-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M7t4dUrmC+M/9lLKLtMd6UKPGQMQ3AsqsQZseZX7YWTD6ezKzCFRBSYr7n2052j9 SjrqX5qtqsfS/4EQ1bqpTA== 0000950124-01-504151.txt : 20020411 0000950124-01-504151.hdr.sgml : 20020411 ACCESSION NUMBER: 0000950124-01-504151 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 21 REFERENCES 429: gov.sec.edgar.dataobjects.object.PDSubFN429Data@d6b36772 FILED AS OF DATE: 20011121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSUMERS ENERGY CO FINANCING VI CENTRAL INDEX KEY: 0001141910 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-73922-01 FILM NUMBER: 1798366 BUSINESS ADDRESS: STREET 1: FAIRLANE PLAZA SOUTH LEGAL DEPT STREET 2: 330 TOWN CENTER CITY: DEARBORN STATE: MI ZIP: 48126 BUSINESS PHONE: 3139829354 MAIL ADDRESS: STREET 1: FAIRLANE PLAZA SOUTH LEGAL DEPT STREET 2: 330 TOWN CENTER CITY: DEARBORN STATE: MI ZIP: 48126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSUMERS ENERGY CO CENTRAL INDEX KEY: 0000201533 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 380442310 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-73922 FILM NUMBER: 1798365 BUSINESS ADDRESS: STREET 1: 212 W MICHIGAN AVE CITY: JACKSON STATE: MI ZIP: 49201 BUSINESS PHONE: 5177881030 MAIL ADDRESS: STREET 1: 212 W MICHIGAN AVE STREET 2: M 946 CITY: JACKSON STATE: MI ZIP: 49201 FORMER COMPANY: FORMER CONFORMED NAME: CONSUMERS POWER CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSUMERS ENERGY CO FINANCING V CENTRAL INDEX KEY: 0001141894 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-73922-02 FILM NUMBER: 1798367 BUSINESS ADDRESS: STREET 1: FAIRLANE PLAZA SOUTH LEGAL DEPT STREET 2: 330 TOWN CENTER CITY: DEARBORN STATE: MI ZIP: 48126 BUSINESS PHONE: 3139829354 MAIL ADDRESS: STREET 1: FAIRLANE PLAZA SOUTH LEGAL DEPT STREET 2: 330 TOWN CENTER CITY: DEARBORN STATE: MI ZIP: 48126 S-3 1 k65350s-3.txt FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 21, 2001 REGISTRATION NO. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------ CONSUMERS ENERGY COMPANY CONSUMERS ENERGY COMPANY FINANCING V CONSUMERS ENERGY COMPANY FINANCING VI (Exact name of registrant as specified in (Exact name of registrant as specified in (Exact name of registrant as specified in its charter) its charter) its charter) MICHIGAN DELAWARE DELAWARE (State or other jurisdiction of (State or other jurisdiction of (State or other jurisdiction of incorporation or organization) incorporation or organization) incorporation or organization) 38-2726431 52-7194937 52-7193813 (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 212 WEST MICHIGAN AVENUE 212 WEST MICHIGAN AVENUE 212 WEST MICHIGAN AVENUE JACKSON, MICHIGAN 49201 JACKSON, MICHIGAN 49201 JACKSON, MICHIGAN 49201 (517) 788-0351 (517) 788-0351 (517) 788-0351 (Address, including zip code, and (Address, including zip code, and (Address, including zip code, and telephone number, including area code, of telephone number, including area code, of telephone number, including area code, of registrant's principal executive office) registrant's principal executive office) registrant's principal executive office) ALAN M. WRIGHT EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND CHIEF ADMINISTRATIVE OFFICER CONSUMERS ENERGY COMPANY 212 WEST MICHIGAN AVENUE JACKSON,MICHIGAN 49201 (517) 788-0351 (Name, address, including zip code, and telephone number, including area code, of agent for service)
It is respectfully requested that the Commission send copies of all notices, orders and communications to: MICHAEL D. VAN HEMERT, ESQ. ASSISTANT GENERAL COUNSEL CMS ENERGY CORPORATION FAIRLANE PLAZA SOUTH 330 TOWN CENTER DRIVE, SUITE 1100 DEARBORN, MICHIGAN 48126 (313) 436-9602 ------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. ------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [ ] CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED(1)(2) PRICE PER UNIT(1)(2)(3) OFFERING PRICE(1)(2)(3) REGISTRATION FEE(1)(2)(3) - --------------------------------------------------------------------------------------------------------------------------------- Senior Notes of Consumers Energy Company(4)...................... - --------------------------------------------------------------------------------------------------------------------------------- Subordinated Debentures of Consumers Energy Company(4)..... - --------------------------------------------------------------------------------------------------------------------------------- Trust Preferred Securities of Consumers Energy Company Financing V..................... - --------------------------------------------------------------------------------------------------------------------------------- Trust Preferred Securities of Consumers Energy Company Financing VI.................... - --------------------------------------------------------------------------------------------------------------------------------- Guarantee of Consumers Energy Company with respect to Trust Preferred Securities of Consumers Energy Company Financing V and Consumers Energy Company Financing VI(5)......... - --------------------------------------------------------------------------------------------------------------------------------- Total(6)......................... $450,000,000 100% $450,000,000 $112,500 - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
(1) There are being registered hereunder such presently indeterminate principal amount of Senior Notes and Subordinated Debentures, as well as shares of Trust Preferred Securities of Consumers Energy Company Financing V and Consumers Energy Company Financing VI, as may from time to time be issued at indeterminate prices. (2) Estimated solely for the purpose of calculating the registration fee. Pursuant to Rule 457(o) under the Securities Act of 1933 which permits the registration fee to be calculated on the basis of the maximum offering price of all the securities listed, the table does not specify by each class information as to the amount to be registered, proposed maximum offering price per unit or proposed maximum aggregate offering price. (3) Exclusive of accrued interest and distributions, if any. (4) The Senior Notes or Subordinated Debentures may be purchased by, and constitute assets of, Consumers Energy Company Financing V or Consumers Energy Company Financing VI, and may later be distributed under certain circumstances to holders of Trust Preferred Securities. (5) The Registration Statement is deemed to include the obligations of Consumers Energy Company under the guarantee and certain backup undertakings under: (1) the subordinated debt indenture pursuant to which the subordinated debentures will be issued or the senior debt indenture pursuant to which the senior notes will be issued; (2) the subordinated debentures or the senior notes; and (3) the declaration of trust of Consumers Energy Company Financing V and Consumers Energy Company Financing VI, including Consumers Energy Company's obligations under such subordinated debt indenture or senior debt indenture to pay costs, expenses, debts and liabilities of the trust (other than with respect to the trust preferred securities and the common securities of Consumers Energy Company Financing V or Consumers Energy Company Financing VI), which taken together provide a full and unconditional guarantee of amounts due on the trust preferred securities. No separate consideration will be received for the guarantee and such backup undertakings. The guarantee is not traded separately. (6) Pursuant to Rule 429 of the Securities, as amended, the prospectus contained herein also relates to the Senior Notes, Subordinated Debentures, Guarantees and Trust Preferred Securities of Consumers Energy Company V and VI, Guarantees, Stock Purchase contracts and Stock Purchase Units of the registrant previously registered under in the Registration statement on Form S-3 (File Number 333-62500) of which $50,000,000 is being carried forward. The filing fee associated with the securities and previously paid with the earlier registration statement is $12,500. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER TO SALE IS NOT PERMITTED. CONSUMERS ENERGY COMPANY SENIOR NOTES SUBORDINATED DEBENTURES GUARANTEES AND CONSUMERS ENERGY COMPANY FINANCING V CONSUMERS ENERGY COMPANY FINANCING VI TRUST PREFERRED SECURITIES GUARANTEED TO THE EXTENT SET FORTH HEREIN BY CONSUMERS ENERGY COMPANY OFFERING PRICE: $500,000,000 ------------------------ We may offer, from time to time: - secured senior debt, unsecured senior debt or unsecured subordinated debt securities consisting of debentures, notes and other unsecured evidence of indebtedness; and - guarantees of Consumers Energy Company with respect to trust preferred securities of Consumers Energy Company Financing V and Consumers Energy Company Financing VI. For each type of securities listed above, the amount, price and terms will be determined at or prior to the time of sale. Consumers Energy Company Financing V and Consumers Energy Company Financing VI, which are Delaware business trusts, may offer trust preferred securities. The trust preferred securities represent preferred undivided beneficial interests in the assets of Consumers Energy Company Financing V and Consumers Energy Company Financing VI in amounts, at prices and on terms to be determined at or prior to the time of sale. We will provide the specific terms of these securities in an accompanying prospectus supplement or supplements. You should read this prospectus and the accompanying prospectus supplement or supplements carefully before you invest. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. We intend to sell these securities through underwriters, dealers, agents or directly to a limited number of purchasers. The names of, and any securities to be purchased by or through, these parties, the compensation of these parties and other special terms in connection with the offering and sale of these securities will be provided in the related prospectus supplement or supplements. This prospectus may not be used to consummate sales of any of these securities unless accompanied by a prospectus supplement. You should rely only on the information contained or incorporated by reference in this prospectus. We have not, and the underwriters have not, authorized any person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus. Consumers' business, financial condition, results of operations and prospects may have changed since such dates. WHERE YOU CAN FIND MORE INFORMATION Consumers files reports, proxy statements and other information with the Securities and Exchange Commission. Our SEC filings are also available over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document it files at the SEC's public reference room at 450 Fifth Street N.W., Room 1024, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the public reference rooms and their copy charges. You may also inspect our SEC reports and other information at the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Consumers is "incorporating by reference" information into this prospectus. This means that Consumers is disclosing important information by referring to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, except for any information superceded by information in this prospectus. This prospectus incorporates by reference the documents set forth that Consumers has previously filed with the SEC. These documents contain important information about Consumers and its finances.
SEC FILINGS (FILE NO. 1-5611) PERIOD/DATE - ------------------------------------------ ----------- - - Annual Report on Form 10-K.............. Year ended December 31, 2000 - - Quarterly Reports of Form 10-Q.......... Quarters ended March 31, 2001, June 30, 2001, and September 30, 2001 - - Current Reports on Form 8-K............. Filed February 23, 2001, June 22, 2001, July 12, 2001, August 1, 2001, August 31, 2001, and October 26, 2001
The documents filed by Consumers with the SEC pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this prospectus, but prior to its termination, are also incorporated by reference into this prospectus. Consumers will provide, upon your oral or written request, a copy of any or all of the information that has been incorporated by reference in the prospectus but not delivered with the prospectus. You may request a copy of these filings at no cost, by writing or telephoning Consumers at the following address: Consumers Energy Company 212 West Michigan Avenue Jackson, Michigan 49201 Tel: (517) 788-0550 Attention: Office of the Secretary You should rely only on the information contained or incorporated by reference in this prospectus. Consumers has not authorized anyone to provide you with information that is different from this information. Separate financial statements of the trusts have not been included in this prospectus. Consumers and the trusts do not consider such financial statements to be helpful because: - Consumers beneficially owns directly or indirectly all of the undivided beneficial interests in the assets of the trusts (other than the beneficial interests represented by the trust preferred securities). 2 See "Consumers Energy Company Trusts," "Description of Securities -- Trust Preferred Securities" and "Description of Securities -- The Guarantees." - Consumers will guarantee the trust preferred securities such that the holders of the trust preferred securities, with respect to the payment of distributions and amounts upon liquidation, dissolution and winding-up, are at least in the same position with regard to the assets of Consumers as a preferred stockholder of Consumers. - in future filings under the Securities Exchange Act of 1934, an audited footnote to Consumers' annual financial statements will state that the trusts are wholly-owned by Consumers, that the sole assets of the trusts are the senior notes or the subordinated debentures of Consumers having a specified total principal amount, and, considered together, the back-up undertakings, including the guarantees, constitute a full and unconditional guarantee by Consumers of the trusts' obligations under the trust preferred securities issued by the trusts. - each trust is a newly created special purpose entity, has no operating history, no independent operations and is not engaged in, and does not propose to engage in, any activity other than as described under "Consumers Energy Company Trusts." CONSUMERS ENERGY COMPANY Consumers, formed in Michigan in 1968, is the successor to a corporation organized in Maine in 1910 that conducted business in Michigan from 1915 to 1968. Consumers is a public utility that provides natural gas and/or electricity to almost six million of the approximately 9.9 million residents in Michigan's lower peninsula. Consumers' electric operations include the generation, purchase, transmission, distribution, and sale of electricity. Consumers provides electric services in 61 of the 68 counties of Michigan's lower peninsula. In 2000, Consumers' electric utility owned and operated 31 electric generating plants with an aggregate of 6,437 MW of capacity and served 1.69 million customers in Michigan's lower peninsula. Consumers' gas utility operations purchase, transport, store, distribute and sell natural gas. As of December 31, 2000, it was authorized to provide service in 54 of the 68 counties in Michigan's lower peninsula. Consumers' gas utility owned and operated over 24,383 miles of distribution mains and 1,108 miles of transmission lines throughout Michigan's lower peninsula, providing natural gas to 1.6 million customers. In 2000, Consumers' consolidated operating revenue was $3.935 billion. Of Consumers' operating revenue, 68% was generated from its electric utility business, 30% from its gas utility business, and 2% from its non-utility business. Consumers is subject to regulation by various federal, state, local and foreign governmental agencies. Consumers is subject to the jurisdiction of the Michigan Public Service Commission, which regulates public utilities in Michigan with respect to retail utility rates, accounting, utility services, certain facilities and various other matters. The Federal Energy Regulatory Commission ("FERC") also has jurisdiction under the Natural Gas Act over Michigan Gas Storage Company, a subsidiary of Consumers, relating, among other things, to the construction of facilities and to service provided and rates charged by Michigan Gas Storage. Some of Consumers' gas business is also subject to regulation of FERC, including a blanket transportation tariff pursuant to which Consumers can transport gas in interstate commerce. Certain of Consumers' electric operations are also subject to regulation by FERC, including compliance with FERC's accounting rules and other regulations applicable to "public utilities" and "licensees," the transmission of electric energy in interstate commerce and the rates and charges for the sale of electric energy at wholesale and transmission of electric energy in interstate commerce, the consummation of certain mergers, the sale of certain facilities, the construction, operation and maintenance of hydroelectric projects and the issuance of securities, as provided by the Federal Power Act. Consumers is subject to the jurisdiction of the Nuclear Regulatory Commission ("NRC") with respect to the design, construction and operation of its Palisades nuclear power plant and the decommissioning of its closed Big Rock power plant. Consumers is also subject to NRC jurisdiction with respect to certain other uses of nuclear material. 3 The foregoing information concerning Consumers does not purport to be comprehensive. For additional information concerning Consumers' business and affairs, including their capital requirements and external financing plans, pending legal and regulatory proceedings and descriptions of certain laws and regulations to which those companies are subject, prospective purchasers should refer to the Incorporated Documents. See "Where You Can Find More Information" above. The address of the principal executive offices of Consumers Energy Company is 212 West Michigan Avenue, Jackson, Michigan 49201. Its telephone number is (517) 788-0550. CONSUMERS ENERGY COMPANY TRUSTS Consumers Energy Company Financing V and Consumers Energy Company Financing VI are statutory business trusts created under the Delaware Business Trust Act by way of: - Declaration of Trust executed by Consumers, as sponsor, and the trustees of the trusts and - the filing of certificates of trust with the Secretary of State of the State of Delaware. At the time of public issuance of the trust preferred securities, each Declaration of Trust will be amended and restated in its entirety and will be qualified as an indenture under the Trust Indenture Act of 1939, as amended. Consumers will directly or indirectly acquire common securities of each trust in a total liquidation amount of at least 3% of the total capital of the trust. Each trust exists for the exclusive purposes of: - issuing the trust preferred securities and common securities representing undivided beneficial interests in the assets of the trust; - investing the gross proceeds of the common securities and the trust preferred securities in the senior notes or subordinated debentures; and - engaging in only those other activities necessary or incidental thereto. Each trust has a term of approximately 55 years, but may terminate earlier as provided in the amended and restated Declaration of Trust. The proceeds from the offering of the trust preferred securities and the sale of the common securities may be used by each trust to purchase from Consumers senior notes or subordinated debentures in a total principal amount equal to the total liquidation preference of the common securities and the trust preferred securities. The Consumers notes or debentures would bear interest at an annual rate equal to the annual distribution rate of the common securities and the trust preferred securities and would have certain redemption terms that correspond to the redemption terms for the common securities and the trust preferred securities. The senior notes will rank on an equal basis with all other unsecured debt of Consumers except subordinated debt. The subordinated debentures will rank subordinate in right of payment to all of Consumers' senior indebtedness (as defined in this prospectus). Distributions on the common securities and the trust preferred securities may not be made unless each trust receives corresponding interest payments on the senior notes or the subordinated debentures from Consumers. Consumers will irrevocably guarantee, on a senior or subordinated basis, as applicable, and to the extent set forth in the guarantee, with respect to each of the common securities and the trust preferred securities, the payment of distributions, the redemption price, including all accrued or deferred and unpaid distributions, and payment on liquidation, but only to the extent of funds on hand. Each guarantee will be unsecured and will be either equal to or subordinate to, as applicable, all senior indebtedness, of Consumers. Upon the occurrence of certain events (subject to the conditions to be described in an accompanying prospectus supplement) each trust may be liquidated and the holders of the common securities and the trust preferred securities could receive senior notes or subordinated debentures in lieu of any liquidating cash distribution. Pursuant to the amended and restated Declaration of Trust, the number of trustees of each trust will initially be four. Two of the trustees will be persons who are employees or officers of or who are affiliated 4 with Consumers and will be referred to as the regular trustees. The third trustee will be a financial institution that is unaffiliated with Consumers, which trustee will serve as property trustee under the applicable amended and restated Declaration of Trust and as indenture trustee for the purposes of compliance with the provisions of the Trust Indenture Act of 1939. Initially, The Bank of New York, a New York banking corporation, will be the property trustee until removed or replaced by the holder of the common securities. For the purpose of compliance with the provisions of the Trust Indenture Act of 1939, The Bank of New York will also act as guarantee trustee. The fourth trustee, The Bank of New York (Delaware), will act as the Delaware trustee for the purposes of the Delaware Business Trust Act, until removed or replaced by the holder of the common securities. See "Description of Securities -- The Guarantees." The property trustee will hold title to the applicable senior notes or subordinated debenture for the benefit of the holders of the common securities and the trust preferred securities and the property trustee will have the power to exercise all rights, powers and privileges under the applicable indentures as the holder of the senior notes or subordinated debenture. In addition, the property trustee will maintain exclusive control of a segregated non-interest bearing bank account to hold all payments made in respect of the senior notes or subordinated debentures for the benefit of the holders of the common securities and the trust preferred securities. The property trustee will make payments of distributions and payments on liquidation, redemption and otherwise to the holders of the common securities and the trust preferred securities out of funds from the segregated non-interest bearing bank account. The guarantee trustee will hold the guarantees for the benefit of the holders of the common securities and the trust preferred securities. Consumers, as the direct or indirect holder of all the common securities, will have the right to appoint, remove or replace any of the trustees. Consumers will also have the right to increase or decrease the number of trustees, as long as the number of trustees shall be at least three, a majority of which shall be regular trustees. Consumers will pay all fees and expenses related to the trusts and the offering of the common securities and the trust preferred securities. The rights of the holders of the trust preferred securities, including economic rights, rights to information and voting rights, are set forth in the applicable amended and restated Declaration of Trust, the Delaware Business Trust Act and the Trust Indenture Act of 1939. The trustee for each trust in the State of Delaware is The Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711. The principal place of business of each trust will be c/o Consumers Energy Company, 212 West Michigan Avenue, Jackson, Michigan 49201. USE OF PROCEEDS The proceeds received by each of the trusts from the sale of its trust preferred securities or the common securities will be invested in the senior notes or the subordinated debentures. As will be more specifically set forth in the applicable prospectus supplement, Consumers will use those borrowed amounts and the net proceeds from the sale of senior notes or subordinated debentures offered hereby for its general corporate purposes, including capital expenditures, investment in subsidiaries, working capital and repayment of debt. Any specific allocation of the proceeds to a particular purpose that has been made at the date of any prospectus supplement will be described in the appropriate prospectus supplement. 5 RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS The ratios of earnings to fixed charges and the ratios of earnings to fixed charges and preferred stock dividends for each of the years ended December 31, 1996 through 2000 and the nine months ended September 30, 2001 and 2000, are as follows:
NINE MONTHS ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31 ------------- ---------------------------------- 2001 2000 2000 1999 1998 1997 1996 ----- ----- ---- ---- ---- ---- ---- Ratio of earnings to:(a) Fixed charges................................ 1.65 2.89 3.06 3.46 3.16(b) 3.31 3.27 Fixed charges & preferred stock dividends.... 1.37 2.41 2.57 2.99 2.52(c) 2.61 2.54
- --------------- (a) For purposes of computing the ratio, earnings represent net income before income taxes, net interest charges and the estimated interest portions of lease rentals, plus distributed income of equity investees less earnings from minority interests of equity investees. Earnings for the ratio of earnings to fixed charges and preferred stock dividends also includes the amount required to pay distributions on preferred securities and the amount of pretax earnings required to pay the dividends on outstanding preferred stock. (b) Excludes a cumulative effect of change in accounting after-tax gain of $43 million; if included, ratio would be 3.52. (c) Excludes a cumulative effect of change in accounting after-tax gain of $43 million: if included, ratio would be 2.81. 6 DESCRIPTION OF SECURITIES INTRODUCTION Specific terms of the debt securities consisting of the senior notes and subordinated debentures, or the trust preferred securities, or any combination of these securities, the irrevocable guarantees of Consumers, with respect to each of the common securities and the preferred securities of the trust, for which this prospectus is being delivered, will be set forth in an accompanying prospectus supplement or supplements. The prospectus supplement will set forth with regard to the particular offered securities, without limitation, the following: - in the case of debt securities, the designation, total principal amount, denomination, maturity, premium, if any, any exchange, conversion, redemption or sinking fund provisions, interest rate (which may be fixed or variable), the time or method of calculating interest payments, the right of Consumers, if any, to defer payment or interest on the debt securities and the maximum length of such deferral, put options, if any, public offering price, ranking, any listing on a securities exchange and other specific terms of the offering; and - in the case of trust preferred securities, the designation, number of shares, liquidation preference per security, initial public offering price, any listing on a securities exchange, dividend rate (or method of calculation thereof), dates on which dividends shall be payable and dates from which dividends shall accrue, any voting rights, any redemption, exchange, conversion or sinking fund provisions and any other rights, preferences, privileges, limitations or restrictions relating to a specific series of the trust preferred securities including a description of the Consumers guarantee, as the case may be. DEBT SECURITIES Senior notes will be issued under a senior debt indenture. The subordinated debentures will be issued under a subordinated debt indenture. The senior debt indenture and the subordinated debt indenture are sometimes referred to in this prospectus individually as an "indenture" and collectively as the "indentures." The following briefly summarizes the material provisions of the indentures and the debt securities. You should read the more detailed provisions of the applicable indenture, including the defined terms, for provisions that may be important to you. You should also read the particular terms of a series of debt securities, which will be described in more detail in the applicable prospectus supplement. Copies of the indentures may be obtained from Consumers or the applicable trustee. Unless otherwise provided in the applicable prospectus supplement, the trustee under the senior debt indenture will be The Chase Manhattan Bank and the trustee under the subordinated debt indenture will be The Bank of New York. General The indentures provide that debt securities of Consumers may be issued in one or more series, with different terms, in each case as authorized on one or more occasions by Consumers. Federal income tax consequences and other special considerations applicable to any debt securities issued by Consumers at a discount will be described in the applicable prospectus supplement. The applicable prospectus supplement relating to any series of debt securities will describe the following terms, where applicable: - the title of the debt securities; - whether the debt securities will be senior or subordinated debt; - the total principal amount of the debt securities; 7 - the percentage of the principal amount at which the debt securities will be sold and, if applicable, the method of determining the price; - the maturity date or dates; - the interest rate or the method of computing the interest rate; - the date or dates from which any interest will accrue, or how such date or dates will be determined, and the interest payment date or dates and any related record dates; - the location where payments on the debt securities will be made; - the terms and conditions on which the debt securities may be redeemed at the option of Consumers; - any obligation of Consumers to redeem, purchase or repay the debt securities at the option of a holder upon the happening of any event and the terms and conditions of redemption, purchase or repayment; - any provisions for the discharge of Consumers' obligations relating to the debt securities by deposit of funds or United States government obligations; - whether the debt securities are to trade in book-entry form and the terms and any conditions for exchanging the global security in whole or in part for paper certificates; - any material provisions of the applicable indenture described in this prospectus that do not apply to the debt securities; - any additional amounts with respect to the debt securities that Consumers will pay to a non-United States person because of any tax, assessment or governmental charge withheld or deducted and, if so, any option of Consumers to redeem the debt securities rather than paying these additional amounts; - any additional events of default; and - any other specific terms of the debt securities. Concerning the Trustees Each of The Chase Manhattan Bank, the trustee under the senior debt indenture for the senior notes, and The Bank of New York, the trustee under the subordinated debt indenture for the subordinated debentures, is one of a number of banks with which Consumers and its subsidiaries maintain ordinary banking relationships, including credit facilities. Exchange and Transfer Debt securities may be presented for exchange. Registered debt securities may be presented for registration of transfer at the offices and, subject to the restrictions set forth in the debt security and in the applicable prospectus supplement, without service charge, but upon payment of any taxes or other governmental charges due in connection with the transfer, subject to any limitations contained in the applicable indenture. Debt securities in bearer form and any related coupons, will be transferable by delivery. Payment Distributions on the debt securities in registered form will be made at the office or agency of the applicable trustee in the Borough of Manhattan, the City of New York or its other designated office. However, at the option of Consumers, payment of any interest may be made by check or by wire transfer. Payment of any interest due on debt securities in registered form will be made to the persons in whose 8 name the debt securities are registered at the close of business on the record date for such interest payments. Payments made in any other manner will be specified in the prospectus supplement. Governing Law Each indenture and the debt securities will be governed by, and construed in accordance with, the laws of the State of Michigan unless the laws of another jurisdiction shall mandatorily apply. The rights, duties and obligations of the subordinated note trustee are governed by and construed in accordance with the laws of the State of New York. SENIOR NOTES General The following summaries of some important provisions of the senior note indenture (including its supplements by such reference) do not purport to be complete and are subject to, and qualified in their entirety by, all of the provisions of the senior note indenture. The senior note indenture is incorporated by reference in this prospectus and is available upon request to the senior note trustee. In addition, capitalized terms used in this section and not otherwise defined in this prospectus shall have the meaning given to them in the senior note indenture. Security; Release Date Until the release date (as described in the next paragraph), the senior notes will be secured by one or more series of Consumers' first mortgage bonds issued and delivered by Consumers to the senior note trustee. See "Description of First Mortgage Bonds." Upon the issuance of a series of senior notes prior to the release date, Consumers will simultaneously issue and deliver to the senior note trustee, as security for all senior notes, a series of first mortgage bonds that will have the same stated maturity date and corresponding redemption provisions, and will be in the same total principal amount as the series of the senior notes being issued. Any series of first mortgage bonds securing senior notes may, but need not, bear interest. Any payment by Consumers to the senior note trustee of principal of, interest and/or premium, if any, on a series of first mortgage bonds will be applied by the senior note trustee to satisfy Consumers' obligations with respect to principal of, interest and/or premium, if any, on the corresponding senior notes. The "release date" will be the date that all first mortgage bonds of Consumers issued and outstanding under a mortgage indenture with The Chase Manhattan Bank as mortgage trustee, other than first mortgage bonds securing senior notes, have been retired (at, before or after their maturity) through payment, redemption or otherwise. On the release date, the senior note trustee will deliver to Consumers, for cancellation, all first mortgage bonds securing senior notes. Not later than 30 days thereafter, the senior note trustee will provide notice to all holders of senior notes of the occurrence of the release date. As a result, on the release date, the first mortgage bonds securing senior notes will cease to secure the senior notes. The senior notes will then become unsecured general obligations of Consumers and will rank equally with other unsecured indebtedness of Consumers. Each series of first mortgage bonds that secures senior notes will be secured by a lien on certain property owned by Consumers. See "Description of First Mortgage Bonds -- Priority and Security." Upon the payment or cancellation of any outstanding senior notes, the senior note trustee will surrender to Consumers for cancellation an equal principal amount of the related series of first mortgage bonds. Consumers will not permit, at any time prior to the release date, the total principal amount of first mortgage bonds securing senior notes held by the senior note trustee to be less than the total principal amount of senior notes outstanding. Following the release date, Consumers will cause the mortgage to be discharged and will not issue any additional first mortgage bonds under the mortgage. While Consumers will be precluded after the release date from issuing additional first mortgage bonds, it will not be precluded under the senior note indenture or senior notes from issuing or assuming other secured debt, or incurring liens on its property, except to the extent indicated below under "-- Certain Covenants of Consumers -- Limitation on Liens." 9 Events Of Default The following constitute events of default under senior notes of any series: (1) failure to pay principal of and premium, if any, on any senior note of such series when due; (2) failure to pay interest on any senior note of such series when due for 60 days; (3) failure to perform any other covenant or agreement of Consumers in the senior notes of such series for 90 days after written notice to Consumers by the senior note trustee or the holders of at least 33% in total principal amount of the outstanding senior notes; (4) prior to the release date, a default under the mortgage; provided, however, that the waiver or cure of such default and the rescission and annulment of the consequences under the mortgage will be a waiver of the corresponding event of default under the senior note indenture and a rescission and annulment of the consequences under the senior note indenture; and (5) certain events of bankruptcy, insolvency, reorganization, assignment or receivership of Consumers. If an event of default occurs and is continuing, either the senior note trustee or the holders of a majority in total principal amount of the outstanding senior notes may declare the principal amount of all senior notes to be due and payable immediately. The senior note trustee generally will be under no obligation to exercise any of its rights or powers under the senior note indenture at the request or direction of any of the holders of senior notes of such series unless those holders have offered to the senior note trustee reasonable security or indemnity. Subject to the provisions for indemnity and certain other limitations contained in the senior note indenture, the holders of a majority in principal amount of the outstanding senior notes of such series generally will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the senior note trustee, or of exercising any trust or power conferred on the senior note trustee. The holders of a majority in principal amount of the outstanding senior notes of such series generally will have the right to waive any past default or event of default (other than a payment default) on behalf of all holders of senior notes of such series. No holder of senior notes of a series may institute any action against Consumers under the senior note indenture unless: (1) that holder gives to the senior note trustee advance written notice of default and its continuance; (2) the holders of not less than a majority in total principal amount of senior notes of such series then outstanding affected by that event of default request the senior note trustee to institute such action; (3) that holder has offered the senior note trustee reasonable indemnity; and (4) the senior note trustee shall not have instituted such action within 60 days of such request. Furthermore, no holder of senior notes will be entitled to institute any such action if and to the extent that that action would disturb or prejudice the rights of other holders of senior notes of such series. Within 90 days after the occurrence of a default with respect to the senior notes of a series, the senior note trustee must give the holders of the senior notes of such series notice of any such default known to the senior note trustee, unless cured or waived. The senior note trustee may withhold such notice if it determines in good faith that it is in the interest of such holders to do so except in the case of default in the payment of principal of, and interest and/or premium, if any, on any senior notes of such series. Consumers is required to deliver to the senior note trustee each year a certificate as to whether or not, to the knowledge of the officers signing such certificate, Consumers is in compliance with the conditions and covenants under the senior note indenture. 10 Modification Consumers and the senior note trustee cannot modify and amend the senior note indenture without the consent of the holders of a majority in principal amount of the outstanding affected senior notes. Consumers and the senior note trustee cannot modify and amend the senior note indenture without the consent of the holder of each outstanding senior note of such series to: (1) change the maturity date of any senior note of such series; (2) reduce the rate (or change the method of calculation thereof) or extend the time of payment of interest on any senior note of such series; (3) reduce the principal amount of, or premium payable on, any senior note of such series; (4) change the coin or currency of any payment of principal of, and interest and/or premium on any senior note of such series; (5) change the date on which any senior note of such series may be redeemed or repaid at the option of its holder or adversely affect the rights of a holder to institute suit for the enforcement of any payment on or with respect to any senior note of such series; (6) impair the interest of the senior note trustee in the first mortgage bonds securing the senior notes of such series held by it or, prior to the release date, reduce the principal amount of any series of first mortgage bond securing the senior notes of such series to an amount less than the principal amount of the related series of senior notes or alter the payment provisions of such senior note mortgage bonds in a manner adverse to the holders of the senior notes; or (7) modify the senior notes of such series necessary to modify or amend the senior note indenture or to waive any past default to less than a majority. Consumers and the senior note trustee can modify and amend the senior note indenture without the consent of the holders in certain cases, including: (1) to add to the covenants of Consumers for the benefit of the holders or to surrender a right conferred on Consumers in the senior note indenture; (2) to add further security for the senior notes of such series; (3) to add provisions enabling Consumers to be released with respect to one or more series of outstanding senior notes from its obligations under the covenants upon satisfaction of conditions with respect to such series of senior notes; (4) to supply omissions, cure ambiguities or correct defects which actions, in each case, are not prejudicial to the interests of the holders in any material respect; or (5) to make any other change that is not prejudicial to the holders of senior notes of such series in any material respect. A supplemental indenture which changes or eliminates any covenant or other provision of the senior note indenture (or any supplemental indenture) which has expressly been included solely for the benefit of one or more series of senior notes, or which modifies the rights of the holders of senior notes of such series with respect to such covenant or provision, will be deemed not to affect the rights under the senior note indenture of the holders of senior notes of any other series. Defeasance and Discharge The senior note indenture provides that Consumers will be discharged from any and all obligations in respect to the senior notes of such series and the senior note indenture (except for certain obligations such as obligations to register the transfer or exchange of senior notes, replace stolen, lost or mutilated senior notes and maintain paying agencies) if, among other things, Consumers irrevocably deposits with the senior note trustee, in trust for the benefit of holders of senior notes of such series, money or certain 11 United States government obligations, or any combination of money or government obligations. The payment of interest and principal on the deposits in accordance with their terms must provide money in an amount sufficient, without reinvestment, to make all payments of principal of, and any premium and interest on, the senior notes on the dates such payments are due in accordance with the terms of the senior note indenture and the senior notes of such series. If all of the senior notes of such series are not due within 90 days of such deposit by redemption or otherwise, Consumers must also deliver to the senior note trustee an opinion of counsel to the effect that the holders of the senior notes of such series will not recognize income, gain or loss for federal income tax purposes as a result of that defeasance or discharge of the senior note indenture. Thereafter, the holders of senior notes must look only to the deposit for payment of the principal of, and interest and any premium on, the senior notes. Consolidation, Merger and Sale or Disposition of Assets Consumers may consolidate with or merge into, or sell or otherwise dispose of its properties as or substantially as an entirety if: (1) the new corporation is a corporation organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia, (2) the new corporation assumes the due and punctual payment of the principal of and premium and interest on all the senior notes and the performance of every covenant of the senior note indenture to be performed or observed by Consumers, and (3) if prior to the release date, the new corporation assumes Consumers' obligations under the mortgage indenture with respect to first mortgage bonds securing senior notes. The conveyance or other transfer by Consumers of: (1) all or any portion of its facilities for the generation of electric energy, (2) all of its facilities for the transmission of electric energy, or (3) all of its facilities for the distribution of natural gas, in each case considered alone or in any combination with properties described in (1), (2) or (3) of this sentence, will not be considered a conveyance or other transfer of all the properties of Consumers, as or substantially as an entirety. Certain Covenants Of Consumers Limitation on Liens So long as any senior notes are outstanding, Consumers may not issue, assume, guarantee or permit to exist after the release date any debt that is secured by any mortgage, security interest, pledge or lien (each a "lien") of or upon any operating property of Consumers, whether owned at the date of the senior note indenture or thereafter acquired, without in any such case effectively securing the senior notes (together with, if Consumers shall so determine, any other indebtedness of Consumers ranking equally with the senior notes) equally and ratably with such debt (but only so long as such debt is so secured). The foregoing restriction will not apply to: (1) liens on any operating property existing at the time of its acquisition (which liens may also extend to subsequent repairs, alterations and improvements to such operating property); (2) liens on operating property of a corporation existing at the time such corporation is merged into or consolidated with, or such corporation disposes of its properties (or those of a division) as or substantially as an entirety to, Consumers; (3) liens on operating property to secure the cost of acquisition, construction, development or substantial repair, alteration or improvement of property or to secure indebtedness incurred to provide funds for any such purpose or for reimbursement of funds previously expended for any such purpose, provided such liens are created or assumed contemporaneously with, or within 18 months after, such 12 acquisition or the completion of substantial repair or alteration, construction, development or substantial improvement; (4) liens in favor of any state or any department, agency or instrumentality or political subdivision of any state, or for the benefit of holders of securities issued by any such entity (or providers of credit enhancement with respect to such securities), to secure any debt (including, without limitation, obligations of Consumers with respect to industrial development, pollution control or similar revenue bonds) incurred for the purpose of financing all or any part of the purchase price or the cost of substantially repairing or altering, constructing, developing or substantially improving operating property of Consumers; or (5) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in clauses (1) through (4), provided, however, that the principal amount of debt secured thereby and not otherwise authorized by said clauses (1) to (4), inclusive, shall not exceed the principal amount of debt, plus any premium or fee payable in connection with any such extension, renewal or replacement, so secured at the time of such extension, renewal or replacement. These restrictions will not apply to the issuance, assumption or guarantee by Consumers of debt secured by a lien which would otherwise be subject to the foregoing restrictions up to a total amount which, together with all other secured debt of Consumers (not including secured debt permitted under any of the foregoing exceptions) and the value of sale and lease-back transactions existing at such time (other than sale and lease-back transactions the proceeds of which have been applied to the retirement of certain indebtedness, sale and lease-back transactions in which the property involved would have been permitted to be subjected to a lien under any of the foregoing exceptions in clauses (1) to (5) and sale and lease-back transactions that are permitted by the first sentence of "Limitation on Sale and Lease-Back Transactions" below), does not exceed the greater of 15% of Net Tangible Assets or 15% of Capitalization. Limitation on Sale and Lease-Back Transactions So long as senior notes are outstanding, Consumers may not enter into or permit to exist after the release date any sale and lease-back transaction with respect to any operating property (except for transactions involving leases for a term, including renewals, of not more than 48 months), if the purchaser's commitment is obtained more than 18 months after the later of the completion of the acquisition, construction or development of such operating property or the placing in operation of such operating property or of such operating property as constructed or developed or substantially repaired, altered or improved. This restriction will not apply if: (1) Consumers would be entitled under any of the provisions described in clauses (1) to (5) of the first sentence of the second paragraph under "Limitation on Liens" above to issue, assume, guarantee or permit to exist debt secured by a lien on such operating property without equally and ratably securing the senior notes, (2) after giving effect to such sale and lease-back transaction, Consumers could incur pursuant to the provisions described in the second sentence of the second paragraph under "Limitation on Liens," at least $1.00 of additional debt secured by liens (other than liens permitted by clause (1)), or (3) Consumers applies within 180 days an amount equal to, in the case of a sale or transfer for cash, the net proceeds (not exceeding the net book value), and, otherwise, an amount equal to the fair value (as determined by its Board of Directors) of the operating property so leased to the retirement of senior notes or other debt of Consumers ranking equally with, the senior notes, subject to reduction for senior notes and such debt retired during such 180-day period otherwise than pursuant to mandatory sinking fund or prepayment provisions and payments at stated maturity. 13 Voting Of Senior Note Mortgage Bonds Held By the Senior Note Trustee The senior note trustee, as the holder of first mortgage bonds securing senior notes, will attend any meeting of bondholders under the mortgage indenture, or, at its option, will deliver its proxy in connection therewith as it relates to matters with respect to which it is entitled to vote or consent. So long as no event of default under the senior note indenture has occurred and is continuing, the senior note trustee will vote or consent: (1) in favor of amendments or modifications of the mortgage indenture of substantially the same tenor and effect as follows: - to eliminate the maintenance and replacement fund and to recover amounts of net property additions previously applied in satisfaction thereof so that the same would become available as a basis for the issuance of first mortgage bonds; - to eliminate sinking funds or improvement funds and to recover amounts of net property additions previously applied in satisfaction thereof so that the same would become available as a basis for the issuance of first mortgage bonds; - to eliminate the restriction on the payment of dividends on common stock and to eliminate the requirements in connection with the periodic examination of the mortgaged and pledged property by an independent engineer; - to permit first mortgage bonds to be issued under the mortgage indenture in a principal amount equal to 70% of unfunded net property additions instead of 60%, to permit sinking funds improvement funds requirements (to the extent not otherwise eliminated) under the Mortgage to be satisfied by the application of net property additions in an amount equal to 70% of such additions instead of 60%, and to permit the acquisition of property subject to certain liens prior to the lien of the Mortgage if the principal amount of indebtedness secured by such liens does not exceed 70% of the cost of such property instead of 60%; - to eliminate requirements that Consumers deliver a net earnings certificate for any purpose under the mortgage indenture; - to raise the minimum dollar amount of insurance proceeds on account of loss or damage that must be payable to the senior note trustee from $50,000 to an amount equal to the greater of (A) $5,000,000 and (B) three per centum (3%) of the total principal amount of first mortgage bonds outstanding; - to increase the amount of the fair value of property which may be sold or disposed of free from the lien of the mortgage indenture, without any release or consent by the senior note trustee, from not more than $25,000 in any calendar year to not more than an amount equal to the greater of (A) $5,000,000 and (B) three per centum (3%) of the total principal amount of first mortgage bonds then outstanding; - to permit certain mortgaged and pledged property to be released from the lien of the mortgage indenture if, in addition to certain other conditions, the senior note trustee receives purchase money obligations of not more than 70% of the fair value of such property instead of 60% and to eliminate the further requirement for the release of such property that the total principal amount of purchase money obligations held by the senior note trustee not exceed 20% of the principal amount of first mortgage bonds outstanding; - to eliminate the restriction prohibiting the mortgage trustee from applying cash held by it pursuant to the mortgage indenture to the purchase of bonds not otherwise redeemable at a price exceeding 110% of the principal of such bonds, plus accrued interest; and (2) with respect to any other amendments or modifications of the mortgage indenture, as follows: the senior note trustee shall vote all first mortgage bonds securing senior notes then held by it, or consent with respect thereto, proportionately with the vote or consent of the holders of all other 14 first mortgage bonds outstanding under the mortgage indenture, the holders of which are eligible to vote or consent. However, the senior note trustee will not vote in favor of, or consent to, any amendment or modification of the mortgage which, if it were an amendment or modification of the senior note indenture, would require the consent of senior notes holders (as described under "Modification,") without the prior consent of holders of senior notes which would be required for such an amendment or modification of the senior note indenture. Concerning The Senior Note Trustee The Chase Manhattan Bank is both the senior note trustee under the senior note indenture and the mortgage trustee under the mortgage indenture. Consumers and its affiliates maintain depositary and other normal banking relationships with The Chase Manhattan Bank. The Chase Manhattan Bank is also a lender to Consumers and its affiliates. The senior note indenture provides that Consumers' obligations to compensate the senior note trustee and reimburse the senior note trustee for expenses, disbursements and advances will constitute indebtedness which will be secured by a lien generally prior to that of the senior notes upon all property and funds held or collected by the senior note trustee as such. DESCRIPTION OF FIRST MORTGAGE BONDS General The first mortgage bonds securing senior notes are to be issued under a mortgage indenture as amended and supplemented by various supplemental indentures with The Chase Manhattan Bank, as the mortgage trustee. The statements herein concerning the mortgage indenture are an outline and do not purport to be complete and are subject to, and qualified in their entirety by, all of the provisions of the mortgage indenture, which is incorporated by reference herein. They make use of defined terms and are qualified in their entirety by express reference to the cited sections and articles of the mortgage indenture a copy of which will be available upon request to the senior note trustee. First mortgage bonds securing senior notes will be issued as security for Consumers' obligations under the senior note indenture and will be immediately delivered to and registered in the name of the senior note trustee. The first mortgage bonds securing senior notes will be issued as security for senior notes of a series and will secure the senior notes of that series until the release date. The senior note indenture provides that the senior note trustee shall not transfer any first mortgage bonds securing senior notes except to a successor trustee, to Consumers (as provided in the senior note indenture) or in compliance with a court order in connection with a bankruptcy or reorganization proceeding of Consumers. The senior note trustee shall generally vote the first mortgage bonds securing senior notes proportionately with what it believes to be the vote of all other first mortgage bonds then outstanding except in connection with certain amendments or modifications of the mortgage indenture, as described under "Description of Senior Notes Voting of Senior Note Mortgage Bonds Held by Senior Note Trustee." First mortgage bonds securing senior notes will correspond to the senior notes of its related series in respect of principal amount, interest rate, maturity date and redemption provisions. Upon payment of the principal or premium, if any, or interest on senior notes of a series, the related first mortgage bonds in a principal amount equal to the principal amount of such senior notes will, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of Consumers to make such payment shall be discharged. Priority And Security The first mortgage bonds securing senior notes of any series will rank equally as to security with bonds of other series now outstanding or issued later under the mortgage indenture. This security is a direct first lien on substantially all of Consumers' property and franchises (other than certain property expressly excluded from the lien (such as cash, bonds, stock and certain other securities, contracts, accounts and bills receivables, judgments and other evidences of indebtedness, stock in trade, materials or supplies manufactured or acquired for the purpose of sale and/or resale in the usual course of business or 15 consumable in the operation of any of the properties of Consumers, natural gas, oil and minerals, motor vehicles and certain real property listed in Schedule A to the mortgage indenture)). This lien is subject to excepted encumbrances (and certain other limitations) as defined and described in the mortgage indenture. It is also subject to certain provisions of Michigan law which provides that under certain circumstances, the State of Michigan's lien against property on which it has incurred costs related to any response activity that is subordinate to prior recorded liens can become superior to such prior liens pursuant to court order. The mortgage indenture permits, with certain limitations, the acquisition of property subject to prior liens and, under certain conditions, permits the issuance of additional indebtedness under such prior liens to the extent of 60% of net property additions made by Consumers to the property subject to such prior liens. Release And Substitution Of Property The mortgage indenture provides that, subject to various limitations, property may be released from the lien thereof when sold or exchanged, or contracted to be sold or exchanged, upon the basis of: - cash deposited with the mortgage trustee; - bonds or purchase money obligations delivered to the mortgage trustee; - prior lien bonds delivered to the mortgage trustee or reduced or assumed by the purchaser; - property additions acquired in exchange for the property released; or - upon a showing that unfunded net property additions exist. The mortgage indenture also permits the withdrawal of cash upon a showing that unfunded net property additions exist or against the deposit of bonds or the application thereof to the retirement of bonds. Modification Of Mortgage The mortgage indenture, the rights and obligations of Consumers and the rights of the bondholders may be modified by Consumers with the consent of the holders of 75% in principal amount of the bonds and of not less than 60% of the principal amount of each series affected. In general, however, no modification of the terms of payment of principal or interest and no modification affecting the lien or reducing the percentage required for modification is effective against any bondholder without the bondholder's consent. Consumers has reserved the right without any consent or other action by the holders of bonds of any series created after September 15, 1993 or by the holder of any senior note or exchange note, to amend the mortgage in order to substitute a majority in principal amount of bonds outstanding under the mortgage for the 75% requirement set forth above (and then only in respect of such series of outstanding bonds as shall be affected by the proposed action) and to eliminate the requirement for a series-by-series consent requirement. Concerning The Mortgage Trustee The Chase Manhattan Bank is both the mortgage trustee under the mortgage indenture and the senior note trustee under the senior note indenture. Consumers and its affiliates maintain depositary and other normal banking relationships with The Chase Manhattan Bank. The Chase Manhattan Bank is also a lender to Consumers and its affiliates. The mortgage indenture provides that Consumers' obligations to compensate the mortgage trustee and reimburse the trustee for expenses, disbursements and advances will constitute indebtedness which will be secured by a lien generally prior to that of the first mortgage bonds securing senior notes upon all property and funds held or collected by the mortgage trustee as such. The mortgage trustee or the holders of 20% in total principal amount of the bonds may declare the principal due on default, but the holders of a majority in total principal amount may annul such declaration and waive the default if the default has been cured. Subject to certain limitations, the holders of a majority in total principal amount may generally direct the time, method and place of conducting any proceeding for the enforcement of the mortgage indenture. No bondholder has the right to institute any 16 proceedings for the enforcement of the mortgage indenture unless that holder has given the mortgage trustee written notice of a default, the holders of 20% of outstanding bonds shall have tendered to the mortgage trustee reasonable security or indemnity against costs, expenses and liabilities and requested the mortgage trustee to take action, the mortgage trustee shall have declined to take action or failed to do so within sixty days and no inconsistent directions shall have been given by the holders of a majority in total principal amount of the bonds. Defaults The mortgage defines the following as "defaults": - failure to pay principal when due; - failure to pay interest for sixty days; - failure to pay any installment of any sinking or other purchase fund for ninety days; - certain events in bankruptcy, insolvency or reorganization; and - failure to perform any other covenant for ninety days following written demand by the mortgage trustee for Consumers to cure such failure. Consumers has covenanted to pay interest on any overdue principal and (to the extent permitted by law) on overdue installments of interest, if any, on the bonds under the mortgage indenture at the rate of 6% per year. The mortgage indenture does not contain a provision requiring any periodic evidence to be furnished as to the absence of default or as to compliance with the terms thereof. However, Consumers is required by law to furnish annually to the trustee a certificate as to compliance with all conditions and covenants under the mortgage indenture. SUBORDINATED DEBENTURES The subordinated debentures will be issued under the subordinated debt indenture and will rank subordinated and junior in right of payment, to the extent set forth in the subordinated debt indenture, to all "senior indebtedness" (as defined below) of Consumers. If Consumers defaults in the payment of any distributions on any senior indebtedness when it becomes due and payable after any applicable grace period, then, unless and until the default is cured or waived or ceases to exist, Consumers cannot make a payment on account of or redeem or otherwise acquire the subordinated debentures. The subordinated debt indenture provisions described in this paragraph, however, do not prevent Consumers from making sinking fund payments in subordinated debentures acquired prior to the maturity of senior indebtedness or, in the case of default, prior to such default and notice thereof. If there is any insolvency, bankruptcy, liquidation or other similar proceeding relating to Consumers, its creditors or its property, then all senior indebtedness must be paid in full before any payment may be made to any holders of subordinated debentures. Holders of subordinated debentures must return and deliver any payments received by them, other than in a plan of reorganization or through a defeasance trust as described above, directly to the holders of senior indebtedness until all senior indebtedness is paid in full. "Senior indebtedness" means distributions on the following, whether outstanding on the date of execution of the subordinated debt indenture or thereafter incurred, created or assumed: - indebtedness of Consumers for money borrowed by Consumers or evidenced by debentures (other than the subordinated debentures), notes, bankers' acceptances or other corporate debt securities or similar instruments issued by Consumers; - capital lease obligations of Consumers; 17 - obligations of Consumers incurred for deferring the purchase price of property, with respect to conditional sales, and under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); - obligations of Consumers with respect to letters of credit; - all indebtedness of others of the type referred to in the four preceding clauses assumed by or guaranteed in any manner by Consumers or in effect guaranteed by Consumers; or - renewals, extensions or refundings of any of the indebtedness referred to in the preceding three clauses unless, in the case of any particular indebtedness, renewal, extension or refunding, under the express provisions of the instrument creating or evidencing the same or the assumption or guarantee of the same, or pursuant to which the same is outstanding, such indebtedness or such renewal, extension or refunding thereof is not superior in right of payment to the subordinated debt securities. The subordinated debt indenture does not limit the total amount of senior indebtedness that may be issued. As of September 30, 2001, senior indebtedness of Consumers totaled approximately $2,911 million. Certain Covenants If debt securities are issued to a trust or a trustee of such trust in connection with the issuance of trust preferred securities of that trust, Consumers will covenant that it will not (1) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of Consumers' capital stock or (2) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities (including guarantees of indebtedness for money borrowed) of Consumers that rank equal (in the case of subordinated debentures) with or junior (in the case of senior and subordinated debentures) to that debt security (other than (a) any dividend, redemption, liquidation, interest, principal or guarantee payment by Consumers where the payment is made by way of securities (including capital stock) that rank equal with or junior to the securities on which such dividend, redemption, interest, principal or guarantee payment is being made, (b) payments under the Consumers' guarantees of trust securities), if at such time (1) there shall have occurred any event of which Consumers has actual knowledge that (a) with the giving of notice or the lapse of time, or both, would constitute an event of default under the indentures and (b) in respect of which Consumers shall not have taken reasonable steps to cure, (2) Consumers shall be in default with respect to its payment of any obligations under the guarantees or (3) Consumers will have given notice of its selection of an extension period as provided in the indentures with respect to the Debt Securities and will not have rescinded such notice, or such extension period, or any extension thereof, shall be continuing. Consumers will also covenant: (1) to maintain directly or indirectly 100% ownership of the common securities, provided that certain successors that are permitted pursuant to the indentures may succeed to Consumers' ownership of the common securities, (2) not to voluntarily dissolve, wind-up or liquidate the trust, except: (a) in connection with a distribution of the debt securities to the holders of the trust preferred securities in liquidation of such trust or (b) in connection with certain mergers, consolidations or amalgamations permitted by the amended and restated Declaration of Trust, and (3) to use its reasonable efforts, consistent with the terms and provisions of the amended and restated Declaration of Trust, to cause such trust to remain classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes. 18 Events of Default The subordinated debt indenture provides that events of default regarding any series of subordinated debentures will be: - failure to pay required interest on any subordinated debentures of such series for 30 days; - failure to pay principal other than a scheduled installment payment or premium, if any, on any subordinated note of such series when due; - failure to make any required scheduled installment payment on subordinates notes of such series; - failure to perform for 60 days after notice any other covenant in the relevant indenture other than a covenant included in the relevant indenture solely for the benefit of a series of subordinated debentures other than such series; - certain events of bankruptcy or insolvency, whether voluntary or not; and - if subordinated debentures are issued, such trust is voluntarily or involuntarily dissolved, wound-up or terminated, except in connection with the distribution of subordinated debentures to the holders of the common securities and the trust preferred securities in liquidation of the trust, the redemption of all outstanding trust securities of the trust and certain mergers, consolidation or amalgamations permitted by the declaration of that trust. If an event of default regarding subordinated debentures of any series issued should occur and be continuing, either the subordinated note trustee or the holders of 25% in the principal amount of outstanding subordinated debentures of such series may declare each subordinated note of that series due and payable. Holders of a majority in principal amount of the outstanding subordinated debentures of any series will be entitled to control certain actions of the subordinated note trustee and to waive past defaults regarding such series. The trustee generally will not be requested, ordered or directed by any of the holders of subordinated debentures, unless one or more of such holders shall have offered to the trustee reasonable security or indemnity. Before any holder of any series of subordinated debentures may institute action for any remedy, except payment on such holder's subordinated debentures when due, the holders of not less than 25% in principal amount of the subordinated debentures of that series outstanding must request the subordinated note trustee to take action. Holders must also offer and give the satisfactory security and indemnity against liabilities incurred by the trustee for taking such action. Consumers is required to annually furnish the subordinated note trustee a statement as to Consumers' compliance with all conditions and covenants under the subordinated debt indenture. The subordinated debt indenture provides that the subordinated note trustee may withhold notice to the holders of the subordinated debentures of any series of any default affecting such series, except payment on holders' subordinated debentures when due, if it considers withholding notice to be in the interests of the holders of the subordinated debentures of such series. Consolidation, Merger or Sale of Assets The subordinated debt indenture provides that Consumers may consolidate with or merge into, or sell, lease or convey its property as an entirety or substantially as an entirety to, any other corporation if the new corporation assumes the obligations of Consumers under the subordinated debentures and the subordinated debt indenture and is organized and existing under the laws of the United States of America, any U.S. state or the District of Columbia. 19 Modification of the Indenture The subordinated debt indenture permits Consumers and the subordinated note trustee to enter into supplemental indentures without the consent of the holders of the subordinated debentures to establish the form and terms of any series of securities under the subordinated debt indentures. The subordinated debt indenture also permits Consumers and the subordinated note trustee, with the consent of the holders of at least a majority in total principal amount of the subordinated debentures of all series then outstanding and affected (voting as one class), to change in any manner the provisions of the subordinated debt indenture or modify in any manner the rights of the holders of the subordinated debentures of each such affected series. Consumers and the relevant trustee may not, without the consent of the holder of each subordinated debenture affected, enter into any supplemental indenture to: - change the time of payment of the principal; - reduce the principal amount of such subordinated debentures; - reduce the rate or change the time of payment of interest on such subordinated debentures; - impair the right to institute suit for the enforcement of any payment on any subordinated debentures when due. In addition, no such modification may reduce the percentage in principal amount of the subordinated debentures of the affected series, the consent of whose holders is required for any such modification or for any waiver provided for in the subordinated debt indenture. Prior to the acceleration of the maturity of any subordinated debentures, the holders, voting as one class, of a majority in total principal amount of the subordinated debentures with respect to which a default or event of default has occurred and is continuing, may, on behalf of the holders of all such affected subordinated debentures, waive any past default or event of default and its consequences, except a default or an event of default in respect of a covenant or provision of the applicable indenture or of any subordinated debenture which cannot be modified or amended without the consent of the holder of each subordinated debentures affected. Defeasance, Covenant Defeasance and Discharge The subordinated debt indenture provides that, at the option of Consumers, Consumers will be discharged from all obligations in respect of the subordinated debentures of a particular series then outstanding (except for certain obligations to register the transfer of or exchange the subordinated debentures of such series, to replace stolen, lost or mutilated subordinated debentures of such series, to maintain paying agencies and to maintain the trust described below). If Consumers in each case irrevocably deposits in trust with the relevant trustee money, and/or securities backed by the full faith and credit of the United States which, through the payment of the principal thereof and the interest thereon in accordance with their terms, will provide money in an amount sufficient to pay all the principal and interest on the subordinated debentures of such series on the stated maturities of such subordinated debentures in accordance with the terms thereof. To exercise this option, Consumers is required to deliver to the relevant trustee an opinion of independent counsel to the effect that the exercise of such option would not cause the holders of the subordinated debentures of such series to recognize income, gain or loss for United States federal income tax purposes as a result of such defeasance, and such holders will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred. TRUST PREFERRED SECURITIES Each trust may issue, on one or more occasion, trust preferred securities having terms described in the applicable prospectus supplement. The amended and restated Declaration of Trust of each trust will 20 authorize the establishment of no more than one series of trust preferred securities, having such terms, including distributions, redemption, voting, liquidation rights and such other preferred, deferred or other special rights or such rights or restrictions as shall be set forth therein or otherwise established by the trustees pursuant thereto. Reference is made to the prospectus supplement relating to the trust preferred securities for specific terms, including: - the distinctive designation and the number of trust preferred securities to be offered which will represent undivided beneficial interests in the assets of the trust; - the annual distribution rate and the dates or date upon which such distributions will be paid, provided, however distributions on the trust preferred securities will be paid quarterly in arrears to holders of trust preferred securities as of a record date on which the trust preferred securities are outstanding; - whether distributions on trust preferred securities would be deferred during any deferral of interest payments on the debt securities, provided, however that no such deferral, including extensions, if any, may exceed 20 consecutive quarters nor extend beyond the stated maturity date of the debt securities, and at the end of any such deferrals, Consumers will make all interest payments then accrued or deferred and unpaid (including any compounded interest); - the amount of any liquidation preference; - the obligation, if any, of the trust to redeem trust preferred securities through the exercise of Consumers of an option on the corresponding debt securities and the price or prices at which, the period or periods within which and the terms and conditions upon which trust preferred securities will be purchased or redeemed, in whole or in part, under to such obligation; - the period or periods within which and the terms and conditions, if any, including the price or prices or the rate or rates of conversion or exchange and the terms and conditions of any adjustments, upon which the trust preferred securities shall be convertible or exchangeable at the option of the holder of the trust preferred securities of other property or cash; - the voting rights, if any, of the trust preferred securities in addition to those required by law and in the amended and restated Declaration of Trust, or set forth under a Consumers' guarantee (as defined below); - the additional payments, if any, which the trust will pay as a distribution as necessary so that the net amounts reserved by the trust and distributable to the holders of the trust preferred securities, after all taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) have been paid will not be less than the amount that would have been reserved and distributed by the trust, and the amount the holders of the trust preferred securities would have reserved, had no such taxes, duties, assessments or governmental charges been imposed; - the terms and conditions, if any, upon which the debt securities may be distributed to holders of trust preferred securities; and - any other relative rights, powers, preferences, privileges, limitations or restrictions of the trust preferred securities not inconsistent with the amended and restated Declaration of Trust or applicable law. All trust preferred securities offered hereby will be irrevocably guaranteed by Consumers, on a senior or subordinated basis, as applicable, and to the extent set forth below under "The Guarantees." Any applicable federal income tax considerations applicable to any offering of the trust preferred securities will be described in the prospectus supplement relating thereto. The total number of trust preferred securities which the trust shall have authority to issue will be pursuant to the terms of the amended and restated Declaration of Trust. 21 EFFECT OF OBLIGATIONS UNDER THE DEBT SECURITIES AND THE GUARANTEES As set forth in the amended and restated Declaration of Trust, the sole purpose of the trusts are to issue the common securities and the trust preferred securities evidencing undivided beneficial interests in the assets of each of the trusts, and to invest the proceeds from such issuance and sale to acquire directly the debt securities from Consumers. As long as payments of interest and other payments are made when due on the debt securities, such payments will be sufficient to cover distributions and payments due on the common securities and the trust preferred securities because of the following factors: - the total principal amount of debt securities will be equal to the sums of the total stated liquidation amount of the common securities and the trust preferred securities; - the interest rate and the interest and other payment dates on the debt securities will match the distribution rate and distribution and other payment dates for the common securities and the trust preferred securities; - Consumers will pay all, and each trust shall not be obligated to pay, directly or indirectly, all its costs, expenses, debt and obligations (other than with respect to the common securities and the trust preferred securities); and - the amended and restated Declaration of Trust further provides that Consumers trustees will not take or cause or permit the trust to, among other things, engage in any activity that is not consistent with the purposes of the trust. Payments of distributions (to the extent funds for distributions are available) and other payments due on the trust preferred securities (to the extent funds for other payments are available) are guaranteed by Consumers as and to the extent discussed under "The Guarantees" below. If Consumers does not make interest payments on the debt securities purchased by the trust, it is expected that the trusts will not have sufficient funds to pay distributions on the trust preferred securities. The Consumers guarantees do not apply to any payment of distributions unless and until the trusts have sufficient funds for the payment of distributions and other payments on the trust preferred securities only if and to the extent that Consumers has made a payment of interest or principal on the debt securities held by the trusts as their sole asset. The Consumers guarantees, when taken together with Consumers' obligations under the debt securities and the related indenture and its obligations under the applicable amended and restated Declaration of Trust, including its obligations to pay costs, expenses, debts and liabilities of the trust (other than with respect to the common securities and the trust preferred securities), provide a full and unconditional guarantee of amounts on the trust preferred securities. If Consumers fails to make interest or other payments on the debt securities when due (taking account of any extension period), the applicable amended and restated Declaration of Trust provide a mechanism whereby the holders of the trust preferred securities may direct a property trustee to enforce its rights under the debt securities. If a property trustee fails to enforce its rights under the debt securities, a holder of trust preferred securities may, to the fullest extent permitted by applicable law, institute a legal proceeding against Consumers to enforce a property trustee's rights under the debt securities without first instituting any legal proceeding against a property trustee or any other person or entity. Notwithstanding the foregoing, if an event of default has occurred and is continuing under the applicable amended and restated Declaration of Trust, and such event is attributable to the failure of Consumers to pay interest or principal on the debt securities on the date such interest or principal is otherwise payable (or in the case of redemption on the redemption date), then a holder of trust preferred securities may institute legal proceedings directly against Consumers to obtain payment. If Consumers fails to make payments under the guarantees, the guarantees provide a mechanism whereby the holders of the trust preferred securities may direct a guarantee trustee to enforce its rights thereunder. Any holder of trust preferred securities may institute a legal proceeding directly against Consumers to enforce a guarantee trustee's rights under a guarantee without first instituting a legal proceeding against the trust, the guarantee trustee, or any other person or entity. 22 THE GUARANTEES Set forth below is a summary of information concerning the guarantees that will be executed and delivered by Consumers for the benefit of the holders, from time to time, of the trust preferred securities. Each guarantee will be qualified as an indenture under the Trust Indenture Act of 1939. The Bank of New York will act as indenture trustee under the guarantees for the purpose of compliance with the provisions of the Trust Indenture Act of 1939. This summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the guarantees, which is filed as an exhibit to the Registration Statement of which this prospectus forms a part. General Consumers will irrevocably agree to pay in full, on a senior or subordinated basis, as applicable, to the extent set forth herein, the guarantee payments (as described below) to the holders of the trust preferred securities, as and when due, regardless of any defense, right of set-off or counterclaim that the trust may have or assert other than the defense of payment. The following payments with respect to the trust preferred securities, to the extent not paid by or on behalf of the trust, will be subject to a guarantee by Consumers of: (1) any accumulated and unpaid distributions required to be paid on the trust preferred securities, to the extent that the trust has funds on hand available therefore at such time; (2) the redemption price with respect to any trust preferred securities called for redemption to the extent that the trust has funds on hand available therefore at such time; or (3) upon a voluntary or involuntary dissolution, winding up or liquidation of the trust (unless the debt securities are distributed to holders of the trust preferred securities), the lesser of (a) the liquidation distribution, to the extent that the trust has funds on hand available the distribution at such time, and (b) the amount of assets of the trust remaining available for distribution to holders of trust preferred securities. Consumers' obligation to make a guarantee payment may be satisfied by direct payment of the required amounts of Consumers to the holders of the trust preferred securities or by causing the trust to pay such amount to such holders. The Consumers guarantees will be irrevocable guarantees, on a senior or subordinated basis, as applicable, of the trust's obligations under the trust preferred securities, but will apply only to the extent that the trust has funds sufficient to make such payments, and are not guarantees of collection. If Consumers does not make interest payments on the debt securities held by the trust, the trust will not be able to pay distributions on the trust preferred securities and will not have funds legally available therefore. Consumers has, through the guarantees, the applicable amended and restated Declaration of Trust, the senior notes, the subordinated debentures, and the indentures, taken together, fully, irrevocably and unconditionally guaranteed all of the trust's obligations under the trust preferred securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes such guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of the trust's obligations under the trust preferred securities. Consumers has also agreed separately to irrevocably and unconditionally guarantee the obligations of the trust with respect to the common securities to the same extent as the guarantees of the preferred securities, except that upon the occurrence and during the continuation of a amended and restated Declaration of Trust Event of Default, holders of trust preferred securities shall have priority over holders of common securities with respect to distributions and payments on liquidation, redemption or otherwise. 23 Certain Covenants of Consumers Consumers will also covenant that it will not (1) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of Consumers' capital stock or (2) make any payment of principal, interest or premium, if any, on or repay or repurchase or redeem any debt securities (including guarantees of indebtedness for money borrowed) of Consumers that rank equal (in the case of subordinated debentures with or junior in the case of the senior and subordinated debentures) to the debt securities (other than (a) any dividend, redemption, liquidation, interest, principal or guarantee payment by Consumers where the payment is made by way of securities (including capital stock) that rank equal with or junior to the securities on which such dividend, redemption, interest, principal or guarantee payment is being made, (b) payments under the Consumers guarantees of the trust securities, (c) as a result of a reclassification of Consumers' capital stock or the exchange or conversion of one series or class of Consumers' capital stock for another series or class of Consumers' capital stock and (d) the purchase of fractional interests in shares of Consumers' capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged) if at such time (1) there shall have occurred any event of which Consumers has actual knowledge that (a) with the giving of notice or the lapse of time, or both, would constitute a event of default and (b) in respect of which Consumers shall not have taken reasonable steps to cure, (2) Consumers shall be in default with respect to its payment of any obligations under the guarantee or (3) Consumers shall have given notice of its selection of an extension period as provided in the indentures with respect to the debt securities and shall not have rescinded such notice, or such extension period, or any extension thereof, shall be continuing. Consumers also will covenant to: (1) maintain directly or indirectly 100% ownership of the common securities, provided that certain successors which are permitted pursuant to the indentures may succeed to Consumers' ownership of the common securities, (2) not voluntarily dissolve, wind-up or liquidate the trust, except: - in connection with a distribution of the debt securities to the holders of the trust preferred securities in liquidation of the trust, or - in connection with certain mergers, consolidations or amalgamations permitted by the amended and restated Declaration of Trust, and (3) use its reasonable efforts, consistent with the terms and provisions of the applicable amended and restated Declaration of Trust, to cause the trust to remain classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes. Amendments and Assignment Except with respect to any changes which do not materially adversely affect the rights of holders of the trust preferred securities (in which case no vote will be required), the Consumers guarantees of the trust preferred securities may not be amended without the prior approval of the holders of not less than a majority in total liquidation amount of such outstanding trust preferred securities. All guarantees and agreements contained in the guarantees shall bind the successors, assigns, receivers, trustees and representatives of Consumers and shall inure to the benefit of the holders of the trust preferred securities then outstanding. 24 Termination of the Guarantees The Consumers guarantees of the trust preferred securities will terminate and be of no further force and effect upon full payment of the redemption price of the trust preferred securities, upon full payment of the amounts payable upon liquidation of the trust or upon distribution of the debt securities to the holders of the trust preferred securities in exchange for all of the trust preferred securities. The guarantees will continue to be effective or will be reinstated, as the case may be, if at any time any holder of trust preferred securities must restore payment of any sums paid under such trust preferred securities or the guarantees. Events of Default An event of default under a Consumers guarantee of the trust preferred securities will occur upon the failure of Consumers to perform any of its payment or other obligations thereunder. The holders of a majority in total liquidation amount of the trust preferred securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to a guarantee trustee in respect of a guarantee or to direct the exercise of any trust or power conferred upon a guarantee trustee under the guarantees. If a guarantee trustee fails to enforce a Consumers guarantee of the trust preferred securities, any holder of the trust preferred securities may institute a legal proceeding directly against Consumers to enforce its rights under such guarantee without first instituting a legal proceeding against the trust, the guarantee trustee or any other person or entity. In addition, any record holder of trust preferred securities shall have the right, which is absolute and unconditional, to proceed directly against Consumers to obtain guarantee payments, without first waiting to determine if the guarantee trustee has enforced a guarantee or instituting a legal proceeding against the trust, the guarantee trustee or any other person or entity. Consumers has waived any right or remedy to require that any action be brought just against the trust, or any other person or entity before proceeding directly against Consumers. Status of the Guarantees The Consumers guarantee of the trust preferred securities will constitute unsecured obligations of Consumers and will rank: (1) equal to or subordinate and junior in right of payment to all other liabilities of Consumers, as applicable, (2) equal with the most senior preferred stock now or hereafter issued by Consumers and with any guarantee now or hereafter entered into by Consumers in respect of any preferred or preference stock of any affiliate of Consumers, and (3) senior to Consumers' common stock. The Consumers guarantee of the trust preferred securities will constitute a guarantee of payment and not of collection (i.e., the guaranteed party may institute a legal proceeding directly against the guarantor to enforce its rights under the guarantee without first instituting a legal proceeding against any other person or entity). The guarantees will be held for the benefit of the holders of the trust preferred securities. The guarantees will not be discharged except by payment of the guarantee payments in full to the extent not paid by the trust or upon distribution of the debt securities to the holders of the trust preferred securities. The guarantees do not place a limitation on the amount of additional indebtedness that may be incurred by Consumers. 25 PLAN OF DISTRIBUTION Consumers and/or the trusts may sell the offered securities: (1) through the solicitation of proposals of underwriters or dealers to purchase the offered securities; (2) through underwriters or dealers on a negotiated basis; (3) directly to a limited number of purchasers or to a single purchaser; or (4) through agents. The prospectus supplement with respect to any offered securities will set forth the terms of such offering, including the name or names of any underwriters, dealers or agents; the purchase price of the offered securities and the proceeds to Consumers and/or the trust from such sale; any underwriting discounts and commissions and other items constituting underwriters' compensation; any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers and any securities exchange on which such offered securities may be listed. Any initial public offering price, discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. If underwriters are used in the sale, the offered securities will be acquired by the underwriters for their own account and may be resold on one or more occasions in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The offered securities may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. The underwriter or underwriters with respect to a particular underwritten offering offered securities will be named in the prospectus supplement relating to such offering and, if an underwriting syndicate is used, the managing underwriter or underwriters will be set forth on the cover of such prospectus supplement. Unless otherwise set forth in the prospectus supplement relating thereto, the obligations of the underwriters to purchase the offered securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all the offered securities if any are purchased. If dealers are utilized in the sale of offered securities, Consumers and/or the trusts will sell such offered securities to the dealers as principals. The dealers may then resell such offered securities to the public at varying prices to be determined by such dealers at the time of resale. The names of the dealers and the terms of the transaction will be set forth in the prospectus supplement relating thereto. The offered securities may be sold directly by Consumers and/or the trusts or through agents designated by Consumers and/or the trusts from time to time. Any agent involved in the offer or sale of the offered securities in respect to which this prospectus is delivered will be named, and any commissions payable by Consumers and/or the trusts to such agent will be set forth, in the prospectus supplement relating thereto. Unless otherwise indicated in the prospectus supplement, any such agent will be acting on a best efforts basis for the period of its appointment. The offered securities may be sold directly by Consumers and/or the trusts to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof. The terms of any such sales will be described in the prospectus supplement relating thereto. Agents, dealers and underwriters may be entitled under agreements with Consumers and/or the trusts to indemnification by Consumers and/or the trust against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which such agents, dealers or underwriters may be required to make in respect thereof. Agents, dealers and underwriters may be customers of, engage in transactions with, or perform services for Consumers and/or the trust in the ordinary course of business. The offered securities may also be offered and sold, if so indicated in the applicable prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more firms ("remarketing firms"), acting as 26 principals for their own accounts or as agents for Consumers and/or the trusts. Any remarketing firm will be identified and the terms of its agreement, if any, with its compensation will be described in the applicable prospectus supplement. Remarketing firms may be deemed to be underwriters, as such term is defined in the Securities Act, in connection with the offered securities remarketed thereby. Remarketing firms may be entitled under agreements which may be entered into with Consumers and/or the trusts to indemnification or contribution by Consumers and/or the trusts against certain civil liabilities, including liabilities under the Securities Act, and may be customers of, engage in transactions or perform services for Consumers and its subsidiaries in the ordinary course of business. The offered securities may or may not be listed on a national securities exchange. Reference is made to the prospectus supplement with regard to such matter. No assurance can be given that there will be a market for any of the offered securities. LEGAL OPINIONS Opinions as to the legality of certain of the offered securities will be rendered for Consumers by Michael D. Van Hemert, Esq., Assistant General Counsel for CMS Energy Corporation, the parent of Consumers. Certain matters of Delaware law relating to the validity of the trust preferred securities will be passed upon on behalf of the trusts by Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel to the trusts. Certain United States federal income taxation matters may be passed upon for Consumers and the trust by either Theodore Vogel, Vice President and Tax Counsel for CMS Energy Corporation, or by special tax counsel to Consumers and of the trust, who will be named in the prospectus supplement. Certain legal matters with respect to offered securities will be passed upon by counsel for any underwriters, dealers or agents, each of whom will be named in the related prospectus supplement. As of November 21, 2001, Mr. Van Hemert beneficially owned approximately 6,000 shares of CMS Energy Common Stock. As of November 21, 2001, an attorney currently employed by Skadden, Arps, Slate, Meagher & Flom LLP and formerly employed by CMS Energy, owned approximately 51,734 shares of CMS Common Stock, 10 shares of Consumers $4.50 series preferred stock, $100 per value and $50,000 aggregate principal amount of certain debt securities issued by CMS Energy. From time to time, Skadden, Arps, Slate, Meagher & Flom LLP has represented CMS Energy, the Company and their affiliates. As of November 21, 2001, Mr. Vogel beneficially owned approximately 8,000 shares of CMS Energy Common Stock. EXPERTS The consolidated financial statements and schedule of Consumers as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000 incorporated by reference in this prospectus, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. With respect to the unaudited interim consolidated financial information for the periods ended March 31, 2001, June 30, 2001 and September 30, 2001, Arthur Andersen LLP has applied limited procedures in accordance with professional standards for a review of that information. However, their separate reports thereon state that they did not audit and they did not express an opinion on that interim consolidated financial information. Accordingly, the degree of reliance on their reports on that information should be restricted in light of the limited nature of the review procedures applied. In addition, the accountants are not subject to the liability provisions of Section 11 of the Securities Act, for their reports on the unaudited interim consolidated financial information because these reports are not "reports" or a part of the registration statement prepared or certified by the accountants within the meaning of Sections 7 and 11 of the Securities Act. 27 Future consolidated financial statements of Consumers and the reports thereon of Arthur Andersen LLP also will be incorporated by reference in this prospectus in reliance upon the authority of that firm as experts in giving those reports to the extent that said firm has audited said consolidated financial statements and consented to the use of their reports thereon. 28 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
AMOUNT -------- Filing fee -- Securities and Exchange Commission............ $112,500 *Listing on New York Stock Exchange......................... *Trustees expenses.......................................... 15,000 *Printing and Engraving..................................... 200,000 *Services of counsel........................................ 35,000 *Services of independent public accountants, Arthur Andersen LLP....................................................... 10,000 *Rating Agency Fees, Collateral Agent's and Purchase Contract Agent's Fees..................................... 68,000 *Blue Sky fees and expenses................................. 10,000 *Miscellaneous.............................................. 10,000 -------- Total............................................. $560,500 ========
- --------------- * Estimated ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The following resolution was adopted by the Board of Directors of Consumers on May 6, 1987: RESOLVED: That effective March 1, 1987 the Company shall indemnify to the full extent permitted by law every person (including the estate, heirs and legal representatives of such person in the event of the decease, incompetency, insolvency or bankruptcy of such person) who is or was a director, officer, partner, trustee, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against all liability, costs, expenses, including attorneys' fees, judgments, penalties, fines and amounts paid in settlement, incurred by or imposed upon the person connection with or resulting from any claim or any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative, investigative or of whatever nature, arising from the person's service or capacity as, or by reason of the fact that the person is or was, a director, officer, partner, trustee, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, partner, trustee, employee or agent of another corporation partnership, joint venture, trust or other enterprise. Such right of indemnification shall not be deemed exclusive of any other rights to which the person may be entitled under statute, bylaw, agreement, vote of shareholders or otherwise. Article XIII, Section 1 of Consumers Bylaws provides: The Company may purchase and maintain liability insurance, to the full extent permitted by law, on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity. Article V of Consumers Restated Articles of Incorporation reads: A director shall not be personally liable to the Company or its shareholders for monetary damages for breach of duty as a director except (i) for a breach of the director's duty of loyalty to the Company or its shareholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for a violation of Section 551(1) of the Michigan Business Corporation Act, and (iv) any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article V, and no modification to its provisions by law, shall apply to, or have any effect II-1 upon, the liability or alleged liability of any director of the Company for or with respect to any acts or omissions of such director occurring prior to such amendment, repeal or modification. Article VI of Consumers Restated Articles of Incorporation reads: Each director and each officer of the Company shall be indemnified by the Company to the fullest extent permitted by law against expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the defense of any proceeding in which he or she was or is a party or is threatened to be made a party by reason of being or having been a director or an officer of the Company. Such right of indemnification is not exclusive of any other rights to which such director or officer may be entitled under any now or thereafter existing statute, any other provision of these Articles, bylaw, agreement, vote of shareholders or otherwise. If Business Corporation Act of the State of Michigan is amended after approval by the shareholders of this Article VI to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the Business Corporation Act of the State of Michigan, as so amended. Any repeal or modification of this Article VI by the shareholders of the Company shall not adversely affect any right or protection of a director of the Company existing at the time of such repeal or modification. Sections 561 through 569 of the Michigan Business Corporation Act provides Consumers with the power to indemnify directors, officers, employees and agents against certain expenses and payments, and to purchase and maintain insurance on behalf of directors, officers, employees and agents. Officers and directors are covered within specified monetary limits by insurance against certain losses arising from claims made by reason of their being directors or officers of Consumers or of Consumers' subsidiaries and Consumers' officers and directors are indemnified against such losses by reason of their being or having been directors or officers of another corporation, partnership, joint venture, trust or other enterprise at Consumers' request. In addition, Consumers has indemnified each of its present directors by contracts that contain affirmative provisions essentially similar to those in Sections 561 through 569 of the Michigan Business Corporation Act cited above. Officers and directors and Regular Trustees of the trust are covered within specified monetary limits by insurance against certain losses arising from claims made by reason of their being directors or officers of Consumers or of Consumers' subsidiaries and Consumers' officers and directors are indemnified against such losses by reason of their being or having been directors or officers of another corporation, partnership, joint venture, trust or other enterprise at Consumers' request. In addition, Consumers has indemnified each of its present directors by contracts that contain affirmative provisions essentially similar to those in sections 561 through 569 of the Michigan Business Corporation Act cited above. The amended and restated Declaration of Trust provides that to the fullest extent permitted by applicable law, Consumers shall indemnify and hold harmless each of the Trustees, any Affiliate of the Trustees, any officer, director, shareholder, employee, representative or agent of any Trustee and any employee or agent of the trust or its Affiliates (each a "Indemnified Person"), from and against any loss, damage, liability, tax, penalty, expense or claim of any kind or nature whatsoever incurred by such Indemnified Person by reason the creation, operation or termination of the trust or any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the trust and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by the amended and restated Declaration of Trust, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Indemnified Person by reason of negligence or willful misconduct with respect to such acts or omissions. Exhibits listed above which have been filed with the Securities and Exchange Commission are incorporated herein by reference with the same effect as if filed with this Registration Statement. II-2 ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION - -------- ----------- *(1)(a) -- Form of Underwriting Agreement with respect to the trust preferred securities. (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (1)(a).) *(1)(b) -- Form of Underwriting Agreement with respect to the offered securities (other than the trust preferred securities). (Designated in Consumers Registration Statement on Form S-3, dated June 7, 2001, File No. 333-62500 as Exhibit (1)(b).) (1)(c) -- Underwriting agreement dated as of October 31, 2001 among Consumers Energy Company, Consumers Funding LLC and Morgan Stanley & Co. Incorporated on behalf of itself and as the representative of the several underwriters named therein. *(4)(a) -- Restated Articles of Incorporation of Consumers. (Designated in Consumers' Form 10-K for the year ended December 31, 2000, File No. 1-5611, as Exhibit (3)(c).) *(4)(b) -- By-Laws of Consumers (Designated in Consumers' Form 10-K, for the year ended December 31, 1999, File No. 1-5611, as Exhibit (3)(d).) *(4)(c) -- Indenture dated as of January 1, 1996 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-K for the year ended December 31, 1995, File No. 1-5611, as Exhibit (4)(b).) -- Indentures Supplemental thereto: * -- First Supplemental Indenture dated as of January 18, 1996 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-K for the year ended December 31, 1995, File No. 1-5611, as Exhibit (4)(b).) * -- Second Supplemental Indenture dated as of September 4, 1997 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended September 30, 1997, File No. 1-5611, as Exhibit (4)(a).) * -- Third Supplemental Indenture dated as of November 4, 1999 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended September 30, 1999, File No. 1-5611, as Exhibit (4)(a).) * -- Fourth Supplemental Indenture dated as of May 31, 2001 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended September 30, 2001, File No. 1-5611, as Exhibit (4)(a).) *(4)(d) -- Indenture dated as of February 1, 1998 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Consumers' Form 10-K for the year ended December 31, 1997, File No. 1-5611, as Exhibit (4)(c).) -- Indentures Supplemental thereto: * -- First Supplemental Indenture dated as of May 1, 1998 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended March 31, 1998, File No. 1-5611, as Exhibit (4)(a).) * -- Second Supplemental Indenture dated as of June 15, 1998 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Consumers Energy Company's Bank, as Trustee. (Designated in Consumers Energy Company's Registration Statement on Form S-4 dated July 13, 1998, File No. 333-58943, as Exhibit (4)(b).) * -- Third Supplemental Indenture dated as of October 29, 1998 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended September 30, 1998, File No. 1-5611, as Exhibit (4)(a).)
II-3
EXHIBIT NO. DESCRIPTION - -------- ----------- *(4)(e) -- Indenture dated as of September 1, 1945, between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee, including therein indentures supplemental thereto through the Forty-third supplemental Indenture dated as of May 1, 1979. (Designated In Consumers Energy Company's Registration Statement No. 2-65973, as Exhibit (b)(1)-(4).) -- Indentures Supplemental thereto: * -- Sixty-Eighth Supplement Indenture dated as June 15, 1993 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Consumers File No. 33-41126, as Exhibit (4)(a).) * -- Sixty-Ninth Supplement Indenture dated as of September 15, 1993 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Consumers Form 8-K dated September 21, 1993, File No. 1-5611, as Exhibit (4).) * -- Seventieth Supplemental Indenture dated as of February 1, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 1997, File No. 1-5611, as Exhibit (4).) * -- Seventy First Supplement Indenture dated as of March 1, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 1997, File No. 1-5611, as Exhibit (4).) * -- Seventy-Second Supplement Indenture dated as of May 1, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-Q for quarter ended March 31, 1998, File No. 1-5611, as Exhibit (4)(b).) * -- Seventy-Third Supplement Indenture dated as of June 15, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form S-4 dated July 13, 1998, File No. 333-58943, as Exhibit (4)(d).) * -- Seventy-Fourth Supplement Indenture dated as of October 29, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-Q for quarter ended September 30, 1998, File No. 1-5611, as Exhibit (4)(b).) * -- Seventy-Fifth Supplement Indenture dated as of October 1, 1999 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 1999, File No. 1-5611, as Exhibit (4)(b).) * -- Seventy-Seventh Supplement Indenture dated as of October 1, 1999 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 1999, File No. 1-5611, as Exhibit (4)(d).) * -- Seventy-Eighth Supplement Indenture dated as of March 15, 2000 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 2000, File No. 1-5611, as Exhibit (4)(b).) * -- Seventy-Ninth Supplement Indenture date as of September 26, 2001 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Form 10-Q for the quarter ended September 30, 2001, File No. 1-5611, as Exhibit (4)(b).)
II-4
EXHIBIT NO. DESCRIPTION - -------- ----------- *(4)(f) -- Instruments defining the rights of security holders, including indentures. Consumers Energy Company hereby agrees to furnish to the SEC upon request a copy of any Instrument covering securities the amount of which does not exceed 10% of the total assets of Consumers Energy Company and its subsidiaries on a consolidated basis. (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(f).) (4)(g) -- Certificate of Trust of Consumers Energy Company Financing V (4)(h) -- Certificate of Trust of Consumers Energy Company Financing VI *(4)(i) -- Form of Amended and Restated Declaration of Trust (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(i).) *(4)(j) -- Form of Supplemental Indenture to be used with the Subordinated Debentures issued in connection with the Preferred Securities (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(j).) *(4)(k) -- Form of Subordinated Debenture (included in (4)(j)) *(4)(l) -- Form of Trust Preferred Security (included in (4)(i)) *(4)(m) -- Form of Preferred Securities Guarantee Agreement (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(m).) *(4)(n) -- Form of Common Securities Guarantee Agreement (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(n).) *(4)(o) -- Form of Senior Debenture (included in (4)(d)). (4)(p) -- Indenture dated as of November 8, 2001 between Consumers Funding LLC and The Bank of New York (4)(q) -- Series Supplement dated as of November 8, 2001 between Consumers Funding and the Bank of New York (5)(a) -- Opinion of Michael D. VanHemert, Assistant General Counsel for CMS Energy (5)(b) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding the legality of the trust preferred securities of Consumers Energy Company Financing V (5)(c) -- Opinion of regarding the Skadden, Arps, Slate, Meagher & Flom LLP legality of the trust preferred securities of Consumers Energy Company Financing VI (included in Exhibit (5)(b)) (10)(a) -- Sales agreement dated as of November 8, 2001 between Consumers Energy Company and Consumers Funding LLC. (10)(b) -- Servicing agreement dated as of November 8, 2001 between Consumers Funding LLC and Consumers Energy Company (10)(c) -- Intercreditor agreement dated as of November 8, 2001 among Canadian Imperial Bank of Commerce, Asset Securitization Cooperative Corporation, The Bank of New York, Consumers Funding LLC and Consumers Energy Company (12) -- Statement regarding computation of ratios of earnings to fixed charges and ratios of earnings to fixed charges and preferred stock dividends (15) -- Letter re unaudited interim financial information (23)(a) -- Consent of Michael D. VanHemert, Assistant General Counsel for CMS Energy (included in Exhibit (5)(a) above)
II-5
EXHIBIT NO. DESCRIPTION - -------- ----------- (23)(b) -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit (5)(b) and (5)(c) above) (23)(c) -- Consent of Arthur Andersen, LLP (24) -- Powers of Attorney (25)(a) -- Statement of Eligibility and Qualification of The Chase Manhattan Bank (Senior Note Trustee of Consumers Energy Company) (25)(b) -- Statement of Eligibility and Qualification of the Bank of New York (Subordinated Notes Trustee of Consumers Energy Company) (25)(c) -- Statement of Eligibility of Property Trustee of Consumers Energy Company Financing V (25)(d) -- Statement of Eligibility of Property Trustee of Consumers Energy Company Financing VI (25)(e) -- Statement of Eligibility of Preferred Guarantee Trustee of Consumers Energy Company Financing V (25)(f) -- Statement of Eligibility of the Preferred Guarantee Trustee of Consumers Energy Financing VI
- --------------- * Previously filed ITEM 17. UNDERTAKINGS. The undersigned registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the total, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the total, the changes in volume and price represent no more than a 20% change in the maximum total offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that (i) and (ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new II-6 registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that as claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and be governed by the final adjudication of such issue. (6) That (1) for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective; and (2) for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Form S-3 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Jackson, and State of Michigan, on the 19th day of November, 2001. Consumers Energy Company By: /s/ ALAN M. WRIGHT ------------------------------------ Alan M. Wright Executive Vice President, Chief Financial Officer and Chief Administrative Officer Pursuant to the requirements of the Securities Act of 1933, this Form S-3 Registration Statement has been signed below by the following persons in the capacities and on the 19th day of November 2001.
NAME TITLE ---- ----- (i) Principal executive officer: /s/ WILLIAM T. MCCORMICK, JR. Chairman of the Board and Chief Executive - ------------------------------------------ Officer William T. McCormick, Jr. (ii) Principal financial officer: /s/ ALAN M. WRIGHT Executive Vice President, - ------------------------------------------ Chief Financial Officer and Alan M. Wright Chief Administrative Officer (iii) Controller or principal accounting officer: /s/ DENNIS DAPRA Senior Vice President, Accounting and - ------------------------------------------ Regulatory Affairs Dennis DaPra * Director - ------------------------------------------ William T. McCormick, Jr. * Director - ------------------------------------------ (John M. Deutch) * Director - ------------------------------------------ (James J. Duderstadt) * Director - ------------------------------------------ (Kathleen R. Flaherty) * Director - ------------------------------------------ (Earl D. Holton) * Director - ------------------------------------------ (David W. Joos) * Director - ------------------------------------------ (William U. Parfet)
II-8
NAME TITLE ---- ----- * Director - ------------------------------------------ (Percy A. Pierre) * Director - ------------------------------------------ (Kenneth L. Way) * Director - ------------------------------------------ (Kenneth Whipple) * Director - ------------------------------------------ (John B. Yasinsky) By: /s/ ALAN M. WRIGHT - ----------------------------------------- Alan M. Wright Attorney in-fact
II-9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Consumers Energy Company Financing V certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Form S-3 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Jackson, State of Michigan, on the 21st day of November, 2001. CONSUMERS ENERGY COMPANY FINANCING V By: /s/ ALAN M. WRIGHT ------------------------------------- Alan M. Wright, Trustee By: /s/ THOMAS A. MCNISH ------------------------------------- Thomas A. McNish, Trustee II-10 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Consumers Energy Company Financing VI certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Form S-3 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Jackson, State of Michigan, on the 21st day of November, 2001. CONSUMERS ENERGY COMPANY FINANCING VI By: /s/ ALAN M. WRIGHT ------------------------------------- Alan M. Wright, Trustee By: /s/ THOMAS A. MCNISH ------------------------------------- Thomas A. McNish, Trustee II-11 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - -------- ----------- *(1)(a) -- Form of Underwriting Agreement with respect to the trust preferred securities. (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (1)(a).) *(1)(b) -- Form of Underwriting Agreement with respect to the offered securities (other than the trust preferred securities). (Designated in Consumers Registration Statement on Form S-3, dated June 7, 2001, File No. 333-62500 as Exhibit (1)(b).) (1)(c) -- Underwriting agreement dated as of October 31, 2001 among Consumers Energy Company, Consumers Funding LLC and Morgan Stanley & Co. Incorporated on behalf of itself and as the representative of the several underwriters named therein. *(4)(a) -- Restated Articles of Incorporation of Consumers. (Designated in Consumers' Form 10-K for the year ended December 31, 2000, File No. 1-5611, as Exhibit (3)(c).) *(4)(b) -- By-Laws of Consumers (Designated in Consumers' Form 10-K, for the year ended December 31, 1999, File No. 1-5611, as Exhibit (3)(d).) *(4)(c) -- Indenture dated as of January 1, 1996 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-K for the year ended December 31, 1995, File No. 1-5611, as Exhibit (4)(b).) -- Indentures Supplemental thereto: * -- First Supplemental Indenture dated as of January 18, 1996 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-K for the year ended December 31, 1995, File No. 1-5611, as Exhibit (4)(b).) * -- Second Supplemental Indenture dated as of September 4, 1997 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended September 30, 1997, File No. 1-5611, as Exhibit (4)(a).) * -- Third Supplemental Indenture dated as of November 4, 1999 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended September 30, 1999, File No. 1-5611, as Exhibit (4)(a).) * -- Fourth Supplemental Indenture dated as of May 31, 2001 between Consumers Energy Company and The Bank of New York, as Trustee. (Designated in Form 10-Q for the quarter ended September 30, 2001, File No. 1-5611, as Exhibit (4)(a).) *(4)(d) -- Indenture dated as of February 1, 1998 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Consumers' Form 10-K for the year ended December 31, 1997, File No. 1-5611, as Exhibit (4)(c).) -- Indentures Supplemental thereto: * -- First Supplemental Indenture dated as of May 1, 1998 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended March 31, 1998, File No. 1-5611, as Exhibit (4)(a).) * -- Second Supplemental Indenture dated as of June 15, 1998 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Consumers Energy Company's Bank, as Trustee. (Designated in Consumers Energy Company's Registration Statement on Form S-4 dated July 13, 1998, File No. 333-58943, as Exhibit (4)(b).) * -- Third Supplemental Indenture dated as of October 29, 1998 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Consumers' Form 10-Q for the quarter ended September 30, 1998, File No. 1-5611, as Exhibit (4)(a).)
EXHIBIT NO. DESCRIPTION - -------- ----------- *(4)(e) -- Indenture dated as of September 1, 1945, between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee, including therein indentures supplemental thereto through the Forty-third supplemental Indenture dated as of May 1, 1979. (Designated In Consumers Energy Company's Registration Statement No. 2-65973, as Exhibit (b)(1)-(4).) -- Indentures Supplemental thereto: * -- Sixty-Eighth Supplement Indenture dated as June 15, 1993 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Consumers File No. 33-41126, as Exhibit (4)(a).) * -- Sixty-Ninth Supplement Indenture dated as of September 15, 1993 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Consumers Form 8-K dated September 21, 1993, File No. 1-5611, as Exhibit (4).) * -- Seventieth Supplemental Indenture dated as of February 1, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 1997, File No. 1-5611, as Exhibit (4).) * -- Seventy First Supplement Indenture dated as of March 1, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 1997, File No. 1-5611, as Exhibit (4).) * -- Seventy-Second Supplement Indenture dated as of May 1, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-Q for quarter ended March 31, 1998, File No. 1-5611, as Exhibit (4)(b).) * -- Seventy-Third Supplement Indenture dated as of June 15, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form S-4 dated July 13, 1998, File No. 333-58943, as Exhibit (4)(d).) * -- Seventy-Fourth Supplement Indenture dated as of October 29, 1998 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-Q for quarter ended September 30, 1998, File No. 1-5611, as Exhibit (4)(b).) * -- Seventy-Fifth Supplement Indenture dated as of October 1, 1999 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 1999, File No. 1-5611, as Exhibit (4)(b).) * -- Seventy-Seventh Supplement Indenture dated as of October 1, 1999 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 1999, File No. 1-5611, as Exhibit (4)(d).) * -- Seventy-Eighth Supplement Indenture dated as of March 15, 2000 between Consumers Energy Company and Chemical Bank (successor to Manufacturers Hanover Trust Company, as Trustee. (Designated in Form 10-K for year ended December 31, 2000, File No. 1-5611, as Exhibit (4)(b).) * -- Seventy-Ninth Supplement Indenture date as of September 26, 2001 between Consumers Energy Company and The Chase Manhattan Bank, as Trustee. (Designated in Form 10-Q for the quarter ended September 30, 2001, File No. 1-5611, as Exhibit (4)(b).)
EXHIBIT NO. DESCRIPTION - -------- ----------- *(4)(f) -- Instruments defining the rights of security holders, including indentures. Consumers Energy Company hereby agrees to furnish to the SEC upon request a copy of any Instrument covering securities the amount of which does not exceed 10% of the total assets of Consumers Energy Company and its subsidiaries on a consolidated basis. (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(f).) (4)(g) -- Certificate of Trust of Consumers Energy Company Financing V (4)(h) -- Certificate of Trust of Consumers Energy Company Financing VI *(4)(i) -- Form of Amended and Restated Declaration of Trust (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(i).) *(4)(j) -- Form of Supplemental Indenture to be used with the Subordinated Debentures issued in connection with the Preferred Securities (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(j).) *(4)(k) -- Form of Subordinated Debenture (included in (4)(j)) *(4)(l) -- Form of Trust Preferred Security (included in (4)(i)) *(4)(m) -- Form of Preferred Securities Guarantee Agreement (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(m).) *(4)(n) -- Form of Common Securities Guarantee Agreement (Designated in Consumers' Registration Statement on Form S-3, dated October 20, 1999, File No. 333-89363, as Exhibit (4)(n).) *(4)(o) -- Form of Senior Debenture (included in (4)(d)). (4)(p) -- Indenture dated as of November 8, 2001 between Consumers Funding LLC and The Bank of New York (4)(q) -- Series Supplement dated as of November 8, 2001 between Consumers Funding and the Bank of New York (5)(a) -- Opinion of Michael D. VanHemert, Assistant General Counsel for CMS Energy (5)(b) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding the legality of the trust preferred securities of Consumers Energy Company Financing V (5)(c) -- Opinion of regarding the Skadden, Arps, Slate, Meagher & Flom LLP legality of the trust preferred securities of Consumers Energy Company Financing VI (included in Exhibit (5)(b)) (10)(a) -- Sales agreement dated as of November 8, 2001 between Consumers Energy Company and Consumers Funding LLC. (10)(b) -- Servicing agreement dated as of November 8, 2001 between Consumers Funding LLC and Consumers Energy Company (10)(c) -- Intercreditor agreement dated as of November 8, 2001 among Canadian Imperial Bank of Commerce, Asset Securitization Cooperative Corporation, The Bank of New York, Consumers Funding LLC and Consumers Energy Company (12) -- Statement regarding computation of ratios of earnings to fixed charges and ratios of earnings to fixed charges and preferred stock dividends (15) -- Letter re unaudited interim financial information (23)(a) -- Consent of Michael D. VanHemert, Assistant General Counsel for CMS Energy (included in Exhibit (5)(a) above)
EXHIBIT NO. DESCRIPTION - -------- ----------- (23)(b) -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit (5)(b) and (5)(c) above) (23)(c) -- Consent of Arthur Andersen, LLP (24) -- Powers of Attorney (25)(a) -- Statement of Eligibility and Qualification of The Chase Manhattan Bank (Senior Note Trustee of Consumers Energy Company) (25)(b) -- Statement of Eligibility and Qualification of the Bank of New York (Subordinated Notes Trustee of Consumers Energy Company) (25)(c) -- Statement of Eligibility of Property Trustee of Consumers Energy Company Financing V (25)(d) -- Statement of Eligibility of Property Trustee of Consumers Energy Company Financing VI (25)(e) -- Statement of Eligibility of Preferred Guarantee Trustee of Consumers Energy Company Financing V (25)(f) -- Statement of Eligibility of the Preferred Guarantee Trustee of Consumers Energy Financing VI
- --------------- * Previously filed EX-1.C 3 k65350ex1-c.txt UNDERWRITING AGREEMENT DATED OCTOBER 31, 2001 EXHIBIT 1(c) UNDERWRITING AGREEMENT $468,592,000 Consumers Funding LLC Securitization Bonds Series 2001-1 Consumers Energy Company Underwriting Agreement October 31, 2001 To the Representative named in Schedule I hereto of the Underwriters named in Schedule II hereto Dear Sirs: Consumers Funding LLC, a Delaware limited liability company (the "Issuer"), proposes to sell to the underwriters named in Schedule II hereto (the "Underwriters"), for whom you (the "Representative") are acting as representative, the principal amount of the securities identified in Schedule I hereto (the "Securitization Bonds"). If the firm or firms listed in Schedule II hereto include only the firm listed in Schedule I hereto, then the terms "Underwriters" and "Representative", as used herein, shall each be deemed to refer to such firm. The Issuer is a wholly-owned subsidiary of Consumers Energy Company, an operating electric and gas public utility incorporated under the laws of the State of Michigan (the "Company"). The Securitization Bonds will be issued pursuant to a base indenture dated on or about November 8, 2001 as supplemented by the Series 2001-1 Supplemental Indenture thereto (as so supplemented, the "Indenture"), between the Issuer and the Bank of New York, as trustee (the "Bond Trustee"). The Securitization Bonds will be secured primarily by Securitization Property sold to the Issuer by the Company. The Company's sale of Securitization Property to the Issuer will occur pursuant to a Sale Agreement between the Company and the Issuer, dated on or about November 8, 2001 (the "Sale Agreement"). The Securitization Property will be serviced pursuant to a Servicing Agreement, dated on or about November 8, 2001, between the Company, as servicer, and the Issuer, as owner of the Securitization Property (as amended and supplemented from time to time, the "Servicing Agreement"). Pursuant to an Administration Agreement between the Company and the Issuer, dated on or about November 8, 2001 (the "Administration Agreement"), the Company will provide certain administrative services for the benefit of the Issuer. In addition, the Company, the Issuer, the Bond Trustee, Canadian Imperial Bank of Commerce and Asset Securitization Cooperative Corporation will enter into an Intercreditor Agreement dated on or about November 8, 2001 (the "Intercreditor Agreement"). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Indenture. The Issuer has prepared and filed with the Securities and Exchange Commission (the "Commission"), in accordance with the provisions of the Securities Act of 1933, as amended (the "Act"), a registration statement on Form S-3, as amended (Registration No. 333-47938), including a prospectus relating to the Securitization Bonds and such registration statement has become effective under the Act. The registration statement at the time such registration statement became effective and as it may have been thereafter amended to the date of this Agreement (including the documents then incorporated by reference therein) is hereinafter referred to as the "Registration Statement." The prospectus forming a part of the Registration Statement at the time the Registration Statement became effective (including the documents then incorporated by reference therein) is hereinafter referred to as the "Basic Prospectus," provided that in the event that the Basic Prospectus shall have been amended, revised or supplemented prior to the date of this Agreement, or if the Issuer shall have supplemented the Basic Prospectus by filing any documents pursuant to Section 13, 14 or 15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the time the Registration Statement became effective and prior to the date of this Agreement, which documents are deemed to be incorporated in the Basic Prospectus, the term "Basic Prospectus" shall also mean such prospectus as so amended, revised or supplemented. The Basic Prospectus, as it shall be revised or supplemented to reflect the final terms of the offering and sale of the Securitization Bonds by a prospectus supplement (the "Prospectus Supplement") relating to the Securitization Bonds, and in the form to be filed with, or transmitted for filing to, the Commission pursuant to Rule 424(b) under the Act, is hereinafter referred to as the "Prospectus." Any preliminary prospectus supplement to the Basic Prospectus that describes the Securitization Bonds and the offering thereof and is used prior to filing of the Prospectus is hereinafter referred to as the "Preliminary Prospectus." Any reference herein to the terms "amend," "amendment" or "supplement" with respect to the Registration Statement, the Preliminary Prospectus or the Prospectus shall be deemed to include only amendments or supplements to the Registration Statement, the Preliminary Prospectus or Prospectus, as the case may be, and documents incorporated by reference therein after the date of this Agreement and prior to the termination of the offering of the Securitization Bonds by the Underwriters. 1. Purchase and Sale: Upon the basis of the representations and warranties and on the terms and subject to the conditions herein set forth, the Issuer agrees to sell to the respective Underwriters, severally and not jointly, and the respective Underwriters, severally and not jointly, agree to purchase from the Issuer, at the purchase price specified in Schedule III hereto, the respective principal amounts of Securitization Bonds set forth opposite their names in Schedule II hereto. The Company and the Issuer are advised by the Representative that the Underwriters propose to make a public offering of their respective portions of the Securitization Bonds as soon as practicable, in their judgment, after this Agreement has become effective. 2. Payment and Delivery: Payment for the Securitization Bonds shall be made to the Issuer or its order in Federal or other immediately available funds in New York City (or such other place or places of payment as shall be agreed upon by the Issuer and the Representative in writing), upon the delivery of the Securitization Bonds at the offices of Skadden, Arps, Slate, Meagher and Flom LLP ("Skadden, Arps"), at Four Times Square, New York, New York 10036 (or such other place or places of delivery as shall be agreed upon by the Issuer and the Representative) to the Representative for the respective accounts of the Underwriters against receipt therefor signed by the Representative on behalf of itself and as agent for the other Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York time on November 8, 2001 (or on such later business day as shall be agreed upon by the Company, the Issuer and the Representative in writing), unless postponed in accordance with the provisions of Section 11 hereof. The day and time at which payment and delivery for the Securitization Bonds are to be made is herein called the "Time of Purchase." The Securitization Bonds to be so delivered shall be initially represented by Securitization Bonds registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). The interests of beneficial owners of the Securitization Bonds will be represented by book entries on the records of DTC and participating members thereof. Definitive Securitization Bonds will be available only under limited circumstances. The Company and the Issuer agree to make the Securitization Bonds available for inspection by the Underwriters at the offices of Skadden, Arps, at least 24 hours prior to the Time of Purchase, in definitive, fully registered form, as described pursuant to the preceding paragraph. 3. Conditions of Underwriters' Obligations: The several obligations of the Underwriters hereunder are subject to the accuracy of the warranties and representations on the part of the Issuer and the Company contained herein as of the date of execution of this Agreement and as of the Time of Purchase, on the part of the Company contained in Article III of the Sale Agreement and Section 5.01 of the Servicing Agreement and to the following other conditions: (a) If filing of the Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the Prospectus, and any such supplement, shall have been filed in the manner and within the time period required by Rule 424(b); and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) The Representative shall have received an opinion of David A. Mikelonis, Senior Vice President and General Counsel of the Company, Skadden, Arps, Slate Meagher & Flom LLP, outside counsel for the Company (with respect to the opinion in clause (iii) below), Miller, Canfield, Paddock and Stone, P.L.C., special Michigan counsel for the Company (with respect to the opinion in clause (iii) below), or such other counsel for the Company as may be acceptable to the Representative, dated the Time of Purchase, in form and substance reasonably satisfactory to the Representative, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Michigan, and there is no other jurisdiction where the nature of the Company's business requires qualification in order to protect the validity and enforceability of this Agreement, the Servicing Agreement, the Sale Agreement, the Bill of Sale, the Administration Agreement and the Intercreditor Agreement (collectively, the "Company Documents") or where the failure to be so qualified could materially and adversely affect the business, properties or assets of the Company. The Company has the power and authority to execute, deliver and perform its obligations under the Company Documents and to own its properties and conduct its business as described in the Registration Statement and the Prospectus; (ii) The execution, delivery and performance by the Company of the Company Documents and the consummation by the Company of the transactions contemplated thereby have been duly authorized by all requisite corporate action on the part of the Company and each of the Company Documents has been duly executed and delivered by the Company; (iii) The Company Documents constitute valid and legally binding obligations of the Company enforceable according to their terms; (iv) The Company holds all franchises, certificates of public convenience, licenses and permits necessary to carry on the utility business in which it is engaged, the absence of which would have a material adverse effect on the financial condition of the Company or on the validity of the Company Documents. All consents, approvals, authorizations of, or filings or registrations with, any governmental body, authority or agency applicable to the Company and required as a condition to the validity of the Company Documents or in connection with the execution, delivery and performance by the Company of the Company Documents have been obtained or made; (v) The execution, delivery and performance by the Company (or, in the case of clause (d) below, the Issuer) of the Company Documents, each in accordance with its terms, do not (a) conflict with the Restated Articles of Incorporation or By-laws of the Company, (b) conflict with or breach any of the terms or provisions of, or constitute (with or without notice or lapse of time) a default under any indenture, material agreement or instrument to which the Company is a party or by which the Company or any of its property is bound, (c) result in the creation or imposition of any security interest or lien on any properties of the Company pursuant to the terms of any such agreement or instrument, except as provided in the Sale Agreement, (d) violate any law or any consent, order, rule, regulation or decree of any court or federal or state regulatory body, administrative agency or other governmental authority having jurisdiction over the Company or the Issuer or any of their respective properties, or (e) violate any law, rule or regulation applicable to the Company; (vi) There is no pending and, to the best of such counsel's knowledge, no threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries, or involving or relating to the Financing Order or the collection of the Securitization Charge or the use and enjoyment of the Securitization Property under the Customer Choice and Electric Reliability Act (2000 PA 141 and 142) (the "Customer Choice Act") of a character required to be disclosed in the Registration Statement or the Prospectus that is not adequately disclosed in the Prospectus, and there is no franchise, contract or other document of a character required to be disclosed in the Registration Statement or the Prospectus, or to be filed as an exhibit, that is not disclosed or filed as required; (vii) The Securitization Property is not subject to the lien of the Trust Indenture of Consumers Energy Company with The Chase Manhattan Bank as Trustee, dated as of September 1, 1945, as amended and supplemented (the "Trust Indenture"), and the grant of a security interest in the Securitization Property pursuant to Section 2.01(e) of the Sale Agreement will not breach any covenant in the Trust Indenture. The transfer of the Securitization Property and the other Collateral by the Company to the Issuer on the date of issuance of the Securitization Bonds is free and clear of the lien created by any indenture, agreement or other instrument to which the Company is a party or by which the Company is bound; (viii) The statements included in the Prospectus under the caption "Consumers Energy Company," to the extent that they constitute matters of Michigan law or legal conclusions with respect thereto, provide a fair and accurate summary of such law and conclusions; and (ix) Nothing has come to such counsel's attention to lead such counsel to believe that the Registration Statement at the effective date thereof contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or that the Final Prospectus contained as of its date or contains as of the date hereof an untrue statement of a material fact or omitted or omits, as the case may be, to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) The Representative shall have received opinions of counsel for the Issuer, portions of which may be delivered by Skadden, Arps, Slate Meagher & Flom LLP, outside counsel for the Issuer, portions of which may be delivered by Miller, Canfield, Paddock and Stone, P.L.C., special Michigan counsel for the Issuer, and portions of which may be delivered by Loomis, Ewert, Parsley, David & Gotting, PC, special regulatory counsel for the Issuer, each dated the Time of Purchase, in form and substance reasonably satisfactory to the Representative, to the effect that: (i) The Issuer has been duly formed and is validly existing and in good standing as a limited liability company under the laws of the State of Delaware; (ii) The Issuer is duly qualified to do business and is in good standing under the laws of the State of Michigan; (iii) The Issuer has the limited liability company power and authority to execute, deliver and perform its obligations under the Sale Agreement, the Bill of Sale, the Servicing Agreement, the Administration Agreement, the Intercreditor Agreement, the Indenture, the Underwriting Agreement and the Securitization Bonds and to own its properties and conduct its business as described in the Registration Statement and the Prospectus; (iv) The execution and delivery of each of the Sale Agreement, the Bill of Sale, the Servicing Agreement, the Administration Agreement, the Intercreditor Agreement, the Indenture, the Underwriting Agreement and the Securitization Bonds and the consummation by the Issuer of the transactions contemplated thereby have been duly authorized by all requisite limited liability company action on the part of the Issuer and each of such documents has been duly executed and delivered by the Issuer; (v) The issue and sale of the Securitization Bonds by the Issuer, the execution and delivery by the Issuer of each of the Sale Agreement, the Bill of Sale, the Servicing Agreement, the Administration Agreement, the Intercreditor Agreement, the Indenture and the Underwriting Agreement and the performance by the Issuer of its obligations under each of the foregoing, each in accordance with its terms, do not (a) conflict with, result in any breach of any of the terms or provisions of, or constitute (with or without notice or lapse of time) a default under the Issuer Certificate of Formation or the Issuer LLC Agreement, (b) conflict with or breach any of the material terms or provisions of, or constitute (with or without notice or lapse of time) a default under any indenture, material agreement or instrument to which the Issuer is a party or by which the Issuer is bound, (c) result in the creation or imposition of any security interest or lien on any properties of the Issuer (other than as contemplated by the Basic Documents), (d) violate any consent, order or decree of any court or federal or state regulatory body, administrative agency or other governmental authority having jurisdiction over the Issuer or any of its properties, or (e) violate any applicable law; (vi) No consent, approval, license, authorization or validation of, giving of notice to, or filing, recording or registration with, any court or governmental authority pursuant to applicable law which has not been obtained or taken and is not in full force and effect, is required under applicable law to authorize, or is required under applicable law in connection with, the execution, delivery or performance by the Issuer of any of the Sale Agreement, the Bill of Sale, the Servicing Agreement, the Administration Agreement, the Intercreditor Agreement, the Indenture, the Underwriting Agreement or the Securitization Bonds, or the performance by the Issuer of the transactions contemplated by such documents; (vii) Each of the Sale Agreement, the Bill of Sale, the Servicing Agreement, the Administration Agreement, the Intercreditor Agreement, the Indenture and the Underwriting Agreement constitutes the valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms; (viii) When authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement, the Securitization Bonds will constitute the valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their respective terms and will be entitled to the benefits of the Indenture; (ix) Neither the execution, delivery or performance by the Issuer of the Sale Agreement, the Bill of Sale, the Servicing Agreement, the Administration Agreement, the Intercreditor Agreement, the Indenture, the Underwriting Agreement or the Securitization Bonds nor the compliance by the Issuer with the terms and provisions thereof nor the issuance and sale by the Issuer of the Securitization Bonds, will contravene any provisions of applicable laws; (x) The Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and neither the Sale Agreement nor the Servicing Agreement is required to be registered under the Trust Indenture Act; (xi) The Securitization Bonds have been duly authorized and executed by the Issuer; (xii) The Registration Statement has become effective under the Act; any required filing of the Prospectus pursuant to Rule 424(b) under the Act has been made in the manner and within the time period required by Rule 424(b); to the best of the knowledge of such counsel after due inquiry with the Commission, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or threatened; and the Registration Statement, the Preliminary Prospectus and the Prospectus (other than the financial statements and other financial and statistical information contained therein, as to which such counsel need express no opinion) comply as to form in all material respects with the applicable requirements of the Act and the rules thereunder, and any amendments thereto under the Exchange Act comply as to form in all material respects with the applicable requirements of the Exchange Act and the rules thereunder; (xiii) The Issuer is not, and after giving effect to the offering and sale of the Securitization Bonds and the application of the proceeds thereof as described in the Prospectus will not be required to be, registered as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended; (xiv) The Issuer will not be subject to any other taxes currently imposed by the State of Michigan or any political subdivision thereof which would result from the issuance of the Securitization Bonds, the Issuer's purchase of the Securitization Property from the Company or from its ownership of the Securitization Property; (xv) The Securitization Bonds, the Indenture, the Servicing Agreement and, the Sale Agreement, the Issuer LLC Agreement and the Intercreditor Agreement conform in all material respects to the descriptions thereof (other than, with respect to the Securitization Bonds, the statements under the subheading "The Securitization Bonds-- Securitization Bonds Will Be Issued in Book-Entry Form") contained in the Prospectus; (xvi) The statements set forth in (a) the Prospectus under the captions (i) "The Securitization Bonds" (other than the statements under the subheading "Securitization Bonds Will Be Issued in Book-Entry Form") and "Payments of Interest and Principal" (other than the statements under the subheadings "Material Income Tax Considerations" and "ERISA Considerations"), insofar as they purport to summarize certain provisions of the Securitization Bonds and the Indenture, (ii) "The Sale Agreement", insofar as they purport to summarize certain provisions of the Sale Agreement, (iii) "The Servicing Agreement", insofar as they purport to summarize certain provisions of the Servicing Agreement, (iv) "The Indenture", insofar as they purport to summarize certain provisions of the Indenture, (v) "The Intercreditor Agreement", insofar as they purport to summarize certain provisions of the Intercreditor Agreement, and (vi) "Consumers Funding LLC", insofar as they purport to summarize certain provisions of the Issuer LLC Agreement, in each case constitute fair summaries of such provisions; (b) the Prospectus Supplement under the captions (i) "The Series 2001-1 Securitization Bonds" insofar as they purport to summarize certain provisions of the Securitization Bonds and (ii) "Credit Enhancement - Collection Account and Subaccounts" insofar as they purport to summarize certain provisions of the Indenture, constitute fair summaries of such provisions, and (c) the Prospectus under the caption "ERISA Considerations", insofar as such statements purport to summarize certain provisions of the laws referred to therein, fairly summarize such provisions in all material respects; (xvii) The statements in the Prospectus under the heading "Material Income Tax Consequences for the Securitization Bonds" subject to the qualifications set forth therein, accurately describe the material federal income tax consequences to holders of the Securitization Bonds that are not U.S. persons (within the meaning of the Internal Revenue Code), under existing law and the assumptions stated therein; (xviii) Such counsel adopts and confirms its opinion as set forth in the Prospectus Supplement under the caption "Introduction - Tax Status" and in the Prospectus under the captions "Payments of Interest and Principal - Material Income Tax Consequences" and "Material Income Tax Consequences for the Securitization Bonds"; (xix) The statements in the Prospectus Supplement under the captions "Introduction - Transaction Overview", "The Series 2001-1 Securitization Bonds - The Collateral" and "Credit Enhancement" and the statements in the Prospectus under the captions "Risk Factors", "Judicial, Legislative or Regulatory Action That May Adversely Affect Your Investment", "Servicing Risks", "The Risks Associated With Potential Bankruptcy or Creditors' Rights Proceedings", "Other Risks Associated With An Investment In The Securitization Bonds", "Summary of Terms - Transaction Overview", "The Collateral", "The Customer Choice Act", "The MPSC Financing Order and the Securitization Charge" and "How a Bankruptcy of the Seller or the Servicer May Affect Your Investment" that describe Michigan law or state legal conclusions under Michigan law, provide a fair and accurate summary of such laws and conclusions; (xx) Such counsel adopts and confirms its opinions as set forth under the headings "Payments of Interest and Principal - Material Income Tax Consequences" and "Material Income Tax Consequences for the Securitization Bonds - Material State of Michigan Tax Consequences" in the Prospectus; (xxi) No facts have come such counsel's attention that has led it to believe that the Registration Statement at the effective date thereof contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained as of its date or contains as of the Closing Date an untrue statement of a material fact or omitted or omits, as the case may be, to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that such counsel need express no opinion or belief with respect to (i) the numerical, statistical and financial information included therein or excluded therefrom, (ii) the Bond Trustee's Statement of Eligibility and Qualification under the Trust Indenture Act on Form T-1 or (iii) the statements under the subheading "The Securitization Bonds--Securitization Bonds Will Be Issued in Book-Entry Form"; (xxii) The financing order of the Michigan Public Service Commission dated October 24, 2000, as supplemented by the order dated January 4, 2001 (collectively, the "Financing Order"), has been duly issued by the Michigan Public Service Commission in accordance with all applicable laws, rules and regulations, including the Customer Choice Act; the Financing Order and process by which it was issued complies with all applicable laws, rules and regulations, including the Customer Choice Act; the Financing Order is in full force and effect and is final and nonappealable; and the Customer Choice Act has been duly enacted by the State of Michigan in accordance with all applicable laws, is in full force and effect and is not the subject of any pending appeal or litigation; (xxiii) The Financing Order is effective in accordance with its terms, and the Financing Order, together with the "Securitization Charges" (as referred to therein) authorized in the Financing Order, are irrevocable and not subject to reduction, impairment or adjustment by further action of the Michigan Public Service Commission for the period that the Securitization Bonds are outstanding, except as provided under Section 10k (3) of the Customer Choice Act; (xxiv) The Financing Order authorizes the issuance of the Securitization Bonds, the transfer of the Securitization Property to the Issuer, the imposition of the Securitization Charges and the periodic adjustments of the Securitization Charges, and the sections of the Financing Order authorizing the foregoing are irrevocable; (xxv) The provisions of the Customer Choice Act are constitutional under the constitutions of the United States and of Michigan; (xxvi) The Securitization Bonds are "securitization bonds" within the meaning of Section 10h of the Customer Choice Act and the Securitization Bonds are entitled to the protections of the Customer Choice Act. With respect to routine periodic adjustments to the Securitization Charge required by Section 10k(3) of the Customer Choice Act, the Michigan Public Service Commission has not determined the procedures to be applied in conducting its review of those adjustments pursuant to the Financing Order, including whether notice and opportunity for a hearing will be granted, except that, as required by the Financing Order, each review and determination of the routine periodic adjustment must be completed within 45 days after the Company, as servicer, or a successor servicer, files its request for an adjustment and must be limited in scope, among others specified in the Financing Order, to the arithmetic computation contained in the Company's, or successor servicer's, proposed adjustment; (xxvii) The issuance and sale of the Securitization Bonds and the consummation of the transactions contemplated by the Basic Documents are consistent in all respects with the requirements of the Customer Choice Act and the Financing Order; (xxviii) The Issuer is an "assignee" within the meaning of Section 10h of the Customer Choice Act and is not considered to be a public utility or person providing electric service solely by virtue of its performance of the transactions specified in the Basic Documents; (xxix) The Customer Choice Act is no longer subject to referendum for the purpose of approving or rejecting it, and no petition for a voter initiative for the purpose of amending or repealing any portion of the Customer Choice Act has been filed with the Michigan Secretary of State; (xxx) Effective on the date the Securitization Bonds are issued, if any provision or portion of the Customer Choice Act is held to be invalid, is invalidated, superseded, replaced or expires for any reason, that occurrence does not affect the validity or continuation of any provisions of the Customer Choice Act that are relevant to the issuance, administration, payment, retirement, or refunding of the Securitization Bonds or to any actions of the Company, its successors, an assignee, a collection agent, or a financing party, and said provisions shall remain in full force and effect; (xxxi) An attempt by the State of Michigan, the Michigan Public Service Commission or any other entity to repeal, amend or otherwise impair the Customer Choice Act or the rights of the holders of the Securitization Bonds, whether by legislation, initiative, executive order or Constitutional amendment, would be subject to preliminary injunction if a court of competent jurisdiction hearing a request for preliminary injunction finds that such relief is necessary to prevent immediate and irreparable harm that cannot be compensated by damages, that greater injury will occur from refusing the injunction than from granting it, that the preliminary injunction will restore the parties to the status quo as it existed immediately before the alleged wrongful conduct, that the alleged wrong is manifest and the injunction is reasonably suited to abate it; and that the right to such relief by the challenging party is clear; further, upon final adjudication of the challenged repeal, amendment or impairment, a court of competent jurisdiction would permanently enjoin the alleged wrongful conduct if the court concluded that such conduct constitutes a legal wrong for which no adequate remedy at law was available; (xxxii) The provisions of the Sale Agreement together with the Bill of Sale are effective to create, in favor of the Issuer, a valid security interest (as such term is defined in the Michigan UCC) in the Seller's rights in the Securitization Property, which security interest if characterized as a transfer for security will secure a payment obligation incurred by the Seller in the amount paid by the Issuer for the Securitization Property; (xxxiii) The security interest described in the immediately preceding paragraph in favor of the Issuer in the Seller's rights in the Securitization Property is perfected; (xxxiv) The provisions of the Indenture are effective to create, in favor of the Bond Trustee to secure the payment of the Secured Obligations, a valid security interest in the Collateral in which a security interest may be created under Articles 8 and 9 of the Michigan UCC other than property which constitutes Collateral solely because of the phrase "and all other property of whatever kind" being included in said definition (the "Indenture Collateral") and, to the extent not included in the Indenture Collateral, in the Securitization Property; (xxxv) The security interest described in the immediately preceding paragraph in favor of the Bond Trustee created in the Indenture in the Indenture Collateral (other than the Excluded UCC Items (as defined in such opinion)) has been perfected in all of such Indenture Collateral in which a security interest may be perfected by the filing of a financing statement within the State of Michigan; (xxxvi) As provided in the Customer Choice Act, the lien and security interest of the Bond Trustee in the Issuer's rights in the Securitization Property (a) have been created, (b) have attached to the Securitization Property, (c) are valid and enforceable, (d) are a perfected lien and security interest in the Issuer's rights in the Securitization Property and all proceeds thereof, whether accrued or not, (e) have priority in order of filing, and (f) take precedence over any subsequent judicial and other lien creditor. In addition, pursuant to the Customer Choice Act, all rights and remedies with respect to a security interest provided by the Michigan UCC shall apply to the Securitization Property; (xxxvii) The provisions of the Securities Account Control Agreement together with those of the Account Agreement (as defined in such opinion) are effective to perfect the security interest of the Bond Trustee created in the Indenture in the Security Entitlements (as defined in such opinion) and the Securities Account (as defined in such opinion); (xxxviii) The Michigan Department of State is the proper filing office under the Customer Choice Act for the filing of financing statements in order to create a perfected lien and security interest in the Securitization Property under said Act as it pertains to the transfer thereof by the Seller. The Michigan Department of State is the proper filing office under Article 9 of the Michigan UCC for the filing of financing statements in order to perfect a security interest granted by the Issuer in the Indenture Collateral (but excluding therefrom property in which a security interest cannot be perfected by the filing of a financing statement under the Michigan UCC, Excluded UCC Items (as defined in such opinion) and proceeds of the Indenture Collateral if such proceeds are not subject to the filing requirements of Article 9 of the Michigan UCC) when such perfection is governed by a filing within the State of Michigan; (xxxix) The provisions of the Indenture are sufficient to constitute authorization by the Issuer of the filing of the Financing Statement for purposes of Section 9-509 of the Delaware UCC; (xl) To the extent that perfection is governed by the Delaware UCC, upon the later of the attachment of the security interest and the filing of the financing statement described in such opinion (the "Financing Statement") in the Office of the Secretary of State of the State of Delaware (the "Filing Office"), the security interest of the Bond Trustee will be perfected in the Issuer's rights in all Collateral to the extent such collateral is of a type subject to Article 9 of the Delaware UCC ("UCC Collateral") that may be perfected by the filing of a UCC financing statement in the Filing Office; (xli) The UCC search report described in such opinion (the "Issuer Search Report") identifies no person as having filed in the Filing Office a financing statement naming "Consumers Funding LLC" as debtor and containing a description of collateral sufficient to include the UCC Collateral as of the effective date of the Issuer Search Report. The Issuer Search Report sets forth the proper debtor necessary to identify those persons who under the Delaware UCC have on file financing statements against the Issuer covering the UCC Collateral as of the effective date of the Issuer Search Report; (xlii) For purposes of the Delaware UCC, the Issuer is a "registered organization"; (xliii) Under the Contract Clauses of the United States and State of Michigan Constitutions, the State of Michigan, including the Michigan Public Service Commission, could not constitutionally take any action of a legislative character, including, but not limited to, the repeal or amendment of the Customer Choice Act or the Financing Order (including repeal or amendment by voter initiative as defined in 63 Michigan Constitution, Article 2, Section 9, or by amendment of the Michigan Constitution), that would substantially impair the value of the Securitization Property or substantially reduce or alter, except as allowed under the adjustment provisions described in Section 10k(3) of the Customer Choice Act, or substantially impair the Securitization Charges to be imposed, collected and remitted to the Issuer, unless such action is a reasonable exercise of the State of Michigan's sovereign powers and of a character reasonable and appropriate to the public purpose justifying such action; (xliv) Under the Taking Clauses of the United States and the State of Michigan Constitutions, the State of Michigan, including the Michigan Public Service Commission, could not repeal or amend the Customer Choice Act or the Financing Order (including repeal or amendment by voter initiative as defined in 63 Michigan Constitution, Article 2, Section 9, or by amendment of the Michigan Constitution) or take any other action in contravention of the pledge set forth in Section 10n(2) of the Customer Choice Act without paying just compensation to the Securitization Bondholders, as determined by a court of competent jurisdiction, if doing so would constitute a permanent appropriation of a substantial property interest of the Securitization Bondholders in the Securitization Property and deprive the Securitization Bondholders of their reasonable expectations arising from their investments in the Securitization Bonds; and (xlv) The pledge set forth in Section 10n(2) of the Customer Choice Act was validly enacted by the State of Michigan and is enforceable. In rendering any such opinion, Skadden, Arps, Slate, Meagher & Flom LLP may rely as to matters involving the application of laws of the State of Michigan, to the extent deemed proper and specified in such opinion, upon the opinion of other counsel of good standing believed to be reliable and who are satisfactory to counsel for the Underwriters, and such counsel may rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Issuer and public officials. References to the Prospectus in this paragraph (c) include any supplements thereto at the Time of Purchase. (d) The Representative and the Bond Trustee shall have received on the Time of Purchase an opinion letter or letters of Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel to the Issuer, dated the Time of Purchase, in form and substance reasonably satisfactory to the Representative, to the effect that: (i) The Issuer LLC Agreement constitutes a valid and binding agreement of the Company, as the sole member of the Issuer, and is enforceable against the Company in accordance with its terms; (ii) If properly presented to a Delaware court, a Delaware court applying Delaware law would conclude that (i) compliance with Section 3.04(b)(iv) of the Issuer LLC Agreement requiring a prior unanimous written consent of the Issuer's Managers, including each of the Independent Managers, to commence a voluntary case under Title 11 of the United States Code (a "Voluntary Case") for the Issuer, is necessary in order to commence a Voluntary Case, and (ii) Section 3.04(b)(iv) of the Issuer LLC Agreement requiring a prior written unanimous consent of the Issuer's Managers, including each of the Independent Managers, to commence a Voluntary Case for the Issuer, constitutes a legal, valid and binding agreement of the Company, and is enforceable against the Company, as the sole member of the Issuer, in accordance with its terms; (iii) Under the Delaware Limited Liability Company Act, 6 Del. C. 18-101, et seq. (the "LLC Act"), and the Issuer LLC Agreement, the bankruptcy or dissolution of the Company would not, by itself, cause the Issuer to be dissolved or its affairs to be wound up; (iv) Under the LLC Act, a judgment creditor of the Company may not attach specific assets of the Issuer directly and may not satisfy its claims against the Company by asserting a claim directly against the assets of the Issuer; (v) Under the LLC Act (i) the Issuer is a separate legal entity, and (ii) the existence of the Issuer as a separate legal entity will continue until the cancellation of the Issuer Certificate of Formation; (e) The Representative and the Bond Trustee shall have received on the Time of Purchase an opinion letter or letters of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Issuer, dated the Time of Purchase, in form and substance reasonably satisfactory to the Representative, to the effect that, under federal law: (i) In a properly presented and argued case, as a legal matter, and based upon existing case law, a bankruptcy court, would hold that compliance with those provisions of the Issuer LLC Agreement requiring the prior unanimous written consent of the Issuer's Managers to commence a voluntary case under Title 11 of the United States Code (a "Voluntary Case") is necessary in order to commence a Voluntary Case; (ii) The bankruptcy or dissolution of the Company would not, by itself, cause the Issuer to be dissolved or its affairs to be wound up; (iii) A judgment creditor of the Company may not satisfy its claims against the Company by asserting these claims directly against the assets of the Issuer, and (iv) (A) The Issuer is a separate legal entity, and (B) the existence of the Issuer as a separate legal entity will continue until the cancellation of its Issuer Certificate of Formation. (f) The Representative and the Issuer have received opinions of Stradley, Ronon, Stevens & Young, LLP, counsel to the Bond Trustee, Emmet, Marvin & Martin, LLP, counsel to the Bond Trustee, and Miller, Canfield, Paddock and Stone, P.L.C., or such other counsel as may be acceptable to the Representative, dated the Time of Purchase, in form and substance reasonably satisfactory to the Representative, to the effect that: (i) the Bond Trustee is a banking corporation validly existing under the laws of the State of New York; (ii) the Bond Trustee has the requisite power and authority to execute and deliver the Indenture and the Intercreditor Agreement, and each of the Indenture and the Intercreditor Agreement has been duly executed and delivered by the Bond Trustee, and constitutes a legal, valid and binding obligation of the Bond Trustee enforceable against the Bond Trustee in accordance with its terms (subject, as to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws or equitable principles affecting creditors' rights generally from time to time in effect); and (iii) the Securitization Bonds have been duly authenticated by the Bond Trustee. (g) Representative shall have received from Orrick, Herrington & Sutcliffe LLP, counsel for the Underwriters, such opinion or opinions, dated the Time of Purchase, with respect to the issuance and sale of the Securitization Bonds, the Indenture, the Registration Statement, the Prospectus (together with any supplement thereto) and other related matters as the Representative may reasonably require, and the Company, the Seller and the Issuer shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (h) The Representative and the Bond Trustee shall have received a certificate of the Issuer, signed by the President and the principal financial or accounting officer of the Issuer, dated the Time of Purchase, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Prospectus, any supplement to the Prospectus, the Indenture and this Agreement and that: (i) the representations and warranties of the Issuer in this Agreement and in the Indenture are true and correct in all material respects on and as of the Time of Purchase with the same effect as if made on the Time of Purchase, and the Issuer has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Time of Purchase; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Issuer's best knowledge, threatened; and (iii) since the dates as of which information is given in the Prospectus (exclusive of any supplement thereto), there has been no material adverse change in (A) the condition (financial or other), prospects, earnings, business or properties of the Issuer, whether or not arising from transactions in the ordinary course of business, or (B) the Securitization Property, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto). (i) The Representative and the Bond Trustee shall have received a certificate of the Company, signed by a Vice President and the Treasurer of the Company, dated the Time of Purchase, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Prospectus, any supplement to the Prospectus, the Sale Agreement, the Servicing Agreement and this Agreement and that: (i) the representations and warranties of the Company in this Agreement, the Sale Agreement and the Servicing Agreement are true and correct in all material respects on and as of the Time of Purchase with the same effect as if made on the Time of Purchase, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Time of Purchase; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Company's best knowledge, threatened; and (iii) since the dates as of which information is given in the Prospectus (exclusive of any supplement thereto), there has been no material adverse change in (A) the condition (financial or other), prospects, earnings, business or properties of the Company and its subsidiaries taken as a whole, whether or not arising from transactions in the ordinary course of business, or (B) the Securitization Property, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto). (j) On the date of the Time of Purchase, the Representative shall have received from Arthur Anderson LLP: (i) a letter in form and substance satisfactory to the Representative, dated as of such date, confirming that they are independent public accountants within the meaning of the Act and the applicable published rules and regulations of the Commission thereunder and stating that they have audited the financial statement of the Issuer included in the Registration Statement and the Prospectus as set forth in their report included therein and stating in effect that they have performed certain specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company and its subsidiaries) set forth in the Registration Statement and the Prospectus agrees with the accounting records of the Company and its subsidiaries, excluding any questions of legal interpretation; and (ii) the opinion or certificate, dated the Time of Purchase, in form and substance satisfactory to the Representative, satisfying the requirements of Section 2.10(b)(vi) of the Indenture. References to the Prospectus in this paragraph (j) include any supplement thereto at the date of the letter. In addition, on the date execution of this Agreement, Arthur Anderson LLP shall have furnished to the Representative a letter or letters, dated the date of execution of this Agreement, in form and substance satisfactory to the Representative, to the effect set forth above. (k) The Representative and the Issuer shall have received on the Time of Purchase (A) an opinion letter or letters of Skadden, Arps, Slate Meagher & Flom LLP, outside counsel to the Company and the Issuer, dated the Time of Purchase, in form and substance reasonably satisfactory to the Representative that, in the event of the bankruptcy of the Company, (i) the transfer of the right, title and interest of the Company in, to and under the Securitization Property would be treated as a true sale to the Issuer, such that (a) section 362(a) of the United States Bankruptcy Code would not apply to prevent the Company in its capacity as Servicer from paying collections of the Securitization Charge to the Issuer and its assigns as provided in the Servicing Agreement, and (b) the Securitization Property or collections of the Securitization Charge imposed on account of Securitization Property transferred by the Company to the Issuer would not become property of the Company's bankruptcy estate under section 541(a)(1) or 541(a)(6) of the United States Bankruptcy Code, and (ii) a creditor or trustee of the Company (or the Company as debtor in possession) would not have valid grounds to have a court disregard the limited liability company form of the Issuer so as to cause a substantive consolidation of the assets and liabilities of the Issuer with the assets and liabilities of the Company in a manner prejudicial to the holders of Securitization Bonds; and (B) an opinion letter of Miller, Canfield, Paddock and Stone, P.L.C., special Michigan counsel for the Issuer, dated the Time of Purchase, in form and substance reasonably satisfactory to the Representative, that the transfer of the Securitization Property pursuant to the Sale Agreement constitutes a true sale to the Issuer of the Securitization Property. (l) Subsequent to the date of execution of this Agreement or, if earlier, the dates as of which information is given in the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any supplement thereto), there shall not have been any change, or any development involving a prospective change, in or affecting either (i) the business, business prospects, properties or financial condition of the Company or the Issuer, or (ii) the Securitization Property, the Securitization Bonds, the Financing Order or the Customer Choice Act, the effect of which is, in the case of either clause (i) or (ii), in the judgment of the Representative, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Securitization Bonds as contemplated by the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any supplement thereto). (m) Prior to the Time of Purchase, no stop order suspending the effectiveness of the Registration Statement shall have been issued under the Act by the Commission or proceedings therefor initiated or threatened. (n) The Company and the Issuer shall have performed such of their respective obligations under this Agreement as are to be performed at or before the Time of Purchase by the terms hereof. (o) The Securitization Bonds shall have been rated in the highest long-term rating category by each of the Rating Agencies. (p) Any filing of the Prospectus and any supplements thereto required pursuant to Rule 424 under the Act shall have been made in compliance with Rule 424 in the time periods provided by Rule 424. (q) On or prior to the Time of Purchase, the Issuer shall have delivered to the Representative evidence, in form and substance reasonably satisfactory to the Representative, that appropriate filings have been made in accordance with applicable law to perfect the grant of a security interest by the Issuer in the Securitization Property, the other Collateral, and the proceeds thereof to the Bond Trustee, including any necessary filings with the Michigan Public Service Commission and the filing of the UCC financing statements in the offices of the Secretaries of State of the State of Michigan and the State of Delaware. (r) On or prior to the Time of Purchase, the Issuer shall have delivered to the Representative a copy of the Michigan Public Service Commission's Financing Order relating to the Securitization Property and the Company shall have furnished to the Representative copies of the private letter ruling, dated November 15, 2000 issued by the Internal Revenue Service to the Company. (s) On or prior to the Time of Purchase, the Issuer shall have furnished to the Representative the documents required pursuant to Section 2.10(b) of the Indenture. (t) On or prior to the Time of Purchase, the Company shall have delivered to the Representative evidence, in form and substance reasonably satisfactory to the Representative, that appropriate filings have been made in accordance with applicable law to perfect the grant of a security interest by the Company in the Securitization Property to the Issuer and to perfect the transfer of the Securitization Property by the Company to the Issuer pursuant to the Sale Agreement, including any necessary filings with the Michigan Public Service Commission and the filing of the UCC financing statements in the office of the Secretary of State of the State of Michigan. (u) On or prior to the Time of Purchase, the Issuer shall have delivered to the Representative copies of the UCC search reports referred to in Section 3(c) of this Agreement, along with copies of all filings referenced in such search reports. (v) On or prior to the Time of Purchase, the Issuer shall have delivered to the Representative copies of (i) the RPA's (as defined in the Intercreditor Agreement) as amended to reflect the provisions specified in Exhibit A to the Intercreditor Agreement and (ii) all filed amendments to UCC financing statements necessary to reflect such amendments to the RPA's. (w) Prior to the Time of Purchase, the Issuer and the Company shall have furnished to the Representative such further information, certificates, opinions and documents as the Representative may reasonably request, including any documents provided to the Rating Agencies. If any of the conditions specified in this Section 3 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Representative and counsel for the Underwriters, this Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Time of Purchase by the Representative. Notice of such cancellation shall be given to the Issuer in writing or by telephone or telegraph confirmed in writing. The documents required to be delivered by this Section 3 shall be delivered at the offices of Skadden, Arps, Slate, Meagher & Flom, LLP in New York City on the Time of Purchase. 4. Conditions of the Issuer's Obligations: The obligation of the Issuer hereunder to sell the Securitization Bonds are subject to the satisfaction of the condition set forth in Section 3(m). 5. Certain Covenants of the Issuer: In further consideration of the agreements of the Underwriters herein contained, the Issuer covenants as follows: (a) To use its best efforts to cause any post-effective amendments to the Registration Statement to become effective as promptly as possible. During the time when a Prospectus is required to be delivered under the Act, the Issuer will comply so far as it is able with all requirements imposed upon it by the Act and the rules and regulations of the Commission to the extent necessary to permit the continuance of sales of or dealings in the Securitization Bonds in accordance with the provisions hereof and of the Prospectus. (b) To deliver to the Representative a conformed copy of the Registration Statement and any amendments thereto (including all exhibits thereto) and full and complete sets of all comments of the Commission or its staff and all responses thereto with respect to the Registration Statement and any amendments thereto, and to furnish to the Representative, for each of the Underwriters, conformed copies of the Registration Statement and any amendments thereto, without exhibits. (c) As soon as the Issuer is advised thereof, to advise the Representative and confirm the advice in writing of: (i) the effectiveness of any amendment to the Registration Statement, (ii) any request made by the Commission for amendments to the Registration Statement, the Preliminary Prospectus or Prospectus or for additional information with respect thereto, (iii) when the Prospectus, the Preliminary Prospectus, and any supplement thereto, shall have been filed with the Commission pursuant to Rule 424(b), (iv) the suspension of qualification of the Securitization Bonds for sale under Blue Sky or state securities laws, and (v) the entry of a stop order suspending the effectiveness of the Registration Statement or of the initiation or threat or any proceedings for that purpose. The Issuer will use its best efforts to prevent the issuance of any such stop order and, if issued, to make every reasonable effort to obtain the lifting or removal thereof. (d) To deliver to the Underwriters, without charge, as soon as practicable, and from time to time during such period of time as they are required by law to deliver a prospectus, as many copies of the Preliminary Prospectus and the Prospectus (as supplemented or amended if the Issuer shall have made any supplements or amendments thereto) as the Representative may reasonably request; and in case any Underwriter is required to deliver a prospectus after the expiration of nine months after the date of the Prospectus, to furnish to the Representative, upon request, at the expense of such Underwriter, a reasonable quantity of a supplemental prospectus or of supplements to the Prospectus complying with Section 10(a)(3) of the Act. The Issuer shall furnish or cause to be furnished to the Representative copies of all reports on Form SR required by Rule 463 under the Act. The Issuer will pay the expenses of printing or other production of all documents specifically relating to the offering of the Securitization Bonds under the Act. (e) For such period of time after the date of the Prospectus as the Underwriters are required by law to deliver a prospectus in respect of the Securitization Bonds, if any event shall have occurred as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it becomes necessary to amend or supplement the Prospectus to comply with law, to forthwith prepare and file with the Commission an appropriate amendment or supplement to the Prospectus and deliver to the Underwriters, without charge, such number of copies thereof as may be reasonably requested. (f) To use its best efforts to qualify the Securitization Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representative may designate and to pay (or cause to be paid), or reimburse (or cause to be reimbursed) the Underwriters and their counsel for, reasonable filing fees and expenses in connection therewith (including the reasonable fees and disbursements of counsel to the Underwriters and filing fees and expenses paid and incurred prior to the date hereof), provided, however, that the Issuer shall not be required to qualify to do business as a foreign corporation or as a securities dealer or to file a general consent to service of process or to file annual reports or to comply with any other requirements reasonably deemed by the Issuer to be unduly burdensome. (g) To pay all expenses, fees and taxes (other than transfer taxes on sales by the respective Underwriters) in connection with the issuance and delivery of the Securitization Bonds (including the reasonable fees and disbursements of counsel to the Underwriters). (h) Prior to the termination of the offering of the Securitization Bonds, to not file any amendment to the Registration Statement or supplement to the Prospectus (including the Basic Prospectus) unless the Issuer has furnished the Representative and counsel to the Underwriters with a copy for their review and comment a reasonable time prior to filing and has reasonably considered any comments of the Representative, or any such amendment or supplement to which such counsel shall reasonably object on legal grounds in writing, after consultation with the Representative. Subject to the foregoing sentence, the Issuer will cause the Prospectus, properly completed, and any supplement thereto to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the Representative of such timely filing. (i) So long as any of the Securitization Bonds are outstanding, to furnish to the Representative (A) as soon as available, a copy of each report filed with the Commission under the Exchange Act, or mailed to Securitization Bondholders, (B) a copy of any filings with the Michigan Public Service Commission or any other governmental agency or instrumentality relating to the Securitization Bonds, and (C) from time to time, any information concerning the Company or the Issuer, as the Representative may reasonably request. (j) So long as may be required by law for the distribution of the Securitization Bonds by the Underwriters or by any dealers that participate in the distribution thereof, to comply with all requirements under the Exchange Act relating to the timely filing with the Commission of the Issuer's reports pursuant to Section 13 of the Exchange Act. (k) To make generally available to the Securitization Bondholders, as soon as practicable, an "earning statement" (which need not be audited by independent public accountants) covering a twelve-month period commencing after the effective date of the Registration Statement and ending not later than 15 months thereafter, which shall comply in all material respects with and satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (l) To the extent, if any, that any rating necessary to satisfy the conditions set forth in Section 3 of this Agreement is conditioned upon the furnishing of documents or the taking of other actions by the Issuer on or after the Time of Purchase, to furnish such documents and take such other actions as are reasonably required. (m) To file with the Commission a report on Form 8-K setting forth all Computational Materials (as such term is defined in Section 14) provided to the Issuer by an Underwriter and identified by it as such within the time period allotted for such filing pursuant to the No-Action Letters (as defined in Section 14); provided, however, that prior to any filing of the Computational Materials by the Issuer, such Underwriter must comply with its obligations pursuant to Section 14 and the Issuer must receive a letter from Arthur Anderson LLP, certified public accountants, satisfactory in form and substance to the Issuer and such Underwriter, to the effect that such accountants have performed specified procedures, all of which have been agreed to by the Issuer and such Underwriter, as a result of which they have determined that the information included in the Computational Materials provided by such Underwriter to the Issuer for filing on Form 8-K pursuant to Section 14 and this subsection (m), and which the accountants have examined in accordance with such agreed upon procedures, is accurate except as to such matters that are not deemed by the Issuer and such Underwriter to be material. The Issuer shall file any corrected Computational Materials described in Section 14(a)(iii) as soon as practicable following receipt thereof. 6. Certain Covenants of the Company: In further consideration of the agreements of the Underwriters herein contained, the Company covenants as follows: (a) To use its best efforts to cause any post-effective amendments to the Registration Statement to become effective as promptly as possible. The Company will use its best efforts to prevent the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement and, if issued, to obtain as soon as possible the withdrawal thereof. (b) So long as any of the Securitization Bonds are outstanding and the Company is the Servicer, to furnish to the Representative (A) as soon as available, a copy of each report filed by the Servicer or the Company with the Commission under the Exchange Act, or mailed by the Servicer or the Company to Securitization Bondholders, (B) a copy of any filings by the Servicer or the Company with the Michigan Public Service Commission or any other governmental agency or instrumentality relating to the Securitization Bonds, and (C) from time to time, any information concerning the Company and the Issuer as the Representative may reasonably request. (c) To the extent, if any, that any rating necessary to satisfy the conditions set forth in Section 3 of this Agreement is conditioned upon the furnishing of documents or the taking of other actions by the Company on or after the Time of Purchase, to furnish such documents and take such other actions as are reasonably required. 7. Representations and Warranties of the Company: The Company represents and warrants to, and agrees with, each of the Underwriters that, as of the date hereof and as of the Time of Purchase: (a) The Registration Statement has become effective under the Act; a true and correct copy of the Registration Statement in the form in which it became effective has been delivered to the Representative and to the Representative for each of the Underwriters (except that copies delivered for the Underwriters excluded exhibits to such Registration Statement); any filing of the Prospectus and any supplements thereto required pursuant to Rule 424(b) has been or will be made in the manner and within the time period required by Rule 424(b); no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purposes are pending before or, to the knowledge of the Company, threatened by the Commission. On the effective date of the Registration Statement, the Registration Statement and the Basic Prospectus complied, or were deemed to have complied, and on its respective issue date, each preliminary prospectus filed pursuant to Rule 424(b) complied, and the Basic Prospectus complied, and on its issue date, the Prospectus will comply, or will be deemed to comply, in all material respects with the applicable provisions of the Act, the Trust Indenture Act and the published rules and regulations of the Commission; on the effective date of the Registration Statement and at the Time of Purchase the Indenture did or will comply in all material respects with the requirements of the Trust Indenture Act and the rules thereunder; none of the Registration Statement, the Basic Prospectus, or any other preliminary prospectus, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Prospectus, as amended or supplemented, if applicable, as of the Time of Purchase, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the Company makes no warranty or representation to any Underwriter with respect to any statements or omissions made therein in reliance upon and in conformity with information furnished in writing to the Company or the Issuer by, or through the Representative on behalf of, any Underwriter expressly for use therein, or to any statements in or omissions from that part of the Registration Statement that shall constitute the Statement of Eligibility and Qualification under the Trust Indenture Act of the Bond Trustee under the Indenture; (b) The documents incorporated by reference in the Registration Statement, any preliminary prospectus, the Basic Prospectus and the Prospectus, when they were filed (or, if an amendment with respect to any such document was filed, when such amendment was filed) with the Commission, conformed in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and any further documents so filed and incorporated by reference will, when they are filed with the Commission, conform in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder; none of such documents, when it was filed (or, if an amendment with respect to any such document was filed, when such amendment was filed), contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and no such further document, when it is filed, will contain an untrue statement of a material fact or will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; (c) the Company has been duly incorporated and is validly existing as a corporation in good standing under laws of the State of Michigan, with power and authority (corporate and other) to own its properties and conduct its businesses as described in the Registration Statement and the Prospectus, and is duly qualified to do business in all jurisdictions (and is in good standing under the laws of all such jurisdictions) to the extent that such qualification and good standing is or shall be necessary to protect the validity and enforceability of this Agreement, the Servicing Agreement, the Sale Agreement, the Administration Agreement and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby; (d) this Agreement, the Servicing Agreement, the Sale Agreement, the Administration Agreement and each of the other Basic Documents to which the Company is a party have been duly authorized, executed and delivered, and constitute valid and legally binding obligations of the Company enforceable according to their terms; (e) there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries (other than the Issuer) of a character required to be disclosed in the Registration Statement that is not adequately disclosed in the Prospectus, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Prospectus, or to be filed as an exhibit, that is not described or filed as required; (f) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated herein and by the Basic Documents, except such as have been obtained under the Michigan law and such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securitization Bonds by the Underwriters and such other approvals as have been obtained; (g) neither the execution and delivery of this Agreement, the Servicing Agreement, the Sale Agreement, the Administration Agreement, and the other Basic Documents nor the consummation of the transactions contemplated thereby nor the fulfillment of the terms thereof by the Company, will (A) conflict with, result in any breach of any of the terms or provisions of, or constitute (with or without notice or lapse of time) a default under the articles of incorporation, bylaws or other organizational documents of the Company, or conflict with or breach any of the terms or provisions of, or constitute (with or without notice or lapse of time) a default under, any indenture, material agreement or other material instrument to which the Company is a party or by which the Company is bound, (B) result in the creation or imposition of any lien upon any properties of the Company pursuant to the terms of any such indenture, agreement or other instrument (other than as contemplated by the Indenture and the Customer Choice Act, or (C) violate any law or any order, rule or regulation applicable to the Company of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Company or any of its properties; (h) except as described in the Registration Statement and the Prospectus, the Company holds all franchises, certificates of public convenience, licenses and permits necessary to carry on the utility business in which it is engaged; (i) there has not been any material and adverse change in (A) the condition (financial or other), prospects, earnings, business or properties of the Company, whether or not arising from transactions in the ordinary course of business, or (B) the Securitization Property, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto); and (j) except as set forth in the Basic Prospectus, no event or condition exists that constitutes, or with the giving of notice or lapse of time or both would constitute, a default or any breach or failure to perform by the Company in any material respect under any indenture, mortgage, loan agreement, lease or other material agreement or instrument to which the Company is a party or by which it or any of its properties may be bound. 8. Representations and Warranties of the Issuer: The Issuer represents and warrants to, and agrees with, each of the Underwriters that, as of the date hereof and as of the Time of Purchase: (a) The Registration Statement has become effective under the Act; a true and correct copy of the Registration Statement in the form in which it became effective has been delivered to the Representative and to the Representative for each of the Underwriters (except that copies delivered for the Underwriters excluded exhibits to such Registration Statement); any filing of the Prospectus and any supplements thereto required pursuant to Rule 424(b) has been or will be made in the manner and within the time period required by Rule 424(b); no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purposes are pending before or, to the knowledge of the Issuer, threatened by the Commission. On the effective date of the Registration Statement, the Registration Statement and the Basic Prospectus complied, or were deemed to have complied, and on its respective issue date, each preliminary prospectus filed pursuant to Rule 424(b) complied, and the Basic Prospectus complied, and on its issue date, the Prospectus will comply, or will be deemed to comply, in all material respects with the applicable provisions of the Act, the Trust Indenture Act and the published rules and regulations of the Commission; on the effective date of the Registration Statement and at the Time of Purchase the Indenture did or will comply in all material respects with the requirements of the Trust Indenture Act and the rules thereunder; none of the Registration Statement, the Basic Prospectus, or any other preliminary prospectus, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Prospectus, as amended or supplemented, if applicable, as of the Time of Purchase, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the Issuer makes no warranty or representation to any Underwriter with respect to any statements or omissions made therein in reliance upon and in conformity with information furnished in writing to the Company or the Issuer by, or through the Representative on behalf of, any Underwriter expressly for use therein, or to any statements in or omissions from that part of the Registration Statement that shall constitute the Statement of Eligibility and Qualification under the Trust Indenture Act of the Bond Trustee under the Indenture; (b) The documents incorporated by reference in the Registration Statement, any preliminary prospectus, the Basic Prospectus and the Prospectus, when they were filed (or, if an amendment with respect to any such document was filed, when such amendment was filed) with the Commission, conformed in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and any further documents so filed and incorporated by reference will, when they are filed with the Commission, conform in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder; none of such documents, when it was filed (or, if an amendment with respect to any such document was filed, when such amendment was filed), contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and no such further document, when it is filed, will contain an untrue statement of a material fact or will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; (c) the Issuer has been duly organized and is validly existing as a limited liability company in good standing under laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its businesses as described in the Registration Statement and the Prospectus, and is duly qualified to do business in all jurisdictions (and is in good standing under the laws of all such jurisdictions) to the extent that such qualification and good standing is or shall be necessary to protect the validity and enforceability of this Agreement, the Sale Agreement, the Indenture, the Servicing Agreement, the Administration Agreement and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby; (d) this Agreement, the Servicing Agreement, the Indenture, the Administration Agreement, the Sale Agreement and each of the other Basic Documents to which the Issuer is a party have been duly authorized, executed and delivered, and constitute valid and legally binding obligations of the Issuer enforceable according to their terms; (e) there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Issuer or any of its subsidiaries of a character required to be disclosed in the Registration Statement that is not adequately disclosed in the Prospectus, and there is no franchise, contract or other document of a character required to be described in the Registration Statement or Prospectus, or to be filed as an exhibit, that is not described or filed as required; (f) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated herein and by the Basic Documents, except such as have been obtained under the Michigan law and such as may be required under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securitization Bonds by the Underwriters and such other approvals as have been obtained; (g) neither the execution and delivery of this Agreement, the Servicing Agreement, the Sale Agreement, the Indenture, the Administration Agreement and the other Basic Documents nor the consummation of the transactions contemplated thereby nor the fulfillment of the terms thereof by the Issuer, will (A) conflict with, result in any breach of any of the terms or provisions of, or constitute (with or without notice or lapse of time) a default under the certificate of formation, operating agreement or other organizational documents of the Issuer, or conflict with or breach any of the terms or provisions of, or constitute (with or without notice or lapse of time) a default under, any indenture, material agreement or other material instrument to which the Issuer is a party or by which the Issuer is bound, (B) result in the creation or imposition of any lien upon any properties of the Issuer pursuant to the terms of any such indenture, agreement or other instrument (other than as contemplated by the Indenture and the Customer Choice Act, or (C) violate any law or any order, rule or regulation applicable to the Issuer of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Issuer or any of its properties; (h) except as described in the Registration Statement and the Prospectus, the Issuer holds all franchises, certificates of public convenience, licenses and permits necessary to carry on the utility business in which it is engaged; (i) there has not been any material and adverse change in (A) the condition (financial or other), prospects, earnings, business or properties of the Issuer, whether or not arising from transactions in the ordinary course of business, or (B) the Securitization Property, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto); and (j) except as set forth in the Basic Prospectus, no event or condition exists that constitutes, or with the giving of notice or lapse of time or both would constitute, a default or any breach or failure to perform by the Issuer in any material respect under any indenture, mortgage, loan agreement, lease or other material agreement or instrument to which the Issuer is a party or by which it or any of its properties may be bound. 9. Representation and Warranties of Underwriters: --------------------------------------------- Each Underwriter warrants and represents that the information, if any, furnished in writing to the Company through the Representative expressly for use in the Registration Statement and Prospectus is correct in all material respects as to such Underwriter. Each Underwriter, in addition to other information furnished to the Company for use in the Registration Statement and Prospectus, herewith furnishes to the Company for use in the Registration Statement and Prospectus, the information stated herein with regard to the public offering, if any, by such Underwriter and represents and warrants that such information is correct in all material respects as to such Underwriter. 10. Indemnification: --------------- (a) Each of the Company and the Issuer agrees jointly and severally, to the extent permitted by law, to indemnify and hold harmless each Underwriter, the directors, officers, members, employees and agents of each Underwriter, and each person, if any, who controls any such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act or otherwise, and to reimburse the Underwriters and such persons, if any, for any legal or other expenses incurred by them in connection with defending any action, suit or proceeding (including governmental investigations) as provided in Section 10(c) hereof, insofar as such losses, claims, damages, liabilities or actions, suits or proceedings (including governmental investigations) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in (i) the Securitization Property Information and the Computational Materials delivered to investors by any Underwriter to the extent such loss, claim, damage or liability arises from the Securitization Property Information or (ii) the Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the Prospectus, or in any amendment or supplement thereto or arise out of or are based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any such untrue statement or alleged untrue statement or omission or alleged omission which was made in such Registration Statement, Basic Prospectus, Preliminary Prospectus or Prospectus, or in the Prospectus as so amended or supplemented, in reliance upon and in conformity with information furnished in writing to the Company by, or through the Representative on behalf of, any Underwriter expressly for use therein or with statements in or omissions from that part of the Registration Statement that shall constitute the Statement of Eligibility and Qualification under the Trust Indenture Act of the Bond Trustee under the Indenture, and except that this indemnity shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) on account of any losses, claims, damages, liabilities or actions, suits or proceedings arising from the sale of the Securitization Bonds to any person if a copy of the Prospectus, as the same may then be supplemented or amended (excluding, however, any document then incorporated or deemed incorporated therein by reference), was not sent or given by or on behalf of such Underwriter to such person (i) with or prior to the written confirmation of sale involved or (ii) promptly after being provided to the Representative by the Company or the Issuer after such written confirmation, relating to an event occurring prior to the payment for and delivery to such person of the Securitization Bonds involved in such sale, and the omission or alleged omission or untrue statement or alleged untrue statement was corrected in the Prospectus as supplemented or amended at such time. As used herein, the term "Securitization Property Information" means information, whether in written or electronic format or otherwise, regarding the Securitization Property provided to the Underwriters by or on behalf of the Company or the Issuer. The Company's indemnity agreement contained in this Section 10(a), and the covenants, representations and warranties of the Company contained in this Agreement, shall remain in full force and effect regardless of any investigation made by or on behalf of any person, and shall survive the delivery of and payment for the Securitization Bonds hereunder, and the indemnity agreement contained in this Section 10(a) shall survive any termination of this Agreement. The liabilities of the Company in this Section 10(a) are in addition to any other liabilities of the Company under this Agreement or otherwise. (b) Each Underwriter agrees, severally and not jointly, to the extent permitted by law, to indemnify, hold harmless and reimburse the Company and the Issuer, the directors, officers, members, managers, employees and agents of the Company and the Issuer, and each person, if any, who controls the Company or the Issuer within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and such of the officers of the Issuer as shall have signed the Registration Statement or any amendment thereof, to the same extent and upon the same terms as the indemnity agreement of the Company and the Issuer set forth in Section 10(a) hereof, but only with respect to alleged untrue statements or omissions made in the Registration Statement, the Basic Prospectus or in the Prospectus, as amended or supplemented (if applicable), in reliance upon and in conformity with information furnished in writing to the Company or the Issuer by such Underwriter expressly for use therein. The indemnity agreement on the part of each Underwriter contained in this Section 10(b) and the representations and warranties of such Underwriter contained in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any other person, and shall survive the delivery of and payment for the Securitization Bonds hereunder, and the indemnity agreement contained in this Section 10(b) shall survive any termination of this Agreement. The liabilities of each Underwriter in this Section 10(b) are in addition to any other liabilities of such Underwriter under this Agreement or otherwise. (c) If a claim is made or an action, suit or proceeding (including governmental investigations) is commenced or threatened against any person as to which indemnity may be sought under Section 10(a) or 10(b), such person (the "Indemnified Person") shall notify the person against whom such indemnity may be sought (the "Indemnifying Person") promptly after any assertion of such claim threatening to institute an action, suit or proceeding or if such an action, suit or proceeding is commenced against such Indemnified Person, promptly after such Indemnified Person shall have been served with a summons or other first legal process, giving information as to the nature and basis of the claim. Failure to so notify the Indemnifying Person shall not, however, relieve the Indemnifying Person from any liability which it may have on account of the indemnity under Section 10(a) or 10(b) if the Indemnifying Person has not been prejudiced in any material respect by such failure. Subject to the immediately succeeding sentence, the Indemnifying Person shall assume the defense of any such litigation or proceeding, including the employment of counsel and the payment of all expenses, with such counsel being designated, subject to the immediately succeeding sentence, in writing by the Representative in the case of parties indemnified pursuant to Section 10(b) and by the Company and the Issuer in the case of parties indemnified pursuant to Section 10(a); provided, however, that such counsel shall be reasonably satisfactory to the Indemnified Person. Any Indemnified Person shall have the right to participate in such litigation or proceeding and to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the retention of such counsel, (ii) the named parties to any such proceeding (including any impleaded parties) include (x) the Indemnifying Person and (y) the Indemnified Person and, in the written opinion of counsel to such Indemnified Person, representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them, in either of which cases the reasonable fees and expenses of counsel (including disbursements) for such Indemnified Person shall be reimbursed by the Indemnifying Person to the Indemnified Person. If there is a conflict as described in clause (ii) above, and the Indemnified Persons have participated in the litigation or proceeding utilizing separate counsel whose fees and expenses have been reimbursed by the Indemnifying Person and the Indemnified Persons, or any of them, are found to be solely liable, such Indemnified Persons shall repay to the Indemnifying Person such fees and expenses of such separate counsel as the Indemnifying Person shall have reimbursed. It is understood that the Indemnifying Person shall not, in connection with any litigation or proceeding or related litigation or proceedings in the same jurisdiction as to which the Indemnified Persons are entitled to such separate representation, be liable under this Agreement for the reasonable fees and out-of-pocket expenses of more than one separate firm (together with not more than one appropriate local counsel) for all such Indemnified Persons. Subject to the next paragraph, all such fees and expenses shall be reimbursed by payment to the Indemnified Persons of such reasonable fees and expenses of counsel promptly after payment thereof by the Indemnified Persons. In furtherance of the requirement above that fees and expenses of any separate counsel for the Indemnified Persons shall be reasonable, the Representative, the Issuer and the Company agree that the Indemnifying Person's obligations to pay such fees and expenses shall be conditioned upon the following: (1) in case separate counsel is proposed to be retained by the Indemnified Persons pursuant to clause (ii) of the preceding paragraph, the Indemnified Persons shall in good faith fully consult with the Indemnifying Person in advance as to the selection of such counsel; (2) reimbursable fees and expenses of such separate counsel shall be detailed and supported in a manner reasonably acceptable to the Indemnifying Person (but nothing herein shall be deemed to require the furnishing to the Indemnifying Person of any information, including without limitation, computer print-outs of lawyers' daily time entries, to the extent that, in the judgment of such counsel, furnishing such information might reasonably be expected to result in a waiver of any attorney-client privilege); and (3) the Issuer, the Company, the Representative and the Underwriters shall cooperate in monitoring and controlling the fees and expenses of separate counsel for Indemnified Persons for which the Indemnifying Person is liable hereunder, and the Indemnified Person shall use every reasonable effort to cause such separate counsel to minimize the duplication of activities as between themselves and counsel to the Indemnifying Person. The Indemnifying Person shall not be liable for any settlement of any litigation or proceeding effected without the written consent of the Indemnifying Person, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees, subject to the provisions of this Section 10, to indemnify the Indemnified Person from and against any loss, damage, liability or expenses by reason of such settlement or judgment. The Indemnifying Person shall not, without the prior written consent of the Indemnified Persons, effect any settlement of any pending or threatened litigation, proceeding or claim in respect of which indemnity has been properly sought by the Indemnified Persons hereunder, unless such settlement includes an unconditional release by the claimant of all Indemnified Persons from all liability with respect to claims which are the subject matter of such litigation, proceeding or claim. 11. Contribution: If the indemnification provided for in Section 10 above is unavailable to or insufficient to hold harmless an Indemnified Person under such Section in respect of any losses, claims, damages or liabilities (or actions, suits or proceedings (including governmental investigations) in respect thereof) referred to therein, then each Indemnifying Person under Section 10 shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Indemnifying Person on the one hand and the Indemnified Person on the other from the offering of the Securitization Bonds. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each Indemnifying Person shall contribute to such amount paid or payable by such Indemnified Person in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of each Indemnifying Person, if any, on the one hand and the Indemnified Person on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions, suits or proceedings (including governmental investigations) in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Issuer on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Issuer and the total underwriting discounts and commission received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus, bear to the aggregate public offering price of the Securitization Bonds. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Issuer on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Issuer and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 11 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 11. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages or liabilities (or actions, suits or proceedings (including governmental proceedings) in respect thereof) referred to above in this Section 11 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any such action, suits or proceedings (including governmental proceedings) or claim, provided that the provisions of Section 10 have been complied with (in all material respects) in respect of any separate counsel for such Indemnified Person. Notwithstanding the provisions of this Section 11 and except as may be provided in any agreement among underwriters relating to the offering of the Securitization Bonds, no Underwriter shall be required to contribute any amount in excess of the underwriting discount or commission applicable to the Securitization Bonds purchased by such Underwriter hereunder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this Section 11 to contribute are several in proportion to their respective underwriting obligations and not joint. The agreement with respect to contribution contained in this Section 11 shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any Underwriter, and shall survive delivery of and payment for the Securitization Bonds hereunder and any termination of this Agreement. For purposes of this Section 11, each person who controls an Underwriter within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of an Underwriter shall have the same rights to contribution as such Underwriter, and each person who controls the Issuer or the Company within the meaning of either the Act or the Exchange Act, each officer of the Issuer or the Company who shall have signed the Registration Statement and each director of the Issuer or the Company shall have the same rights to contribution as the Issuer or the Company, subject in each case to the applicable terms and conditions of this Section 11. 12. Default by an Underwriter: If any one or more Underwriters shall fail to purchase and pay for any of the Securitization Bonds agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the nondefaulting Underwriters shall be obligated severally to take up and pay for (in the respective proportions which the amount of Securitization Bonds set forth opposite their names in Schedule II hereto bears to the aggregate amount of Securitization Bonds set forth opposite the names of all the remaining Underwriters) the Securitization Bonds which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that in the event that the aggregate amount of Securitization Bonds which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate amount of Securitization Bonds set forth in Schedule II hereto, the nondefaulting Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securitization Bonds, and if such nondefaulting Underwriters do not purchase all the Securitization Bonds, this Agreement will terminate without liability to any nondefaulting Underwriter, the Issuer or the Company. In the event of a default by any Underwriter as set forth in this Section 12, the Time of Purchase shall be postponed for such period, not exceeding three days, as the Representative shall determine in order that the required changes in the Registration Statement and the Prospectus or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Underwriter of its liability, if any, to the Issuer and the Company and any nondefaulting Underwriter for damages occasioned by its default hereunder. 13. Termination of Agreement: This Agreement may be terminated at any time prior to the Time of Purchase by the Representative in the absolute discretion of the Representative, if, prior to such time (A) there shall have occurred any change, or any development involving a prospective change, in or affecting either (x) the business, business prospects, properties or financial condition of the Issuer or the Company (as most recently disclosed in documents filed with the Commission and publicly available as of the date and time this Agreement is executed by the Representative) or (y) the Securitization Property, the Securitization Bonds, the Financing Order or the Customer Choice Act, the effect of which, in the case of either clause (x) or (y), in the judgment of the Representative, materially impairs the investment quality of the Securitization Bonds or makes it impractical or inadvisable to market the Securitization Bonds, or (B) (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board of Options Exchange or the Chicago Mercantile Exchange, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities shall have been declared by federal, New York State or Michigan State authorities or (iv) the United States shall have become engaged in hostilities, there shall have been an escalation of hostilities involving the United States, there shall have been a declaration by the United States of a national emergency or war or there shall have occurred any change in financial markets or any calamity or crisis that, in the judgment of the Representative, is material and adverse, and, in the case of any of the events specified in clauses (B)(i) through (iv), such event singly or together with any other such event makes it, in the judgment of the Representative, impracticable or inadvisable to proceed with the offering or delivery of the Securitization Bonds as contemplated by the Prospectus (exclusive of any supplement thereto). If the Representative elects to terminate this Agreement, as provided in this Section 13, the Representative will promptly notify the Company and each other Underwriter by telephone or telecopy, confirmed by letter. Notwithstanding the foregoing, the provisions of Sections 5(g), 10 and 11 shall survive any termination of this Agreement. 14. Computational Materials: ----------------------- (a) In connection with the offering of the Securitization Bonds, each Underwriter may prepare and provide to prospective investors items similar to computational materials ("Computational Materials") as defined in the no-action letter of May 20, 1994 issued by the Commission to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated and Kidder Structured Asset Corporation, as made applicable to other issuers and underwriters by the Commission in response to the request of the Public Securities Association dated May 24, 1994, as well as the no-action letter of February 17, 1995 issued by the Commission to the Public Securities Association (collectively, the "No-Action Letters"), subject to the following conditions: (i) All Computational Materials provided to prospective investors that are required to be filed pursuant to the No-Action Letters shall bear a legend substantially in the form attached hereto as Exhibit A. The Issuer shall have the right to require additional specific legends or notations to appear on any Computational Materials, the right to require changes regarding the use of terminology and the right to determine the types of information appearing therein. Notwithstanding the foregoing, this subsection (i) will be satisfied if all Computational Materials referred to herein bear a legend in a form previously approved in writing by the Issuer. (ii) Such Underwriter shall provide to the Issuer, for approval by the Issuer, representative forms of all Computational Materials at least two business days prior to their first use. Such Underwriter shall provide to the Issuer, for filing on Form 8-K as provided in Section 5(m), copies (in such format as required by the Issuer) of all Computational Materials that are required to be filed with the Commission pursuant to the No-Action Letters. The Underwriter may provide copies of the foregoing in a consolidated or aggregated form including all information required to be filed if filing in such format is permitted by the No-Action Letters. All Computational Materials described in this subsection (ii) must be provided to the Issuer not later than 10:00 a.m. New York City time at least two business days before filing thereof is required pursuant to the terms of this Agreement. Such Underwriter shall not provide to any investor or prospective investor in the Securitization Bonds any Computational Materials on or after the day on which Computational Materials are required to be provided to the Issuer pursuant to this paragraph (ii) (other than copies of Computational Materials previously submitted to the Issuer in accordance with this paragraph (ii) for filing pursuant to Section 5(m)), unless such Computational Materials are preceded or accompanied by the delivery of a Prospectus to such investor or prospective investor. (iii) The Issuer shall not be obligated to file any Computational Materials that have been determined to contain any material error or omission, provided that, at the request of any Underwriter, the Issuer will file Computational Materials that contain a material error or omission if clearly marked "SUPERSEDED BY MATERIALS DATED _________" and accompanied by corrected Computational Materials that are marked, "MATERIAL PREVIOUSLY DATED _________, AS CORRECTED." If, within the period during which a prospectus relating to the Securitization Bonds is required to be delivered under the Act, any Computational Materials are determined, in the reasonable judgment of the Issuer or such Underwriter, to contain a material error or omission, such Underwriter shall prepare a corrected version of such Computational Materials, shall circulate such corrected Computational Materials to all recipients of the prior versions thereof that either indicated orally to such Underwriter they would purchase all or any portion of the Securitization Bonds, or actually purchased all or any portion thereof, and shall deliver copies of such corrected Computational Materials (marked "AS CORRECTED") to the Issuer for filing with the Commission in a subsequent Form 8-K submission (subject to the Issuer's obtaining an accountant's comfort letter in respect of such corrected Computational Materials). (b) Each Underwriter shall be deemed to have represented, as of the Time of Purchase, that, except for Computational Materials provided to the Issuer pursuant to subsection (a) above and except for the Preliminary Prospectus, such Underwriter did not provide any prospective investors with any information in written or electronic form in connection with the offering of the Securitization Bonds that is required to be filed with the Commission in accordance with the No-Action Letters. (c) In the event of any delay in the delivery by any Underwriter to the Issuer of all Computational Materials required to be delivered in accordance with subsection (a) above, or in the delivery of the accountant's comfort letter in respect thereof pursuant to Section 5(m), the Issuer shall have the right to delay the release of the Prospectus to investors or to any Underwriter, to delay the Time of Purchase and to take other appropriate actions, in each case set forth in Section 5(m), to file the Computational Materials by the time specified therein. (d) Each Underwriter further represents and warrants that, if and to the extent it has provided any prospective investors with any Computational Materials prior to the date hereof in connection with the offering of the Securitization Bonds, all of the conditions set forth in clause (a) of this Section 14 have been satisfied with respect thereto. (e) Each Underwriter severally agrees that it shall comply with all applicable laws and regulations in connection with the use of Computational Materials. 15. Notices: All notices hereunder shall, unless otherwise expressly provided, be in writing and be delivered at or mailed to the following addresses or be sent by telecopy as follows: if to the Underwriters or the Representative, to the Representative at the address or number, as appropriate, designated in Schedule I hereto, and, if to the Company, to it at, Consumers Energy Company, 212 W. Michigan Avenue, Jackson, Michigan 49201, Attention: Thomas McNish, Corporate Secretary; and if sent to the Issuer, to it at Consumers Funding LLC, 212 W. Michigan Avenue, Suite M-1029, Jackson, Michigan 49201, Attention: Managers. 16. Parties in Interest: The Agreement herein set forth has been and is made solely for the benefit of the Underwriters, the Company (including the directors thereof and such of the officers thereof as shall have signed the Registration Statement), and the controlling persons, if any, referred to in Section 10 hereof, and their respective successors, assigns, executors and administrators, and no other person shall acquire or have any right under or by virtue of this Agreement. 17. Miscellaneous: All obligations of the Underwriters hereunder are several and not joint. The term "successors" as used in this Agreement shall not include any purchaser, as such purchaser, of any of the Securitization Bonds from any of the respective Underwriters. 18. Governing Law: This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 19. Counterparts: This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by you, this letter and such acceptance hereof shall constitute a binding agreement between each of the Underwriters and the Company. Very truly yours, CONSUMERS ENERGY COMPANY By: /s/ Laura L. Mountcastle ------------------------------------ Name: Laura L. Mountcastle Title: Vice President and Treasurer CONSUMERS FUNDING LLC By: /s/ Laura L. Mountcastle ------------------------------------ Name: Laura L. Mountcastle Title: President, Chief Executive Officer, Chief Financial Officer and Treasurer Confirmed and accepted as of the date first written above: MORGAN STANLEY & CO. INCORPORATED by: /s/ Gail McDonnell ---------------------------------- Name: Gail McDonnell Title: Managing Director for themselves and the other several Underwriters, if any, named in Schedule I to the foregoing Agreement. Schedule I:_Representative Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036
Schedule II: Underwriters ------------------------- Principal Amount of Securitization Bonds to be Purchased Morgan Banc One Stanley & Co. Capital Barclays J.P. Morgan Loop Capital Incorporated Markets, Inc. Capital Securities Inc. Markets, LLC ------------ ------------- -------- --------------- - ------------- Class A-1 Securitization Bonds $ 15,600,000 $ 3,640,000 $ 3,640,000 $ 2,340,000 $ 780,000 Class A-2 Securitization Bonds 50,400,000 11,760,000 11,760,000 7,560,000 2,520,000 Class A-3 Securitization Bonds 18,600,000 4,340,000 4,340,000 2,790,000 930,000 Class A-4 Securitization Bonds 57,000,000 13,300,000 13,300,000 8,550,000 2,850,000 Class A-5 Securitization Bonds 70,200,000 16,380,000 16,380,000 10,530,000 3,510,000 Class A-6 Securitization Bonds 69,355,200 16,182,880 16,182,880 10,403,280 3,467,760 Total $281,155,200 $65,602,880 $65,602,880 $42,173,280 $14,057,760
Schedule III Information Regarding the Securitization Bonds Title, Purchase Price and Description of Securitization Bonds: Title: Consumers Funding LLC $468,592,000 Securitization Bonds, Series 2001-1 Principal Amount, Price to Public, Underwriting Discounts and Commissions, Purchase Price to the Issuer, and Required Ratings:
Total Principal Underwriting Required Amount of Price to Discounts and Proceeds to Ratings Class Public Commissions the Issuer (Fitch/Moody's/S&P) --------------- -------- ------------- ----------- - ------------------- Class A-1 Securitization Bonds $ 26,000,000 99.99590% 0.370% $ 25,902,845 AAA/Aaa/AAA Class A-2 Securitization Bonds 84,000,000 99.99182% 0.462% 83,605,169 AAA/Aaa/AAA Class A-3 Securitization Bonds 31,000,000 99.95901% 0.662% 30,782,193 AAA/Aaa/AAA Class A-4 Securitization Bonds 95,000,000 99.96793% 0.782% 94,226,753 AAA/Aaa/AAA Class A-5 Securitization Bonds 117,000,000 99.97673% 0.817% 116,017,004 AAA/Aaa/AAA Class A-6 Securitization Bonds 115,592,000 99.98053% 0.897% 114,532,754 AAA/Aaa/AAA Total $468,592,000 $465,066,718
EXHIBIT A --------- This information has been prepared in connection with the issuance of the securities described herein, and is based on information provided by Consumers Funding LLC and Consumers Energy Company with respect to the expected characteristics of the securitization property securing these securities. The actual characteristics and performance of the securitization property will differ from the assumptions used in preparing these materials, which are hypothetical in nature. Changes in the assumptions may have a material impact on the information set forth in these materials. No representation is made that any performance or return indicated herein will be achieved. This information may not be used or otherwise disseminated in connection with the offer or sale of these or any other securities, except in connection with the initial offer or sale of these securities to you to the extent set forth below. NO REPRESENTATION IS MADE AS TO THE APPROPRIATENESS, USEFULNESS, ACCURACY OR COMPLETENESS OF THESE MATERIALS OR THE ASSUMPTIONS ON WHICH THEY ARE BASED. The underwriters disclaim any and all liability relating to this information, including without limitation any express or implied representations and warranties for statements contained in, and omissions from, this information. Additional information is available upon request. These materials do not constitute an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. ANY SUCH OFFER TO BUY OR SELL ANY SECURITY WOULD BE MADE PURSUANT TO A DEFINITIVE PROSPECTUS AND PROSPECTUS SUPPLEMENT PREPARED BY THE ISSUER WHICH WOULD CONTAIN MATERIAL INFORMATION NOT CONTAINED IN THESE MATERIALS. SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT WILL CONTAIN ALL MATERIAL INFORMATION IN RESPECT OF ANY SUCH SECURITY OFFERED THEREBY AND ANY DECISION TO INVEST IN SUCH SECURITIES SHOULD BE MADE SOLELY IN RELIANCE UPON SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. ANY CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN ARE TO BE READ IN CONJUNCTION WITH SUCH PROSPECTUS AND PROSPECTUS SUPPLEMENT. In the event of any such offering, these materials, including any description of the securitization property contained herein, shall be deemed superseded, amended and supplemented in their entirety by such Prospectus and Prospectus Supplement. To Our Readers Worldwide: In addition, please note that this information has been provided by Morgan Stanley & Co., Incorporated and approved by Morgan Stanley & Co. International Limited, a member of the Securities and Futures Authority, and Morgan Stanley Japan Ltd. We recommend that investors obtain the advice of their Morgan Stanley & Co. International Limited or Morgan Stanley Japan Ltd. representative about the investment concerned. NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K. SECURITIES AND FUTURES AUTHORITY. EX-4.G 4 k65350ex4-g.txt CERTIFICATE OF TRUST OF CMS ENERGY FINANCING V EXHIBIT (4)(G) CERTIFICATE OF TRUST OF CONSUMERS ENERGY COMPANY FINANCING V The undersigned, constituting all of the trustees of Consumers Energy Company Financing V, desiring to form a business trust pursuant to the Delaware Business Trust Act, 12 Del. C. Section 3801, et seq., hereby certify as follows: (a) Name. The name of the business trust being formed hereby (the "Trust") is "Consumers Energy Company Financing V." (b) Delaware Trustee. The Name and business address of the trustee of the Trust which has its principal place of business in the State of Delaware are as follows: The Bank of New York (Delaware) White Clay Center, Route 273 Newark, Delaware 19711 (c) Effective Date. This Certificate of Trust shall be effective as of the date of filing with the Secretary of State of the State of Delaware. Dated: November 21, 2001 IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust, have executed this Certificate of Trust as of the date first above written. /s/Alan M. Wright Alan M. Wright, as Regular Trustee /s/Thomas A. McNish Thomas A. McNish, as Regular Trustee The Bank of New York (Delaware), as Delaware Trustee By: /s/William T. Lewis Name: William T. Lewis Title: SVP EX-4.H 5 k65350ex4-h.txt CERTIFICATE OF TRUST OF CMS ENERGY FINANCING VI EXHIBIT (4)(H) CERTIFICATE OF TRUST OF CONSUMERS ENERGY COMPANY FINANCING VI The undersigned, constituting all of the trustees of Consumers Energy Company Financing VI, desiring to form a business trust pursuant to the Delaware Business Trust Act, 12 Del. C. Section 3801, et seq., hereby certify as follows: (a) Name. The name of the business trust being formed hereby (the "Trust") is "Consumers Energy Company Financing VI." (b) Delaware Trustee. The Name and business address of the trustee of the Trust which has its principal place of business in the State of Delaware are as follows: The Bank of New York (Delaware) White Clay Center, Route 273 Newark, Delaware 19711 (c) Effective Date. This Certificate of Trust shall be effective as of the date of filing with the Secretary of State of the State of Delaware. Dated: November 21, 2001 IN WITNESS WHEREOF, the undersigned, being the Trustees of the Trust, have executed this Certificate of Trust as of the date first above written. /s/Alan M. Wright Alan M. Wright, as Regular Trustee /s/Thomas A. McNish Thomas A. McNish, as Regular Trustee The Bank of New York (Delaware), as Delaware Trustee By: /s/William T. Lewis Name: William T. Lewis Title: SVP EX-4.P 6 k65350ex4-p.txt INDENTURE DATED AS OF NOVEMBER 8, 2001 EXHIBIT 4(p) INDENTURE CONSUMERS FUNDING LLC, Issuer and THE BANK OF NEW YORK, Trustee --------------------- INDENTURE Dated as of November 8, 2001 --------------------- Securing Securitization Bonds Issuable in Series TABLE OF CONTENTS ARTICLE I Definitions and Incorporation by Reference SECTION 1.01 Definitions...................................................2 SECTION 1.02 Incorporation by Reference of the Trust Indenture Act.........2 SECTION 1.03 Rules of Construction.........................................3 ARTICLE II The Securitization Bonds SECTION 2.01 Form..........................................................3 SECTION 2.02 Execution, Authentication and Delivery........................4 SECTION 2.03 Denominations; Securitization Bonds Issuable in Series........4 SECTION 2.04 Temporary Securitization Bonds................................5 SECTION 2.05 Registration; Registration of Transfer and Exchange...........6 SECTION 2.06 Mutilated, Destroyed, Lost or Stolen Securitization Bonds.....7 SECTION 2.07 Persons Deemed Owner..........................................8 SECTION 2.08 Payment of Principal and Interest; Interest on Overdue Principal; Principal and Interest Rights Preserved............8 SECTION 2.09 Cancellation.................................................10 SECTION 2.10 Amount; Authentication and Delivery of Securitization Bonds........................................................10 SECTION 2.11 Book-Entry Securitization Bonds..............................15 SECTION 2.12 Notices to Clearing Agency...................................16 SECTION 2.13 Definitive Securitization Bonds..............................16 ARTICLE III Covenants SECTION 3.01 Payment of Principal and Interest............................17 SECTION 3.02 Maintenance of Office or Agency..............................18 SECTION 3.03 Money for Payments To Be Held in Trust.......................18 SECTION 3.04 Existence....................................................20 SECTION 3.05 Protection of Collateral.....................................20 SECTION 3.06 Opinions as to Collateral....................................20 SECTION 3.07 Performance of Obligations...................................21 SECTION 3.08 Negative Covenants...........................................21 SECTION 3.09 Annual Statement as to Compliance............................22 SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms..........22 SECTION 3.11 Successor or Transferee......................................23 SECTION 3.12 No Other Business............................................24 SECTION 3.13 No Borrowing.................................................24 SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities............24 SECTION 3.15 Capital Expenditures.........................................24 SECTION 3.16 Restricted Payments..........................................24 SECTION 3.17 Notice of Events of Default..................................25 SECTION 3.18 Inspection...................................................25 SECTION 3.19 Adjusted Overcollateralization Balance Schedules.............25 SECTION 3.20 Sale Agreement, Servicing Agreement and Swap Agree ment Covenants...............................................25 SECTION 3.21 Taxes........................................................29 ARTICLE IV Satisfaction and Discharge; Defeasance SECTION 4.01 Satisfaction and Discharge of Indenture; Defeasance..........29 SECTION 4.02 Conditions to Defeasance.....................................31 SECTION 4.03 Application of Trust Money...................................32 SECTION 4.04 Repayment of Moneys Held by Paying Agent.....................32 ARTICLE V Remedies SECTION 5.01 Events of Default............................................33 SECTION 5.02 Acceleration of Maturity; Rescission and Annulment...........34 SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee......................................................35 SECTION 5.04 Remedies.....................................................37 SECTION 5.05 Optional Preservation of the Collateral......................38 SECTION 5.06 Limitation of Proceedings....................................38 SECTION 5.07 Unconditional Rights of Securitization Bondholders To Receive Principal and Interest...............................39 SECTION 5.08 Restoration of Rights and Remedies...........................39 SECTION 5.09 Rights and Remedies Cumulative...............................40 SECTION 5.10 Delay or Omission Not a Waiver...............................40 SECTION 5.11 Control by Securitization Bondholders........................40 SECTION 5.12 Waiver of Past Defaults......................................41 SECTION 5.13 Undertaking for Costs........................................41 SECTION 5.14 Waiver of Stay or Extension Laws.............................42 SECTION 5.15 Action on Securitization Bonds...............................42 ARTICLE VI The Trustee SECTION 6.01 Duties and Liabilities of Trustee............................42 SECTION 6.02 Rights of Trustee............................................43 SECTION 6.03 Individual Rights of Trustee.................................44 SECTION 6.04 Trustee's Disclaimer.........................................44 SECTION 6.05 Notice of Defaults...........................................45 SECTION 6.06 Reports by Trustee to Holders................................45 SECTION 6.07 Compensation and Indemnity...................................46 SECTION 6.08 Replacement of Trustee.......................................46 SECTION 6.09 Successor Trustee by Merger..................................47 SECTION 6.10 Appointment of Co-Trustee or Separate Trustee................48 SECTION 6.11 Eligibility; Disqualification................................49 SECTION 6.12 Preferential Collection of Claims Against Issuer.............49 SECTION 6.13 Representations and Warranties of the Trustee................49 ARTICLE VII Securitization Bondholders' Lists and Reports SECTION 7.01 Issuer To Furnish Trustee Names and Addresses of Securitization Bondholders...................................50 SECTION 7.02 Preservation of Information; Communications to Securitization Bondholders...................................50 SECTION 7.03 Reports by Issuer............................................50 SECTION 7.04 Reports by Trustee...........................................51 SECTION 7.05 Provision of Servicer Reports................................51 ARTICLE VIII Accounts, Disbursements and Releases SECTION 8.01 Collection of Money..........................................52 SECTION 8.02 Collection Account...........................................52 SECTION 8.03 Release of Collateral........................................58 SECTION 8.04 Issuer Opinion of Counsel....................................58 SECTION 8.05 Reports by Independent Accountants...........................58 ARTICLE IX Supplemental Indentures SECTION 9.01 Supplemental Indentures Without Consent of Securitiza tion Bondholders.............................................59 SECTION 9.02 Supplemental Indentures with Consent of Securitization Bondholders..................................................61 SECTION 9.03 Execution of Supplemental Indentures.........................62 SECTION 9.04 Effect of Supplemental Indenture.............................63 SECTION 9.05 Conformity with Trust Indenture Act..........................63 SECTION 9.06 Reference in Securitization Bonds to Supplemental Inden tures........................................................63 ARTICLE X Redemption of Securitization Bonds SECTION 10.01 Optional Redemption by Issuer................................63 SECTION 10.02 Mandatory Redemption by Issuer...............................64 SECTION 10.03 Form of Redemption Notice....................................64 SECTION 10.04 Payment of Redemption Price..................................65 ARTICLE XI Miscellaneous SECTION 11.01 Compliance Certificates and Opinions, etc....................65 SECTION 11.02 Form of Documents Delivered to Trustee.......................66 SECTION 11.03 Acts of Securitization Bondholders...........................67 SECTION 11.04 Notices, etc., to Trustee, Issuer and Rating Agencies........67 SECTION 11.05 Notices to Securitization Bondholders; Waiver................68 SECTION 11.06 Notices to Luxembourg Stock Exchange.........................69 SECTION 11.07 Alternate Payment and Notice Provisions......................69 SECTION 11.08 Conflict with Trust Indenture Act............................69 SECTION 11.09 Effect of Headings and Table of Contents.....................70 SECTION 11.10 Successors and Assigns.......................................70 SECTION 11.11 Severability.................................................70 SECTION 11.12 Benefits of Indenture........................................70 SECTION 11.13 Legal Holidays...............................................70 SECTION 11.14 Governing Law................................................70 SECTION 11.15 Counterparts.................................................70 SECTION 11.16 Issuer Obligation............................................70 SECTION 11.17 No Petition..................................................71 APPENDIX A MASTER DEFINITIONS INDENTURE, dated as of November 8, 2001, by and between CONSUMERS FUNDING LLC, a Delaware limited liability company, as Issuer, and THE BANK OF NEW YORK, a New York banking corporation in its capacity as trustee for the benefit of the Holders of the Securitization Bonds and as agent for itself and any Swap Counterparty (collectively, the "Trustee"). The Issuer has duly authorized the execution and delivery of this Indenture to provide for one or more Series of Securitization Bonds, issuable as provided in this Indenture. Each such Series of Securitization Bonds will be issued only under a separate Series Supplement to this Indenture duly executed and delivered by the Issuer and the Trustee. The Issuer is entering into this Indenture, and the Trustee is accepting the trusts created hereby, each for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and each intending to be legally bound hereby. GRANTING CLAUSE The Issuer hereby Grants to the Trustee as trustee for the benefit of (i) the Holders of the Securitization Bonds from time to time issued and outstanding, (ii) the Trustee and (iii) any Swap Counterparty, all of the Issuer's right, title and interest whether now owned or hereafter acquired, in, to and under: (a) all Securitization Property transferred by the Seller to the Issuer from time to time pursuant to the Sale Agreement, including, without limitation, all Securitiza tion Charge Collections, provided that, for the avoidance of doubt, Securitization Charge Collections with respect to the Securitization Property shall be determined in accordance with the allocation methodology set forth in Annex 2 to the Servicing Agreement, (b) the Sale Agreement, (c) all Bills of Sale delivered by the Seller pursuant to the Sale Agreement, (d) the Servicing Agreement, (e) the Administration Agreement, (f) any Interest Rate Swap Agreement; (g) the Intercreditor Agreement, (h) the Collection Account and all sub-accounts thereof (other than the Capital Reserve Subaccount) (including, without limitation, the General Subaccount, each Series Overcollateralization Subaccount, each Series Capital Subaccount, the Reserve Subaccount, each Series Subaccount, any Class Subaccount and any Defeasance Subaccount) and all cash, securities, instruments, investment property or other assets deposited in or credited to the Collection Account or any subaccount thereof (other than the Capital Reserve Subaccount) from time to time or purchased with funds therefrom, (i) all investment property and all other property of whatever kind owned from time to time by the Issuer, including rights under any interest rate swap or cap agreement, other than: (w) any cash released to any Swap Counterparty by the Trustee from the related Class Subaccount pursuant to Section 8.02(f) and any interest rate swap or cap agreement, (x) any cash or other property released to the Issuer by the Trustee from any Series Capital Subaccount pursuant to Section 8.02(g)(x) and (y) the proceeds from the sale of the Securitization Bonds used to pay (1) the costs of issuance of the Securitization Bonds and all other up-front qualified costs permitted by the Financing Order and (2) the purchase price of the Securitization Property pursuant to the Sale Agreement, (j) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing and (k) all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, general intangibles, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condem nation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing (collectively, the "Collateral"). Such Grants are made to the Trustee to have and to hold in trust to secure the payment of principal of, and interest on, and any other amounts owing in respect of, the Securitization Bonds and all fees, expenses, counsel fees and other amounts due and owing to the Trustee and, if and to the extent provided in any Series Supplement, any amounts due and owing to any Swap Counterparty (collectively, the "Secured Obligations"), equally and ratably without prejudice, preference, priority or distinction, except as expressly provided in this Indenture and to secure performance by the Issuer of all of the Issuer's obligations under this Indenture with respect to the Securitization Bonds, all as provided in this Indenture. The Trustee, as trustee on behalf of the Holders of the Securitization Bonds, acknowledges such Grant, accepts the trusts hereunder in accordance with the provisions hereof and agrees to perform its duties herein required. ARTICLE I Definitions and Incorporation by Reference SECTION 1.01 Definitions. Capitalized terms used but not otherwise defined in this Indenture have the respective meanings set forth in Appendix A hereto unless the context otherwise requires. SECTION 1.02 Incorporation by Reference of the Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. Each of the following TIA terms used in this Indenture has the following meaning: "Commission" means the Securities and Exchange Commission. "indenture securities" means the Securitization Bonds. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule have the meaning assigned to them by such definitions. SECTION 1.03 Rules of Construction. (a) An accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time; (b) "including" means including without limitation; (c) with respect to terms defined in Appendix A hereto, words in the singular include the plural and words in the plural include the singular; (d) unless otherwise specified, references herein to Sections or Articles are to Sections or Articles of this Indenture; and (e) the words "herein", "hereof", "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. ARTICLE II The Securitization Bonds SECTION 2.01 Form. (a) The Securitization Bonds and the Trustee's certificate of authentication shall be in substantially the forms set forth in Exhibit A to the related Series Supplement, with such appropriate insertions, omissions, substitutions and other varia tions as are required or permitted by this Indenture or by the related Series Supplement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the Managers of the Issuer executing such Securitization Bonds, as evidenced by their execution of such Securitization Bonds. Any portion of the text of any Securitization Bond may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Securitization Bond. Each Securitization Bond shall be dated the date of its authentication. (b) The Securitization Bonds shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the Managers of the Issuer executing such Securitization Bonds, as evidenced by their execution of such Securitization Bonds. (c) Each Securitization Bond shall bear upon its face the designation so selected for the Series and Class, if any, to which it belongs. The terms of all Securitization Bonds of the same Series shall be the same, unless such Series is comprised of one or more Classes, in which case the terms of all Securitization Bonds of the same Class shall be the same. (d) Each Securitization Bond shall state that under the Customer Choice Act the State of Michigan pledges, for the benefit and protection of the Holders of the Securitization Bonds, other persons acting for the benefit of a Holder and Consumers, that it will not take or permit any action that would impair the value of the Securitization Property, reduce or alter, except as allowed under section 10k(3) of the Customer Choice Act with respect to periodic adjustments of the Securitization Charges, or impair the Securitization Charges to be imposed, collected, and remitted to\the Trustee, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the Securitization Bonds have been paid and performed in full. The Issuer is authorized to include this pledge in any documen tation relating to the Securitization Bonds. SECTION 2.02 Execution, Authentication and Delivery. (a) The Securitiza tion Bonds shall be executed on behalf of the Issuer by a Manager. The signature of any such Manager on the Securitization Bonds may be manual or facsimile. (b) Securitization Bonds bearing the manual or facsimile signature of individuals who were at any time Managers shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securitization Bonds. (c) At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Securitization Bonds executed on behalf of the Issuer to the Trustee pursuant to an Issuer Order for authentication; and the Trustee shall authenticate and deliver such Securitization Bond as in this Indenture provided and not otherwise. (d) No Securitization Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Securitization Bond a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Securitization Bond shall be conclusive evidence, and the only evidence, that such Securiti zation Bond has been duly authenticated and delivered hereunder. (e) To the extent any of the Securitization Bonds are listed on the Luxem bourg Stock Exchange and the rules and regulations of such exchange so require, a transfer or other agent appointed pursuant to Section 3.02(b) shall be authorized on behalf of the Trustee to execute and deliver such certificate of authentication. SECTION 2.03 Denominations; Securitization Bonds Issuable in Series. (a) The Securitization Bonds of each Series shall be issuable as registered Securitization Bonds in the Authorized Denominations specified in the Series Supplement therefor. (b) The Securitization Bonds may, at the election of and as authorized by a Manager and set forth in a Series Supplement, be issued in one or more Series (each of which may be comprised of one or more Classes), and shall be designated generally as the "Securitiza tion Bonds" of the Issuer, with such further particular designations added or incorporated in such title for the Securitization Bonds of any particular Series or Class as a Manager of the Issuer may determine and be set forth in the Series Supplement therefor. (c) Each Series of Securitization Bonds shall be created by a Series Supple ment authorized by a Manager and establishing the terms and provisions of such Series and, if applicable, any Classes thereof. The several Series and any Classes thereof may differ as between Series and Classes, in respect of any of the following matters: (i) designation of the Series and each Class thereof; (ii) the aggregate initial principal amount of the Securitization Bonds of the Series and each Class thereof; (iii) the Interest Rate of the Series and each Class thereof or the formula, if any, used to calculate the applicable Interest Rate or Interest Rates for the Series and each Class thereof; (iv) the Payment Dates of the Series and each Class thereof; (v) the Expected Final Payment Date of the Series and each Class thereof; (vi) the Final Maturity Date of the Series and each Class thereof; (vii) the Series Issuance Date of the Series; (viii) the place or places for payments with respect to the Series and each Class thereof; (ix) the Authorized Denominations for the Series and each Class thereof; (x) the provisions, if any, for redemption by the Issuer of the Series and each Class thereof; (xi) the Expected Amortization Schedule for the Series and each Class thereof; (xii) the Overcollateralization Amount with respect to the Series; (xiii) the Required Capital Amount with respect to the Series; (xiv) the Calculation Dates and Adjustment Dates for the Series; (xv) the credit enhancement, if any, applicable to the Series and each Class thereof; and (xvi) any other terms of the Series or each Class that are not inconsistent with the provisions of this Indenture. SECTION 2.04 Temporary Securitization Bonds. (a) Pending the prepara tion of definitive Securitization Bonds pursuant to Section 2.13 or in the case of Securitization Bonds held in a book-entry only system by a Clearing Agency, a Manager on behalf of the Issuer may execute, and upon receipt of an Issuer Order the Trustee shall authenticate and deliver, temporary Securitization Bonds which are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the definitive Securitization Bonds in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture as the Manager executing such Securitization Bonds may determine, as evidenced by their execution of such Securitization Bonds. (b) If temporary Securitization Bonds are issued, the Issuer will cause definitive Securitization Bonds to be prepared without unreasonable delay except where temporary Securitization Bonds are held by a Clearing Agency. After the preparation of definitive Securitization Bonds, the temporary Securitization Bonds shall be exchangeable for definitive Securitization Bonds upon surrender of the temporary Securitization Bonds at the office or agency of the Issuer to be maintained as provided in Section 3.02, without charge to any Holder. Upon surrender for cancellation of any one or more temporary Securitization Bonds, a Manager on behalf of the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefor a like Series (and if applicable, Class) and aggregate initial principal amount of definitive Securitization Bonds in Authorized Denominations. Until so exchanged, the temporary Securitization Bonds shall in all respects be entitled to the same benefits under this Indenture as definitive Securitization Bonds. SECTION 2.05 Registration; Registration of Transfer and Exchange. (a) The Issuer shall cause to be kept a register (the "Securitization Bond Register") in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Securitization Bonds and the registration of transfers of Securitization Bonds. The Trustee shall be the registrar (the Trustee or any successor thereof in such capacity, the "Securitization Bond Registrar") for the purpose of registering Securitization Bonds and transfers of Securitization Bonds as herein provided. Upon any resignation of any Securitization Bond Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Securitization Bond Registrar. (b) If a Person other than the Trustee is appointed by the Issuer as Securitiza tion Bond Registrar, the Issuer shall give the Trustee and any transfer, paying or listing agent of the Issuer appointed pursuant to Section 3.02(b) prompt written notice of the appointment of such Securitization Bond Registrar and of the location, and any change in the location, of the Securitization Bond Register; the Trustee and any such agent shall have the right to inspect the Securitization Bond Register at all reasonable times and to obtain copies thereof; and the Trustee and any such agent shall have the right to rely upon a certificate executed on behalf of the Securitization Bond Registrar by a duly authorized officer thereof as to the names and addresses of the Holders of the Securitization Bonds and the original and Outstanding principal amounts and number of such Securitization Bonds (separately stated by Series and, if applicable, Class). (c) Upon surrender for registration of transfer of any Securitization Bond at the office or agency of the Issuer to be maintained as provided in Section 3.02, a Manager on behalf of the Issuer shall execute, and the Trustee shall authenticate and the Securitization Bondholder shall obtain from the Trustee, in the name of the designated transferee or transferees, one or more new Securitization Bonds in any Authorized Denominations, of a like Series (and, if applicable, Class) and aggregate initial principal amount. (d) At the option of the Holder, Securitization Bonds may be exchanged for other Securitization Bonds of a like Series (and, if applicable, Class) and aggregate initial principal amount in Authorized Denominations, upon surrender of the Securitization Bonds to be exchanged at such office or agency as provided in Section 3.02. Whenever any Securitization Bonds are so surrendered for exchange, a Manager on behalf of the Issuer shall execute, and the Trustee shall authenticate and the Securitization Bondholder shall obtain from the Trustee, the Securitization Bonds which the Securitization Bondholder making the exchange is entitled to receive. (e) All Securitization Bonds issued upon any registration of transfer or exchange of Securitization Bonds shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securitization Bonds surrendered upon such registration of transfer or exchange. (f) Every Securitization Bond presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in such form as is satisfactory to the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing, with such signature guaranteed by an Eligible Guarantor Institution in the form set forth in such Securitization Bond. (g) No service charge shall be made to a Holder for any registration of transfer or exchange of Securitization Bonds (except as may be required by the rules and regulations of the Luxembourg Stock Exchange with respect to any Securitization Bonds listed thereon), but, other than in respect of exchanges pursuant to Sections 2.04 or 9.06 not involving any transfer, the Issuer may require payment by such Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securitization Bonds, including the fees and expenses of the Trustee. (h) The preceding provisions of this Section 2.05 notwithstanding, except to the extent otherwise required by the rules and regulations of the Luxembourg Stock Exchange with respect to any Securitization Bonds listed thereon, the Issuer shall not be required to make, and the Securitization Bond Registrar need not register, transfers or exchanges of Securitization Bonds selected for redemption or transfers or exchanges of any Securitization Bond for a period of fifteen (15) days preceding the date on which final payment of principal is to be made with respect to such Securitization Bond. SECTION 2.06 Mutilated, Destroyed, Lost or Stolen Securitization Bonds. (a) If (i) any mutilated Securitization Bond is surrendered to the Trustee, or the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Securitization Bond, and (ii) there is delivered to the Trustee such security or indemnity as may be required by it to hold the Issuer and the Trustee harmless, then, in the absence of notice to the Issuer, the Securitization Bond Registrar or the Trustee that such Securitization Bond has been acquired by a protected purchaser, a Manager on behalf of the Issuer shall execute, and upon a Manager's request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Securitization Bond, a replacement Securitization Bond of like Series (and, if applicable, Class), tenor and initial principal amount in an Authorized Denomination, bearing a number not contemporaneously outstanding; provided, however, that if any such destroyed, lost or stolen Securitization Bond, but not a mutilated Securitization Bond, shall have become or within seven days shall be due and payable, or shall have been called for redemption, instead of issuing a replacement Securitization Bond, the Issuer may pay such destroyed, lost or stolen Securitization Bond when so due or payable or upon the Redemption Date without surrender thereof. Upon issuance of any substituted Securitization Bond, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other related expenses. If, after the delivery of such replacement Securitization Bond or payment of a destroyed, lost or stolen Securitization Bond pursuant to the proviso to the preceding sentence, a protected purchaser of the original Securitization Bond in lieu of which such replacement Securitization Bond was issued presents for payment such original Securitization Bond, the Issuer and the Trustee shall be entitled to recover such replacement Securitization Bond (or such payment) from the Person to whom it was delivered or any Person taking such replacement Securitization Bond from such Person to whom such replacement Securitization Bond was delivered or any assignee of such Person, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Trustee in connection therewith. (b) Every replacement Securitization Bond issued pursuant to this Section 2.06 in replacement of any mutilated, destroyed, lost or stolen Securitization Bond shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Securitization Bond shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securitization Bonds duly issued hereunder. (c) The provisions of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securitization Bonds. SECTION 2.07 Persons Deemed Owner. Prior to due presentment for registration of transfer of any Securitization Bond, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name any Securitization Bond is registered (as of the day of determination) as the owner of such Securitization Bond for the purpose of receiving payments of principal of and interest on such Securitization Bond and for all other purposes whatsoever, whether or not such Securitization Bond be overdue, and neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall be affected by notice to the contrary. SECTION 2.08 Payment of Principal and Interest; Interest on Overdue Principal; Principal and Interest Rights Preserved. (a) The Securitization Bonds shall accrue interest as provided in the form of Securitization Bond attached to the Series Supplement for such Securitization Bonds, at the applicable Interest Rate specified therein, and such interest shall be payable on each Payment Date as specified therein. Any instalment of interest or principal payable on any Securitization Bond which is punctually paid or duly provided for by the Issuer on the applicable Payment Date shall be paid to the Person in whose name such Securitization Bond (or one or more Predecessor Securitization Bonds) is registered on the Record Date for such Payment Date, in the manner specified in the related Series Supplement, and if not specified therein, either (i) by check mailed first-class, postage prepaid to such Person's address as it appears on the Securitization Bond Register on such Record Date or (ii) with respect to Securitization Bonds registered on a Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee, except for the final instalment of principal payable with respect to such Securitization Bond on a Payment Date, which shall be payable as provided in clause (b) below. The funds represented by any such checks or other amounts returned undelivered shall be held in accordance with Section 3.03. (b) The principal of each Securitization Bond of each Series (and, if applica ble, Class) shall be payable in instalments on each Payment Date specified in the Expected Amortization Schedule included in the form of Securitization Bond attached to the Series Supplement for such Securitization Bonds, but only to the extent that moneys are available for such payment pursuant to Section 8.02. Failure to pay in accordance with such Expected Amortization Schedule because moneys are not so available pursuant to Section 8.02 to make such payments shall not constitute a Default or Event of Default under this Indenture. Notwith standing the foregoing, the entire Outstanding principal amount of the Securitization Bonds of any Series or Class shall be due and payable, if not previously paid, either: (i) on the Final Maturity Date therefor, (ii) on the date on which the Securitization Bonds of all Series have been declared immediately due and payable in accordance with Section 5.02 or (iii) on the Redemp tion Date, if any, therefor. The Trustee shall notify the Person in whose name a Securitization Bond is registered, and any other Person required under the relevant Series Supplement, at the close of business on the Record Date preceding the Payment Date on which the Issuer expects that the final instalment of principal of and interest on such Securitization Bond will be paid. Such notice shall be mailed no later than ten (10) days prior to such final Payment Date and shall specify that such final instalment of principal will be payable only upon presentation and surrender of such Securitization Bond and shall specify the place where such Securitization Bond may be presented and surrendered for payment of such instalment, which, so long as any Securitization Bonds are listed on the Luxembourg Stock Exchange, shall include the office of the paying agent in Luxembourg appointed pursuant to Section 3.02(b). The Trustee shall also arrange for such notice to be published in an Authorized Newspaper, not later than the fifth day of the month of the expected payment of such final instalment. Notices in connection with redemptions of Securitization Bonds also shall be mailed to Securitization Bondholders as provided in Section 10.03. (c) If the Issuer defaults in a payment of interest on the Securitization Bonds of any Series, or in a default of any amount payable to any Swap Counterparty, the Issuer shall pay defaulted interest, plus interest on such defaulted interest at the applicable Interest Rate in any lawful manner (subject to the availability of such amounts in the related Class Subaccount, in the case of interest owed with respect to any Securitization Bonds which have a floating rate of interest). The Issuer may pay such defaulted interest to the Persons who are Securitization Bondholders and to any Swap Counterparty, as applicable, at the rate specified in the related Series Supplement or Interest Rate Swap Agreement, respectively, on a subsequent special record date, which date shall be at least five Business Days prior to the payment date. The Issuer shall fix or cause to be fixed any such special record date and payment date, and, at least fifteen (15) days before any such special record date, the Issuer shall mail to each affected Securitization Bondholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. SECTION 2.09 Cancellation. All Securitization Bonds surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by the Trustee. The Issuer may at any time deliver to the Trustee for cancellation any Securitization Bonds previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Securitization Bonds so delivered shall be promptly canceled by the Trustee. No Securitization Bonds shall be authenticated in lieu of or in exchange for any Securitization Bonds canceled as provided in this Section 2.09, except as expressly permitted by this Indenture. All canceled Securitization Bonds may be held or disposed of by the Trustee in accordance with its standard retention or disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to it; provided that such Issuer Order is timely and the Securitization Bonds have not been previously disposed of by the Trustee. SECTION 2.10 Amount; Authentication and Delivery of Securitization Bonds. (a) The aggregate principal amount of Securitization Bonds that may be authenticated and delivered under this Indenture shall not exceed $468,592,000 plus the amount of any Refunding Issuance. The Issuer may issue Securitization Bonds of a new Series as a Financing Issuance or a Refunding Issuance. (b) Securitization Bonds of a new Series may from time to time be executed by a Manager on behalf of the Issuer and delivered to the Trustee for authentication and thereupon the same shall be authenticated and delivered by the Trustee upon Issuer Request and upon delivery by the Issuer, at the Issuer's expense, to the Trustee of the following: (i) Trust Action. An Issuer Order authorizing and directing the authentication and delivery of the Securitization Bonds by the Trustee and specifying the principal amount of Securitization Bonds to be authenticated. (ii) Authorizing Certificate. A certified resolution of the Managers authorizing the execution and delivery of the Series Supplement for the Securitization Bonds applied for and the execution, authentication and delivery of such Securitization Bonds. (iii) Series Supplement. A Series Supplement for the Series of Securitization Bonds being issued, which shall set forth the provisions and form of the Securitization Bonds of such Series (and, if applicable, each Class thereof). (iv) Certificates of the Issuer and the Seller. (A) An Issuer Officer's Certificate dated as of the Series Issuance Date, stating: (1) that no Default has occurred and is continuing under this Indenture and that the issuance of the Securitization Bonds being issued will not result in any Default; (2) that the Issuer has not assigned any interest or participation in the Collateral except for the Grant contained in this Indenture; that the Issuer has the power and authority to Grant the Collat eral to the Trustee as security hereunder; and that the Issuer, subject to the terms of this Indenture, has Granted to the Trustee a perfected security interest in all right, title and interest in, to and under the Collateral free and clear of any Lien, except the Lien of this Indenture; (3) that the Issuer has appointed the firm of independ ent certified public accountants as contemplated in Section 8.05; (4) that attached thereto are duly executed, true and complete copies of the Sale Agreement and the Servicing Agreement; (5) that all Delaware UCC and Michigan UCC financ ing statements with respect to the Collateral which are required to be filed by the terms of the Sale Agreement, the Servicing Agreement or this Indenture will be filed as required; and (6) that all conditions precedent provided in this Inden ture relating to the authentication and delivery of the Securitization Bonds have been complied with. (B) An Officer's Certificate from the Seller, dated as of the Series Issuance Date, to the effect that, in the case of the Securitization Property to be transferred to the Issuer on such date, immediately prior to the conveyance thereof to the Issuer pursuant to the Sale Agreement: (1) the Seller was the sole owner of such Securitization Property and such ownership interest was perfected; such Securitization Property will be validly transferred and sold to the Issuer free and clear of all Liens (other than Liens created by the Issuer pursuant to this Indenture) and such transfer will be perfected; the Seller has the power and authority to own, sell and assign such Securitization Property to the Issuer; the Seller has duly authorized such sale and assignment to the Issuer; and the Seller has its chief executive office in the State of Michigan; and (2) the attached copy of the Financing Order creating such Securitization Property is true and correct and is in full force and effect; and (v) Issuer Opinion of Counsel. An Issuer Opinion of Counsel, portions of which may be delivered by counsel for the Issuer and portions of which may be delivered by counsel for the Seller and/or the Servicer, dated as of the Series Issuance Date, subject to customary qualifications, to the collective effect, subject to customary qualifications and exceptions that: (A) the Issuer has the power and authority to execute and deliver the Series Supplement and this Indenture and to issue the Securitization Bonds being issued, each of the Series Supplement and this Indenture and such Securitization Bonds have been duly authorized, executed and delivered, and the Issuer is duly organized, is validly existing as a limited liability company and in good standing under the laws of the jurisdiction of its organization and is in good standing in any jurisdiction where it is required to be qualified; (B) no authorization, approval or consent of any governmental body is required for the valid issuance, authentication or delivery of such Securiti zation Bonds, except for any such authorization, approval or consent as has already been obtained and such registrations as are required under the Blue Sky and securities laws of any State; (C) the Securitization Bonds being issued, when executed, and authenticated in accordance with the provisions of this Indenture and delivered, will constitute valid and binding obligations of the Issuer entitled to the benefits of this Indenture and the related Series Supplement; (D) the Financing Order is final and non-appealable; (E) this Indenture (including the related Series Supplement), the Sale Agreement and the Servicing Agreement have been duly authorized, executed and delivered by the Issuer and constitute the legal, valid and binding agreements of the Issuer, enforceable against the Issuer in accordance with their respective terms except as such enforceability may be subject to bankruptcy, insolvency, reorganization and other similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (F) the Sale Agreement has been duly authorized, executed and delivered by the Seller and constitutes the legal, valid and binding agreement of the Seller, enforceable against the Seller in accordance with its terms except as such enforceability may be subject to bankruptcy, insolvency, reorganization and other similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law); (G) the Servicing Agreement has been duly authorized, exe cuted and delivered by the Servicer and constitutes the legal, valid and binding agreement of the Servicer, enforceable against the Servicer in accordance with its terms except as such enforceability may be subject to bankruptcy, insolvency, reorganization and other similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law); (H) (1) the provisions of the Sale Agreement together with the Bill of Sale are effective to create, in favor of the Issuer, a valid security interest (as such term is defined in the Michigan UCC) in the Seller's rights in the Securitization Property described in the Bill of Sale, which security interest if characterized as a transfer for security will secure the amount paid by the Issuer for such Transferred Securitization Property; it being noted that the term "security interest" includes both a sale and a transfer for security of an account and no opinion is expressed as to the proper characterization of the transfer of the Transferred Securitization Property by the Seller to the Issuer; (2) the security interest in favor of the Issuer in the Transferred Securitization Property has been perfected; and (3) the UCC search reports for the Issuer and for Consumers identifies no person as having filed in the Filing Office a financing statement naming either Consumers Energy Company or Con sumers Funding LLC as debtor and containing a description of collateral sufficient to include the Collateral as of the effective date of the Search Report; and (I) (1) this Indenture creates in favor of the Trustee, to secure payment of the Secured Obligations, a valid security interest in the rights of the Issuer in, to and under that portion of the Collateral subject to Article 8 or Article 9 of the Michigan UCC, including the Securitization Property, (2) upon filing of the related financing statements in accordance with the Michigan UCC and the Delaware UCC, such security interest will be perfected, and (3) the UCC search reports for the Issuer and for Consumers identifies no person as having filed in the Filing Office a financing statement naming either Consumers Energy Company or Con sumers Funding LLC as debtor and containing a description of collateral sufficient to include the Collateral as of the effective date of the Search Report; (J) this Indenture has been duly qualified under the Trust Indenture Act and either the Series Supplement for the Securitization Bonds applied for has been duly qualified under the Trust Indenture Act or no such qualification of such Series Supplement is necessary; (K) either (1) the registration statement covering the Securitiza tion Bonds is effective under the Securities Act of 1933 and, to the best of such counsel's knowledge and information, no stop order suspending the effectiveness of such registration statement has been issued under the Securities Act of 1933 nor have proceedings therefor been instituted or threatened by the Commission or (2) the Securitization Bonds are exempt from the registration requirements under the Securities Act of 1933; and (L) the Issuer is not now and, following the issuance of the Securitization Bonds will not be, required to be registered under the Investment Company Act of 1940, as amended. (vi) Accountant's Certificate or Opinion. A letter addressed to the Issuer and the Trustee complying with the requirements of Section 11.01, of a firm of Independent certified public accountants of recognized national reputation to the effect that (A) such accountants are Independent with respect to the Issuer within the meaning of this Indenture, and are independent public accountants within the meaning of the standards of The American Institute of Certified Public Accountants, and (B) with respect to the Collateral, they have made certain specified recalculations of calculations and information provided by the Issuer for the purpose of determining that, based on certain specified assumptions used in calculating the Securitization Charge with respect to the related Transferred Securitization Property, as of the Series Issuance Date for such Series, the Securitization Charge will be sufficient to pay as of each Payment Date taking into account any amounts on deposit in the reserve subaccount: (1) assumed Operating Expenses when incurred, plus (2) the Overcollateralization Amount for such Series set forth in the Prospectus (as such term is defined in the Underwriting Agreement), plus (3) interest on the Securitization Bonds at their respective Interest Rates when due as set forth in the Final Prospectus, plus (4) principal of the Securitization Bonds in accordance with the Expected Amortization Schedule set forth in the Final Prospectus, and found such calculations to be mathematically correct. (vii) Required Capital Amount. Evidence satisfactory to the Trustee that the Required Capital Amount for such Series has been credited to the Capital Subaccount for such Series, provided that in the case of the initial Series of Securitization Bonds, $100,000 of the Required Capital Amount for such Series shall have been deposited to the credit of the Capital Reserve Subaccount. (viii) Rating Agency Condition. Written notice from each Rating Agency that such action will not result in a reduction or withdrawal of the then current rating by such Rating Agency of any Outstanding Series or Class of Securitization Bonds. (ix) Bill of Sale. If the issuance of an additional Series of Securitiza tion Bonds is a Financing Issuance, the Bill of Sale delivered to the Issuer under the Sale Agreement with respect to the Securitization Property being purchased with the proceeds of such Financing Issuance. (x) Moneys for Refunding. If the issuance of a Series of Securitization Bonds is a Refunding Issuance, the amount of money necessary to pay the outstanding principal balance of and interest on the Securitization Bonds being refunded to the Redemption Date for the Securitization Bonds being refunded upon redemption, such money to be deposited into a separate account with the Trustee. SECTION 2.11 Book-Entry Securitization Bonds. Unless otherwise specified in the related Series Supplement, each Series of Securitization Bonds, upon original issuance, will be issued in the form of a typewritten Securitization Bond or Securitization Bonds representing the Book-Entry Securitization Bonds, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Issuer. Such Securitization Bond shall initially be registered on the Securitization Bond Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Securitization Bond Owner will receive a definitive Securitization Bond representing such Securitization Bond Owner's interest in such Securitization Bond, except as provided in Section 2.13. Unless and until definitive, fully registered Securitization Bonds (the "Definitive Securitization Bonds") have been issued to Securitization Bondholders pursuant to Section 2.13: (a) the provisions of this Section 2.11 shall be in full force and effect; (b) the Securitization Bond Registrar and the Trustee shall be entitled to deal with the Clearing Agency for all purposes of this Indenture (including the payment of principal of and interest on the Securitization Bonds and the giving of instructions or directions hereunder) as the sole Holder of the Securitization Bonds, and shall have no obligation to the Securitization Bond Owners; (c) to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section shall control; (d) the rights of Securitization Bond Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Securitization Bond Owners and the Clearing Agency or the Clearing Agency Participants. Pursuant to the DTC Agreement, unless and until Definitive Securitization Bonds are issued pursuant to Section 2.13, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments of principal of and interest on the Securitization Bonds to such Clearing Agency Participants; and (e) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Holders of Securitization Bonds evidencing a specified percentage of the Outstanding Amount of the Securitization Bonds or a Series or Class thereof, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Securitization Bond Owners or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Securitization Bonds or such Series or Class and has delivered such instructions to the Trustee. SECTION 2.12 Notices to Clearing Agency. Whenever a notice or other communication to the Securitization Bondholders is required under this Indenture, unless and until Definitive Securitization Bonds shall have been issued to Securitization Bond Owners pursuant to Section 2.13, the Trustee shall give all such notices and communications specified herein to be given to Securitization Bondholders to the Clearing Agency, and shall have no obligation to the Securitization Bond Owners. SECTION 2.13 Definitive Securitization Bonds. (a) If (i) the Issuer advises the Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities as depository with respect to any Series or Class of Securitization Bonds and the Issuer is unable to locate a qualified successor, (ii) the Issuer, at its option, advises the Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency with respect to any Series or Class of Securitization Bonds or (iii) after the occurrence of an Event of Default, Securitization Bond Owners representing beneficial interests aggregating at least a majority of the Outstanding Amount of the Securitization Bonds of all Series advise the Trustee through the Clearing Agency in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Securitization Bond Owners, then the Clearing Agency shall notify all affected Securitization Bond Owners and the Trustee of the occurrence of any such event and of the availability of Definitive Securitization Bonds to affected Securitization Bond Owners requesting the same. Upon surrender to the Trustee of the typewritten Securitization Bond or Securitization Bonds representing the Book-Entry Securitiza tion Bonds by the Clearing Agency, accompanied by registration instructions, a Manager on behalf of the Issuer shall execute and the Trustee shall authenticate the Definitive Securitization Bonds upon receipt of an Issuer Order registered in such names and in such denominations in accordance with the instructions of the Clearing Agency. None of the Issuer, the Securitization Bond Registrar or the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Any Definitive Securitization Bonds listed on the Luxembourg Stock Exchange shall be made available to the Securitization Bond Owners through the office of the transfer agent appointed pursuant to Section 3.02(b). Upon the issuance of Definitive Securitization Bonds, the Trustee shall recognize the Holders of the Definitive Securitization Bonds as Securitization Bondholders. (b) Definitive Securitization Bonds will be transferable and exchangeable at the offices of the Securitization Bond Registrar or, with respect to any Securitization Bonds listed on the Luxembourg Stock Exchange, at the offices of the transfer agent appointed pursuant to Section 3.02(b). With respect to any transfer of such listed Securitization Bonds, the new Definitive Securitization Bonds registered in the names specified by the transferee and the original transferor shall be available at the offices of such transfer agent. ARTICLE III Covenants SECTION 3.01 Payment of Principal and Interest. The Issuer will duly and punctually pay the principal of and interest on the Securitization Bonds in accordance with the terms of the Securitization Bonds and this Indenture; provided that except on the Final Maturity Date or the Redemption Date for a Series or Class of Securitization Bonds or upon the accelera tion of the Securitization Bonds pursuant to Section 5.02, the Issuer shall only be obligated to pay the principal of such Securitization Bonds on each Payment Date therefor to the extent moneys are available for such payment pursuant to Section 8.02. Amounts properly withheld under the Code by any Person from a payment to any Securitization Bondholder of interest or principal shall be considered as having been paid by the Issuer to such Securitization Bondholder for all purposes of this Indenture. SECTION 3.02 Maintenance of Office or Agency. (a) The Issuer will maintain in the Borough of Manhattan, the City of New York, an office or agency where Securitization Bonds may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Securitization Bonds and this Indenture may be served. The Issuer hereby initially appoints the Trustee to serve as its agent for the foregoing purposes. The Issuer will give prompt written notice to the Trustee and any agent appointed pursuant to clause (b) below of the location and identity, and of any change in the location or identity, of any such office or agency. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Trustee and each such agent with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its agent to receive all such surrenders, notices and demands. (b) To the extent any of the Securitization Bonds are listed on the Luxem bourg Stock Exchange and the rules of such exchange so require, (i) the Issuer will maintain in Luxembourg (A) an office and a transfer agent where Securitization Bonds may be surrendered for registration of transfer or exchange, (B) an office and a listing agent where notices and demands to or upon the Issuer in respect of the Securitization Bonds and this Indenture may be served, and (C) an office and a paying agent where payments in respect of the Securitization Bonds may be made and (ii) any reference in this Indenture to the office or agency of the Issuer referenced in Section 3.02(a) or 3.02(b) shall also refer to such offices, and the transfer, listing and paying agents, of the Issuer in Luxembourg, as applicable. The Issuer shall give the Trustee and any other agent appointed under this Section 3.02(b) prompt written notice of the location and identity, and of any change in the location or identity, of any such office or agency. SECTION 3.03 Money for Payments To Be Held in Trust. (a) As provided in Section 8.02(a), all payments of principal of and interest on the Securitization Bonds that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.02(g), or Section 4.03 shall be made on behalf of the Issuer by the Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account for payments of Securitization Bonds shall be paid over to the Issuer except as provided in this Section 3.03 and in Section 8.02. (b) The Issuer shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.03, that such Paying Agent will: (i) hold all sums held by it for the payment of principal of or interest on the Securitization Bonds in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided; (ii) give the Trustee notice of any Default by the Issuer (or any other obligor upon the Securitization Bonds) of which the Paying Agent has actual knowledge in the making of any payment required to be made with respect to the Securitization Bonds; (iii) at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; (iv) immediately resign as a Paying Agent and forthwith pay to the Trustee all sums held by the Paying Agent in trust for the payment of Securitization Bonds if at any time the Paying Agent ceases to meet the standards required to be met by a Paying Agent at the time of its appointment; and (v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Securitization Bonds of any applicable withholding taxes imposed thereon and with respect to any applicable reporting require ments in connection therewith. (c) The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. (d) Subject to applicable laws with respect to escheat of funds or other applicable abandoned property laws, any money held by the Trustee or any Paying Agent in trust for the payment of any amount of principal of or interest on any Securitization Bond and remaining unclaimed for two years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer; and the Holder of such Securitization Bond shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the City of New York, and in an Authorized Newspaper, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The Trustee may also adopt and employ, at the expense of the Issuer, any other reason able means of notification of such repayment (including mailing notice of such repayment to Holders whose Securitization Bonds have been called but have not been surrendered for redemption or whose right to or interest in moneys due and payable but not claimed is determina ble from the records of the Trustee or of any Paying Agent, at the last address of record for each such Holder). SECTION 3.04 Existence. Subject to Section 3.10, the Issuer shall keep in full effect its existence, rights and franchises as a statutory limited liability company under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Securitization Bonds, the Collateral and each other instrument or agreement included therein. SECTION 3.05 Protection of Collateral. (a) The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all such filings, financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable to: (i) maintain and preserve the Grant, Lien and security interest (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof; (ii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture; (iii) enforce any of the Collateral, including any Interest Rate Swap Agreement; (iv) preserve and defend title to the Collateral and the rights of the Trustee and the Securitization Bondholders in the Collateral against the claims of all Persons and parties; or (v) pay any and all taxes levied or assessed upon all or any part of the Collateral. (b) The Issuer hereby designates the Trustee its agent and attorney-in-fact to execute any filing with the MPSC, financing statement, continuation statement or other instru ment required by the Trustee pursuant to this Section 3.05. SECTION 3.06 Opinions as to Collateral. (a) On or before March 31 in each calendar year, while any Series is outstanding, commencing March 31, 2002, the Issuer shall furnish to the Trustee an Issuer Opinion of Counsel either (i) stating that, in the opinion of such counsel, such action has been taken with respect to the execution and filing of any filings pursuant to the Michigan UCC and the Delaware UCC of financing statements and continuation statements as is necessary to maintain the Lien and security interest, and the perfection thereof, created by this Indenture and reciting the details of such action or (ii) stating that in the opinion of such counsel no such action is necessary to maintain such Grant, Lien and security interest, and the perfection thereof. Such Issuer Opinion of Counsel shall also describe the execution and filing of any filings pursuant to the Michigan UCC and the Delaware UCC of financing statements and continuation statements that will, in the opinion of such counsel, be required to maintain the Grant, Lien and security interest of this Indenture until March 31 in the following calendar year. (b) Prior to the effectiveness of any amendment to the Sale Agreement, the Servicing Agreement or this Indenture, the Issuer shall furnish to the Trustee an Issuer Opinion of Counsel either (i) stating that, in the opinion of such counsel, all filings, including filings pursuant to the Michigan UCC and the Delaware UCC, have been executed and filed that are necessary fully to preserve and protect the interest of the Issuer and the Trustee in the Transferred Securitization Property and the proceeds thereof, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (ii) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. SECTION 3.07 Performance of Obligations. (a) The Issuer (i) shall diligently pursue any and all actions to enforce its rights under each instrument or agreement included in the Collateral and (ii) shall not take any action and will use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person's covenants or obligations under any such instrument or agreement or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except, in each case, as expressly provided in this Indenture, the Sale Agreement, the Servicing Agreement, any Interest Rate Swap Agree ment, the Intercreditor Agreement or any other Basic Document. (b) The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Trustee in an Issuer Officer's Certificate shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Administrator to assist the Issuer in performing its duties under this Indenture. (c) The Issuer shall punctually perform and observe in all material respects all of its obligations and agreements contained in the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement, any Interest Rate Swap Agreement and in all other instruments and agreements included in the Collateral. SECTION 3.08 Negative Covenants. The Issuer shall not: (a) except as expressly permitted by this Indenture, the Sale Agreement, the Servicing Agreement, any Interest Rate Swap Agreement, the Intercreditor Agreement or any other Basic Document, sell, transfer, exchange or otherwise dispose of any of the Collateral, unless directed to do so by the Trustee in accordance with Article V; (b) claim any credit on, or make any deduction from the principal or interest payable in respect of, the Securitization Bonds (other than amounts properly withheld from such payments under the Code or pursuant to any Interest Rate Swap Agreement) or assert any claim against any present or former Securitization Bondholder by reason of the payment of taxes levied or assessed upon the Issuer or any part of the Collateral; (c) (i) permit the validity or effectiveness of this Indenture to be impaired, or permit the Lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Securitization Bonds under this Indenture except as may be expressly permitted hereby, (ii) permit any Lien (other than the Lien created by this Indenture) to be created on or extend to or otherwise arise upon or burden the Collateral or any part thereof, any interest therein or the proceeds thereof or (iii) permit the Lien of this Indenture not to constitute a continuing valid first priority security interest in the Collateral; or (d) take any action with respect to which notice is required to be given to the Rating Agencies in order to satisfy the Rating Agency Condition if the Issuer or the Trustee has received notice from any Rating Agency that such action would result in a reduction or with drawal of the then current rating by such Rating Agency of any Outstanding Series or Class of Securitization Bonds. SECTION 03.09 Annual Statement as to Compliance. The Issuer will deliver to the Trustee, within 120 days after the end of each fiscal year of the Issuer (commencing with the fiscal year 2001), an Issuer Officer's Certificate stating, as to the Manager signing such Issuer Officer's Certificate, that (a) a review of the activities of the Issuer during such year (or relevant portion thereof) and of performance under this Indenture has been made under such Manager's supervi sion; and (b) to the best of such Manager's knowledge, based on such review, the Issuer has complied with all conditions and covenants under this Indenture throughout such calendar year (or relevant portion thereof), or, if there has been a default in complying with any such condition or covenant, describing each such default and the nature and status thereof. SECTION 03.10 Issuer May Consolidate, etc., Only on Certain Terms. The Issuer shall not consolidate or merge with or into any other Person or sell substantially all of its assets to any other Person or dissolve, unless: (a) the Person (if other than the Issuer) formed by or surviving such consoli dation or merger or to whom substantially all of such assets are sold shall be a Person organized and existing under the laws of the United States of America or any State and shall expressly assume by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all Securitization Bonds and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein and in the applicable Series Supplement or Series Supplements; (b) the Person (if other than the Issuer) formed by or surviving such consoli dation or merger or to whom substantially all of such assets are sold shall expressly assume all obligations and succeed to all rights of the Issuer under the Sale Agreement, the Administration Agreement, the Servicing Agreement, the Intercreditor Agreement and any Interest Rate Swap Agreement pursuant to an assignment and assumption agreement executed and delivered to the Trustee, in form satisfactory to the Trustee; (c) immediately after giving effect to such consolidation, merger or sale, no Default or Event of Default shall have occurred and be continuing; (d) the Rating Agency Condition shall have been satisfied with respect to such consolidation or merger or sale; (e) the Issuer shall have received an Issuer Opinion of Counsel (and shall have delivered copies thereof to the Trustee) substantially to the effect that such consolidation, merger or sale (i) will not have any material adverse tax consequence to the Issuer or any Securitization Bondholder, (ii) complies in all material respects with this Indenture and all of the conditions precedent herein relating to such transaction and (iii) will result in the Trustee maintaining a continuing valid perfected security interest in the Collateral; (f) neither the Securitization Property nor the Financing Order nor the rights of the Seller, the Servicer or the Issuer under the Customer Choice Act or the Financing Order shall be impaired thereby; and (g) any action as is necessary to maintain the Lien created by this Indenture shall have been taken. SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or merger of the Issuer in accordance with Section 3.10, the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein. (b) Upon any sale by the Issuer of substantially all of its assets in a sale which complies with Section 3.10, Consumers Funding LLC will be released from every covenant and agreement of this Indenture to be observed or performed on the part of the Issuer with respect to the Securitization Bonds and from every covenant and agreement of the Sale Agreement, the Administration Agreement, the Servicing Agreement and any Interest Rate Swap Agreement to be observed or performed on the part of the Issuer. SECTION 3.12 No Other Business. The Issuer shall not engage in any business other than purchasing and owning Securitization Property, issuing Securitization Bonds from time to time, pledging its interest in the Collateral to the Trustee under this Indenture in order to secure the Securitization Bonds, entering into the Basic Documents and performing its obligations thereunder and performing activities that are necessary, suitable or convenient to accomplish these purposes or are incidental thereto and other than as contemplated by the Basic Documents. SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Securitization Bonds and except as contemplated by the Basic Documents. SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities. Except as contemplated by the Basic Documents, Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person, other than any Eligible Investments. SECTION 3.15 Capital Expenditures. The Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty) other than Securitization Property purchased from the Seller pursuant to, and in accordance with, the Sale Agreement. SECTION 3.16 Restricted Payments. The Issuer shall not, directly or indirectly, (a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to any owner of a beneficial interest in the Issuer or otherwise with respect to any ownership or equity interest in, or owner ship security of, the Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or security or (c) set aside or otherwise segregate any amounts for any such purpose; provided, however, that if no Event of Default shall have occurred and be continuing or would otherwise result from such payment, the Issuer may make, or cause to be made, any such distributions to any owner of a beneficial interest in the Issuer or otherwise with respect to any ownership or equity interest or security in or of the Issuer using funds either distributed to the Issuer pursuant to Section 8.02(g) or which are not otherwise subject to the Lien of this Indenture, to the extent that such distributions would not cause the book value of the remaining equity in the Issuer to decline below 0.5% of the original principal amount of all Series of Securitization Bonds which remain outstanding. The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the Basic Documents. SECTION 3.17 Notice of Events of Default. The Issuer agrees to deliver to the Trustee, the Rating Agencies and (to the extent the rules and regulations of the Luxembourg Stock Exchange so require) any agent in Luxembourg appointed pursuant to Section 3.02(b) written notice in the form of an Issuer Officer's Certificate of any Default or Event of Default hereunder or under any of the Basic Documents, its status and what action the Issuer is taking or proposes to take with respect thereto, within five Business Days after the occurrence thereof. SECTION 3.18 Inspection. The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Trustee, during the Issuer's normal business hours, to examine all the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited annually by Independent certified public accountants, and to discuss the Issuer's affairs, finances and accounts with the Issuer's officers, employees and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Trustee shall and shall cause its representa tives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. SECTION 3.19 Sale Agreement, Servicing Agreement and Swap Agree ment Covenants. (a) The Issuer agrees to take all such lawful actions to enforce its rights under the Sale Agreement, the Servicing Agreement and any Interest Rate Swap Agreement and to compel or secure the performance and observance by the Seller, the Servicer and any Swap Counterparty, of each of their obligations to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement and any Interest Rate Swap Agreement, respectively, in accordance with the terms thereof. So long as no Event of Default occurs and is continuing, but subject to Section 3.19(e), the Issuer may exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement and any Interest Rate Swap Agreement. (b) If an Event of Default occurs and is continuing, the Trustee may, and, at the direction (which direction shall be in writing or by telephone (confirmed in writing promptly thereafter)) of (i) with respect to the Sale Agreement or the Servicing Agreement, the Holders of a majority of the Outstanding Amount of the Securitization Bonds of all Series or (ii) with respect to any Interest Rate Swap Agreement, the Holders of that percentage of the Outstanding Amount of the Securitization Bonds of the related Class specified in the related Series Supple ment, shall, exercise all right, remedies, powers, privileges and claims of the Issuer against the Seller, the Servicer or any Swap Counterparty under or in connection with the Sale Agreement, the Servicing Agreement and any Interest Rate Swap Agreement, respectively, including the right or power to take any action to compel or secure performance or observance by the Seller, the Servicer or any Swap Counterparty of each of their obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale Agreement, the Servicing Agreement and any Interest Rate Swap Agreement, and any right of the Issuer to take such action shall be suspended. (c) With the consent of the Trustee, the Sale Agreement, the Intercreditor Agreement and the Servicing Agreement may be amended, so long as the Rating Agency Condition is satisfied in connection therewith, at any time and from time to time, without the consent of the Securitization Bondholders, or the counterparty under any Interest Rate Swap Agreement. However, such amendment may not adversely affect in any material respect the interest of any Securitization Bondholder or any counterparty under any Interest Rate Swap Agreement without the consent of the Holders of a majority of the Outstanding Amount of the Securitization Bonds of each Series or Class, and each such counterparty, materially and adversely affected thereby. Further, with the consent of the Trustee and the related counterparty under any Interest Rate Swap Agreement, any Interest Rate Swap Agreement may be amended, at any time and from time to time, so long as the Rating Agency Condition is satisfied in connection therewith. However, such amendment may not adversely affect in any material respect the interest of any Securitization Bondholder or counterparty under any Interest Rate Swap Agreement without the consent of the Holders of a majority of the Outstanding Amount of the Securitization Bonds of each Series or Class and each such counterparty materially and adversely affected thereby. (d) If the Issuer, the Seller or the Servicer proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, waiver, supple ment, termination, or surrender of, the terms of the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement or any Interest Rate Swap Agreement, or waive timely performance or observance thereunder by the Seller, the Servicer or any Swap Counterparty under the Sale Agreement, the Servicing Agreement, the Intercreditor Agreement or any Interest Rate Swap Agreement, respectively, in each case in such a way as would materially and adversely affect the interests of any Class of any Series of Securitization Bondholders or the counterparty under any Interest Rate Swap Agreement, the Issuer shall first notify the Rating Agencies of the proposed amendment, modification, termination or surrender. Upon receiving notification regarding whether the Rating Agency Condition has been satisfied, the Issuer shall notify the Trustee, and the Trustee shall notify the Securitization Bondholders and each counterparty under any Interest Rate Swap Agreement, of the proposal and whether the Rating Agency Condition has been satisfied with respect thereto. With respect to any such proposed action related to the Sale Agreement, the Intercreditor Agreement and the Servicing Agreement, the Trustee shall consent to such proposed action only (i) with the consent of the Holders of a majority of the Outstanding Amount of the Securitization Bonds of each Class of each Series, and each counterparty under any Interest Rate Swap Agreement, materially and adversely affected thereby and (ii) upon satisfaction of the Rating Agency Condition. With respect to any such proposed action related to any Interest Rate Swap Agreement, the Trustee shall consent to such proposed action only (y) with the consent of the Holders of a majority of the Outstanding Amount of the Securitization Bonds of the related Class, and each counterparty under any Interest Rate Swap Agreement, materially and adversely affected thereby and (z) upon satisfaction of the Rating Agency Condition. If any such amendment, modification, supplement or waiver shall be so consented to by the Trustee or such Holders, the Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as shall be necessary or appropriate in the circumstances. For so long as any of the Securitization Bonds are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, the Issuer will publish notice of such proposed action in an Authorized Newspaper promptly following its effectiveness. (e) If the Issuer or the Servicer proposes to amend, modify, waive, supple ment, terminate or surrender in any material respect, or to agree to any material amendment, modification, waiver, supplement, termination or surrender of, the Securitization Charge Adjustment Process, the Issuer shall notify the Trustee and the Trustee shall notify Securitization Bondholders of such proposal and the Trustee shall consent thereto only with the consent of the Holders a majority of the Outstanding Amount of the Securitization Bonds of each Series materially and adversely affected thereby and only if the Rating Agency Condition has been satisfied with respect thereto. (f) Promptly following a default by either the Seller, the Servicer or any Swap Counterparty under the Sale Agreement, the Servicing Agreement or any Interest Rate Swap Agreement, respectively, and at the Issuer's expense, the Issuer agrees to take all such lawful actions as the Trustee may request to compel or secure the performance and observance by the Seller, the Servicer or any Swap Counterparty, as applicable, of each of their obligations to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement or any Interest Rate Swap Agreement in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement or any Interest Rate Swap Agreement, respectively, to the extent and in the manner directed by the Trustee, including the transmission of notices of default on the part of the Seller, the Servicer or any Swap Counterparty thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Seller, the Servicer or any Swap Counterparty of each of their respective obligations under the Sale Agreement, the Servicing Agreement and any Interest Rate Swap Agreement. (g) If the Issuer shall have knowledge of the occurrence of a Servicer Default under the Servicing Agreement or an event of default, termination event or downgrade event under any Interest Rate Swap Agreement, the Issuer shall promptly give written notice thereof to the Trustee and the Rating Agencies, and shall specify in such notice the action, if any, the Issuer is taking with respect to such default or event. (h) If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Servicing Agreement with respect to the Securitization Property or the Securitization Charge, the Issuer shall take all reasonable steps available to it to remedy such failure. The Issuer shall not take any action to terminate the Servicer's rights and powers under the Servicing Agreement following a Servicer Default without the prior written consent of the Trustee and of the Holders of a majority of the Outstanding Amount of the Securitization Bonds of all Series and unless such termination is permitted under the Intercreditor Agreement. (i) As promptly as possible after the giving of notice of termination to the Servicer and the Rating Agencies of the Servicer's rights and powers pursuant to Section 6.01 of the Servicing Agreement, the Trustee, with the consent of the Holders of Securitization Bonds evidencing not less than a majority of the Outstanding Amount of the Securitization Bonds of all Series and subject to the terms of the Intercreditor Agreement, may appoint a successor Servicer (the "Successor Servicer"), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Issuer and the Trustee. A person shall qualify as a Successor Servicer only if such Person satisfies the requirements of Section 6.04 of the Servicing Agreement. In connection with any such appointment, the Issuer may make such arrangements for the compensation of such Successor Servicer as it and such Successor Servicer shall agree, subject to the limitations set forth below and in the Servicing Agreement and the terms of the Intercreditor Agreement, and in accordance with Section 6.04 of the Servicing Agreement, the Issuer shall enter into an agreement with such Successor Servicer for the servicing of the Securitization Property (such agreement to be in form and substance satisfactory to the Trustee). (j) Upon termination of the Servicer's rights and powers pursuant to the Servicing Agreement, the Trustee shall promptly notify the Issuer, the Securitization Bondhold ers and the Rating Agencies of such termination. As soon as a Successor Servicer is appointed, the Issuer shall notify the Trustee, the Securitization Bondholders and the Rating Agencies of such appointment, specifying in such notice the name and address of such Successor Servicer. (k) The Issuer shall not take any action to terminate or assign the Swap Counterparty's rights and powers under any Interest Rate Swap Agreement or replace any Swap Counterparty following an event of default, termination event or downgrade event under any Interest Rate Swap Agreement without (i) the prior written consent of the Trustee and of the Holders of that percentage of the Outstanding Amount of the Securitization Bonds, if any such consent is required under the related Series Supplement, of the related Series and Class, if any, specified in the related Series Supplement, and (ii) satisfying any other requirements set forth in the related Series Supplement and Interest Rate Swap Agreement. (l) Upon termination or assignment of any Swap Counterparty's rights and powers, pursuant to any Interest Rate Swap Agreement, the Trustee shall promptly inform the Issuer, the Securitization Bondholders of the related Class and the Rating Agencies of such termination or assignment. As soon as a replacement Swap Counterparty is appointed, the Issuer shall notify the Trustee, the Securitization Bondholders of the related Class and the Rating Agencies of such appointment, specifying in such notice the name and address of such replace ment Swap Counterparty. SECTION 3.20 Taxes. So long as any of the Securitization Bonds are outstanding, the Issuer shall pay all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Collateral. ARTICLE IV Satisfaction and Discharge; Defeasance SECTION 4.01 Satisfaction and Discharge of Indenture; Defeasance. (a) The Securitization Bonds of any Series, all moneys payable with respect thereto and this Indenture as it applies to such Series shall cease to be of further effect and the Lien hereunder shall be released with respect to such Series, interest shall cease to accrue on the Securitization Bonds of such Series and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Securitization Bonds of such Series, when (i) either (A) all Securitization Bonds of such Series theretofore authenti cated and delivered (other than (1) Securitization Bonds that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06 and (2) Securitization Bonds for whose payment money has theretofore been depos ited in trust or segregated and held in trust by the Issuer or thereafter repaid to the Issuer or discharged from such trust, as provided in Section 3.03(d) have been delivered to the Trustee for cancellation; or (B) the Expected Final Payment Date or Redemption Date has occurred with respect to all Securitization Bonds of such Series not theretofore delivered to the Trustee for cancellation, and the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Trustee cash, in trust for such purpose, in an amount sufficient to pay and discharge the entire indebtedness on such Securitization Bonds not theretofore delivered to the Trustee on the Expected Final Payment Date or Redemption Date, as applicable, therefor; (ii) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer with respect to such Series; and (iii) the Issuer has delivered to the Trustee an Issuer Officer's Certifi cate, an Issuer Opinion of Counsel and (if required by the TIA or the Trustee) an Inde pendent Certificate from a firm of certified public accountants, each meeting the applica ble requirements of Section 11.01 and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to Securitization Bonds of such Series have been complied with. (b) Subject to Sections 4.01(e) and 4.02, the Issuer at any time may terminate (i) all its obligations under this Indenture with respect to the Securitization Bonds of any Series ("Legal Defeasance Option") or (ii) its obligations under Sections 3.04, 3.05, 3.06,(other than with respect to amounts in the Defeasance Account), 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19 and 3.20 and the operation of Section 5.01(d) ("Covenant Defeasance Option") with respect to any Series of Securitization Bonds. The Issuer may exercise the Legal Defeasance Option with respect to any Series of Securitization Bonds notwithstanding its prior exercise of the Covenant Defeasance Option with respect to such Series. (c) If the Issuer exercises the Legal Defeasance Option with respect to any Series, the maturity of the Securitization Bonds of such Series may not be (i) accelerated pursuant to Section 5.02 or (ii) except as provided in Section 4.02, redeemed. If the Issuer exercises the Covenant Defeasance Option with respect to any Series, the maturity of the Securitization Bonds of such Series may not be accelerated because of an Event of Default specified in Section 5.01(d). (d) Upon satisfaction of the conditions set forth herein to the exercise of the Legal Defeasance Option or the Covenant Defeasance Option with respect to any Series of Securitization Bonds, the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of the obligations that are termi nated pursuant to such exercise. (e) Notwithstanding Sections 4.01(a) and 4.01(b) above, (i) rights of registra tion of transfer and exchange, (ii) rights of substitution of mutilated, destroyed, lost or stolen Securitization Bonds, (iii) rights of Securitization Bondholders to receive payments of principal and interest, but only from the amounts deposited with the Trustee for such payments, (iv) Sections 4.03 and 4.04, (v) the rights, obligations and immunities of the Trustee hereunder (including the rights of the Trustee under Section 6.07 and the obligations of the Trustee under Section 4.03) and (vi) the rights of Securitization Bondholders under this Indenture with respect to the property deposited with the Trustee payable to all or any of them, shall survive until the Securitization Bonds of the Series as to which this Indenture or certain obligations hereunder have been satisfied and discharged pursuant to Section 4.01(a) or 4.01(b) and have been paid in full. Thereafter, the obligations in Sections 6.07 and 4.04 with respect to such Series shall survive. SECTION 4.02 Conditions to Defeasance. (a) The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to any Series of Securitization Bonds only if: (i) the Issuer irrevocably deposits or causes to be deposited in trust with the Trustee cash or U.S. Government Obligations for the payment of principal of and interest on such Series of Securitization Bonds to the Expected Payment Date or Redemp tion Date therefor, as applicable, such deposit to be made in the Defeasance Subaccount for such Series of Securitization Bonds; (ii) the Issuer delivers to the Trustee a certificate from a nationally recognized firm of Independent accountants expressing its opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Govern ment Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Securitization Bonds of such Series (A) subject to clause (B), principal in accordance with the Expected Amortization Schedule therefor, (B) if such Series is to be redeemed, the Redemption Price therefor on the Redemption Date therefor and (C) interest when due; (iii) in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during such ninety-five (95) day period no Default specified in Section 5.01(e) or 5.01(f) occurs which is continuing at the end of the period; provided, however, that in determining whether a default under Section 5.01(e) has occurred, the requirement that the decree or order shall remain unstayed and in effect for ninety (90) days shall be disregarded; (iv) no Default has occurred and is continuing on the day of such deposit and after giving effect thereto; (v) in the case of the Legal Defeasance Option, the Issuer delivers to the Trustee an Issuer Opinion of Counsel of nationally recognized tax counsel stating that (A) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Securitization Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of such Legal Defeasance Option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (vi) in the case of the Covenant Defeasance Option, the Issuer delivers to the Trustee an Issuer Opinion of Counsel of nationally recognized tax counsel to the effect that the Holders of the Securitization Bonds of such Series will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of such Covenant Defeasance Option and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and (vii) the Issuer delivers to the Trustee an Issuer Officer's Certificate and an Issuer Opinion of Counsel, each stating that all conditions precedent to the satisfaction and discharge of the Securitization Bonds of such Series to the extent contemplated by this Article IV have been complied with. (b) Notwithstanding any other provision of this Section 4.02 to the contrary, no delivery of cash or U.S. Government Obligations to the Trustee under this Section 4.02 shall terminate any obligations of the Issuer under this Indenture with respect to any Securitization Bonds which are to be redeemed prior to the Expected Final Payment Date therefor until such Securitization Bonds shall have been irrevocably called or designated for redemption on a date thereafter on which such Securitization Bonds may be redeemed in accordance with the provisions of this Indenture and proper notice of such redemption shall have been given in accordance with the provisions of this Indenture or the Issuer shall have given the Trustee, in form satisfactory to the Trustee, irrevocable instructions to give, in the manner and at the times prescribed herein, notice of redemption of such Series. SECTION 4.03 Application of Trust Money. All moneys or U.S. Govern ment Obligations deposited with the Trustee pursuant to Sections 4.01 or 4.02 with respect to any Series of Securitization Bonds shall be held in trust in the Defeasance Subaccount for such Series and applied by it, in accordance with the provisions of the Securitization Bonds and this Indenture, to the payment, either directly or through any Paying Agent, as the Trustee may determine, to the Holders of the particular Securitization Bonds for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal and interest. Such moneys shall be segregated and held apart solely for paying such Securitization Bonds and such Securitization Bonds shall not be entitled to any amounts on deposit in the Collection Account other than amounts on deposit in the Defeasance Subaccount for such Securitization Bonds. SECTION 4.04 Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture or the Covenant Defeasance Option or Legal Defeasance Option with respect to the Securitization Bonds of any Series, all moneys then held by any Paying Agent other than the Trustee under the provisions of this Indenture with respect to such Securitization Bonds shall, upon demand of the Issuer, be paid to the Trustee to be held and applied according to Section 3.03 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. ARTICLE V Remedies SECTION 5.01 Events of Default. "Event of Default" wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) default in the payment of any interest on any Securitization Bond when the same becomes due and payable and the continuation of such default for five Business Days; (b) default in the payment of the then unpaid principal of any Securitization Bond of any Series or Class on the Final Maturity Date therefor; (c) default in the payment of the Redemption Price for any Securitization Bond on the Redemption Date therefor; (d) default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than a covenant or agreement, a default in the observance or performance of which is specifically dealt with in clause (a), (b) or (c) above), or any representation or warranty of the Issuer made in this Indenture or in any certificate or other writing delivered pursuant hereto or in connection herewith proving to have been incorrect in any material respect as of the time when made, and any such default shall continue or not be cured, for a period of 30 days after the earlier of (i) the date on which there shall have been given, by registered or certified mail, to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% of the Outstanding Amount of the Securitization Bonds of any Series or Class, a written notice specifying such default or incorrect representation or warranty and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder or (ii) the date the Issuer has knowledge of the default; (e) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Collateral in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for the Issuer or for any substantial part of the Collateral, or ordering the winding-up or liquidation of the Issuer's affairs, and such decree or order shall remain unstayed and in effect for a period of ninety (90) consecutive days; (f) the commencement by the Issuer of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for the Issuer or for any substantial part of the Collateral, or the making by the Issuer of any assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing; or (g) any act or failure to act by the State of Michigan or any of its agencies (including the MPSC), officers or employees that violates or is not in accordance with the pledge of the State of Michigan in Section 10n(2) of the Customer Choice Act. SECTION 5.02 Acceleration of Maturity; Rescission and Annulment (a) If an Event of Default (other than an Event of Default under Section 5.01(g)) occurs and is continuing, then and in every such case either the Trustee or the Holders of Securitization Bonds representing not less than a majority of the Outstanding Amount of the Securitization Bonds of all Series may, but need not, declare all the Securitization Bonds to be immediately due and payable, by a notice in writing to the Issuer (and to the Trustee if given by the Securitization Bondholders), and upon any such declaration the unpaid principal amount of the Securitization Bonds of all Series, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable. (b) At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V, the Holders of Securitization Bonds represent ing a majority of the Outstanding Amount of the Securitization Bonds of all Series, by written notice to the Issuer and the Trustee, may rescind and annul such declaration and its conse quences, provided that: (i) the Issuer has paid or deposited with the Trustee, for deposit in the General Subaccount of the Collection Account, a sum sufficient to pay (A) all payments of principal of and interest on all Securitiza tion Bonds of all Series and all other amounts that would then be due hereunder or upon such Securitization Bonds if the Event of Default giving rise to such acceleration had not occurred; and (B) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and (ii) all Events of Default, other than the nonpayment of the principal of the Securitization Bonds of all Series that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12. (c) No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by Trustee. (a) The Issuer covenants that if (i) Default is made in the payment of any interest on any Securitization Bond when such interest becomes due and payable and such Default continues for five Business Days, (ii) Default is made in the payment of the then unpaid principal of any Securitization Bond on the Final Maturity Date therefor or (iii) Default is made in the payment of the Redemption Price or for any Securitization Bond on the Redemption Date therefor, the Issuer shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Securitization Bonds of such Series, such amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel and the whole amount then due and payable on such Securiti zation Bonds for principal and interest, with interest upon the overdue principal and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue instalments of interest, at the respective Interest Rate of such Series or the applicable Class of such Series. (b) In case the Issuer shall fail forthwith to pay the amounts specified in clause (a) above upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer or other obligor upon such Securitization Bonds and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Securitization Bonds, wherever situated, the moneys adjudged or decreed to be payable. (c) If an Event of Default occurs and is continuing, the Trustee may, as more particularly provided in Section 5.04, in its discretion, proceed to protect and enforce its rights and the rights of the Securitization Bondholders, by such appropriate Proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Indenture or by law including foreclosing or otherwise enforcing the Lien on the Securitization Property securing the Securitization Bonds or applying to the MPSC or a court of competent jurisdiction for sequestration of revenues arising with respect to such Securitization Property. (d) In case there shall be pending, relative to the Issuer or any other obligor upon the Securitization Bonds or any Person having or claiming an ownership interest in the Collateral, Proceedings under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been ap pointed for or taken possession of the Issuer or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to the Issuer or other obligor upon the Securitization Bonds, or to the creditors or property of the Issuer or such other obligor, the Trustee, irrespective of whether the principal of any Securitization Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.03, shall be entitled and empowered, by intervention in such Proceedings or otherwise: (i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Securitization Bonds and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Securitization Bondholders allowed in such Proceedings; (ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of Securitization Bonds in any election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings; (iii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Securitization Bondholders and of the Trustee on their behalf; and (iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee or the Holders of Securitization Bonds allowed in any judicial proceedings relative to the Issuer, its creditors and its property; and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Securitization Bondholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to such Securitization Bondholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of negligence or bad faith. (e) Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Securitization Bondholder any plan of reorganization, arrangement, adjustment or composition affecting the Securitization Bonds or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Securitization Bondholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. (f) All rights of action and of asserting claims under this Indenture, or under any of the Securitization Bonds, may be enforced by the Trustee without the possession of any of the Securitization Bonds or the production thereof in any trial or other Proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securitiza tion Bonds. (g) In any Proceedings brought by the Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Securitization Bonds, and it shall not be necessary to make any Securitization Bondholder a party to any such Proceedings. SECTION 5.04 Remedies. (a) If an Event of Default other than under Section 5.01(g) occurs and is continuing, the Trustee may do one or more of the following (subject to Section 5.05): (i) institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Securitization Bonds or under this Indenture with respect thereto, whether by declaration or otherwise, enforce any judgment obtained, and collect from the Issuer and any other obligor upon such Securiti zation Bonds moneys adjudged due; (ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Collateral; (iii) exercise any remedies of a secured party under the Michigan UCC, the Delaware UCC or the Customer Choice Act or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the Trustee and the Holders of the Securitization Bonds of such Series; (iv) sell the Collateral or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; and (v) exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Administrator, the Servicer, any party to the Intercreditor Agreement or any Swap Counterparty under or in connection with the Sale Agreement, the Administration Agreement, the Servicing Agreement or any Interest Rate Swap Agreement, respectively, as provided in Section 3.19(b); provided, however, that the Trustee may not sell or otherwise liquidate any portion of the Collateral following an Event of Default, other than an Event of Default described in Section 5.01(a), 5.01(b) or 5.01(c), with respect to any Series unless (A) the Holders of one hundred percent (100%) of the Outstanding Amount of the Securitization Bonds of all Series consent thereto, (B) the proceeds of such sale or liquidation distributable to the Securitization Bondhold ers of all Series are sufficient to discharge in full all amounts then due and unpaid upon such Securitization Bonds for principal and interest, or (C) the Trustee determines that the Collateral will not continue to provide sufficient funds for all payments on the Securitization Bonds of all Series as they would have become due if the Securitization Bonds had not been declared due and payable and the Trustee obtains the consent of Holders of 662/3% of the Outstanding Amount of the Securitization Bonds of all Series. In determining such sufficiency or insufficiency with respect to clause (B) and (C), the Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Collateral for such purpose. (b) If an Event of Default under Section 5.01(g) occurs and is continuing, the Trustee, for the benefit of the Holders, shall be entitled and empowered to the extent permitted by applicable law to institute or participate in Proceedings reasonably necessary to compel performance of or to enforce the pledge of the State of Michigan in Section 10n(2) of the Customer Choice Act and to collect any monetary damages incurred by the Holders or the Trustee as a result of any such Event of Default, and may prosecute any such Proceeding to final judgment or decree. Such remedy shall be the only remedy that the Trustee may exercise if the only Event of Default that has occurred and is continuing is an Event of Default under Section 5.01(g). SECTION 5.05 Optional Preservation of the Collateral. If the Securitization Bonds have been declared to be due and payable under Section 5.02 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, the Trustee may, but need not, elect, as provided in Section 5.11(c), to maintain possession of the Collateral and not sell or liquidate the same. It is the desire of the parties hereto and the Securitization Bondholders that there be at all times sufficient funds for the payment of principal of and interest on the Securitization Bonds, and the Trustee shall take such desire into account when determining whether or not to maintain possession of the Collateral or sell or liquidate the same. In determining whether to maintain possession of the Collateral or sell or liquidate the same, the Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Collateral for such purpose. SECTION 5.06 Limitation of Proceedings. (a) No Holder of any Securitiza tion Bond of any Series shall have any right to institute any Proceeding, judicial or otherwise, or to avail itself of any remedies provided in the Customer Choice Act, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (ii) the Holders of not less than twenty-five percent (25%) of the Outstanding Amount of the Securitization Bonds of all Series have made written request to the Trustee to institute such Proceeding in respect of such Event of Default in its own name as Trustee hereunder; (iii) such Holder or Holders have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in complying with such request; (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and (v) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Holders of a majority of the Outstanding Amount of the Securitization Bonds of all Series; it being understood and intended that no one or more Holders of Securitization Bonds shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securitization Bonds or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided. (b) In the event the Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of Securitization Bonds, each representing less than a majority of the Outstanding Amount of the Securitization Bonds of all Series, the Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture. SECTION 5.07 Unconditional Rights of Securitization Bondholders To Receive Principal and Interest. Notwithstanding any other provisions in this Indenture, the Holder of any Securitization Bond shall have the right, which is absolute and unconditional, and shall not be impaired without the consent of each such Holder, (a) to receive payment of (i) the interest, if any, on such Securitization Bond on or after the due dates thereof expressed in such Securitization Bond or in this Indenture, (ii) the unpaid principal, if any, of such Securitization Bonds on or after the Final Maturity Date therefor or (iii) in the case of redemption, receive payment of the unpaid principal, if any, and interest, if any, on such Securitization Bond on or after the Redemption Date therefor and (b) to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. SECTION 5.08 Restoration of Rights and Remedies. If the Trustee or any Securitization Bondholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Securitization Bondholder, then and in every such case the Issuer, the Trustee and the Securitization Bondholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Securitization Bondhold ers shall continue as though no such Proceeding had been instituted. SECTION 5.09 Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Securitization Bondholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of the Trustee or any Securitization Bondholder to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Trustee or to the Securitization Bondholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Securitiza tion Bondholders, as the case may be. SECTION 5.11 Control by Securitization Bondholders. The Holders of a majority of the Outstanding Amount of the Securitization Bonds of all Series (or, if less than all Series or Classes are affected, the affected Series or Class or Classes) shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Trustee with respect to the Securitization Bonds of such Series or Class or Classes or exercising any trust or power conferred on the Trustee with respect to such Series or Class or Classes; provided that (a) such direction shall not be in conflict with any rule of law or with this Indenture or the Intercreditor Agreement; (b) subject to the express terms of Section 5.04, any direction to the Trustee to sell or liquidate the Collateral shall be by the Holders of Securitization Bonds representing not less than one hundred percent (100%) of the Outstanding Amount of the Securitization Bonds of all Series; (c) if the conditions set forth in Section 5.05 have been satisfied and the Trustee elects to retain the Collateral pursuant to such Section and elects not to sell or liquidate the same, then any direction to the Trustee by Holders of Securitization Bonds representing less than one hundred percent (100%) of the Outstanding Amount of the Securitization Bonds of all Series to sell or liquidate the Collateral shall be of no force and effect; and (d) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction; provided, however, that, subject to Section 6.01, the Trustee need not take any action that it determines might involve it in liability for which it reasonably believes it will not be adequately indemnified against the costs, expenses and liabilities which might be incurred by it in comply ing with this request. The Trustee also need not take any action that it determines might materially and adversely affect the rights of any Securitization Bondholders not consenting to such action. SECTION 5.12 Waiver of Past Defaults. (a) Prior to the declaration of the acceleration of the maturity of the Securitization Bonds of all Series as provided in Section 5.02, the Holders of not less than a majority of the Outstanding Amount of the Securitization Bonds of all Series may waive any past Default or Event of Default and its consequences except a Default (i) in payment of principal of or interest on any of the Securitization Bonds or (ii) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Securitization Bond of all Series or Classes affected. In the case of any such waiver, the Issuer, the Trustee and the Holders of the Securitization Bonds shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto. (b) Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. SECTION 5.13 Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Securitization Bond by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to (a) any suit instituted by the Trustee, (b) any suit instituted by any Securitization Bondholder, or group of Securitization Bondholders, in each case holding in the aggregate more than ten percent (10%) of the Outstanding Amount of the Securitization Bonds of a Series or (c) any suit instituted by any Securitization Bondholder for the enforcement of the payment of (i) interest on any Securitization Bond on or after the due dates expressed in such Securitization Bond and in this Indenture, (ii) the unpaid principal, if any, of any Securitiza tion Bond on or after the Final Maturity Date therefor or (iii) in the case of redemption, the unpaid principal of and interest on any Securitization Bond on or after the Redemption Date therefor. SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 5.15 Action on Securitization Bonds. The Trustee's right to seek and recover judgment on the Securitization Bonds or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this Indenture nor any rights or remedies of the Trustee or the Securitization Bondholders shall be impaired by the recovery of any judgment by the Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Collateral or upon any of the assets of the Issuer. ARTICLE VI The Trustee SECTION 6.01 Duties and Liabilities of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (b) Except during the continuance of an Event of Default: (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the same to determine whether or not they conform to the require ments of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) this clause (c) does not limit the effect of clause (b) of this Section 6.01; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.11. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to clauses (a), (b) and (c) of this Section 6.01. (e) The Trustee shall not be liable for interest on any money received by it except as provided in this Indenture or as the Trustee may agree in writing with the Issuer. (f) Money held in trust by the Trustee need not be segregated from other funds held by the Trustee except to the extent required by law or the terms of this Indenture, the Sale Agreement, the Servicing Agreement or any Interest Rate Swap Agreement. (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.01 and to the provisions of the TIA. (i) Under no circumstances shall the Trustee be liable for any indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising under the Securitization Bonds or any Basic Document. SECTION 6.02 Rights of Trustee. (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Issuer Officer's Certificate or an Issuer Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Issuer Officer's Certificate or an Issuer Opinion of Counsel. (c) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent attorney, custodian, or nominee appointed with due care by it thereunder. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee's conduct does not constitute wilful misconduct, negligence or bad faith. (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securitization Bonds shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. SECTION 6.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securitization Bonds and may otherwise deal with the Issuer or its affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Securitization Bond Registrar, co-registrar or co-paying\agent, or agent appointed pursuant to Section 3.02(b) may do the same with like rights. However, the Trustee must comply with Sections 6.11 and 6.12. SECTION 6.04 Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securitization Bonds. The Trustee shall not be accountable for the Issuer's use of the proceeds from the Securitization Bonds, and the Trustee shall not be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Securitization Bonds or in the Securitization Bonds other than the Trustee's certificate of authentication. The Trustee shall not be responsible for the form, character, genuineness, sufficiency, value or validity of any of the Collateral, or for or in respect of the validity or sufficiency of the Securitization Bonds (other than the certificate of authentication for the Securitization Bonds) or the Basic Documents and the Trustee shall in no event assume or incur any liability, duty or obligation to any Holder of a Securitization Bond, other than as expressly provided for in this Indenture. The Trustee shall not be liable for the default or misconduct of the Issuer, the Seller, the Servicer or the Member or any Manager of the Issuer under any Basic Document or otherwise, or the default or misconduct of any counterparty under any Interest Rate Swap Agreement, and the Trustee shall have no obligation or liability to perform the obligations of the Issuer. SECTION 6.05 Notice of Defaults. If a Default occurs and is continuing with respect to any Class or Series and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Rating Agency and to each Holder of Securitization Bonds of all Series notice of the Default within thirty (30) days after it occurs. Except in the case of a Default in payment of principal of or interest on any Securitization Bond, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Securitization Bondholders. SECTION 6.06 Reports by Trustee to Holders. (a) The Trustee shall deliver to each Holder of Securitization Bonds such information as may be required to enable such Holder to prepare its federal and state income tax returns. (b) With respect to each Series of Securitization Bonds, on or prior to each Payment Date therefor, the Trustee shall deliver a statement prepared by the Trustee to each Holder of Securitization Bonds which shall include (to the extent applicable) the following information (and any other information so specified in the Series Supplement for such Series) as to the Securitization Bonds of such Series with respect to such Payment Date or the period since the previous Payment Date, as applicable: (i) the amount paid to Holders of such Securitization Bonds in respect of interest; such amount to be expressed as a dollar amount per thousand; (ii) the amount paid to Holders of such Securitization Bonds in respect of principal; such amount to be expressed as a dollar amount per thousand; (iii) the Securitization Bond Balance, after giving effect to the pay ments to be made on such Payment Date, and the Projected Securitization Bond Balance, in each case for such Series and as of such Payment Date; (iv) the amount on deposit in the Overcollateralization Subaccount for such Series and the Scheduled Overcollateralization Level for such Series as of such Payment Date; (v) the amount on deposit in the Capital Subaccount for such Series as of such Payment Date; (vi) the amount, if any, on deposit in the Reserve Subaccount as of such Payment Date; (vii) the amount to be paid to any Swap Counterparty, if any, (on a gross and a net basis, separately stated) under any Interest Rate Swap Agreement on or before that Payment Date; (viii) the amounts paid to the Trustee since the preceding Payment Date; (ix) the amounts paid to the Servicer since the preceding Payment Date; and (x) the amount of any other transfers and payments to be made on that Payment Date pursuant to the Indenture. (c) If any Securitization Bonds are listed on the Luxembourg Stock Exchange and rules of such exchange so require, the Trustee shall arrange for publication in an Authorized Newspaper that such statement shall be available with the Issuer's listing agent in Luxembourg appointed pursuant to Section 3.02(b). (d) The Trustee's responsibility for disbursing the information described in clause (b) above to Holders of Securitization Bonds is limited to the availability, timeliness and accuracy of the information provided by the Servicer pursuant to Section 3.05 and Annex 1 of the Servicing Agreement. SECTION 6.07 Compensation and Indemnity. (a) The Issuer shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensa tion shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Issuer shall indemnify and hold harmless the Trustee from and against any and all costs, damages, expenses, losses, liabilities or other amounts whatsoever (including reasonable counsel fees) incurred by the Trustee in connection with the administration of this trust, the enforcement of this trust and all of the Trustee's rights, powers and duties under this Indenture and the perfor mance by the Trustee of the duties and obligations of the Trustee under or pursuant to this Indenture. The Trustee shall notify the Issuer promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. (b) The Issuer shall defend the claim and the Trustee may have separate counsel and the Issuer shall pay the reasonable fees and expenses of such counsel. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee (i) through the Trustee's own wilful misconduct, negligence or bad faith or (ii) to the extent the Trustee was reimbursed for or indemnified against any such loss, liability or expense by the Seller pursuant to the Sale Agreement or by the Servicer pursuant to the Servicing Agreement. (c) When the Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(e) or 5.01(f) with respect to the Issuer, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or similar law. SECTION 6.08 Replacement of Trustee. (a) The Trustee may resign at any time upon thirty (30) days' prior written notice by so notifying the Issuer. The Issuer may remove the Trustee with or without cause at any time, with prior notice to the Rating Agencies, upon thirty (30) days' prior written notice, and shall remove the Trustee if: (i) the Trustee fails to comply with Section 6.11; (ii) the Trustee is adjudged a bankrupt or insolvent; (iii) a receiver or other public officer takes charge of the Trustee or its property; or (iv) the Trustee otherwise becomes incapable of acting. (b) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the "Retiring Trustee"), the Issuer shall promptly appoint a successor Trustee. (c) In addition, the Holders of a majority in Outstanding Amount of the Securitization Bonds of all Series may remove the Trustee by so notifying the Issuer and the Trustee and such Holders may appoint a successor Trustee. (d) A successor Trustee shall deliver a written acceptance of its appointment to the Retiring Trustee and to the Issuer. Thereupon the resignation or removal of the Retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. No resignation or removal of the Trustee shall become effective until the acceptance of the appointment by a successor Trustee. Upon the date of such succession, the successor Trustee shall mail a notice of its succession to Securitization Bondholders. The Retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee. (e) If a successor Trustee does not take office within 60 days after the Retiring Trustee resigns or is removed, the Retiring Trustee, the Issuer or the Holders of a majority in Outstanding Amount of the Securitization Bonds of all Series may petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) If the Trustee fails to comply with Section 6.11, any Securitization Bondholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (g) Notwithstanding the replacement of the Trustee pursuant to this Section 6.08, the Issuer's obligations under Section 6.07 shall continue for the benefit of the Retiring Trustee. SECTION 6.09 Successor Trustee by Merger. (a) If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association shall, without any further act, be the successor Trustee. Notice of any such event shall be promptly given to each Rating Agency by the successor Trustee and any agent in Luxembourg appointed pursuant to Section 3.02(b). (b) In case at the time such successor or successors by merger, conversion, consolidation or transfer shall succeed to the trusts created by this Indenture any of the Securiti zation Bonds shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any Retiring Trustee, and deliver such Securitiza tion Bonds so authenticated; and in case at that time any of the Securitization Bonds shall not have been authenticated, any successor to the Trustee may authenticate such Securitization Bonds either in the name of any Retiring Trustee hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force and effect granted by the Securitization Bonds or by this Indenture and this force and effect shall be equal to any certifi cate issued by the Trustee. SECTION 6.10 Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Collateral may at the time be located, the Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Collateral, and to vest in such Person or Persons, in such capacity and for the benefit of the Securitization Bondholders, such title to the Collateral, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Securitization Bondholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08. Notice of any such appointment shall be promptly given to each Rating Agency by the Trustee. (b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unquali fied to perform such act or acts, in which event such rights, powers, duties and obliga tions (including the holding of title to the Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee; (ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and (iii) the Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee. (d) Any separate trustee or co-trustee may at any time constitute the Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. SECTION 6.11 Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA Section 310(a) and Section 26(a)(i) of the Investment Company Act of 1940. The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and it shall have a long term debt rating of "BBB-" or better by Standard & Poor's, "Baa3" or better by Moody's and "BBB-" or better by Fitch. The Trustee shall comply with TIA Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. SECTION 06.12 Preferential Collection of Claims Against Issuer. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. SECTION 06.13 Representations and Warranties of the Trustee. The Trustee hereby represents and warrants that: (a) the Trustee is a banking corporation validly existing in good standing under the laws of the State of New York; and (b) the Trustee has full power, authority and legal right to execute, deliver and perform this Indenture and the Basic Documents to which the Trustee is a party and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture and such Basic Documents. ARTICLE VII Securitization Bondholders' Lists and Reports SECTION 7.01 Issuer To Furnish Trustee Names and Addresses of Securitization Bondholders. The Issuer shall furnish or cause to be furnished to the Trustee (a) not more than five days after the earlier of (i) each Record Date with respect to each Series and (ii) three months after the last Record Date with respect to each Series, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securitization Bonds of such Series as of such Record Date, (b) at such other times as the Trustee may request in writing, within thirty (30) days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than ten days prior to the time such list is furnished; provided, however, that so long as the Trustee is the Securitization Bond Registrar, no such list shall be required to be furnished. In addition, the Issuer shall furnish such list to any listing, transfer or paying agent appointed under Section 3.02(b) to the extent such information is required by the rules and regulations of the Luxembourg Stock Exchange. SECTION 7.02 Preservation of Information; Communications to Securiti zation Bondholders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders of Securitization Bonds contained in the most recent list furnished to the Trustee as provided in Section 7.01 and the names and addresses of Holders of Securitization Bonds received by the Trustee in its capacity as Securitization Bond Registrar. The Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished. (b) Securitization Bondholders may communicate with other Securitization Bondholders pursuant to Section 312(b) of the TIA, with respect to their rights under this Indenture or under the Securitization Bonds. (c) The Issuer, the Trustee and the Securitization Bond Registrar shall have the protection of Section 312(c) of the TIA. SECTION 7.03 Reports by Issuer. (a) The Issuer shall: (i) file with the Trustee and, so long as any Securitization Bonds are listed on the Luxembourg Stock Exchange and its rules so require, with the listing agent of the Issuer in Luxembourg appointed pursuant to Section 3.02(b), within fifteen (15) days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; (ii) file with the Trustee, the Commission and, so long as any Securiti zation Bonds are listed on the Luxembourg Stock Exchange, the listing agent in Luxem bourg appointed pursuant to Section 3.02(b), in accordance with rules and regulations prescribed from time to time by the Commission or the Luxembourg Stock Exchange, respectively, such additional information, documents and reports with respect to compli ance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (iii) supply to the Trustee (and the Trustee shall transmit by mail to all Securitization Bondholders described in TIA Section 313(c)) and, so long as any Securiti zation Bonds are listed on the Luxembourg Stock Exchange and its rules so require, to the listing agent of the Issuer in Luxembourg appointed pursuant to Section 3.02(b), such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as may be required by rules and regulations prescribed from time to time by the Commission. (b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year. SECTION 7.04 Reports by Trustee. (a) If required by TIA Section 313(a), within 60 days after the end of each fiscal year of the Issuer, commencing with the year after the issuance of the Securitization Bonds of any Series, the Trustee shall mail to each Holder of Securitization Bonds of such Series as required by TIA Section 313(c) a brief report dated as of such date that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b); provided, however, that the initial report so issued shall be delivered not more than twelve (12) months after the initial issuance of each Series. (b) A copy of each report at the time of its mailing to Securitization Bond holders shall be filed by the Trustee with the Commission and each stock exchange, if any, on which the Securitization Bonds are listed (to the extent required by the rules of such exchange). The Issuer shall notify the Trustee if and when the Securitization Bonds are listed on any stock exchange. (c) The Trustee shall provide notice to the Rating Agencies of any withdraw als from the Collection Account other than on a Payment Date and other than the Monthly Servicing Fee or the monthly Trustee's fee plus expenses (other than any Indemnity Amounts). SECTION 7.05 Provision of Servicer Reports. Upon the written request of any Securitization Bondholder to the Trustee addressed to the Corporate Trust Office, the Trustee shall provide such Securitization Bondholder with a copy of the Issuer Officer's Certificate referred to in Section 3.05 of the Servicing Agreement and the Annual Accountant's Report referred to in Section 3.06 of the Servicing Agreement. If any Securitization Bonds are listed on the Luxembourg Stock Exchange and rules of such exchange so require, the Trustee shall also arrange for publication in an Authorized Newspaper that a copy of such Issuer Officer's Certifi cate and such Annual Accountant's Report shall be available with the Issuer's listing agent in Luxembourg appointed pursuant to Section 3.02(b). ARTICLE VIII Accounts, Disbursements and Releases SECTION 8.01 Collection of Money. Except as otherwise expressly provided herein, the Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Trustee pursuant to this Indenture. The Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Collateral, the Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V. SECTION 8.02 Collection Account. (a)(i) On or prior to the Series Issuance Date for the first Series issued hereunder, the Issuer shall open, at the Trustee's Corporate Trust Office, or at another Eligible Institution, one or more segregated trust accounts in the Trustee's name for the benefit of the Holders (collectively, the "Collection Account"). The Collection Account shall initially be divided into subaccounts, which need not be separate bank accounts: a general subaccount (the "General Subaccount"), an overcollateralization subaccount for each Series of Securitization Bonds (each, an "Overcollateralization Subaccount" or the "Series Overcollateralization Subaccount"), a capital subaccount for each Series of Securitization Bonds (each, a "Capital Subaccount" or the "Series Capital Subaccount"), a capital reserve subaccount (the "Capital Reserve Subaccount"), a reserve subaccount (the "Reserve Subaccount"), a series subaccount for each Series of Securitization Bonds (each, a "Series Subaccount") and a class subaccount for any Class of any Series of Securitization Bonds which has a floating rate of interest as specified in any Series Supplement (each, a "Class Subaccount"). On or prior to the Series Issuance Date for each Series issued after the Series Issuance Date for the first Series issued hereunder, the Issuer shall establish an additional Series Subaccount therefor and a Class Subaccount for any Class of such Series which has a floating rate of interest and in respect of which the Issuer has entered into an Interest Rate Swap Agreement, as Subaccounts of the Collection Account. Prior to depositing funds or U.S. Government Obligations in the Collection Account pursuant to Sections 4.01 or 4.02, the Issuer shall establish defeasance subaccounts (each, a "Defeasance Subaccount") for each Series for which funds shall be deposited, as subaccounts of the Collection Account. All amounts in the Collection Account not allocated to any other Subaccount shall be allocated to the General Subaccount. Prior to the initial Payment Date, all amounts in the Collection Account (other than funds deposited into the Capital Subaccount, up to the Required Capital Amount) shall be allocated to the General Subaccount. All payments received by the Trustee from any Swap Counterparty at any time shall be deposited in the related Class Subaccount. All references to the Collection Account shall be deemed to include reference to all subaccounts contained therein. Withdrawals from and deposits to each of the foregoing subaccounts of the Collection Account shall be made as set forth in Sections 4.01, 4.02, 4.03 and 8.02(d) through (n). The Collection Account shall at all times be maintained in an Eligible Securities Account and only the Trustee shall have access to the Collection Account for the purpose of making deposits in and withdrawals from the Collection Account in accordance with this Indenture. Funds in the Collection Account shall not be commingled by the Issuer with any other moneys, and shall not be commingled by the Trustee. All moneys deposited from time to time in the Collection Account, all deposits therein pursuant to this Indenture, and all investments made in Eligible Investments with such moneys, including all income or other gain from such investments, shall be held by the Trustee in the Collection Account as part of the Collateral as herein provided, with the exception of any amount up to $100,000 held at any time in the Capital Reserve Subaccount. The Capital Reserve Subaccount shall be funded with $100,000 from amounts contributed to the Capital Subaccount for the initial Series of Securitiza tion Bonds. Amounts on deposit in the Capital Reserve Subaccount shall be available, upon request of the Issuer, to pay any expenses of the Issuer. (ii) Notwithstanding any other provision of this Indenture, the Collection Account shall be a securities account and shall be established only with a securities intermediary (as defined in Section 8-102(1)(m) of the Michigan UCC) that agrees with the Trustee that (A) the Collection Account shall be a securities account of the Trustee, (B) all property credited to the Collection Account shall be treated as a financial asset, (C) such securities intermediary shall treat the Trustee as entitled to exercise the rights that comprise each financial asset credited to the Collection Account, (D) such securities intermediary shall comply with entitlement orders originated by the Trustee without the further consent of any other person or entity, (E) such securities intermediary shall not agree with any person other than the Trustee to comply with entitlement orders originated by such other person, (F) the Collection Account and all property credited to it shall not be subject to any Lien or right of set-off in favor of such securities intermediary or anyone claiming through it (other than the Trustee), and (G) such agreement shall be governed by the laws of the State of Michigan. The Collection Account shall be under the control (within the meaning of Section 8-106 of the Michigan UCC) of the Trustee. If at any time the Collection Account ceases to be an Eligible Securities Account, the Trustee shall, within ten (10) days, establish a new Collection Account as an Eligible Securities Account. (b) All or a portion of the funds in the Collection Account shall be invested in Eligible Investments and reinvested by the Trustee upon Issuer Order; provided, however, that no funds in the Defeasance Subaccount for any Series of Securitization Bonds shall be invested in Eligible Investments or otherwise, except that U.S. Government Obligations deposited by the Issuer with the Trustee pursuant to Sections 4.01 or 4.02 shall remain as such. Except as provided in Section 8.02(g)(x), all income or other gain from investments of moneys deposited in the Collection Account shall be deposited by the Trustee in the Collection Account, and any loss resulting from such investments shall be charged to the Collection Account. The Issuer shall not direct the Trustee to make any investment of any funds or to sell any investment held in the Collection Account unless the security interest granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Trustee to make any such investment or sale, if requested by the Trustee, the Issuer shall deliver to the Trustee an Issuer Opinion of Counsel, acceptable to the Trustee, to such effect. Subject to Section 6.01(c), the Trustee shall not in any way be held liable for the selection of Eligible Investments or for investment losses incurred thereon except for losses attributable to the Trustee's failure to make payments on such Eligible Investments issued by the Trustee, in its commercial capacity as principal obligor and not as Trustee, in accordance with their terms. The Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or the failure of the Issuer to provide timely written investment direction. The Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of written investment direction pursuant to an Issuer Order; provided, however, that if (i) the Issuer shall have failed to give investment directions for any funds on deposit in the Collec tion Account to the Trustee by 11:00 a.m. (prevailing New York City time) (or such other time as may be agreed by the Issuer and Trustee) on any Business Day, or (ii) a Default or Event of Default shall have occurred and be continuing but the Securitization Bonds shall not have been declared due and payable pursuant to Section 5.02, then the Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Collection Account in one or more Eligible Invest ments of the kind described in clause (e) of the definition thereof. (c) Any Securitization Charge Collections remitted by the Servicer to the Trustee, any Indemnity Amounts remitted to the Trustee by the Seller or the Servicer or otherwise received by the Trustee or the Issuer, any other proceeds of Collateral received by the Servicer, the Issuer or the Trustee, and any amounts paid by any counterparty under any Interest Rate Swap Agreement received by the Servicer, the Issuer or the Trustee, shall be deposited in the General Subaccount. (d) Monthly, on the 20th day of each month, or if such day is not a Business Day, the preceding Business Day, beginning January 20, 2002, the fee owed to the Trustee in an amount equal to $1,875 for such month, plus any expenses, including legal fees and expenses, Indemnity Amounts (up to a maximum of $10,000,000 in the aggregate for the then current and all prior Payment Dates and for all Series, provided that the payment of such amounts does not result in an Event of Default, unless the Issuer has received confirmation from S&P and Fitch that a further amount will not result in a reduction or a withdrawal of the then current rating of the outstanding Securitization Bonds), shall, at the direction of the Servicer, be paid to the Trustee. (e) After the distribution made pursuant to clause (d) above, monthly, on the 20th day of each month, or if such day is not a Business Day, the preceding Business Day, beginning January 20, 2002, the Monthly Servicing Fee and any unpaid Monthly Servicing Fees shall, at the direction of the Servicer, be paid to the Servicer. (f) On each Payment Date, or such other date related to such Payment Date as may be specified in the related Series Supplement, the Trustee, at the direction of the Servicer, shall allocate to each Class Subaccount from the related Series Subaccount the amounts specified in the related Series Supplement. Such amounts shall be so allocated after taking into account all allocations required in connection with such Payment Date under clauses (d) and (e) above and (g)(i) through (iii) below; provided that in the event of any shortfall of amounts to be allocated pursuant to clause (g)(iii) among more than one Class of the applicable Series, amounts shall be allocated to such Class Subaccount on a Pro Rata basis with all other Classes of the relevant Series. Amounts in each Class Subaccount shall be applied as provided in the related Series Supplement. (g) Except as otherwise provided in any Series Supplement with respect to any floating rate Class, on each Payment Date, by 12:00 noon (prevailing New York City time), or if such day is not a Business Day, on the following Business Day, the Trustee shall, at the direction of the Servicer, apply all amounts on deposit in the General Subaccount of the Collection Account and any investment earnings on the subaccounts in the Collection Account, after distribution in accordance with clauses (d) and (e) above, and, subject to the qualifications therein, after allocation to any Class Subaccount and payment to any related Swap Counterparty in accordance with clause (f) above, in the following priority: (i) the administration fee payable under the Administration Agree ment, as specified in the related Series Supplement, shall be paid to the Administrator; and fees payable to the Independent Managers in an amount equal to $583.33 for such Payment Date, shall be paid to the Independent Managers; (ii) so long as no Event of Default has occurred and is continuing or would be caused by such payment, all Operating Expenses other than distributions in accordance with clauses (d), (e) and (g)(i) above shall be paid to the Persons entitled thereto, provided that the amount paid on such Payment Date pursuant to this clause (g)(ii) may not exceed $100,000 in the aggregate for all Series; (iii) an amount equal to Interest payable on each Class of each Series of Securitization Bonds on such Payment Date shall be allocated on a Pro Rata basis to the corresponding Series Subaccount, which, to the extent provided in any Series Supplement with respect to interest on any floating rate Class, shall be an amount equal to the applicable amount specified in the related Series Supplement payable with respect to that Class and which will be allocated Pro Rata to the corresponding Class Subaccount; (iv) an amount equal to any Principal of each Class of each Series of Securitization Bonds payable as a result of acceleration pursuant to Section 5.02, any Principal of any Series or Class of Securitization Bonds payable on the Final Maturity Date of such Series or Class, and any Principal of a Series or Class of Securitization Bonds payable on the Redemption Date for such Series or Class shall be allocated on a Pro Rata basis to the corresponding Series Subaccount; (v) an amount equal to Principal scheduled to be paid on each Class of each Series of Securitization Bonds on such Payment Date according to the Expected Amortization Schedule, excluding any amounts provided for pursuant to clause (g)(iv) above, shall be allocated on a Pro Rata basis to the corresponding Series Subaccount; (vi) all remaining unpaid Operating Expenses and Indemnity Amounts (excluding those paid pursuant to clause (d) above) and any termination or similar non-recurring payments under any Interest Rate Swap Agreement shall be paid to the Persons entitled thereto; (vii) any amount necessary to replenish any shortfalls in the Capital Subaccount for each Series below the Required Capital Amount for such Series shall be allocated to the Capital Subaccount for such Series, Pro Rata, based on the Outstanding principal balance of each Series; (viii) an amount shall be allocated to the Overcollateralization Subaccount for each Series sufficient to cause the amount in the Overcollateralization Subaccount for such Series to equal the Scheduled Overcollateralization Level for such Series as of that Payment Date, Pro Rata, based on the Outstanding principal balance of each Series; (ix) so long as no Event of Default has occurred and is continuing, an amount equal to investment earnings on amounts in the Capital Subaccount shall be released to the Issuer; (x) the balance, if any, shall be allocated to the Reserve Subaccount; and (xi) following repayment of all outstanding Series of Securitization Bonds, the balance, if any, shall be released to the Issuer free from the Lien of this Indenture. (h) For purposes of allocations among Series prior to an acceleration of the Securitization Bonds pursuant to Section 5.02, except as otherwise provided in any Series Supplement, "Pro Rata" means with respect to any Series a ratio, (i) in the case of a payment of Interest on any Payment Date, the numerator of which is the amount of Interest payable on such Series on such Payment Date which shall include, with respect to any Class of such Series of floating rate Securitization Bonds, the Gross Fixed Amount for that Class (as such term is defined by the related Series Supplement) on such Payment Date and the denominator of which is the aggregate amount of Interest payable on all Series on such Payment Date; (ii) in the case of a payment of Principal on any Payment Date, the numerator of which is the aggregate amount of Principal scheduled to be paid or payable, as the case may be, on such Payment Date with respect to such Series and the denominator of which is the sum of the aggregate amounts of Principal scheduled to be paid or payable, as the case may be, with respect to all Outstanding Series on such Payment Date; and (iii) in the case of a payment or allocation on any Payment Date other than of Interest or Principal, the numerator of which is the Outstanding principal amount of such Series immediately prior to such Payment Date and the denominator of which is the aggregate Outstanding principal amount of all Series immediately prior to such Payment Date. (i) If, on any Payment Date, funds on deposit in the General Subaccount are insufficient to make the payments and allocations contemplated by subclauses (d), (e), (f) and (g)(i) through (viii) above for all Series, the Trustee shall, at the direction of the Servicer, draw from amounts on deposit in the following subaccounts in the following order up to the amount of such shortfall, in order to make such payments and allocations: (i) from the Reserve Subaccount for all Series, Pro Rata, for payments and allocations contemplated by subclauses (d), (e), (f) and (g)(i) through (v), (vii) and (viii), (ii) from the Overcollateralization Subaccount for such Series, Pro Rata, for payments and allocations contemplated by subclauses (d), (e), (f) and (g)(i) through (v), and (iii) from the Capital Subaccount for such Series, Pro Rata, for payments and allocations contemplated by subclauses (d), (e), (f) and (g)(i) through (v); provided that no amounts from the Reserve Subaccount, the Overcollateralization Subaccount for such Series or the Capital Subaccount for such Series shall by allocated to any Class Subaccount pursuant to subclause (g)(iii) to the extent a shortfall in amounts available to pay interest due on the related Class of Securitization Bonds is due solely to any failure by a Swap Counterparty to make payments due under the related Interest Rate Swap Agreement. (j) On each Payment Date for any Series prior to an acceleration of the Securitization Bonds pursuant to Section 5.02, the amounts on deposit in the Series Subaccount shall be allocated, at the direction of the Servicer, in the following order of priority: (i) to pay Interest due and payable on the Securitization Bonds of such Series with respect to such Payment Date to the Holders of Securitization Bonds of such Series, and (ii) the balance, if any, up to the amount of Principal scheduled to be paid or payable on the Securitization Bonds of such Series on such Payment Date, to pay such Principal to the Holders of Securitization Bonds of such Series. (k) Prior to an acceleration of the Securitization Bonds pursuant to Section 5.02, all allocations of Principal and Interest with respect to any Series comprised of two or more Classes shall be allocated among the Classes within such Series on a Pro Rata basis. (l) For purposes of allocations among Classes within a single Series prior to an acceleration of the Securitization Bonds pursuant to Section 5.02, except as otherwise provided in any Series Supplement, "Pro Rata" means with respect to any Class a ratio, (i) in the case of a payment of Interest with respect to any Payment Date, the numerator of which is the amount of interest payable to such Class on such Payment Date, or in the case of any Class of floating rate Securitization Bonds, the Gross Fixed Amount for that Class (as such term is defined by the related Series Supplement) on such Payment Date, and the denominator of which is the aggregate amount of Interest payable on all Classes within such Series on such Payment Date; and (ii) in the case of a payment of Principal on any Payment Date, the numerator of which is the aggregate amount of Principal scheduled to be paid or payable, as the case may be, on such Payment Date with respect to such Class and the denominator of which is the sum of the aggregate amounts of Principal scheduled to be paid or payable, as the case may be, with respect to all Outstanding Classes within such Series on such Payment Date. (m) Prior to an acceleration of the Securitization Bonds pursuant to Section 5.02, all payments of Principal and Interest to Holders of Securitization Bonds of a single Class, or of a single Series without Classes, shall be made on a proportionate basis based on the respective principal amounts of such Securitization Bonds held by such Holders. (n) Upon an acceleration of the maturity of the Securitization Bonds pursuant to Section 5.02, the aggregate amount of principal of and interest accrued on each Securitization Bond shall be payable, without priority of interest over principal or of principal over interest and without regard to Series or Class, in the proportion that the aggregate amount of principal of and interest accrued on such Securitization Bond bears to the aggregate amount of principal of and interest accrued on all Securitization Bonds. (o) Notwithstanding any other provision in this Indenture to the contrary, in the event of an acceleration of the Securitization Bonds and a subsequent liquidation of the Collateral in accordance with Section 5.04(a), if so provided in any Interest Rate Swap Agree ment, the proceeds of such liquidation allocated to the related Class of floating rate Securitization Bonds in accordance with this Section 8.03 shall be deposited in the related Class Subaccount and allocated between and paid to the Holders of such floating rate Class, on the one hand, and the related Swap Counterparty, on the other hand, pro rata based on the aggregate amount of principal and interest due and payable on such floating rate Class and the aggregate amount payable to the related Swap Counterparty in accordance with such Interest Rate Swap Agree ment. SECTION 8.03 Release of Collateral. (a) All money and other property withdrawn from the Collection Account by the Trustee for payment to the Issuer as provided in this Indenture in accordance with Section 8.02 shall be deemed released from this Indenture when so withdrawn and applied in accordance with the provisions of Article VIII, without further notice to, or release or consent by, the Trustee. (b) Other than as provided for in clause (a) above, the Trustee shall release property from the Lien of this Indenture only as and to the extent permitted by the Basic Documents and only upon receipt of an Issuer Request accompanied by an Issuer Officer's Certificate, an Issuer Opinion of Counsel and Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01 or an Issuer Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent Certificate. (c) Subject to the payment of its fees and expenses pursuant to Section 6.07, the Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the Lien of this Indenture, or convey the Trustee's interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Trustee as provided in this Article VIII shall be bound to ascertain the Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. (d) Subject to Section 8.03(b), the Trustee shall, at such time as there are no Securitization Bonds Outstanding and all sums due the Trustee pursuant to Section 6.07 have been paid, release any remaining portion of the Collateral that secured the Securitization Bonds from the Lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds or investments then on deposit in or credited to the Collection Account. SECTION 8.04 Issuer Opinion of Counsel. The Trustee shall receive at least five days notice when requested by the Issuer to take any action pursuant to Section 8.03, accompanied by copies of any instruments involved, and the Trustee shall also require, as a condition to such action, an Issuer Opinion of Counsel, in form and substance satisfactory to the Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Securitization Bonds or the rights of the Securitization Bondholders in contravention of the provisions of this Indenture; provided, however, that such Issuer Opinion of Counsel shall not be required to express an opinion as to the fair value of the Collateral. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Trustee in connection with any such action. SECTION 8.05 Reports by Independent Accountants. The Issuer shall appoint a firm of Independent certified public accountants of recognized national reputation, subject to the approval of the Trustee, for purposes of preparing and delivering the reports or certificates of such accountants required by this Indenture and the related Series Supplements. Upon any resignation by such firm, the Issuer shall promptly appoint a successor thereto that shall also be a firm of Independent certified public accountants of recognized national reputation. If the Issuer shall fail to appoint a successor to a firm of Independent certified public accountants that has resigned within 30 days after such resignation, the Trustee shall promptly notify the Issuer of such failure in writing. If the Issuer shall not have appointed a successor within ten (10) days thereafter, the Trustee shall promptly appoint a successor firm of Independent certified public accountants of recognized national reputation. The fees of such firm of Independent certified public accountants and its successor shall be payable by the Issuer. ARTICLE IX Supplemental Indentures SECTION 9.01 Supplemental Indentures Without Consent of Securitiza tion Bondholders. (a) Without the consent of the Holders of any Securitization Bonds or the counterparty under any Interest Rate Swap Agreement but with prior notice to the Rating Agencies, the Issuer and the Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof), in form satisfactory to the Trustee, for any of the following purposes: (i) to correct or amplify the description of the Collateral, or better to assure, convey and confirm unto the Trustee the Collateral, or to subject to the Lien of this Indenture additional property; (ii) to evidence the succession, in compliance with the applicable provisions hereof, of another Person to the Issuer, and the assumption by any applicable successor of the covenants of the Issuer contained herein and in the Securitization Bonds; (iii) to add to the covenants of the Issuer, for the benefit of the Securiti zation Bondholders, or to surrender any right or power herein conferred upon the Issuer; (iv) to convey, transfer, assign, mortgage or pledge any property to the Trustee; (v) to cure any ambiguity, to correct or supplement any provision herein or in any Supplemental Indenture which may be inconsistent with any other provision herein or in any Supplemental Indenture or to make any other provisions with respect to matters or questions arising under this Indenture or in any Supplemental Indenture consistent with other provisions of the Basic Documents or less ambiguous; provided, however, that (i) such action shall not, as evidenced by an Issuer Opinion of Counsel, adversely affect in any material respect the interests of any Securitization Bondholder or any counterparty under any Interest Rate Swap Agreement and (ii) the Rating Agency Condition shall have been satisfied with respect thereto; (vi) to evidence and provide for the acceptance of the appointment hereunder by a successor Trustee with respect to the Securitization Bonds and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the require ments of Article VI; (vii) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA; (viii) to set forth the terms of any Series that has not theretofore been authorized by a Supplemental Indenture, provided that the Rating Agency Condition has been satisfied; (ix) to provide for any Interest Rate Swap Agreements with respect to any Series or Class of Securitization Bonds which bears a floating rate of interest or any Series or Class with specified credit enhancement; provided, however, that: (A) such action shall not, as evidenced by an Opinion of Counsel, adversely affect in any material respect the interests of any Securitiza tion Bondholder or any counterparty under any Interest Rate Swap Agreement and (B) the Rating Agency Condition shall have been satisfied with respect thereto; or (x) to authorize the appointment of any listing agent, transfer agent or paying agent or additional registrar for any Class of any Series of Securitization Bonds required or advisable in connection with the listing of any Class or any Series of Securiti zation Bonds on the Luxembourg Stock Exchange or any other stock exchange, and otherwise to amend this Indenture to incorporate any changes requested or required by any governmental authority, stock exchange authority, listing agent, transfer agent or paying agent or additional registrar for any Class of any Series of Securitization Bonds in connection with that listing. (b) The Trustee is hereby authorized to join in the execution of any such Supplemental Indenture and to make any further appropriate agreements and stipulations that may be therein contained. SECTION 9.02 Supplemental Indentures with Consent of Securitization Bondholders. (a) The Issuer and the Trustee, when authorized by an Issuer Order, also may, upon satisfaction of the Rating Agency Condition (in each case, accompanied by the form of the proposed supplemental indenture) and with the consent of the Holders of not less than a majority of the Outstanding Amount of the Securitization Bonds of each Series or Class to be affected, by Act of such Holders delivered to the Issuer and the Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Securitization Bonds under this Indenture; provided, however, that no such Supplemental Indenture shall, without the consent of the Holder of each Outstanding Securitiza tion Bond of each Series or Class and each counterparty under any Interest Rate Swap affected thereby: (i) change the date of payment of any instalment of principal of or interest on any Securitization Bond, or reduce the principal amount thereof, the interest rate thereon or the redemption price with respect thereto, change the provisions of any Interest Rate Swap Agreement relating to the amount, calculation or timing of payments, change the provisions of this Indenture and the related applicable Supplemental Indenture or Series Supplement relating to the application of collections on, or the proceeds of the sale of, the Collateral to payment of principal of or interest on the Securitization Bonds, or change the currency in which, any Securitization Bond or the interest thereon is payable; (ii) impair the right to institute suit for the enforcement of the provi sions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Securitization Bonds on or after the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date); (iii) reduce the percentage of the Outstanding Amount of the Securiti zation Bonds or of a Series or Class thereof, the consent of the Holders of which is required for any such Supplemental Indenture, or the consent of the Holders of which is required for any waiver of compliance with provisions of this Indenture or defaults hereunder and their consequences provided for in this Indenture or modify or alter the provisions of the proviso to the definition of the term "Outstanding"; (iv) reduce the percentage of the Outstanding Amount of the Securiti zation Bonds required to direct the Trustee to direct the Issuer to sell or liquidate the Collateral pursuant to Section 5.04 or to preserve the Collateral pursuant to Section 5.05; (v) reduce the percentage of the Outstanding Amount of a Series or Class of Securitization Bonds, the consent of the Holders of which is required for any amendments to the Sale Agreement, the Administration Agreement, the Servicing Agreement or any Interest Rate Swap Agreement; (vi) modify any of the provisions of this Indenture in such manner so as to affect the amount of any payment of interest or principal payable on any Securitization Bond on any Payment Date or change the Redemption Dates, Expected Amortization Schedules or Final Maturity Date of any Series or Class of Securitization Bonds, or the method of calculation of interest on any floating rate Securitization Bonds; (vii) decrease the Overcollateralization Amount or Required Capital Amount with respect to any Series or the Scheduled Overcollateralization Level with respect to any Payment Date; (viii) modify or alter the provisions of this Indenture regarding the voting of Securitization Bonds held by the Issuer, the Seller, an Affiliate of either of them or any obligor on the Securitization Bonds; (ix) decrease the percentage of the aggregate principal amount of Securitization Bonds required to amend the sections of this Indenture which specify the applicable percentage of the aggregate principal amount of the Securitization Bonds necessary to amend this Indenture or any other Basic Document; or (x) permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the Collateral or, except as otherwise permitted or contemplated herein, terminate the Lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Securitization Bond of the security provided by the Lien of this Indenture. (b) It shall not be necessary for any Act of Securitization Bondholders under this Section 9.02 to approve the particular form of any proposed Supplemental Indenture, but it shall be sufficient if such Act shall approve the substance thereof. (c) Promptly after the execution by the Issuer and the Trustee of any Supple mental Indenture pursuant to this Section 9.02, the Trustee shall mail to the Holders of the Securitization Bonds to which such amendment or Supplemental Indenture relates a notice setting forth in general terms the substance of such Supplemental Indenture. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. If any Securitization Bonds are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, the Trustee shall arrange for publication an Authorized Newspaper that such notice shall be available with the Issuer's listing agent in Luxembourg appointed pursuant to Section 3.02(b). SECTION 9.03 Execution of Supplemental Indentures. In executing, or permitting the additional trusts created by, any Supplemental Indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Issuer Opinion of Counsel stating that the execution of such Supplemental Indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such Supplemental Indenture that affects the Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. SECTION 9.04 Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to each Series or Class of Securitization Bonds affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Trustee, the Issuer, the Holders of the Securitization Bonds and any counterparty under any Interest Rate Swap Agreement shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 9.05 Conformity with Trust Indenture Act. Every amendment of this Indenture and every Supplemental Indenture executed pursuant to this Article IX shall conform to the requirements of the TIA as then in effect so long as this Indenture shall then be qualified under the TIA. SECTION 9.06 Reference in Securitization Bonds to Supplemental Indentures. Securitization Bonds authenticated and delivered after the execution of any Supplemental Indenture pursuant to this Article IX may, and if required by the Trustee shall, bear a notation in form approved by the Trustee as to any matter provided for in such Supplemental Indenture. If the Issuer or the Trustee shall so determine, new Securitization Bonds so modified as to conform, in the opinion of the Trustee and the Issuer, to any such Supplemental Indenture may be prepared and executed by the Issuer and authenticated and delivered by the Trustee in exchange for Outstanding Securitization Bonds. ARTICLE X Redemption of Securitization Bonds SECTION 10.01 Optional Redemption by Issuer. If so provided in the related Series Supplement and provided that there is no Interest Rate Swap Agreement with respect to any Class of that Series in effect, the Issuer may, at its option, redeem all, but not less than all, of the Securitization Bonds of a Series on any Payment Date if, after giving effect to payments that would otherwise be made on such Payment Date, the Outstanding Amount of any such Series of Securitization Bonds has been reduced to less than five percent (5%) of the initial principal balance of such Series. The redemption price in any case shall be equal to the outstanding principal amount of the Bonds to be redeemed plus accrued and unpaid interest thereon at the Interest Rate to the Redemption Date (the "Redemption Price"). If the Issuer elects to redeem the Securitization Bonds of a Series pursuant to this Section 10.01, it shall furnish notice of such election to (a) the Trustee, not later than twenty-five (25) days prior to the Redemption Date for such redemption and (b) to the Rating Agencies, not later than ten (10) days prior to such Redemption Date, whereupon all such Securitization Bonds shall be due and payable on such Redemption Date upon the furnishing of a notice complying with Section 10.03 to each Holder of the Securitization Bonds of such Series pursuant to this Section 10.01. SECTION 10.02 Mandatory Redemption by Issuer. The Issuer shall redeem the Securitization Bonds of a Series on the Redemption Date or Dates, if any, in the amounts required, if any, and at the redemption price specified in the Series Supplement for such Series, which in any case shall be not less than the outstanding principal amount of the Bonds to be redeemed, plus accrued interest thereon to such Redemption Date. If the Issuer is required to redeem the Securitization Bonds of a Series pursuant to this Section 10.02, it shall furnish notice of such requirement to the Trustee not later than twenty-five (25) days prior to the Redemption Date for such redemption whereupon all such Securitization Bonds shall be due and payable on the Redemption Date upon the furnishing of a notice complying with Section 10.03 to each Holder of the Securitization Bonds of such Series pursuant to this Section 10.02. SECTION 10.03 Form of Redemption Notice. (a) Unless otherwise specified in the Series Supplement relating to a Series of Securitization Bonds, notice of redemption under Sections 10.01 or 10.02 shall be given by the Trustee by first-class mail, postage prepaid, mailed not less than five days nor more than forty-five (45) days prior to the applicable Redemption Date to each Holder of Securitization Bonds to be redeemed, as of the close of business on the Record Date preceding the applicable Redemption Date at such Holder's address appearing in the Securitization Bond Register. (b) All notices of redemption shall state: (i) the Redemption Date; (ii) the amount of such Securitization Bonds to be redeemed; (iii) the Redemption Price; and (iv) the place where such Securitization Bonds are to be surrendered for payment of the Redemption Price and accrued interest (which shall be the office or agency of the Issuer to be maintained as provided in Section 3.02). (c) Notice of redemption of the Securitization Bonds to be redeemed shall be given by the Trustee in the name and at the expense of the Issuer. For so long as any Securitiza tion Bonds are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, the Trustee shall arrange that such notice will also be given by publication in an Authorized Newspaper at least ten (10) days prior to the Redemption Date. Failure to give notice of redemption, or any defect therein, to any Holder of any Securitization Bond selected for redemption shall not impair or affect the validity of the redemption of any other Securitization Bond. Notice of optional redemption shall be irrevocable once given. SECTION 10.04 Payment of Redemption Price. If notice of redemption has been duly mailed or duly waived by the Holders of all Securitization Bonds called for redemp tion, then the Securitization Bonds called for redemption shall be payable on the applicable Redemption Date at the applicable Redemption Price. No further interest will accrue on the principal amount of any Securitization Bonds called for redemption after the Redemption Date, and the Holders of such Securitization Bonds will have no rights with respect thereto, if payment of the Redemption Price has been duly provided for on or before the Redemption Date declared therefor. Notwithstanding the foregoing, the Holders of the Securitization Bonds shall be entitled to payment of interest on the Redemption Price accrued at the related Interest Rates to the extent the Issuer fails to pay the Redemption Price on the Redemption Date declared therefor. Payment of the Redemption Price shall be made by the Trustee to or upon the order of the Holders of the Securitization Bonds called for redemption upon surrender of such Securitization Bonds, and the Securitization Bonds so redeemed shall cease to be of further effect and the Lien hereunder shall be released with respect to such Securitization Bonds. ARTICLE XI Miscellaneous SECTION 11.01 Compliance Certificates and Opinions, etc. (a) Upon any application or request by the Issuer to the Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Trustee (i) an Issuer Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Issuer Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section 11.01, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished. (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with. SECTION 11.02 Form of Documents Delivered to Trustee. (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. (b) Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Issuer Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer, the Seller or the Issuer, stating that the information with respect to such factual matters is in the possession of the Servicer, the Seller or the Issuer, unless such Authorized Officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. (c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. (d) Whenever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Trustee's right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI. SECTION 11.03 Acts of Securitization Bondholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Securitization Bondholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securitization Bond holders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Issuer. Such instru ment or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securitization Bondholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 11.03. (b) The fact and date of the execution by any person of any such instrument or writing may be proved in any manner that the Trustee deems sufficient. (c) The ownership of Securitization Bonds shall be proved by the Securitization Bond Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Securitization Bonds shall bind the Holder of every Securitiza tion Bond issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Securitization Bond. SECTION 11.04 Notices, etc., to Trustee, Issuer and Rating Agencies. (a) Any request, demand, authorization, direction, notice, consent, waiver or Act of Securitization Bondholders or other documents provided or permitted by this Indenture to be made upon, given or furnished to or filed with: (i) the Trustee by any Securitization Bondholder or by the Issuer, or (ii) the Issuer by the Trustee or by any Securitization Bondholder, shall be sufficient for every purpose hereunder if in English and in writing, and sent by United States first-class mail, reputable overnight courier service, facsimile transmission or 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 request, demand, authorization, direction, notice, consent, waiver or Act shall be effective when delivered or transmitted, or if mailed, five days after deposit in the United States first-class mail with proper postage for first-class mail prepaid, in the case of the Trustee, addressed to the Trustee at its Corporate Trust Office at: The Bank of New York, Asset Backed Securities (ABS), 5 Penn Plaza, 16th Floor, New York, New York 10001-1803, and in the case of the Issuer, addressed to: Consumers Funding LLC, 212 W. Michigan Avenue, Suite M-1029, Jackson, Michigan 49201, Attention: Managers, or at any other address previously furnished in writing to the Trustee by the Issuer. The Issuer shall promptly transmit any notice received by it from the Securitization Bondholders to the Trustee. (b) Notices required to be given to the Rating Agencies by the Issuer, the Trustee or a Manager shall be in writing, delivered personally, via facsimile transmission, by reputable overnight courier or by first-class mail, postage prepaid, to: (i) in the case of Moody's: Moody's Investors Service, Inc., Attention: ABS Monitoring Department, 99 Church Street, New York, New York 10007; (ii) in the case of Standard & Poor's: Standard & Poor's Corporation, 55 Water Street, New York, NY 10041, Attention: Asset Backed Surveillance Department and (iii) in the case of Fitch: Fitch, Inc., 1 State Street Plaza, New York, New York 10004, Attention: ABS Surveillance. SECTION 11.05 Notices to Securitization Bondholders; Waiver. (a) Where this Indenture provides for notice to Securitization Bondholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and delivered by first-class mail, postage prepaid, to each Securitization Bondholder affected by such event, at the address of such Securitization Bondholder as it appears on the Securitization Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Securitization Bondholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Securitization Bondholder shall affect the sufficiency of such notice with respect to other Securitization Bondholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. (b) Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Securitiza tion Bondholders shall be filed with the Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver. (c) In case it shall be impractical to deliver notice in accordance with clause (a) of this Section 11.05 to the Holders of Securitization Bonds when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. (d) Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default. SECTION 11.06 Notices to Luxembourg Stock Exchange. (a) For so long as any Securitization Bonds are listed on the Luxembourg Stock Exchange and to the extent the rules of such exchange so require, the Issuer shall notify the Luxembourg Stock Exchange and any agent appointed pursuant to Section 3.02(b) if any rating assigned to such Securitization Bonds is reduced or withdrawn and shall arrange for such notice to be published in an Autho rized Newspaper. (b) For so long as any Securitization Bonds are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, the Trustee shall make available to the Holders of such Securitization Bonds and shall deposit on file with the Issuer's listing agent in Luxembourg appointed pursuant to Section 3.02(b), copies of the Basic Documents, all reports provided to Securitization Bondholders pursuant to this Indenture, the prospectus related to such Securitization Bonds, the reports of independent certified public accountants obtained with respect to the Issuer pursuant to this Indenture, the financial information regarding Consumers in its annual report on Form 10-K for the fiscal year ended December 31, 2000 and copies of each annual report of Consumers on Form 10-K for subsequent fiscal years. The Trustee shall deposit with the Chief Registrar of the District Court of Luxembourg prior to listing on the Luxembourg Stock Exchange a copy of the Issuer Certificate of Formation, the Issuer LLC Agreement and any legal notices relating to the issuance of such Securitization Bonds. SECTION 11.07 Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the Securitization Bonds to the contrary, the Issuer may enter into any agreement with any Holder of a Securitization Bond providing for a method of payment, or notice by the Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this Indenture for such payments or notices. The Issuer will furnish to the Trustee a copy of each such agreement and the Trustee will cause payments to be made and notices to be given in accordance with such agreements. SECTION 11.08 Conflict with Trust Indenture Act. (a) If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the TIA, such required provision shall control. (b) The provisions of TIA Sections 310 through 317 that impose duties on any Person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. SECTION 11.09 Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.10 Successors and Assigns. (a) All covenants and agreements in this Indenture and the Securitization Bonds by the Issuer shall bind its successors and permitted assigns, whether so expressed or not. (b) All agreements of the Trustee in this Indenture shall bind its successors. (c) The Trustee shall provide prior notice to the Rating Agencies of any assignment of the obligations under this Agreement. SECTION 11.11 Severability. In case any provision in this Indenture or in the Securitization Bonds shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.12 Benefits of Indenture. Nothing in this Indenture or in the Securitization Bonds, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Securitization Bondholders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Collateral, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 11.13 Legal Holidays. In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Securitization Bonds or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date. SECTION 11.14 GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVI SIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERE UNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 11.15 Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.16 Issuer Obligation. No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Trustee on the Securitization Bonds or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Member or any Manager, employee or agent of the Issuer or (ii) any stockholder, officer, director, employee or agent of the Trustee (it being understood that none of the Trustee's obligations are in its individual capacity). SECTION 11.17 No Petition. The Trustee, by entering into this Indenture, and each Securitization Bondholder, by accepting a Securitization Bond, hereby covenants and agrees (or shall be deemed to have covenanted and agreed) that it shall not at any time institute against the Issuer, or join in the institution against the Issuer of, or acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any Federal or State bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer or ordering the winding up or liquidation of the affairs of the Issuer. SECTION 11.18 Intercreditor Agreement. The Trustee is hereby authorized, at the request of the Issuer, to execute and deliver additional intercreditor agreements pursuant to Section 18(b) of the Initial Intercreditor Agreement subject only to the satisfaction of the Rating Agency Condition and receipt by the Trustee of the Opinion of Counsel referenced in such Section 18(b). Each Intercreditor Agreement shall be binding on the Securitization Bondholders. IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture to be duly executed and delivered by an officer thereof, each thereunto duly authorized, all as of the day and year first above written. CONSUMERS FUNDING LLC, as Issuer By: /s/ Laura L. Mountcastle --------------------------------- Name: Laura L. Mountcastle Title: President, Chief Executive Officer, Chief Financial Officer and Treasurer THE BANK OF NEW YORK, as Trustee By: /s/ Cassandra D. Shedd ----------------------------------------- Name: Cassandra D. Shedd Title: Assistant Vice President APPENDIX A MASTER DEFINITIONS The definitions contained in this Appendix A are applicable to the singular as well as the plural forms of such terms. Act has the meaning specified in Section 11.03(a) of the Indenture. Adjustment Date means (a) the first day of the first billing cycle of the Servicer in December of each year through December 2013 and (b) thereafter, as long as the Securiti zation Bonds are outstanding, the first day of the first billing cycle of the Servicer in March, June, September and December of each year, beginning with the billing cycle for December 2014. Adjustment Request means an application filed by the Servicer with the MPSC for a Securitization Charge Adjustment pursuant to Section 5 of the Issuer Annex. Administration Agreement means the Administration Agreement dated as of November 8, 2001, between Consumers, as administrator, and the Issuer, as the same may be amended or supplemented from time to time. Administrator means Consumers, as administrator under the Administration Agreement, and each successor to Consumers, in the same capacity, pursuant to Section 14 of the Administration Agreement. Affiliate means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing. Alternative Electric Suppliers means any third party, including any electric generation supplier, providing billing or metering services, licensed by the MPSC pursuant to relevant provisions of the Customer Choice Act, the MPSC Regulations and the Financ ing Order. Annual Accountant's Report has the meaning assigned to that term in Section 3.07 of the Servicing Agreement. Authorized Denominations means, with respect to any Series or Class of Securitization Bonds, $1,000 and integral multiples of $1.00 above that amount, provided, however, that one bond of each Class may have denomination of less than $1,000, or such other denominations as may be specified in the Series Supplement therefor. Authorized Newspaper means the Luxemburger Wort or any other newspaper published in Luxembourg on a daily basis. Authorized Officer means, with respect to the Issuer, (A) any Manager and, (B) any person designated as an "Officer" under the Issuer LLC Agreement and authorized thereby to act on behalf of the Issuer. Basic Documents means the Formation Documents, the Sale Agreement, the Intercreditor Agreement, any Bills of Sale, the Servicing Agreement, the Administration Agreement, the Indenture, the Underwriting Agreement, the Securities Account Control Agreement and any Interest Rate Swap Agreement, as each may be amended or supplemented from time to time. Bill of Sale means any bill of sale issued by the Seller to the Issuer pursuant to the Sale Agreement evidencing the sale of Securitization Property by the Seller to the Issuer. Billing Month means the schedule for current month billings (each billing month includes 21 billing segments regardless of the number of days in the current calendar month). For uniformity of customer billings, each customer's meter is read every 27 to 33 days and billed in one of the 21 monthly billing segments. Book-Entry Securitization Bonds means beneficial interests in the Securitization Bonds, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.11 of the Indenture. Business Day means any day other than a Saturday or Sunday or a day on which banking institutions in the City of Jackson, Michigan, or in the City of New York, New York or, with respect to any Securitization Bonds listed on the Luxembourg Stock Exchange, in Luxembourg, are required or authorized by law or executive order to remain closed. Calculation Date means the day which is a Business Day at least 45 days before each Adjustment Date on which the Servicer files an Adjustment Request. Capital Reserve Subaccount has the meaning specified in Section 8.02(a) of the Inden ture. Capital Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Class means, with respect to any Series, any one of the classes of Securitization Bonds of that Series, as specified in the Series Supplement for that Series. Class Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Clearing Agency means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. Clearing Agency Participant means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. Code means the Internal Revenue Code of 1986, as amended from time to time, and the treasury regulations promulgated thereunder. Collateral has the meaning specified in the Granting Clause of the Indenture. Collection Account has the meaning specified in Section 8.02(a) of the Indenture. Collection Curve means, with respect to a Billing Month, the forecast prepared by the Servicer of the percentages of amounts billed in a Billing Month that are expected to be received during each of the Billing Months for which the Collection Curve Percentage will be applied to determine the amount of Securitization Charges collected. Collection Curve Percentage means the percentages of amounts billed in a particular Billing Month that are expected to be received during that month. The initial Collection Curve Percentages are: First Billing Month's Collection Curve Percentage: 40.08% Second Billing Month's Collection Curve Percentage: 45.09% Third Billing Month's Collection Curve Percentage: 10.58% provided that the Collection Curve Percentages will be updated by Consumers periodi cally while the Securitization Bonds are outstanding using similar methodology. Commission means the U.S. Securities and Exchange Commission, and any successor thereof. Consumers means Consumers Energy Company, a Michigan corporation. Corporate Trust Office means the principal office of the Trustee at which at any particu lar time its corporate trust business shall be administered, which office at date of the execution of this Indenture is located at 5 Penn Plaza-16th floor, New York, New York 10001-1803, Attention: Corporate Trust-Asset Backed Securities (ABS), or at such other address as the Trustee may designate from time to time by notice to the Securitization Bondholders and the Issuer, or the principal corporate trust office of any successor Trustee (the address of which the successor Trustee will notify the Securitization Bondholders and the Issuer in writing). Covenant Defeasance Option has the meaning specified in Section 4.01(b) of the Indenture. Customers means all electric customers taking delivery of electricity from Consumers or its successor on its MPSC-approved rate schedules and special contracts. Customer Choice Act means the Customer Choice and Electricity Reliability Act as set forth in Michigan Public Acts 2000 PA 141 and 2000 PA 142 and effective on June 5, 2000. Daily Remittance Date means, if the Servicer has not satisfied the conditions of Section 5.11(b) of the Servicing Agreement, each Business Day commencing on the second Business Day following the date on which the Servicer ceases to satisfy such conditions. Default means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default. Defeasance Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Definitive Securitization Bonds has the meaning specified in Section 2.11 of the Inden ture. Delaware UCC means the Uniform Commercial Code, as in effect in the State of Delaware, as amended from time to time. DTC Agreement means the agreement between the Issuer, the Trustee and The Depository Trust Company, as the initial Clearing Agency, dated on or about November 8, 2001, relating to the Securitization Bonds, as the same may be amended or supplemented from time to time. Eligible Guarantor Institution means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution," including (as such terms are defined therein): (a) a bank; (b) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (c) a credit union; (d) a national securities exchange, registered securities association or clearing agency; or (e) a savings association that is a participant in a securities transfer associa tion. Eligible Institution means: (a) the corporate trust department of the Trustee, so long as any of the securi ties of the Trustee have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade, or (b) a depositary institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank), which (i) has either (A) with respect to any Eligible Investment having a maturity of greater than one month, a long-term unsecured debt rating of "AA-" by Standard & Poor's and Fitch and "Aa3" by Moody's, or (B) with respect to any Eligible Investment having a maturity one month or less, a certificate of deposit rating of "A-1+" by Standard & Poor's, "P-1" by Moody's and "F1+" by Fitch, or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies, and (ii) whose deposits are insured by the FDIC. Eligible Investments mean book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which evidence: (a) direct obligations of, and obligations fully and unconditionally guaranteed as to timely payment by, the United States of America; (b) demand deposits, time deposits or certificates of deposit of any depository institution or trust company (any depositary institution or trust company being referred to in this definition as a "financial institution") incorporated under the laws of the United States of America or any State thereof (or any domestic branch of a foreign bank) and subject to supervision and exami nation by Federal or State banking or depositary institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depositary institution or trust company) thereof shall have a credit rating from each of the Rating Agencies in the highest investment category granted thereby; (c) commercial paper or other short term obligations of any corporation organized under the laws of the United States of America (other than Consumers) whose ratings, at the time of the investment or contractual commitment to invest therein, from each of the Rating Agencies are in the highest investment category granted thereby; (d) investments in money market funds having a rating from each of the Rating Agencies in the highest investment category granted thereby (including funds for which the Trustee or any of its Affiliates act as investment manager or advisor); (e) bankers' acceptances issued by any depositary institution or trust company referred to in clause (b) above; (f) repurchase obligations with respect to any security that is a direct obliga tion of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depositary institution or trust company (acting as principal) de scribed in clause (b) above; (g) repurchase obligations with respect to any security or whole loan entered into with (i) a financial institution (acting as principal) described in clause (b) above, (ii) a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (any broker/dealer being referred to in this definition as a "broker/dealer"), the unsecured short-term debt obligations of which are rated P-1 by Moody's, A-1+ by Standard & Poor's and F1+ by Fitch at the time of enter ing into this repurchase obligation, or (iii) an unrated broker/dealer, acting as principal, that is a wholly-owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated P-1 by Moody's, A-1+ by Standard & Poor's and F1+ by Fitch at the time of purchase; or (h) any other investment permitted by each Rating Agency; provided, however, that, with respect to Moody's only, the obligor related to clauses (b), (c), (e), (f) and (g) above must have both a long term rating of at least A1 and a short term rating of at least P-1, and provided further, that, unless otherwise permitted by each Rating Agency, upon the failure of any Eligible Institution to maintain any applicable rating set forth in this definition or the definition of Eligible Institution, the related investments at such institution shall be reinvested in Eligible Investments at a successor Eligible Institution within 10 days, and provided, further, that, any Eligible Investment must not: (a) be sold, liquidated or otherwise disposed of at a loss, prior to the maturity thereof, or (b) mature later than (i) the date on which the proceeds of such Eligible Investment will be required to be on deposit in the Collection Account in order for the Trustee to make all required and scheduled payments and deposits into Subaccounts under the Indenture, if such Eligible Investment is held by an Affiliate of the Trustee, or (ii) the Business Day prior to the date on which the proceeds of such Eligible Investment will be required to be on deposit in the Collection Account in order for the Trustee to make all required and scheduled payments and deposits into Subaccounts under the Indenture, if such Eligible Investment is not held by an Affiliate of the Trustee; provided, however that with respect to the period prior to the first Payment Date any Eligible Investment must not have a maturity of greater than six months. Eligible Securities Account means either: (a) a segregated trust account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depositary institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depositary institution shall have a credit rating from each Rating Agency in one of its generic rating catego ries which signifies investment grade. Event of Default has the meaning specified in Section 5.01 of the Indenture. Exchange Act means the Securities Exchange Act of 1934, as amended. Expected Amortization Schedule means, with respect to each Series or, if applicable, each Class of Securitization Bonds, the expected amortization schedule for principal thereof, as specified in the Series Supplement therefor. Expected Final Payment Date means, with respect to each Series or, if applicable, each Class of Securitization Bonds, the date when all interest and principal is scheduled to be paid with respect to that Series or Class in accordance with the Expected Amortization Schedule, as specified in the Series Supplement therefor. Filing Office means the Office of the of the Secretary of State of the State of Michigan or the Office of the Secretary of State of the State of Delaware, as applicable. Final Maturity Date means, for each Series or, if applicable, each Class of Securitization Bonds, the date by which all principal of and interest on such Series or Class of Securitization Bonds is required to be paid, as specified in the Series Supplement therefor. Financing Issuance means an issuance of a new Series of Securitization Bonds under the Indenture to provide funds to finance the purchase by the Issuer of Securitization Property. Financing Order means the Opinion and Order issued on October 24, 2000 and the Order Granting Rehearing issued on January 12, 2001 by the MPSC (MPSC Docket Number U-12505) with respect to Consumers. Fitch means Fitch, Inc., or its successor. Formation Documents means, collectively, the Issuer LLC Agreement, the Issuer Certificate of Formation and any other document pursuant to which the Issuer is formed or governed, as each may be amended or supplemented from time to time. General Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Grant means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, and grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm. A Grant of the Collateral or of any other agree ment or instrument shall include all rights, powers and options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal, interest and other payments in respect of the Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto. Holder or Securitization Bondholder means the Person in whose name a Securitization Bond of any Series or Class is registered in the Securitization Bond Register. Indemnified Person has the meaning specified in Section 5.02 of the Servicing Agree ment. Indemnity Amount means the amount of any indemnification obligation payable under the Basic Documents. Indenture means the Indenture dated as of November 8, 2001, between the Issuer and the Trustee, as the same may be amended and supplemented from time to time by one or more Supplemental Indentures, and shall include each Series Supplement and the forms and terms of the Securitization Bonds established thereunder. Independent means, when used with respect to any specified Person, that the Person (a) is in fact independent of the Issuer, any other obligor upon the Securitiza tion Bonds, Consumers, the Servicer (if different from Consumers) and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, Consumers or any Affiliate of any of the foregoing Persons, and (c) is not connected with the Issuer, any such other obligor, Consumers or any Affiliate of any of the foregoing Persons as an officer, employee, pro moter, underwriter, trustee, partner, director or person performing similar functions. Independent Certificate means a certificate or opinion to be delivered to the Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order and approved by the Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of "Independent" in this Appendix A and that the signer is Independent within the meaning thereof. Independent Manager has the meaning set forth in the Issuer LLC Agreement. Initial Purchase Price has the meaning set forth in Section 2.01(a) of the Sale Agreement. Initial Transfer Date means the Series Issuance Date for the first Series of Securitization Bonds. Initial Transferred Securitization Property means the Securitization Property sold, assigned and/or transferred by the Seller to the Issuer as of the Initial Transfer Date pursuant to the Sale Agreement and the Bill of Sale delivered on or prior to the Initial Transfer Date as identified in such Bill of Sale. Insolvency Event means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person's affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days or (b) the commencement by such Person of a voluntary case under any applica ble Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing. Intercreditor Agreement means: (i) the Intercreditor Agreement dated as of November 8, 2001 (the "Initial Intercreditor Agreement"), among Consumers, the Trustee, the Issuer, Canadian Imperial Bank of Commerce and Asset Securitization Cooperative Corporation, as amended and supplemented from time to time; or (ii) any subsequent intercreditor agreement entered into by the Trustee pursuant to Section 18(b) of the Initial Intercreditor Agreement. Interest means, for any Payment Date for any Series or Class of Securitization Bonds, the sum, without duplication, of: (a) an amount equal to the amount of interest accrued at the applicable Interest Rate from the prior Payment Date with respect to that Series or Class; (b) any unpaid interest, plus any interest accrued on this unpaid inter est at the applicable Interest Rate, to the extent permitted by appli cable law; (c) if the Securitization Bonds have been declared due and payable, all accrued and unpaid interest thereon; and (d) with respect to a Series or Class to be redeemed prior to the next Payment Date, the amount of interest that will be payable as inter est on such Series or Class upon such redemption. Interest Rate means, with respect to each Series or Class of Securitization Bonds, the rate at which interest accrues on the principal balance of Securitization Bonds of such Series or Class, as specified in the Series Supplement therefor. Interest Rate Swap Agreement means any interest rate swap agreement entered into by the Issuer with respect to any Series or Class of Securitization Bonds, including, without limitation, the ISDA Master Agreement and the related Schedule and Confirmation between the Issuer and a Swap Counterparty, as same may be amended or supplemented from time to time. Issuer means Consumers Funding LLC, a Delaware limited liability company, or its successor under the Indenture or the party named as such in the Indenture until a successor replaces it and, thereafter, means the successor. Issuer Annex means Annex 1 of the Servicing Agreement. Issuer Certificate of Formation means the Amended and Restated Certificate of Forma tion of the Issuer which was filed with the Delaware Secretary of State's Office on November 6, 2001, as the same may be amended or supplemented from time to time. Issuer LLC Agreement means the Amended and Restated Limited Liability Company Agreement between the Issuer and Consumers, as sole Member, dated as of November 8, 2001, as the same may be amended or supplemented from time to time. Issuer Officer's Certificate means a certificate signed by any Authorized Officer of the Issuer, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01 of the Indenture, and delivered to the Trustee. Unless otherwise specified, any reference in the Indenture to an Officer's Certificate shall be to an Officer's Certificate of any Authorized Officer of the Issuer. Issuer Opinion of Counsel means one or more written opinions of counsel who may, except as otherwise expressly provided in the Indenture, be employees of or counsel to the Issuer or the Seller and who shall be reasonably satisfactory to the Trustee, and which opinion or opinions shall be addressed to the Trustee, and shall be in a form reasonably satisfactory to the Trustee. Issuer Order or Issuer Request means a written order or request, respectively, signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Trustee. Legal Defeasance Option has the meaning specified in Section 4.01(b) of the Indenture. Lien means a security interest, lien, charge, pledge, equity or encumbrance of any kind. Losses means collectively, any and all liabilities, obligations, losses, damages, payments, costs or expenses of any kind whatsoever. Manager has the meaning set forth in the Issuer LLC Agreement. Member means Consumers, as the sole member of the Issuer, in its capacity as such member under the Issuer LLC Agreement. Michigan UCC means the Uniform Commercial Code, as in effect in the State of Michigan, as amended from time to time. Monthly Remittance Date means the 19th day of each calendar month (or if such day is not a Business Day, the preceding Business Day). Monthly Servicing Fee means the fee payable to the Servicer on a monthly basis for services rendered, in accordance with Section 5.07 of the Servicing Agreement. Moody's means Moody's Investors Service, Inc., or its successor. MPSC means the Michigan Public Service Commission or its successor. MPSC Regulations means any regulations, orders, guidelines or directives promulgated, issued or adopted by the MPSC, as in effect from time to time. Officers' Certificate means, with respect to a corporation, a certificate signed by the chairman of the board, the president, the vice chairman of the board, any executive vice president, any vice president, the treasurer or the secretary of such company, and with respect to a limited liability company, any Manager. Operating Expenses means, with respect to the Issuer, all fees, costs, expenses and indemnity payments owed by the Issuer, including, without limitation, all amounts owed by the Issuer to the Trustee, the Monthly Servicing Fee, the fees and expenses payable by the Issuer to the Administrator under the Administration Agreement, the fees and expenses payable by the Issuer to the Independent Managers and Special Members of the Issuer, fees of the Rating Agencies, legal fees and expenses of the Servicer pursuant to Section 3.10 of the Servicing Agreement, legal and accounting fees, costs and expenses of the Issuer and legal, accounting or other fees, costs and expenses of the Seller (includ ing, without limitation, any costs and expenses incurred by the Seller pursuant to Section 4.09 of the Sale Agreement) under or in connection with the Basic Documents or the Financing Order. Opinion of Counsel means one or more written opinions of counsel who may be an employee of or counsel to Consumers, the Issuer or any other Person (as the context may require), which counsel shall be reasonably acceptable to the Trustee, the Issuer or the Rating Agencies, as applicable, and which shall be in form reasonably satisfactory to the Trustee, if applicable. Outstanding with respect to Securitization Bonds means, as of the date of determination, all Securitization Bonds theretofore authenticated and delivered under the Indenture except: (a) Securitization Bonds theretofore canceled by the Securitization Bond Registrar or delivered to the Securitization Bond Registrar for cancella tion; (b) Securitization Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securitization Bonds; provided, however, that if such Securitization Bonds are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor, satisfactory to the Trustee, made; and (c) Securitization Bonds in exchange for or in lieu of other Securitization Bonds which have been authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Trustee is presented that any such Securitization Bonds are held by a protected purchaser; provided that in determining whether the Holders of the requisite Outstanding Amount of the Securitization Bonds or any Series or Class thereof have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Docu ment, Securitization Bonds owned by the Issuer, any other obligor upon the Securitiza tion Bonds, Consumers or any Affiliate of any of the foregoing Persons shall be disre garded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securitization Bonds that the Trustee knows to be so owned shall be so disregarded. Securitization Bonds so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securitization Bonds and that the pledgee is not the Issuer, any other obligor upon the Securitization Bonds, Consumers or any Affiliate of any of the foregoing Persons. Outstanding Amount means the aggregate principal amount of all Outstanding Securitiza tion Bonds or, if the context requires, all Outstanding Securitization Bonds of a Series or Class Outstanding at the date of determination. Overcollateralization means, with respect to any Payment Date, an amount that, if deposited to the Overcollateralization Subaccount, would cause the balance in such subaccount to equal the Scheduled Overcollateralization Level for such Payment Date, without regard to investment earnings. Overcollateralization Amount means, with respect to any Series of Securitization Bonds, the amount specified as such in the Series Supplement therefor. Overcollateralization Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Paying Agent means the Trustee or any other Person, including any Person appointed pursuant to Section 3.02(b) of the Indenture, that meets the eligibility standards for the Trustee specified in Section 6.11 of the Indenture and is authorized by the Issuer to make the payments of principal of or premium, if any, or interest on the Securitization Bonds on behalf of the Issuer. Payment Date means, with respect to each Series or Class of Securitization Bonds, each date or dates respectively specified as Payment Dates for such Series or Class in the Series Supplement therefor. Person means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), business trust, limited liability company, unincorporated organization or government or any agency or political subdivision thereof. Predecessor Securitization Bond means, with respect to any particular Securitization Bond, every previous Securitization Bond evidencing all or a portion of the same debt as that evidenced by such particular Securitization Bond; and, for the purpose of this definition, any Securitization Bond authenticated and delivered under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Securitization Bond shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Securitiza tion Bond. Principal means, with respect to any Payment Date and each Series or Class of Securiti zation Bonds: (a) the amount of principal scheduled to be paid on such Payment Date in accordance with the Expected Amortization Schedule; (b) the amount of principal due on the Final Maturity Date of any Series or Class if such Payment Date is the Final Maturity Date; (c) the amount of principal due as a result of the occurrence and continuance of an Event of Default and acceleration of the Securitization Bonds; (d) the amount of principal and premium, if any, due as a result of a redemp tion of Securitization Bonds on such Payment Date; and (e) any overdue payments of principal. Pro Rata has the meaning set forth in Section 8.02(l) of the Indenture. Proceeding means any suit in equity, action at law or other judicial or administrative proceeding. Projected Securitization Bond Balance means, as of any date, the sum of the amounts provided for in the Expected Amortization Schedules for each Outstanding Series of Securitization Bonds as of such date. Rating Agency means, as of any date, any rating agency rating the Securitization Bonds of any Class or Series at the time of issuance thereof at the request of the Issuer. If no such organization or successor is any longer in existence, "Rating Agency" shall be a nation ally recognized statistical rating organization or other comparable Person designated by the Issuer, notice of which designation shall be given to the Trustee, the Member and the Servicer. Rating Agency Condition means, with respect to any action, the notification by the Trustee to each Rating Agency of such action and the notification from each of Fitch and S&P to the Trustee and the Issuer that such action will not result in a reduction or withdrawal of the then current rating by such Rating Agency of any Outstanding Series or Class of Securitization Bonds. Record Date has the meaning set forth in each Supplemental Indenture. Redemption Date means, with respect to each Series or Class of Securitization Bonds, the date for the redemption of the Securitization Bonds of such Series or Class pursuant to Sections 10.01 or 10.02 of the Indenture or the Series Supplement for such Series or Class, which in each case shall be a Payment Date. Redemption Price has the meaning set forth in Section 10.01 of the Indenture. Refunding Issuance means an issuance of a new Series of Securitization Bonds under the Indenture to pay the cost of refunding, through redemption or payment on the Expected Final Payment Date for a Series or Class of Securitization Bonds, all or part of the Securitization Bonds of such Series or Class to the extent permitted by the terms thereof. Released Parties has the meaning specified in Section 5.02(e) of the Servicing Agreement. Remittance Date means a Daily Remittance Date or a Monthly Remittance Date, as applicable. Required Capital Amount means with respect to any Series, the amount required to be deposited in the Capital Subaccount on the Series Issuance Date of such Series, as specified in the related Series Supplement. Reserve Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Responsible Officer means, with respect to the Trustee, any officer assigned to the Corporate Trust Division (or any successor thereto), including any vice president, assistant vice president, trust officer, secretary, assistant secretary, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers, in each case having direct responsibility for the administration of the Indenture. Retiring Trustee has the meaning specified in Section 6.08(b) of the Indenture. Sale Agreement means the Sale Agreement dated November 8, 2001 between the Seller and the Issuer, as the same may be amended or supplemented from time to time. Scheduled Overcollateralization Level means, with respect to each Series and any Payment Date, the amount with respect to such Series set forth as such in Schedule B of the Series Supplement. Secured Obligations has the meaning set forth in the Granting Clause of the Indenture. Securities Account Control Agreement means the securities account control agreement dated as of November 8, 2001, by and between Consumers Funding LLC, as debtor, the Trustee as the secured party and The Bank of New York, in its capacity as securities intermediary thereunder. Securitization Bond means any of the Securitization Bonds (as defined in the Customer Choice Act) issued by the Issuer pursuant to the Indenture. Securitization Bond Balance means, as of any date, the aggregate Outstanding Amount of all Series of Securitization Bonds on such date. Securitization Bond Register has the meaning specified in Section 2.05(a) of the Indenture. Securitization Bond Registrar has the meaning specified in Section 2.05(a) of the Indenture. Securitization Charge means the nonbypassable amounts to be charged for the use or availability of electric services (but does not include tax charges authorized by the Financing Order), approved by the MPSC under the Financing Order, to fully recover qualified costs, to be collected by Consumers, its successors, assignees or other collection agents, as provided for in the Financing Order. Securitization Charge Adjustment means each adjustment to the Securitization Charge related to the Transferred Securitization Property made in accordance with Section 4.01 of the Servicing Agreement, the Issuer Annex and the Financing Order. Securitization Charge Rate means the amount of the surcharge applied to all kilo watt-hours (KWh) billed to determine the amount of the Securitization Charges. Securitization Charge Collections means amounts received by the Servicer in respect of the Securitization Charge as determined by the Servicer in accordance with the allocation methodology set forth in Annex 2 to the Servicing Agreement. Securitization Property has the meaning assigned to that term in the Customer Choice Act and as approved with respect to Consumers in the Financing Order. Securitization Property Documentation means all documents relating to the Transferred Securitization Property, including copies of the Financing Order and all documents filed with the MPSC in connection with any Securitization Charge Adjustment. Securitization Ratio means for an entire Billing Month the total Securitization Charges billed by the Servicer for each rate class divided by the total charges billed by Consumers and the Servicer for each rate class to customers for such Billing Month. Customers for this purpose refers to Consumers' electric and combination electric and gas customers (and not gas only customers). Seller means Consumers, in its capacity as seller of the Securitization Property to the Issuer pursuant to the Sale Agreement. Series means any series of Securitization Bonds issued by the Issuer and authenticated by the Trustee pursuant to the Indenture, as specified in the Series Supplement therefor. Series Capital Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Issuance Date means, with respect to any Series, the date on which the Securitiza tion Bonds of such Series are to be originally issued in accordance with Section 2.10 of the Indenture and the Series Supplement for such Series. Series Overcollateralization Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Supplement means an indenture supplemental to the Indenture that authorizes a particular Series of Securitization Bonds, as the same may be amended or supplemented from time to time. Servicer means Consumers, as the servicer of the Securitization Property, and each successor to Consumers (in the same capacity) pursuant to Section 5.03, 5.04 or 6.04 of the Servicing Agreement. Servicer Default means an event specified in Section 6.01 of the Servicing Agreement. Servicing Agreement means the Servicing Agreement dated as of November 8, 2001 between the Issuer and the Servicer, as the same may be amended and supplemented from time to time. Special Member has the meaning set forth in the Issuer LLC Agreement. Standard & Poor's, or S&P, means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, or its successor. State means any one of the 50 states of the United States of America or the District of Columbia. Subaccount means any of the subaccounts of the Collection Account specified in Section 8.02 of the Indenture. Subsequent Sale means the sale of additional Securitization Property by the Seller to the Issuer after the Initial Transfer Date, subject to the satisfaction of the conditions specified in the Sale Agreement and the Indenture. Subsequent Transfer Date means the date that a sale of Subsequent Transferred Securiti zation Property will be effective, as specified in a written notice provided by the Seller to the Issuer pursuant to the Sale Agreement. Subsequent Transferred Securitization Property means Securitization Property sold by the Seller to the Issuer as of a Subsequent Transfer Date pursuant to the Sale Agreement and the Bill of Sale delivered on or prior to the Subsequent Transfer Date as identified in such Bill of Sale. Successor Servicer has the meaning specified in Section 3.19(i) of the Indenture. Supplemental Indenture means a supplemental indenture entered into by the Issuer and the Trustee pursuant to Article IX of the Indenture. Swap Counterparty means, with respect to any Interest Rate Swap Agreement, the swap counterparty under that Interest Rate Swap Agreement. Termination Notice has the meaning specified in Section 6.01(d) of the Servicing Agreement. Transfer Date means the Initial Transfer Date or any Subsequent Transfer Date, as applicable. Transferred Securitization Property means Securitization Property which has been sold, assigned and/or transferred to the Issuer pursuant to the Sale Agreement and the Bill of Sale. Trust Indenture Act or TIA means the Trust Indenture Act of 1939, as in force on the date hereof, unless otherwise specifically provided. Trustee means The Bank of New York, a New York banking corporation, or its succes sor, as trustee under the Indenture, or any successor Trustee under the Indenture. UCC means the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time. Underwriting Agreement means the Underwriting Agreement dated as of October 31, 2001 among the Seller, the Issuer and Morgan Stanley & Co. Incorporated, on behalf of itself and as the representative of the several underwriters named therein. U.S. Government Obligations means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option. EX-4.Q 7 k65350ex4-q.txt SERIES SUPPLEMENT DATED AS OF NOVEMBER 8, 2001 EXHIBIT 4(q) SERIES SUPPLEMENT CONSUMERS FUNDING LLC, Issuer and THE BANK OF NEW YORK, Trustee ------------------------------ 2001-1 SERIES SUPPLEMENT Dated as of November 8, 2001 ------------------------------ 2001-1 SERIES SUPPLEMENT dated as of November 8, 2001 (this "Supplement"), by and between CONSUMERS FUNDING LLC, a Delaware limited liability company (the "Issuer"), and THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"), as Trustee under the Indenture dated as of November 8, 2001 between the Issuer and the Trustee (the "Indenture"). PRELIMINARY STATEMENT Section 9.01 of the Indenture provides, among other things, that the Issuer and the Trustee may at any time and from time to time enter into one or more indentures supplemental to the Indenture for the purposes of authorizing the issuance by the Issuer of a Series of Securitization Bonds and specifying the terms thereof. The Issuer has duly authorized the execution and delivery of this Supplement and the creation of a Series of Securitization Bonds with an initial aggregate principal amount of $468,592,000 to be known as the Issuer's Securitization Bonds, Series 2001-1 (the "Series 2001-1 Securitization Bonds"). All acts and all things necessary to make the Series 2001-1 Securitization Bonds, when duly executed by the Issuer and authenticated by the Trustee as provided in the Indenture and this Supplement and issued by the Issuer, the valid, binding and legal obligations of the Issuer and to make this Supplement a valid and enforceable supplement to the Indenture have been done, performed and fulfilled and the execution and delivery hereof have been in all respects duly and lawfully authorized. The Issuer and the Trustee are executing and delivering this Supplement in order to provide for the Series 2001-1 Securitization Bonds. In order to secure the payment of principal of and interest on the Series 2001-1 Securitization Bonds issued and to be issued under the Indenture and/or any Series Supplement, the Issuer hereby confirms the Grant to the Trustee for the benefit of the Holders of the Series 2001-1 Securitization Bonds from time to time issued and Outstanding, of all of the Issuer's right, title and interest in, to and under the Collateral, including, without limitation, the Securitization Property transferred by the Seller to the Issuer as of the Initial Transfer Date pursuant to the Sale Agreement and all proceeds thereof. The Trustee, on behalf of the Holders of the Series 2001-1 Securitization Bonds, acknowledges the confirmation of such Grant, accepts the trusts hereunder in accordance with the provisions hereof and agrees to perform its duties required in the Indenture and this Supplement. SECTION 1. Definitions. All terms used in this Supplement that are defined in the Indenture, either directly or by reference therein, have the meanings assigned to them therein, except to the extent such terms are defined or modified in this Supplement or the context clearly requires otherwise. SECTION 2. Other Definitional Provisions. Authorized Denominations shall mean $1,000 and integral multiples of $1.00 above that amount, provided, however, that one Securitization Bond of each Class may have a denomination of less than $1,000. Calculation Period means, with respect to a Payment Date, the period from and including the preceding Payment Date to but excluding such Payment Date, or in the case of the first Calculation Period, from and including the Series Issuance Date to but excluding the initial Payment Date. Expected Amortization Schedule means Schedule A to this Supplement. Expected Final Payment Date means, with respect to any Class of the Series 2001-1 Securitization Bonds, the expected final payment date therefor, as specified in Section 4 of this Supplement. Final Maturity Date means, with respect to any Class of the Series 2001-1 Securitization Bonds, the final maturity date thereof, as specified in Section 4 of this Supplement. Interest Rate has the meaning set forth in Section 4 of this Supplement. Overcollateralization Amount has the meaning set forth in Section 6(d) of this Supplement. Payment Date has the meaning set forth in Section 5(a) of this Supplement. Record Date shall mean, with respect to any Payment Date, the Business Day prior to such Payment Date or, with respect to any Definitive Securitization Bonds, the last Business Day of the month preceding such Payment Date. Required Capital Amount has the meaning set forth in Section 5(e) of this Supplement. Series Issuance Date has the meaning set forth in Section 3(b) of this Supplement. SECTION 3. Designation; Series Issuance Dates. (a) Designation. The Series 2001-1 Securitization Bonds shall be designated generally as the Issuer's Securitization Bonds, Series 2001-1, and further denominated as Class A-1, Class A-2, Class A-3, Class A-4, Class A-5 and Class A-6. (b) Series Issuance Date. The Series 2001-1 Securitization Bonds that are authenticated and delivered by the Trustee to or upon the order of the Issuer on November 8, 2001 (the "Series Issuance Date") shall have as their date of authentication November 8, 2001. SECTION 4. Initial Principal Amount; Interest Rate; Expected Final Payment Date; Final Maturity Dates. The Securitization Bonds of each Class of the Series 2001-1 Securitization Bonds shall have the initial principal amounts, bear interest at the Interest Rates and have Expected Final Payment Dates and Final Maturity Dates as set forth below:
Initial Principal Expected Final Final Class Amount Interest Rate Payment Date Maturity Date ----- ------ ------------- ------------ - ------------- A-1 $26,000,000 2.59000% April 20, 2003 April 20, 2005 A-2 $84,000,000 3.80000% April 20, 2006 April 20, 2008 A-3 $31,000,000 4.55000% April 20, 2007 April 20, 2009 A-4 $95,000,000 4.98000% April 20, 2010 April 20, 2012 A-5 $117,000,000 5.43000% April 20, 2013 April 20, 2015 A-6 $115,592,000 5.76000% October 20, 2015 October 20, 2016
The interest payable on the Series 2001-1 Securitization Bonds for any Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months or, for the initial Payment Date, the number of days from and including the Series Issuance Date to but excluding the initial Payment Date. SECTION 5. Payment Dates; Expected Amortization Schedule for Principal; Interest; Overcollateralization Amount; Required Capital Amount. (a) Payment Dates. The Payment Dates for each Class of the Series 2001-1 Securitization Bonds are January 20, April 20, July 20, October 20 of each year or, if any such date is not a Business Day, the next succeeding Business Day, commencing on July 20, 2002 and continuing until the earlier of repayment of such Class in full and the applicable Final Maturity Date. (b) Expected Amortization Schedule for Principal. Except in the case of an optional redemption pursuant to Section 10.01 of the Indenture, unless an Event of Default has occurred and is continuing and the unpaid principal amount of all Series of Securitization Bonds has been declared to be due and payable together with accrued and unpaid interest thereon, on each Payment Date the Trustee shall distribute to the Series 2001-1 Securitization Bondholders of record as of the related Record Date amounts payable in respect of the Series 2001-1 Securitization Bonds pursuant to Section 8.02(g) of the Indenture as principal, in accordance with the Expected Amortization Schedule. Notwithstanding the foregoing, if one or more Classes did not receive principal on any prior Payment Date in accordance with the Expected Amortization Schedule, such shortfalls of principal shall be paid prior to the payment of principal scheduled to be paid on the current Payment Date and shall be paid in the order in which such amounts were scheduled to be paid previously pursuant to the Expected Amortization Schedule; provided, however, that in no event shall a principal payment pursuant to this Section 6(b) on any Class on a Payment Date be greater than the amount that reduces the Outstanding Amount of such Class of Series 2001-1 Securitization Bonds to the amount specified in the Expected Amortization Schedule for such Class and Payment Date. (c) Interest. On each Payment Date after the initial Payment Date, interest will be payable on each Class of the Series 2001-1 Securitization Bonds in an amount equal to the number of days (determined on the basis of a 360-day year of twelve 30-day months and assuming that the 20th day is also a Business Day) from and including the preceding Payment Date to, but excluding, the current Payment Date, divided by 360, times the product of. (a) the applicable Interest Rate for the related Class of Securitization Bonds times (b) the Outstanding Amount of the related Class of Securitization Bonds as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the related Class of Securitization Bonds on such preceding Payment Date. With respect to the initial Payment Date, interest will be payable on each Class of the Series 2001-1 Securitization Bonds in an amount equal to the number of days (determined on the basis of a 360-day year of twelve 30-day months) from and including the Series Issuance Date to, but excluding, the initial Payment Date divided by 360, times the product of: (a) the applicable Interest Rate for such Class times (b) the original principal amount of such Class of Securitization Bonds as of the Series Issuance Date. (d) Overcollateralization Amount. The Overcollateralization Amount for the Series 2001-1 Securitization Bonds shall be as set forth in Schedule B hereto. (e) Required Capital Amount. The Required Capital Amount for the Series 2001-1 Securitization Bonds shall be $2,342,960. (f) No Premium. No premium will be payable in connection with the early redemption of the Series 2001-1 Securitization Bonds SECTION 6. Authorized Denominations. The Series 2001-1 Securitization Bonds shall be issuable in the Authorized Denominations. SECTION 7. Redemption. (a) Mandatory Redemption. The Series 2001-1 Securitization Bonds shall not be subject to mandatory redemption. (b) Optional Redemption. The Issuer may redeem the Securitization Bonds of Series 2001-1, at its option, on any Payment Date in accordance with Section 10.01 of the Indenture if (1) after giving effect to payments that would otherwise be made on such Payment Date, the Outstanding Amount of such Series has been reduced to less than five percent of the initial principal balance of such Series and (2) no Interest Rate Swap Agreement is in effect. SECTION 8. Credit Enhancement. No credit enhancement (other than the Overcollateralization Amount, the Required Capital Amount and any adjustments to the Securitization Charge approved by the MPSC as contemplated in the Servicing Agreement) is provided for the Series 2001-1 Securitization Bonds. SECTION 9. Delivery and Payment for the Series 2001-1 Securitization Bonds; Form of the Series 2001-1 Securitization Bonds. The Trustee shall deliver the Series 2001-1 Securitization Bonds to the Issuer when authenticated in accordance with Section 2.02 of the Indenture. The Series 2001-1 Securitization Bonds of each Class shall be in the form of Exhibits A through D hereto. SECTION 10. Administration Fee. The Administrator shall be paid by the Issuer a fee of $20,000 on each Payment Date with respect to the Series 2001-1 Securitization Bonds. SECTION 11. Confirmation of Indenture. As supplemented by this Supplement, the Indenture is in all respects ratified and confirmed and the Indenture, as so supplemented by this Supplement, shall be read, taken, and construed as one and the same instrument. SECTION 12. Counterparts. This Supplement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. SECTION 13. Governing Law. This Supplement shall be construed in accordance with the laws of the State of Michigan, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Supplement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. CONSUMERS FUNDING LLC, as Issuer By: /s/ Laura L. Mountcastle --------------------------------- Name: Laura L. Mountcastle Title: President, Chief Executive Officer, Chief Financial Officer and Treasurer THE BANK OF NEW YORK, as Trustee By: /s/ Cassandra D. Shedd ---------------------- Name: Cassandra D. Shedd Title: Assistant Vice President
SCHEDULE A Expected Amortization Schedule - Outstanding Principal Balance (all amounts are in United States Dollars) Payment Date Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class A-6 - ---------------------------------------------------------------- ------------------------------------------------ - ----------------------------------------------------------------------------------------------------------------- 7/20/02 17,655,681 84,000,000 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/02 10,350,370 84,000,000 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/03 3,691,230 84,000,000 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/03 0 80,995,212 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/03 0 74,960,820 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/03 0 67,445,198 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/04 0 60,523,312 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/04 0 53,595,934 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/04 0 47,370,596 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/04 0 39,659,114 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/05 0 32,539,944 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/05 0 25,400,876 31,000,000 95,000,000 117,000,000 115,592,000 - ---------------------------------------------------------------------------------------------------------------- 7/20/05 0 18,957,771 31,000,000 95,000,000 117,000,000 115,592,000 - ---------------------------------------------------------------------------------------------------------------- 10/20/05 0 11,013,254 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/06 0 3,669,663 31,000,000 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/06 0 0 27,311,403 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/06 0 0 20,631,820 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/06 0 0 12,422,539 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/07 0 0 4,811,562 95,000,000 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/07 0 0 0 92,178,190 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/07 0 0 0 85,196,052 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/07 0 0 0 76,659,749 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/08 0 0 0 68,722,123 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/08 0 0 0 60,760,937 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/08 0 0 0 53,430,899 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/08 0 0 0 44,529,552 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/09 0 0 0 36,234,922 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/09 0 0 0 27,921,859 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/09 0 0 0 20,224,989 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/09 0 0 0 10,939,860 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/10 0 0 0 2,268,849 117,000,000 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/10 0 0 0 0 110,583,885 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/10 0 0 0 0 102,493,016 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/10 0 0 0 0 92,787,923 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/11 0 0 0 0 83,692,571 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/11 0 0 0 0 74,576,511 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/11 0 0 0 0 66,036,174 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/11 0 0 0 0 55,863,953 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/12 0 0 0 0 46,306,494 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/12 0 0 0 0 36,730,431 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 7/20/12 0 0 0 0 27,714,166 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 10/20/12 0 0 0 0 17,048,406 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 1/20/13 0 0 0 0 7,001,680 115,592,000 - ----------------------------------------------------------------------------------------------------------------- 4/20/13 0 0 0 0 0 112,529,730 - ----------------------------------------------------------------------------------------------------------------- 7/20/13 0 0 0 0 0 103,007,017 - ----------------------------------------------------------------------------------------------------------------- 10/20/13 0 0 0 0 0 91,809,325 - ----------------------------------------------------------------------------------------------------------------- 1/20/14 0 0 0 0 0 81,224,794 - ----------------------------------------------------------------------------------------------------------------- 4/20/14 0 0 0 0 0 70,614,670 - ----------------------------------------------------------------------------------------------------------------- 7/20/14 0 0 0 0 0 60,522,964 - ----------------------------------------------------------------------------------------------------------------- 10/20/14 0 0 0 0 0 48,737,706 - ----------------------------------------------------------------------------------------------------------------- 1/20/15 0 0 0 0 0 37,425,774 - ----------------------------------------------------------------------------------------------------------------- 4/20/15 0 0 0 0 0 25,254,761 - ----------------------------------------------------------------------------------------------------------------- 7/20/15 0 0 0 0 0 13,561,209 - ----------------------------------------------------------------------------------------------------------------- 10/20/15 0 0 0 0 0 0 - -----------------------------------------------------------------------------------------------------------------
SCHEDULE B Required Overcollateralization Level Schedule Payment Date Scheduled Overcollateralization Level - -------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- Closing $0 - -------------------------------------------------------------------------------------------------------- 7/20/02 125,516 - -------------------------------------------------------------------------------------------------------- 10/20/02 167,354 - -------------------------------------------------------------------------------------------------------- 1/20/03 209,193 - -------------------------------------------------------------------------------------------------------- 4/20/03 251,031 - -------------------------------------------------------------------------------------------------------- 7/20/03 292,870 - -------------------------------------------------------------------------------------------------------- 10/20/03 334,709 - -------------------------------------------------------------------------------------------------------- 1/20/04 376,547 - -------------------------------------------------------------------------------------------------------- 4/20/04 418,386 - -------------------------------------------------------------------------------------------------------- 7/20/04 460,224 - -------------------------------------------------------------------------------------------------------- 10/20/04 502,063 - -------------------------------------------------------------------------------------------------------- 1/20/05 543,901 - -------------------------------------------------------------------------------------------------------- 4/20/05 585,740 - -------------------------------------------------------------------------------------------------------- 7/20/05 627,579 - -------------------------------------------------------------------------------------------------------- 10/20/05 669,417 - -------------------------------------------------------------------------------------------------------- 1/20/06 711,256 - -------------------------------------------------------------------------------------------------------- 4/20/06 753,094 - -------------------------------------------------------------------------------------------------------- 7/20/06 794,933 - -------------------------------------------------------------------------------------------------------- 10/20/06 836,771 - -------------------------------------------------------------------------------------------------------- 1/20/07 878,610 - -------------------------------------------------------------------------------------------------------- 4/20/07 920,449 - -------------------------------------------------------------------------------------------------------- 7/20/07 962,287 - -------------------------------------------------------------------------------------------------------- 10/20/07 1,004,126 - -------------------------------------------------------------------------------------------------------- 1/20/08 1,045,964 - -------------------------------------------------------------------------------------------------------- 4/20/08 1,087,803 - -------------------------------------------------------------------------------------------------------- 7/20/08 1,129,641 - -------------------------------------------------------------------------------------------------------- 10/20/08 1,171,480 - -------------------------------------------------------------------------------------------------------- 1/20/09 1,213,319 - -------------------------------------------------------------------------------------------------------- 4/20/09 1,255,157 - -------------------------------------------------------------------------------------------------------- 7/20/09 1,296,996 - -------------------------------------------------------------------------------------------------------- 10/20/09 1,338,834 - -------------------------------------------------------------------------------------------------------- 1/20/10 1,380,673 - -------------------------------------------------------------------------------------------------------- 4/20/10 1,422,511 - -------------------------------------------------------------------------------------------------------- 7/20/10 1,464,350 - -------------------------------------------------------------------------------------------------------- 10/20/10 1,506,189 - -------------------------------------------------------------------------------------------------------- 1/20/11 1,548,027 - -------------------------------------------------------------------------------------------------------- 4/20/11 1,589,866 - -------------------------------------------------------------------------------------------------------- 7/20/11 1,631,704 - -------------------------------------------------------------------------------------------------------- 10/20/11 1,673,543 - -------------------------------------------------------------------------------------------------------- 1/20/12 1,715,381 - -------------------------------------------------------------------------------------------------------- 4/20/12 1,757,220 - -------------------------------------------------------------------------------------------------------- 7/20/12 1,799,059 - -------------------------------------------------------------------------------------------------------- 10/20/12 1,840,897 - -------------------------------------------------------------------------------------------------------- 1/20/13 1,882,736 - -------------------------------------------------------------------------------------------------------- 4/20/13 1,924,574 - -------------------------------------------------------------------------------------------------------- 7/20/13 1,966,413 - -------------------------------------------------------------------------------------------------------- 10/20/13 2,008,251 - -------------------------------------------------------------------------------------------------------- 1/20/14 2,050,090 - -------------------------------------------------------------------------------------------------------- 4/20/14 2,091,929 - -------------------------------------------------------------------------------------------------------- 7/20/14 2,133,767 - -------------------------------------------------------------------------------------------------------- 10/20/14 2,175,606 - -------------------------------------------------------------------------------------------------------- 1/20/15 2,217,444 - -------------------------------------------------------------------------------------------------------- 4/20/15 2,259,283 - -------------------------------------------------------------------------------------------------------- 7/20/15 2,301,121 - -------------------------------------------------------------------------------------------------------- 10/20/15 2,342,960 - --------------------------------------------------------------------------------------------------------
Exhibit A to Series Supplement Form of Bond REGISTERED $ No. R- CUSIP NO. ---------- ---------------- SEE REVERSE FOR CERTAIN DEFINITIONS THE PRINCIPAL OF THIS CLASS A-1 SECURITIZATION BOND WILL BE PAID IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A-1 SECURITIZATION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE HOLDER OF THIS CLASS A-1 SECURITIZATION BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE WHICH IS ONE (1) YEAR AND ONE (1) DAY AFTER THE PAYMENT IN FULL OF THE SERIES 2001-1, CLASS A-1 SECURITIZATION BONDS, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST, THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OF THE UNITED STATES. TRANSFERS OF THIS GLOBAL SECURITIZATION BOND SHALL BE LIMITED TO TRANSFERS IN THE CLEARING AGENCY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITIZATION BOND SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE.
CONSUMERS FUNDING LLC SECURITIZATION BONDS, SERIES 2001-1, CLASS A-1. Interest Original Principal Expected Final Rate Amount Payment Date Maturity Date % $
CONSUMERS FUNDING LLC, a limited liability company formed and existing under the laws of the State of Delaware (herein referred to as the "Issuer"), for value received, hereby promises to pay to the Registered Holder hereof, or registered assigns, the Original Principal Amount shown above in quarterly instalments on the Payment Dates (as defined below) and in the amounts specified on the reverse hereof or, if less, the amounts determined pursuant to Section 8.02(g) of the Indenture, in each year, commencing on the date determined as provided on the reverse hereof and ending on or before the Final Maturity Date, to pay the entire unpaid principal hereof on the Final Maturity Date and to pay interest, at the Interest Rate shown above at a fixed rate, on each January 20, April 20, July 20, and October 20, and if any such day is not a Business Day, the next succeeding Business Day, commencing on July 20, 2002 and continuing until the earlier of the payment of the principal hereof and the Final Maturity Date (each a "Payment Date"), on the principal amount of this Class A-1 Securitization Bond outstanding from time to time. Interest will be computed (i) for the first Payment Date on the basis of the number of days (determined on the basis of a 360-day year of twelve 30-day months) from and including the Series Issuance Date, to but excluding the initial Payment Date, divided by 360, multiplied by [ ]%, multiplied by the original principal amount of the Class A-1 Securitization Bonds as of the Series Issuance Date, and (ii) for each succeeding Payment Date, the number of days (determined on the basis of a 360-day year of twelve 30-day months and assuming that the 20th day is also a Business Day) from and including the preceding Payment Date to, but excluding, the current Payment Date, divided by 360, multiplied by [ ]%, multiplied by the Outstanding Amount of the Class A-1 Securitization Bonds as of the close of business on the preceding Payment Date after giving effect to all payments of principal made to the Holders of the Class A-1 Securitization Bonds on such preceding Payment Date. Such principal of and interest on this Class A Securitization Bond shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Series 2001-1, Class A-1 Securitization Bond are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Class A-1 Securitization Bond shall be applied first to interest due and payable on this Class A-1 Securitization Bond as provided above and then to the unpaid principal of this Class A-1 Securitization Bond, all in the manner set forth in Section 8.02(g) of the Indenture. Reference is made to the further provisions of this Class A-1 Securitization Bond set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Class A-1 Securitization Bond. Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual signature, this Class A-1 Securitization Bond shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by an authorized Manager of the Issuer. Dated: November 8, 2001 CONSUMERS FUNDING LLC By:_____________________________ Name: Title: Manager TRUSTEE'S CERTIFICATE OF AUTHENTICATION Dated: November 8, 2001 This is one of the Class A-1 Securitization Bonds of the Series 2001-1 Securitization Bonds, designated above and referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee By:_________________________________ Name: Title: REVERSE OF SECURITIZATION BOND This Series 2001-1, Class A-1 Securitization Bond is one of a duly authorized issue of Securitization Bonds of the Issuer, designated as its Securitization Bonds (herein called the "Securitization Bonds"), issued and to be issued in one or more Series, which Series are issuable in one or more Classes. The Series 2001-1 Securitization Bonds consist of six Classes, including the Class A-1 Securitization Bonds (herein called the "Class A-1 Securitization Bonds"). The Class A-1 Securitization Bonds have been issued under an indenture dated as of November 8, 2001, and a series supplement thereto dated as of November 8, 2001, (such series supplement, as supplemented or amended, the "Series Supplement" and, collectively with such indenture, as supplemented or amended, the "Indenture"), each between the Issuer and The Bank of New York, as Trustee (the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the Collateral pledged, the nature and extent of the security, the respective rights, obligations and immunities thereunder of the Issuer, the Trustee and the Holders of the Securitization Bonds and the terms and conditions under which additional Securitization Bonds may be issued. All terms used in this Class A-1 Securitization Bond that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in the Indenture. The Class A-1 Securitization Bonds, the other Classes of Series 2001-1 Securitization Bonds and any other Series of Securitization Bonds issued by the Issuer are and will be equally and ratably secured by the Collateral pledged as security therefor as provided in the Indenture. The principal of this Class A-1 Securitization Bond shall be payable on each Payment Date only to the extent that amounts in the Collection Account are available therefor, and only until the outstanding principal balance of the Class A-1 Securitization Bonds on such Payment Date (after giving effect to all payments of principal, if any, made on such Payment Date) has been reduced to the principal balance specified in the Expected Amortization Schedule which is attached to the Series Supplement as Schedule A, unless payable earlier either because (i) an Event of Default has occurred and is continuing and the Trustee or the Holders of Securitization Bonds representing not less than a majority of the Outstanding Amount of the Securitization Bonds of all Series have declared the Securitization Bonds to be immediately due and payable in accordance with Section 5.02 of the Indenture, or (ii) the Issuer, at its option, has called for the redemption of the Series 2001-1 Securitization Bonds in whole pursuant to Section 7(b) of the Series Supplement and Section 10.01 of the Indenture. However, actual principal payments may be made in lesser than expected amounts and at later than expected times as determined pursuant to Section 8.02(g) of the Indenture. The entire unpaid principal amount of this Series 2001-1, Class A-1 Securitization Bond shall be due and payable on the earlier of the Final Maturity Date hereof and the Redemption Date, if any. Notwithstanding the foregoing, the entire unpaid principal amount of the Securitization Bonds shall be due and payable, if not then previously paid, on the date on which an Event of Default shall have occurred and be continuing and the Trustee or the Holders of the Securitization Bonds of all Series representing not less than a majority of the Outstanding Amount of the Securitization Bonds have declared the Securitization Bonds to be immediately due and payable in the manner provided in Section 5.02 of the Indenture. All principal payments on the Class A-1 Securitization Bonds shall be made pro rata to the Class A-1 Securitization Bondholders entitled thereto based on the respective principal amounts of the Series 2001-1, Class A-1 Securitization Bonds held by them. Payments of interest on this Class A-1 Securitization Bond due and payable on each Payment Date, together with the instalment of principal payable on this Class A-1 Securitization Bond on such Payment Date shall be made by check mailed first-class, postage prepaid, to the Person whose name appears as the Registered Holder of this Class A-1 Securitization Bond (or one or more predecessors of such Securitization Bond) in the Securitization Bond Register as of the close of business on the Record Date or in such other manner as may be provided in the Series Supplement, except that with respect to Class A-1 Securitization Bonds registered on the Record Date in the name of a Clearing Agency, payments will be made by wire transfer in immediately available funds to the account designated by such Clearing Agency and except for the final instalment of principal payable with respect to this Class A-1 Securitization Bond on a Payment Date which shall be payable as provided below. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears in the Securitization Bond Register as of the applicable Record Date without requiring that this Class A-1 Securitization Bond be submitted for notation of payment. Any reduction in the principal amount of this Class A-1 Securitization Bond (or any one or more predecessor to such Securitization Bond) effected by any payments made on any Payment Date shall be binding upon all future Holders of this Class A-1 Securitization Bond and of any Class A-1 Securitization Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Class A-1 Securitization Bond on a Payment Date, then the Trustee, in the name of and on behalf of the Issuer, will notify the Person who was the Registered Holder hereof as of the second preceding Record Date to such Payment Date by notice mailed no later than five days prior to such final Payment Date and shall specify that such final instalment will be payable to the Registered Holder hereof as of the Record Date immediately preceding such final Payment Date and only upon presentation and surrender of this Class A-1 Securitization Bond and shall specify the place where this Series 2001-1, Class A-1 Securitization Bond may be presented and surrendered for payment of such instalment. The Issuer shall pay interest on overdue instalments of interest on this Class A-1 Securitization Bond at the Interest Rate for Class A-1 to the extent lawful. As provided in the Indenture, the Class A-1 Securitization Bonds may be redeemed, in whole, but not in part, in certain circumstances as provided in Section 7(b) of the Series Supplement and Section 10.01 of the Indenture. This Class A-1 Securitization Bond is a Securitization Bond as such term is defined in the Customer Choice Act. Principal and interest due and payable on this Securitization Bond are payable from and secured primarily by Securitization Property created and established by the Financing Order pursuant to the Customer Choice Act. Securitization Property consists of the irrevocable right to impose and collect certain non-bypassable charges (defined in the Customer Choice Act as "Securitization Charges") to be included in electric utility bills of all electric service retail customers of Consumers Energy Company, a Michigan electric utility. Under the Customer Choice Act, the State of Michigan pledges, for the benefit and protection of the Holders of the Securitization Bonds, other persons acting for the benefit of a Holder and Consumers, that it will not take or permit any action that would impair the value of the Securitization Property, reduce or alter, except as allowed under section 10k(3) of the Customer Choice Act with respect to periodic adjustments of the Securitization Charges, or impair the Securitization Charges to be imposed, collected, and remitted to the Trustee, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the Securitization Bonds have been paid and performed in full, and that the Issuer is authorized to include this pledge in any documentation relating to the Securitization Bonds. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Class A-1 Securitization Bond may be registered in the Securitization Bond Register upon surrender of this Class A-1 Securitization Bond for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by the Holder hereof or his attorney duly authorized in writing, with such signature guaranteed by an Eligible Guarantor Institution, and thereupon one or more new Class A-1 Securitization Bonds of any Authorized Denominations and in the same aggregate initial principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Class A-1 Securitization Bond, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange. Prior to the due presentment for registration of transfer of this Class A-1 Securitization Bond, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the Person in whose name this Class A-1 Securitization Bond is registered (as of the day of determination) as the owner hereof for the purpose of receiving payments of principal of and interest on this Class A-1 Securitization Bond and for all other purposes whatsoever, whether or not this Class A-1 Securitization Bond may be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Holders of the Securitization Bonds under the Indenture at any time by the Issuer with the consent of the Holders of Securitization Bonds representing a majority of the Outstanding Amount of all Securitization Bonds at the time Outstanding of each Series or Class to be affected and upon satisfaction of the Rating Agency Condition. The Indenture also contains provisions permitting the Holders of Securitization Bonds representing specified percentages of the Outstanding Amount of the Securitization Bonds of all Series, on behalf of the Holders of all the Securitization Bonds, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Class A-1 Securitization Bond (or any one of more predecessors of such Securitization Bonds) shall be conclusive and binding upon such Holder and upon all future Holders of this Class A-1 Securitization Bond and of any Class A-1 Securitization Bond issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Class A-1 Securitization Bond. The Indenture also permits the Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of Holders of the Securitization Bonds issued thereunder. The term "Issuer" as used in this Series 2001-1, Class A-1 Securitization Bond includes any successor to the Issuer under the Indenture. The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Trustee and the Holders of Securitization Bonds under the Indenture. The Class A-1 Securitization Bonds are issuable only in registered form in Authorized Denominations as provided in the Indenture and the Series Supplement, subject to certain limitations therein set forth. This Class A-1 Securitization Bond and the Indenture shall be construed in accordance with the laws of the State of Michigan, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws. No reference herein to the Indenture and no provision of this Class A-1 Securitization Bond or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Class A-1 Securitization Bond at the times and rate and in the currency herein prescribed. ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee: FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ___ (name and address of assignee) the within Class A-1 Securitization Bond and all rights thereunder, and hereby irrevocably constitutes and appoints (name and address of appointee) attorney, to transfer said Class A-1 Securitization Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: * - ----------------- ----------------------------------------------------- Signature Guaranteed: * NOTE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Class A-1 Securitization Bond in every particular, without alteration, enlargement or any change whatsoever. EX-5.(A) 8 k65350ex5-a.txt OPINION OF MICHAEL D. VANHEMERT EXHIBIT (5)(a) November 21, 2001 Consumers Energy Company Consumers Energy Company Financing V Consumers Energy Company Financing VI 212 West Michigan Avenue Jackson, Michigan 49201 RE: Registration Statement on Form S-3 Ladies and Gentlemen: I refer to the Registration Statement on Form S-3 (the "Registration Statement") being filed by Consumers Energy Company (the "Company") and Consumers Energy Company Financing V and Consumers Energy Company Financing VI (each a "Trust" and collectively, the "Trusts") with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of $500,000,000 of (i) trust preferred securities of the Trusts ("Preferred Securities"); (ii) Subordinated Debentures of the Company ("Debentures"); (iii) Senior Notes of the Company ("Senior Notes"); and (iv) the guarantee of the Preferred Securities by the Company ("Preferred Securities Guarantee"). (The foregoing offered securities, collectively, the "Securities".) The Preferred Securities Guarantee is to be issued pursuant to the Preferred Securities Guarantee Agreement (the "Preferred Securities Guarantee Agreement") to be entered into between the Company and the Bank of New York, as trustee (the "Guarantee Trustee"). The Debentures are to be issued under an Indenture between the Company and the Bank of New York, as trustee (the "Indenture Trustee"), and one or more supplemental indentures thereto (collectively, the "Debenture Indenture"). The Senior Notes are to be issued under a Senior Note Indenture between the Company and The Chase Manhattan Bank, as trustee (the "Senior Note Trustee") that may include one or more supplemental indentures thereto according to the terms of the Senior Note Indenture. Capitalized terms not otherwise defined herein have the respective meanings specified in the Registration Statement. In rendering this opinion, I have examined and relied upon a copy of the Registration Statement. I have also examined, or have arranged for the examination by an attorney or attorneys under my general supervision of, originals, or copies of originals certified to my satisfaction, of such agreements, documents, certificates and other statements of governmental officials and other instruments, and have examined such questions of law and have satisfied myself as to such matters of fact as I have considered relevant and necessary as a basis for this opinion. I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures, the legal capacity of all natural persons and the conformity with the original documents of any copies thereof submitted to me for examination. Based on the foregoing, it is my opinion that: 1. The Company is duly incorporated and validly existing under the laws of the State of Michigan. 2. The Company has corporate power and authority (i) to execute and deliver the Preferred Securities Guarantee Agreement, the Debenture Indenture, and the Senior Note Indenture, (ii) to authorize and sell the Debentures pursuant to the Debenture Indenture, and (iii) to authorize and sell the Senior Notes pursuant to the Senior Note Indenture. 3. The Preferred Securities Guarantee will be a legally issued and binding obligation of the Company (except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors' rights generally and by the effect of general principals of equity, regardless of whether enforceability is considered in a proceeding in equity or at law) when (i) the Registration Statement, as finally amended (including any necessary post-effective amendment), shall have become effective under the Securities Act; (ii) the Preferred Securities Guarantee shall have been qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and duly executed and delivered by the Company and the Guarantee Trustee; (iii) the Preferred Securities shall have been legally issued; and (iv) the Preferred Securities Guarantee shall have been duly executed and delivered as provided in the Preferred Securities Guarantee Agreement. 4. The Debentures will be legally issued and binding obligations of the Company (except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors' rights generally and by the effect of general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law) when (i) the Registration Statement, as finally amended (including any necessary post-effective amendments), shall have become effective under the Securities Act, and the Debenture Indenture shall have been qualified under the Trust Indenture Act, and duly executed and delivered by the Company and the Indenture Trustee; (ii) the Company's Board of Directors or duly authorized committee thereof shall have duly adopted final resolutions authorizing the issuance and sale of the Debentures, as contemplated by the Registration Statement and the Debenture Indenture; and (iii) the Debenture Indenture under which such Debentures are to be issued shall have been duly executed as provided in such resolutions and the Debentures shall have been duly executed and authenticated as provided in the Indenture, and shall have been duly delivered to the purchasers thereof against payment of the agreed consideration therefor. 5. The Senior Notes will be legally issued and binding obligations of the Company (except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors' rights generally and by the effect of general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law) when (i) the Registration Statement, as finally amended (including any necessary post-effective amendments) shall have become effective under the Securities Act, and the Senior Note Indenture shall have been qualified under the Trust Indenture Act, and duly executed and delivered by the Company and the Senior Note Trustee; (ii) the Company's Board of Directors or duly authorized committee thereof shall have duly adopted final resolutions authorizing the issuance and sale of the Senior Notes, as contemplated by the Registration Statement and the Senior Note Indenture; and (iii) the Senior Note Indenture under which such Senior Notes are to be issued shall have been duly executed as provided in such resolutions and the Senior Notes shall have been duly executed and authenticated as provided in the Senior Note Indenture, and shall have been duly delivered to the purchasers thereof against payment of the agreed consideration therefor. For purposes of this opinion, I have assumed that there will be no changes in the laws currently applicable to the Company and that such laws will be the only laws applicable to the Company. I do not find it necessary for the purposes of this opinion to cover, and accordingly I express no opinion as to, the application of the securities or blue sky laws of the various states to the execution and delivery of the Preferred Securities Guarantee or the sale of the Securities. The opinions expressed herein are limited to the laws of the State of Michigan and the Federal laws of the United States of America. I note that each indenture and the debt securities will be governed by, and construed in accordance with, the laws of the State of Michigan unless the laws of another jurisdiction shall mandatorily apply. The rights, duties and obligations of the subordinate note Trustee are governed by and construed in accordance with the laws of the State of New York. I hereby consent to the filing of this opinion as an exhibit to the Company's Registration Statement on Form S-3 relating to the Securities and to all references to me included in or made a part of the Registration Statement. Very truly yours, /s/Michael D. VanHemert Michael D. VanHemert EX-5.(B) 9 k65350ex5-b.txt OPINON OF SKADDEN, ARPS, SLATE, MEAGHER & FLOMM EXHIBIT 5(B) November 21, 2001 Consumers Energy Company Financing V Consumers Energy Company Financing VI c/o Consumers Energy Company 212 West Michigan Avenue Jackson, Michigan 49201 Re: Consumers Energy Company Financing V Consumers Energy Company Financing VI Registration Statement on Form S-3 Ladies and Gentlemen: We have acted as special Delaware counsel to Consumers Energy Company Financing V and Consumers Energy Company Financing VI ( each, a "Trust" and collectively, the "Trusts"), each a statutory business trust created under the laws of the State of Delaware, in connection with the preparation of a Registration Statement on Form S-3 (the "Registration Statement"), to be filed by the Consumers Energy Company (the "Company") and the Trusts with the Securities and Exchange Commission (the "Commission") on the date hereof under the Securities Act of 1933, as amended (the "Act"). The Registration Statement relates, among other things, to the issuance and sale from time to time pursuant to Rule 415 of the General Rules and Regulations promulgated under the Act, of Trust Preferred Securities (the "Preferred Securities") of each of the Trusts. The Preferred Securities of each of the Trusts are to be issued pursuant to an Amended and Restated Declaration of Trust of such Trust (each, a "Declaration" and collectively, the "Declarations"), each such Declaration being among the Company, as sponsor, The Bank of New York, as property trustee (the "Property Trustee"), The Bank of New York (Delaware), as Delaware trustee, and Alan M. Wright and Thomas A. McNish, as administrative trustees. Consumers Energy Company Financing V Consumers Energy Company Financing VI November 21, 2001 Page 2 This opinion is being delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Act. Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Registration Statement. In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement, (ii) the certificates of trust of each of the Trusts as filed with the Secretary of State of the State of Delaware (collectively, the "Certificates of Trust") and (iii) the form of the Declarations. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such copies. In making our examination of executed documents or documents to be executed, we have assumed that the parties thereto, other than the Trusts, have been duly organized and are validly existing and in good standing under the laws of their respective jurisdiction of organization and had or will have the power, corporate, trust or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and that such documents constitute valid and binding obligations of such parties. In addition, we have assumed that the Declarations of the Trusts, will be established so as not to violate, conflict with or constitute a default under (i) any agreement or instrument to which the Company or any of the Trusts or their respective property is subject, (ii) any law, rule, or regulation to which the Company or either of the Trusts is subject, (iii) any judicial or administrative order or decree of any governmental authority or (iv) any consent, approval, license, authorization or validation of, or filing, recording or registration with any governmental authority. We have also assumed that the certificates evidencing the Preferred Securities to be issued will be in a form that complies with, and the terms of such Preferred Securities will be duly established in accordance with, the Delaware Business Trust Act. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon oral or written 2 Consumers Energy Company Financing V Consumers Energy Company Financing VI November 21, 2001 Page 3 statements and representations of officers, trustees and other representatives of the Company, the Trusts and others. We do not express any opinion as to the laws of any jurisdiction other than the Business Trust Act of the State of Delaware. Based on and subject to the foregoing and to the other qualifications and limitations set forth herein, we are of the opinion that the Preferred Securities of each Trust to be offered pursuant to the Registration Statement (the "Offered Preferred Securities"), when (i) the Registration Statement, as finally amended (including all necessary post-effective amendments), has become effective under the Act; (ii) an appropriate prospectus with respect to the Offered Preferred Securities has been prepared, delivered and filed in compliance with the Act and the applicable rules and regulations thereunder; (iii) the Declaration of such Trust has been duly executed and delivered by the parties thereto; (iv) the terms of the Offered Preferred Securities have been established in accordance with the Declaration; (v) the Offered Preferred Securities have been issued, executed and authenticated in accordance with the Declaration and delivered and paid for in the manner contemplated in the Registration Statement or any prospectus relating thereto; and (vi) if the Offered Preferred Securities are to be sold pursuant to a firm commitment underwritten offering, the underwriting agreement with respect to the Offered Preferred Securities has been duly authorized, executed and delivered by the applicable Trust and the other parties thereto, (1) the Offered Preferred Securities will be duly authorized for issuance and will be validly issued, fully paid and nonassessable, representing undivided beneficial interests in the assets of such Trust and (2) the holders of the Offered Preferred Securities will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the Delaware General Corporation Law. We bring to your attention, however, that the holders of the Offered Preferred Securities may be obligated, pursuant to the Declaration of such Trust, to (i) provide indemnity and/or security in connection with, and pay taxes or governmental charges arising from, transfers of Offered Preferred Securities and (ii) provide security and indemnity in connection with the requests of or directions to the Property Trustee of such Trust to exercise its rights and powers under the Declaration of such Trust. 3 Consumers Energy Company Financing V Consumers Energy Company Financing VI November 21, 2001 Page 4 We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also hereby consent to the use of our name under the heading "Legal Matters" in the base prospectus included in the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission promulgated thereunder. This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable law. Very truly yours, /s/ Skadden, Arps, Slate, Meagher & Flom LLP 4 EX-10.A 10 k65350ex10-a.txt SALES AGREEMENT DATED AS OF NOVEMBER 8, 2001 EXHIBIT 10(a) SALE AGREEMENT SALE AGREEMENT between CONSUMERS FUNDING LLC Issuer and CONSUMERS ENERGY COMPANY Seller Dated as of November 8, 2001 TABLE OF CONTENTS ARTICLE I Definitions SECTION 1.01 Definitions......................................................1 SECTION 1.02 Other Definitional Provisions....................................1 ARTICLE II Conveyance of Transferred Securitization Property SECTION 2.01 Conveyance of Initial Transferred Securitization Property.........................................................2 SECTION 2.02 Conditions to Conveyance of Securitization Property..............3 ARTICLE III Representations and Warranties of Seller SECTION 3.01 Organization and Good Standing...................................5 SECTION 3.02 Due Qualification................................................5 SECTION 3.03 Power and Authority..............................................5 SECTION 3.04 Binding Obligation...............................................5 SECTION 3.05 No Violation.....................................................5 SECTION 3.06 No Proceedings...................................................6 SECTION 3.07 Approvals........................................................6 SECTION 3.08 The Transferred Securitization Property..........................6 SECTION 3.09 Solvency.........................................................9 ARTICLE IV Covenants of the Seller SECTION 4.01 Seller's Existence...............................................9 SECTION 4.02 No Liens or Conveyances..........................................9 SECTION 4.03 Use of Proceeds. ..............................................10 SECTION 4.04 Delivery of Collections.........................................10 SECTION 4.05 Notice of Liens.................................................10 SECTION 4.06 Compliance with Law.............................................10 SECTION 4.07 Covenants Related to Transferred Securitization Property........10 SECTION 4.08 Notice of Indemnification Events................................11 SECTION 4.08 Protection of Title.............................................11 SECTION 4.09 Taxes...........................................................12 ARTICLE V Additional Undertakings of the Seller SECTION 5.01 Liability of the Seller; Indemnities............................13 SECTION 5.02 Merger or Consolidation of, or Assumption of the Obligations of, the Seller......................................14 SECTION 5.03 Limitation on Liability of the Seller and Others................15 ARTICLE VI Miscellaneous Provisions SECTION 6.01 Amendment.......................................................15 SECTION 6.02 Notices.........................................................16 SECTION 6.03 Assignment by Seller............................................16 SECTION 6.04 Assignment to Trustee...........................................17 SECTION 6.05 Limitations on Rights of Others.................................17 SECTION 6.06 Severability....................................................17 SECTION 6.07 Separate Counterparts...........................................17 SECTION 6.08 Headings........................................................17 SECTION 6.09 Governing Law...................................................17 SECTION 6.10 Nonpetition Covenant............................................18 EXHIBIT A - Bill of Sale.....................................................A-1 EXHIBIT B - Opinion of Counsel...............................................B-1 EXHIBIT C - Opinion of Counsel...............................................C-1 APPENDIX A - Master Definitions SALE AGREEMENT, dated as of November 8, 2001, by and between CONSUMERS FUNDING LLC, a Delaware limited liability company, as issuer (the "Issuer"), and CONSUMERS ENERGY COMPANY, a Michigan corporation, as seller hereunder (in such capacity, the "Seller"). W I T N E S S E T H: WHEREAS the Issuer desires to purchase from time to time Securitization Property created pursuant to the Customer Choice Act and the Financing Order; WHEREAS the Seller is willing to sell Securitization Property to the Issuer; WHEREAS the Issuer, in order to finance the purchase of the Transferred Securitization Property, will from time to time issue Securitization Bonds under the Indenture; and WHEREAS the Issuer, to secure its obligations under the Securitization Bonds and the Indenture, will pledge its right, title and interest in, to and under the Transferred Securitization Property to the Trustee for the benefit of the Securitization Bondholders. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I Definitions SECTION 1.01 Definitions. Capitalized terms used herein and not otherwise defined herein have the meanings assigned to them in Appendix A hereto. SECTION 1.02 Other Definitional Provisions. (a) "Agreement" means this Sale Agreement, as the same may be amended, supplemented or otherwise modified from time to time. (b) Non-capitalized terms used herein which are defined in the Customer Choice Act, as the context requires, have the meanings assigned to such terms in the Customer Choice Act, but without giving effect to amendments to the Customer Choice Act after the date hereof which have a material adverse effect on the Issuer or the Securitization Bondholders. (c) All terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. (d) The words "hereof", "herein", "hereunder" and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term "including" means "including without limitation". (e) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. ARTICLE II Conveyance of Transferred Securitization Property SECTION 2.01 Conveyance of Initial Transferred Securitization Property. (a) In consideration of the Issuer's payment to or upon the order of the Seller of $468,592,000 (the "Initial Purchase Price") by wire transfer of funds immediately available on the date hereof to Seller's account no. 113-10 at Bank One, Detroit Michigan, routing transit # 0720 0032 6, subject to the conditions specified in Section 2.02, the Seller does hereby irrevocably sell, transfer, assign and otherwise convey to the Issuer, without recourse (subject to the obligations of the Seller herein), all right, title and interest of the Seller in, to and under the Initial Transferred Securitization Property as confirmed by the Bill of Sale delivered pursuant to Section 2.02(a) on or prior to the Initial Transfer Date (such sale, transfer, assignment and conveyance of the Initial Transferred Securitization Property to include, to the fullest extent permitted by Michigan law, the assignment of all revenues, collections, payments, money and proceeds arising out of the Securitization Charges and the other rights and interests constituting the Initial Transferred Securitization Property, as the same may be adjusted from time to time). Such sale, transfer, assignment and conveyance of the Initial Transferred Securitization Property is hereby expressly stated to be a sale or other absolute transfer and, pursuant to Section 10l. of the Customer Choice Act, constitutes a true sale and not a secured transaction and that title, legal and equitable, to the Initial Transferred Securitization Property has passed to the Issuer. The preceding sentence is the statement referred to in Section 10l. of the Customer Choice Act. The Seller agrees and confirms that, upon the execution and delivery of this Agreement and the related Bill of Sale and payment of the Initial Purchase Price, title, legal and equitable, to the Initial Transferred Securitization Property shall pass to the Issuer and the Seller shall have no right, title or interest in, to or under the Initial Transferred Securitization Property. (b) Subject to the conditions specified in Section 2.02, the Issuer does hereby purchase the Initial Transferred Securitization Property from the Seller for the consideration set forth in paragraph (a) above. (c) The Seller and the Issuer each acknowledge and agree that the purchase price for the Initial Transferred Securitization Property sold pursuant to this Agreement is equal to its fair market value at the time of sale. (d) The Seller and the Issuer further agree that from time to time the Seller may offer to sell, and the Issuer may purchase, Subsequent Transferred Securitization Property as of Subsequent Transfer Dates, subject to the conditions specified in Section 2.02, in exchange for consideration to be agreed upon (the "Subsequent Purchase Price"). The Seller and the Issuer hereby agree that each such sale, transfer, assignment and conveyance of any Subsequent Transferred Securitization Property shall include, to the fullest extent permitted by Michigan law, the assignment of all revenues, collections, payments, money and proceeds of or arising out of the Securitization Charges and the other rights and interests constituting the Subsequent Transferred Securitization Property, as the same may be adjusted from time to time. Such sale, transfer, assignment and conveyance of the Subsequent Transferred Securitization Property is hereby expressly stated to be a sale or other absolute transfer and, pursuant to Section 10l. of the Customer Choice Act, shall constitute a true sale and not a secured transaction and that title, legal and equitable, to the Subsequent Transferred Securitization Property has passed to the Issuer. The preceding sentence is the statement referred to in Section 10l. of the Customer Choice Act. The Seller agrees and confirms that, after giving effect to any sale contemplated by this paragraph (d), the execution and delivery of the related Bill of Sale and payment of the Subsequent Purchase Price, title, legal and equitable, to the Subsequent Transferred Securitization Property shall pass to the Issuer and the Seller shall have no right, title or interest in, to or under the Subsequent Transferred Securitization Property. (e) Notwithstanding the foregoing, in the event that any sale, transfer, assignment and conveyance of any Transferred Securitization Property is determined by a court of competent jurisdiction not to be a true and absolute sale as contemplated by the parties hereto and the Customer Choice Act, then such sale, transfer, assignment and conveyance shall be treated as a pledge of such Transferred Securitization Property and the Seller shall be deemed to have granted, and does hereby grant, as of the date hereof, a security interest to the Issuer in such Transferred Securitization Property to secure a payment obligation incurred by the Seller in the amount paid by the Issuer for such Transferred Securitization Property, plus interest. SECTION 2.02 Conditions to Conveyance of Securitization Property. The sale by the Seller to the Issuer, and the purchase by the Issuer from the Seller, of Securitization Property upon any Transfer Date shall be subject to and conditioned upon the satisfaction or waiver of each of the following conditions: (a) on or prior to the Transfer Date, the Seller shall deliver to the Issuer a duly executed Bill of Sale identifying the Securitization Property to be conveyed as of that date, substantially in the form of Exhibit A hereto; (b) as of the Transfer Date, no breach by the Seller of its representations, warranties or covenants in this Agreement shall exist and the Seller shall have delivered to the Issuer and the Trustee an Officers' Certificate to such effect and no Servicer Default shall have occurred and be continuing; (c) on the Transfer Date: (i) the Issuer shall have sufficient funds available to pay the purchase price for the Transferred Securitization Property to be conveyed on such date, and (ii) all conditions set forth in the Indenture to the issuance of one or more Series of Securitization Bonds intended to provide such funds shall have been satisfied or waived; (d) on or prior to the Transfer Date, the Seller shall have taken all actions required under applicable law, including under the Customer Choice Act and other applicable law, to transfer to the Issuer ownership of the Transferred Securitization Property to be conveyed on such date, free and clear of all Liens other than Liens created by the Issuer pursuant to the Indenture, and the Issuer shall have taken all actions required for the Issuer to grant the Trustee a first priority perfected security interest in the Collateral, in each case including, without limitation, filings under the Michigan UCC and the Delaware UCC; (e) in the case of any sale of Subsequent Transferred Securitization Property only, the Seller shall have provided the Issuer and each Rating Agency with a notice specifying the Subsequent Transfer Date for the Subsequent Transferred Securitization Property not later than 10 days prior to the Subsequent Transfer Date; (f) the Seller shall have delivered to each Rating Agency and to the Issuer: (i) an Opinion of Counsel to the Seller with respect to the transfer of the Transferred Securitization Property then being conveyed to the Issuer substantially in the form of Exhibit B hereto, and (ii) an Opinion of Counsel to the Seller, substantially in the form of Exhibit C hereto; (g) the Seller shall have delivered to the Trustee and the Issuer an Officers' Certificate confirming the satisfaction of each condition precedent specified in this Section 2.02; (h) with respect to any Subsequent Sale, the Seller shall have received written notice from each Rating Agency that such Subsequent Sale will not result in a reduction or withdrawal of the then current rating by such Rating Agency of any Outstanding Series or Class of Securitization Bonds; and (i) the Seller shall have received the Initial Purchase Price or the Subsequent Purchase Price, as applicable, in funds immediately available on the applicable Transfer Date. ARTICLE III Representations and Warranties of Seller As of the Transfer Date, the Seller makes the following representations and warranties on which the Issuer has relied and will rely in acquiring Transferred Securitization Property. The following representations and warranties are made under existing law as in effect as of the Transfer Date. The Seller shall not be in breach of any representation or warranty herein as a result of a change in law occurring after the Transfer Date. The representations and warranties shall survive the sale of Transferred Securitization Property to the Issuer and the pledge thereof to the Trustee pursuant to the Indenture. SECTION 3.01 Organization and Good Standing. The Seller is a corporation duly organized and in good standing under the laws of the State of Michigan, with corporate power and authority to own its properties and conduct its business as currently owned or conducted. SECTION 3.02 Due Qualification. The Seller is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualifications, licenses or approvals (except where the failure to so qualify would not be reasonably likely to have a material adverse effect on the Seller's business, operations, assets, revenues, properties or prospects, the Securitization Property, the Issuer or the Securitization Bonds). SECTION 3.03 Power and Authority. The Seller has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; the Seller has full corporate power and authority to own the Securitization Property and sell and assign the Transferred Securitization Property to the Issuer, and the Seller has duly authorized such sale and assignment to the Issuer by all necessary corporate action; and the execution, delivery and performance of this Agreement has been duly authorized by the Seller by all necessary corporate action. SECTION 3.04 Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms subject to bankruptcy, receivership, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity (regardless of whether considered in a proceeding in equity or at law). SECTION 3.05 No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or by-laws of the Seller, or any indenture, agreement or other instrument to which the Seller is a party or by which it is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any applicable indenture, agreement or other instrument (except as set forth in Section 2.01(e) hereof and any bills of sale for Securitization Property); nor violate any law or any order, rule or regulation applicable to the Seller of any court or of any Federal or State regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties. SECTION 3.06 No Proceedings. Except as disclosed in writing by the Seller to the Issuer, there are no proceedings or investigations pending or, to the Seller's best knowledge, threatened, before any court, Federal or State regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or the Issuer or their respective properties: (a) asserting the invalidity of the Basic Documents, the Securitization Bonds, the Customer Choice Act or the Financing Order; (b) seeking to prevent the issuance of the Securitization Bonds or the consummation of any of the transactions contemplated by the Basic Documents or the Securitization Bonds; (c) challenging the Seller's treatment of the Securitization Bonds as debt of the Seller for Federal and State income, gross receipts or franchise tax purposes; or (d) seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of, the Basic Documents or the Securitization Bonds. SECTION 3.07 Approvals. Except for the filing of financing statements and continuation statements under the Michigan UCC and the Delaware UCC, no approval, authorization, consent, order or other action of, or filing with, any court, Federal or State regulatory body, administrative agency or other governmental instrumentality is required in connection with the execution and delivery by the Seller of this Agreement, the performance by the Seller of the transactions contemplated hereby, the fulfillment by the Seller of the terms hereof or the creation or transfer of the Transferred Securitization Property, except those that have been obtained or made. SECTION 3.08 The Transferred Securitization Property. (a) Information. All information provided by the Seller to the Issuer with respect to the Transferred Securitization Property is correct in all material respects. (b) Effect of Transfer. Each sale, transfer, assignment and conveyance herein contemplated constitutes a sale or other absolute transfer, of all right, title and interest of the Seller in, to and under the Transferred Securitization Property from the Seller to the Issuer; upon execution and delivery of this Agreement and the related Bill of Sale, the Seller will have no right, title or interest in, to or under the Transferred Securitization Property; and the Transferred Securitization Property and the proceeds thereof would not be part of the estate of the Seller as debtor in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. (c) Transfer Filings. The Seller is the sole owner of the Transferred Securitization Property sold to the Issuer on the Transfer Date; and the Transferred Securitization Property will have been validly sold, assigned, transferred and conveyed to the Issuer free and clear of all Liens other than Liens created by the Issuer pursuant to the Indenture. All actions or filings, including filings under either the Michigan UCC or the Delaware UCC, necessary in any jurisdiction to give the Issuer a valid first priority perfected ownership interest in the Transferred Securitization Property and to grant to the Trustee a first priority perfected security interest in the Transferred Securitization Property, free and clear of all Liens of the Seller or anyone else claiming through the Seller, have been taken or made. (d) Financing Order Irrevocable; Process Valid; No Litigation; Etc. (i) The Financing Order has been issued by the MPSC in accordance with the Customer Choice Act, and the Financing Order and the process by which it was issued comply with all applicable laws, rules and regulations. The Financing Order has become effective pursuant to the Customer Choice Act and is and as of the date of issuance of any Securitization Bonds will be in full force and effect and final and non- appealable. (ii) As of the Series Issuance Date, the Securitization Bonds of the related Series will be entitled to the protections provided by the Customer Choice Act and, in accordance with the Customer Choice Act, the Financing Order and the Securitization Charge authorized therein, subject to the periodic adjustments to the Securitization Charge provided for in the Financing Order, have become irrevocable. (iii) (A) Under the Customer Choice Act, the State of Michigan may not take or permit any action that would impair the value of the Transferred Securitization Property or reduce or alter, except as allowed under Section 10k(3) of the Customer Choice Act, or impair the Securitization Charges to be imposed, collected and remitted to the Issuer, until the principal, interest and premium and any other charges incurred and contracts to be performed in connection with the Securitization Bonds have been paid and performed in full; and (B) under the contract clauses of the State of Michigan and United States Constitutions, the State of Michigan, including the MPSC, could not constitutionally take any action of a legislative character, including, but not limited to, the repeal or amendment of the Customer Choice Act or the MPSC financing order (including repeal or amendment by voter initiative as defined in the Michigan Constitution or by amendment of the Michigan Constitution), that would substantially impair the value of the Transferred Securitization Property or substantially reduce or alter, except as allowed under the adjustment provisions described in Customer Choice Act, or substantially impair the Securitization Charges to be imposed, collected and remitted to the Issuer, unless this 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 this action and, under the takings clauses of the State of Michigan and United States Constitutions, the State of Michigan, including the MPSC, could not repeal or amend the Customer Choice Act or the Financing Order (including repeal or amendment by voter initiative as defined in the Michigan Constitution, or by amendment of the Michigan Constitution) 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 this action 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. (iv) There is no order by any court providing for the revocation, alteration, limitation or other impairment of the Customer Choice Act, the Financing Order, the Transferred Securitization Property or the Securitization Charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the Financing Order. (e) Assumptions. The assumptions used in calculating the Securitization Charge in any notice delivered by Consumers to the MPSC will be reasonable and made in good faith. (f) Creation of Transferred Securitization Property. (i) The Transferred Securitization Property constitutes a present property right; (ii) the Securitization Property consists of the rights and interests of the Seller, or its successor, under the Financing Order, including all of the following: (a) the right under Section 10j(1)(a) of the Customer Choice Act to impose, collect, and receive the Securitization Charges authorized in the Financing Order in an amount necessary to provide the full recovery of all qualified costs, as defined in the Customer Choice Act; (b) the right under Section 10j(1)(b) of the Customer Choice Act and under the Financing Order to obtain periodic adjustments of Securitization Charges under Section 10k(3) of the Customer Choice Act; and (c) all revenue, collections, payments, money, and proceeds arising out of the rights and interests described above; (iii) the Transferred Securitization Property is not subject to any Lien created by the Indenture dated September 1, 1945 of the Seller to City Bank Farmers Trust Company (now Citibank, NA), as mortgage trustee (the "Trust Indenture"), or any Lien created by any other indenture, agreement or other instrument to which the Seller is a party or by which the Seller is bound; and the grant of a security interest in the Transferred Securitization Property pursuant to Section 2.01(e) of this Agreement will not breach any covenant in the Trust Indenture or in any such indenture, agreement or other instrument. (iv) the Financing Order, together with the Securitization Charges authorized therein, is irrevocable and the Securitization Charges are not subject to reduction, impairment or adjustment by further action of the MPSC, except as provided under Section 10k(3) of the Customer Choice Act. SECTION 3.09 Solvency. Upon giving effect to the sale of any Transferred Securitization Property hereunder, the Seller: (a) is solvent and expects to remain solvent; (b) is adequately capitalized to conduct its business and affairs considering its size and the nature of its business and intended purposes; (c) is not engaged nor does it expect to engage in a business for which its remaining property represents an unreasonably small amount of capital; (d) reasonably believes that it will be able to pay its debts as they come due; and (e) is able to pay its debts as they mature and does not intend to incur, or believe that it will incur, indebtedness that it will not be able to repay at its maturity. ARTICLE IV Covenants of the Seller SECTION 4.01 Seller's Existence. So long as any of the Securitization Bonds are outstanding, the Seller shall, subject to Section 5.02, keep in full force and effect its existence and remain in good standing under the laws of the jurisdiction of its organization, and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or will be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement to which the Seller is a party necessary to the proper administration of this Agreement and the transactions contemplated hereby. SECTION 4.02 No Liens or Conveyances. Except for the conveyances hereunder, the Seller shall not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any Lien on, any of the Transferred Securitization Property, whether now existing or hereafter created, or any interest therein. The Seller shall not at any time assert any Lien against or with respect to any Transferred Securitization Property, and shall defend the right, title and interest of the Issuer and the Trustee, as assignee of the Issuer, in, to and under the Transferred Securitization Property, whether now existing or hereafter created, against all claims of third parties claiming through or under the Seller. SECTION 4.03 Use of Proceeds. The Seller shall use proceeds from the sale of the Securitization Property in accordance with the Financing Order and the Customer Choice Act. SECTION 4.04 Delivery of Collections. If the Seller receives collections of the Securitization Charge in its capacity as Seller, the Seller shall pay the Servicer all payments received by the Seller in respect thereof as soon as practicable after receipt thereof by the Seller, but in no event later than two Business Days after such receipt. SECTION 4.05 Notice of Liens. The Seller shall notify the Issuer and the Trustee promptly after becoming aware of any purported Lien on any Transferred Securitization Property other than the conveyances hereunder or under the Indenture. SECTION 4.06 Compliance with Law. The Seller shall comply with its organizational or governing documents and all laws, treaties, rules, regulations and determinations of any governmental instrumentality applicable to the Seller, except to the extent that failure to so comply would not materially adversely affect the Issuer's or the Trustee's interests in the Transferred Securitization Property or under any of the Basic Documents or the Seller's performance of its obligations hereunder or its obligations as Seller under any of the Basic Documents to which it is a party. SECTION 4.07 Covenants Related to Transferred Securitization Property. (a) So long as any of the Securitization Bonds are outstanding, the Seller shall: (i) treat the Securitization Bonds as debt for all purposes; (ii) disclose in its financial statements that on a non-consolidated basis it is not the owner of the Transferred Securitization Property and that the assets of the Issuer are not available to pay creditors of the Seller or any of its Affiliates (other than the Issuer); (iii) disclose the effects of all transactions between the Seller and the Issuer in accordance with generally accepted accounting principles; and (iv) not own or purchase any Securitization Bonds. (b) The Seller agrees that upon the sale by the Seller of the Transferred Securitization Property to the Issuer pursuant to this Agreement: (i) to the fullest extent permitted by law, including the Customer Choice Act and applicable MPSC Regulations, the Issuer shall have all of the rights originally held by the Seller with respect to the Transferred Securitization Property, including the right to collect any amounts payable by any Customer in respect of such Transferred Securitization Property, notwithstanding any objection or direction to the contrary by the Seller; and (ii) any payment by any Customer to the Issuer of Securitization Charges shall discharge such Customer's obligations in respect of such Transferred Securitization Property to the extent of such payment, notwithstanding any objection or direction to the contrary by the Seller. (c) So long as any of the Securitization Bonds are Outstanding, (i) except for tax and financial reporting purposes, the Seller shall not make any statement or reference in respect of the Transferred Securitization Property that is inconsistent with the ownership thereof by the Issuer; and (ii) the Seller shall not take any action in respect of the Transferred Securitization Property except as contemplated by the Basic Documents. SECTION 4.08 Notice of Indemnification Events. The Seller shall deliver to the Issuer and the Trustee, promptly after having obtained knowledge thereof, written notice in an Officer's Certificate of the occurrence of any event which requires or which, with the giving of notice or the passage of time or both, would require the Seller to make any indemnification payment pursuant to Section 5.01. SECTION 4.09 Protection of Title. The Seller shall execute and file such filings, and cause to be executed and filed such filings, and take all such actions, all in such manner and in such places as may be required by law fully to preserve, maintain, and protect the interests of the Issuer and the Trustee in the Transferred Securitization Property, including all filings required under the Michigan UCC and the Delaware UCC relating to the transfer of the ownership of the Transferred Securitization Property by the Seller to the Issuer and the pledge of the Transferred Securitization Property by the Issuer to the Trustee. The Seller shall deliver (or cause to be delivered) to the Issuer and the Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. The Seller shall take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary: (a) to protect the Issuer and the Securitization Bondholders from claims, State actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation set forth in Section 3.08; or (b) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Customer Choice Act, the Financing Order or the rights of Securitization Bondholders by legislative enactment or constitutional amendment that would be adverse to the Issuer, the Trustee or the Securitization Bondholders. The costs of any such actions or proceedings shall be reimbursed by the Issuer to the Seller from Securitization Charge Collections as an Operating Expense. The Seller designates the Issuer as its agent and attorney-in-fact to execute any filings of financing statements, continuation statements or other instruments required of the Issuer pursuant to this Section, it being understood that the Issuer shall have no obligation to execute any such instruments. SECTION 4.10 Taxes. So long as any of the Securitization Bonds are outstanding, the Seller shall, and shall cause each of its subsidiaries to, pay all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Transferred Securitization Property; provided that no such tax need be paid if the Seller or one of its Affiliates is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Seller or such Affiliate has established appropriate reserves as shall be required in conformity with generally accepted accounting principles. ARTICLE V Additional Undertakings of the Seller The Seller hereby undertakes the obligations contained in this Article V and agrees that the Issuer shall have the right to assign its rights with respect to such obligations to the Trustee for the benefit of the Securitization Bondholders. SECTION 5.01 Liability of the Seller; Indemnities. (a) The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement. (b) The Seller shall indemnify the Issuer and the Trustee, for itself and on behalf of the Securitization Bondholders, and each of their respective officers, directors, managers, employees and agents for, and defend and hold harmless each such Person from and against, any and all taxes (other than any taxes imposed on Securitization Bondholders solely as a result of their ownership of Securitization Bonds) that may at any time be imposed on or asserted against any such Person under existing law as of any Transfer Date as a result of the sale and assignment of the Transferred Securitization Property by the Seller to the Issuer, the acquisition or holding of the Transferred Securitization Property by the Issuer or the issuance and sale by the Issuer of the Securitization Bonds, including any sales, gross receipts, general corporation, personal property, privilege, franchise, license or single business taxes, but excluding any taxes imposed as a result of a failure of such person to properly withhold or remit taxes imposed with respect to payments on any Securitization Bond. (c) The Seller shall indemnify the Issuer and the Trustee, for itself and on behalf of the Securitization Bondholders, and each of their respective officers, directors, managers, employees and agents for, and defend and hold harmless each such Person from and against, (i) any and all amounts of principal of and interest on the Securitization Bonds not paid when due or when scheduled to be paid in accordance with their terms and the amount of any deposits to the Issuer required to have been made in accordance with the terms of the Basic Documents which are not made when so required, as a result of the Seller's breach of any of its representations, warranties or covenants contained in this Agreement, and (ii) any and all liabilities, obligations, claims, actions, suits or payments of any kind whatsoever that may be imposed on or asserted against any such Person, other than any liabilities, obligations or claims for or payments of principal of or interest on the Securitization Bonds, together with any reasonable costs and expenses incurred by such Person, as a result of the Seller's breach of any of its representations, warranties or covenants contained in this Agreement. (d) The Seller shall pay any and all taxes levied or assessed upon all or any part of the Issuer's property or assets based on existing law as of the Transfer Date. (e) Indemnification under this Section 5.01 shall survive the resignation or removal of the Trustee and the termination of this Agreement and shall include reasonable fees and expenses of investigation and litigation (including reasonable attorneys' fees and expenses). The Seller shall not indemnify any party for any changes in law after the Transfer Date. (f) The indemnification obligation of the Seller under this Section 5.01 shall be pari passu with all other general unsecured obligations of the Seller. SECTION 5.02 Merger or Consolidation of, or Assumption of the Obligations of, the Seller. Any Person: (a) into which the Seller may be merged or consolidated and which succeeds to all or the major part of the electric distribution business of the Seller, (b) which results from the division of the Seller into two or more Persons and which succeeds to all or the major part of the electric distribution business of the Seller, (c) which may result from any merger or consolidation to which the Seller shall be a party and which succeeds to all or the major part of the electric distribution business of the Seller, (d) which may succeed to the properties and assets of the Seller substantially as a whole and which succeeds to all or the major part of the electric distribution business of the Seller, or (e) which may otherwise succeed to all or the major part of the electric distribution business of the Seller, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Seller under this Agreement, shall be the successor to the Seller hereunder without the execution or filing of any document or any further act by any of the parties to this Agreement; provided, however, that: (i) immediately after giving effect to such transaction, no representation or warranty made pursuant to Article III shall have been breached and no Servicer Default, and no event that, after notice or lapse of time, or both, would become a Servicer Default, shall have occurred and be continuing, (ii) the Seller shall have delivered to the Issuer and the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section 5.02 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, (iii) the Seller shall have delivered to the Issuer and the Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all filings to be made by the Seller, including filings under the Michigan and Delaware UCC, that are necessary fully to preserve and protect fully the respective interests of the Issuer and the Trustee in the Transferred Securitization Property have been executed and filed, and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action is necessary to preserve and protect such interests, (iv) the Rating Agencies shall have received prior written notice of such transaction (although there is no requirement of any Rating Agency Confirmation); and (v) the Seller shall have delivered to the Issuer and the Trustee an opinion of independent tax counsel as selected by the Issuer and the Trustee which opinion is and in form and substance reasonably satisfactory to the Issuer and the Trustee and which may be based on a ruling from the Internal Revenue Service, to the effect that, for federal income tax purposes, such consolidation or merger will not result in a material adverse federal income tax consequence to the Seller, the Issuer, the Trustee or the holders of the Outstanding Securitization Bonds. The Seller shall not consummate any transaction referred to in clauses (a), (b), (c), (d) or (e) above except upon execution of the above described agreement of assumption and compliance with clauses (i), (ii), (iii), (iv) and (v) above. When any Person acquires the properties and assets of the Seller substantially as a whole and becomes the successor to the Seller in accordance with the terms of this Section 5.02, then upon the satisfaction of all of the other conditions of this Section 5.02, the Seller shall automatically and without further notice be released from its obligations hereunder. SECTION 5.03 Limitation on Liability of the Seller and Others. The Seller and any director, officer, employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person, respecting any matters arising hereunder. Subject to Section 4.08, the Seller shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability. ARTICLE VI Miscellaneous Provisions SECTION 6.01 Amendment. (a) This Agreement may be amended by the Seller and the Issuer, with the consent of the Trustee and the satisfaction of the Rating Agency Condition. Promptly after the execution of any such amendment or consent, the Issuer shall furnish written notification of the substance of such amendment or consent to each of the Rating Agencies. (b) Prior to the execution of any amendment to this Agreement, the Issuer and the Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement. The Issuer and the Trustee may, but shall not be obligated to, enter into any such amendment which affects their own rights, duties or immunities under this Agreement or otherwise. SECTION 6.02 Notices. Unless otherwise specifically provided herein, all notices, directions, consents and waivers required under the terms and provisions of this 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 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, five days after deposit in the United States first-class mail with proper postage for first-class mail prepaid: (a) in the case of the Seller, at Consumers Energy Company, 212 W. Michigan Avenue, Jackson, Michigan 49201 Attention: Thomas McNish, Corporate Secretary, (b) in the case of the Issuer, at Consumers Funding LLC, 212 W. Michigan Avenue, Suite M-1029, Jackson, Michigan 49201, Attention: Managers, (c) in the case of Moody's, at Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007, (d) in the case of Standard & Poor's, at Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041, Attention: Asset Backed Surveillance Department, and (e) in the case of Fitch, at Fitch, Inc., 1 State Street Plaza, New York, New York, Attention: ABS Surveillance, (f) in the case the Trustee, at the address provided for notices or communications to the Trustee in the Indenture; or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. SECTION 6.03 Assignment by Seller. Subject to Section 5.02, this Agreement may not be assigned by the Seller. SECTION 6.04 Assignment to Trustee. The Seller hereby acknowledges and consents to any pledge, assignment and grant of a security interest by the Issuer to the Trustee pursuant to the Indenture for the benefit of the Securitization Bondholders of all right, title and interest of the Issuer in, to and under the Transferred Securitization Property and the proceeds thereof and the assignment of any or all of the Issuer's rights hereunder to the Trustee. SECTION 6.05 Limitations on Rights of Others. The provisions of this Agreement are solely for the benefit of the Seller, the Issuer and the Trustee, on behalf of itself and the Securitization Bondholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Collateral or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 6.06 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 6.07 Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 6.08 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 6.09 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 6.10 Nonpetition Covenant. Notwithstanding any prior termination of this Agreement or the Indenture, the Seller hereby covenants and agrees that it shall not, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of the Securitization Bonds, any other amounts owed under the Indenture, including any amounts owed to third-party credit enhancers, and any amounts owed under any hedge or swap agreement, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any Federal or State bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective duly authorized officers as of the date and year first above written. CONSUMERS FUNDING LLC, as Issuer By: /s/ Thomas A. McNish --------------------------------------- Name: Thomas A. McNish Title: Manager CONSUMERS ENERGY COMPANY, as Seller By: /s/ Thomas A. McNish --------------------------------------- Name: Thomas A. McNish Title: Vice President and Secretary EXHIBIT A BILL OF SALE For good and valuable consideration the receipt of which is hereby acknowledged, CONSUMERS ENERGY COMPANY, a Michigan corporation (the "Seller"), does hereby sell, assign, transfer and convey to CONSUMERS FUNDING LLC, a Delaware limited liability company (the "Issuer"), without recourse except as provided in the Sale Agreement referred to below, all of the Seller's right, title and interest in, to and under all of the Securitization Property (being the "Transferred Securitization Property"), which sale, assignment, transfer and conveyance of the Transferred Securitization Property shall include, as provided in the Customer Choice Act, the sale, assignment, transfer and conveyance of all of the Seller's right, title and interest in, to and under all revenues, collections, payments, money and proceeds arising under or with respect to the Securitization Charges related to the Transferred Securitization Property, as the same may be adjusted from time to time in accordance with the Customer Choice Act and the Financing Order, to have and to hold the same unto the Issuer and to the successors and assigns of the Issuer, forever. Capitalized terms used herein and not defined shall have the meanings set forth in the Sale Agreement dated November 8, 2001 (the "Sale Agreement") between the Issuer and the Seller. This Bill of Sale shall be construed in accordance with the laws of the State of Michigan, without reference to its conflict of law provisions. IN WITNESS WHEREOF, the Seller has duly executed and delivered this Bill of Sale this 8th day of November, 2001. CONSUMERS ENERGY COMPANY, as Seller By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- Accepted this 8th day of November, 2001. CONSUMERS FUNDING LLC By: -------------------------------------------------- Name: ------------------------------------------------ Title: ----------------------------------------------- EXHIBIT B Opinion of Counsel EXHIBIT C Opinion of Counsel APPENDIX A MASTER DEFINITIONS The definitions contained in this Appendix A are applicable to the singular as well as the plural forms of such terms. Act has the meaning specified in Section 11.03(a) of the Indenture. Adjustment Date means (a) the first day of the first billing cycle of the Servicer in December of each year through December 2013 and (b) thereafter, as long as the Securitization Bonds are outstanding, the first day of the first billing cycle of the Servicer in March, June, September and December of each year, beginning with the billing cycle for December 2014. Adjustment Request means an application filed by the Servicer with the MPSC for a Securitization Charge Adjustment pursuant to Section 5 of the Issuer Annex. Administration Agreement means the Administration Agreement dated as of November 8, 2001, between Consumers, as administrator, and the Issuer, as the same may be amended or supplemented from time to time. Administrator means Consumers, as administrator under the Administration Agreement, and each successor to Consumers, in the same capacity, pursuant to Section 14 of the Administration Agreement. Affiliate means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing. Alternative Electric Suppliers means any third party, including any electric generation supplier, providing billing or metering services, licensed by the MPSC pursuant to relevant provisions of the Customer Choice Act, the MPSC Regulations and the Financing Order. Annual Accountant's Report has the meaning assigned to that term in Section 3.07 of the Servicing Agreement. Authorized Denominations means, with respect to any Series or Class of Securitization Bonds, $1,000 and integral multiples of $1.00 above that amount, provided, however, that one bond of each Class may have denomination of less than $1,000, or such other denominations as may be specified in the Series Supplement therefor. Authorized Newspaper means the Luxemburger Wort or any other newspaper published in Luxembourg on a daily basis. Authorized Officer means, with respect to the Issuer, (a) any Manager and, (b) any person designated as an "Officer" under the Issuer LLC Agreement and authorized thereby to act on behalf of the Issuer. Basic Documents means the Formation Documents, the Sale Agreement, the Intercreditor Agreement, any Bills of Sale, the Servicing Agreement, the Administration Agreement, the Indenture, the Underwriting Agreement, the Securities Account Control Agreement and any Interest Rate Swap Agreement, as each may be amended or supplemented from time to time. Bill of Sale means any bill of sale issued by the Seller to the Issuer pursuant to the Sale Agreement evidencing the sale of Securitization Property by the Seller to the Issuer. Billing Month means the schedule for current month billings (each billing month includes 21 billing segments regardless of the number of days in the current calendar month). For uniformity of customer billings, each customer's meter is read every 27 to 33 days and billed in one of the 21 monthly billing segments. Book-Entry Securitization Bonds means beneficial interests in the Securitization Bonds, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.11 of the Indenture. Business Day means any day other than a Saturday or Sunday or a day on which banking institutions in the City of Jackson, Michigan, or in the City of New York, New York or, with respect to any Securitization Bonds listed on the Luxembourg Stock Exchange, in Luxembourg, are required or authorized by law or executive order to remain closed. Calculation Date means the day which is a Business Day at least 45 days before each Adjustment Date on which the Servicer files an Adjustment Request. Capital Reserve Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Capital Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Class means, with respect to any Series, any one of the classes of Securitization Bonds of that Series, as specified in the Series Supplement for that Series. Class Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Clearing Agency means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. Clearing Agency Participant means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. Code means the Internal Revenue Code of 1986, as amended from time to time, and the treasury regulations promulgated thereunder. Collateral has the meaning specified in the Granting Clause of the Indenture. Collection Account has the meaning specified in Section 8.02(a) of the Indenture. Collection Curve means, with respect to a Billing Month, the forecast prepared by the Servicer of the percentages of amounts billed in a Billing Month that are expected to be received during each of the Billing Months for which the Collection Curve Percentage will be applied to determine the amount of Securitization Charges collected. Collection Curve Percentage means the percentages of amounts billed in a particular Billing Month that are expected to be received during that month. The initial Collection Curve Percentages are: First Billing Month's Collection Curve Percentage: 40.08% Second Billing Month's Collection Curve Percentage: 45.09% Third Billing Month's Collection Curve Percentage: 10.58% provided that the Collection Curve Percentages will be updated by Consumers periodically while the Securitization Bonds are outstanding using similar methodology. Commission means the U.S. Securities and Exchange Commission, and any successor thereof. Consumers means Consumers Energy Company, a Michigan corporation. Corporate Trust Office means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at date of the execution of this Indenture is located at 5 Penn Plaza-16th floor, New York, New York 10001-1803, Attention: Corporate Trust-Asset Backed Securities (ABS), or at such other address as the Trustee may designate from time to time by notice to the Securitization Bondholders and the Issuer, or the principal corporate trust office of any successor Trustee (the address of which the successor Trustee will notify the Securitization Bondholders and the Issuer in writing). Covenant Defeasance Option has the meaning specified in Section\ 4.01(b) of the Indenture. Customers means all electric customers taking delivery of electricity from Consumers or its successor on its MPSC-approved rate schedules and special contracts. Customer Choice Act means the Customer Choice and Electricity Reliability Act as set forth in Michigan Public Acts 2000 PA 141 and 2000 PA 142 and effective on June 5, 2000. Daily Remittance Date means, if the Servicer has not satisfied the conditions of Section 5.11(b) of the Servicing Agreement, each Business Day commencing on the second Business Day following the date on which the Servicer ceases to satisfy such conditions. Default means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default. Defeasance Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Definitive Securitization Bonds has the meaning specified in Section 2.11 of the Indenture. Delaware UCC means the Uniform Commercial Code, as in effect in the State of Delaware, as amended from time to time. DTC Agreement means the agreement between the Issuer, the Trustee and The Depository Trust Company, as the initial Clearing Agency, dated on or about November 8, 2001, relating to the Securitization Bonds, as the same may be amended or supplemented from time to time. Eligible Guarantor Institution means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution," including (as such terms are defined therein): (a) a bank; (b) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (c) a credit union; (d) a national securities exchange, registered securities association or clearing agency; or (e) a savings association that is a participant in a securities transfer association. Eligible Institution means: (a) the corporate trust department of the Trustee, so long as any of the securities of the Trustee have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade, or (b) a depositary institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank), which (i) has either (A) with respect to any Eligible Investment having a maturity of greater than one month, a long-term unsecured debt rating of "AA-" by Standard & Poor's and Fitch and "Aa3" by Moody's, or (B) with respect to any Eligible Investment having a maturity one month or less, a certificate of deposit rating of "A-1+" by Standard & Poor's, "P-1" by Moody's and "F1+" by Fitch, or any other long-term, short-term or certificate of\ deposit rating acceptable to the Rating Agencies, and (ii) whose deposits are insured by the FDIC. Eligible Investments mean book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which evidence: (a) direct obligations of, and obligations fully and unconditionally guaranteed as to timely payment by, the United States of America; (b) demand deposits, time deposits or certificates of deposit of any depository institution or trust company (any depositary institution or trust company being referred to in this definition as a "financial institution") incorporated under the laws of the United States of America or any State thereof (or any domestic branch of a foreign bank) and subject to supervision and examination by Federal or State banking or depositary institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depositary institution or trust company) thereof shall have a credit rating from each of the Rating Agencies in the highest investment category granted thereby; (c) commercial paper or other short term obligations of any corporation organized under the laws of the United States of America (other than Consumers) whose ratings, at the time of the investment or contractual commitment to invest therein, from each of the Rating Agencies are in the highest investment category granted thereby; (d) investments in money market funds having a rating from each of the Rating Agencies in the highest investment category granted thereby (including funds for which the Trustee or any of its Affiliates act as investment manager or advisor); (e) bankers' acceptances issued by any depositary institution or trust company referred to in clause (b) above; (f) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depositary institution or trust company (acting as principal) described in clause (b) above; (g) repurchase obligations with respect to any security or whole loan entered into with (i) a financial institution (acting as principal) described in clause (b) above, (ii) a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (any broker/dealer being referred to in this definition as a "broker/dealer"), the unsecured short-term debt obligations of which are rated P-1 by Moody's, A- 1+ by Standard & Poor's and F1+ by Fitch at the time of entering into this repurchase obligation, or (iii) an unrated broker/dealer, acting as principal, that is a wholly- owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated P-1 by Moody's, A-1+ by Standard & Poor's and F1+ by Fitch at the time of purchase; or (h) any other investment permitted by each Rating Agency; provided, however, that, with respect to Moody's only, the obligor related to clauses (b), (c), (e), (f) and (g) above must have both a long term rating of at least A1 and a short term rating of at least P-1, and provided further, that, unless otherwise permitted by each Rating Agency, upon the failure of any Eligible Institution to maintain any applicable rating set forth in this definition or the definition of Eligible Institution, the related investments at such institution shall be reinvested in Eligible Investments at a successor Eligible Institution within 10 days, and provided, further, that, any Eligible Investment must not: (a) be sold, liquidated or otherwise disposed of at a loss, prior to the maturity thereof, or (b) mature later than (i) the date on which the proceeds of such Eligible Investment will be required to be on deposit in the Collection Account in order for the Trustee to make all required and scheduled payments and deposits into Subaccounts under the Indenture, if such Eligible Investment is held by an Affiliate of the Trustee, or (ii) the Business Day prior to the date on which the proceeds of such Eligible Investment will be required to be on deposit in the Collection Account in order for the Trustee to make all required and scheduled payments and deposits into Subaccounts under the Indenture, if such Eligible Investment is not held by an Affiliate of the Trustee; provided, however that with respect to the period prior to the first Payment Date any Eligible Investment must not have a maturity of greater than six months. Eligible Securities Account means either: (a) a segregated trust account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depositary institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depositary institution shall have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade. Event of Default has the meaning specified in Section 5.01 of the Indenture. Exchange Act means the Securities Exchange Act of 1934, as amended. Expected Amortization Schedule means, with respect to each Series or, if applicable, each Class of Securitization Bonds, the expected amortization schedule for principal thereof, as specified in the Series Supplement therefor. Expected Final Payment Date means, with respect to each Series or, if applicable, each Class of Securitization Bonds, the date when all interest and principal is scheduled to be paid with respect to that Series or Class in accordance with the Expected Amortization Schedule, as specified in the Series Supplement therefor. Filing Office means the Office of the of the Secretary of State of the State of Michigan or the Office of the Secretary of State of the State of Delaware, as applicable. Final Maturity Date means, for each Series or, if applicable, each Class of Securitization Bonds, the date by which all principal of and interest on such Series or Class of Securitization Bonds is required to be paid, as specified in the Series Supplement therefor. Financing Issuance means an issuance of a new Series of Securitization Bonds under the Indenture to provide funds to finance the purchase by the Issuer of Securitization Property. Financing Order means the Opinion and Order issued on October 24, 2000 and the Order Granting Rehearing issued on January 12, 2001 by the MPSC (MPSC Docket Number U- 12505) with respect to Consumers. Fitch means Fitch, Inc., or its successor. Formation Documents means, collectively, the Issuer LLC Agreement, the Issuer Certificate of Formation and any other document pursuant to which the Issuer is formed or governed, as each may be amended or supplemented from time to time. General Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Grant means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, and grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm. A Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal, interest and other payments in respect of the Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto. Holder or Securitization Bondholder means the Person in whose name a Securitization Bond of any Series or Class is registered in the Securitization Bond Register. Indemnified Person has the meaning specified in Section 5.02 of the Servicing Agreement. Indemnity Amount means the amount of any indemnification obligation payable under the Basic Documents. Indenture means the Indenture dated as of November 8, 2001, between the Issuer and the Trustee, as the same may be amended and supplemented from time to time by one or more Supplemental Indentures, and shall include each Series Supplement and the forms and terms of the Securitization Bonds established thereunder. Independent means, when used with respect to any specified Person, that the Person (a) is in fact independent of the Issuer, any other obligor upon the Securitization Bonds, Consumers, the Servicer (if different from Consumers) and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, Consumers or any Affiliate of any of the foregoing Persons, and (c) is not connected with the Issuer, any such other obligor, Consumers or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Independent Certificate means a certificate or opinion to be delivered to the Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order and approved by the Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of "Independent" in this Appendix A and that the signer is Independent within the meaning thereof. Independent Manager has the meaning set forth in the Issuer LLC Agreement. Initial Purchase Price has the meaning set forth in Section 2.01(a) of the Sale Agreement. Initial Transfer Date means the Series Issuance Date for the first Series of Securitization Bonds. Initial Transferred Securitization Property means the Securitization Property sold, assigned and/or transferred by the Seller to the Issuer as of the Initial Transfer Date pursuant to the Sale Agreement and the Bill of Sale delivered on or prior to the Initial Transfer Date as identified in such Bill of Sale. Insolvency Event means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person's affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days or (b) the commencement by such Person of a voluntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing. Intercreditor Agreement means: (i) the Intercreditor Agreement dated as of November 8, 2001 (the "Initial Intercreditor Agreement"), among Consumers, the Trustee, the Issuer, Canadian Imperial Bank of Commerce and Asset Securitization Cooperative Corporation, as amended and supplemented from time to time; or (ii) any subsequent intercreditor agreement entered into by the Trustee pursuant to Section 18(b) of the Initial Intercreditor Agreement. Interest means, for any Payment Date for any Series or Class of Securitization Bonds, the sum, without duplication, of: (a) an amount equal to the amount of interest accrued at the applicable Interest Rate from the prior Payment Date with respect to that Series or Class; (b) any unpaid interest, plus any interest accrued on this unpaid interest at the applicable Interest Rate, to the extent permitted by applicable law; (c) if the Securitization Bonds have been declared due and payable, all accrued and unpaid interest thereon; and (d) with respect to a Series or Class to be redeemed prior to the next Payment Date, the amount of interest that will be payable as interest on such Series or Class upon such redemption. Interest Rate means, with respect to each Series or Class of Securitization Bonds, the rate at which interest accrues on the principal balance of Securitization Bonds of such Series or Class, as specified in the Series Supplement therefor. Interest Rate Swap Agreement means any interest rate swap agreement entered into by the Issuer with respect to any Series or Class of Securitization Bonds, including, without limitation, the ISDA Master Agreement and the related Schedule and Confirmation between the Issuer and a Swap Counterparty, as same may be amended or supplemented from time to time. Issuer means Consumers Funding LLC, a Delaware limited liability company, or its successor under the Indenture or the party named as such in the Indenture until a successor replaces it and, thereafter, means the successor. Issuer Annex means Annex 1 of the Servicing Agreement. Issuer Certificate of Formation means the Amended and Restated Certificate of Formation of the Issuer which was filed with the Delaware Secretary of State's Office on November 6, 2001, as the same may be amended or supplemented from time to time. Issuer LLC Agreement means the Amended and Restated Limited Liability Company Agreement between the Issuer and Consumers, as sole Member, dated as of November 8, 2001, as the same may be amended or supplemented from time to time. Issuer Officer's Certificate means a certificate signed by any Authorized Officer of the Issuer, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01 of the Indenture, and delivered to the Trustee. Unless otherwise specified, any reference in the Indenture to an Officer's Certificate shall be to an Officer's Certificate of any Authorized Officer of the Issuer. Issuer Opinion of Counsel means one or more written opinions of counsel who may, except as otherwise expressly provided in the Indenture, be employees of or counsel to the Issuer or the Seller and who shall be reasonably satisfactory to the Trustee, and which opinion or opinions shall be addressed to the Trustee, and shall be in a form reasonably satisfactory to the Trustee. Issuer Order or Issuer Request means a written order or request, respectively, signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Trustee. Legal Defeasance Option has the meaning specified in Section 4.01(b) of the Indenture. Lien means a security interest, lien, charge, pledge, equity or encumbrance of any kind. Losses means collectively, any and all liabilities, obligations, losses, damages, payments, costs or expenses of any kind whatsoever. Manager has the meaning set forth in the Issuer LLC Agreement. Member means Consumers, as the sole member of the Issuer, in its capacity as such member under the Issuer LLC Agreement. Michigan UCC means the Uniform Commercial Code, as in effect in the State of Michigan, as amended from time to time. Monthly Remittance Date means the 19th day of each calendar month (or if such day is not a Business Day, the preceding Business Day). Monthly Servicing Fee means the fee payable to the Servicer on a monthly basis for services rendered, in accordance with Section 5.07 of the Servicing Agreement. Moody's means Moody's Investors Service, Inc., or its successor. MPSC means the Michigan Public Service Commission or its successor. MPSC Regulations means any regulations, orders, guidelines or directives promulgated, issued or adopted by the MPSC, as in effect from time to time. Officers' Certificate means, with respect to a corporation, a certificate signed by the chairman of the board, the president, the vice chairman of the board, any executive vice president, any vice president, the treasurer or the secretary of such company, and with respect to a limited liability company, any Manager. Operating Expenses means, with respect to the Issuer, all fees, costs, expenses and indemnity payments owed by the Issuer, including, without limitation, all amounts owed by the Issuer to the Trustee, the Monthly Servicing Fee, the fees and expenses payable by the Issuer to the Administrator under the Administration Agreement, the fees and expenses payable by the Issuer to the Independent Managers and Special Members of the Issuer, fees of the Rating Agencies, legal fees and expenses of the Servicer pursuant to Section 3.10 of the Servicing Agreement, legal and accounting fees, costs and expenses of the Issuer and legal, accounting or other fees, costs and expenses of the Seller (including, without limitation, any costs and expenses incurred by the Seller pursuant to Section 4.09 of the Sale Agreement) under or in connection with the Basic Documents or the Financing Order. Opinion of Counsel means one or more written opinions of counsel who may be an employee of or counsel to Consumers, the Issuer or any other Person (as the context may require), which counsel shall be reasonably acceptable to the Trustee, the Issuer or the Rating Agencies, as applicable, and which shall be in form reasonably satisfactory to the Trustee, if applicable. Outstanding with respect to Securitization Bonds means, as of the date of determination, all Securitization Bonds theretofore authenticated and delivered under the Indenture except: (a) Securitization Bonds theretofore canceled by the Securitization Bond Registrar or delivered to the Securitization Bond Registrar for cancellation; (b) Securitization Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securitization Bonds; provided, however, that if such Securitization Bonds are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor, satisfactory to the Trustee, made; and (c) Securitization Bonds in exchange for or in lieu of other Securitization Bonds which have been authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Trustee is presented that any such Securitization Bonds are held by a protected purchaser; provided that in determining whether the Holders of the requisite Outstanding Amount of the Securitization Bonds or any Series or Class thereof have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Securitization Bonds owned by the Issuer, any other obligor upon the Securitization Bonds, Consumers or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securitization Bonds that the Trustee knows to be so owned shall be so disregarded. Securitization Bonds so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securitization Bonds and that the pledgee is not the Issuer, any other obligor upon the Securitization Bonds, Consumers or any Affiliate of any of the foregoing Persons. Outstanding Amount means the aggregate principal amount of all Outstanding Securitization Bonds or, if the context requires, all Outstanding Securitization Bonds of a Series or Class Outstanding at the date of determination. Overcollateralization means, with respect to any Payment Date, an amount that, if deposited to the Overcollateralization Subaccount, would cause the balance in such subaccount to equal the Scheduled Overcollateralization Level for such Payment Date, without regard to investment earnings. Overcollateralization Amount means, with respect to any Series of Securitization Bonds, the amount specified as such in the Series Supplement therefor. Overcollateralization Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Paying Agent means the Trustee or any other Person, including any Person appointed pursuant to Section 3.02(b) of the Indenture, that meets the eligibility standards for the Trustee specified in Section 6.11 of the Indenture and is authorized by the Issuer to make the payments of principal of or premium, if any, or interest on the Securitization Bonds on behalf of the Issuer. Payment Date means, with respect to each Series or Class of Securitization Bonds, each date or dates respectively specified as Payment Dates for such Series or Class in the Series Supplement therefor. Person means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), business trust, limited liability company, unincorporated organization or government or any agency or political subdivision thereof. Predecessor Securitization Bond means, with respect to any particular Securitization Bond, every previous Securitization Bond evidencing all or a portion of the same debt as that evidenced by such particular Securitization Bond; and, for the purpose of this definition, any Securitization Bond authenticated and delivered under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Securitization Bond shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Securitization Bond. Principal means, with respect to any Payment Date and each Series or Class of Securitization Bonds: (a) the amount of principal scheduled to be paid on such Payment Date in accordance with the Expected Amortization Schedule; (b) the amount of principal due on the Final Maturity Date of any Series or Class if such Payment Date is the Final Maturity Date; (c) the amount of principal due as a result of the occurrence and continuance of an Event of Default and acceleration of the Securitization Bonds; (d) the amount of principal and premium, if any, due as a result of a redemption of Securitization Bonds on such Payment Date; and (e) any overdue payments of principal. Pro Rata has the meaning set forth in Section 8.02(l) of the Indenture. Proceeding means any suit in equity, action at law or other judicial or administrative proceeding. Projected Securitization Bond Balance means, as of any date, the sum of the amounts provided for in the Expected Amortization Schedules for each Outstanding Series of Securitization Bonds as of such date. Rating Agency means, as of any date, any rating agency rating the Securitization Bonds of any Class or Series at the time of issuance thereof at the request of the Issuer. If no such organization or successor is any longer in existence, "Rating Agency" shall be a nationally recognized statistical rating organization or other comparable Person designated by the Issuer, notice of which designation shall be given to the Trustee, the Member and the Servicer. Rating Agency Condition means, with respect to any action, the notification by the Trustee to each Rating Agency of such action and the notification from each of Fitch and S&P to the Trustee and the Issuer that such action will not result in a reduction or withdrawal of the then current rating by such Rating Agency of any Outstanding Series or Class of Securitization Bonds. Record Date has the meaning set forth in each Supplemental Indenture. Redemption Date means, with respect to each Series or Class of Securitization Bonds, the date for the redemption of the Securitization Bonds of such Series or Class pursuant to Sections 10.01 or 10.02 of the Indenture or the Series Supplement for such Series or Class, which in each case shall be a Payment Date. Redemption Price has the meaning set forth in Section 10.01 of the Indenture. Refunding Issuance means an issuance of a new Series of Securitization Bonds under the Indenture to pay the cost of refunding, through redemption or payment on the Expected Final Payment Date for a Series or Class of Securitization Bonds, all or part of the Securitization Bonds of such Series or Class to the extent permitted by the terms thereof. Released Parties has the meaning specified in Section 5.02(e) of the Servicing Agreement. Remittance Date means a Daily Remittance Date or a Monthly Remittance Date, as applicable. Required Capital Amount means with respect to any Series, the amount required to be deposited in the Capital Subaccount on the Series Issuance Date of such Series, as specified in the related Series Supplement. Reserve Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Responsible Officer means, with respect to the Trustee, any officer assigned to the Corporate Trust Division (or any successor thereto), including any vice president, assistant vice president, trust officer, secretary, assistant secretary, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers, in each case having direct responsibility for the administration of the Indenture. Retiring Trustee has the meaning specified in Section 6.08(b) of the Indenture. Sale Agreement means the Sale Agreement dated November 8, 2001 between the Seller and the Issuer, as the same may be amended or supplemented from time to time. Scheduled Overcollateralization Level means, with respect to each Series and any Payment Date, the amount with respect to such Series set forth as such in Schedule B of the Series Supplement. Secured Obligations has the meaning set forth in the Granting Clause of the Indenture. Securities Account Control Agreement means the securities account control agreement dated as of November 8, 2001, by and between Consumers Funding LLC, as debtor, the Trustee as the secured party and The Bank of New York, in its capacity as securities intermediary thereunder. Securitization Bond means any of the Securitization Bonds (as defined in the Customer Choice Act) issued by the Issuer pursuant to the Indenture. Securitization Bond Balance means, as of any date, the aggregate Outstanding Amount of all Series of Securitization Bonds on such date. Securitization Bond Register has the meaning specified in Section 2.05(a) of the Indenture. Securitization Bond Registrar has the meaning specified in Section 2.05(a) of the Indenture. Securitization Charge means the nonbypassable amounts to be charged for the use or availability of electric services (but does not include tax charges authorized by the Financing Order), approved by the MPSC under the Financing Order, to fully recover qualified costs, to be collected by Consumers, its successors, assignees or other collection agents, as provided for in the Financing Order. Securitization Charge Adjustment means each adjustment to the Securitization Charge related to the Transferred Securitization Property made in accordance with Section 4.01 of the Servicing Agreement, the Issuer Annex and the Financing Order. Securitization Charge Rate means the amount of the surcharge applied to all kilowatt- hours (KWh) billed to determine the amount of the Securitization Charges. Securitization Charge Collections means amounts received by the Servicer in respect of the Securitization Charge as determined by the Servicer in accordance with the allocation methodology set forth in Annex 2 to the Servicing Agreement. Securitization Property has the meaning assigned to that term in the Customer Choice Act and as approved with respect to Consumers in the Financing Order. Securitization Property Documentation means all documents relating to the Transferred Securitization Property, including copies of the Financing Order and all documents filed with the MPSC in connection with any Securitization Charge Adjustment. Securitization Ratio means for an entire Billing Month the total Securitization Charges billed by the Servicer for each rate class divided by the total charges billed by Consumers and the Servicer for each rate class to customers for such Billing Month. Customers for this purpose refers to Consumers' electric and combination electric and gas customers (and not gas only customers). Seller means Consumers, in its capacity as seller of the Securitization Property to the Issuer pursuant to the Sale Agreement. Series means any series of Securitization Bonds issued by the Issuer and authenticated by the Trustee pursuant to the Indenture, as specified in the Series Supplement therefor. Series Capital Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Issuance Date means, with respect to any Series, the date on which the Securitization Bonds of such Series are to be originally issued in accordance with Section 2.10 of the Indenture and the Series Supplement for such Series. Series Overcollateralization Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Supplement means an indenture supplemental to the Indenture that authorizes a particular Series of Securitization Bonds, as the same may be amended or supplemented from time to time. Servicer means Consumers, as the servicer of the Securitization Property, and each successor to Consumers (in the same capacity) pursuant to Section 5.03, 5.04 or 6.04 of the Servicing Agreement. Servicer Default means an event specified in Section 6.01 of the Servicing Agreement. Servicing Agreement means the Servicing Agreement dated as of November 8, 2001 between the Issuer and the Servicer, as the same may be amended and supplemented from time to time. Special Member has the meaning set forth in the Issuer LLC Agreement. Standard & Poor's, or S&P, means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, or its successor. State means any one of the 50 states of the United States of America or the District of Columbia. Subaccount means any of the subaccounts of the Collection Account specified in Section 8.02 of the Indenture. Subsequent Sale means the sale of additional Securitization Property by the Seller to the Issuer after the Initial Transfer Date, subject to the satisfaction of the conditions specified in the Sale Agreement and the Indenture. Subsequent Transfer Date means the date that a sale of Subsequent Transferred Securitization Property will be effective, as specified in a written notice provided by the Seller to the Issuer pursuant to the Sale Agreement. Subsequent Transferred Securitization Property means Securitization Property sold by the Seller to the Issuer as of a Subsequent Transfer Date pursuant to the Sale Agreement and the Bill of Sale delivered on or prior to the Subsequent Transfer Date as identified in such Bill of Sale. Successor Servicer has the meaning specified in Section 3.19(i) of the Indenture. Supplemental Indenture means a supplemental indenture entered into by the Issuer and the Trustee pursuant to Article IX of the Indenture. Swap Counterparty means, with respect to any Interest Rate Swap Agreement, the swap counterparty under that Interest Rate Swap Agreement. Termination Notice has the meaning specified in Section 6.01(d) of the Servicing Agreement. Transfer Date means the Initial Transfer Date or any Subsequent Transfer Date, as applicable. Transferred Securitization Property means Securitization Property which has been sold, assigned and/or transferred to the Issuer pursuant to the Sale Agreement and the Bill of Sale. Trust Indenture Act or TIA means the Trust Indenture Act of 1939, as in force on the date hereof, unless otherwise specifically provided. Trustee means The Bank of New York, a New York banking corporation, or its successor, as trustee under the Indenture, or any successor Trustee under the Indenture. UCC means the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time. Underwriting Agreement means the Underwriting Agreement dated as of October 31, 2001 among the Seller, the Issuer and Morgan Stanley & Co. Incorporated, on behalf of itself and as the representative of the several underwriters named therein. U.S. Government Obligations means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option. EX-10.B 11 k65350ex10-b.txt SERVICING AGREEMENT DATED AS OF NOVEMBER 8, 2001 EXHIBIT 10(b) SERVICING AGREEMENT SERVICING AGREEMENT between CONSUMERS FUNDING LLC Issuer and CONSUMERS ENERGY COMPANY Servicer Dated as of November 8, 2001
TABLE OF CONTENTS ARTICLE I Definitions SECTION 1.01 Definitions..............................................................1 SECTION 1.02 Other Definitional Provisions............................................1 ARTICLE II Appointment and Authorization of Servicer SECTION 2.01 Appointment of Servicer; Acceptance of Appointment.......................2 SECTION 2.02 Authorization............................................................2 SECTION 2.03 Dominion and Control over Transferred Securitization Property............2 ARTICLE III Billing Services SECTION 3.01 Duties of Servicer.......................................................3 SECTION 3.02 Collection and Allocation of the Securitization Charges..................4 SECTION 3.03 Payment of Securitization Charge Collections.............................5 SECTION 3.04 Servicing and Maintenance Standards......................................5 SECTION 3.05 Servicer's Certificates..................................................6 SECTION 3.06 Annual Statement as to Compliance........................................6 SECTION 3.07 Annual Independent Certified Public Accountants' Report..................6 SECTION 3.08 Securitization Property Documentation....................................7 SECTION 3.09 Computer Records; Audits of Documentation................................7 SECTION 3.10 Defending Transferred Securitization Property Against Claims.............8 SECTION 3.11 Opinions of Counsel......................................................8 ARTICLE IV Services Related to Securitization Charge Adjustments SECTION 4.01 Securitization Charge Adjustments........................................9 ARTICLE V The Servicer SECTION 5.01 Representations and Warranties of Servicer...............................9 SECTION 5.02 Indemnities of Servicer; Release of Claims..............................11 SECTION 5.03 Merger or Consolidation of, or Assumption of the Obligations of, .......13 SECTION 5.04 Assignment of Servicer's Obligations....................................14 SECTION 5.05 Limitation on Liability of Servicer.....................................14 SECTION 5.06 Consumers Not To Resign as Servicer.....................................15 SECTION 5.07 Monthly Servicing Fee...................................................15 SECTION 5.08 Servicer Expenses.......................................................15 SECTION 5.09 Subservicing............................................................15 SECTION 5.10 No Servicer Advances....................................................15 SECTION 5.11 Remittances.............................................................15 SECTION 5.12 Protection of Title.....................................................16 ARTICLE VI Servicer Default SECTION 6.01 Servicer Default........................................................16 SECTION 6.02 Notice of Servicer Default..............................................18 SECTION 6.03 Waiver of Past Defaults.................................................18 SECTION 6.04 Appointment of Successor................................................18 SECTION 6.05 Cooperation with Successor..............................................19 ARTICLE VII Miscellaneous Provisions SECTION 7.01 Amendment...............................................................19 SECTION 7.02 Notices.................................................................20 SECTION 7.03 Limitations on Rights of Others.........................................20 SECTION 7.04 Severability............................................................20 SECTION 7.05 Separate Counterparts...................................................21 SECTION 7.06 Headings................................................................21 SECTION 7.07 GOVERNING LAW...........................................................21 SECTION 7.08 Assignment to the Trustee...............................................21 SECTION 7.09 Nonpetition Covenants...................................................21 SECTION 7.10 Termination.............................................................21 ANNEX 1 Securitization Charge Adjustment Process and Reports-- ANNEX 2 Securitization Calculation Process APPENDIX A Master Definitions
SERVICING AGREEMENT, dated as of November 8, 2001, by and between CONSUMERS FUNDING LLC, a Delaware limited liability company, as issuer (the "Issuer"), and CONSUMERS ENERGY COMPANY, a Michigan corporation ("Consumers"), as the servicer of the Securitization Property hereunder (together with each successor to Consumers (in the same capacity) pursuant to Section 5.03, 5.04 or 6.04, the "Servicer"). W I T N E S S E T H: WHEREAS Consumers is willing to service the Transferred Securitization Property purchased from the Seller by the Issuer pursuant to the Sale Agreement between the Issuer and the Seller; and WHEREAS the Issuer, in connection with ownership of Transferred Securitization Property, desires to engage Consumers to carry out the functions described herein. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I Definitions SECTION 1.01 Definitions. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in Appendix A hereto. SECTION 1.02 Other Definitional Provisions. (a) "Agreement" means this Servicing Agreement, as the same may be amended, supplemented or otherwise modified from time to time. (b) Non-capitalized terms used herein which are defined in the Customer Choice Act, as the context requires, have the meanings assigned to such terms in the Customer Choice Act, but without giving effect to amendments to the Customer Choice Act after the date hereof. (c) All terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. (d) The words "hereof", "herein", "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Annex, Schedule and Exhibit references contained in this Agreement are references to Sections, Annexes, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term "including" shall mean "including without limitation". (e) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. ARTICLE II Appointment and Authorization of Servicer SECTION 2.01 Appointment of Servicer; Acceptance of Appointment. Subject to Section 5.06 and Article VI, the Issuer hereby appoints Consumers and Consumers hereby accepts such appointment, to perform the Servicer's obligations pursuant to this Agreement on behalf of and for the benefit of the Issuer in accordance with the terms of this Agreement. This appointment and Consumers' acceptance thereof may not be revoked except in accordance with the express terms of this Agreement. SECTION 2.02 Authorization. With respect to all or any portion of the Transferred Securitization Property, the Servicer shall be, and hereby is, authorized and empowered by the Issuer to: (a) execute and deliver, on behalf of itself, the Issuer, or both, as the case may be, any and all instruments, documents or notices, and (b) on behalf of itself, the Issuer, or both, as the case may be, make any filing and participate in proceedings of any kind with any governmental authorities, including with the MPSC. The Issuer shall furnish the Servicer with such documents as have been prepared by the Servicer for execution by the Issuer, and with such other documents as may be in the Issuer's possession, as necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. Upon the written request of the Servicer, the Issuer shall furnish the Servicer with any powers of attorney or other documents necessary or appropriate to enable the Servicer to carry out its duties hereunder. SECTION 2.03 Dominion and Control over Transferred Securitization Property. Notwithstanding any other provision herein, the Servicer and the Issuer agree that the Issuer shall have dominion and control over the Transferred Securitization Property, and the Servicer, in accordance with the terms hereof, is acting solely as the servicing agent of the Issuer with respect to the Transferred Securitization Property. The Servicer hereby agrees that it shall not take any action that is not authorized by this Agreement, that is not consistent with its customary procedures and practices, or that shall impair the rights of the Issuer with respect to the Transferred Securitization Property, in each case unless such action is required by law or court or regulatory order. ARTICLE III Billing Services SECTION 3.01 Duties of Servicer. The Servicer, as agent for the Issuer (to the extent provided herein), shall have the following duties: (a) Duties of Servicer Generally. The Servicer will manage, service, administer and effect collections in respect of the Securitization Charges. The Servicer's duties will include: (i) obtaining meter reads, calculating and billing the Securitization Charges and collecting from Customers all Securitization Charge Collections; (ii) responding to inquiries by Customers, Alternative Electric Suppliers, if any, the MPSC, or any federal, local or other state governmental authority with respect to the Securitization Charges; (iii) delivering bills or arranging for delivery of bills, accounting for Securitization Charge Collections, investigating and resolving delinquencies, processing and depositing collections, making periodic remittances and furnishing periodic reports, to the Issuer, the Trustee, the Securitization Bondholders, the Securities and Exchange Commission and the Rating Agencies, subject, in the case of processing and depositing collections, making periodic remittances and furnishing periodic reports, to the provisions of the Intercreditor Agreement; (iv) settling, as the agent for the Issuer, as its interest may appear, defaulted or written off accounts in accordance with the Servicer's usual and customary practices for accounts of its own electric service customers; and (v) taking action in connection with Securitization Charge Adjustments as is set forth herein. Anything to the contrary notwithstanding, the duties of the Servicer set forth in this Agreement shall be limited in their entirety by the provisions of the Customer Choice Act, the Financing Order and any applicable MPSC Regulations, as in effect at the time such duties are to be performed. Without limiting the generality of this Section 3.01(a), in furtherance of the foregoing, the Servicer hereby agrees that it shall also have, and shall comply with, the duties and responsibilities relating to Securitization Charge Adjustments, data acquisition, usage and bill calculation, billing, customer service functions, collections, payment processing and remittance set forth in Annex 1 hereto. (b) Notification of Laws and Regulations. The Servicer shall promptly notify the Issuer, the Trustee and the Rating Agencies in writing of any laws or MPSC Regulations hereafter promulgated that have a material adverse effect on the Servicer's ability to perform its duties under this Agreement. (c) Other Information. Upon the reasonable request of the Issuer, the Trustee or any Rating Agency, the Servicer shall provide to the Issuer, the Trustee or the Rating Agencies, as the case may be, any public financial information in respect of the Servicer, or any material information regarding the Transferred Securitization Property to the extent it is reasonably available to the Servicer, that may be reasonably necessary and permitted by law for the Issuer, the Trustee or the Rating Agencies to monitor the performance by the Servicer hereunder. In addition, so long as any of the Securitization Bonds of any Series are outstanding, the Servicer shall provide to the Issuer and to the Trustee, within a reasonable time after written request therefor, any information available to the Servicer or reasonably obtainable by it that is necessary to calculate the Securitization Charges. (d) Alternative Electric Suppliers. The Servicer shall not permit Alternative Electric Suppliers to bill and collect the Securitization Charge unless it is required to do so by law. SECTION 3.02 Collection and Allocation of the Securitization Charges. (a) The Servicer shall use all reasonable efforts, consistent with its customary servicing procedures, to collect all amounts owed in respect of the Securitization Charges as and when the same shall become due and shall follow such collection procedures as it follows with respect to collection activities that Consumers conducts for itself or others. The Servicer shall not change the amount of or reschedule the due date of any scheduled payment by customers of the Securitization Charges, except as contemplated in this Agreement or as required by law or court order or MPSC Regulations; provided, however, that the Servicer may take any of the foregoing actions to the extent that such action would be in accordance with customary billing and collection practices of Consumers with respect to billing and collection activities that it conducts for itself or others. (b) The amount of Securitization Charge Collections during any Billing Month of the Servicer shall be determined in accordance with the allocation methodology set forth in Annex 2 hereto. (c) Consumers' other charges may include gas charges which may be billed together with electric charges and all other charges which Consumers may be permitted to bill and collect from customers on their utility bills. If there is more than one Series of Securitization Bonds, the Servicer shall allocate Securitization Charge Collections among such Series, pro rata, based on the respective outstanding amounts payable and scheduled to be paid with respect to such Series. (d) The Servicer is without authority or responsibility to collect tax charges authorized by the Financing Order, nor does the Servicer have any control over any amounts received with respect to such tax charges. SECTION 3.03 Payment of Securitization Charge Collections. (a) On each Monthly Remittance Date, for so long as the Servicer has satisfied the conditions of Section 5.11(b), the Servicer shall remit to the Trustee the Securitization Charge Collections in accordance with Section 5.11(b) (each, a "Monthly Remittance"). On each Daily Remittance Date, for so long as the Servicer has not satisfied the conditions of Section 5.11(b), the Servicer shall remit to the Trustee the Securitization Charge Collections in accordance with Section 5.11(a) (each, a "Daily Remittance"). (b) The Servicer agrees and acknowledges that it holds all Securitization Charge Collections collected by it for the benefit of the Issuer and that all amounts will be remitted by the Servicer in accordance with this Agreement without any surcharge, fee (other than the Servicing Fee under Section 5.07 hereunder), offset, charge or other deduction and without making any claim to reduce its obligation to remit all Securitization Charge Collections collected by it. SECTION 3.04 Servicing and Maintenance Standards. The Servicer shall, on behalf of the Issuer: (a) manage, service, administer and make collections in respect of the Transferred Securitization Property with reasonable care and in material compliance with applicable law, including all applicable MPSC Regulations, using the same degree of care and diligence that the Servicer exercises with respect to billing and collection activities that the Servicer conducts for itself and others; (b) follow standards, policies and procedures in performing its duties as Servicer that are customary in the electric distribution industry; (c) use all reasonable efforts, consistent with its customary servicing procedures, to enforce and maintain the Issuer's and the Trustee's rights in respect of the Transferred Securitization Property; and (d) calculate the Securitization Charges in compliance with the Customer Choice Act, the Financing Order and any applicable tariffs; except where the failure to comply with any of the foregoing would not materially and adversely affect the Issuer's or the Trustee's interest in the Transferred Securitization Property. The Servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable in its servicing of the Transferred Securitization Property, which, in the Servicer's judgment, may include the taking of legal action pursuant to Section 3.10 or otherwise. Notwithstanding the foregoing, the Servicer shall not change its customary and usual practices and procedures in any manner that would materially and adversely affect the Issuer's or the Trustee's interest in the Transferred Securitization Property unless it shall have provided the Rating Agencies with prior written notice. SECTION 3.05 Servicer's Certificates. The Servicer will provide to the Issuer and to the Trustee the statements and data specified in Annex 1. SECTION 3.06 Annual Statement as to Compliance. The Servicer shall deliver to the Issuer, the Trustee and each Rating Agency, on or before March 31 of each year, beginning March 31, 2002 to and including March 31 succeeding the retiring of the Securitization Bonds, an Officers' Certificate, stating that: (a) a review of the activities of the Servicer during the preceding calendar year (or relevant portion thereof in the case of the first such Officer's Certificate) and of its performance under this Agreement has been made under such officers' supervision, and (b) to the best of such officers' knowledge, based on such review, the Servicer has fulfilled all its obligations under this Agreement throughout such period or, if there has been a default in the fulfillment of any such obligation, describing each such default. SECTION 3.07 Annual Independent Certified Public Accountants' Report. (a) The Servicer shall cause a firm of independent certified public accountants (which may also provide other services to the Servicer or Consumers) to prepare, and the Servicer shall deliver to the Issuer, to the Trustee and to each Rating Agency, on or before March 31 of each year, beginning March 31, 2002 to and including the March 31 succeeding the retirement of all Securitization Bonds, a report addressed to the Servicer (the "Annual Accountant's Report"), which may be included as part of the Servicer's customary auditing activities, to the effect that such firm has performed certain procedures in connection with the Servicer's compliance with its obligations under this Agreement during the preceding calendar year (or, in the case of the first Annual Accountant's Report, the period of time from the Initial Transfer Date until December 31, 2002), identifying the results of such procedures and including any exceptions noted. In the event such accounting firm requires the Trustee or the Issuer to agree or consent to the procedures performed by such firm, the Issuer shall direct the Trustee in writing to so agree; it being understood and agreed that the Trustee will deliver such letter of agreement or consent in conclusive reliance upon the direction of the Issuer, and the Trustee will not make any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. (b) The Annual Accountant's Report shall also indicate that the accounting firm providing such report is independent of the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants in effect from time to time. SECTION 3.08 Securitization Property Documentation. To assure uniform quality in servicing the Transferred Securitization Property and to reduce administrative costs, the Servicer shall keep on file, in accordance with its customary procedures, all Securitization Property Documentation. SECTION 3.09 Computer Records; Audits of Documentation. (a) Safekeeping. The Servicer shall maintain accurate and complete accounts, records and computer systems pertaining to the Transferred Securitization Property and the Securitization Property Documentation in accordance with its standard accounting procedures and in sufficient detail to permit calculation of the Securitization Charge Collections to be remitted from time to time to the Trustee pursuant to Section 3.03 and to enable the Issuer to comply with this Agreement and the Indenture. The Servicer shall conduct, or cause to be conducted, periodic audits of the Securitization Property Documentation held by it under this Agreement and of the related accounts, records and computer systems, in such a manner as shall enable the Issuer and the Trustee, as pledgee of the Issuer, to verify the accuracy of the Servicer's record keeping. The Servicer shall promptly report to the Issuer and to the Trustee any failure on the Servicer's part to hold the Securitization Property Documentation and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. Nothing herein shall be deemed to require an initial review or any periodic review by the Issuer or the Trustee of the Securitization Property Documentation. The Servicer's duties to hold the Securitization Property Documentation on behalf of the Issuer set forth in this Section 3.09(a), to the extent such Securitization Property Documentation has not been previously transferred to a successor Servicer, shall terminate three years after the earlier of the date on which (i) the Servicer is succeeded by a successor Servicer pursuant to the provisions of this Agreement or (ii) no Securitization Bonds of any Series are outstanding. (b) Maintenance of and Access to Records. The Servicer shall maintain the Securitization Property Documentation at 212 W. Michigan Avenue, Jackson, Michigan 49201, or at such other office as shall be specified to the Issuer and to the Trustee by written notice not later than 30 days prior to any change in location. The Servicer shall permit the Issuer and the Trustee or their respective duly authorized representatives, attorneys, agents or auditors at any time during normal business hours to inspect, audit and make copies of and abstracts from the Servicer's records regarding the Transferred Securitization Property, the Securitization Charges and the Securitization Property Documentation. The failure of the Servicer to provide access to such information as a result of an obligation or applicable law (including MPSC Regulations) prohibiting disclosure of information regarding Customers shall not constitute a breach of this Section 3.09(b). SECTION 3.10 Defending Transferred Securitization Property Against Claims. The Servicer shall institute and maintain any action or proceeding necessary to compel performance by the MPSC or the State of Michigan of any of their obligations or duties under the Customer Choice Act or the Financing Order with respect to the Transferred Securitization Property, and the Servicer agrees to take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary to block or overturn any attempts to cause a repeal of, modification of or supplement to the Customer Choice Act or the Financing Order, as the case may be, or the rights of holders of Transferred Securitization Property that would be adverse to Securitization Bondholders. In any proceedings related to the exercise of the power of eminent domain by any municipality to acquire a portion of Consumers' electric distribution facilities, the Servicer shall assert that the court ordering such condemnation must treat such municipality as a successor to Consumers under the Customer Choice Act and the Financing Order. The costs of any such action reasonably allocated by the Servicer to the Transferred Securitization Property shall be payable from Securitization Charge Collections as an Operating Expense in accordance with the Indenture. The Servicer's obligations pursuant to this Section 3.10 shall survive and continue notwithstanding the fact that the payment of Operating Expenses pursuant to the Indenture may be delayed (it being understood that the Servicer may be required to advance its own funds to satisfy its obligations under this Section 3.10). SECTION 3.11 Opinions of Counsel. The Servicer shall deliver to the Issuer and to the Trustee: (a) promptly after the execution and delivery of this Agreement and of the Sale Agreement and of each amendment hereto or thereto, and on each Transfer Date, an Opinion of Counsel either: (i) to the effect that, in the opinion of such counsel, all UCC filings that are necessary to perfect or maintain the perfection of the security interest of the Trustee in the Transferred Securitization Property have been executed and filed, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (ii) to the effect that, in the opinion of such counsel, no such action is necessary to perfect or maintain the perfection of such security interest based on law in existence on the date of such Opinion of Counsel; and (b) within 90 days after the beginning of each calendar year beginning with the first calendar year beginning more than three full calendar months after the Initial Transfer Date, an Opinion of Counsel, dated as of a date during such 90-day period, either: (i) to the effect that, in the opinion of such counsel, all UCC filings have been executed and filed that are necessary to perfect or maintain the perfection of the security interest of the Trustee in the Transferred Securitization Property, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (ii) to the effect that, in the opinion of such counsel, no such action is necessary to perfect or maintain the perfection of such security interest based on law in existence on the date of such Opinion of Counsel. Each Opinion of Counsel referred to in clause (a) or (b) above shall specify any action necessary (as of the date of such Opinion of Counsel) to be taken in the following year to perfect or maintain the perfection of such security interest based on law in existence on the date of such Opinion of Counsel. ARTICLE IV Services Related to Securitization Charge Adjustments SECTION 4.01 Securitization Charge Adjustments. The Servicer shall perform the calculations and take the actions relating to adjusting the Securitization Charges, as set forth in Annex 1. ARTICLE V The Servicer SECTION 5.01 Representations and Warranties of Servicer. The Servicer makes the following representations and warranties as of each Transfer Date, on which the Issuer has relied and will rely in acquiring Transferred Securitization Property and in entering into this Agreement. The representations and warranties shall survive the execution and delivery of this Agreement, the sale of any of the Transferred Securitization Property to the Issuer and the pledge thereof to the Trustee pursuant to the Indenture. (a) Organization and Good Standing. The Servicer is a corporation duly organized and in good standing under the laws of the state of its incorporation, with the corporate power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted and to execute, deliver and carry out the terms of this Agreement, and has the power, authority and legal right to service the Transferred Securitization Property. (b) Due Qualification. The Servicer has duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals in all jurisdictions, in which the ownership or lease of property or the conduct of its business (including the servicing of the Transferred Securitization Property as required by this Agreement) requires such qualifications, licenses or approvals (except where the failure to so qualify would not be reasonably likely to have a material adverse effect on the Servicer's business, operations, assets, revenues, properties or prospects or adversely affect the servicing of the Transferred Securitization Property). (c) Power and Authority. The Servicer has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement have been duly authorized by the Servicer by all necessary corporate action. (d) Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Servicer enforceable against the Servicer in accordance with its terms subject to bankruptcy, receivership, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity (regardless of whether considered in a proceeding in equity or at law). (e) No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or by-laws of the Servicer, or any material indenture, material agreement or other material instrument to which the Servicer is a party or by which it is bound; or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument; or violate any law or any order, rule or regulation applicable to the Servicer or its properties of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties. (f) Approvals. Except for filings with the MPSC for adjusting the Securitization Charges pursuant to Section 4.01 and Annex 1, filing of financing statements under the Michigan UCC and the Delaware UCC and UCC continuation filings, no approval, authorization, consent, order or other action of, or filing with, any court, federal or state regulatory body, administrative agency or other governmental instrumentality is required in connection with the execution and delivery by the Servicer of this Agreement, the performance by the Servicer of the transactions contemplated hereby or the fulfillment by the Servicer of the terms hereof, except those that have been obtained or made. (g) No Proceedings. There are no proceedings or investigations pending or, to the Servicer's best knowledge, threatened before any court, federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties: (i) seeking to prevent the issuance of the Securitization Bonds or the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents; (ii) except as disclosed in writing by the Servicer to the Issuer, seeking any determination or ruling that might materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability against the Servicer of, this Agreement or any of the other Basic Documents; or (iii) relating to the Servicer and which might materially and adversely affect the federal or state tax attributes of the Securitization Bonds. (h) Reports and Certificates. Each report and certificate delivered in connection with any filing made to the MPSC by the Servicer on behalf of the Issuer with respect to the Securitization Charges or Securitization Charge Adjustments will constitute a representation and warranty by the Servicer that each such report or certificate, as the case may be, is true and correct in all material respects; provided, however, that to the extent any such report or certificate is based in part upon or contains assumptions, forecasts or other predictions of future events, the representation and warranty of the Servicer with respect thereto will be limited to the representation and warranty that such assumptions, forecasts or other predictions of future events are based upon historical performance, current conditions and reasonable expectations. SECTION 5.02 Indemnities of Servicer; Release of Claims. (a) The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer under this Agreement. (b) The Servicer shall indemnify the Issuer and the Trustee (for itself and on behalf of the Securitization Bondholders) and each of their respective trustees, members, managers, officers, directors, employees and agents for, and defend and hold harmless each such Person from and against, any and all Losses that may be imposed upon, incurred by or asserted against any such Person as a result of: (i) the Servicer's wilful misconduct, bad faith or gross negligence in the performance of its duties or observance of its covenants under this Agreement or the Servicer's reckless disregard of its obligations and duties under this Agreement; (ii) the Servicer's breach of any of its representations or warranties in this Agreement; and (iii) litigation and related expenses relating to its status and obligations as Servicer, provided, however, that the Servicer shall not be liable for any Losses resulting from the willful misconduct, bad faith or gross negligence of any Person indemnified pursuant to this Section 5.02(b) (each, an "Indemnified Person") or resulting from a breach of a representation or warranty made by such Indemnified Person in any of the Basic Documents that gives rise to the Servicer's breach. Promptly after receipt by an Indemnified Person of notice of its involvement in any action, proceeding or investigation, such Indemnified Person shall, if a claim for indemnification in respect thereof is to be made against the Servicer under this Section 5.02(b), notify the Servicer in writing of such involvement. Failure by an Indemnified Person to so notify the Servicer shall relieve the Servicer from the obligation to indemnify and hold harmless such Indemnified Person under this Section 5.02 only to the extent that the Servicer suffers actual prejudice as a result of such failure. With respect to any action, proceeding or investigation brought by a third party against an Indemnified Person for which indemnification may be sought under this Section 5.02, the Servicer shall be entitled to assume the defense of any such action, proceeding or investigation. Upon assumption by the Servicer of the defense of any such action, proceeding or investigation, the Indemnified Person shall have the right to participate in such action or proceeding and to retain its own counsel (including local counsel), and the Servicer shall bear the reasonable fees, costs and expenses of such separate counsel. The Indemnified Person shall not 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 may be sought under this Section 5.02 (whether or not the Servicer is an actual or potential party to such claim or action) unless the Servicer agrees in writing to such settlement, compromise or consent and such settlement, compromise or consent includes an unconditional release of the Servicer from all liability arising out of such claim, action, suit or proceeding. (c) The Servicer shall indemnify the Trustee and its respective officers, directors and agents for, and defend and hold harmless each such Person from and against, any and all Losses that may be imposed upon, incurred by or asserted against any such Person as a result of the acceptance or performance of the trusts and duties contained herein and in the Indenture, except to the extent that any such Loss is due to the wilful misconduct, bad faith or gross negligence of the Trustee; provided, however, that the foregoing indemnity is extended to the Trustee solely in its individual capacity and not for the benefit of the Securitization Bondholders or any other Person. Any such amounts payable under this Section 5.02(c) with respect to the Trustee shall be deposited in the General Subaccount and distributed in accordance with the Indenture. (d) The Servicer's indemnification obligations under Section 5.02(b) and (c) for events occurring prior to the removal or resignation of the Trustee or the termination of this Agreement shall survive the resignation or removal of the Trustee or the termination of this Agreement and shall include reasonable costs, fees and expenses of investigation and litigation (including the Issuer's and the Trustee's reasonable attorneys' fees and expenses). (e) Except to the extent expressly provided for in the Basic Documents (including the Servicer's claims with respect to the Monthly Servicing Fees and Consumers' claim for payment of the purchase price of the Transferred Securitization Property), the Servicer hereby releases and discharges the Issuer (including its Member, Managers, officers, employees and agents, if any), and the Trustee (including its respective officers, directors and agents) (collectively, the "Released Parties") from any and all actions, claims and demands whatsoever, which the Servicer shall or may have against any such Person relating to the Transferred Securitization Property or the Servicer's activities with respect thereto other than any actions, claims and demands arising out of the willful misconduct, bad faith or gross negligence of the Released Parties. (f) The indemnification obligation of the Servicer under this Section 5.02 shall be pari passu with all other general unsecured obligations of the Servicer. SECTION 5.03 Merger or Consolidation of, or Assumption of the Obligations of, Servicer. Any Person: (a) into which the Servicer may be merged or consolidated and which succeeds to all or the major part of the electric distribution business of the Servicer, (b) which results from the division of the Servicer into two or more Persons and which succeeds to all or the major part of the electric distribution business of the Servicer, (c) which may result from any merger or consolidation to which the Servicer shall be a party and which succeeds to all or the major part of the electric distribution business of the Servicer, (d) which may succeed to the properties and assets of the Servicer substantially as a whole and which succeeds to all or the major part of the electric distribution business of the Servicer, or (e) which may otherwise succeed to all or the major part of the electric distribution business of the Servicer, which Person in any of the foregoing cases (a) through (e) executes an agreement of assumption to perform every obligation of the Servicer under this Agreement, shall be the successor to the Servicer hereunder without the execution or filing of any document or any further act by any of the parties to this Agreement, provided that: (i) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 5.01 shall have been breached and no Servicer Default, and no event that, after notice or lapse of time, or both, would become a Servicer Default, shall have occurred and be continuing; (ii) the successor Servicer shall have delivered to the Issuer and the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section 5.03 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with; (iii) the successor Servicer shall have delivered to the Issuer and to the Trustee an Opinion of Counsel either: (A) stating that, in the opinion of such counsel, all filings to be made by the Servicer, including UCC filings, that are necessary to perfect or maintain the perfection of the security interest of the Trustee in the Transferred Securitization Property have been executed and filed and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action is necessary to perfect or maintain the perfection of such security interest based on law in existence on the date of such opinion; (iv) the Rating Agencies shall have received prior written notice of such transaction (although there is no requirement of any Rating Agency Confirmation); (v) the successor Servicer shall have delivered to the Issuer and the Trustee an opinion of independent tax counsel (as selected by, and in form and substance reasonably satisfactory to, the Issuer and the Trustee), which may be based on a ruling from the Internal Revenue Service, to the effect that, for federal income tax purposes, such consolidation or merger will not result in a material adverse federal income tax consequence to the Issuer, the Trustee or the then existing Securitization Bondholders; and (vi) any applicable requirements of the Intercreditor Agreement have been satisfied. The Servicer shall not consummate any transaction referred to in subclauses (a), (b), (c), (d) or (e) above except upon execution of the above described agreement of assumption and compliance with subclauses (i) through (vi) above. When any Person acquires the properties and assets of the Servicer substantially as a whole and becomes the successor to the Servicer in accordance with the terms of this Section 5.03, then upon the satisfaction of all of the other conditions of this Section 5.03, the Servicer shall automatically and without further notice be released from its obligations hereunder. SECTION 5.04 Assignment of Servicer's Obligations. The Servicer may not assign its rights or obligations hereunder to any successor unless the Rating Agency Condition and any other condition specified in the Financing Order and the Intercreditor Agreement have been satisfied. SECTION 5.05 Limitation on Liability of Servicer. The Servicer shall not be liable to the Issuer or the Trustee, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; provided, however, that this provision shall not protect the Servicer against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of obligations and duties under this Agreement. The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on the advice of counsel reasonably acceptable to the Trustee or on any document of any kind, prima facie properly executed and submitted by any Person, respecting any matters arising under this Agreement. Except as provided in this Agreement, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its duties to service the Transferred Securitization Property in accordance with this Agreement or related to its obligation to pay indemnification, and that in its reasonable opinion may cause it to incur any expense or liability. SECTION 5.06 Consumers Not To Resign as Servicer. Subject to the provisions of Sections 5.03 and 5.04, Consumers shall not resign from the obligations and duties imposed on it as Servicer under this Agreement except upon a determination that the performance of its duties under this Agreement shall no longer be permissible under applicable law. Notice of any such determination permitting the resignation of Consumers shall be communicated to the Issuer, the Trustee and each Rating Agency at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time), and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Issuer and the Trustee concurrently with or promptly after such notice. No such resignation shall become effective until a successor Servicer has assumed the servicing obligations and duties hereunder of the Servicer in accordance with Section 6.04. SECTION 5.07 Monthly Servicing Fee. The Issuer agrees to pay the Servicer the Monthly Servicing Fee with respect to all Series of Securitization Bonds. For so long as Consumers is the Servicer, the Monthly Servicing Fee shall be one-twelfth times 0.25% times the total Outstanding Amount as of the date of payment of such Monthly Servicing Fee. The foregoing Monthly Servicing Fee constitutes a fair and reasonable price for the obligations to be performed by the Servicer. SECTION 5.08 Servicer Expenses. Except as otherwise expressly provided herein, the Servicer shall be required to pay all expenses incurred by it in connection with its activities hereunder, including fees and disbursements of independent accountants and counsel, taxes imposed on the Servicer and expenses incurred in connection with reports to Securitization Bondholders. SECTION 5.09 Subservicing. The Servicer may at any time appoint a subservicer to perform all or any portion of its obligations as Servicer hereunder; provided, however, that the Rating Agency Condition shall have been satisfied in connection therewith; and provided further that the Servicer shall remain obligated and be liable to the Issuer, the Trustee and the Securitization Bondholders for the servicing and administering of the Transferred Securitization Property in accordance with the provisions hereof without diminution of such obligation and liability by virtue of the appointment of such subservicer and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Transferred Securitization Property. The fees and expenses of the subservicer shall be as agreed between the Servicer and its subservicer from time to time, and none of the Issuer, the Trustee or the Securitization Bondholders shall have any responsibility therefor. Any such appointment shall not constitute a Servicer resignation under Section 5.06. SECTION 5.10 No Servicer Advances. The Servicer shall not make any advances of interest on or principal of the Securitization Bonds. SECTION 5.11 Remittances. (a) The Servicer shall remit Securitization Charge Collections (from whatever source) not later than each Daily Remittance Date, and all proceeds of other Collateral of the Issuer, if any, received by the Servicer during the second preceding Business Day, to the Trustee for deposit pursuant to the Indenture. The Servicer shall promptly remit any Indemnity Amounts paid or received by it immediately to the Trustee for deposit pursuant to the Indenture. (b) Notwithstanding the foregoing clause (a), as long as: (i) Consumers or any successor to Consumers' electric distribution business remains the Servicer, and (ii) no Servicer Default has occurred and is continuing, and (A) Consumers or such successor obtains and maintains a short-term rating of "A-1"or better by Standard & Poor's, "P-1" or better by Moody's and "F-1" or better by Fitch (and for five Business Days following a reduction in any such rating), or (B) the Rating Agency Condition has been otherwise satisfied (and any conditions or limitations imposed by the Rating Agencies in connection therewith are complied with), the Servicer need not make the Daily Remittances, but in lieu thereof, may remit all Securitization Charge Collections (from whatever source), and all proceeds of other Collateral of the Issuer, if any, received by the Servicer during the preceding Billing Month, (or, in the case of the first Monthly Remittance following a Daily Remittance, since the second Business Day preceding such Daily Remittance) to the Trustee for deposit pursuant to the Indenture, not later than the corresponding Monthly Remittance Date. (c) If the Servicer has been making Monthly Remittances but fails to continue to satisfy the requirements of clause (b) above, the Servicer shall begin making Daily Remittances pursuant to clause (a) above immediately following such failure; provided, that, on the first Daily Remittance Date following such Monthly Remittances, the Servicer shall remit all Securitization Charge Collections (from whatever source), and all proceeds of other Collateral of the Issuer, if any, received by the Servicer since the last day of the preceding Billing Month, to the Trustee for deposit pursuant to the Indenture. SECTION 5.12 Protection of Title. The Servicer shall execute and file such filings and cause to be executed and filed such filings, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interests of the Trustee in the Transferred Securitization Property, including all filings required under the UCC relating to the transfer of ownership of or a security interest in the Transferred Securitization Property by the Seller to the Issuer or the security interest granted by the Issuer to the Trustee in the Transferred Securitization Property. The Servicer shall deliver (or cause to be delivered) to the Issuer and the Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. ARTICLE VI Servicer Default SECTION 6.01 Servicer Default. If any one of the following events (a "Servicer Default") occurs and is continuing: (a) any failure by the Servicer to remit to the Trustee, on behalf of the Issuer, any required remittance that continues unremedied for a period of five Business Days after written notice of such failure is received by the Servicer from the Issuer or the Trustee; or (b) any failure by the Servicer duly to observe or perform in any material respect any other covenant or agreement of the Servicer set forth in this Agreement, which failure: (i) materially and adversely affects the Transferred Securitization Property or the rights of the Securitization Bondholders, and (ii) continues unremedied for a period of 60 days after written notice of such failure has been given to the Servicer by the Issuer or by the Trustee or after discovery of such failure by an officer of the Servicer; or (c) any representation or warranty made by the Servicer in this Agreement proves to have been incorrect when made, which has a material adverse effect on the Issuer or the Securitization Bondholders and which material adverse effect continues unremedied for a period of 60 days after the date on which written notice thereof has been given to the Servicer by the Issuer or the Trustee or after discovery of such failure by an officer of the Servicer, as the case may be; or (d) an Insolvency Event occurs with respect to the Servicer; then, and in each and every case, so long as the Servicer Default shall not have been remedied, the Trustee, with the consent of the Holders of a majority of the outstanding principal amount of the Securitization Bonds of all Series, but subject to the provisions of the Intercreditor Agreement, by notice then given in writing to the Servicer (a "Termination Notice") may terminate all the rights and obligations (other than the indemnification obligations set forth in Section 5.02 hereof and the obligation under Section 6.04 to continue performing its functions as Servicer until a successor Servicer is appointed) of the Servicer under this Agreement. In addition, upon a Servicer Default specified in Section 6.01(a) above, the Issuer and the Trustee shall be entitled to apply to the MPSC or any court of competent jurisdiction for sequestration and payment to the Trustee of revenues arising with respect to the Transferred Securitization Property. On or after the receipt by the Servicer of a Termination Notice, all authority and power of the Servicer under this Agreement, whether with respect to the Transferred Securitization Property, the related Securitization Charges or otherwise, shall, upon appointment of a successor Servicer pursuant to Section 6.04, without further action, pass to and be vested in such successor Servicer and, without limitation, the Trustee is hereby authorized and empowered to execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such Termination Notice, whether to complete the transfer of the Securitization Property Documentation and related documents, or otherwise. The predecessor Servicer shall cooperate with the successor Servicer, the Trustee and the Issuer in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for remittance, or shall thereafter be received by it with respect to the Transferred Securitization Property or the related Securitization Charges. As soon as practicable after receipt by the Servicer of such Termination Notice, the Servicer shall deliver the Securitization Property Documentation to the successor Servicer. All reasonable costs and expenses (including attorneys fees and expenses) incurred in connection with transferring the Securitization Property Documentation to the successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this Section 6.01 shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses. Termination of Consumers as Servicer shall not terminate Consumers' rights or obligations under the Sale Agreement. SECTION 6.02 Notice of Servicer Default. The Servicer shall deliver to the Issuer, the Trustee and each Rating Agency promptly after having obtained knowledge thereof, but in no event later than five Business Days thereafter, written notice in an Officer's Certificate of any event or circumstance which, with the giving of notice or the passage of time, would become a Servicer Default under Section 6.01. Such notice shall also be given by publication in an Authorized Newspaper, so long as any Securitization Bonds are listed on the Luxembourg Stock Exchange and the rules of that exchange so require. SECTION 6.03 Waiver of Past Defaults. The Trustee, with the consent of Holders of the majority of the outstanding principal amount of the Securitization Bonds of all Series, may waive in writing any default by the Servicer in the performance of its obligations hereunder and its consequences, except a default in making any required remittances to the Trustee of Securitization Charge Collections in accordance with Section 3.03. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto. SECTION 6.04 Appointment of Successor. (a) Upon the Servicer's receipt of a Termination Notice pursuant to Section 6.01 or the Servicer's resignation in accordance with the terms of this Agreement, the predecessor Servicer shall continue to perform its functions as Servicer under this Agreement and shall be entitled to receive the requisite portion of the Monthly Servicing Fees, until a successor Servicer has assumed in writing the obligations of the Servicer hereunder as described below. In the event of the Servicer's removal or resignation hereunder, the Trustee, as assignee of the Issuer, shall appoint a successor Servicer, with the consent of the Holders of a majority of the outstanding principal amount of the Securitization Bonds of all Series, but subject to the provisions of the Intercreditor Agreement, and the successor Servicer shall accept its appointment by a written assumption in form acceptable to the Issuer and the Trustee. If, within 30 days after the delivery of the Termination Notice, a new Servicer has not been appointed and accepted such appointment, the Trustee may petition the MPSC or a court of competent jurisdiction to appoint a successor Servicer under this Agreement. A Person shall qualify as a successor Servicer only if: (i) such Person is not prevented from performing the duties of the Servicer pursuant to the Customer Choice Act, the MPSC Regulations, the Financing Order and this Agreement; (ii) the Rating Agency Condition has been satisfied; and (iii) such Person enters into a servicing agreement with the Issuer having substantially the same provisions as this Agreement. (b) Upon appointment, the successor Servicer shall be the successor in all respects to the predecessor Servicer under this Agreement and shall be subject to all the responsibilities, duties and liabilities arising thereafter relating thereto placed on the predecessor Servicer and shall be entitled to the Monthly Servicing Fee and all the rights granted to the predecessor Servicer by the terms and provisions of the Agreement. (c) The successor Servicer may resign only if it is prohibited from serving as such by applicable law. SECTION 6.05 Cooperation with Successor. The Servicer covenants and agrees with the Issuer that it will, on an ongoing basis, cooperate with the successor Servicer and provide whatever information is, and take whatever actions are, reasonably necessary to assist the successor Servicer in performing its obligations hereunder, including, without limitation, furnishing to the successor Servicer all information necessary to calculate the Securitization Charge Collections. ARTICLE VII Miscellaneous Provisions SECTION 7.01 Amendment. This Agreement may be amended by the Servicer and the Issuer, with the consent of the Trustee and the satisfaction of the Rating Agency Condition. Promptly after the execution of any such amendment or consent, the Issuer shall furnish written notification of the substance of such amendment or consent to each of the Rating Agencies. Prior to the execution of any amendment to this Agreement, each of the Issuer and the Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and the Opinion of Counsel referred to in Section 3.11. Each of the Issuer and the Trustee may, but shall not be obligated to, enter into any such amendment which adversely affects its own rights, duties or immunities under this Agreement or otherwise. SECTION 7.02 Notices. Unless otherwise specifically provided herein, all notices, directions, consents and waivers required under the terms and provisions of this 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 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, five days after deposit in the United States first-class mail with proper postage for first-class mail prepaid, (a) in the case of the Servicer, at Consumers Energy Company, 212 W. Michigan Avenue, Jackson, Michigan 49201; (b) in the case of the Issuer, at Consumers Funding LLC, 212 W. Michigan Avenue, Suite M-1029, Jackson, Michigan 49201; (c) in the case of the Trustee, at the address provided for notices or communications to the Trustee in the Indenture; (d) in the case of Moody's, at Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007; (e) in the case of Standard & Poor's, at Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041, Attention: Asset Backed Surveillance Department; and (f) in the case of Fitch, at Fitch, Inc., 1 State Street Plaza, New York, New York 10004, Attention: ABS Surveillance; or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. SECTION 7.03 Limitations on Rights of Others. The provisions of this Agreement are solely for the benefit of the Servicer, the Issuer and the Trustee, on behalf of itself and the Securitization Bondholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in any Collateral or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 7.04 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 7.05 Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 7.06 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 7.07 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 7.08 Assignment to the Trustee. (a) The Servicer hereby acknowledges and consents to any pledge, assignment and grant of a security interest by the Issuer to the Trustee pursuant to the Indenture for the benefit of the Securitization Bondholders of all right, title and interest of the Issuer in, to and under the Transferred Securitization Property owned by the Issuer and the proceeds thereof and the assignment of any or all of the Issuer's rights hereunder to the Trustee. (b) In no event shall the Trustee have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Issuer. SECTION 7.09 Nonpetition Covenants. Notwithstanding any prior termination of this Agreement or the Indenture, the Servicer hereby covenants and agrees that it shall not, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of the Securitization Bonds, any other amounts owed under the Indenture, including, without limitation, any amounts owed to third-party credit enhancers, and any amounts owed by the Issuer under any Interest Rate Swap Agreement, acquiesce in, petition or otherwise invoke or cause the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any Federal or State bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer. SECTION 7.10 Termination. This Agreement shall terminate when all Securitization Bonds have been retired, redeemed or defeased in full. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective duly authorized officers as of the date and year first above written. CONSUMERS FUNDING LLC, as Issuer By: /s/ Thomas A. McNish ---------------------------- Name: Thomas A. McNish Title: Manager CONSUMERS ENERGY COMPANY, as Servicer By: /s/ Laura L. Mountcastle ----------------------------- Name: Laura L. Mountcastle Title: Vice President and Treasurer Acknowledged and Accepted: THE BANK OF NEW YORK, as Trustee By: /s/ Cassandra D. Shedd ------------------------------ Name: Cassandra D. Shedd Title: Assistant Vice President ANNEX 1 to SERVICING AGREEMENT The Servicer agrees to comply with the following with respect to Consumers Funding LLC (the "Issuer"): SECTION 1. Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in Appendix A to the Servicing Agreement dated as of November 8, 2001, between the Issuer and Consumers, as Servicer. SECTION 2. Trustee and Servicer Payment Date Statements. At least one Business Day before each date on which distributions to the Trustee and the Servicer are to be made pursuant to Sections 8.02(d) and (e) of the Indenture, the Servicer shall provide the Trustee with a statement setting forth the amounts to be distributed to each of the Trustee and Servicer pursuant to such sections. SECTION 3. Payment Date Statements. At least one Business Day before each Payment Date, the Servicer shall provide to the Issuer, the Trustee, each Rating Agency and for so long as any Securitization Bonds are listed on the Luxembourg Stock Exchange, any listing agent in Luxembourg and notice that such report is available shall be published in an Authorized Newspaper, a statement indicating: 1. the amount to be paid to Securitization Bondholders of each Series and Class in respect of principal on such Payment Date; 2. the amount to be paid to Securitization Bondholders of each Series and Class in respect of interest on such Payment Date; 3. the Projected Securitization Bond Balance and the Securitization Bond Balance for each Series and Class as of that Payment Date (after giving effect to the payments on such Payment Date); 4. the amount on deposit in the Overcollateralization Subaccount for each Series and the Scheduled Overcollateralization Level for each Series, as of that Payment Date (after giving effect to the transfers to be made from or into the Overcollateralization Subaccount on such Payment Date); 5. the amount on deposit in the Capital Subaccount for each Series as of that Payment Date (after giving effect to the transfers to be made from or into the Capital Subaccount on such Payment Date); 6. the amount, if any, on deposit in the Reserve Subaccount as of that Payment Date (after giving effect to the transfers to be made from or into the Reserve Subaccount on such Payment Date); 7. the amount, if any, to be paid to any Swap Counterparty (on a gross and a net basis, separately stated) under any Interest Rate Swap Agreement on or before such Payment Date; and 8. the amount of any transfers and payments to be made on such Payment Date pursuant to Sections 8.02(d), (e), (f), (g), and (i) of the Indenture. SECTION 4. Remittance Date Statements. At least one Business Day before each Remittance Date, but not more frequently than monthly, the Servicer shall prepare and furnish to the Issuer and the Trustee a statement setting forth the amount to be remitted by the Servicer to the Trustee for deposit on such Remittance Date pursuant to the Indenture. SECTION 5. Securitization Charge Adjustments. (a) Prior to each Calculation Date, the Servicer shall calculate (i) the Securitization Bond Balance as of the Payment Date immediately preceding the next Adjustment Date (a written copy of which shall be delivered by the Servicer to the Trustee within five days following such Calculation Date), and (ii) the revised Securitization Charges with respect to the Transferred Securitization Property in respect of each Adjustment Date such that the Servicer projects that Securitization Charge Collections therefrom allocable to the Issuer will be sufficient so that: (A) the Securitization Bond Balance on the Payment Date immediately preceding the next Adjustment Date will equal the Projected Securitization Bond Balance as of such date, taking into account any amounts on deposit in the Reserve Subaccount, (B) the amount on deposit in the Overcollateralization Subaccount on the Payment Date immediately preceding the next Adjustment Date will equal the Scheduled Overcollateralization Level for such date, taking into account amounts on deposit in the Reserve Subaccount, (C) the amount on deposit in the Capital Subaccount on the Payment Date immediately preceding the next Adjustment Date will equal its required level for such date, taking into account any amounts on deposit in the Reserve Subaccount, (D) the amount on deposit in the Reserve Subaccount on the Payment Date immediately preceding the next Adjustment Date will equal zero, and (E) the Securitization Charge Collections will provide for (i) amortization of the remaining outstanding principal amount of each Series in accordance with the Expected Amortization Schedule therefor, (ii) payment of interest on each Series when due, payment of any amounts under any Interest Rate Swap Agreement, (iii) payment of all Operating Expenses of the Issuer when due in accordance with the Indenture, and (iv) deposits to the Overcollateralization Subaccount such that the balance therein will equal the Scheduled Overcollateralization Level on the Payment Date immediately preceding the next Adjustment Date. (b) On or before each Calculation Date, the Servicer shall file an Adjustment Request with the MPSC. This filing shall include the data specified in the Financing Order. (c) On each Adjustment Date, the Servicer shall (i) take all reasonable actions and make all reasonable efforts to effectuate all adjustments to the Securitization Charges, and (ii) promptly send to the Trustee copies of all material notices and documents relating to such adjustments. (d) On each Adjustment Date, the Servicer shall provide Moody's with a schedule indicating any changes to the Securitization Charges. (e) If deemed appropriate by the Servicer to protect Securitization Bondholders and to remedy a significant and recurring variance between actual and expected Securitization Charge Collections, the Servicer shall make "non-routine" filings with the MPSC as authorized by the Financing Order, for adjustments to the Securitization Charge to assure timely payment of the periodic payment requirements of the Issuer set forth in the Indenture. Such filings shall be made at least 90 days prior to the proposed effective date of the proposed adjustments. ANNEX 2 to the Servicing Agreement Dated as of November 8, 2001 Consumers Energy Company Securitization Calculation Process The following three processes will be used by Consumers Energy Company, as Servicer, under the Servicing Agreement for calculating the daily amounts of Securitization Charges to be remitted to the Trustee for deposit in the Collection Account not later than the Remittance Date: Standard Process Initial Start-Up Process Process for Securitization Charge Rate Changes Resulting from a True-Up Adjustment Terms are used herein as defined in Appendix A - Master Definitions to the Servicing Agreement. The customer billing and collections referred to in this Annex 2 are billings to and collections from Consumers' electric and combined electric and gas customers (but not gas only customers). Standard Process 1. Each business day that customer billing and collections are processed, a file is created from the billing systems containing the billing data (rate class, total charges billed, Securitization Charges billed and KWh delivered) and a file is created with collection data (collection amount by rate class). 2. Billing Data: For an entire Billing Month the total Securitization Charges billed by the Servicer for each rate class are divided by the total charges billed by Consumers and the Servicer for each rate class to customers for such Billing Month, creating the Securitization Ratio. This information will be used for the subsequent Billing Month's calculation process. (Monthly Ratio Analysis) 3. Collection Data: Each business day after collections are received the total dollar amount collected by rate class is multiplied by the prior Billing Month's Securitization Ratio for each rate class. This amount is the total Securitization Charges collected, which will be remitted to the Trustee on a daily basis. (Daily Servicer's Report) 4. Monthly Summary: At the end of each Billing Month the total of the daily collections for that period are summarized and reported to the Trustee. (Monthly Servicer's Report) Initial Start-Up The standard process will be modified during the first three Billing Months following the Transfer Date of the Initial Transferred Securitization Property under the Sale Agreement. The first such Billing Month requires the calculation of the amount of Securitization Charges for the prior Billing Month and collections for all three of those Billing Months must take into account payment history by adjustment based on the Collection Curve for the applicable Billing Month. First Billing Month 1. Billing Data: The amount of Securitization Charges that would have been billed during the Billing Month prior to actual securitization billing is calculated. The total Securitization Charges that would have been billed for each rate class are divided by the total charges billed by Consumers and the Servicer for each rate class to provide the Securitization Ratio. This will be done to the input files from the billing systems and then processed as described above. (Monthly Ratio Analysis) 2. Collection Data: For the first of the three Billing Months, the daily amounts of Securitization Charges collected are adjusted to reflect the time lag between the customer receiving the bill and the Servicer receiving payment. To accomplish this, the amounts collected from the billing systems will be multiplied by the First Billing Month's Collection Curve Percentage. Standard processing is then performed. (Daily Servicer's Report) 3. Monthly Summary: At the end of each Billing Month the total Securitization Charges collected are summarized and reported to the Trustee. (Monthly Servicer's Report) Months Two and Three 1 Billing Data: For the preceding Billing Month the total Securitization Charges for each rate class are divided by the total charges billed by Consumers and the Servicer for each rate class. This billing rate information is then used for the current Billing Month's calculation process. (Monthly Ratio Analysis) 2. Collection Data: For the second and third Billing Months, the daily amounts of Securitization Charges collected are adjusted to reflect the time lag between the customer receiving the bill and the Servicer receiving payment. To accomplish this, the amounts collected from the billing systems during the Second Billing Month are multiplied by the cumulative First and Second Billing Months' Collection Curve Percentage, and the amounts collected from the billing systems during the Third Billing Month are multiplied by the cumulative First, Second and Third Billing Months' Collection Curve Percentage. Standard processing is then performed. (Daily Servicer's Report) In the fourth Billing Month and thereafter, standard processing is performed based upon 100% of the amounts billed and collected. 3. Monthly Summary: At the end of each Billing Month the total Securitization Charges collected are summarized and reported to the Trustee. (Monthly Servicer's Report) Securitization Charge Rate Changes Resulting from a True-Up Adjustment The first two Billing Months after a Securitization Charge Rate change resulting from an annual or quarterly true-up, special processing is required to (a) reflect the fact that during the Billing Month prior to the change the Securitization Charge was billed under the prior Securitization Charge Rate and (b) amounts collected for the first two Billing Months after the Securitization Charge Rate change will reflect payments for both old and new billing amounts resulting from the prior and new Securitization Charge Rates. First Securitization Charge Rate-Change Billing Month To calculate the appropriate Securitization Ratio for the first Billing Month after the Securitization Charge Rate change: Collections Applicable to Prior Securitization Charge Rate 1. Collection Data: For the first Billing Month, the daily amounts of Securitization Charges collected must be adjusted to reflect the collections of the Securitization Charges billed under the prior Securitization Charge Rate. To accomplish this, the collection amounts from the billing systems are multiplied by 1 minus the first Billing Month's Collection Curve Percentage. Standard processing is then performed on these amounts using the prior Billing Month's Securitization Ratio. (Daily Servicer's Report) Collections Applicable to New Securitization Charge Rate 2. Billing Data: For the first Billing Month, the amount of Securitization Charges billed is recalculated by multiplying the KWh delivered for each rate class by the new Securitization Charge Rate. The total calculated Securitization Charges billed for each rate class are divided by the total charges billed by Consumers and the Servicer for each rate class. This information is then used for the First Billing Month's second calculation process (point 3 below). (Monthly Ratio Analysis) 3. Collection Data: For the first Billing Month, the daily amounts of Securitization Charges collected must be adjusted to reflect the collections billed under the new Securitization Charge Rate. To accomplish this, the collection amounts from the billing systems are multiplied by the First Billing Month's Collection Curve Percentage. Standard processing is then performed using the recalculated prior month's Securitization Ratio. (Daily Servicer's Report) 4. Summarized Collection Data: For the first Billing Month, the Daily Servicer's Reports (points 1 and 3 above) are summarized into one set of reports. This summarized amount is the total Securitization Charges collected, which will be remitted to the Trustee on a daily basis. (Daily Servicer's Report) Second Securitization Charge Rate Change Month To calculate the appropriate Securitization Ratio for the second Billing Month after the Securitization Charge Rate change: Collection Applicable to Prior Securitization Charge Rate 1. Billing Data: For the second Billing Month, the amount of Securitization Charges collected is recalculated by multiplying the KWh billed by the prior Securitization Charge Rate. The total calculated Securitization Charges billed are divided by the total charges billed by Consumers and the Servicer for each rate class. This information is then used for the second Billing Month's second calculation process (point 2). (Monthly Ratio Analysis) 2. Collection Data: For the second Billing Month, the daily amounts of Securitization Charges collected must be adjusted to reflect the collections billed under the prior Securitization Charge Rate applicable to each rate class. To accomplish this, the collection amounts from the billing systems are multiplied by 1 minus the cumulative First and Second Billing Months' Collection Curve Percentage. Standard processing on these amounts is then performed using the recalculated prior month's Securitization Ratio. (Daily Servicer's Report) Collection Applicable to New Securitization Charge Rate 3. Collection Data: For the second Billing Month, the daily amounts of Securitization Charges collected must be adjusted to reflect the collections billed under the new Securitization Charge Rate. To accomplish this, the collection amounts from the billing systems are multiplied by the cumulative First and Second Billing Months' Collection Curve Percentage. Standard processing is then performed using the prior month's Securitization Ratio. (Daily Servicer's Report) 4. Summarized Collection Data: For the second Billing Month, the Daily Servicer's Reports (points 2 and 3 above) are summarized into one set of reports. This summarized amount is the total Securitization Charges collected, which will be remitted to the Trustee on a daily basis. (Daily Servicer's Report) APPENDIX A MASTER DEFINITIONS The definitions contained in this Appendix A are applicable to the singular as well as the plural forms of such terms. Act has the meaning specified in Section 11.03(a) of the Indenture. Adjustment Date means (a) the first day of the first billing cycle of the Servicer in December of each year through December 2013 and (b) thereafter, as long as the Securitization Bonds are outstanding, the first day of the first billing cycle of the Servicer in March, June, September and December of each year, beginning with the billing cycle for December 2014. Adjustment Request means an application filed by the Servicer with the MPSC for a Securitization Charge Adjustment pursuant to Section 5 of the Issuer Annex. Administration Agreement means the Administration Agreement dated as of November 8, 2001, between Consumers, as administrator, and the Issuer, as the same may be amended or supplemented from time to time. Administrator means Consumers, as administrator under the Administration Agreement, and each successor to Consumers, in the same capacity, pursuant to Section 14 of the Administration Agreement. Affiliate means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing. Alternative Electric Suppliers means any third party, including any electric generation supplier, providing billing or metering services, licensed by the MPSC pursuant to relevant provisions of the Customer Choice Act, the MPSC Regulations and the Financing Order. Annual Accountant's Report has the meaning assigned to that term in Section 3.07 of the Servicing Agreement. Authorized Denominations means, with respect to any Series or Class of Securitization Bonds, $1,000 and integral multiples of $1.00 above that amount, provided, however, that one bond of each Class may have denomination of less than $1,000, or such other denominations as may be specified in the Series Supplement therefor. Authorized Newspaper means the Luxemburger Wort or any other newspaper published in Luxembourg on a daily basis. Authorized Officer means, with respect to the Issuer, a any Manager and, bany person designated as an "Officer" under the Issuer LLC Agreement and authorized thereby to act on behalf of the Issuer. Basic Documents means the Formation Documents, the Sale Agreement, the Intercreditor Agreement, any Bills of Sale, the Servicing Agreement, the Administration Agreement, the Indenture, the Underwriting Agreement, the Securities Account Control Agreement and any Interest Rate Swap Agreement, as each may be amended or supplemented from time to time. Bill of Sale means any bill of sale issued by the Seller to the Issuer pursuant to the Sale Agreement evidencing the sale of Securitization Property by the Seller to the Issuer. Billing Month means the schedule for current month billings (each billing month includes 21 billing segments regardless of the number of days in the current calendar month). For uniformity of customer billings, each customer's meter is read every 27 to 33 days and billed in one of the 21 monthly billing segments. Book-Entry Securitization Bonds means beneficial interests in the Securitization Bonds, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 2.11 of the Indenture. Business Day means any day other than a Saturday or Sunday or a day on which banking institutions in the City of Jackson, Michigan, or in the City of New York, New York or, with respect to any Securitization Bonds listed on the Luxembourg Stock Exchange, in Luxembourg, are required or authorized by law or executive order to remain closed. Calculation Date means the day which is a Business Day at least 45 days before each Adjustment Date on which the Servicer files an Adjustment Request. Capital Reserve Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Capital Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Class means, with respect to any Series, any one of the classes of Securitization Bonds of that Series, as specified in the Series Supplement for that Series. Class Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Clearing Agency means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. Clearing Agency Participant means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. Code means the Internal Revenue Code of 1986, as amended from time to time, and the treasury regulations promulgated thereunder. Collateral has the meaning specified in the Granting Clause of the Indenture. Collection Account has the meaning specified in Section 8.02(a) of the Indenture. Collection Curve means, with respect to a Billing Month, the forecast prepared by the Servicer of the percentages of amounts billed in a Billing Month that are expected to be received during each of the Billing Months for which the Collection Curve Percentage will be applied to determine the amount of Securitization Charges collected. Collection Curve Percentage means the percentages of amounts billed in a particular Billing Month that are expected to be received during that month. The initial Collection Curve Percentages are: First Billing Month's Collection Curve Percentage: 40.08% Second Billing Month's Collection Curve Percentage: 45.09% Third Billing Month's Collection Curve Percentage: 10.58% provided that the Collection Curve Percentages will be updated by Consumers periodically while the Securitization Bonds are outstanding using similar methodology. Commission means the U.S. Securities and Exchange Commission, and any successor thereof. Consumers means Consumers Energy Company, a Michigan corporation. Corporate Trust Office means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at date of the execution of this Indenture is located at 5 Penn Plaza-16th floor, New York, New York 10001-1803, Attention: Corporate Trust-Asset Backed Securities (ABS), or at such other address as the Trustee may designate from time to time by notice to the Securitization Bondholders and the Issuer, or the principal corporate trust office of any successor Trustee (the address of which the successor Trustee will notify the Securitization Bondholders and the Issuer in writing). Covenant Defeasance Option has the meaning specified in Section 4.01(b) of the Indenture. Customers means all electric customers taking delivery of electricity from Consumers or its successor on its MPSC-approved rate schedules and special contracts. Customer Choice Act means the Customer Choice and Electricity Reliability Act as set forth in Michigan Public Acts 2000 PA 141 and 2000 PA 142 and effective on June 5, 2000. Daily Remittance Date means, if the Servicer has not satisfied the conditions of Section 5.11(b) of the Servicing Agreement, each Business Day commencing on the second Business Day following the date on which the Servicer ceases to satisfy such conditions. Default means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default. Defeasance Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Definitive Securitization Bonds has the meaning specified in Section 2.11 of the Indenture. Delaware UCC means the Uniform Commercial Code, as in effect in the State of Delaware, as amended from time to time. DTC Agreement means the agreement between the Issuer, the Trustee and The Depository Trust Company, as the initial Clearing Agency, dated on or about November 8, 2001, relating to the Securitization Bonds, as the same may be amended or supplemented from time to time. Eligible Guarantor Institution means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution," including (as such terms are defined therein): (a) a bank; (b) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (c) a credit union; (d) a national securities exchange, registered securities association or clearing agency; or (e) a savings association that is a participant in a securities transfer association. Eligible Institution means: (a) the corporate trust department of the Trustee, so long as any of the securities of the Trustee have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade, or (b) a depositary institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank), which (i) has either (A) with respect to any Eligible Investment having a maturity of greater than one month, a long-term unsecured debt rating of "AA-" by Standard & Poor's and Fitch and "Aa3" by Moody's, or (B) with respect to any Eligible Investment having a maturity one month or less, a certificate of deposit rating of "A-1+" by Standard & Poor's, "P-1" by Moody's and "F1+" by Fitch, or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies, and (ii) whose deposits are insured by the FDIC. Eligible Investments mean book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which evidence: (a) direct obligations of, and obligations fully and unconditionally guaranteed as to timely payment by, the United States of America; (b) demand deposits, time deposits or certificates of deposit of any depository institution or trust company (any depositary institution or trust company being referred to in this definition as a "financial institution") incorporated under the laws of the United States of America or any State thereof (or any domestic branch of a foreign bank) and subject to supervision and examination by Federal or State banking or depositary institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depositary institution or trust company) thereof shall have a credit rating from each of the Rating Agencies in the highest investment category granted thereby; (c) commercial paper or other short term obligations of any corporation organized under the laws of the United States of America (other than Consumers) whose ratings, at the time of the investment or contractual commitment to invest therein, from each of the Rating Agencies are in the highest investment category granted thereby; (d) investments in money market funds having a rating from each of the Rating Agencies in the highest investment category granted thereby (including funds for which the Trustee or any of its Affiliates act as investment manager or advisor); (e) bankers' acceptances issued by any depositary institution or trust company referred to in clause (b) above; (f) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depositary institution or trust company (acting as principal) described in clause (b) above; (g) repurchase obligations with respect to any security or whole loan entered into with (i) a financial institution (acting as principal) described in clause (b) above, (ii) a broker/dealer (acting as principal) registered as a broker or dealer under Section 15 of the Exchange Act (any broker/dealer being referred to in this definition as a "broker/dealer"), the unsecured short-term debt obligations of which are rated P-1 by Moody's, A-1+ by Standard & Poor's and F1+ by Fitch at the time of entering into this repurchase obligation, or (iii) an unrated broker/dealer, acting as principal, that is a wholly-owned subsidiary of a non-bank or bank holding company the unsecured short-term debt obligations of which are rated P-1 by Moody's, A-1+ by Standard & Poor's and F1+ by Fitch at the time of purchase; or (h) any other investment permitted by each Rating Agency; provided, however, that, with respect to Moody's only, the obligor related to clauses (b), (c), (e), (f) and (g) above must have both a long term rating of at least A1 and a short term rating of at least P-1, and provided further, that, unless otherwise permitted by each Rating Agency, upon the failure of any Eligible Institution to maintain any applicable rating set forth in this definition or the definition of Eligible Institution, the related investments at such institution shall be reinvested in Eligible Investments at a successor Eligible Institution within 10 days, and provided, further, that, any Eligible Investment must not: (a) be sold, liquidated or otherwise disposed of at a loss, prior to the maturity thereof, or (b) mature later than (i) the date on which the proceeds of such Eligible Investment will be required to be on deposit in the Collection Account in order for the Trustee to make all required and scheduled payments and deposits into Subaccounts under the Indenture, if such Eligible Investment is held by an Affiliate of the Trustee, or (ii) the Business Day prior to the date on which the proceeds of such Eligible Investment will be required to be on deposit in the Collection Account in order for the Trustee to make all required and scheduled payments and deposits into Subaccounts under the Indenture, if such Eligible Investment is not held by an Affiliate of the Trustee; provided, however that with respect to the period prior to the first Payment Date any Eligible Investment must not have a maturity of greater than six months. Eligible Securities Account means either: (a) a segregated trust account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depositary institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depositary institution shall have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade. Event of Default has the meaning specified in Section 5.01 of the Indenture. Exchange Act means the Securities Exchange Act of 1934, as amended. Expected Amortization Schedule means, with respect to each Series or, if applicable, each Class of Securitization Bonds, the expected amortization schedule for principal thereof, as specified in the Series Supplement therefor. Expected Final Payment Date means, with respect to each Series or, if applicable, each Class of Securitization Bonds, the date when all interest and principal is scheduled to be paid with respect to that Series or Class in accordance with the Expected Amortization Schedule, as specified in the Series Supplement therefor. Filing Office means the Office of the of the Secretary of State of the State of Michigan or the Office of the Secretary of State of the State of Delaware, as applicable. Final Maturity Date means, for each Series or, if applicable, each Class of Securitization Bonds, the date by which all principal of and interest on such Series or Class of Securitization Bonds is required to be paid, as specified in the Series Supplement therefor. Financing Issuance means an issuance of a new Series of Securitization Bonds under the Indenture to provide funds to finance the purchase by the Issuer of Securitization Property. Financing Order means the Opinion and Order issued on October 24, 2000 and the Order Granting Rehearing issued on January 12, 2001 by the MPSC (MPSC Docket Number U-12505) with respect to Consumers. Fitch means Fitch, Inc., or its successor. Formation Documents means, collectively, the Issuer LLC Agreement, the Issuer Certificate of Formation and any other document pursuant to which the Issuer is formed or governed, as each may be amended or supplemented from time to time. General Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Grant means mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, and grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm. A Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal, interest and other payments in respect of the Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto. Holder or Securitization Bondholder means the Person in whose name a Securitization Bond of any Series or Class is registered in the Securitization Bond Register. Indemnified Person has the meaning specified in Section 5.02 of the Servicing Agreement. Indemnity Amount means the amount of any indemnification obligation payable under the Basic Documents. Indenture means the Indenture dated as of November 8, 2001, between the Issuer and the Trustee, as the same may be amended and supplemented from time to time by one or more Supplemental Indentures, and shall include each Series Supplement and the forms and terms of the Securitization Bonds established thereunder. Independent means, when used with respect to any specified Person, that the Person (a) is in fact independent of the Issuer, any other obligor upon the Securitization Bonds, Consumers, the Servicer (if different from Consumers) and any Affiliate of any of the foregoing Persons, (b) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, Consumers or any Affiliate of any of the foregoing Persons, and (c) is not connected with the Issuer, any such other obligor, Consumers or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Independent Certificate means a certificate or opinion to be delivered to the Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order and approved by the Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of "Independent" in this Appendix A and that the signer is Independent within the meaning thereof. Independent Manager has the meaning set forth in the Issuer LLC Agreement. Initial Purchase Price has the meaning set forth in Section 2.01(a) of the Sale Agreement. Initial Transfer Date means the Series Issuance Date for the first Series of Securitization Bonds. Initial Transferred Securitization Property means the Securitization Property sold, assigned and/or transferred by the Seller to the Issuer as of the Initial Transfer Date pursuant to the Sale Agreement and the Bill of Sale delivered on or prior to the Initial Transfer Date as identified in such Bill of Sale. Insolvency Event means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person's affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days or (b) the commencement by such Person of a voluntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing. Intercreditor Agreement means: (i) the Intercreditor Agreement dated as of November 8, 2001 (the "Initial Intercreditor Agreement"), among Consumers, the Trustee, the Issuer, Canadian Imperial Bank of Commerce and Asset Securitization Cooperative Corporation, as amended and supplemented from time to time; or (ii) any subsequent intercreditor agreement entered into by the Trustee pursuant to Section 18(b) of the Initial Intercreditor Agreement. Interest means, for any Payment Date for any Series or Class of Securitization Bonds, the sum, without duplication, of: (a) an amount equal to the amount of interest accrued at the applicable Interest Rate from the prior Payment Date with respect to that Series or Class; (b) any unpaid interest, plus any interest accrued on this unpaid interest at the applicable Interest Rate, to the extent permitted by applicable law; (c) if the Securitization Bonds have been declared due and payable, all accrued and unpaid interest thereon; and (d) with respect to a Series or Class to be redeemed prior to the next Payment Date, the amount of interest that will be payable as interest on such Series or Class upon such redemption. Interest Rate means, with respect to each Series or Class of Securitization Bonds, the rate at which interest accrues on the principal balance of Securitization Bonds of such Series or Class, as specified in the Series Supplement therefor. Interest Rate Swap Agreement means any interest rate swap agreement entered into by the Issuer with respect to any Series or Class of Securitization Bonds, including, without limitation, the ISDA Master Agreement and the related Schedule and Confirmation between the Issuer and a Swap Counterparty, as same may be amended or supplemented from time to time. Issuer means Consumers Funding LLC, a Delaware limited liability company, or its successor under the Indenture or the party named as such in the Indenture until a successor replaces it and, thereafter, means the successor. Issuer Annex means Annex 1 of the Servicing Agreement. Issuer Certificate of Formation means the Amended and Restated Certificate of Formation of the Issuer which was filed with the Delaware Secretary of State's Office on November 6, 2001, as the same may be amended or supplemented from time to time. Issuer LLC Agreement means the Amended and Restated Limited Liability Company Agreement between the Issuer and Consumers, as sole Member, dated as of November 8, 2001, as the same may be amended or supplemented from time to time. Issuer Officer's Certificate means a certificate signed by any Authorized Officer of the Issuer, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.01 of the Indenture, and delivered to the Trustee. Unless otherwise specified, any reference in the Indenture to an Officer's Certificate shall be to an Officer's Certificate of any Authorized Officer of the Issuer. Issuer Opinion of Counsel means one or more written opinions of counsel who may, except as otherwise expressly provided in the Indenture, be employees of or counsel to the Issuer or the Seller and who shall be reasonably satisfactory to the Trustee, and which opinion or opinions shall be addressed to the Trustee, and shall be in a form reasonably satisfactory to the Trustee. Issuer Order or Issuer Request means a written order or request, respectively, signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Trustee. Legal Defeasance Option has the meaning specified in Section 4.01(b) of the Indenture. Lien means a security interest, lien, charge, pledge, equity or encumbrance of any kind. Losses means collectively, any and all liabilities, obligations, losses, damages, payments, costs or expenses of any kind whatsoever. Manager has the meaning set forth in the Issuer LLC Agreement. Member means Consumers, as the sole member of the Issuer, in its capacity as such member under the Issuer LLC Agreement. Michigan UCC means the Uniform Commercial Code, as in effect in the State of Michigan, as amended from time to time. Monthly Remittance Date means the 19th day of each calendar month (or if such day is not a Business Day, the preceding Business Day). Monthly Servicing Fee means the fee payable to the Servicer on a monthly basis for services rendered, in accordance with Section 5.07 of the Servicing Agreement. Moody's means Moody's Investors Service, Inc., or its successor. MPSC means the Michigan Public Service Commission or its successor. MPSC Regulations means any regulations, orders, guidelines or directives promulgated, issued or adopted by the MPSC, as in effect from time to time. Officers' Certificate means, with respect to a corporation, a certificate signed by the chairman of the board, the president, the vice chairman of the board, any executive vice president, any vice president, the treasurer or the secretary of such company, and with respect to a limited liability company, any Manager. Operating Expenses means, with respect to the Issuer, all fees, costs, expenses and indemnity payments owed by the Issuer, including, without limitation, all amounts owed by the Issuer to the Trustee, the Monthly Servicing Fee, the fees and expenses payable by the Issuer to the Administrator under the Administration Agreement, the fees and expenses payable by the Issuer to the Independent Managers and Special Members of the Issuer, fees of the Rating Agencies, legal fees and expenses of the Servicer pursuant to Section 3.10 of the Servicing Agreement, legal and accounting fees, costs and expenses of the Issuer and legal, accounting or other fees, costs and expenses of the Seller (including, without limitation, any costs and expenses incurred by the Seller pursuant to Section 4.09 of the Sale Agreement) under or in connection with the Basic Documents or the Financing Order. Opinion of Counsel means one or more written opinions of counsel who may be an employee of or counsel to Consumers, the Issuer or any other Person (as the context may require), which counsel shall be reasonably acceptable to the Trustee, the Issuer or the Rating Agencies, as applicable, and which shall be in form reasonably satisfactory to the Trustee, if applicable. Outstanding with respect to Securitization Bonds means, as of the date of determination, all Securitization Bonds theretofore authenticated and delivered under the Indenture except: (a) Securitization Bonds theretofore canceled by the Securitization Bond Registrar or delivered to the Securitization Bond Registrar for cancellation; (b) Securitization Bonds or portions thereof the payment for which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securitization Bonds; provided, however, that if such Securitization Bonds are to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or provision therefor, satisfactory to the Trustee, made; and (c) Securitization Bonds in exchange for or in lieu of other Securitization Bonds which have been authenticated and delivered pursuant to the Indenture unless proof satisfactory to the Trustee is presented that any such Securitization Bonds are held by a protected purchaser; provided that in determining whether the Holders of the requisite Outstanding Amount of the Securitization Bonds or any Series or Class thereof have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any Basic Document, Securitization Bonds owned by the Issuer, any other obligor upon the Securitization Bonds, Consumers or any Affiliate of any of the foregoing Persons shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securitization Bonds that the Trustee knows to be so owned shall be so disregarded. Securitization Bonds so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securitization Bonds and that the pledgee is not the Issuer, any other obligor upon the Securitization Bonds, Consumers or any Affiliate of any of the foregoing Persons. Outstanding Amount means the aggregate principal amount of all Outstanding Securitization Bonds or, if the context requires, all Outstanding Securitization Bonds of a Series or Class Outstanding at the date of determination. Overcollateralization means, with respect to any Payment Date, an amount that, if deposited to the Overcollateralization Subaccount, would cause the balance in such subaccount to equal the Scheduled Overcollateralization Level for such Payment Date, without regard to investment earnings. Overcollateralization Amount means, with respect to any Series of Securitization Bonds, the amount specified as such in the Series Supplement therefor. Overcollateralization Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Paying Agent means the Trustee or any other Person, including any Person appointed pursuant to Section 3.02(b) of the Indenture, that meets the eligibility standards for the Trustee specified in Section 6.11 of the Indenture and is authorized by the Issuer to make the payments of principal of or premium, if any, or interest on the Securitization Bonds on behalf of the Issuer. Payment Date means, with respect to each Series or Class of Securitization Bonds, each date or dates respectively specified as Payment Dates for such Series or Class in the Series Supplement therefor. Person means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), business trust, limited liability company, unincorporated organization or government or any agency or political subdivision thereof. Predecessor Securitization Bond means, with respect to any particular Securitization Bond, every previous Securitization Bond evidencing all or a portion of the same debt as that evidenced by such particular Securitization Bond; and, for the purpose of this definition, any Securitization Bond authenticated and delivered under Section 2.06 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Securitization Bond shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Securitization Bond. Principal means, with respect to any Payment Date and each Series or Class of Securitization Bonds: (a) the amount of principal scheduled to be paid on such Payment Date in accordance with the Expected Amortization Schedule; (b) the amount of principal due on the Final Maturity Date of any Series or Class if such Payment Date is the Final Maturity Date; (c) the amount of principal due as a result of the occurrence and continuance of an Event of Default and acceleration of the Securitization Bonds; (d) the amount of principal and premium, if any, due as a result of a redemption of Securitization Bonds on such Payment Date; and (e) any overdue payments of principal. Pro Rata has the meaning set forth in Section 8.02(l) of the Indenture. Proceeding means any suit in equity, action at law or other judicial or administrative proceeding. Projected Securitization Bond Balance means, as of any date, the sum of the amounts provided for in the Expected Amortization Schedules for each Outstanding Series of Securitization Bonds as of such date. Rating Agency means, as of any date, any rating agency rating the Securitization Bonds of any Class or Series at the time of issuance thereof at the request of the Issuer. If no such organization or successor is any longer in existence, "Rating Agency" shall be a nationally recognized statistical rating organization or other comparable Person designated by the Issuer, notice of which designation shall be given to the Trustee, the Member and the Servicer. Rating Agency Condition means, with respect to any action, the notification by the Trustee to each Rating Agency of such action and the notification from each of Fitch and S&P to the Trustee and the Issuer that such action will not result in a reduction or withdrawal of the then current rating by such Rating Agency of any Outstanding Series or Class of Securitization Bonds. Record Date has the meaning set forth in each Supplemental Indenture. Redemption Date means, with respect to each Series or Class of Securitization Bonds, the date for the redemption of the Securitization Bonds of such Series or Class pursuant to Sections 10.01 or 10.02 of the Indenture or the Series Supplement for such Series or Class, which in each case shall be a Payment Date. Redemption Price has the meaning set forth in Section 10.01 of the Indenture. Refunding Issuance means an issuance of a new Series of Securitization Bonds under the Indenture to pay the cost of refunding, through redemption or payment on the Expected Final Payment Date for a Series or Class of Securitization Bonds, all or part of the Securitization Bonds of such Series or Class to the extent permitted by the terms thereof. Released Parties has the meaning specified in Section 5.02(e) of the Servicing Agreement. Remittance Date means a Daily Remittance Date or a Monthly Remittance Date, as applicable. Required Capital Amount means with respect to any Series, the amount required to be deposited in the Capital Subaccount on the Series Issuance Date of such Series, as specified in the related Series Supplement. Reserve Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Responsible Officer means, with respect to the Trustee, any officer assigned to the Corporate Trust Division (or any successor thereto), including any vice president, assistant vice president, trust officer, secretary, assistant secretary, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers, in each case having direct responsibility for the administration of the Indenture. Retiring Trustee has the meaning specified in Section 6.08(b) of the Indenture. Sale Agreement means the Sale Agreement dated November 8, 2001 between the Seller and the Issuer, as the same may be amended or supplemented from time to time. Scheduled Overcollateralization Level means, with respect to each Series and any Payment Date, the amount with respect to such Series set forth as such in Schedule B of the Series Supplement. Secured Obligations has the meaning set forth in the Granting Clause of the Indenture. Securities Account Control Agreement means the securities account control agreement dated as of November 8, 2001, by and between Consumers Funding LLC, as debtor, the Trustee as the secured party and The Bank of New York, in its capacity as securities intermediary thereunder. Securitization Bond means any of the Securitization Bonds (as defined in the Customer Choice Act) issued by the Issuer pursuant to the Indenture. Securitization Bond Balance means, as of any date, the aggregate Outstanding Amount of all Series of Securitization Bonds on such date. Securitization Bond Register has the meaning specified in Section 2.05(a) of the Indenture. Securitization Bond Registrar has the meaning specified in Section 2.05(a) of the Indenture. Securitization Charge means the nonbypassable amounts to be charged for the use or availability of electric services (but does not include tax charges authorized by the Financing Order), approved by the MPSC under the Financing Order, to fully recover qualified costs, to be collected by Consumers, its successors, assignees or other collection agents, as provided for in the Financing Order. Securitization Charge Adjustment means each adjustment to the Securitization Charge related to the Transferred Securitization Property made in accordance with Section 4.01 of the Servicing Agreement, the Issuer Annex and the Financing Order. Securitization Charge Rate means the amount of the surcharge applied to all kilowatt-hours (KWh) billed to determine the amount of the Securitization Charges. Securitization Charge Collections means amounts received by the Servicer in respect of the Securitization Charge as determined by the Servicer in accordance with the allocation methodology set forth in Annex 2 to the Servicing Agreement. Securitization Property has the meaning assigned to that term in the Customer Choice Act and as approved with respect to Consumers in the Financing Order. Securitization Property Documentation means all documents relating to the Transferred Securitization Property, including copies of the Financing Order and all documents filed with the MPSC in connection with any Securitization Charge Adjustment. Securitization Ratio means for an entire Billing Month the total Securitization Charges billed by the Servicer for each rate class divided by the total charges billed by Consumers and the Servicer for each rate class to customers for such Billing Month. Customers for this purpose refers to Consumers' electric and combination electric and gas customers (and not gas only customers). Seller means Consumers, in its capacity as seller of the Securitization Property to the Issuer pursuant to the Sale Agreement. Series means any series of Securitization Bonds issued by the Issuer and authenticated by the Trustee pursuant to the Indenture, as specified in the Series Supplement therefor. Series Capital Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Issuance Date means, with respect to any Series, the date on which the Securitization Bonds of such Series are to be originally issued in accordance with Section 2.10 of the Indenture and the Series Supplement for such Series. Series Overcollateralization Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Subaccount has the meaning specified in Section 8.02(a) of the Indenture. Series Supplement means an indenture supplemental to the Indenture that authorizes a particular Series of Securitization Bonds, as the same may be amended or supplemented from time to time. Servicer means Consumers, as the servicer of the Securitization Property, and each successor to Consumers (in the same capacity) pursuant to Section 5.03, 5.04 or 6.04 of the Servicing Agreement. Servicer Default means an event specified in Section 6.01 of the Servicing Agreement. Servicing Agreement means the Servicing Agreement dated as of November 8, 2001 between the Issuer and the Servicer, as the same may be amended and supplemented from time to time. Special Member has the meaning set forth in the Issuer LLC Agreement. Standard & Poor's, or S&P, means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, or its successor. State means any one of the 50 states of the United States of America or the District of Columbia. Subaccount means any of the subaccounts of the Collection Account specified in Section 8.02 of the Indenture. Subsequent Sale means the sale of additional Securitization Property by the Seller to the Issuer after the Initial Transfer Date, subject to the satisfaction of the conditions specified in the Sale Agreement and the Indenture. Subsequent Transfer Date means the date that a sale of Subsequent Transferred Securitization Property will be effective, as specified in a written notice provided by the Seller to the Issuer pursuant to the Sale Agreement. Subsequent Transferred Securitization Property means Securitization Property sold by the Seller to the Issuer as of a Subsequent Transfer Date pursuant to the Sale Agreement and the Bill of Sale delivered on or prior to the Subsequent Transfer Date as identified in such Bill of Sale. Successor Servicer has the meaning specified in Section 3.19(i) of the Indenture. Supplemental Indenture means a supplemental indenture entered into by the Issuer and the Trustee pursuant to Article IX of the Indenture. Swap Counterparty means, with respect to any Interest Rate Swap Agreement, the swap counterparty under that Interest Rate Swap Agreement. Termination Notice has the meaning specified in Section 6.01(d) of the Servicing Agreement. Transfer Date means the Initial Transfer Date or any Subsequent Transfer Date, as applicable. Transferred Securitization Property means Securitization Property which has been sold, assigned and/or transferred to the Issuer pursuant to the Sale Agreement and the Bill of Sale. Trust Indenture Act or TIA means the Trust Indenture Act of 1939, as in force on the date hereof, unless otherwise specifically provided. Trustee means The Bank of New York, a New York banking corporation, or its successor, as trustee under the Indenture, or any successor Trustee under the Indenture. UCC means the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time. Underwriting Agreement means the Underwriting Agreement dated as of October 31, 2001 among the Seller, the Issuer and Morgan Stanley & Co. Incorporated, on behalf of itself and as the representative of the several underwriters named therein. U.S. Government Obligations means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer's option. EX-10.C 12 k65350ex10-c.txt INTERCREDITOR AGREEMENT DATED NOVEMBER 8, 2001 EXHIBIT 10(c) INTERCREDITOR AGREEMENT INTERCREDITOR AGREEMENT dated as of November 8, 2001 among CANADIAN IMPERIAL BANK OF COMMERCE, a banking institution chartered under the Bank Act of Canada with an office at 425 Lexington Avenue, New York, New York ("CIBC" and as Servicing Agent under the RPA's referred to below, the "Servicing Agent"), ASSET SECURITIZATION COOPERATIVE CORPORATION, a California cooperative corporation with an office at 425 Lexington Avenue, New York, New York ("ASCC"), THE BANK OF NEW YORK, a New York banking corporation, with an office at 5 Penn Plaza, 16th Floor, New York, New York 10001 (as Trustee under the Indenture referred to below, the "Bond Trustee"), CONSUMERS FUNDING LLC, a Delaware limited liability company with an office at 212 W. Michigan Avenue, Jackson, Michigan (the "Bond Issuer"), and CONSUMERS ENERGY COMPANY, a Michigan corporation with an office at 212 W. Michigan Avenue, Jackson, Michigan ("Consumers"). WHEREAS, pursuant to (i) the Receivables Sale Agreement, dated as of December 20, 1996, as amended, restated, supplemented or otherwise modified from time to time, between Consumers, as Seller and as Collection Agent, and CIBC, as Purchaser and as Servicing Agent, and (ii) the Receivables Sale Agreement, dated as of December 20, 1996, as amended, restated, supplemented or otherwise modified from time to time, among Consumers, as Seller and as Collection Agent, ASCC, as Purchaser, and CIBC, as Servicing Agent (collectively, the "RPA's"), Consumers has sold and may hereafter sell interests in its Receivables (as defined in the RPA's) to CIBC, ASCC and/or other persons that may from time to time become parties to one or both of the RPA's as purchasers (collectively, the "Purchasers"); and WHEREAS, pursuant to the Sale Agreement, dated as of November 8, 2001, between Consumers and the Bond Issuer (the "Sale Agreement"), Consumers has sold all of its Securitization Property (which includes the Securitization Charge) to the Bond Issuer, and pursuant to the Servicing Agreement, dated as of November 8, 2001, between Consumers and the Bond Issuer (the "Servicing Agreement"), Consumers has agreed to service the Securitization Property on behalf of the Bond Issuer; and WHEREAS, pursuant to the terms of the Indenture dated as of November 8, 2001 between the Bond Issuer and the Bond Trustee, as supplemented by one or more Series Supplements (collectively, the "Indenture"), the Bond Issuer, among other things, has granted to the Bond Trustee a security interest in the Securitization Property and certain of its other assets to secure the Secured Obligations, which include, among other things, the Securitization Bonds issued pursuant to the Indenture (the "Securitization Bonds"); and WHEREAS, pursuant to the Servicing Agreement, Consumers' obligations as the servicer under the Servicing Agreement on behalf of the Bond Issuer (the "Bond Servicer") include the collection of the Securitization Charge; and WHEREAS, pursuant to the RPA's, Consumers as Collection Agent on behalf of the Purchasers has agreed to provide servicing functions with respect to Collections of the Receivables; and WHEREAS, Collections with respect to Receivables and Securitization Charge Collections and related bank accounts in which the same may be deposited are the subject of the RPA's, the Sale Agreement, the Indenture and the Servicing Agreement; and WHEREAS, the parties hereto wish to agree upon their respective rights relating to such Collections, Securitization Charge Collections and bank accounts, as well as other matters of common interest to them under the RPA's, the Sale Agreement, the Indenture and the Servicing Agreement; and WHEREAS, defined terms used but not otherwise defined herein have the meaning set forth in the RPA's or in Annex A to the Sale Agreement, the Indenture and the Servicing Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: 1. The Purchasers hereby acknowledge the ownership interest of the Bond Issuer in the Transferred Securitization Property including revenues, collections, payments, money and proceeds arising therefrom (the "Bond Issuer Assets") and the security interest in favor of the Bond Trustee in such assets (the "Bond Trustee Collateral"). The Bond Trustee and the Bond Issuer hereby acknowledge the ownership interest of the Purchasers in the Receivables. The Purchasers further acknowledge that, notwithstanding anything in the RPA's to the contrary, none of them has any interest in the Bond Issuer Assets or the Bond Trustee Collateral, and each of the Bond Trustee and the Bond Issuer further acknowledges that, notwithstanding anything in the Sale Agreement or the Indenture to the contrary, it has no interest in the Receivables. Each of the parties hereto agrees that the determination of the assets that constitute Securitization Charge Collections in respect of the Transferred Securitization Property shall be made in accordance with the allocation methodology set forth in Annex 2 to the Servicing Agreement. It is understood and agreed that such Annex 2 will not be amended or modified without the prior written consent of each of the parties hereto. 2. (a) The Purchasers, the Bond Issuer and the Bond Trustee acknowledge that Collections with respect to Receivables and Securitization Charge Collections will be deposited into either (i) account no. 10132-33 at Bank One, Detroit, Michigan, ABA #072000326, or (ii) account no. 4825285820 at Standard Federal Bank, Troy, Michigan, ABA #072000805 (each, together with any additional or replacement account agreed to in writing by the Servicing Agent and the Bond Trustee subject to the Rating Agency Condition (as defined below), an "Account") held by Consumers. Consumers in its respective capacities as Collection Agent and as Bond Servicer, and on behalf of its successors and assigns in such capacities, agrees that it will (i) allocate amounts in the Accounts on a daily basis between Collections with respect to Receivables and Securitization Charge Collections in accordance with the allocation methodology set forth in Annex 2 to the Servicing Agreement and (ii) thereafter (x) allocate and apply Collections with respect to Receivables in accordance with the RPA's and (y) allocate and apply Securitization Charge Collections in accordance with the Servicing Agreement. (b) The Bond Trustee and the Bond Issuer waive any interest in deposits to the Accounts to the extent that they are properly allocable to Collections with respect to Receivables, and the Purchasers waive any interest in deposits to the Accounts to the extent that they are properly allocable to Securitization Charge Collections. Each of the parties hereto acknowledges the respective security interests of the others in the Accounts to the extent of their respective interests as described in this Agreement. 3. (a) The Purchasers hereby acknowledge that, notwithstanding anything in the RPA's to the contrary, all Securitization Charge Collections are property of the Bond Issuer pledged to the Bond Trustee, subject to the terms of the Indenture, the Sale Agreement and the Servicing Agreement. Each of the Bond Issuer and the Bond Trustee hereby acknowledges that, notwithstanding anything in the Sale Agreement or the Indenture to the contrary, all Collections with respect to the Receivables are the property of the Purchasers, subject to the terms of the respective RPA. (b) Each of the Purchasers hereby releases all liens and security interests of any kind whatsoever which any Purchaser (or any trustee or agent acting on its behalf) may hold in the Transferred Securitization Property. Each of the Purchasers agrees, upon the reasonable request of Consumers or the Bond Trustee, to execute and deliver to the Bond Trustee such UCC partial release statements and other documents and instruments, and do such other acts and things, as the Consumers or Bond Trustee may reasonably request in order to evidence the release provided for in this Section 3(b) and/or to execute and deliver to the Bond Trustee UCC financing statement amendments to exclude the Transferred Securitization Property from the assets covered by any existing UCC financing statements relating to the Receivables; provided, however, that failure to execute and deliver any such partial release statements, financing statement amendments, documents or instruments, or to do such acts and things, shall not affect or impair the release provided for in this Section 3(b). (c) Each of the Bond Issuer and the Bond Trustee hereby releases all liens and security interests of any kind whatsoever which either of them may hold in the Receivables. Each of the Bond Issuer and the Bond Trustee agrees, upon the reasonable request of the Servicing Agent, to execute and deliver to the Servicing Agent such UCC partial release statements and other documents and instruments, and do such other acts and things, as the Servicing Agent may reasonably request in order to evidence the release provided for in this Section 3(c) and/or to execute and deliver to the Servicing Agent UCC financing statement amendments to exclude such Receivables from the assets covered by any existing UCC financing statements relating to the Transferred Securitization Property; provided, however, that failure to execute and deliver any such partial release statements, financing statement amendments, documents or instruments, or to do such acts and things, shall not affect or impair the release provided for in this Section 3(c). 4. The acknowledgments contained in Sections 1, 2 and 3 of this Agreement are applicable irrespective of the time or order of attachment or perfection of security or ownership interests or the time or order of filing or recording of financing statements or mortgages. 5. (a) Subject to the remaining provisions of this Section 5(a), the Purchasers recognize the existence of rights in favor of the Bond Trustee under the Indenture to replace Consumers as Bond Servicer under the Servicing Agreement, and the Bond Issuer and the Bond Trustee recognize the existence of rights in favor of the Servicing Agent under the RPA's to replace Consumers as Collection Agent under the RPA's. If the Bond Trustee is entitled to and desires to exercise its right to replace Consumers or its successor as Bond Servicer under the Servicing Agreement, or the Servicing Agent is entitled to and desires to exercise its right to replace Consumers or its successor as Collection Agent under the RPA's, the party desiring to exercise such right shall give written notice to the other party and shall consult with the other party with respect to the person which would replace Consumers or its successor in such capacities. Any successor in such capacities shall be agreed to by both the Bond Trustee and the Servicing Agent within ten Business Days of the date of such notice and shall be subject to the Rating Agency Condition (as defined below). In recognition of the fact that the rights and duties of the Bond Servicer under the Servicing Agreement and of the Collection Agent under the RPA's overlap in certain circumstances, the parties agree that, except as provided in Section 5(b) below, the Bond Servicer and the Collection Agent shall be the same person. The person named as replacement Bond Servicer and replacement Collection Agent in accordance with this Section 5(a) is referred to herein as the "Replacement Servicer". (b) In the event that either the Bond Trustee is entitled to and desires to exercise its rights to take control of Securitization Charge Collections, or the Servicing Agent is entitled to and desires to exercise its rights to take control of Collections with respect to the Receivables, then the parties hereto agree that CIBC, if and for so long as it is rated not less than A+ by S&P, A1 by Moody's and, if rated by Fitch, A+ by Fitch (each as defined in the Indenture), or, if CIBC is unable or unwilling to act in that capacity, such other financial institution as is selected by the Bond Trustee and the Servicing Agent subject to satisfaction of the Rating Agency Condition (the "Designated Account Holder") shall (i) use commercially reasonable efforts to take control of the Accounts (by delivering to the Lock-Box Banks notice in the form of Exhibit E to the RPA's), (ii) cooperate with the Bond Trustee and provide to the Bond Trustee any necessary information in the Designated Account Holder's possession in connection with the delivery by the Bond Trustee to the obligors under the Receivables and the Securitization Charges of a notification to the effect that the Securitization Charge Collections are owned by the Bond Issuer and have been pledged to the Bond Trustee, (iii) allocate Collections of Receivables and Securitization Charge Collections in accordance with Section 2(a)(i) hereof in accordance with the allocation methodology set forth in Annex 2 to the Servicing Agreement on the basis of billing information provided to the Designated Account Holder by Consumers or the Replacement Servicer, as applicable, provided that if Consumers or the Replacement Servicer, as applicable, fails to provide such billing information for any billing month, the Designated Account Holder shall make such allocation on the basis of the billing information for the last month for which such information was provided, (iv) remit Collections of Receivables in accordance with the instructions of the Collection Agent and remit Securitization Charge Collections in accordance with the instructions of the Bond Servicer, and (v) maintain records as to the amounts deposited into the Accounts, the amounts remitted therefrom and the application and allocation of such amounts as provided in clauses (iii) and (iv) above; provided that the Designated Account Holder shall not be required to take any action at the request of the Servicing Agent or the Bond Trustee unless the Designated Account Holder has been assured to its satisfaction that it will be indemnified by Consumers against any and all liability and expense which it may incur in taking or continuing to take such action. The fees and expenses of the Designated Account Holder shall be payable from amounts deposited into the Accounts on a pro rata basis as between Collections of Receivables and Securitization Charge Collections, provided that that portion of those fees and expenses allocable to Securitization Charge Collections shall be payable by the Bond Servicer from the servicer fees provided for in the Servicing Agreement. The Bond Trustee, the Bond Issuer, the Servicing Agent, and the Purchasers shall each have the right to require an accounting from time to time (but not more frequently than monthly) of collections, allocations and remittances by the Designated Account Holder. (c) Subject to the provisions of this Section 5, the parties hereto recognize the existence of rights in favor of the Bond Trustee under the Indenture to assume control of Securitization Charge Collections as provided in the Indenture, the Servicing Agreement, the Act and the Financing Order (whether by means of court ordered sequestration or otherwise), and of the Servicing Agent under the RPA's to assume control of Collections with respect to the Receivables as provided in the RPA's. Notwithstanding the foregoing, in no event may the Bond Trustee take any action with respect to the Securitization Charge Collections in a manner that would result in the Bond Trustee obtaining possession of, or any control over, Collections of Receivables or any Account. In the event that the Bond Trustee obtains possession of any Collections related to the Receivables, the Bond Trustee shall notify the Servicing Agent of such fact, shall hold them in trust and shall promptly deliver them to the Servicing Agent upon request. Notwithstanding the foregoing, in no event may the Servicing Agent take any action with respect to the Collection of Receivables in a manner that would result in the Servicing Agent obtaining possession of, or any control over, Securitization Charge Collections or any Account, except as provided in Section 5(b) above. In the event that the Servicing Agent obtains possession of any Securitization Charge Collections, the Servicing Agent shall notify the Bond Trustee of such fact, shall hold them in trust and shall promptly deliver them to the Bond Trustee upon request. (d) Anything in this Agreement to the contrary notwithstanding, any action taken by either the Bond Trustee or the Servicing Agent pursuant to Section 5(a) hereof shall be subject to the Rating Agency Condition and the consent, if required by law, regulation or regulatory order, of the Michigan Public Service Commission. For the purposes of this Agreement, the "Rating Agency Condition" means, with respect to any such action, notification to each rating agency then rating any class or series of the Securitization Bonds of such action, and the receipt of notification from each of Fitch and S&P that such action will not result in a reduction or withdrawal of its rating on such Securitization Bonds. The parties hereto acknowledge and agree that the approval or the consent of the rating agencies which is required in order to satisfy the Rating Agency Condition is not subject to any standard of commercial reasonableness, and the parties are bound to satisfy this condition whether or not the rating agencies are unreasonable or arbitrary. 6. (a) Subject to Section 5(c) hereof, none of the Purchasers or the Servicing Agent, in their respective capacities as such, is the agent of, or owes any fiduciary obligation to, the Bond Trustee, the Bond Issuer, the Securitization Bondholders or any other party under this Agreement. Each of the Bond Trustee (on behalf of itself and the Securitization Bondholders), the Bond Issuer and Consumers hereby waives any right that it may now have or hereafter acquire to make any claim against the Purchasers or the Servicing Agent, in their respective capacities as such, on the basis of any such fiduciary obligation hereunder. Subject to Section 5(c) hereof, neither the Bond Trustee nor the Bond Issuer is the agent of, or owes any fiduciary obligation to, any of the Purchasers or any other party under this Agreement. Each of the Purchasers and Consumers hereby waives any right that it may now have or hereafter acquire to make any claim against the Bond Trustee or the Bond Issuer on the basis of any such fiduciary obligation hereunder. (b) Notwithstanding anything herein to the contrary, none of the Purchasers, the Servicing Agent, the Bond Trustee or the Bond Issuer shall be required to take any action that exposes it to personal liability or that is contrary to the Indenture, the Servicing Agreement, the RPA's or applicable law. (c) None of the Purchasers, the Servicing Agent, the Bond Trustee or the Bond Issuer nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence, bad faith or willful misconduct. Without limiting the foregoing, each of the Purchasers, the Servicing Agent, the Bond Trustee and the Bond Issuer: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any party and shall not be responsible to any party for any statements, warranties or representations made by any other party in connection with this Agreement or any other agreement; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other agreement on the part of any other party; and (iv) shall incur no liability under or in respect of this Agreement by acting upon any writing (which may be by facsimile) believed by it in good faith to be genuine and signed or sent by the proper party or parties. 7. The Servicing Agent, the Purchasers, Consumers, the Collection Agent and the Bond Servicer agree that the Lock-Box Agreements in the form attached to the RPA's as Exhibit F shall not be amended, altered or supplemented in any material respect or terminated without the prior written consent of the Bond Trustee. 8. The Servicing Agent, the Bond Trustee and Consumers agree to cooperate with each other and to make available to each other or any Replacement Servicer any and all records and other data relevant to the Bond Issuer Assets and the Receivables which it may from time to time receive from Consumers (or its successor) including, without limitation, any and all computer programs, data files, documents, instruments, files and records and any receptacles and cabinets containing the same. 9. Nothing herein contained shall be deemed as effecting a joint venture among the Purchasers, the Servicing Agent, Consumers, the Bond Issuer and the Bond Trustee. 10. For the purpose of this Agreement, the Purchasers hereby consent and agree to the method of adjustment of the Securitization Charge set forth in Section 4.01 of the Servicing Agreement and irrevocably waive any right to object to or enjoin such adjustment. 11. This Agreement shall terminate upon the payment in full of either the Securitization Bonds or the termination of both RPA's in accordance with their respective terms, except that the understandings and acknowledgments contained in Sections 1, 2, 3, 4, 6 and 16 shall survive the termination of this Agreement. 12. (a) This Agreement shall be governed by the laws of the State of New York. (b) In connection with any suit, claim, action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby, each party hereto hereby consents to the in personam jurisdiction of any court of the State of New York or any U.S. federal court located in the Borough of Manhattan in the City of New York, State of New York; each party hereto agrees that service by registered mail, or any other form equivalent thereto (or, in the alternative, by any other means sufficient under applicable law, rules and regulations) at the addresses set forth in Section 19 hereof shall be valid and sufficient for all purposes; and each party hereto agrees to, and irrevocably waives any objection based on forum non conveniens or venue not to, appear in such state or U.S. federal court located in the Borough of Manhattan. Each of Consumers and the Bond Issuer irrevocably designates CT Corporation System, 111 Eighth Avenue, New York, NY 10011, as its agent and attorney-in-fact for the acceptance of service of process and making an appearance on its behalf in any such action or proceeding and taking all such acts as may be necessary or appropriate in order to confer jurisdiction over it by such state or U.S. federal court in the Borough of Manhattan, and each of such parties stipulates that such appointment is irrevocable and coupled with an interest. (c) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. 13. The Purchasers, Consumers, the Bond Issuer, the Bond Trustee, the Bond Servicer and the Collection Agent agree to execute any and all agreements, instruments, financing statements, releases and any and all other documents reasonably requested by any other party hereto in order to effectuate the intent of this Agreement. In each case where a release is to be given pursuant to this Agreement, the term release shall include any documents or instruments necessary to effect a release, as contemplated by this Agreement. All releases, subordinations and other instruments submitted to the executing party are to be prepared at the expense of Consumers. 14. This Agreement is solely for the benefit of the Purchasers, the Servicing Agent, Consumers, the Bond Issuer, the Bond Trustee (individually and for the benefit of the Securitization Bondholders), the Bond Servicer and the Collection Agent, and no other person or entity shall have any rights, benefits, priority or interest under or because of the existence of this Agreement. 15. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. 16. Notwithstanding any prior termination of this Agreement or the Indenture, each of the parties hereto hereby covenants and agrees that it shall not, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of the Securitization Bonds, any other amounts owed under the Indenture, including, without limitation, any amounts owed to third-party credit enhancers or under any interest rate swap agreement, acquiesce, petition or otherwise invoke or cause the Bond Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Bond Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Bond Issuer or any substantial part of the property of the Bond Issuer, or ordering the winding up or liquidation of the affairs of the Bond Issuer. 17. Each of the Purchasers and the Servicing Agent agrees that it will not (i) challenge the transfer of Bond Issuer Assets from Consumers to the Bond Issuer, whether on the grounds that such transfer was a disguised financing or a fraudulent conveyance or otherwise, so long as such transfer is carried out in all material respects in accordance with the Sale Agreement and related documents, or (ii) assert that Consumers and the Bond Issuer should be substantively consolidated. The Bond Trustee agrees that it will not challenge any transfer of the Receivables from Consumers to the Purchasers, whether on the grounds that such transfer was a disguised financing or a fraudulent conveyance or otherwise, so long as such transfer is carried out in all material respects in accordance with the RPA's and related documents. 18. (a) Consumers hereby represents and warrants to the Bond Issuer and the Bond Trustee that the forms of the RPA's delivered to the Bond Issuer and the Bond Trustee concurrently herewith are the RPA's as amended (to reflect the provisions specified in Exhibit A hereto) and as in effect on the date hereof. Consumers hereby covenants to the Bond Issuer and the Bond Trustee that it will not (i) amend, supplement or terminate any of the provisions of either of the RPA's specified in Exhibit A hereto without the prior written consent of the Bond Trustee and satisfaction of the Rating Agency Condition, as well as delivery to each Rating Agency of the form of the proposed amendment or supplement, or (ii) agree to any additional person becoming a purchaser under either of the RPA's unless such person has theretofore agreed, in a written instrument delivered to the Bond Issuer and the Bond Trustee and satisfactory to the Bond Trustee, to be bound by the terms of, and to become a party as a "Purchaser" to, this Agreement. (b) Notwithstanding any provision of this Agreement to the contrary, upon the termination, substitution or assignment of the RPA's in connection with a restructuring of Consumers' Receivables securitization program, upon the written request of Consumers, the Bond Issuer and the Bond Trustee agree to enter into a replacement intercreditor agreement with the parties to such restructured Receivables program having substantially the same terms and provisions as this Agreement upon (i) receipt by the Trustee of an opinion of counsel satisfactory to the Bond Trustee to the effect that the substitution of such replacement intercreditor agreement and such restructured Receivables program and the related documentation will not adversely affect the rights and interests of the Transition Bondholders, the Bond Issuer or the Bond Trustee and (ii) satisfaction of the Rating Agency Condition. 19. Unless otherwise specifically provided herein, all notices, directions, consents and waivers required under the terms and provisions of this Agreement shall be 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 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, five days after deposit in the United States first-class mail with proper postage for first-class mail prepaid, in the case of Consumers, at Consumers Energy Company, 212 W. Michigan Avenue, Jackson, Michigan 49201; telephone:(800) 477-5050; fax: (517) 788-2186; email:customer@consumersenergy.com; in the case of the Bond Issuer, at Consumers Funding LLC, 212 W. Michigan Avenue, Suite M-1029, Jackson, Michigan 49201; telephone: (517) 788-0179; fax: (517) 788- 0768; email: mdvanhem@cmsenergy.com; in the case of the Bond Trustee, at 5 Penn Plaza, 16th Floor, New York, New York 10001-1803, Attention: Asset Backed Securities (ABS); telephone: (212) 328-7543; fax: (212) 328-7623; email: cdshedd@bankofny.com; in the case of CIBC, Attention: R. Santos, at 425 Lexington Avenue, New York, New York 10017; telephone: (212) 856-3811; fax: (212) 856-3643; email: richard.santos@us.cibc.com; in the case of ASCC, Attention: R. Santos, at 425 Lexington Avenue, New York, New York 10017; telephone: (212) 856-3811; fax: (212) 856-3643; email: richard.santos@us.cibc.com; in the case of Moody's, at Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007; telephone: (212) 553-0300; fax: (212) 553-4642; email: fabrikant@moodys.com; in the case of Standard & Poor's, at Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041, Attention: Asset Backed Surveillance Department; telephone: (212) 438-2000; fax: (212) 438-2655; email: Tom_currie@standardandpoors.com; and in the case of Fitch, at Fitch, Inc., 1 State Street Plaza, New York, New York 10004, Attention: ABS Surveillance; telephone: (212) 908-0500; fax:(212) 480-4438; email:James.grady@fitchratings.com; or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. 20. No delay upon the part of any party to this Agreement in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by any such party of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy. No waiver, amendment or other modification, or consent with respect to, any provision of this Agreement shall be effective unless the same shall be in writing and shall be signed by each of the parties hereto. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. CANADIAN IMPERIAL BANK OF COMMERCE Individually and as Servicing Agent By: /s/ Robert L. Stern Jr. --------------------------------------- Name: Robert L. Stern Jr. Title: Authorized Signatory ASSET SECURITIZATION COOPERATIVE CORPORATION By: /s/ Joyce Pernin --------------------------------------- Name: Joyce Pernin Title: Vice President CONSUMERS ENERGY COMPANY Individually, as Collection Agent and as Bond Servicer By: /s/ Laura L. Mountcastle --------------------------------------- Name: Laura L. Mountcastle Title: Vice President and Treasurer THE BANK OF NEW YORK, as Bond Trustee By: /s/ Cassandra D. Shedd --------------------------------------- Name: Cassandra D. Shedd Title: Assistant Vice President CONSUMERS FUNDING LLC By: /s/ Laura L. Mountcastle --------------------------------------- Name: Laura L. Mountcastle Title: President, Chief Executive Officer, Chief Financial Officer and Treasurer [THE FOLLOWING PROVISIONS TO APPEAR IN THE AMENDED RPA'S] Article I: [Definition of Receivable:] "Receivable" means the obligation of an Obligor to pay for electricity, natural gas, electric and natural gas power or other energy products or merchandise sold or services rendered by the Seller, and includes the Seller's rights to payment of any interest, financing charges or late fees and the merchandise (including returned goods) and contracts relating to such Receivable, all security interests, guaranties and property securing or supporting payment of such Receivable, all books and records relating to the Receivables and all proceeds of the foregoing. Notwithstanding the foregoing, "Receivable" does not include (i) Transferred Securitization Property or (ii) the books and records relating solely to the Transferred Securitization Property, provided that the determination of what constitutes collections of the Securitization Charge in respect of Transferred Securitization Property shall be made in accordance with the allocation methodology specified in Annex 2 to the Servicing Agreement. [Additional Definitions:] "Financing Order" means the financing order issued by the Michigan Public Service Commission on October 24, 2000, as amended. "Intercreditor Agreement" means the Intercreditor Agreement dated as of November 8, 2001 among Canadian Imperial Bank of Commerce, Asset Securitization Cooperative Corporation, The Bank of New York, as trustee, Consumers Funding LLC, and Consumers Energy Company. "Securitization Charge" has the meaning specified in Appendix A to the Servicing Agreement. "Securitization Charge Collections" has the meaning specified in Appendix A to the Servicing Agreement. "Securitization Property" means "securitization property" within the meaning of the Michigan Customer Choice and Electricity Reliability Act, 2000 PA 141 and 2000 PA 142 as approved in the Financing Order "Transferred Securitization Property" has the meaning specified in Appendix A to the Servicing Agreement. "Servicing Agreement" means the Servicing Agreement dated as of November 8, 2001 between Consumers Funding LLC and Consumers Energy Company, as the same may be amended and supplemented from time to time with the consent of the Purchaser (to the extent such consent is required by the terms of this Agreement). Section 7.2: Application of Collections. The Collection Agent shall, upon receipt of payments of amounts billed and collected from customers of Consumers on their utility bills, allocate those receipts on a daily basis between Collections of Receivables and Securitization Charge Collections in accordance with the allocation methodology specified in Annex 2 to the Servicing Agreement. Section 10.1(h): Instruct all Obligors to cause all Collections and Securitization Charge Collections to be deposited directly into a Lock-Box. Section 10.3(e): Deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-Box cash or cash proceeds other than Collections and Securitization Charge Collections. Section 11.1(h): the commingling of Collections with other funds of the Seller other than Securitization Charge Collections; Exhibit E: [New clauses (iii) and (iv) at the end of the first paragraph:] and (iii) The Bank of New York, or any successor thereto, as trustee (the "Bond Trustee") under the Indenture dated as of November 8, 2001 between the Seller and the Bond Trustee, as supplemented, and (iv) Consumers Funding LLC, as issuer of the Securitization Bonds. Exhibit F: [New clause at the end of the first sentence of the second paragraph:] and for the benefit of The Bank of New York, as trustee (the "Bond Trustee") under the Indenture dated as of November 8, 2001 between the Seller and the Bond Trustee, as supplemented, and for the benefit of Consumers Funding LLC, as Issuer of the Securitization Bonds (the "Bond Issuer"). [New clause (iii) at the end of the first paragraph of Attachment A to Lock Box Agreement:] and (iii) for the benefit of The Bank of New York, as trustee (the "Bond Trustee") under the Indenture dated as of November 8, 2001 between the Seller and the Bond Trustee, as supplemented, and for the benefit of Consumers Funding LLC, as Issuer of the Securitization Bonds. Exhibit F: [Fourth line of the third paragraph:] of the Purchasers, the Bond Issuer and the Bond Trustee and all instructions and thereafter regarding the EX-12 13 k65350ex12.txt STATEMENT RE: COMPUTATION OF RATIOS OF EARNINGS EXHIBIT (12) CONSUMERS ENERGY CORPORATION Ratio of Earnings to Fixed Charges (Millions of Dollars)
- ------------------------------------------------------------------------------------------------------------------------------- Nine Months Ended September 30, 2001 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Earnings as defined: - ------------------------------------------------------------------------------------------------------------------------------- Net income $ 88 $ 304 $ 340 $ 349(b) $ 321 $ 296 - ------------------------------------------------------------------------------------------------------------------------------- Net income (loss) after preferred dividends $ 57 $ 268 $ 313 $ 312(b) $ 284 $ 260 And distributions - ------------------------------------------------------------------------------------------------------------------------------- Income taxes 41 $ 148 172 158 152 150 - ------------------------------------------------------------------------------------------------------------------------------- Exclude equity basis subsidiaries (32) (57) (50) (50) (49) (42) - ------------------------------------------------------------------------------------------------------------------------------- Distributed income of equity investees 8 10 10 12 - ------------------------------------------------------------------------------------------------------------------------------- Fixed charges as defined, adjusted to exclude capitalized interest of $4, $2, $0, $1, $1 and $2 million for the six months ended June 30, 2001 and for the years ended December 31, 2000, 1999, 1998, 1997 and 1996, respectively 149 194 192 185 182 175 - ------------------------------------------------------------------------------------------------------------------------------- Earnings as defined $ 254 $ 599 $ 664 $ 654 $ 606 $ 579 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Fixed charges as defined: Interest on long-term debt $ 111 $ 141 $ 140 $ 138 $ 138 $ 139 - ------------------------------------------------------------------------------------------------------------------------------- Estimated interest portion of lease rental 8 11 11 10 9 9 - ------------------------------------------------------------------------------------------------------------------------------- Other interest charges 35 44 41 38 36 29 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Fixed charges as defined $ 154 $ 196 $ 192 $ 186 $ 183 $ 177 - ------------------------------------------------------------------------------------------------------------------------------- Ratio of earnings to: (a) - ------------------------------------------------------------------------------------------------------------------------------- Fixed charges 1.65 3.06 3.46 3.16(c) 3.31 3.27 - ------------------------------------------------------------------------------------------------------------------------------- Fixed charges & preferred dividends 1.37 2.57 2.99 2.52(d) 2.61 2.54 - -------------------------------------------------------------------------------------------------------------------------------
NOTES: (a) For purposes of computing the ratio, earnings represent net income before income taxes, net interest charges and the estimated interest portions of lease rentals, plus distributed income of equity investees less earnings from minority interests of equity investees. Earnings for the ratio of earnings to fixed charges and preferred stock dividends also includes the amount required to pay distributions on preferred securities and the amount of pretax earnings required to pay the distributions on outstanding preferred stock. (b) Includes a pre-tax $66 million increase due to a one-time change in method of accounting for property taxes. (c) Excludes a cumulative effect of change-in-accounting, after-tax gain of $43 million; if included, ratio would be 3.52. (d) Excludes a cumulative effect of change-in-accounting, after-tax gain of $43 million; if included, ratio would be 2.81. EX-15 14 k65350ex15.txt LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION EXHIBIT (15) November 16, 2001 To Consumers Energy Company: We are aware that Consumers Energy Company has incorporated by reference in this registration statement its Form 10-Q for the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001, which include our reports dated April 27, 2001 and July 31, 2001, respectively, covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, this report is not considered a part of the registration statement prepared or certified by our Firm or a report prepared or certified by our Firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, EX-23.(C) 15 k65350ex23-c.txt CONSENT OF ARTHUR ANDERSEN, LLP EXHIBIT (23)(C) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports dated February 2, 2001 included or incorporated by reference in Consumers Energy Company's Form 10-K for the year ended December 31, 2000 and to all references to our Firm included in this registration statement. Detroit, Michigan, November 16, 2001 EX-24 16 k65350ex24.txt POWERS OF ATTORNEY EXHIBIT 24 October 4, 2001 Mr. Alan M. Wright and Mr. Thomas A. McNish Consumers Energy Company 212 West Michigan Avenue Jackson, MI 49201 We hereby appoint each of you lawful attorney for each of us and in each of our names to sign and cause to be filed with the Securities and Exchange Commission registration statement(s) and/or any amendment(s) thereto, including post-effective amendment or amendments, to be accompanied in each case by a prospectus or supplemental prospectus and any necessary exhibits with respect to the issue and sale of up to $500 million of any debt securities of the Company (plus an additional 20% for the purpose of covering underwriters' over-allotments, price adjustments, or sale of additional securities). Very truly yours, /s/David W. Joos David W. Joos September 28, 2001 Mr. Alan M. Wright and Mr. Thomas A. McNish Consumers Energy Company 212 West Michigan Avenue Jackson, MI 49201 We hereby appoint each of you lawful attorney for each of us and in each of our names to sign and cause to be filed with the Securities and Exchange Commission registration statement(s) and/or any amendment(s) thereto, including post-effective amendment or amendments, to be accompanied in each case by a prospectus or supplemental prospectus and any necessary exhibits with respect to the issue and sale of up to $500 million of any debt securities of the Company (plus an additional 20% for the purpose of covering underwriters' over-allotments, price adjustments, or sale of additional securities). Very truly yours, /s/William T. McCormick, Jr. /s/John M. Deutch William T. McCormick, Jr. John M. Deutch /s/James J. Duderstadt /s/Kathleen R. Flaherty James J. Duderstadt Kathleen R. Flaherty /s/Earl D. Holton /s/William U. Parfet Earl D. Holton William U. Parfet /s/Percy A. Pierre /s/Kenneth L. Way Percy A. Pierre Kenneth L. Way /s/Kenneth Whipple /s/John B. Yasinsky Kenneth Whipple John B. Yasinsky EX-25.A 17 k65350ex25-a.txt STATEMENT OF ELIGIBILITY EXHIBIT 25(a) -------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ------------------------------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ---------------------------------------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) NEW YORK 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 PARK AVENUE NEW YORK, NEW YORK 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) --------------------------------------------------------- CONSUMERS ENERGY COMPANY (Exact name of obligor as specified in its charter) MICHIGAN 38-2726431 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 212 WEST MICHIGAN AVENUE JACKSON, MICHIGAN 49201 (Address of principal executive offices) (Zip Code) ------------------------------------------------------------------- SENIOR NOTES (Title of the indenture securities) ------------------------------------------------------------------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. -2- Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-76439, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 19th day of November, 2001. THE CHASE MANHATTAN BANK By /s/L. O'Brien L. O'Brien Vice President -3- Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 2001, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS ASSETS IN MILLIONS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ............................................................................ $ 21,536 Interest-bearing balances .................................................................... 31,428 Securities: Held to maturity securities ....................................................................... 481 Available for sale securities ..................................................................... 60,903 Federal funds sold and securities purchased under agreements to resell ......................................................................... 42,824 Loans and lease financing receivables: Loans and leases held for sale ............................................................... 3,856 Loans and leases, net of unearned income $153,575 Less: Allowance for loan and lease losses 2,216 Loans and leases, net of unearned income and allowance .................................................................................... 153,299 Trading Assets .................................................................................... 66,636 Premises and fixed assets (including capitalized leases)........................................... 4,468 Other real estate owned ........................................................................... 45 Investments in unconsolidated subsidiaries and associated companies ......................................................................... 353 Customers' liability to this bank on acceptances outstanding .................................................................................. 346 Intangible assets Goodwill .................................................................................. 1,785 Other Intangible assets ................................................................... 4,365 Other assets ...................................................................................... 19,923 -------- TOTAL ASSETS ...................................................................................... $412,248 ========
-4- LIABILITIES Deposits In domestic offices .............................................................................. $ 137,865 Noninterest-bearing .......... $ 56,799 Interest-bearing ............. 81,066 In foreign offices, Edge and Agreement subsidiaries and IBF's ........................................................................... 113,924 Noninterest-bearing .......... $ 6,537 Interest-bearing ............. 107,387 Federal funds purchased and securities sold under agreements to repurchase .............................................................................. 65,474 Trading liabilities ................................................................................... 39,611 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) ........................................................ 10,573 Bank's liability on acceptances executed and outstanding .............................................. 346 Subordinated notes and debentures ..................................................................... 6,355 Other liabilities ..................................................................................... 14,772 TOTAL LIABILITIES ..................................................................................... 388,920 Minority Interest in consolidated subsidiaries ........................................................ 89 EQUITY CAPITAL Perpetual preferred stock and related surplus ......................................................... 0 Common stock .......................................................................................... 1,211 Surplus (exclude all surplus related to preferred stock) ............................................. 12,715 Retained earnings ................................................................................. 9,985 Accumulated other comprehensive income ............................................................ (672) Other equity capital components ....................................................................... 0 TOTAL EQUITY CAPITAL .................................................................................. 23,239 --------- TOTAL LIABILITIES, MINORITY INTEREST, AND EQUITY CAPITAL .............................................. $ 412,248 =========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. WILLIAM B. HARRISON JR. ) DOUGLAS A. WARNER III ) DIRECTORS WILLIAM H. GRAY III ) -5- EX-25.B 18 k65350ex25-b.txt STATEMENT OF ELIGIBILTY EXHIBIT 25(b) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) CONSUMERS ENERGY COMPANY (Exact name of obligor as specified in its charter) Michigan 38-2726431 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 212 West Michigan Avenue Jackson, Michigan 49201 (Address of principal executive offices) (Zip code) ------------- Subordinated Debentures (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------------------------------------- Name Address - --------------------------------------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 20th day of November, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ------------------------------------ Name: STACEY POINDEXTER Title: ASSISTANT TREASURER EXHIBIT 25(b) EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin............................................. $2,811,275 Interest-bearing balances.............................. 3,133,222 Securities: Held-to-maturity securities............................ 147,185 Available-for-sale securities.......................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell............................. 3,378,526 Loans and lease financing receivables: Loans and leases held for sale......................... 74,702 Loans and leases, net of unearned income...............37,471,621 LESS: Allowance for loan and lease losses............599,061 Loans and leases, net of unearned income and allowance................................. 36,872,560 Trading Assets............................................ 11,757,036 Premises and fixed assets (including capitalized leases).................................... 768,795 Other real estate owned................................... 1,078 Investments in unconsolidated subsidiaries and associated companies............................... 193,126 Customers' liability to this bank on acceptances outstanding................................ 592,118 Intangible assets......................................... Goodwill............................................... 1,300,295 Other intangible assets................................ 122,143 Other assets.............................................. 3,676,375 ---------
Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing.......................10,586,346 Interest-bearing..........................15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing..........................373,085 Interest-bearing..........................24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)....... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 Total liabilities...................................... $63,658,235 EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 - --------------------------------------------------------------- --------------------------------------------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. ---- Thomas A. Renyi | Gerald L. Hassell | Alan R. Griffith | Directors ---- - -------------------------------------------------------------------------------- EX-25.C 19 k65350ex25-c.txt STATEMENT OF ELIGIBILITY OF PROPERTY TRUSTEE EXHIBIT 25(c) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) CONSUMERS ENERGY COMPANY FINANCING V (Exact name of obligor as specified in its charter) Delaware To Be Applied For (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 212 West Michigan Avenue Jackson, Michigan 49201 (Address of principal executive offices) (Zip code) ------------- Trust Preferred Securities (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- --------------------------------------------------------------------------------------------------------------- Name Address - --------------------------------------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 20th day of November, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ----------------------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER EXHIBIT 25(c) EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin............................................. $2,811,275 Interest-bearing balances.............................. 3,133,222 Securities: Held-to-maturity securities............................ 147,185 Available-for-sale securities.......................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell............................. 3,378,526 Loans and lease financing receivables: Loans and leases held for sale......................... 74,702 Loans and leases, net of unearned income...............37,471,621 LESS: Allowance for loan and lease losses............599,061 Loans and leases, net of unearned income and allowance................................. 36,872,560 Trading Assets............................................ 11,757,036 Premises and fixed assets (including capitalized leases).................................... 768,795 Other real estate owned................................... 1,078 Investments in unconsolidated subsidiaries and associated companies............................... 193,126 Customers' liability to this bank on acceptances outstanding................................ 592,118 Intangible assets......................................... Goodwill............................................... 1,300,295 Other intangible assets................................ 122,143 Other assets.............................................. 3,676,375 ---------
Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing.......................10,586,346 Interest-bearing..........................15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing..........................373,085 Interest-bearing..........................24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)....... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 Total liabilities...................................... $63,658,235 EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 - --------------------------------------------------------------- --------------------------------------------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. ---- Thomas A. Renyi | Gerald L. Hassell | Alan R. Griffith | Directors ---- - -------------------------------------------------------------------------------- EX-25.D 20 k65350ex25-d.txt STATEMENT OF ELIGIBILITY OF PROPERTY TRUSTEE EXHIBIT (25)(d) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) CONSUMERS ENERGY COMPANY FINANCING VI (Exact name of obligor as specified in its charter) Delaware To Be Applied For (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 212 West Michigan Avenue Jackson, Michigan 49201 (Address of principal executive offices) (Zip code) ------------- Trust Preferred Securities (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. --------------------------------------------------------------------------- Name Address --------------------------------------------------------------------------- Superintendent of Banks of the 2 Rector Street, New York, State of New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 20th day of November, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ------------------------------------ Name: STACEY POINDEXTER Title: ASSISTANT TREASURER EXHIBIT 25(d) EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin............................................. $2,811,275 Interest-bearing balances.............................. 3,133,222 Securities: Held-to-maturity securities............................ 147,185 Available-for-sale securities.......................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell............................. 3,378,526 Loans and lease financing receivables: Loans and leases held for sale......................... 74,702 Loans and leases, net of unearned income...............37,471,621 LESS: Allowance for loan and lease losses............599,061 Loans and leases, net of unearned income and allowance................................. 36,872,560 Trading Assets............................................ 11,757,036 Premises and fixed assets (including capitalized leases).................................... 768,795 Other real estate owned................................... 1,078 Investments in unconsolidated subsidiaries and associated companies............................... 193,126 Customers' liability to this bank on acceptances outstanding................................ 592,118 Intangible assets......................................... Goodwill............................................... 1,300,295 Other intangible assets................................ 122,143 Other assets.............................................. 3,676,375 ---------
Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing.......................10,586,346 Interest-bearing..........................15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing..........................373,085 Interest-bearing..........................24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)....... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 Total liabilities...................................... $63,658,235 EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 - --------------------------------------------------------------- --------------------------------------------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. ---- Thomas A. Renyi | Gerald L. Hassell | Alan R. Griffith | Directors ---- - -------------------------------------------------------------------------------- EX-25.E 21 k65350ex25-e.txt STATEMENT OF ELIGIBILITY OF PREFERRED GUARANTEE EXHIBIT (25)(e) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) CONSUMERS ENERGY COMPANY (Exact name of obligor as specified in its charter) Michigan 38-2726431 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 212 West Michigan Avenue Jackson, Michigan 49201 (Address of principal executive offices) (Zip code) ------------- Guarantee of Trust Preferred Securities of Consumers Energy Company Financing V (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- -------------------------------------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 20th day of November, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ------------------------------------ Name: STACEY POINDEXTER Title: ASSISTANT TREASURER EXHIBIT 25(e) EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin............................................. $2,811,275 Interest-bearing balances.............................. 3,133,222 Securities: Held-to-maturity securities............................ 147,185 Available-for-sale securities.......................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell............................. 3,378,526 Loans and lease financing receivables: Loans and leases held for sale......................... 74,702 Loans and leases, net of unearned income...............37,471,621 LESS: Allowance for loan and lease losses............599,061 Loans and leases, net of unearned income and allowance................................. 36,872,560 Trading Assets............................................ 11,757,036 Premises and fixed assets (including capitalized leases).................................... 768,795 Other real estate owned................................... 1,078 Investments in unconsolidated subsidiaries and associated companies............................... 193,126 Customers' liability to this bank on acceptances outstanding................................ 592,118 Intangible assets......................................... Goodwill............................................... 1,300,295 Other intangible assets................................ 122,143 Other assets.............................................. 3,676,375 ---------
Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing.......................10,586,346 Interest-bearing..........................15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing..........................373,085 Interest-bearing..........................24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)....... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 Total liabilities...................................... $63,658,235 EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 - --------------------------------------------------------------- --------------------------------------------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. ---- Thomas A. Renyi | Gerald L. Hassell | Alan R. Griffith | Directors ---- - -------------------------------------------------------------------------------- EX-25.F 22 k65350ex25-f.txt STATEMENT OF ELIGIBILTY OF THE PREFERRED GUARANTEE EXHIBIT (25)(f) ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) CONSUMERS ENERGY COMPANY (Exact name of obligor as specified in its charter) Michigan 38-2726431 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 212 West Michigan Avenue Jackson, Michigan 49201 (Address of principal executive offices) (Zip code) ------------- Guarantee of Trust Preferred Securities of Consumers Energy Company Financing VI (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- ------------------------------------------------------------------------------------------------------------- Name Address - ------------------------------------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 20th day of November, 2001. THE BANK OF NEW YORK By: /s/ STACEY POINDEXTER ---------------------------------- Name: STACEY POINDEXTER Title: ASSISTANT TREASURER EXHIBIT 25(f) EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS In Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin............................................. $2,811,275 Interest-bearing balances.............................. 3,133,222 Securities: Held-to-maturity securities............................ 147,185 Available-for-sale securities.......................... 5,403,923 Federal funds sold and Securities purchased under agreements to resell............................. 3,378,526 Loans and lease financing receivables: Loans and leases held for sale......................... 74,702 Loans and leases, net of unearned income...............37,471,621 LESS: Allowance for loan and lease losses............599,061 Loans and leases, net of unearned income and allowance................................. 36,872,560 Trading Assets............................................ 11,757,036 Premises and fixed assets (including capitalized leases).................................... 768,795 Other real estate owned................................... 1,078 Investments in unconsolidated subsidiaries and associated companies............................... 193,126 Customers' liability to this bank on acceptances outstanding................................ 592,118 Intangible assets......................................... Goodwill............................................... 1,300,295 Other intangible assets................................ 122,143 Other assets.............................................. 3,676,375 ---------
Total assets........................................... $70,232,359 =========== LIABILITIES Deposits: In domestic offices................................. $25,962,242 Noninterest-bearing.......................10,586,346 Interest-bearing..........................15,395,896 In foreign offices, Edge and Agreement subsidiaries, and IBFs............................ 24,862,377 Noninterest-bearing..........................373,085 Interest-bearing..........................24,489,292 Federal funds purchased and securities sold under agreements to repurchase............................ 1,446,874 Trading liabilities.................................... 2,373,361 Other borrowed money: (includes mortgage indebtedness and obligations under capitalized leases)....... 1,381,512 Bank's liability on acceptances executed and outstanding......................................... 592,804 Subordinated notes and debentures...................... 1,646,000 Other liabilities...................................... 5,373,065 Total liabilities...................................... $63,658,235 EQUITY CAPITAL Common stock........................................... 1,135,284 Surplus................................................ 1,008,773 Retained earnings...................................... 4,426,033 Accumulated other comprehensive income................. 4,034 Other equity capital components........................ 0 - --------------------------------------------------------------- --------------------------------------------- Total equity capital................................... 6,574,124 ----------- Total liabilities and equity capital................... $70,232,359 ===========
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro, Senior Vice President and Comptroller We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. ---- Thomas A. Renyi | Gerald L. Hassell | Alan R. Griffith | Directors ---- - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----