Document:

exv10w1

 

Exhibit 10.1

Execution Copy

 

LOAN AGREEMENT

Between

Michigan Strategic Fund

And

The Detroit Edison Company

$68,500,000

Michigan Strategic Fund

Variable Rate Limited Obligation Revenue Bonds

(The Detroit Edison Company Exempt Facilities Project),

Series 2006CT

 

Dated as of

December 1, 2006

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	PARTIES
	 	 	1	 
	RECITALS:
	 	 	1	 
	ARTICLE I DEFINITIONS AND INTERPRETATIONS
	 	 	1	 
	Section 1.1. Definitions
	 	 	1	 
	Section 1.2. Interpretations
	 	 	2	 
	ARTICLE II USE OF PROCEEDS
	 	 	3	 
	Section 2.1. Project Fund
	 	 	3	 
	Section 2.2 Investment of Bond Fund and Project Fund; Non-Arbitrage Covenant
	 	 	3	 
	ARTICLE III ISSUANCE OF THE BONDS; LOAN; DISPOSITION OF LOAN PROCEEDS
	 	 	3	 
	Section 3.1. Issuance of the Bonds
	 	 	3	 
	Section 3.2. Loan
	 	 	4	 
	Section 3.3 Procurement of Municipal Bond Insurance Policy
	 	 	4	 
	ARTICLE IV COMPANY OBLIGATIONS, LOAN PAYMENTS AND OTHER PECUNIARY OBLIGATIONS
	 	 	4	 
	Section 4.1. Company Approval of Issuance of Bonds
	 	 	4	 
	Section 4.2. Refunding of Bonds
	 	 	4	 
	Section 4.3. Redemption of Bonds
	 	 	4	 
	Section 4.4. Loan Payments
	 	 	5	 
	Section 4.5. Purchase Price Payments of the Company
	 	 	7	 
	Section 4.6. Administrative Expenses
	 	 	7	 
	Section 4.7. Payment of Other Costs of Issuer
	 	 	7	 
	Section 4.8. Obligations of the Company Absolute and Unconditional
	 	 	7	 
	Section 4.9. Option to Prepay Amounts Under Agreement in Whole in Certain Events
	 	 	8	 
	Section 4.10. Company’s Performance Under Indenture
	 	 	8	 
	Section 4.11 Credit Facility
	 	 	8	 
	ARTICLE V OTHER MATTERS REGARDING THE PROJECT
	 	 	10	 
	Section 5.1. Modifications of Project
	 	 	10	 
	Section 5.2. Issuer Relieved From Responsibility With Respect to Project
	 	 	10	 
	Section 5.3. Casualty and Condemnation
	 	 	10	 
	Section 5.4. Access to Project and Records
	 	 	10	 
	ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER
	 	 	10	 
	Section 6.1. Representations and Warranties of the Issuer
	 	 	10	 
	Section 6.2. Covenants of the Issuer
	 	 	12	 
	ARTICLE VII INDEMNIFICATION; REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
	 	 	13	 
	Section 7.1. Indemnification of Issuer and Indemnified Persons
	 	 	13	 
	Section 7.2. Filing and Recording
	 	 	14	 

-i-

 

	 	 	 	 	 
	 	 	Page
	Section 7.3. Removal of Liens
	 	 	14	 
	Section 7.4. Federal Income Tax Exemption
	 	 	14	 
	Section 7.5. Company Representations and Covenants
	 	 	17	 
	Section 7.6. Maintenance of Corporate Existence
	 	 	18	 
	Section 7.7. Financial Information
	 	 	18	 
	Section 7.8. Agreement of Issuer Not to Assign or Pledge
	 	 	19	 
	Section 7.9. Reference to Bonds Ineffective After Bonds Paid
	 	 	19	 
	Section 7.10. Assignments or Lease of Project
	 	 	19	 
	Section 7.11. Amendment of Agreement or Indenture
	 	 	19	 
	Section 7.12. Indemnification of the Trustee, the Paying Agent and the Registrar
	 	 	19	 
	ARTICLE VIII ASSIGNMENT
	 	 	20	 
	Section 8.1. Assignment by the Company
	 	 	20	 
	Section 8.2. Issuer’s Rights of Assignment
	 	 	20	 
	ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
	 	 	20	 
	Section 9.1. Trustee and Remedies
	 	 	20	 
	Section 9.2. Annulment of Acceleration
	 	 	21	 
	Section 9.3. Agreement to Pay Attorneys’ Fees and Expenses
	 	 	22	 
	Section 9.4. General Enforcement Provisions
	 	 	22	 
	ARTICLE X GENERAL PROVISIONS
	 	 	22	 
	Section 10.1. Force Majeure
	 	 	22	 
	Section 10.2. Third Party Beneficiaries
	 	 	23	 
	Section 10.3. Notices; Communications
	 	 	23	 
	Section 10.4. Amendments, Governing Law, Etc
	 	 	24	 
	Section 10.5. Severability
	 	 	24	 
	Section 10.6. Term of Agreement
	 	 	24	 
	Section 10.7. Company’s Approval of Bond Documents
	 	 	24	 
	Section 10.8. Counterparts
	 	 	24	 
	Section 10.9. Captions
	 	 	24	 
	Section 10.10. Payments on Non-Business Days
	 	 	24	 

-ii-

 

Loan Agreement

between

Michigan Strategic Fund

and

The Detroit Edison Company

     THIS LOAN AGREEMENT, dated as of December 1, 2006, is made and entered into between MICHIGAN
STRATEGIC FUND, a public body corporate and politic of the State of Michigan (the “Issuer”), and
THE DETROIT EDISON COMPANY, a Michigan corporation (the “Company”).

R E C I T A L S:

     The Issuer is authorized and empowered under the Michigan Strategic Fund Act, which is Act No.
270, Public Acts of Michigan, 1984, as amended (the “Act”), to issue bonds for the purpose of
paying all or part of the cost of the construction, acquisition, improvement and installation of
solid waste disposal facilities of the Company, and to enter into loan agreements for the purpose
of providing funds sufficient to pay the principal of, and premium, if any, and interest on, such
bonds; and

     The Issuer proposes to issue and sell bonds and to lend the proceeds thereof to the Company to
be used to finance the Project, all in accordance with the Bond Resolution adopted by the governing
body of the Issuer on November 15, 2006.

     NOW, THEREFORE, the parties hereto, intending to be legally bound hereby and in consideration
of the premises, DO HEREBY AGREE as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

     Section 1.1. Definitions. Capitalized terms used in this Agreement, including the
recitals hereto, which are defined in the Indenture and not defined in this Agreement have the same
meanings which are assigned to such terms in the Indenture (as defined below). The following terms
have the meanings assigned to them below whenever they are used in this Agreement. Except where
the context otherwise requires, words imparting the singular number shall include the plural number
and vice versa. Reference to any Bond Document means that Bond Document as amended or supplemented
from time to time. Reference to any party in a Bond Document means that party and its successors
and assigns.

     “Act” means the Michigan Strategic Fund Act, Act No. 270, Public Acts of Michigan, 1984, as
amended.

     “Agreement” means this Loan Agreement.

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     “Costs of Issuance” means any items of expense directly or indirectly payable or reimbursable
by the Company and directly or indirectly attributable to the authorization, sale and issuance of
the Bonds, including, but not limited to: printing costs; costs of preparation and reproduction of
documents; initial fees and charges of the Trustee, the Registrar and the Paying Agent; legal fees
and charges, if any; underwriting discount or fees paid to the Underwriter in connection with the
initial offering and sale of the Bonds; the Issuer fees and direct out-of-pocket expenses incurred
in issuing and paying the Bonds and loaning the proceeds of the Bonds to the Company; municipal
bond insurance premiums; fees and disbursements of Bond Counsel and other attorneys’ fees; and
costs of credit ratings.

     “Event of Default” means an Event of Default as defined in Section 9.1(b) of this Agreement.

     “Force Majeure” means acts of God, strikes, lockouts or other industrial disturbances, acts of
the public enemy, orders of any kind of the government of the United States of America, or of any
state thereof, or any civil or military authority, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fires, hurricanes, tornadoes, storms, floods, washouts, droughts, arrests,
restraining of government and people, civil disturbances, explosions, nuclear accidents, wars,
breakage or accidents to machinery, transmission pipes or canals, partial or entire failure of
utilities or energy suppliers, shortages of labor, material, supplies or transportation, or any
other cause not reasonably within the control of the party claiming the inability to perform.

     “Indemnified Persons” means the Issuer or any of its officers, members, employees, agents, and
any other Person acting for or on behalf of the Issuer.

     “Indenture” means that certain Trust Indenture, dated as of the date of this Agreement,
between the Issuer and the Trustee, pursuant to which the Bonds are issued.

     “Loan Payments” means the payments to be made by the Company pursuant to Section 4.4 of this
Agreement.

     “Organizational Documents” means as to the Company, its Articles of Incorporation as filed
with the Secretary of State of the State of Michigan, and its Bylaws in effect on the date of this
Agreement.

     “Project” means the construction, acquisition, improvement and installation of certain solid
waste disposal facilities at the Plant.

     “Project Costs” means costs incurred with respect to the construction, acquisition and
installation of the Project, including interest on the Bonds paid during or attributable to the
period of construction of the Project.

     “State” means the State of Michigan.

     Section 1.2. Interpretations. The table of contents and article and section headings
of this Agreement are for reference purposes only and shall not affect its interpretation in any
respect.

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ARTICLE II

USE OF PROCEEDS

     Section 2.1. Project Fund. The Issuer has authorized the issuance and sale of the
Bonds in the aggregate principal amount of $68,500,000. Upon issuance and delivery thereof, the
net proceeds of the Bonds shall be delivered by the Issuer to the Company for deposit to the
Project Fund established on the books of the Company in accordance with Section 6.01 of the
Indenture. The Company shall withdraw amounts on deposit in the Project Fund from time to time to
pay Project Costs and Costs of Issuance of the Bonds.

     The obligations of the Issuer and the Company under this Agreement are expressly conditioned
upon delivery of the Bonds and receipt of the proceeds thereof.

     Section 2.2 Investment of Bond Fund and Project Fund; Non-Arbitrage Covenant. Any
moneys held as part of the Project Fund shall be invested or reinvested by the Company in
accordance with Section 6.01 of the Indenture. Any moneys held as part of the Bond Fund shall be
invested, reinvested or applied by the Trustee in accordance with and subject to the conditions of
Article VII of the Indenture. The Company and the Issuer shall make no use of the proceeds of the
Bonds, or any funds which may be deemed to be proceeds of the Bonds pursuant to Section 148 of the
Code and the applicable regulations thereunder, which would cause the Bonds to be “arbitrage bonds”
within the meaning of such Section and such regulations, and the Company shall comply with the
requirements of such Section and such regulations while any Bonds remain Outstanding.

     In order to ensure that interest on the Bonds is not and will not become subject to federal
income taxes as a result of failure of the Bonds to satisfy Section 103(b) of the Code, the Company
covenants with the Issuer and the Trustee that it will, on or before the date of issuance of the
Bonds, supply to the Issuer and the Trustee all information required under Internal Revenue Service
Form 8038, Information Return for Private Activity Bond Issues.

ARTICLE III

ISSUANCE OF THE BONDS;

LOAN; DISPOSITION OF LOAN PROCEEDS

     Section 3.1. Issuance of the Bonds. The Issuer agrees that immediately following the
delivery of this Agreement it will execute and deliver the Indenture and issue, sell and deliver
the Bonds to the Underwriter. The Bonds shall be limited obligations of the Issuer and shall be
payable by the Issuer solely out of the Revenues derived from or in connection with the Bond
Documents. The Bonds shall never be payable out of any other funds of the Issuer or the State.

     The Company agrees to pay, promptly following demand therefor, all Costs of Issuance paid,
incurred or charged by the Issuer, the Trustee, the Paying Agent, the Remarketing Agent, the
Auction Agent and the Registrar, including without limitation all fees required to be paid to
the Issuer by the Company, and all out-of-pocket expenses and costs of issuance reasonably
incurred by the Issuer, the Trustee, the Paying Agent, the Remarketing Agent, the Auction Agent and
the Registrar in connection with the issuance and remarketing of the Bonds.

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     Section 3.2. Loan. Concurrently with the delivery of the Bonds, the Issuer will, upon
the terms and subject to the conditions of this Agreement, lend to the Company an amount equal to
the aggregate principal amount of the Bonds, by deposit of the proceeds thereof to the Project Fund
in accordance with the Indenture for application to Project Costs and Costs of Issuance of the
Bonds.

     Section 3.3 Procurement of Municipal Bond Insurance Policy. The Company, at no cost
to the Issuer, shall procure the Municipal Bond Insurance Policy so that it is in full force and
effect concurrent with the delivery of the Bonds by the Issuer to secure the payment of the
principal of and interest on the Bonds.

ARTICLE IV

COMPANY OBLIGATIONS, LOAN PAYMENTS

AND OTHER PECUNIARY OBLIGATIONS

     Section 4.1. Company Approval of Issuance of Bonds. Simultaneously with the
authorization of this Agreement by the governing body of the Issuer, the governing body of the
Issuer has adopted the Bond Resolution and authorized the execution of the Indenture. The Company
hereby approves the Bond Resolution and the Indenture. It is hereby agreed that the foregoing
approval of the Bond Resolution and the Indenture constitutes the acknowledgement and agreement of
the Company that the Bonds, when issued, sold and delivered as provided in the Bond Resolution and
the Indenture, will be issued in accordance with and in compliance with this Agreement,
notwithstanding any other provisions of this Agreement or any other contract or agreement to the
contrary. Any Owner is entitled to rely fully and unconditionally on the foregoing approval.
Notwithstanding any provisions of this Agreement or any other contract or agreement to the
contrary, the Company’s approval of the Bond Resolution and the Indenture shall be the Company’s
agreement that all pledges, covenants and provisions in this Agreement and the Indenture affecting
the Company shall, upon the delivery of the Bonds and the Indenture, become unconditional, valid
and binding pledges, covenants and obligations of the Company so long as the Bonds and the interest
thereon are outstanding and unpaid. Particularly, the obligation of the Company to pay, promptly
when due, all Loan Payments specified in this Agreement and the Indenture shall be absolute and
unconditional, and said obligation may be enforced as provided in this Agreement and the Indenture.

     Section 4.2. Refunding of Bonds. After the issuance of any Bonds, the Issuer shall
not refund any of the Bonds or change or modify the Bonds in any way, except as provided for in the
Indenture, without the prior written approval of an Authorized Company Representative; nor shall
the Issuer redeem any Bonds prior to the Maturity Date except upon the written request of an
Authorized Company Representative, unless such redemption is required by the Indenture.

     Section 4.3. Redemption of Bonds. The Issuer, upon the written request of the Company
(and provided that the affected Bonds are subject to redemption prior to maturity at
the option of the Issuer, or the Company, and provided that such request is received in
sufficient time prior to the date upon which such redemption is proposed), promptly shall take or
cause to be taken all action that may be necessary under the applicable redemption provisions to
effect such redemption prior to maturity, to the full extent of funds either made available for such
purpose by the Company or already on deposit in the Bond Fund and available for such purpose. The
redemption of any Outstanding Bonds prior to maturity at any time shall not relieve the

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Company of
its absolute and unconditional obligation to pay each remaining Loan Payment, with respect to any
Outstanding Bonds, as specified in the Indenture. If a redemption of Bonds is required pursuant to
the provisions of the Indenture, the Company agrees as provided herein to promptly make Loan
Payments sufficient to pay the principal of, premium, if any, and interest on the Bonds due on such
redemption date.

     Section 4.4. Loan Payments. (a) To repay the loan, the Company hereby covenants and
agrees to make the Loan Payments, as hereinafter provided in subsections (b), (c), (f) and (h) of
this Section 4.4, to the Trustee, or the Paying Agent for the account of the Trustee, on behalf of
the Issuer in accordance with this Agreement.

     (b) The Company shall make Loan Payments, subject to the limitations of subsection (e) below
of this Section 4.4, in immediately available funds directly to the Trustee or the Paying Agent for
deposit in the Bond Fund on or before each day on which any payment of principal of, premium, if
any, or interest on the Bonds shall become due (whether at maturity or upon redemption or
acceleration or otherwise) in an amount which, together with other money held by the Trustee under
the Indenture and available therefor, will enable the Trustee to make such payment in full when due
in accordance with the Indenture.

     (c) In the event the Company should fail to make any of the Loan Payments required in this
Section, the Loan Payment so in default shall continue as an obligation of the Company until the
amount in default shall have been fully paid, and the Company agrees to pay the same with interest
thereon at the rate then borne by the Bonds, to the extent permitted by law and subject to the
provisions of subsection (e) below, from the date when such payment was due as provided in the
Indenture.

     (d) If, subsequent to or on a date on which the Company is obligated to pay the Loan Payments
(subject to provisions of Article VIII of the Indenture), losses (net of gains) shall be incurred
in respect of any investments, or any other event has occurred causing the money in the Bond Fund,
together with any other money then held by the Trustee and available for the purpose of the Bond
Fund, to be less than the amount sufficient at the time of such occurrence or other event to pay,
in accordance with the provisions of the Indenture, all amounts due and payable or to become due
and payable, the Trustee shall notify the Company of such fact and thereafter the Company, as and
when required for purposes of such Bond Fund, shall pay in immediately available funds to the
Trustee for deposit in the Bond Fund the amount of any such reduction below such sufficient amount.

     (e) Notwithstanding any provision of the Bond Documents to the contrary, in no event
(including without limitation the acceleration of maturity of the Bonds or the redemption of the
Bonds pursuant to the Bond Documents) shall the amount of interest contracted for, charged,
received, reserved or taken in connection with the loan made hereunder (together with any other
costs or considerations that constitute interest under applicable law which are
contracted for, charged, received, reserved or taken pursuant to the Bond Documents)
(collectively, “Interest”) exceed the amount of interest which could have been contracted for,
charged, reserved, received or taken at the Maximum Interest Rate. This provision shall be held to
operate to deny the Owners the right, in any event, to collect usury.

5

 

     (f) The Company further agrees that in the event payment of the principal of and the interest
on the Bonds is accelerated upon the occurrence of an Event of Default under the Indenture, all
amounts payable under Section 4.4(b) for the remainder of the term hereof (other than interest not
yet due) shall be immediately due and payable.

     (g) Any amount held in the Bond Fund on any payment date specified in subsection (b) above
shall be credited against the Loan Payments required to be made by the Company on such date.

     (h) The Company shall be obligated to prepay in whole or in part the amounts payable hereunder
upon a Determination of Taxability (as defined below) giving rise to a mandatory redemption of the
Bonds pursuant to Section 4.03 of the Indenture, by paying an amount equal to, when added to other
funds on deposit in the Bond Fund, the aggregate principal amount of the Bonds to be redeemed
pursuant to the Indenture plus accrued interest to the redemption date.

     (i) The Company shall cause a mandatory redemption to occur within 180 days after a
Determination of Taxability (as defined below) shall have occurred. A “Determination of
Taxability” shall be deemed to have occurred if, as a result of the failure of the Company to
observe any covenant, agreement or representation in this Agreement, an opinion of Bond Counsel
obtained by the Company, or a final decree or judgment of any federal court or a final action of
the Internal Revenue Service determines that interest paid or payable on any Bond is or will be
includible in the gross income of an Owner of the Bonds for federal income tax purposes under the
Code (other than an Owner who is a “substantial user” or “related person” within the meaning of
Section 147(a) of the Code). However, no such decree or action will be considered final for this
purpose unless the Company has been given written notice of the same, either directly or in the
name of any Owner of a Bond, and, if it so desires and is legally allowed, has been afforded the
opportunity to contest the same, either directly or in the name of any Owner of a Bond, and until
conclusion of any appellate review, if sought. If the Trustee receives written notice from the
Issuer or any Owner of a Bond stating (a) that the Issuer or the Owner has been notified in writing
by the Internal Revenue Service that it proposes to include the interest on any Bond in the gross
income of such Owner for the reasons described therein or any other proceeding has been instituted
against the Issuer or such Owner which may lead to a final decree or action as described herein,
and (b) that the Issuer or such Owner will afford the Company the opportunity to contest the same,
either directly or in the name of the Issuer or the Owner, until a conclusion of any appellate
review, if sought, then the Trustee shall promptly give notice thereof to the Company, the Issuer,
the Provider, if any, and the Owner of each Bond then Outstanding. If a final decree or action as
described above thereafter occurs and the Trustee has received written notice thereof, the Trustee
promptly shall request prepayment from the Company of the amounts payable hereunder and give notice
of the redemption of the Bonds at the earliest practical date, but not later than the date
specified in this Article, and in the manner provided by Section 4.05 of the Indenture.

     At the time of any such prepayment of the amounts payable hereunder pursuant to this Section,
the prepayment amount shall be applied, together with other available moneys in the Bond Fund, to
the redemption of the Bonds on the date specified in the notice as provided in the Indenture,
whether or not such date is an Interest Payment Date, to the Trustee’s fees and

6

 

expenses under the
Indenture accrued to such redemption of the Bonds, and to all sums due to the Issuer under this
Agreement.

     Notwithstanding any provision herein or in the Insurance Agreement to the contrary, no
payments of principal of or interest on the Bonds shall be due or paid by the Company hereunder to
the extent that such amounts have been paid by or on behalf of the Municipal Bond Insurer pursuant
to the Municipal Bond Insurance Policy and applied by the Trustee for such payment in accordance
with the Indenture and the Company has provided sufficient funds for reimbursement to the Municipal
Bond Insurer under the Insurance Agreement for such payment.

     Whenever any notice of prepayment of the amounts payable hereunder pursuant to this Article IV
has been given, which includes a notice for redemption of the Bonds pursuant to the Indenture, all
amounts payable under the first paragraph of this Section 4.4(i) shall become due and payable on
the date fixed for redemption of such Bonds.

     Section 4.5. Purchase Price Payments of the Company. (a) In addition to the amounts
payable by the Company under Section 4.4, on or prior to each date on which the Paying Agent is
required to disburse the purchase price for any Bond tendered or deemed tendered in accordance with
Article III of the Indenture, the Company will pay or cause to be paid, as necessary, by the time
and in the manner specified in the Indenture, to the extent remarketing proceeds are unavailable
therefor, the purchase price of bonds tendered to the Paying Agent (as agent for the Owners)
pursuant to Article III of the Indenture, in lawful money of the United States of America (as
required by the Indenture), which will be held in trust for the benefit of the tendering Owners or
Owners that are deemed to have been tendered in an amount which, together with any amounts
available to the Paying Agent for said purpose, will be sufficient to pay the purchase price for
all Bonds which are to be purchased on such date.

     (b) The Issuer shall have no obligation, financial or otherwise, with respect to payment of
the purchase price of any Bonds required to be purchased pursuant to the Indenture, or for
arrangements therefor, except that the Issuer shall generally cooperate with the Company, the
Trustee, the Paying Agent and the Remarketing Agent, as contemplated in the Indenture.

     Section 4.6. Administrative Expenses. The Company shall pay, or cause to be paid, an
amount equal to (i) the reasonable fees and charges of the Trustee for services rendered as Trustee
under the Indenture and its reasonable expenses incurred as Trustee under the Indenture, including
reasonable fees of its counsel, and (ii) the reasonable fees and charges of the Paying Agent and
Registrar and the reasonable expenses incurred by the Paying Agent and the Registrar as and when
the same become due, including the reasonable fees of their respective counsel.

     Section 4.7. Payment of Other Costs of Issuer. The Company shall pay to the Issuer,
upon receipt of statements therefor from time to time, such amounts as are necessary to pay or
reimburse the Issuer for its reasonable and necessary expenses and costs attributable to
the Bonds and the Project. In addition, on or prior to the Closing Date, the Company shall,
as a condition to receiving the loan from the Issuer pursuant to Section 3.2 hereof, pay to the
Issuer an issuance fee in the amount of $98,125.00.

     Section 4.8. Obligations of the Company Absolute and Unconditional. The obligations
of the Company to make the payments required in Sections 3.1, 4.4, 4.5, 4.6, 4.7, 7.1 and 9.3 and

7

 

to perform and observe the other agreements on its part contained herein shall be absolute and
unconditional and shall not be subject to diminution by set-off, counterclaim, abatement or
otherwise. Until payment of all principal of, premium, if any, and interest on the Bonds, and
payment in full of the purchase price of any Bonds purchased pursuant to the Indenture, and payment
of all other amounts payable by the Company hereunder, the Company (a) will not suspend or
discontinue any payments provided for in this Agreement, except to the extent the same have been
prepaid, (b) will perform and observe all its other agreements contained herein, and (c) except as
provided in Section 7.6, will not terminate this Agreement for any cause, including, without
limiting the generality of the foregoing, any acts or circumstances that may constitute failure of
consideration, sale, loss, eviction or constructive eviction, destruction of or damage to the
Project, commercial frustration of purpose, any change in the tax or other laws of the United
States of America or of the State or any political subdivision of either, or any failure of the
Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or in connection herewith or with the Indenture. Nothing contained in
this Section shall be construed to release the Issuer from the performance of any of the agreements
on its part herein contained and in the event the Issuer shall fail to perform any such agreement
on its part, the Company may take such action as the Company may deem necessary to perform or
compel performance, provided that no such action shall violate the agreements on the part of the
Company contained in this Agreement or postpone or diminish the amounts required to be paid by the
Company pursuant to this Agreement. Upon the issuance and delivery of the Bonds to the initial
purchasers thereof, the Company shall have received, and the Issuer shall have given, full and
complete consideration for the Company’s obligation hereunder to make Loan Payments.

     Section 4.9. Option to Prepay Amounts Under Agreement in Whole in Certain Events. The
Company shall have, and is hereby granted, the option to prepay the amounts required to be paid by
the Company under Section 4.4 in whole and to direct the Trustee to redeem the Bonds in whole if
any of the events described in the Indenture permitting such redemption shall have occurred. The
Company may at any time deliver money, and/or Government Obligations to the Trustee with
instructions to the Trustee to hold such money and Government Obligations pursuant to Article VIII
of the Indenture in connection with a discharge of the Indenture.

     The Issuer agrees that, at the request at any time of the Company, it will cooperate with the
Company to cause the Bonds or any portion thereof to be redeemed to the extent permitted by the
Indenture.

     Section 4.10. Company’s Performance Under Indenture. The Company agrees, for the
benefit of the Owners, to do and perform all acts and things contemplated in the Indenture to be
done or performed by it and to not interfere with the exercise of the power and authority granted
to the Trustee in the Indenture. The Company further agrees to aid in
furnishing to the Issuer or the Trustee any documents, certificates or opinions that may be
required under the Indenture.

     Section 4.11 Credit Facility. (a) Initially, there shall be no Credit Facility. The
Company, after receiving the written consent of the Municipal Bond Insurer (unless a Municipal Bond
Insurer Default shall have occurred and be continuing), may at any time provide for a Change of
Credit Facility, provided that the Company delivers to the Trustee, the Auction Agent, the
Municipal Bond Insurer and the Remarketing Agent, not less than five Business Days prior to the
date on which the Trustee must notify the Owners of a Change of Credit Facility pursuant to

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Section 2.18 of the Indenture and prior to the effective date of any such Change of Credit Facility, the
following:

     (1) a notice which (A) states the effective date of the delivery of the Credit Facility
or the date of the Change of Credit Facility, (B) describes the terms of the Change of
Credit Facility, and (C) directs the Trustee to give notice pursuant to Section 2.18(a) of
the Indenture;

     (2) a Favorable Opinion of Bond Counsel with respect to such Change of Credit Facility
and stating, in effect, that such Change of Credit Facility is authorized under this
Agreement;

     (3) a certificate of an Authorized Company Representative as to whether the Bonds are
then rated by either Moody’s or S&P, or both; and

     (4) written evidence from Moody’s, if the Bonds are then rated by Moody’s, and from
S&P, if the Bonds are then rated by S&P, in each case to the effect that such rating agency
has reviewed the proposed Change of Credit Facility and that such Change of Credit Facility
will not, by itself, result in a reduction, suspension or withdrawal of its rating or
ratings of the Bonds.

     (b) In lieu of satisfying the requirements of subsection (a) above, the Company, after
receiving the written consent of the Municipal Bond Insurer (unless a Municipal Bond Insurer
Default shall have occurred and be continuing), may provide for a Change of Credit Facility at any
time that the Bonds are subject to optional redemption pursuant to Section 4.02(b) of the
Indenture, provided that the Company delivers to the Trustee, the Municipal Bond Insurer, the
Auction Agent and the Remarketing Agent not less than 30 days before the effective date of the
Change of Credit Facility:

     (1) a notice which (A) states the effective date of the Change of Credit Facility, (B)
describes the terms of the Change of Credit Facility, (C) directs the Trustee to give notice
pursuant to Section 2.18(b) of the Indenture that the Bonds are subject to mandatory
purchase, in whole, on or before the effective date of the Change of Credit Facility in
accordance with Section 3.02(a)(iii) of the Indenture, and (D) directs the Trustee to take
any other action as shall be necessary for the Trustee to take to effect the Change of
Credit Facility; and

     (2) on or before the effective date of the Change of Credit Facility, the Company shall
furnish to the Trustee a Favorable Opinion of Bond Counsel satisfying the requirements of
Section 4.11(a)(2) above.

     (c) The Company, after receiving the written consent of the Municipal Bond Insurer (unless a
Municipal Bond Insurer Default shall have occurred and be continuing), may provide for one or more
extensions of a Credit Facility for any period commencing after its then-current expiration date
without complying with the foregoing provisions of this Section.

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     (d) The Company may rescind its election to make a Change of Credit Facility at any time prior
to the effective date thereof.

ARTICLE V

OTHER MATTERS REGARDING THE PROJECT

     Section 5.1. Modifications of Project. The Company shall have the right, except as
otherwise provided in the Bond Documents, to remodel or alter the Project, make substitutions,
additions and improvements thereto and abandon or remove any part thereof, all as the Company, in
its discretion, may deem to be desirable, which remodeling, substitutions, modifications and
improvements shall be included under the terms hereunder as part of the Project; provided, however,
that such modifications do not impair (a) the qualification of the Project as a “project” within
the meaning of the Act or (b) the exclusion from gross income for federal income tax purposes of
the interest on the Bonds.

     Section 5.2. Issuer Relieved From Responsibility With Respect to Project. The Company
and the Issuer hereby expressly acknowledge and agree that the Issuer is under no responsibility to
insure, maintain, operate or repair the Project or to pay taxes with respect thereto, and the
Company expressly relieves the Issuer from any such responsibility.

     Section 5.3. Casualty and Condemnation. The occurrence of a casualty to or
condemnation of the Project or any portion thereof shall not entitle the Company to any abatement,
postponement or reduction in the amount of the Loan Payments or other amounts payable under this
Agreement, and the Company hereby waives, to the extent permitted by law, the benefits and
provisions of all laws and rights which, by reason of such casualty or condemnation, might relieve
the Company from any of such obligations.

     Section 5.4. Access to Project and Records. The Issuer, the Trustee and the Municipal
Bond Insurer (unless a Municipal Bond Insurer Default shall have occurred and be continuing), shall
be entitled, upon reasonable notice and during regular business hours and, subject further to the
Company’s safety and confidentiality requirements, to examine the books, records and premises of
the Company concerning the Project or the Bonds, personally or by agent or attorney.

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ARTICLE VI

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER

     Section 6.1. Representations and Warranties of the Issuer. The Issuer represents and
warrants that:

     (a) The Issuer is a public body corporate and politic of the State of Michigan duly
created under the Act.

     (b) The Issuer has full power and authority under the Act and the Constitution and laws
of the State to adopt the Bond Resolution, to issue the Bonds, to execute and deliver the
Bond Documents to be executed and delivered by it and to perform its obligations under the
Bond Documents.

     (c) The Issuer has duly adopted the Bond Resolution, and has duly authorized the
execution and delivery of the Bond Documents to be executed and delivered by it. All action
required on the part of the Issuer for the authorization of the issuance of the Bonds and
the execution and delivery of the Bond Documents to be executed and delivered by it has been
duly and effectively taken.

     (d) The Bond Documents to which the Issuer is a party constitute valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance with their terms
(except that (i) the enforceability of such Bond Documents may be limited by bankruptcy,
reorganization, insolvency, moratorium or other similar laws of general application relating
to the enforcement of creditors’ rights, (ii) certain equitable remedies, including specific
performance, may be unavailable and (iii) the indemnification provisions, if any, contained
therein may be limited by applicable securities laws and public policy).

     (e) All filings with, or approvals or consents of, governmental authorities (other than
approvals or consents required under the Blue Sky or other securities laws of any
jurisdiction) required to be made or obtained by the Issuer for (i) the valid adoption of
the Bond Resolution, (ii) the valid authorization, execution and delivery by the Issuer of
the Bond Documents to which it is a party and (iii) the valid issuance of the Bonds, have
been, or prior to the issuance of the Bonds, will be, duly made or obtained.

     (f) There is no pending action, suit, proceeding or investigation at law or in equity
before or by any court, either state or federal, or public board or body served upon the
Issuer or, to the Issuer’s knowledge, threatened, calling into question the creation or
existence of the Issuer, the validity of the Bond Resolution and the Bond Documents to be
executed and delivered by it, the authority of the Issuer to execute and deliver the Bond
Documents to be executed and delivered by it and to perform its obligations under the Bond
Documents, or the title of any person to the office held by that person with the Issuer.

     (g) The execution and delivery by the Issuer of the Bond Documents to be executed and
delivered by it, and the performance of its obligations under the Bond

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Resolution and the Bond Documents, will not violate any provision of law or regulation,
or of any judgment, decree, writ, order or injunction, and will not contravene the
provisions of, or constitute a default under, or result in the creation of a lien, charge or
encumbrance under, any agreement (other than the Indenture) to which the Issuer is a party
or by which any of its properties constituting a part of the Trust Estate are bound.

     (h) No event has occurred, and no condition currently exists, which constitutes or may,
with the passage of time or the giving of notice, or both, constitute an Event of Default on
the part of the Issuer.

     (i) Neither this Agreement nor the Loan Payments have been pledged or hypothecated in
any manner or for any purpose other than as provided in the Indenture as security for the
payment of the Bonds.

     (j) All of the proceedings approving this Agreement and the Indenture were conducted by
the Issuer at meetings which complied with the Open Meetings Act, 1976 PA 267.

     Each of the foregoing representations and warranties shall be deemed to have been made as of
the date of delivery of the Bonds.

     THE ISSUER MAKES NO EXPRESS OR IMPLIED WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT TO THE
PROJECT, INCLUDING, BUT NOT LIMITED TO: THE MERCHANTABILITY THEREOF OR THE FITNESS THEREOF FOR ANY
PARTICULAR PURPOSES; THE DESIGN OR CONDITION THEREOF; THE WORKMANSHIP, QUALITY OR CAPACITY THEREOF;
COMPLIANCE THEREOF WITH THE REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING
THERETO; PATENT INFRINGEMENT; LATENT DEFECTS; OR THAT THE PROCEEDS DERIVED FROM THE SALE OF THE
BONDS WILL BE SUFFICIENT TO PAY IN FULL FOR ALL COSTS OF THE PROJECT WHICH MAY BE INCURRED.

     Section 6.2. Covenants of the Issuer. The Issuer covenants and agrees that:

     (a) The Issuer will faithfully perform all of its obligations under the Bond Documents.

     (b) The Issuer will not knowingly take any action, which action will adversely affect
the exclusion from gross income for federal income tax purposes of interest on the Bonds.

     (c) To the extent that it is within its power to do so, the Issuer will maintain the
validity and effectiveness of the Bond Documents, and of the Issuer’s pledge and assignment
to the Trustee thereunder, and (except as expressly permitted by such Bond Documents) will
not take any action, the taking of which will release the Company from its obligations under
such Bond Documents or result in the surrender, termination or modification (except as
permitted by the Bond Documents) of, or impair the validity of, such Bond Documents.

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     (d) The Issuer will observe the covenants made by it in the Indenture; it will use its
best efforts to cause the Company to have and exercise all the rights, powers and benefits
stated to be in the Company in this Agreement and the Indenture; and so long as no Event of
Default exists, it will not join in the modification of the Bond Documents in any manner
without the prior written consent of the Company and the Trustee.

ARTICLE VII

INDEMNIFICATION; REPRESENTATIONS, WARRANTIES

AND COVENANTS OF THE COMPANY

     Section 7.1. Indemnification of Issuer and Indemnified Persons.

     (a) The Issuer and the Indemnified Persons shall not be liable to the Company for any reason.
The Company shall indemnify and hold the Issuer and the Indemnified Persons harmless from any loss,
expense (including reasonable counsel fees), or liability of any nature due to any and all suits,
actions, legal or administrative proceedings, or claims arising or resulting from, or in any way
connected with:

	 	(i)	 	the financing, installation, operation, use, or maintenance of the Project,
	 
	 	(ii)	 	any act, failure to act, or misrepresentation by any person, firm,
corporation or governmental agency, including the Issuer, in connection with
the issuance, sale, delivery or remarketing of the Bonds, or
	 
	 	(iii)	 	any act, failure to act, or misrepresentation by the Issuer in
connection with this Agreement, the other Bond Documents or any other document
involving the Issuer in this matter.

If any suit, action or proceeding is brought against the Issuer or any Indemnified Person with
respect to which the Issuer or such Indemnified Person is entitled to indemnification hereunder,
that action or proceeding shall be defended by counsel to the Issuer or the Company, as the Issuer
shall determine. If the defense is by counsel to the Issuer, which is the Attorney General of the
State of Michigan or may, in some instances, be private, retained counsel, the Company shall
indemnify the Issuer and the Indemnified Persons for the reasonable cost of that defense including
reasonable counsel fees. If the Issuer determines that the Company shall defend the Issuer or
Indemnified Person, the Company shall immediately assume the defense at its own cost. The Company
shall not be liable for any settlement of any proceeding made without its prior written consent
(which consent shall not be unreasonably withheld).

     (b) The Company shall not be obligated to indemnify the Issuer or any Indemnified Person under
subsection (a), if a court of competent jurisdiction finds that the liability in question was
caused by the willful misconduct or sole gross negligence of the Issuer or the involved Indemnified
Person, unless the court determines that, despite the adjudication of liability but in view of all
circumstances of the case, the Issuer or the Indemnified Person(s) is (are) fairly and reasonably
entitled to indemnity for the expenses which the court considers proper.

     (c) The Company shall also indemnify the Issuer for all reasonable costs and expenses,
including reasonable counsel fees, incurred in:

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	 	(i)	 	enforcing any obligation of the Company under this Agreement, the other
Bond Documents or any related agreement,
	 
	 	(ii)	 	taking any action requested by the Company,
	 
	 	(iii)	 	taking any action required by this Agreement, the other Bond Documents
or any related agreement, or
	 
	 	(iv)	 	taking any action considered necessary by the Issuer and which is
authorized by this Agreement, the other Bond Documents or any related
agreement.

     (d) The obligations of the Company under this section shall survive any assignment or
termination of this Agreement.

     Section 7.2. Filing and Recording. The Company covenants that if required by statute:
(i) from time to time, it will cause any Bond Document and each amendment and supplement thereto
(or a memorandum with respect thereto or to such amendment or supplement) to be filed, registered
and recorded and to be refiled, reregistered and rerecorded in such manner and in such places as
may be required in order to publish notice of and fully to protect the liens, if any, or to perfect
or continue the perfection of the security interests, if any, created thereby and (ii) it shall
perform or cause to be performed from time to time any other act as required by law, and it will
execute or cause to be executed any and all instruments of further assurance that may be necessary
for such publication, perfection, continuation and protection.

     Section 7.3. Removal of Liens. If any lien, encumbrance or charge of any kind based
on any claim of any kind (including, without limitation, any claim for income, franchise or other
taxes, whether federal, state or otherwise) shall be asserted or filed against the Trust Estate, or
any amount paid or payable by the Company under or pursuant to this Agreement or any order (whether
or not valid) of any court shall be entered with respect to the Trust Estate, or any such amount by
virtue of any claim of any kind, in either case so as to:

     (a) interfere with the due payment of such amount to the Trustee or the due application
of such amount by the Trustee pursuant to the applicable provisions of the Indenture,

     (b) subject the Owners to any obligation to refund any money applied to payment of
principal of, and premium, if any, and interest on, the Bonds, or

     (c) result in the refusal of the Trustee to make such due application because of its
reasonable determination that liability might be incurred if such due application were to be
made,

then the Company will promptly take such action (including, but not limited to, the payment of
money) as may be necessary to prevent, or to nullify the cause or result of, such interference,
obligation or refusal, as the case may be.

     Section 7.4. Federal Income Tax Exemption. The Company covenants to take such action
to assure and to refrain from any action which would adversely affect
the treatment of the

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Bonds as obligations described in Section 103 of the Code, the interest on
which is not includable in the “gross income” of the holder (other than the income for a
“substantial user” of the Project or a “related person” within the meaning of Section 147(a) of the
Code) for purposes of federal income taxation. In particular, but not by way of limitation
thereof, the Company hereby covenants and represents as follows:

     (a) The Company will make such use of the proceeds of the Bonds and all other funds
held by the Trustee under the Indenture or otherwise allocable to the Bonds, restrict the
investment of such proceeds and other funds, and take such other and further action as may
be required so that the Bonds will not constitute “arbitrage bonds” under Section 148 of the
Code and the Treasury Regulations.

     (b) No portion of the proceeds of the Bonds will be used to provide the following:
airplanes, skyboxes or other private luxury boxes, any health club facility, any facility
primarily used for gambling or any store the principal business of which is the sale of
alcoholic beverages for consumption off premises. (Code § 147(e) provides that interest on
any obligation issued as part of an issue will not be excluded from gross income for federal
income tax purposes if any portion of the proceeds of such issue is to be used to provide
any airplane, skybox or other private luxury box, any health club facility, any facility
primarily used for gambling or any store the principal business of which is the sale of
alcoholic beverages for consumption off premises).

     (c) Less than 25% of the Bond proceeds are to be used directly or indirectly for the
acquisition of land used for other than farming purposes, and no portion of the Bond
proceeds is to be used, directly or indirectly, for the acquisition of land used for farming
purposes (Code §§ 144(a)(11) and 147(c) provide that interest with respect to any obligation
issued as part of an issue will not be excluded from gross income for federal income tax
purposes if any portion of the proceeds of such issue is to be used (directly or indirectly)
for the acquisition of land (or an interest therein) to be used for farming purposes, or 25%
or more of the proceeds of such issue is to be used (directly or indirectly) for the
acquisition of land not used for farming purposes).

     (d) No portion of the Bond proceeds will be used for the acquisition of any property
(or an interest therein) the first use of which property is not pursuant to such acquisition
unless the rehabilitation requirements of Code § 147(d)(2) are met with respect to the
Project. (Code § 147(d) provides that interest with respect to any obligation issued as
part of an issue will not be excluded from gross income for federal income tax purposes if
any portion of the proceeds of such issue is to be used for the acquisition of any property
(or an interest therein) unless the first use of such property is pursuant to such
acquisition, or unless certain rehabilitation requirements are met).

     (e) Except as is permitted by Code § 149(b), the Bonds are not federally guaranteed
within the meaning of those provisions. (Code § 149(b) provides that interest on an
obligation will not be excluded from gross income for federal income tax purposes if such
obligation is federally guaranteed as provided therein).

     (f) The reasonably expected economic life of the Project financed with the proceeds of
the Bonds is not less than thirty years.

15

 

     (g) Substantially all (i.e. 95%) of the proceeds of the Bonds will be used to finance
“solid waste disposal facilities” within the meaning of Section 142(a)(6) of the Code. The
Company will comply fully during the term of this Agreement with all effective rules,
rulings or regulations promulgated by the Department of the Treasury or the Internal Revenue
Service, with respect to obligations substantially all of the proceeds of which are to be
used to provide “solid waste disposal facilities”, the interest on which is exempt from
federal income taxation including, but not limited to, future regulations regarding the
Bonds.

     (h) The Company hereby certifies that all or a major portion of the proceeds of the
Bonds will be used directly or indirectly in the trade or business of the Company, and the
payment of the principal of or interest on the Bonds, under the terms of the Bonds, is, in
whole or in major part, secured by an interest in property used or to be used in the trade
or business of the Company or in payments in respect of such property, or to be derived from
payments in respect of property, or borrowed money, used or to be used in the trade or
business of the Company.

     (i) In accordance with Section 147(b) of the Code, the average maturity of the Bonds
does not exceed 120% of the average reasonably expected economic life of the facilities
being financed by the Bonds.

     (j) The Company covenants and represents that it has not taken, or permitted to be
taken on its behalf, or failed to take and agrees that it will not take, or permit to be
taken on its behalf, or fail to take any action which, if taken or omitted to be taken,
would adversely affect the exclusion from gross income for federal income tax purposes of
the interest paid on the Bonds and that it will take, or require to be taken, such acts as
may from time to time be required under applicable law or regulation to preserve the
exclusion from gross income for federal income tax purposes of the interest on the Bonds,
except to the extent that the Bonds are held by a substantial user of the Project or a
related person thereto as those terms are used in Section 147 of the Code. In furtherance
of the foregoing, the Company also agrees on behalf of the Issuer to comply with all
arbitrage rebate requirements and procedures as may become applicable to the Bonds.

     (k) Other than the Bonds, there are no other Tax-Exempt obligations issued for the
benefit of the Company or any “related person” which were or are to be sold (a) within 15
days of the Closing Date, (b) pursuant to the same plan of financing as the Bonds, and (c)
payable from the same source of funds as the Bonds.

     (l) The Company agrees to follow the remedial action requirements of Treas. Reg. §
1.142-2 or any successor regulation with respect to any actions which cause the Bonds not to
meet the requirements of Section 142(a)(6) of the Code (such Section requires that
substantially all of the proceeds of the obligations qualifying thereunder must be used for
solid waste disposal facilities). Any proceeds received upon the sale or other disposition
of any of the property which is included in the Project or constitutes property financed
with the proceeds of the Bonds will be invested at a yield not greater than the yield on the
Bonds, as defined in Exhibit A to the Tax Certificate of the Company, and used as required
by Treas. Reg. § 1.142-2, unless in the opinion of Bond

16

 

Counsel some other use of such proceeds will not impair the exclusion from gross income
of the interest on the Bonds.

     Section 7.5. Company Representations and Covenants.

     (a) The Company represents and warrants: (i) that it has no present intention of
disposing of or abandoning the Project nor of directing the Project to a use other than the
purposes represented to the Issuer; (ii) that it intends to cause the Project to be operated
as a “project” as defined in Section 4(f) of the Act; (iii) that the Project is in
furtherance of the public purposes of the Act, to wit: the promotion and development of
industrial and manufacturing enterprises to promote and encourage employment and the public
welfare; and (iv) that it has all necessary licenses and permits to operate the Project, and
that the Project has been approved by all necessary governmental bodies or agencies having
jurisdiction.

     (b) The Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of and is qualified to do business in the State of Michigan,
with full corporate power to own its properties and conduct its business and has full legal
right, power and authority to enter into this Agreement and any other Bond Documents to
which it is a party and to carry out and consummate all transactions contemplated by this
Agreement and any other Bond Documents to which it is a party.

     (c) The execution and delivery of this Agreement and any other Bond Documents to which
it is a party and the consummation of the transactions herein contemplated will not conflict
with or constitute on the part of the Company a breach of or default under the
Organizational Documents, and do not and will not constitute on the part of the Company a
breach or a default under any material indenture, mortgage, deed of trust, lease, note
agreement or other agreement or instrument to which the Company is a party or by which it or
its properties are bound, or any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its activities or
properties.

     (d) This Agreement or any other Bond Documents to which it is a party have been duly
authorized, executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their terms, (except that
(i) the enforceability of this Agreement and such other Bond Documents may be limited by
bankruptcy, reorganization, insolvency, moratorium or other similar laws of general
application relating to the enforcement of creditors’ rights, (ii) certain equitable
remedies, including specific performance, may be unavailable and (iii) the indemnification
provisions contained therein may be limited by applicable securities laws and public
policy).

     (e) Neither the Company nor any of its business or properties, nor any relationship
between the Company and any other person, nor any circumstances in connection with the
execution, delivery and performance by the Company of this Agreement or the offer, issue,
sale or delivery by the Issuer of the Bonds, is such as to require the consent, approval or
authorization of, or the filing, registration or qualification with, any governmental
authority on the part of the Company, other than those already

17

 

obtained as of the Issue Date; provided, however, no representation is made herein as
to compliance with the securities or “blue sky” laws of any jurisdiction.

     (f) No event has occurred and no condition exists with respect to the Company that
would constitute an Event of Default or which, with the lapse of time or by giving of notice
or both, would become an Event of Default.

     (g) The Project is for the purpose of constructing, acquiring, improving and installing
solid waste disposal facilities at the Plant.

     (h) The Project will not have the effect of transferring employment from one
municipality of the State of Michigan to another except for any transfer of employment
consented to by any municipality from which that employment is transferred.

     (i) The Company agrees, that at the time of the delivery of the Bonds, in accordance
with the provisions of Rule 15c2-12 (the “Rule”) promulgated by the Securities and Exchange
Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, it will provide or
cause to be provided to each nationally recognized municipal securities information
repository (“NRMSIR”) and to the appropriate state information repository, if any, for the
State of Michigan (“SID”), in each case as designated by the SEC in accordance with the
Rule, the information required to be periodically disclosed pursuant to such Rule. Failure
by the Company to comply with the continuing disclosure undertaking shall not constitute a
default or an Event of Default under this Agreement or the Indenture.

     Section 7.6. Maintenance of Corporate Existence. The Company agrees that during the
term of this Agreement it will maintain its corporate existence, will not dissolve or otherwise
dispose of all or substantially all of its assets and will not consolidate with or merge into
another corporation; provided, however, that the Company may, without violating the agreement
contained in this Section, consolidate with or merge into another corporation, or sell or otherwise
transfer to another corporation all or substantially all of its assets as an entirety and
thereafter dissolve, if the surviving, resulting or transferee corporation, as the case may be,
assumes in a writing delivered to the Trustee all of the obligations of the Company herein and is
duly qualified to do business in the State.

     Section 7.7. Financial Information. The Company agrees to furnish to the Issuer and
the Municipal Bond Insurer (unless a Municipal Bond Insurer Default shall have occurred and be
continuing), at either of their written request, a copy of the Company’s most recent annual report
to its stockholders and to furnish the Trustee, the Paying Agent, the Municipal Bond Insurer
(unless a Municipal Bond Insurer Default shall have occurred and be continuing) or the Issuer a
copy of the Company’s most recent Form 10-K Annual Reports and Form 10-Q Quarterly Reports filed
with the United States Securities and Exchange Commission. The Form 10-K Annual Reports and Form
10-Q Quarterly Reports required to be delivered pursuant to this Section 7.7 shall be deemed to
have been delivered on the date on which the Company has posted such information on the Company’s
website on the Internet at www.dteenergy.com (or any successor or replacement website thereof) or
at www.sec.gov or at another website identified in a notice to the Trustee, the Paying Agent, the
Municipal Bond Insurer and the Issuer and accessible by them without charge.

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     Section 7.8. Agreement of Issuer Not to Assign or Pledge. Except for the assignment
and pledge described in the Indenture, the Issuer agrees that it will not attempt to further
assign, pledge, transfer or convey its interest in or create any assignment, pledge, lien, charge
or encumbrance of any form or nature with respect to the rights and interests therein described.

     Section 7.9. Reference to Bonds Ineffective After Bonds Paid. Upon payment of all
principal of, premium, if any, and interest due and owing on the Bonds, payment in full of the
purchase price of Bonds required to be purchased pursuant to the Indenture, and payment of all fees
and charges of the Issuer, the Trustee, the Registrar and the Paying Agent, all references herein
to the Bonds and the Trustee shall be ineffective and neither the Issuer, the Trustee nor the
holders of any of the Bonds shall thereafter have any rights hereunder and the Company shall have
no further obligation hereunder, saving and excepting those that shall have theretofore vested and
any right of the Issuer or the Trustee to indemnification under Section 7.1 or 7.12 and payment of
fees under Section 9.3, which right shall survive the payment of all principal of, premium if any,
and interest on the Bonds and the termination of this Agreement. Reference is hereby made to
Article VIII of the Indenture.

     Section 7.10. Assignments or Lease of Project. Subject to the provisions of Section
7.4 and Section 7.6, the Company may assign its interest in this Agreement and may sell or lease
the Project, in whole or in part, without the prior written consent of the Trustee or the Issuer;
provided that no assignment, lease or sale shall relieve the Company of primary liability for the
Loan Payments due hereunder and of the performance of all other obligations required hereunder, and
that the Company delivers to the Trustee and to the Municipal Bond Insurer (unless a Municipal Bond
Insurer Default shall have occurred and be continuing), within thirty (30) days after the date of
execution and delivery thereof, a copy of such assignment, sales agreement or lease.

     Section 7.11. Amendment of Agreement or Indenture. No amendment, change, addition to,
or waiver of any of the provisions of this Agreement or the Indenture shall be binding upon the
parties hereto unless in writing signed by the Authorized Company Representative and a member of
the Issuer or other officer authorized by the governing body of the Issuer and such amendment,
change, addition to or waiver has been consented to in writing by the Municipal Bond Insurer
(unless a Municipal Bond Insurer Default shall have occurred and be continuing) which consent shall
not be unreasonably withheld.

     Notwithstanding any of the foregoing, it is covenanted and agreed, for the benefit of the
Owners and the Trustee, that (without the concurrence of all of the Owners and the Trustee) the
provisions of this Agreement shall not be amended, changed, added to or waived in any way which
would relieve or abrogate the obligations of the Company to make or pay, or cause to be made or
paid, when due, all Loan Payments and purchase price payments with respect to any then Outstanding
Bonds in the manner and under the terms and conditions provided herein and the Bond Resolution or
the Indenture, or which would materially change or affect Sections 4.4 through 4.8, 7.1, 7.4, 7.6
and 9.3.

     Section 7.12. Indemnification of the Trustee, the Paying Agent and the Registrar. The
Company shall compensate, reimburse for expenses and indemnify and
hold harmless the Trustee, the Paying Agent and the Registrar to the extent and in the manner provided by
the Indenture.

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ARTICLE VIII

ASSIGNMENT

     Section 8.1. Assignment by the Company. The Company may transfer or assign this
Agreement or transfer or assign any or all of its rights and delegate any or all of its duties
hereunder without the necessity of obtaining the consent of the Issuer, the Trustee, the Provider,
if any, the Municipal Bond Insurer or the Owners of the Bonds, but no such transfer, assignment or
delegation shall relieve the Company or any successor Company of its liability for the payment of
the Loan Payments or for the payment of any other amounts to be paid by it under this Agreement and
for the full observance and performance of all of the covenants and conditions to be observed and
performed by it which are contained in this Agreement, unless the Company has received the express
prior written consent of the Issuer, the Municipal Bond Insurer (unless a Municipal Bond Insurer
Default shall have occurred and be continuing), the Provider, if any (unless a Provider Default
shall have occurred and be continuing), and of the Owners of not less than 60% in the aggregate
principal amount of the Bonds then Outstanding.

     Section 8.2. Issuer’s Rights of Assignment. The Issuer may, only in accordance with
the Indenture, assign this Agreement and the Loan Payments thereunder and pledge the moneys
receivable hereunder to the Trustee as security for payment of principal of, and premium, if any,
and interest on, the Bonds. The Company hereby assents to such assignment and agrees that the
Trustee may exercise and enforce in accordance with the Indenture any of such rights of the Issuer
under this Agreement. Any such assignment, however, shall be subject to all of the rights and
privileges of the Company as provided in this Agreement.

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES

     Section 9.1. Trustee and Remedies. (a) The Company is advised and recognizes that the
Issuer will assign all of its right, title, and interest in and to all of the Loan Payments
required to be made pursuant to this Agreement, and the right to receive and collect same, to the
Trustee under the Indenture. All rights of the Issuer against the Company arising under this
Agreement, the Bond Resolution or the Indenture may be enforced by the Issuer; or such rights may
be enforced by the Trustee, or the Owners of the Bonds, to the extent provided in the Indenture,
without making the Issuer a party.

     (b) The following shall be “Events of Default” under this Agreement, and the term “Events of
Default” shall mean, whenever used in this Agreement, any one or more of the following events:

     (i) Failure by the Company to pay the Loan Payments in the amounts and at the times
provided in this Agreement.

     (ii) Any misrepresentation or breach of a warranty made by the Company in the Agreement
which impairs the exclusion of interest on the Bonds or any portion thereof from gross
income for federal income tax purposes.

     (iii) Failure by the Company to perform any obligation or observe any condition on its
part to be performed or observed pursuant to this Agreement for a period

20

 

of 90 days after
receipt of written notice specifying such failure and requesting that it be remedied, given
to the Company by the Issuer, the Municipal Bond Insurer (unless a Municipal Bond Insurer
Default shall have occurred and be continuing) or the Trustee; provided, however, that if
said failure shall be such that it cannot be corrected within such period, it shall not
constitute an Event of Default if the failure, in the judgment of the Trustee in reliance
upon advice of counsel, is correctable without material adverse effect on the Bonds and if
corrective action is instituted by the Company within such period and diligently pursued
until corrected.

     (iv) The dissolution or liquidation of the Company except as permitted under this
Agreement; or failure by the Company promptly to lift any execution, garnishment or
attachment of such consequence as will impair its ability to carry out its obligations under
this Agreement; or if the Company becomes insolvent or bankrupt, or makes an assignment for
the benefit of creditors or consents to the appointment of a trustee or receiver for the
Company or for the greater part of its properties; or a trustee or receiver is appointed for
the Company or for the greater part of its properties without its consent and is not
discharged within 90 days; or bankruptcy, reorganization or liquidation proceedings are
commenced by or against the Company, and if commenced against the Company are consented to
by it or remain undismissed for 90 days; or if an order for relief is entered against the
Company in a bankruptcy or similar proceeding and remains undismissed for 90 days.

     (v) The occurrence and continuance of an Event of Default under the Indenture.

     (c) Upon the occurrence of an Event of Default, the Trustee shall have the power to proceed
with any right or remedy granted by the Constitution and laws of the State, as it may deem best,
including any suit, action or special proceeding in equity or at law, including mandamus
proceedings, for the specific performance of any agreement, obligation or covenant contained herein
or for the enforcement of any proper legal or equitable remedy as the Trustee shall deem most
effectual to protect the rights of the Owners; provided, however, any such proceedings shall be
subject to the provisions of Section 15.14 of the Indenture relating to Force Majeure. Upon the
occurrence of an Event of Default under the Indenture pursuant to the terms of which the Trustee
shall have declared the Bonds immediately due and payable, then all payments required to be made by
the Company under Section 4.4(b) (other than interest not yet accrued) shall become immediately due
and payable, as directed by the Municipal Bond Insurer (unless a Municipal Bond Insurer Default
shall have occurred and be continuing).

     (d) Any amounts collected pursuant to actions taken under this Section 9.1 shall be paid into
the Bond Fund and applied in accordance with the provisions of the Indenture.

     Section 9.2. Annulment of Acceleration. If, in compliance with the requirements of
Section 9.02 of the Indenture, the Trustee shall annul an acceleration declared due to any Event of
Default under the Indenture such annulment shall be deemed to also rescind any acceleration of all
payments required under Section 4.4. In case of any such annulment, or in case any proceeding
taken by the Trustee on account of any such Event of Default shall have
been discontinued or abandoned or determined adversely, then and in every such case the
Issuer, the Company, the Trustee and the Owners shall be restored to their former positions and
rights

21

 

hereunder, but no such annulment shall extend to any subsequent or other Event of Default or
impair any right consequent thereon.

     Section 9.3. Agreement to Pay Attorneys’ Fees and Expenses. In the event the Company
should default under any of the provisions of this Agreement and the Issuer or the Trustee should
employ attorneys or incur other expenses for the collection of payments required hereunder or the
enforcement of performance or observance of any obligation or agreement on the part of the Company
herein contained, the Company agrees that it will upon demand therefor pay to the Issuer or the
Trustee the reasonable fees of such attorneys and such other reasonable expenses so incurred by the
Issuer or the Trustee.

     Section 9.4. General Enforcement Provisions. (a) The terms of this Agreement may be
enforced as to one or more breaches either separately or cumulatively.

     (b) No remedy conferred upon or reserved to the Issuer, the Trustee, or the Owners of the
Bonds in this Agreement is intended to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and shall be in addition to every other remedy now
or hereafter existing at law or in equity or by statute. No delay or omission to exercise any
right or power accruing upon any default, omission, or failure of performance hereunder shall
impair any such right or power or shall be construed to be a waiver thereof, but any such right and
power may be exercised from time to time and as often as may be deemed expedient. In the event any
provision contained in this Agreement should be breached by the Company and thereafter duly waived,
such waiver shall be limited to the particular breach so waived and shall not be deemed to waive
any other breach of this Agreement. No waiver by any party of any breach by any other party of any
of the provisions of this Agreement shall be construed as a waiver of any subsequent breach,
whether of the same or of a different provision of this Agreement.

ARTICLE X

GENERAL PROVISIONS

     Section 10.1. Force Majeure. If, by reason of Force Majeure, either the Issuer or the
Company shall be rendered unable wholly or in part to carry out its obligations under this
Agreement, and if such party gives notice and full particulars of such Force Majeure in writing to
the other party within a reasonable time after failure to carry out its obligations under this
Agreement, such obligations (other than the obligations of the Company specified in the last
sentence of this Section) of the party giving such notice, so far as they are affected by such
Force Majeure, shall be suspended during the continuance of the inability then claimed, including a
reasonable time for removal of the effect thereof. The requirement that any Force Majeure shall be
reasonably beyond the control of the party shall be deemed to be fulfilled even though any existing
or impending strike, lockout or other industrial disturbance may not be settled but could have been
settled by acceding to the demand of the opposing person or persons. The occurrence of any Force
Majeure shall not suspend or otherwise abate, and the Company shall not be relieved from, the
obligation to pay the Loan Payments and to pay any other payments required to be made by it under
this Agreement at the times required.

     Section 10.2. Third Party Beneficiaries. This Agreement is entered into in part to
induce the purchase of the Bonds, and accordingly, so long as any Bonds are Outstanding, all

22

 

respective covenants and agreements of the parties herein contained are hereby declared to be for
the benefit of any and all Owners and may be enforced by or on behalf of the Owners only by the
Trustee in accordance with the provisions of the Indenture. This Agreement shall not be deemed to
create any right of subrogation or otherwise in any person who is not a party hereto (other than
the permitted successors and assigns of a party) and shall not be construed in any respect to be a
contract in whole or in part for the benefit of any third party (other than the permitted
successors or assigns of a party hereto), except in each case the Owners, the Trustee, the
Municipal Bond Insurer and the Indemnified Persons.

     Section 10.3. Notices; Communications. All notices, approvals, consents, requests
and other communications hereunder shall be in writing and shall be deemed to have been given when
delivered or mailed by first class registered or certified mail, return receipt requested, or
overnight mail, postage prepaid, and addressed as follows:

     (a) If to the Issuer:

Michigan Strategic Fund

300 N. Washington Square, 3rd Floor

Lansing, MI 48909

Attention: President

     (b) If to the Company:

The Detroit Edison Company

2000 Second Avenue

2429 WCB

Detroit, Michigan 48226

Attention: Vice President and Treasurer

     (c) If to the Trustee, Registrar or the Paying Agent:

The Bank of New York Trust Company, N.A.

719 Griswold Street, Suite 930

Detroit, Michigan 48226

Attention: Corporate and Municipal Trust Services

     A duplicate copy of each notice, approval, consent, request or other communication given
hereunder by the Issuer, the Company, the Trustee, the Registrar or the Paying Agent to any one of
the others shall also be given to all of the others. The Issuer, the Company, the Trustee, the
Registrar and the Paying Agent may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, approvals, consents, requests or other communications shall
be sent or persons to whose attention the same shall be directed.

     Section 10.4. Amendments, Governing Law, Etc. This Agreement (a) may be modified or
amended only as provided in the Indenture and in Section 7.11 hereof; and (b) shall be governed in
all respects including validity, interpretation and effect by, and shall be
enforceable in accordance with, the laws of the United States of America and the State. The
parties agree that, in accordance with the Act and subject to the limitations of Section 4.4(e),
they will amend

23

 

this Agreement to increase the payments to be made by the Company hereunder if for
any reason such payments, if made, are not sufficient to pay the principal of, and premium, if any,
and interest on, the Bonds as the same become due.

     Section 10.5. Severability. In the event that any clause or provision of this
Agreement shall be held to be invalid by any court of competent jurisdiction, the invalidity of
such clause or provision shall not affect any of the remaining provisions of this Agreement.

     Section 10.6. Term of Agreement. This Agreement shall remain in full force and effect
from the date of execution and delivery hereof until the Indenture has been discharged in
accordance with the provisions thereof; provided, however, that the provisions of Sections 4.6, 7.1
and 7.12 of this Agreement shall survive any expiration or termination of this Agreement.

     Section 10.7. Company’s Approval of Bond Documents. The Bond Documents have been
submitted to the Company for examination, and the Company acknowledges that, by execution of this
Agreement, it has approved the Bond Documents and will perform the obligations imposed upon it
thereunder.

     Section 10.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

     Section 10.9. Captions. The captions and headings herein are for convenience only and
in no way define, limit or describe the scope or intent of any provisions hereof.

     Section 10.10. Payments on Non-Business Days. If any payment required hereunder is
due on a date not a Business Day, payment shall be made on the next succeeding Business Day with
the same force and effect as if made on the date fixed for such payment, and no interest shall
accrue on such amount for the period after such date.

[the rest of this page intentionally left blank]

24

 

     IN WITNESS WHEREOF, the Issuer and the Company have signed this Agreement by their duly
authorized representatives as of the date set forth above.

	 	 	 	 	 	 	 
	 	 	MICHIGAN STRATEGIC FUND	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Diane Cranmer	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Diane Cranmer	 	 
	 

	 	 	 	Its Authorized Officer	 	 
	 
	 	 	 	 	 	 
	 	 	THE DETROIT EDISON COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Paul Stadnikia	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Paul Stadnikia	 	 
	 

	 	 	 	Its Assistant Treasurer	 	 

25<PAGE>

                                                                EXHIBIT NO. 10.1

(AP SERVICES LLC LOGO)                     Detroit   New York   Chicago   Dallas

December 7, 2006

Board of Directors
Tecumseh Products Company
100 E. Patterson Street
Tecumseh, MI 49286

Re: Interim Management, Financial Advisory and Consulting Services

Gentlemen:

This letter, together with the attached Schedule(s), Exhibit and General Terms
and Conditions, sets forth the agreement ("Agreement") between AP Services, LLC,
a Michigan limited liability company ("APS"), and Tecumseh Products Company (the
"Company"), for the engagement of APS to provide interim management, financial
advisory and consulting services to the Company.

This Agreement replaces in its entirety the engagement letters between APS and
the Company dated July 20, 2005 and AlixPartners, LLC, now known as
AlixPartners, LLP a Delaware limited liability partnership ("AlixPartners") and
the Company dated July 20, 2005 (collectively the "Engagement Letters"). The
Company confirms that the Objectives and Tasks under the Engagement Letters were
satisfactorily completed as of the date hereof.

All defined terms shall have the meanings ascribed to them in this letter and in
the attached Schedule(s), Exhibit and General Terms and Conditions.

                              OBJECTIVES AND TASKS

Jim Bonsall will be designated "President of the Engine & Transmission Group,"
reporting to the Company's Chief Executive Officer. In addition, Bob Busch will
be designated as "Vice President-Finance Engine & Transmission Group," reporting
to Jim Bonsall. APS may provide additional resources including a Plant Manager
of New Holstein Operations and up to three consultants to work with the
Company's Engine Group on its sourcing project. James Bonsall, as well as all
APS personnel regardless of designation or title will be deemed to be temporary
employees ("Temporary Staff") of the Company.

Working collaboratively with the senior management team, the Board of Directors
and other Company professionals, Mr. Bonsall will assist the Company in
evaluating and implementing strategic and tactical options for performance
improvement. In addition, the Temporary Staff (as defined below) will work with
the Company and its team to do the following:

    2000 Town Center | Suite 2400 | Southfield, MI | 48075 | 248.358.4420 |
                    248.358.1969 fax | www.alixpartners.com

<PAGE>

(AP SERVICES LLC LOGO)

Board of Directors of Tecumseh Products Company
December 7, 2006
Page 2

-    Perform functions typically assigned to the President, Vice
     President-Finance and Plant Manager.

-    Provide consultation to the President and the Engine procurement group
     related to the sourcing of product previously or currently manufactured in
     New Holstein.

-    Assist with such other matters as may be requested that fall within APS'
     expertise and that are mutually agreeable.

                                    STAFFING

APS will provide the Company with the individuals set forth on Exhibit A subject
to the terms and conditions of this Agreement, with titles, pay rates and other
descriptions set forth therein.

The Temporary Staff may be assisted by or replaced by other professionals at
various levels, as required, who shall also become Temporary Staff. APS will
keep the Company informed as to APS' staffing and will not add additional
Temporary Staff to the assignment without first consulting with the Company to
obtain Company concurrence that such additional resources are required.

                          SETTLEMENT OF PRIOR ACCOUNTS

In satisfaction of all sums due AlixPartners LLC under the July 20, 2005
engagement letter, the Company and APS agree that $4,176,000 is still owed.

The Company agrees to pay $4,176,000 to AlixPartners on the following schedule:

Payment of $338,000 on December 7, 2006 and $338,000 on December 22, 2006

     -    Payment of $250,000 twice a month (the 15th and last day of each
          month) beginning January 15, 2007 through July 31, 2007. The total of
          such payments being $3,500,000.

     -    If payments are made in arrears of the above schedule and such
          arrearage is 20 days, the Company agrees to pay AlixPartners a one
          time additional fee of $5,000,000.

                            TIMING, FEES AND RETAINER

APS commenced this engagement on December 1, 2006. Please return a copy of the
Agreement executed by the Company accompanied by the Retainer, as set forth on
Schedule 1.

<PAGE>

(AP SERVICES LLC LOGO)

Board of Directors of Tecumseh Products Company
December 7, 2006
Page 3

The Company shall compensate APS for its services, and reimburse APS
for expenses, as set forth on Schedule 1.

                                      * * *

The terms and conditions set out in the attached Schedule(s), Exhibit and the
General Terms and Conditions form part of the Agreement and are incorporated by
reference herein.

If these terms meet with your approval, please sign and return the enclosed copy
of the Agreement and wire transfer the amount to increase the Retainer.

We look forward to our continuing relationship with you.

Sincerely yours,

AP SERVICES, LLC

/s/ James J. Bonsall
-------------------------------------
James J. Bonsall
Managing Director

Acknowledged and Agreed to:

TECUMSEH PRODUCTS COMPANY

By: /s/ Todd W. Herrick
    ---------------------------------
Its: CEO
Dated: 12/8/06

Acknowledged and Agreed to with respect to the Settlement of Accounts:

ALIXPARTNERS, LLP

By: /s/ James J. Bonsall
    ---------------------------------
Its: Managing Director
Dated: 12/8/06

<PAGE>

(AP SERVICES LLC LOGO)

                                AP SERVICES, LLC
                     EMPLOYMENT BY TECUMSEH PRODUCTS COMPANY

                                    EXHIBIT A

                               TEMPORARY EMPLOYEES
                  INDIVIDUALS WITH EXECUTIVE OFFICER POSITIONS

<TABLE>
<CAPTION>
                                                                            COMMITMENT
      NAME                     DESCRIPTION              HOURLY RATE   FULL(1) OR PART(2)TIME
-----------------   ---------------------------------   -----------   ----------------------
<S>                 <C>                                 <C>           <C>
James Bonsall       President - Engine &                2006-$670              Full
                    Transmission Group                  2007-$700
</TABLE>

                         ADDITIONAL TEMPORARY EMPLOYEES

<TABLE>
<CAPTION>
                                                                            COMMITMENT
      NAME                     DESCRIPTION              HOURLY RATE   FULL(1) OR PART(2)TIME
-----------------   ---------------------------------   -----------   ----------------------
<S>                 <C>                                 <C>           <C>
Robert Busch        Vice President - Finance Engine &   2006-$550              Full
                    Transmission Group                  2007-$565

Fred Zorn           Plant Manager - New Holstein        2006-$450              Full
                    Operations                          2007-$470

Bob Sullivan        Director APS                        2006-$525              Full
                                                        2007-$550

Parmesh Bhaskaran   Vice President APS                  2006-$495              Full
                                                        2007-$520

Steve Hilgendorf    Vice President APS                  2006-$430              Full
                                                        2007-$450
</TABLE>

The parties agree that Exhibit A can be amended by APS from time to time to add
or delete staff.

(1)  Full time is defined as substantially full time.

(2)  Part time is defined as approximately 2-3 days per week, with some weeks
     more or less depending on the needs and issues facing the Company at that
     time.
<PAGE>

(AP SERVICES LLC LOGO)

                                   SCHEDULE 1

                                FEES AND EXPENSES

1.   FEES: APS' fees will be based on the hours worked by APS personnel at the
     hourly rates specified in Exhibit A In satisfaction of all sums due APS
     under the July 20, 2005 Engagement Letter, the Company and APS agree that
     $395,687.49 is still owing.

2.   SUCCESS FEE: APS does not seek a Success Fee in connection with this
     engagement.

3.   EXPENSES: In addition to the fees set forth herein, the Company shall pay
     directly, or reimburse APS upon receipt of periodic billings, for all
     reasonable out-of-pocket expenses incurred in connection with this
     assignment, such as travel, lodging, postage and a communications charge of
     $4.00 per billable hour to cover telephone and facsimile charges.

4.   BREAK FEE: APS does not seek a Break Fee in connection with this
     engagement.

5.   RETAINER: In addition to the $250,000 retainer paid in accordance with the
     July 20, 2005 engagement, the Company shall pay APS $350,000 for a total
     retainer of $600,000 to be applied against Fees and Expenses as set forth
     in this Schedule and in accordance with Section 2 of the attached General
     Terms and Conditions.

<PAGE>

(AP SERVICES LLC LOGO)

                                   SCHEDULE 2

                                   DISCLOSURES

We know of no fact or situation that would represent a conflict of interest for
us with regard to the Company. However, we wish to disclose the following:

-    Al Koch, a Managing Director of AlixPartners, an affiliate of APS, is also
     on the Board of Directors of Tecumseh Products Company.

-    Pursuant to the Recapitalization Agreement, dated as of August 3, 2006,
     among AlixPartners Holdings, Inc., AlixPartners, LLC, Jay Alix
     individually, H&F Astro LLC and those other persons that may become bound
     thereto, three private equity funds (collectively, "HFCP V") sponsored by
     Hellman & Friedman, LLC ("H&F LLC") acquired, indirectly through H&F Astro
     LLC, a controlling stake in AlixPartners as of October 12, 2006. Hellman &
     Friedman Investors V, LLC and H&F LLC (collectively, "H&F") control HFCP V.
     No material nonpublic information about Company has been furnished by
     AlixPartners to H&F. In conjunction with this transaction AlixPartners, LLC
     was converted to AlixPartners, LLP, a Delaware limited liability
     partnership.

-    Kirkland & Ellis, a professional services firm of the Company, is counsel
     and adverse counsel to current and former AlixPartners and/or APS clients
     in matters unrelated to the Company. AlixPartners has been client of
     Kirkland & Ellis in matters unrelated to the Company.

This Schedule 2 may be updated by AlixPartners from time to time to disclose
additional connections or relationships between AlixPartners and the interested
parties.

<PAGE>

                                AP SERVICES, LLC
                          GENERAL TERMS AND CONDITIONS

These General Terms and Conditions ("Terms") are incorporated into the letter
agreement ("Agreement") between the Company and APS to which these Terms are
attached.

SECTION 1. COMPANY RESPONSIBILITIES

The Company will undertake responsibilities as set forth below:

1.   Provide reliable and accurate detailed information, materials,
     documentation and

2.   Make decisions and take future actions, as the Company determines in its
     sole discretion, on any recommendations made by APS in connection with this
     Agreement.

APS' delivery of the services and the fees charged are dependent on (i) the
Company's timely and effective completion of its responsibilities; and (ii)
timely decisions and approvals made by the Company's management. The Company
shall be responsible for any delays, additional costs or other deficiencies
caused by not completing its responsibilities.

SECTION 2. RETAINER, BILLING AND PAYMENTS

RETAINER AND BILLING. APS will submit monthly invoices for services rendered and
expenses incurred and will offset such invoices against the Retainer. Payment
will be due upon receipt of the invoices to replenish the Retainer to the
agreed-upon amount. Any unearned portion of the Retainer will be returned to the
Company at the termination of the engagement.

PAYMENTS. All payments to be made by the Company to APS shall be payable upon
receipt of invoice via wire transfer to APS' bank account, as follows:

          Receiving Bank:    Comerica Bank
                             ABA #072000096
          Receiving Account: AP Services, LLC
                             A/C #1851-765410

SECTION 3. RELATIONSHIP OF THE PARTIES

The parties intend that an independent contractor relationship will be created
by the Agreement. As an independent contractor, APS will have complete and
exclusive charge of the management and operation of its business, including
hiring and paying the wages and other compensation of all its employees and
agents, and paying all bills, expenses and other charges incurred or payable
with respect to the operation of its business. Of course, neither the Temporary
Staff nor APS will be entitled to receive from the Company any vacation pay,
sick leave, retirement, pension or social security benefits, workers'
compensation, disability, unemployment insurance benefits or any other employee
benefits. APS will be responsible for all employment, withholding, income and
other taxes incurred in connection with the operation and conduct of its
business.

The Company shall not solicit, recruit or hire any employees or agents of APS
for a period of two years subsequent to the expiration or termination of the
Agreement.

SECTION 4. CONFIDENTIALITY

APS shall keep confidential all non-public confidential or proprietary
information obtained from the Company during the performance of its services
hereunder (the "Information"), and neither APS nor the Temporary Staff will
disclose any Information to any other person or entity. "Information" includes
non-public confidential and proprietary data, plans, reports, schedules,
drawings, accounts, records, calculations, specifications, flow sheets, computer
programs, source or object codes, results, models or any work product relating
to the business of the Company, its subsidiaries, distributors, affiliates,
vendors, customers, employees, contractors and consultants.

The foregoing is not intended to prohibit, nor shall it be construed as
prohibiting, APS or the Temporary Staff from disclosure pursuant to a valid
subpoena or court order, but neither APS nor the Temporary Staff shall
encourage, suggest, invite or request, or assist in securing, any such subpoena
or court order; and the Temporary Staff shall promptly give notice of any such
subpoena or court order by fax transmission to the Company. APS and the
Temporary Staff may make reasonable disclosures of Information to third parties
in connection with the performance of APS' obligations and assignments
hereunder. In addition, APS will have the right to disclose to others in the
normal course of business its involvement with the Company.

The Company acknowledges that all information (written or oral), including
advice and Work Product (as defined in Section 5), generated by APS and the
Temporary Staff in connection with this engagement is intended solely for the
benefit and use of the Company (limited to its management and its Board of
Directors) in connection with the transactions to which it relates. The Company
agrees that no such information shall be used for any other purpose or
reproduced, disseminated, quoted or referred to with attribution to APS at any
time in any manner or for any purpose without APS' prior approval except as
required by law.

SECTION 5. INTELLECTUAL PROPERTY

All methodologies, processes, techniques, ideas, concepts, know-how, procedures,
software, tools, writings and other intellectual property that APS has created,
acquired or developed prior to the date of this Agreement are, and shall remain,
the sole and exclusive property of APS, and the Company shall not acquire any
interest therein. APS shall be free to use all methodologies, processes,
techniques, ideas, concepts, know-how, procedures, software, tools, writings and
other intellectual property that APS may create or develop in connection with
this engagement, subject to its duty of confidentiality to the extent that the
same contain information or materials furnished to APS by the Company that
constitute Information referred to in Section 4 above. Except as provided above,
all information, reports, materials, software and other work product that APS
creates or develops specifically for the Company as part of this engagement
(collectively known as "Work Product") shall be owned by the Company and shall
constitute Information referred to in Section 4 above. APS may retain copies of
the Work Product subject to its obligations under Section 4 above.

SECTION 6. FRAMEWORK OF THE ENGAGEMENT

The Company acknowledges that it is retaining APS to provide the Temporary Staff
solely to assist and advise the Company as described in the Agreement. This
engagement shall not constitute an audit, review or compilation, or any other
type of financial statement reporting engagement.

SECTION 7. INDEMNIFICATION AND OTHER MATTERS

<PAGE>

                                AP SERVICES, LLC
                          GENERAL TERMS AND CONDITIONS

The Company shall indemnify, hold harmless and defend APS and APS' directors,
officers, employees, Temporary Staff and agents from and against all claims,
liabilities, losses, expenses and damages arising from services performed by APS
personnel in accordance with this Agreement. With respect to any matter for
which indemnification is provided herein, the Company shall pay costs as
incurred, including reasonable legal fees and disbursements of counsel in any
legal proceeding in which APS or other indemitees may be required or agree to
participate but in which they are not a party. APS and its directors, officers,
employees, Temporary Staff and agents will engage a single firm of separate
counsel acceptable to the Company, the approval for which shall not be
unreasonably withheld, in connection with any of the matters to which
indemnification agreement relates.

The Company shall use its best efforts to specifically include and cover, as a
benefit for their protection, Temporary Staff serving as directors or officers
of the Company or affiliates from time to time with direct coverage as named
insureds under the Company's policy for directors' and officers' ("D&O")
insurance, which policy shall be for at least $10 million.

APS is not responsible for any third-party products or services. The Company's
sole and exclusive rights and remedies with respect to any third party products
or services are against the third-party vendor and not against APS, whether or
not APS is instrumental in procuring the third-party product or service.

APS shall not be liable to the Company except for actual damages resulting from
bad faith, self-dealing or gross negligence.

SECTION 8. GOVERNING LAW

The Agreement is governed by and shall be construed in accordance with the laws
of the State of Michigan with respect to contracts made and to be performed
entirely therein and without regard to choice of law or principles thereof.

Any controversy or claim arising out of or relating to the Agreement, or the
breach thereof, shall be settled by arbitration. Each party shall appoint one
non-neutral arbitrator. The two party arbitrators shall select a third
arbitrator. If within 30 days after their appointment the two party arbitrators
do not select a third arbitrator, the third arbitrator shall be selected by the
American Arbitration Association (AAA). The arbitration shall be conducted in
Southfield, Michigan under the AAA's Commercial Arbitration Rules, and the
arbitrators shall issue a reasoned award. The arbitrators may award costs and
attorneys' fees to the prevailing party. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.

SECTION 9. TERMINATION AND SURVIVAL

The Agreement may be terminated at any time by written notice by one party to
the other; provided, however, that notwithstanding such termination APS will be
entitled to any fees and expenses due under the provisions of the Agreement,
including Success Fee and Break Fee in accordance with Schedule 1. Such payment
obligation shall inure to the benefit of any successor or assignee of APS.

Sections 2, 4, 5, 7, 8, 9 and 10 of these Terms, the provisions of Schedule 2
and the obligation to pay accrued fees and expenses shall survive the expiration
or termination of the Agreement.

SECTION 10. GENERAL

SEVERABILITY. If any portion of the Agreement shall be determined to be invalid
or unenforceable, the remainder shall be valid and enforceable to the maximum
extent possible.

ENTIRE AGREEMENT. These Terms, the letter agreement into which they are
incorporated and the Schedule(s) and Exhibit to such letter agreement contain
the entire understanding of the parties relating to the services to be rendered
by APS and the Temporary Staff and may not be amended or modified in any respect
except in a writing signed by the parties. APS is not responsible for performing
any services not specifically described herein or in a subsequent writing signed
by the parties. If there is a conflict between these Terms and the balance of
the Agreement, these Terms shall govern.

NOTICES. All notices required or permitted to be delivered under the Agreement
shall be sent, if to APS, to:

     AP Services, LLC
     2000 Town Center, Suite 2400
     Southfield, MI 48075
     Attention: Mr. Melvin R. Christiansen

and if to the Company, to the address set forth in the Agreement, to the
attention of the Company's General Counsel, or to such other name or address as
may be given in writing to the other party. All notices under the Agreement
shall be sufficient if delivered by facsimile or overnight mail. Any notice
shall be deemed to be given only upon actual receipt.

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