exv10w40






Exhibit 10.40




EXECUTION COPY




AMENDMENT NO. 7

TO

RECEIVABLES SALE AGREEMENT




          THIS AMENDMENT NO. 7 TO RECEIVABLES SALE AGREEMENT (this “Amendment”) dated as of
November 23, 2010, is entered into among CONSUMERS RECEIVABLES FUNDING II, LLC (“Buyer”)
and CONSUMERS ENERGY COMPANY (“Originator”). Capitalized terms used herein without
definition shall have the meanings ascribed thereto in the “Receivables Sale Agreement” referred to
below.




PRELIMINARY STATEMENTS




          A. Reference is made to that certain Receivables Sale Agreement dated as of May 22, 2003
between Buyer and Originator (as amended prior to the date hereof, as amended hereby and as the
same may be further amended, restated, supplemented or modified from time to time, the
“Receivables Sale Agreement”).




          B. The parties hereto have agreed to amend certain provisions of the Receivables Sale
Agreement upon the terms and conditions set forth herein.




          SECTION 1. Amendments. Subject to the satisfaction of the condition precedent set
forth in Section 3 hereof, the parties hereto hereby agree to amend the Receivables Sale
Agreement as follows:





     (a) Paragraph 3 of the preliminary statements is hereby amended and restated in
its entirety as follows:




“Buyer will sell undivided interests in the Receivables and in the
associated Related Security and Collections pursuant to that certain Amended
and Restated Receivables Purchase Agreement dated as of November 23, 2010
(as the same may from time to time be amended, restated, supplemented or
otherwise modified, the “Purchase Agreement”) among Buyer,
Originator, as Servicer, the Conduits party thereto from time to time, the
Financial Institutions party thereto from time to time, the Managing Agents
party thereto from time to time and JPMorgan Chase Bank, N.A. or any
successor agent appointed pursuant to the terms of the Purchase Agreement,
as administrative agent for the Purchasers (in such capacity, the
“Administrative Agent”).”




     (b) Section 1.2(b) is hereby amended to delete the penultimate sentence and
replace it with the following:




“The Subordinated Loans shall be evidenced by, and shall be payable in
accordance with the terms and provisions of the Subordinated Note and shall
be payable solely from funds which Buyer is not required under the Purchase
Agreement to set aside for the benefit of, or otherwise pay over to, the
Administrative Agent, the Managing Agents or the Purchasers.”



 









 






     (c) Section 1.6(b) is hereby amended and restated in its entirety as follows:




“Originator acknowledges that Buyer, pursuant to the Purchase Agreement,
shall assign to the Administrative Agent, for the benefit of the
Administrative Agent, the Managing Agents and the Purchasers thereunder, all
of its rights, remedies, powers and privileges under this Agreement and that
the Administrative Agent may further assign such rights, remedies, powers
and privileges to the extent permitted by the Purchase Agreement. The
Originator agrees that the Administrative Agent, as the assignee of the
Buyer, shall, subject to the terms of the Purchase Agreement, have the right
to enforce this Agreement and to exercise directly all of Buyer’s rights and
remedies under this Agreement (including, without limitation, the right to
give or withhold any consents or approvals of Buyer to be given or withheld
hereunder, and, in any case without regard to whether specific reference is
made to Buyer’s assigns in the provisions of this Agreement which set forth
such rights and remedies) and Originator agrees to cooperate fully with the
Administrative Agent and the Purchasers in the exercise of such rights and
remedies. Originator further agrees to give to the Administrative Agent
copies of all notices it is required to give to Buyer hereunder.”




     (d) Section 4.1(a)(vi) is hereby amended and restated in its entirety as
follows:




“Copies of Notices. Promptly upon its receipt of any notice,
request for consent, financial statements, certification, report or other
communication under or in connection with any Transaction Document from any
Person other than Buyer, the Administrative Agent, any Managing Agent or any
Financial Institution, copies of the same.”




     (e) The last sentence of Section 4.2(d) is hereby amended and restated in its entirety
as follows:




“Originator shall not create or suffer to exist any mortgage, pledge,
security interest, encumbrance, lien, charge or other similar arrangement on
any of its inventory.”




     (f) Section 7.1(b) is hereby amended and restated in its entirety as follows:




“No provision of this Agreement may be amended, supplemented, modified or
waived except in writing signed by Originator and Buyer and consented to by
the Administrative Agent, each Managing Agent and each Financial
Institution.”




     (g) Section 7.4(a) is hereby amended and restated in its entirety as follows:




“Originator shall maintain and shall cause each of its employees and
officers to maintain the confidentiality of this Agreement and the other
confidential proprietary information with respect to the Administrative



2









 







Agent, the Managing Agents and the Purchasers and their respective
businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein, except
that Originator and its officers and employees may disclose such information
to Originator’s external accountants and attorneys and as required by any
applicable law, regulation or order of any judicial or administrative
proceeding (whether or not having the force of law).”




     (h) Section 7.4(c) is hereby amended and restated in its entirety as follows:




“Anything herein to the contrary notwithstanding, Originator hereby consents
to the disclosure of any nonpublic information with respect to it (i) to
Buyer, the Administrative Agent, the Managing Agents, the Financial
Institutions or the Conduits by each other, (ii) by Buyer, the
Administrative Agent, the Managing Agents, the Financial Institutions or the
Conduits to any prospective or actual assignee or participant of any of
them or (iii) by the Administrative Agent, any Managing Agent or any
Conduit to any rating agency (including, without limitation, in compliance
with Rule 17g-5 under the Securities Exchange Act of 1934), Commercial Paper
dealer or provider of a surety, guaranty or credit or liquidity enhancement
to a Conduit or any entity organized for the purpose of purchasing, or
making loans secured by, financial assets for which any Managing Agent acts
as the administrative agent and to any officers, directors, employees,
outside accountants and attorneys of any of the foregoing provided
each such Person is informed of the confidential nature of such information.
In addition, the Purchasers, the Managing Agents and the Administrative
Agent may disclose any such nonpublic information pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or
effect of law).”




     (i) Section 7.5 is hereby amended and restated in its entirety as follows:




“Bankruptcy Petition. Originator and Buyer each hereby covenants
and agrees that, prior to the date that is one year and one day after the
payment in full of all outstanding senior indebtedness of a Conduit, it will
not institute against, or join any other Person in instituting against, such
Conduit 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.”




     (j) Exhibit I is hereby amended to delete the definitions of “Bank Rate,”
“Business Day,” “Conduit,” “Financial Institution” and “Purchasers” and substitute the
following therefor:




““Bank Rate” means a rate per annum equal to the corporate base
rate, prime rate or base rate of interest, as applicable, announced by



3









 







JPMorgan Chase Bank, N.A. from time to time, changing when and as such rate
changes.”




““Business Day” means any day on which banks are not authorized or
required to close in New York, New York, Chicago, Illinois or Los Angeles,
California and The Depository Trust Company of New York is open for
business.”




““Conduit” means a Person identified as a “Conduit” on Schedule A to
the Purchase Agreement and its respective successors and permitted assigns.”




““Financial Institutions” means, as to any Purchaser Group, each of
the financial institutions listed on Schedule A to the Purchase
Agreement as a “Financial Institution” for such Purchaser Group, together
with its respective successors and permitted assigns.”




““Purchasers” means each Conduit and each Financial Institution.”




     (k) Exhibit I is hereby amended to add the following definition in the
appropriate alphabetical order:




““Managing Agent” means, as to any Conduit or Financial Institution,
the Person listed on Schedule A to the Purchase Agreement as the
“Managing Agent” for such Purchasers, together with its respective
successors and permitted assigns.”




     (l) Exhibit III is hereby replaced in its entirety with the Exhibit III
attached hereto.




     (m) Exhibit VI is hereby replaced in its entirety with the Exhibit VI
attached hereto.



          SECTION 2. Representations and Warranties. The Originator hereby represents and
warrants to Buyer and its assigns that:





     (a) this Amendment constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms; and




     (b) on the date hereof, before and after giving effect to this Amendment, no
Termination Event or Potential Termination Event has occurred and is continuing.



          SECTION 3. Conditions Precedent. This Amendment shall become effective on the first
Business Day (the “Effective Date”) on which Buyer and the Administrative Agent or its
counsel has received four (4) counterpart signature pages to this Amendment, executed by each of
the parties hereto.




          SECTION 4. Reference to and Effect on the Transaction Documents.







4









 









     (a) Upon the effectiveness of this Amendment, (i) each reference in the Receivables
Sale Agreement to “this Receivables Sale Agreement”, “this Agreement”, “hereunder”,
“hereof”, “herein” or words of like import shall mean and be a reference to the Receivables
Sale Agreement as amended or otherwise modified hereby, and (ii) each reference to the
Receivables Sale Agreement in any other Transaction Document or any other document,
instrument or agreement executed and/or delivered in connection therewith, shall mean and be
a reference to the Receivables Sale Agreement as amended or otherwise modified hereby.




     (b) Except as specifically amended, terminated or otherwise modified above, the terms
and conditions of the Receivables Sale Agreement, of all other Transaction Documents and any
other documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect and are hereby ratified and confirmed.




     (c) The execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of Buyer or its assigns under the Receivables Sale
Agreement or any other Transaction Document or any other document, instrument or agreement
executed in connection therewith, nor constitute a waiver of any provision contained
therein. Buyer and its assigns hereby expressly reserve all of their rights with respect to
the occurrence of other Termination Events, if any, whether previously existing or
hereinafter arising or which exist at any time on or after the date first written above.



          SECTION 5. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in 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 Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.




          SECTION 6. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.




          SECTION 7. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment for any other
purpose.




[Remainder of Page Deliberately Left Blank]




5









 





          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their
respective officers as of the date first above written.




	 	 	 	 	 
	 	CONSUMERS RECEIVABLES FUNDING II, LLC

 	 
	 	By:  	/s/ Laura L. Mountcastle
 	 
	 	 	Name:  	Laura L. Mountcastle 	 
	 	 	Title:  	President, Chief Executive
Officer, Chief Financial Officer and
Treasurer 	 
	 
	 	CONSUMERS ENERGY COMPANY

 	 
	 	By:  	/s/ Laura L. Mountcastle
 	 
	 	 	Name:  	Laura L. Mountcastle 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 



Signature Page to Amendment No. 7 to RSA






 









 







Consented to by:




	 	 	 	 	 
	JPMORGAN CHASE BANK, N.A., as a Managing

Agent, as a Financial Institution and as

Administrative Agent

 	 	 
	By:  	/s/ Patrick Menichillo
 	 	 
	 	Name:  	Patrick Menichillo 	 	 
	 	Title:  	Vice President 	 	 
	 
	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK
BRANCH, as a Managing Agent

 	 	 
	By:  	/s/ Aditya Reddy
 	 	 
	 	Name:  	Aditya Reddy 	 	 
	 	Title:  	Senior Vice President 	 	 
	 
	UNION BANK, N.A., as a Financial Institution

 	 	 
	By:  	/s/ Jeffrey Fesenmaier
 	 	 
	 	Name:  	Jeffrey Fesenmaier 	 	 
	 	Title:  	Vice President 	 	 
	 



Signature Page to Amendment No. 7 to RSA









 









 








Exhibit III




Lock-boxes; Collection Accounts; Collection Banks; Specified Accounts



JP Morgan Chase Bank

717 Travis, TX2-S084

Houston, TX 77002

Contact: Nina Lacy

Phone: 713-216-2227




	 	 	 

	Collection Account: 1242263;

	 	provided, that, such account shall be a Specified Account on and
after such date as the account is subject to a Collection Account Agreement.






Comerica Bank

500 Woodward Avenue, 9th Floor, MC3268

Detroit, MI 48226

Contact: Stacie McVeigh

Phone: 313-222-4515




	 	 	 

	Collection Account: 1076119914;

	 	provided, that, such account shall be a Specified Account on
and after such date as the account is subject to a Collection Account
Agreement.






Wachovia Bank

10401 Deerwood Park Blvd — FL0117

South Building, 3rd Floor

Jacksonville, FL 32256

Contact: Carol Grant

Phone: 800-590-7868 team 662 ext. 4

Collection Account: 2000032635920




Lock-Box Zip Code:

Lansing, MI 48937-0001




PNC Bank, National Association

620 Liberty Avenue

Pittsburgh, PA 15222

Contact: Gabe Galioto

Phone: 412-768-1819

Specified Account: 4006909862




Fifth Third Bank

710 Seminole Rd MD R17061

Norton Shores, MI 49441

Contact: Randy Wolffis, VP & Relationship Manager

Phone: 231-733-5006

Fax: 231-739-7430

Email: randal.wolffis@53.com; CommercialSupport@53.com

Specified Account: 7164496916




Exh. III-1









 





Exhibit VI




Form of Amended and Restated Subordinated Note

AMENDED AND RESTATED SUBORDINATED NOTE



     November 23, 2010



          1. Note. FOR VALUE RECEIVED, the undersigned, CONSUMERS RECEIVABLES FUNDING II, LLC,
a Delaware limited liability company (“SPV”), hereby unconditionally promises to pay to the
order of CONSUMERS ENERGY COMPANY, a Michigan corporation (“Originator”), in lawful money
of the United States of America and in immediately available funds, on the date following the
Termination Date which is one year and one day after the date on which (i) the Outstanding Balance
of all Receivables sold under the “Sale Agreement” referred to below has been reduced to zero and
(ii) Originator has paid to the Buyer all indemnities, adjustments and other amounts which may be
owed thereunder in connection with the Purchases (the “Collection Date”), the aggregate
unpaid principal sum outstanding of all “Subordinated Loans” made from time to time by Originator
to SPV pursuant to and in accordance with the terms of that certain Receivables Sale Agreement
dated as of May 22, 2003 between Originator and SPV (as amended, restated, supplemented or
otherwise modified from time to time, the “Sale Agreement”). Reference to Section
1.2 of the Sale Agreement is hereby made for a statement of the terms and conditions under
which the loans evidenced hereby have been and will be made. All terms which are capitalized and
used herein and which are not otherwise specifically defined herein shall have the meanings
ascribed to such terms in the Sale Agreement or the Purchase Agreement (as hereinafter defined).




          2. Interest. SPV further promises to pay interest on the outstanding unpaid principal
amount hereof from the date hereof until payment in full hereof at a rate equal to the Bank Rate;
provided, however, that if SPV shall default in the payment of any principal
hereof, SPV promises to pay, on demand, interest at the rate of the Bank Rate plus 2.00% per annum
on any such unpaid amounts, from the date such payment is due to the date of actual payment.
Interest shall be payable on the first Business Day of each month in arrears; provided,
however, that SPV may elect on the date any interest payment is due hereunder to defer such
payment and upon such election the amount of interest due but unpaid on such date shall constitute
principal under this Amended and Restated Subordinated Note (the “Subordinated Note”). The
outstanding principal of any loan made under this Subordinated Note shall be due and payable on the
Collection Date and may be repaid or prepaid at any time without premium or penalty.




          3. Principal Payments. Originator is authorized and directed by SPV to enter on the
grid attached hereto, or, at its option, in its books and records, the date and amount of each loan
made by it which is evidenced by this Subordinated Note and the amount of each payment of principal
made by SPV, and absent manifest error, such entries shall constitute prima facie evidence of the
accuracy of the information so entered; provided that neither the failure of Originator to
make any such entry or any error therein shall expand, limit or affect the obligations of SPV
hereunder.







Exh. VI-1









 








          4. Subordination. The indebtedness evidenced by this Subordinated Note is
subordinated to the prior payment in full of all of SPV’s recourse obligations under that certain
Amended and Restated Receivables Purchase Agreement dated as of November 23, 2010 by and among SPV,
Originator, as Servicer, the entities from time to time party thereto as Conduits, the entities
from time to time party thereto as Financial Institutions, the entities from time to time party
thereto as Managing Agents, and JPMorgan Chase Bank, N.A., as the “Administrative Agent” (as
amended, restated, supplemented or otherwise modified from time to time, the “Purchase
Agreement”). The subordination provisions contained herein are for the direct benefit of, and
may be enforced by, the Administrative Agent, the Managing Agents and the Purchasers and/or any of
their respective assignees (collectively, the “Senior Claimants”) under the Purchase
Agreement. Until the date on which all “Capital” outstanding under the Purchase Agreement has been
repaid in full and all other obligations of SPV and/or the Servicer thereunder and under the “Fee
Letter” referenced therein (all such obligations, collectively, the “Senior Claim”) have
been indefeasibly paid and satisfied in full, Originator shall not demand, accelerate, sue for,
take, receive or accept from SPV, directly or indirectly, in cash or other property or by set-off
or any other manner (including, without limitation, from or by way of collateral) any payment or
security of all or any of the indebtedness under this Subordinated Note or exercise any remedies or
take any action or proceeding to enforce the same; provided, however, that (i)
Originator hereby agrees that it will not institute against SPV any proceeding of the type
described in Section 5.1(d) of the Sale Agreement unless and until the Collection Date has
occurred and (ii) nothing in this paragraph shall restrict SPV from paying, or Originator from
requesting, any payments under this Subordinated Note so long as SPV is not required under the
Purchase Agreement to set aside for the benefit of, or otherwise pay over to, the funds used for
such payments to any of the Senior Claimants and further provided that the making of such payment
would not otherwise violate the terms and provisions of the Purchase Agreement. Should any
payment, distribution or security or proceeds thereof be received by Originator in violation of the
immediately preceding sentence, Originator agrees that such payment shall be segregated, received
and held in trust for the benefit of, and deemed to be the property of, and shall be immediately
paid over and delivered to the Administrative Agent for the benefit of the Senior Claimants.




          5. Bankruptcy; Insolvency. Upon the occurrence of any proceeding of the type
described in Section 5.1(d) of the Sale Agreement involving SPV as debtor, then and in any
such event the Senior Claimants shall receive payment in full of all amounts due or to become due
on or in respect of Capital and the Senior Claim (including “Yield” as defined and as accruing
under the Purchase Agreement after the commencement of any such proceeding, whether or not any or
all of such Yield is an allowable claim in any such proceeding) before Originator is entitled to
receive payment on account of this Subordinated Note, and to that end, any payment or distribution
of assets of SPV of any kind or character, whether in cash, securities or other property, in any
applicable insolvency proceeding, which would otherwise be payable to or deliverable upon or with
respect to any or all indebtedness under this Subordinated Note, is hereby assigned to and shall be
paid or delivered by the Person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the Administrative Agent for
application to, or as collateral for the payment of, the Senior Claim until such Senior Claim shall
have been paid in full and satisfied.







Exh. VI-2









 








          6. Amendments. This Subordinated Note shall not be amended or modified except in
accordance with Section 7.1 of the Sale Agreement. The terms of this Subordinated Note may
not be amended or otherwise modified without the prior written consent of the Administrative Agent
and each Managing Agent.




          7. GOVERNING LAW. THIS SUBORDINATED NOTE SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE
OF NEW YORK. WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED NOTE SHALL BE INTERPRETED IN
SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS
SUBORDINATED NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF
SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS SUBORDINATED NOTE.




          8. Waivers. All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor. Originator additionally
expressly waives all notice of the acceptance by any Senior Claimant of the subordination and other
provisions of this Subordinated Note and expressly waives reliance by any Senior Claimant upon the
subordination and other provisions herein provided.




          9. Assignment. This Subordinated Note may not be assigned, pledged or otherwise
transferred to any party other than Originator without the prior written consent of the
Administrative Agent, and any such attempted transfer shall be void.




          10. Amendment and Restatement. This Subordinated Note amends and restates in full
that certain Subordinated Note dated May 22, 2003 (the “Existing Subordinated Note”) made
by SPV in favor of Originator and evidences all amounts outstanding thereunder as of the date
hereof as well as amounts hereafter incurred as described above, which Existing Subordinated Note
shall, from and after the date hereof, be of no further force and effect. This Subordinated Note
is given in substitution for, and not in payment of, such Existing Subordinated Note, and is not
intended to constitute a novation of the Existing Subordinated Note.




*****




Exh. VI-3









 





     IN WITNESS WHEREOF, SPV has caused this Subordinated Note to be executed on the date first set
forth above.



	 	 	 	 	 
	 	CONSUMERS RECEIVABLES FUNDING II, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 








Exh. VI-4









 








Schedule

to

AMENDED AND RESTATED SUBORDINATED NOTE




SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL



	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	Amount of	 	Unpaid	 	 
	 	 	Subordinated	 	Principal	 	Principal	 	Notation made
	Date	 	Loan	 	Paid	 	Balance	 	by
	 
	 	 	 	 	 	 	 	 






Exh. VI-5