<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 19, 1995
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE DETROIT EDISON COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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MICHIGAN 4911 38-0478650
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
2000 SECOND AVENUE
DETROIT, MICHIGAN 48226
(313) 237-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
------------------------
SUSAN M. BEALE, VICE PRESIDENT AND CORPORATE SECRETARY
THE DETROIT EDISON COMPANY
2000 SECOND AVENUE
DETROIT, MICHIGAN 48226
(313) 237-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, pursuant to dividend or, check the following box. / /
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED MAXIMUM PROPOSED
CLASS OF SECURITIES AMOUNT TO OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER UNIT(2) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
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% Quarterly Income Debt
Securities ("QUIDS")......... $105,000,000(1) -- (3) $36,206.90
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(1) Estimated maximum QUIDS issuable by The Detroit Edison Company (the
"Company") pursuant to the exchange offer as described herein (the "Exchange
Offer").
(2) Each depositary share (the "Depositary Shares"), each representing a
one-quarter interest in a share of the Company's Cumulative Preferred Stock
($100 par value), 7.75% Series (the "Preferred Stock"), accepted for
exchange will be exchanged for $25 principal amount of QUIDS.
(3) The proposed maximum aggregate offering price equals $105,000,000,
calculated pursuant to Rule 457(f) under the Securities Act of 1933 as
follows: the product of $25.00 (the average of high and low prices for the
Depositary Shares on June 13, 1995, as reported by the New York Stock
Exchange Composite Tape) and 4,200,000 (the maximum number of depositary
shares which may be tendered pursuant to the Exchange Offer.)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
S-4 ITEM NUMBER AND CAPTION PROSPECTUS
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1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Facing Page; Cross Reference Sheet; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. "Available Information"; "Incorporation of
Certain Documents by Reference"; "Table of
Contents".
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. "Prospectus Summary"; "Ratio of Earnings to
Fixed Charges and Earnings to Combined
Fixed Charges and Preferred and Preference
Stock Dividend Requirements"; "Selected
Historical Consolidated Fiscal Data".
4. Terms of the Transaction................... "Prospectus Summary"; "Certain Significant
Considerations"; "The Exchange Offer";
"Description of QUIDS"; Description of
Preferred Stock"; "Certain United States
Federal Income Tax Consequences".
5. Pro Forma Financial Information............ "Capitalization".
6. Material Contacts with the Company Being
Acquired................................... *
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................ *
8. Interests of Named Experts and Counsel..... "Legal Opinions"; "Experts"; Independent
Auditors.
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ *
10. Information with Respect to S-3
Registrants................................ "Incorporation of Certain Documents by
Reference"; "The Company";
"Capitalization"; "Market and Trading
Information"; "Description of QUIDS";
"Description of Preferred Stock".
11. Incorporation of Certain Information by
Reference.................................. "Incorporation of Certain Documents by
Reference"
12. Information with Respect to S-2 or S-3
Registrants................................ *
13. Incorporation of Certain Information by
Reference.................................. *
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants.......... *
15. Information with Respect to
S-3 Companies.............................. *
16. Information, with Respect to S-2 or S-3
Companies.................................. *
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies.................. *
18. Information if Proxies, Consents or
Authorizations are to be Solicited......... *
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer....................... *
</TABLE>
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* Item is omitted because answer is negative or Item is inapplicable.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 19, 1995
THE DETROIT EDISON COMPANY
OFFER TO EXCHANGE
% QUARTERLY INCOME DEBT SECURITIES (QUIDSSM)
(JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES, DUE 2025)
FOR
UP TO 4,200,000 DEPOSITARY SHARES, EACH REPRESENTING A
ONE-QUARTER INTEREST IN A SHARE OF ITS
CUMULATIVE PREFERRED STOCK, 7.75% SERIES
------------------------
THE EXCHANGE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY , 1995, UNLESS EXTENDED.
The Detroit Edison Company (the "Company") hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus (the "Prospectus") and in
the accompanying Letter of Transmittal (the "Letter of Transmittal", which
together with the Prospectus, constitute the "Exchange Offer"), to exchange up
to $105,000,000 aggregate principal amount of its % Quarterly Income Debt
Securities (the "QUIDS") for up to 4,200,000 depositary shares (the "Depositary
Shares"), each representing a one-quarter interest in a share of its Cumulative
Preferred Stock ($100 par value), 7.75% Series (the "Preferred Stock").
The QUIDS are offered in minimum denominations of $25 and integral multiples
thereof, and the Depositary Shares have a liquidation preference of $25 per
share. Consequently, the Exchange Offer will be effected on the basis of $25
principal amount of QUIDS for each Depositary Share validly tendered and
accepted for exchange.
The QUIDS will be issued only in book-entry form through the facilities of
The Depository Trust Company ("DTC"). Accordingly, holders of certificated
Depositary Shares who are not financial institutions that participate in DTC's
book-entry-only system ("DTC Participant") and who wish to participate in the
Exchange Offer must either (i) make arrangements with a DTC Participant to have
such participant (a) tender their Depositary Shares in accordance with the
instructions contained in "The Exchange Offer -- Procedure for Tendering
Depositary Shares" and in the Letter of Transmittal and (b) receive QUIDS issued
in exchange therefor or (ii) tender their Depositary Shares in accordance with
the instructions contained in "The Exchange Offer -- Procedure for Tendering
Depositary Shares" and in the Letter of Transmittal and make use of the
facilities provided by Bankers Trust Company, as Custodian (the "Custodian"), so
that, in either case, such holders may become beneficial owners of QUIDS issued
in the Exchange Offer. See "Acceptance of Depositary Shares; Delivery of QUIDS
- -- Custodial Arrangements". Under the terms of the Exchange Offer, no
certificated QUIDS will be issued in exchange for Depositary Shares.
Pursuant to the terms of the Exchange Offer, the Company will accept for
exchange up to 4,200,000 Depositary Shares validly tendered and not properly
withdrawn prior to 5:00 p.m., New York City time, on July , 1995 or if the
Exchange Offer is extended by the Company, in its sole discretion, the latest
time and date to which it is extended (the "Expiration Time"). Tenders of
Depositary Shares pursuant to the Exchange Offer are irrevocable, except that
Depositary Shares tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Time and, unless theretofore accepted for
exchange pursuant to the Exchange Offer, may be withdrawn at any time after 40
business days from the date of this Prospectus. A holder of Depositary Shares
who desires to tender such shares and whose certificates for such shares are not
immediately available, or who cannot comply in a timely manner with the
procedure for book-entry transfer, may tender such Depositary Shares by
following the procedures for guaranteed delivery set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures".
The expenses of soliciting tenders of Depositary Shares will be borne by the
Company. Subject to the receipt of a Letter of Transmittal with the part thereof
entitled "Notice of Solicited Tenders" properly completed and duly executed as
described herein, the Company will pay to any Soliciting Dealer (as hereinafter
defined) a solicitation fee of $0.50 per Depositary Share tendered and accepted
for exchange pursuant to the Exchange Offer. Soliciting Dealers are not entitled
to a solicitation fee for Depositary Shares beneficially owned by such
Soliciting Dealer. See "The Exchange Offer -- Fees and Expenses; Transfer
Taxes". For a description of the other terms of the Exchange Offer, see "The
Exchange Offer".
SEE "PROSPECTUS SUMMARY -- COMPARISON OF QUIDS AND DEPOSITARY SHARES" AND
"CERTAIN SIGNIFICANT CONSIDERATIONS" FOR A DESCRIPTION OF THE PRINCIPAL TERMS OF
AND CERTAIN SIGNIFICANT CONSIDERATIONS RELATING TO THE EXCHANGE OFFER, THE
DEPOSITARY SHARES AND THE QUIDS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
(Cover continued on following page)
- ---------------
SM QUIDS is a service mark of Goldman, Sachs & Co.
------------------------
The Dealer Managers for the Exchange Offer are:
GOLDMAN, SACHS & CO.
------------------------
The date of this Prospectus is June , 1995.
<PAGE> 4
The QUIDS will mature on September 30, 2025 and will bear interest at an
annual rate of % from the first day following the Expiration Time (the
"Issuance Date"). In addition, holders will receive interest on the QUIDS at a
rate of 7.75% per annum from July 15, 1995 (the last regular dividend payment
date with respect to the Depositary Shares) to but excluding the Issuance Date,
payable on the first interest payment date on the QUIDS. Interest will be
payable quarterly in arrears on March 31, June 30, September 30 and December 31,
commencing September 30, 1995; provided that, so long as an Event of Default (as
hereinafter defined) has not occurred and is not continuing with respect to the
QUIDS, the Company will have the right to extend the interest payment period at
any time and from time to time on the QUIDS, provided that the aggregate
interest payment period, as extended, must end on an interest payment date and
must not exceed 20 consecutive quarterly interest payment periods or extend
beyond the maturity of the QUIDS or any date on which any QUIDS are fixed for
redemption. As a consequence, the quarterly interest payments on the QUIDS would
be deferred (but would continue to accrue with interest thereon compounded
quarterly at the rate of interest on the QUIDS) during any such extended
interest payment period (each a "Deferral Period"). In the event that the
Company exercises this right, the Company may not declare or pay dividends on,
or redeem, purchase or acquire, any of its Capital Stock (as hereinafter
defined) during such Deferral Period, other than redemptions of any series of
Capital Stock of the Company pursuant to the terms of any sinking fund
provisions with respect thereto. In addition, during any Deferral Period, the
Company may not make any advance or loan to, or purchase any securities of, or
make any other investment in, any affiliate of the Company, including DTE
Holdings, Inc. ("Holdings"), for the purpose of, or to enable the payment of,
directly or indirectly, dividends on any equity securities of Holdings. See "The
Company -- Formation of Holding Company". The Company has no current intention
of exercising its right to extend an interest payment period. During any such
Deferral Period, the Company may continue to extend the interest payment period,
provided that the aggregate interest payment period, as extended, must end on an
Interest Payment Date (as hereinafter defined) and must not exceed 20
consecutive quarterly interest payment periods or extend beyond the maturity of
the QUIDS or any date on which any QUIDS are fixed for redemption. Upon the
termination of any Deferral Period and the payment of all amounts then due, the
Company may extend the quarterly payment periods anew, subject to the above
requirements. See "Description of QUIDS -- Quarterly Payments" and "-- Payment
Deferrals".
The QUIDS are unsecured obligations of the Company and will be subordinate
to all existing and future Senior Indebtedness (as hereinafter defined) of the
Company, but senior to all Capital Stock of the Company, including the
Depositary Shares. On March 31, 1995, approximately $4.3 billion of such Senior
Indebtedness was outstanding. See "Description of QUIDS -- Subordination", and
"-- Subrogation".
The QUIDS will be redeemable at the option of the Company, in whole or in
part, at any time on or after June 30, 1998, at a redemption price equal to 100%
of the principal amount redeemed plus accrued and unpaid interest to the date
fixed for redemption (which is approximately ten weeks after which the
Depositary Shares are first redeemable at the option of the Company). See
"Description of QUIDS -- Optional Redemption".
For federal income tax purposes, the exchange of Depositary Shares for
QUIDS will be a taxable transaction, and the QUIDS will be treated as having
been issued with original issue discount. The original issue discount rules may
accelerate the timing of a holder's recognition of income. For a discussion of
these and other United States federal income tax considerations relevant to the
Exchange Offer, see "Certain United States Federal Income Tax Consequences".
The Depositary Shares (of which there are 6,000,000 outstanding) are listed
and principally traded on the New York Stock Exchange (the "NYSE"). On April 12,
1995, the last full day of trading prior to the initial public announcement of
the Exchange Offer, the closing sales price of the Depositary Shares on the
NYSE, as reported on the Composite Tape, was $24.00 per share. On June , 1995,
the last full day of trading prior to the commencement of the Exchange Offer,
the closing sales price of the Depositary Shares on the NYSE as reported on the
Composite Tape was
2
<PAGE> 5
$ per share. Holders of Depositary Shares are urged to obtain current
market quotations therefor.
The QUIDS constitute a new issue of debt securities with no established
trading market. While the Company intends to list the QUIDS on the NYSE, there
can be no assurance that an active market for the QUIDS will develop or be
sustained in the future on the NYSE. Moreover, to the extent that Depositary
Shares are tendered and accepted in the Exchange Offer, a holder's ability to
sell Depositary Shares not tendered for exchange could be adversely affected.
Goldman, Sachs & Co. (the "Dealer Managers") are acting as Dealer Managers
for the Exchange Offer. The Dealer Managers have agreed to use their best
efforts to solicit the exchange of Depositary Shares pursuant to the Exchange
Offer. Bankers Trust Company (the "Exchange Agent") is acting as Exchange Agent
in connection with the Exchange Offer and Georgeson & Company Inc. (the
"Information Agent") is acting as Information Agent in connection with the
Exchange Offer.
Questions and requests for assistance may be directed to the Dealer
Managers or the Information Agent, as set forth on the back cover of this
Prospectus. Requests for or additional copies of this Prospectus, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be directed to the
Information Agent.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER, OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THE COMPANY IS NOT AWARE OF ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE
OFFER IS NOT IN COMPLIANCE WITH APPLICABLE LAW. IF THE COMPANY BECOMES AWARE OF
ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE OFFER WOULD NOT BE IN
COMPLIANCE WITH APPLICABLE LAW, THE COMPANY WILL MAKE A GOOD FAITH EFFORT TO
COMPLY WITH SUCH LAW. IF, AFTER SUCH GOOD FAITH EFFORT, THE COMPANY CANNOT
COMPLY WITH ANY SUCH LAW, THE EXCHANGE OFFER WILL NOT BE MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS RESIDING IN SUCH
JURISDICTIONS. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS
REQUIRE THE EXCHANGE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE
EXCHANGE OFFER WILL BE DEEMED TO BE MADE ON BEHALF OF THE COMPANY BY THE DEALER
MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (the "Registration
Statement", which term shall encompass all amendments, exhibits, annexes and
schedules thereto) pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder,
covering the QUIDS being offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission, and
to which reference is hereby made. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
The Company is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files
3
<PAGE> 6
periodic reports and other information with the Commission. The Registration
Statement, as well as such reports and other information filed by the Company
with the Commission, may be inspected at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and should also be available for inspection and
copying at the regional offices of the Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Certain of
the securities of the Company are listed on the NYSE. Reports and other
information concerning the Company can also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company or Holdings with
the Commission pursuant to the Exchange Act, are hereby incorporated by
reference in this Prospectus:
1. the Company's Annual Report on Form 10-K for the year ended
December 31, 1994;
2. the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995;
3. the Proxy Statement of the Company/Prospectus of Holdings dated
March 9, 1995; and
4. the Company's Current Reports on Form 8-K filed January 27, 1995
and March 1, 1995.
Each document filed by the Company pursuant to Section 13, 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the Exchange Offer pursuant hereto shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this Prospectus
from the date of filing of such document. Any statement contained in this
Prospectus or in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of the Registration Statement and this Prospectus to the extent that a
statement contained in this Prospectus, or in any subsequently filed document
that also is or is deemed to be incorporated by reference in this Prospectus,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents that are incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to Susan M. Beale, Vice President and Corporate Secretary, The Detroit
Edison Company, 2000 Second Avenue, Detroit, Michigan 48226; (313) 237-8000.
4
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TABLE OF CONTENTS
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PAGE
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Available Information............................................................... 3
Incorporation of Certain Documents by Reference..................................... 4
Summary............................................................................. 6
Comparison of QUIDS and Depositary Shares......................................... 12
Certain Significant Considerations.................................................. 14
The Company......................................................................... 16
Selected Historical Consolidated Financial Data..................................... 16
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and
Preferred and Preference Stock Dividend Requirements.............................. 16
Capitalization...................................................................... 17
The Exchange Offer.................................................................. 17
Market and Trading Information...................................................... 29
Description of QUIDS................................................................ 31
DTC Book-Entry-Only System.......................................................... 36
Description of Preferred Stock...................................................... 38
Certain United States Federal Income Tax Consequences............................... 41
Legal Opinions...................................................................... 44
Experts............................................................................. 44
</TABLE>
5
<PAGE> 8
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information appearing elsewhere in this Prospectus
or by documents incorporated by reference into the Prospectus. Capitalized terms
used herein have the respective meanings ascribed to them elsewhere in this
Prospectus.
THE COMPANY
The Company is a Michigan corporation and a regulated public utility
engaged in the generation, purchase, transmission, distribution and sale of
electric energy in a 7,600 square mile service area in southeastern Michigan
which includes about 13% of Michigan's total land area and about half of its
population, electric energy consumption and industrial capacity. At the
Company's April 1995 Annual Meeting of Common Stock Shareholders, such holders
approved the formation of a holding company. See "The Company -- Formation of
Holding Company".
CERTAIN INVESTOR CONSIDERATIONS
Prospective investors should carefully review the information contained
elsewhere in this Prospectus prior to making a decision regarding the Exchange
Offer and should particularly consider the following matters:
POTENTIAL BENEFITS TO EXCHANGING HOLDERS
- The annual interest rate on the QUIDS will be %, as compared with the
indicated annual dividend rate of 7.75% on the Depositary Shares (of
which there are currently 6,000,000 shares outstanding). See "Comparison
of QUIDS and Depositary Shares" below.
- The QUIDS will rank senior to the Depositary Shares as to payment in
respect thereof and as to the distribution of assets upon liquidation.
However, the QUIDS are unsecured obligations of the Company and will be,
and the Depositary Shares are, subordinate in right to payment to all
existing and future Senior Indebtedness of the Company and effectively
subordinated to all obligations of the Company's subsidiaries. See
"Certain Significant Considerations -- Subordination of QUIDS".
- While dividends on the Depositary Shares may be deferred indefinitely,
the interest payment period on the QUIDS can only be extended for a
maximum of 20 consecutive quarterly interest payment periods. In each
case, however, the Company has no current intention of exercising its
right to defer such payments. See "Certain Significant Considerations --
Right of Company to Defer Payment of Interest".
- In order to benefit from the higher annual interest rate on the QUIDS,
holders of Depositary Shares need not pay any additional cash. Holders of
Depositary Shares wishing to participate in the Exchange Offer must
tender their Depositary Shares in accordance with the instructions
contained in "The Exchange Offer -- Procedure for Tendering Depositary
Shares" and in the Letter of Transmittal prior to the Expiration Time.
POTENTIAL RISKS TO EXCHANGING HOLDERS
- Participation in the Exchange Offer will be a taxable event. See "Certain
Significant Considerations -- Exchange Offer as Taxable Event" and
"Certain United States Federal Income Tax Consequences".
- While dividends on the Depositary Shares are eligible for the dividends
received deduction for corporate holders, interest on the QUIDS will not
be eligible for the dividends received deduction for corporate holders.
The dividends received deduction is not applicable for
6
<PAGE> 9
individual, non-corporate holders. See "Comparison of QUIDS and Depositary
Shares" below.
- There has not been any public market for the QUIDS. While the Company
intends to list the QUIDS on the NYSE, there can be no assurance that an
active market for the QUIDS will develop or be sustained in the future on
such exchange. See "Certain Significant Considerations -- Listing and
Trading of QUIDS and Depositary Shares".
OTHER CONSIDERATIONS
- The liquidity and trading market for Depositary Shares could be adversely
affected to the extent Depositary Shares are tendered and accepted in the
Exchange Offer. See "Certain Significant Considerations -- Listing and
Trading of QUIDS and Depositary Shares".
- While the Depositary Shares were issued in fully registered form, the
QUIDS will be issued only in book-entry form through the facilities of
DTC. Accordingly, in order to participate in the Exchange Offer holders
of certificated Depositary Shares who are not DTC Participants must
either (i) make arrangements with a DTC Participant to have such
participant tender their Depositary Shares in accordance with the terms
of the Exchange Offer and to receive QUIDS issued in exchange therefor or
(ii) tender their Depositary Shares in accordance with the instructions
contained in "The Exchange Offer -- Procedure for Tendering Depositary
Shares" and in the Letter of Transmittal and make use of the facilities
provided by the Custodian, so that, in either case, such holders may
become beneficial owners of QUIDS issued in exchange therefor. Under the
terms of the Exchange Offer, no certificated QUIDS will be issued in
exchange for Depositary Shares. See "The Exchange Offer -- Procedure for
Tendering Depositary Shares" and "-- Acceptance of Depositary Shares;
Delivery of QUIDS -- Custodial Arrangements" and "DTC Book-Entry-Only
System".
- Tendering holders will not be obligated to pay brokerage commissions or
fees to the Dealer Managers, the Exchange Agent, the Custodian, the
Information Agent or the Company or, subject to the instructions in the
Letter of Transmittal with respect to special issuance instructions,
transfer taxes with respect to the exchange of Depositary Shares pursuant
to the Exchange Offer.
- The Company will pay all reasonable charges and expenses in connection
with the Exchange Offer, other than any applicable income taxes or any
charges that individual brokerage firms charge their clients for other
services rendered in connection with tendering their shares. Holders of
Depositary Shares may be obligated to pay fees charged by DTC
Participants in order for such participants to tender such holder's
Depositary Shares and to receive QUIDS in exchange therefor on behalf of
such holder. Holders of certificated Depositary Shares who are not DTC
Participants will not be obligated to pay fees charged by the Custodian
related to the establishment and maintenance of accounts opened by such
holder to receive QUIDS issued in exchange for Depositary Shares accepted
in accordance with the terms of the Exchange Offer. See "The Exchange
Offer -- Acceptance of Depositary Shares; Delivery of QUIDS -- Custodial
Arrangements".
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing Depositary Shares with QUIDS. The potential
cash flow benefit to the Company arises because interest payable on the QUIDS
will be deductible by the Company (as it accrues) for United States federal
income tax purposes, while dividends payable with respect to the Depositary
Shares are not deductible. See "The Exchange Offer -- Purpose of the Exchange
Offer".
7
<PAGE> 10
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions of the Exchange Offer, the
Company is offering to exchange up to $105,000,000 aggregate principal amount of
its QUIDS for up to 4,200,000 Depositary Shares, each representing a one-quarter
interest in a share of its Preferred Stock. Exchanges will be made on the basis
of $25 principal amount of QUIDS for each Depositary Share validly tendered and
accepted for exchange. See "The Exchange Offer -- General". As of the date of
this Prospectus, there are 6,000,000 Depositary Shares outstanding.
Pursuant to the terms of the Exchange Offer, the Company will accept for
exchange up to 4,200,000 Depositary Shares validly tendered and not properly
withdrawn prior to the Expiration Time. Depositary Shares not accepted for
exchange because of proration will be returned. See "Proration" below.
SECURITIES OFFERED
The QUIDS will mature on September 30, 2025 and will bear interest at an
annual rate of % from the Issuance Date. In addition, holders will receive
interest on the QUIDS at a rate of 7.75% per annum from July 15, 1995 (the last
regular dividend payment date with respect to the Depositary Shares) to but
excluding the Issuance Date, payable on the first interest payment date on the
QUIDS. Interest will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31, commencing September 30, 1995; provided that, so
long as an Event of Default has not occurred and is not continuing with respect
to the QUIDS, the Company will have the right, upon prior notice by public
announcement given in accordance with NYSE rules at any time, to extend the
interest payment period at any time and from time to time on the QUIDS, provided
that the aggregate interest payment period, as extended, must end on an interest
payment date and must not exceed 20 consecutive quarterly interest payment
periods or extend beyond the maturity of the QUIDS or any date on which any
QUIDS are fixed for redemption. As a consequence, quarterly interest payments on
the QUIDS would be deferred (but would continue to accrue with interest thereon
compounded quarterly at the rate of interest on the QUIDS) during any Deferral
Period. In the event that the Company exercises this right, the Company may not
declare or pay dividends on, or redeem, purchase or acquire, any of its Capital
Stock during such Deferral Period, other than redemptions of any series of
Capital Stock of the Company pursuant to the terms of any sinking fund
provisions with respect thereto. In addition, during any Deferral Period, the
Company may not make any advance or loan to, or purchase any securities of, or
make any other investment in, any affiliate of the Company, including Holdings,
for the purpose of, or to enable the payment of, directly or indirectly,
dividends on any equity securities of Holdings. See "The Company -- Formation of
Holding Company". The Company has no current intention of exercising its right
to extend an interest payment period. However, should the Company determine to
exercise such right in the future, the market price of the QUIDS is likely to be
adversely affected. During any such Deferral Period, the Company may continue to
extend the interest payment period, provided that the aggregate interest payment
period, as extended, must end on an Interest Payment Date and must not exceed 20
consecutive quarterly interest payment periods or extend beyond the maturity of
the QUIDS or any date on which any QUIDS are fixed for redemption. Upon the
termination of any Deferral Period and the payment of all amounts then due, the
Company may extend the quarterly interest payment periods anew, subject to the
above requirements. See "Description of QUIDS -- Quarterly Payments" and
"-- Payment Deferrals".
The QUIDS are unsecured obligations of the Company and will be subordinate
to all existing and future Senior Indebtedness of the Company, but senior to all
Capital Stock (as defined herein) of the Company, including the Depositary
Shares. On March 31, 1995, approximately $4.3 billion of such Senior
Indebtedness was outstanding. As the QUIDS will be issued by the Company, the
QUIDS effectively will be subordinate to all obligations of the Company's
subsidiaries. See "Description of QUIDS -- Subordination". The QUIDS will be
redeemable at the option of the Company, in whole or in part, at any time on or
after June 30, 1998, at a redemption price equal to
8
<PAGE> 11
100% of the principal amount redeemed plus accrued and unpaid interest to the
date fixed for redemption (which is the same date which the Depositary Shares
are first redeemable at the option of the Company). See "Description of
QUIDS -- Optional Redemption".
For federal income tax purposes, the exchange of Depositary Shares for
QUIDS will be a taxable transaction, and the QUIDS will be treated as having
been issued with original issue discount. The original issue discount rules may
accelerate the timing of a holder's recognition of income. For a discussion of
these and other United States federal income tax considerations relevant to the
Exchange Offer, see "Certain United States Federal Income Tax Consequences".
EXPIRATION; EXTENSION; AMENDMENTS; TERMINATION; AND WITHDRAWAL RIGHTS
The Exchange Offer will expire at 5:00 p.m., New York City time on July ,
1995, unless the Company shall have extended the period during which the
Exchange Offer is open, in which event the Exchange Offer will expire at the
latest time and date as so extended by the Company. See "The Exchange
Offer -- Expiration; Extension; Termination; Amendment". Tenders of Depositary
Shares pursuant to the Exchange Offer are irrevocable, except that Depositary
Shares tendered pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Time and, unless theretofore accepted for exchange
pursuant to the Exchange Offer, may also be withdrawn at any time after 40
business days from the date of this Prospectus. See "The Exchange Offer --
Withdrawal Rights".
The Company expressly reserves the right to (i) extend, amend or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any Preferred Stock upon the failure
of any of the conditions specified in "The Exchange Offer -- Conditions of the
Exchange Offer" herein. See "The Exchange Offer -- Expiration; Extension;
Termination; Amendment".
PROCEDURES FOR TENDERING
THE QUIDS WILL BE ISSUED ONLY IN BOOK-ENTRY FORM THROUGH THE FACILITIES OF
DTC. ACCORDINGLY, IN ORDER TO PARTICIPATE IN THE EXCHANGE OFFER, HOLDERS OF
DEPOSITARY SHARES WHO ARE NOT DTC PARTICIPANTS MUST EITHER (I) MAKE ARRANGEMENTS
WITH A DTC PARTICIPANT TO HAVE SUCH PARTICIPANT VALIDLY TENDER SUCH DEPOSITARY
SHARES IN ACCORDANCE WITH THE TERMS OF THE EXCHANGE OFFER AND TO RECEIVE QUIDS
ISSUED IN EXCHANGE THEREFOR OR (II) VALIDLY TENDER SUCH DEPOSITARY SHARES IN
ACCORDANCE WITH THE TERMS OF THE EXCHANGE OFFER AND MAKE USE OF THE FACILITIES
PROVIDED BY THE CUSTODIAN, SO THAT, IN EITHER CASE, SUCH HOLDERS MAY BECOME
BENEFICIAL OWNERS OF QUIDS ISSUED IN THE EXCHANGE OFFER. UNDER THE TERMS OF THE
EXCHANGE OFFER, NO CERTIFICATED QUIDS WILL BE ISSUED IN EXCHANGE FOR DEPOSITARY
SHARES.
In order for Depositary Shares to be validly tendered pursuant to the
Exchange Offer, (i) the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof) properly completed and duly executed in accordance
with the instructions contained herein and therein, together with any required
signature guarantees, or an Agent's Message (as hereinafter defined) in
connection with a book-entry transfer of Depositary Shares, must be received by
the Exchange Agent, at either of its addresses set forth on the back cover page
of this Prospectus and either (a) certificates for the Depositary Shares must be
received by the Exchange Agent at either address or (b) such Depositary Shares
must be transferred pursuant to the procedures for book-entry transfer described
herein and a confirmation of such book-entry transfer must be received by the
Exchange Agent, in each case prior to the Expiration Time or (ii) the guaranteed
delivery procedures described herein must be complied with. See "The Exchange
Offer -- General" and "-- Procedure for Tendering Depositary Shares".
By complying with the procedures set forth above, holders of Depositary
Shares will effect a tender of the underlying Preferred Stock by tendering such
Depositary Shares to the Exchange
9
<PAGE> 12
Agent who, as agent for tendering holders, will withdraw such underlying
Preferred Stock and tender it in the Exchange Offer.
NO LETTERS OF TRANSMITTAL AND NO CERTIFICATES REPRESENTING DEPOSITARY
SHARES SHOULD BE SENT TO THE COMPANY, THE DEALER MANAGERS OR THE INFORMATION
AGENT. SUCH DOCUMENTS SHOULD ONLY BE SENT TO THE EXCHANGE AGENT.
SPECIAL PROCEDURE FOR BENEFICIAL OWNERS
Any beneficial owner whose Depositary Shares are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "The Exchange
Offer -- Procedures for Tendering Depositary Shares".
GUARANTEED DELIVERY PROCEDURES
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Depositary Shares to reach the Exchange Agent before
the Expiration Time or the procedure for book-entry transfer cannot be completed
on a timely basis, a tender may be effected in accordance with the guaranteed
delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery
Procedures".
PRORATION
If more than 4,200,000 Depositary Shares are validly tendered and not
properly withdrawn prior to the Expiration Time, the Company will, upon the
terms and subject to the conditions of the Exchange Offer, accept for exchange
4,200,000 Depositary Shares so tendered and not properly withdrawn on a pro rata
basis, according to the number of Depositary Shares validly tendered by each
holder and not properly withdrawn prior to the Expiration Time (calculated in
all cases based on the number of shares tendered), subject to adjustment to
avoid the acceptance for exchange of fractional Depositary Shares. If 4,200,000
or fewer Depositary Shares are validly tendered and not properly withdrawn prior
to the Expiration Time, the Company will, upon the terms and subject to the
conditions of the Exchange Offer, accept for exchange all such Depositary Shares
so tendered and not properly withdrawn. See "The Exchange Offer -- Proration".
ACCRUED DIVIDENDS
Holders of Depositary Shares accepted for exchange pursuant to the Exchange
Offer will not receive dividends from July 15, 1995 (the last regular dividend
payment date with respect to the Depositary Shares). Holders whose Depositary
Shares are accepted for exchange will receive interest on the QUIDS accruing
initially at a rate of 7.75% per annum (equal to the indicated dividend rate on
the Depositary Shares) from July 15, 1995 to but excluding the Issuance Date,
and thereafter at an annual rate of %, all payable on the first interest
payment on the QUIDS as described in "Description of QUIDS -- Quarterly
Payments". For United States federal income tax purposes, interest accruing from
July 15, 1995 to but excluding the Issuance Date will be treated as part of the
amount received upon the exchange. See "Certain United States Federal Income Tax
Consequences".
Dividends on Depositary Shares not exchanged in the Exchange Offer will
continue to accrue and be payable when, as and if declared in accordance with
the terms of the underlying Preferred Stock.
ACCEPTANCE OF SHARES AND DELIVERY OF QUIDS
Subject to the terms and conditions of the Exchange Offer, including the
reservation by the Company of the right to withdraw, amend or terminate the
Exchange Offer and certain other rights,
10
<PAGE> 13
the Company will accept for exchange Depositary Shares that are properly
tendered in the Exchange Offer and not withdrawn prior to the Expiration Time.
Subject to such terms and conditions, the QUIDS issued pursuant to the Exchange
Offer will be issued as of the Issuance Date and will be delivered as promptly
as practicable following the Expiration Time. See "The Exchange
Offer -- General", "-- Expiration; Extension; Termination; Amendment" and "--
Conditions of the Exchange Offer".
The QUIDS will be issued only in book-entry form through the facilities of
DTC. Accordingly, holders of Depositary Shares accepted for exchange in the
Exchange Offer must make arrangements with a DTC Participant in order to receive
the QUIDS issued in the Exchange Offer or make use of the facilities provided by
the Custodian, so that, in either case, such holders may become beneficial
owners of QUIDS issued in exchange for Depositary Shares accepted pursuant to
the Exchange Offer. See "Acceptance of Depositary Shares; Delivery of QUIDS --
Custodial Arrangements".
If proration for tendered Depositary Shares is required, because of the
difficulty of determining the aggregate number of Depositary Shares validly
tendered and not properly withdrawn (including shares tendered by the guaranteed
delivery procedures), the Company may not be able to announce the final results
of such proration until at least approximately seven NYSE trading days after the
Expiration Time. Preliminary results of proration will be announced by press
release as promptly as practicable after the Expiration Time. Holders of
Depositary Shares may obtain such preliminary information from the Information
Agent and may be able to obtain such information from their brokers. THE COMPANY
WILL NOT ISSUE ANY QUIDS IN EXCHANGE FOR ANY DEPOSITARY SHARES ACCEPTED FOR
EXCHANGE PURSUANT TO THE EXCHANGE OFFER OR RETURN DEPOSITARY SHARES DELIVERED TO
THE EXCHANGE AGENT BUT NOT TENDERED OR RETURN DEPOSITARY SHARES TENDERED BUT NOT
ACCEPTED FOR EXCHANGE BECAUSE OF PRORATION UNTIL THE FINAL PRORATION FACTORS ARE
KNOWN.
EXCHANGE AGENT AND INFORMATION AGENT
Bankers Trust Company has been appointed as Exchange Agent in connection
with the Exchange Offer. Georgeson & Company Inc. has been appointed as
Information Agent in connection with the Exchange Offer. Questions and requests
for assistance, requests for additional copies of this Prospectus or of the
Letter of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Information Agent. The addresses and telephone numbers of the
Exchange Agent and the Information Agent are set forth on the back cover page of
this Prospectus.
DEALER MANAGERS
Goldman, Sachs & Co. have been retained as Dealer Managers to solicit
exchanges of Preferred Stock for QUIDS. Questions with respect to the Exchange
Offer may be directed to Goldman, Sachs & Co. at (800) 828-3182.
FEES AND EXPENSES
The expense of soliciting tenders of Depositary Shares will be borne by the
Company. Subject to the receipt of a Letter of Transmittal with the part thereof
entitled "Notice of Solicited Tenders" properly completed and duly executed as
described herein, the Company will pay to any Soliciting Dealer (as hereinafter
defined) a solicitation fee of $0.50 per Depositary Share tendered and accepted
for exchange pursuant to the Exchange Offer. Soliciting Dealers are not entitled
to a solicitation fee for Depositary Shares beneficially owned by such
Soliciting Dealers. The Company will pay all transfer taxes, if any, applicable
to the exchange of Depositary Shares pursuant to the Exchange Offer. See "The
Exchange Offer -- Fees and Expenses; Transfer Taxes".
11
<PAGE> 14
COMPARISON OF QUIDS AND DEPOSITARY SHARES
The following is a brief summary comparison of certain of the principal
terms of the QUIDS and the Depositary Shares.
<TABLE>
<CAPTION>
QUIDS DEPOSITARY SHARES
---------------------------------- ----------------------------------
<S> <C> <C>
Interest/Dividend % annual interest payable 7.75% annual dividend, payable
Rate............... quarterly in arrears on March 31, quarterly out of funds legally
June 30, September 30 and December available therefor on January 15,
31 of each year, commencing April 15, July 15 and October 15
September 30, 1995, subject to the of each year, when, as and if
Company's right to defer the declared by the Company's Board of
interest payment period at any Directors.
time and from time to time;
provided that the aggregate
interest payment period, as
extended, must end on an Interest
Payment Date and must not exceed
20 consecutive quarterly interest
payment periods or extend beyond
the maturity of the QUIDS or any
date on which the QUIDS are fixed
for redemption as described
herein. At the end of each
Deferral Period, the Company shall
pay all interest then accrued and
unpaid (compounded quarterly at
the rate of interest on the
QUIDS). During any Deferral Period
the Company may not declare or pay
any dividend on, or redeem,
purchase or acquire, any of its
Capital Stock, other than
redemptions of any series of
Capital Stock of the Company
pursuant to the terms of any
sinking fund provisions with
respect thereto. In addition,
during any Deferral Period, the
Company may not make any advance
or loan to, or purchase any
securities of, or make any other
investment in, any affiliate of
the Company, including Holdings,
for the purpose of, or to enable
the payment of, directly or
indirectly, dividends on any
equity securities of Holdings.
Therefore, the Company believes
that the extension of a quarterly
interest payment period on the
QUIDS is unlikely.
Maturity............. September 30, 2025 Not applicable. There is no
mandatory redemption or sinking
fund for the Depositary Shares.
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
QUIDS DEPOSITARY SHARES
---------------------------------- ----------------------------------
<S> <C> <C>
Optional Redeemable at the option of the Redeemable at the option of the
Redemption......... Company at any time on or after Company at any time on or after
June 30, 1998, in whole or in April 15, 1998, in whole or in
part, at a redemption price equal part, at a redemption price equal
to 100% of the principal amount to $100 per share of Preferred
redeemed plus accrued and unpaid Stock (equivalent to $25 per
interest to the date fixed for Depositary Share) plus accrued and
redemption. accumulated but unpaid dividends
to the date fixed for redemption.
Subordination........ Unsecured obligations of the Subordinate to claims of
Company and subordinated to all creditors, including holders of
existing and future Senior the Company's outstanding debt
Indebtedness of the Company, but securities, including the QUIDS,
senior to all Capital Stock of the but senior to the Common Stock of
Company, including the Depositary the Company. Effectively
Shares. Effectively subordinate to subordinated to all obligations of
all obligations of the Company's the Company's subsidiaries.
subsidiaries.
Voting Rights........ None. Non-voting, except that if
dividends are in arrears on any
series of preferred stock of the
Company for four quarters, the
holders of all series of the
Company's preferred stock, voting
separately as a class, are
entitled to elect two additional
members of the Board of Directors
of the Company.
New York Stock Application will be made to list The Depositary Shares are listed
Exchange Listing... the QUIDS on the NYSE. on the NYSE.
Form of Security..... The QUIDS will be issued only in The Depositary Shares are in fully
book-entry form through the registered form, if elected.
facilities of DTC.
Dividends Received Interest will not be eligible for Dividends are eligible for the
Deduction.......... the dividends received deduction dividends received deduction for
for corporate holders. The corporate holders. The dividends
dividends received deduction is received deduction is not
not applicable for individual, applicable for individual,
non-corporate holders. non-corporate holders.
Original Issue The QUIDS will be treated as The Depositary Shares were not is-
Discount........... having been issued with original sued with original issue discount.
issue discount.
</TABLE>
13
<PAGE> 16
CERTAIN SIGNIFICANT CONSIDERATIONS
Prospective exchanging holders of Depositary Shares should carefully
consider, in addition to the other information set forth elsewhere in this
Prospectus, the following:
EXCHANGE OFFER AS TAXABLE EVENT
All holders of Depositary Shares are advised to consult their own tax
advisors regarding the federal, state, local and foreign tax consequences of the
exchange of Depositary Shares. For federal income tax purposes, the exchange of
Depositary Shares for QUIDS will be a taxable transaction, and the QUIDS will be
treated as having been issued with original issue discount. The original issue
discount rules may accelerate the timing of a holder's recognition of income.
For a discussion of these and other United States federal income tax
considerations relevant to the Exchange Offer, see "Certain United States
Federal Income Tax Consequences".
RIGHT OF COMPANY TO DEFER PAYMENT OF INTEREST
So long as no Event of Default with respect to the QUIDS has occurred and
is continuing, the Company shall have the right, upon prior notice by public
announcement given in accordance with NYSE rules at any time, to extend the
interest payment period at any time and from time to time on the QUIDS, provided
that the aggregate interest payment period, as extended, must end on an interest
payment date and must not exceed 20 consecutive quarterly interest payment
periods or extend beyond the maturity of the QUIDS or any date on which any
QUIDS are fixed for redemption. No interest shall be due and payable during a
Deferral Period, but on the interest payment date occurring at the end of each
Deferral Period the Company shall pay to the holders of record on the record
date for such interest payment date (regardless of who the holders of record may
have been on other dates during the Deferral Period) all accrued and unpaid
interest on the QUIDS, together with interest thereon compounded quarterly at
the rate of interest on the QUIDS. In the event that the Company exercises its
right to extend, the Company may not declare or pay dividends on, or redeem,
purchase or acquire, any shares of its Capital Stock until deferred interest on
the QUIDS is paid in full, other than redemptions of any series of Capital Stock
of the Company pursuant to the terms of any sinking fund provisions with respect
thereto. In addition, during any Deferral Period, the Company may not make any
advance or loan to, or purchase any securities of, or make any other investment
in, any affiliate of the Company, including Holdings, for the purpose of, or to
enable the payment of, directly or indirectly, dividends on any equity
securities of Holdings. See "The Company -- Formation of Holding Company". The
Company has no current intention of exercising its right to extend an interest
payment period.
Upon the termination of any Deferral Period and the payment of all interest
then due, the Company may commence a new Deferral Period. Consequently, there
could be multiple Deferral Periods of varying lengths throughout the term of the
QUIDS. See "Description of QUIDS -- Payment Deferral".
In the event a Deferral Period occurs, holders of the QUIDS would continue,
under the original issue discount rules, to accrue income on the QUIDS for
United States federal income tax purposes. As a result, a holder ordinarily
would include such amounts in gross income in advance of the receipt of cash. A
holder that disposes of its QUIDS prior to the record date for payment of
interest at the end of a Deferral Period will not receive cash from the Company
related to such interest because such interest will be paid to the holder of
record on such record date, regardless of who the holders of record may have
been on other dates during the Deferral Period. The extent to which such a
holder will receive a return on the QUIDS for the period it held such QUIDS will
depend on the market for the QUIDS at the time of such disposition. See "Certain
United States Federal Income Tax Consequences -- United States Holders".
The Company has no current intention of exercising its right to extend an
interest payment period.
POTENTIAL MARKET VOLATILITY DURING DEFERRAL PERIOD
As described above, the Company has the right to extend an interest payment
period from time to time, provided that the aggregate interest payment period,
as extended, must end on an interest payment date and must not exceed 20
consecutive quarterly interest payment periods or extend
14
<PAGE> 17
beyond the maturity of the QUIDS or any date on which any QUIDS are fixed for
redemption. In the event the Company determines to extend an interest payment
period, or in the event the Company thereafter extends a Deferral Period, the
market price of the QUIDS is likely to be adversely affected. In addition, as a
result of such rights, the market price of the QUIDS may be more volatile than
other debt instruments that do not have such rights. A holder that disposes of
its QUIDS during a Deferral Period, therefore, may not receive the same return
on its investment as a holder that continues to hold its QUIDS.
SUBORDINATION OF QUIDS
The QUIDS are unsecured obligations of the Company and will be subordinate
to all existing and future Senior Indebtedness (as hereinafter defined) of the
Company, but senior to all Capital Stock of the Company, including the
Depositary Shares. On March 31, 1995, approximately $4.3 billion of such Senior
Indebtedness was outstanding. There are no terms in the QUIDS that limit the
Company's ability to incur additional indebtedness, including indebtedness that
would rank senior to the QUIDS. With respect to the QUIDS, the Indenture (as
hereinafter defined) does not contain any cross-defaults to any other
indebtedness of the Company, and therefore, a default with respect to, or the
acceleration of, any such indebtedness will not constitute an "Event of Default"
with respect to the QUIDS. As the QUIDS will be issued by the Company, the QUIDS
effectively will be subordinate to all obligations of the Company's
subsidiaries. See "Description of QUIDS -- Subordination" and "-- Subrogation".
LISTING AND TRADING OF QUIDS AND DEPOSITARY SHARES
The exchange of Depositary Shares pursuant to the Exchange Offer will
reduce the number of Depositary Shares that might otherwise trade publicly and
the number of holders of such shares, and depending on the number of Depositary
Shares exchanged, could adversely affect the liquidity and market value of
remaining Depositary Shares held by the public.
There has not been any public market for the QUIDS. While the Company
intends to list the QUIDS on the NYSE, there can be no assurance that an active
market for the QUIDS will develop or be sustained in the future on such
exchange. Listing will depend upon the satisfaction of the NYSE's listing
requirements with respect to the QUIDS, including requirements as to the
principal amount and distribution of the QUIDS. Although the Dealer Managers
have indicated to the Company that they intend to make a market in the QUIDS as
permitted by applicable laws and regulations, they are not obligated to do so
and may discontinue any such market-making at any time without notice.
Accordingly, no assurance can be given as to the liquidity of, or trading for,
the QUIDS.
CERTAIN FACTORS AFFECTING THE COMPANY
The Company, in common with other public utilities having industrialized
service areas, is experiencing increased competition and pressure to reduce
rates in order to retain industrial customers. In addition, the Company, in
common with other public utilities, is subject to extensive environmental
regulation. Additional costs may result as the effects of various chemicals on
the environment (including nuclear waste) are studied and governmental
regulations are developed and implemented. The costs of future nuclear
decommissioning activities are the subject of increased regulatory attention;
however, the Company expects that substantially all of the costs of
environmental compliance will be recovered through the ratemaking process.
Substantially all of the Company's properties are subject to the lien of a
Mortgage and Deed of Trust, under which approximately $3.5 billion of General
and Refunding Mortgage Bonds were outstanding as of March 31, 1995. For a
complete description of the Company's capitalization, refer to "The Company --
Capitalization" herein.
Ownership of Fermi 2, a nuclear generating unit comprising 28% of the
Company's total assets and 11% of the Company's summer net rated capability,
subjects the Company to additional significant risks. Nuclear plants are highly
regulated by a number of governmental agencies concerned with public health and
safety and, consequently, are subject to greater risks and scrutiny.
15
<PAGE> 18
THE COMPANY
GENERAL
The Company is a Michigan corporation and a regulated public utility
engaged in the generation, purchase, transmission, distribution and sale of
electric energy in a 7,600 square mile service area in southeastern Michigan
which includes about 13% of Michigan's total land area and about half of its
population, electric energy consumption and industrial capacity.
FORMATION OF A HOLDING COMPANY
On December 5, 1994, the Company's Board of Directors approved the
formation of a holding company, currently named DTE Holdings, Inc., referred to
earlier as "Holdings". The Company's shareholders approved this organizational
structure at the Company's April 1995 Annual Meeting of Common Shareholders.
This organizational structure will be subject to receipt of a number of
regulatory approvals. The holding-company structure could be in place before the
end of 1995.
A holding-company structure will provide the Company with greater financial
flexibility to develop and operate new non-utility businesses. It also will
offer a mechanism for better defining and separating the Company's regulated and
unregulated businesses, and for protecting the Company's utility business and
customers from any risks that may be involved in non-utility ventures.
When all approvals are in place, the Company's Common Stock will be
exchanged share-for-share for the common stock of Holdings. The Company will
become a subsidiary of Holdings with Holdings owning all of the Company's Common
Stock. The Company's Preferred Stock, Preference Stock (none of which is
outstanding), General and Refunding Mortgage Bonds, and other debt securities
will be unchanged and will continue to be securities and obligations of the
Company. All series of the Company's Preferred Stock, Preference Stock, Common
Stock and any other equity securities of the Company are referred to herein as
"Capital Stock".
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
TWELVE MONTHS ENDED --------------------------------------------------------------
MARCH 31, 1995(A) 1994 1993 1992 1991 1990
--------------------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Income Summary:
Operating Revenues.... $3,500,026 $3,519,341 $3,555,211 $3,558,143 $3,591,537 $3,576,281
Operating Income...... 724,239 719,395 843,947 953,156 943,898 890,655
Net Income............ 420,529 419,909 521,903 588,047 568,037 514,459
Earnings per Common
Share............... $ 2.68 $ 2.67 $ 3.34 $ 3.79 $ 3.64 $ 3.26
</TABLE>
- -------------------------
(a) Financial results for this interim period are not necessarily indicative of
results that may be expected for any other interim period or for the fiscal
year.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS
The Company's ratios of earnings to fixed charges* were as follows for the
respective periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
TWELVE MONTHS ENDED --------------------------------------------------------
MARCH 31, 1995 1994 1993 1992 1991 1990
---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
3.17 3.13 3.25 3.09 2.74 2.42
</TABLE>
16
<PAGE> 19
The Company's ratios of earnings to combined fixed charges* and preferred
and preference stock dividend requirements were as follows for the respective
periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
TWELVE MONTHS ENDED -------------------------------------------------
MARCH 31, 1995 1994 1993 1992 1991 1990
------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
2.76 2.73 2.88 2.79 2.50 2.21
</TABLE>
- ---------------
* For the purposes of computing these ratios, earnings represent net income
(including allowance for both borrowed and other funds used during
construction, "AFUDC", accretion income and deferred Fermi 2 depreciation,
amortization and return) before deducting income taxes and fixed charges.
Fixed charges represent total interest charges, interest factor of rents and
amortization of debt discount, premium and expense.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1994 and as adjusted to give effect to the Exchange
Offer (assuming that 4,200,000 of the outstanding Depositary Shares are
exchanged). The financial data at December 31, 1994 in the following table are
derived from the Company's audited financial statements for the year ended
December 31, 1994.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
--------------------------------------------
ACTUAL AS ADJUSTED
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Long-Term Debt................................... $3,825,296 50.8% $3,825,296 50.8%
Quarterly Income Debt Securities................. -- -- 105,000 1.4
---------- ----- ---------- -----
3,825,296 50.8 3,930,296 52.2
Cumulative Preferred Stock Redeemable Solely at
the Option of the Company...................... 380,283 5.0 278,701 3.7
Common Stockholders' Equity...................... 3,326,080 44.2 3,322,662 44.1
---------- ----- ---------- -----
$7,531,659 100.0% $7,531,659 100.0%
========== ===== ========== =====
</TABLE>
THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $105,000,000 aggregate principal amount of its QUIDS for up to
4,200,000 Depositary Shares, each representing a one-quarter interest in a share
of its Preferred Stock. Pursuant to the terms of the Exchange Offer, the Company
will accept for exchange up to 4,200,000 Depositary Shares validly tendered and
not properly withdrawn prior to the Expiration Time. As of the date of this
Prospectus, there are 6,000,000 Depositary Shares outstanding. Depositary Shares
not accepted for exchange because of proration will be returned. See "Proration"
below.
Tendering holders will not be obligated to pay brokerage commissions or
fees to the Dealer Managers, the Exchange Agent, the Custodian, the Information
Agent or the Company or, subject to the instructions in the Letter of
Transmittal with respect to special issuance instructions, transfer taxes with
respect to the exchange of Depositary Shares pursuant to the Exchange Offer. The
Company will pay all reasonable charges and expenses in connection with the
Exchange Offer, other than any applicable income taxes or any charges that
individual brokerage firms charge their clients for other services rendered in
connection with tendering their shares. Holders of Depositary Shares may be
obligated to pay fees charged by DTC Participants in order for such participants
to tender such holder's Depositary Shares and to receive QUIDS in exchange
therefor on behalf of such holder. Holders of certificated Depositary Shares who
are not DTC Participants will not be
17
<PAGE> 20
obligated to pay fees charged by the Custodian related to the establishment or
maintenance of accounts opened by such holders to receive QUIDS issued in
exchange for Depositary Shares accepted in accordance with the terms of the
Exchange Offer. See "The Exchange Offer -- Acceptance of Depositary Shares;
Delivery of QUIDS -- Custodial Arrangements".
PURPOSE OF THE EXCHANGE OFFER
The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing Depositary Shares with QUIDS. The potential
cash flow benefit to the Company arises because interest payable on the QUIDS
will be deductible by the Company (as it accrues) for United States federal
income tax purposes, while dividends payable on the Depositary Shares are not
deductible.
Except in connection with the Exchange Offer, the Company has no present
plans or intention to make any acquisition of or offers for Depositary Shares.
However, after the expiration of the Exchange Offer, the Company will continue
to monitor the market for the Depositary Shares and reserves the right, in its
sole discretion, to acquire and to make offers for Depositary Shares subsequent
to the Expiration Time for cash or in exchange for other securities, by optional
redemption of the Preferred Stock underlying the Depositary Shares or otherwise.
The terms of any such acquisitions or offers may differ from the terms of the
Exchange Offer. Such acquisitions or offers, if any, would depend upon, among
other things, the price and availability of such shares and the Company's tax
position.
EXPIRATION; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer will expire at the Expiration Time, unless the Company
shall have extended the period during which the Exchange Offer is open, in which
case the term "Expiration Time" means the latest time and date at which the
Exchange Offer, as so extended by the Company, shall expire.
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the
Exchange Offer is open by giving oral or written notice of such extension to the
Exchange Agent and making a public announcement thereof. There can be no
assurance that the Company will exercise its right to extend the Exchange Offer.
During any extension of the Exchange Offer, all Depositary Shares previously
tendered pursuant thereto and not exchanged or withdrawn will remain subject to
the Exchange Offer and may be accepted for exchange by the Company at the
expiration of the Exchange Offer subject to the right of a tendering holder to
withdraw its Depositary Shares. See "Withdrawal Rights" below.
The Company also expressly reserves the right, subject to applicable law,
(i) to delay acceptance for exchange of any Depositary Shares or terminate the
Exchange Offer and not accept for exchange any Depositary Shares and promptly
return all such shares to the tendering holders thereof, upon the failure of any
of the conditions specified in "Conditions of the Exchange Offer" below to be
satisfied or waived by the Company or to comply in whole or in part with
applicable law, by giving oral or written notice of such delay or termination to
the Exchange Agent, (ii) to waive any condition to the Exchange Offer and accept
all Depositary Shares previously tendered pursuant thereto, (iii) to extend the
Expiration Time and retain all Depositary Shares tendered pursuant thereto until
the expiration of the Exchange Offer,(iv) to amend the Exchange Offer in any
respect or (v) to modify the form or amount of the consideration to be paid
pursuant to the Exchange Offer. If the Exchange Offer is so amended, the term
"Exchange Offer" shall mean the Exchange Offer as so amended. The reservation by
the Company of the right to delay acceptance for exchange of Depositary Shares
is subject to the provisions of Rule 14e-1(c) under the Exchange Act, which
requires that the Company pay the consideration offered or return the Depositary
Shares deposited by or on behalf of holders thereof promptly after the
termination or withdrawal of the Exchange Offer.
18
<PAGE> 21
Any extension, delay, termination or amendment of the Exchange Offer will
be followed as promptly as practicable by a public announcement thereof. Without
limiting the manner in which the Company may choose to make a public
announcement of any extension, delay, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by issuing a release to the
Dow Jones News Service, except in the case of an announcement of an extension of
the Exchange Offer, in which case the Company shall have no obligation to
publish, advertise or otherwise communicate such announcement other than by
issuing a notice of such extension by press release or other public
announcement, which notice shall be issued no later than 9:00 A.M., New York
City time, on the next business day after the previously scheduled expiration
date of the Exchange Offer.
If the Company shall decide, in its sole discretion, to increase or
decrease the number of Depositary Shares being sought in the Exchange Offer or
to increase or decrease the consideration offered to holders of Depositary
Shares to be paid in the Exchange Offer and if, at the time that notice of such
increase or decrease is first published, sent or given to holders of Depositary
Shares in the manner specified above, the Exchange Offer is scheduled to expire
at any time earlier than the expiration of a period ending on the tenth business
day from and including the date that such notice is first so published, sent or
given, the Exchange Offer will be extended until the expiration of such period
of ten business days. As used in this paragraph, "business day" has the meaning
set forth in Rule 14d-1 (and applicable to Regulation 14E) under the Exchange
Act.
If the Company makes a material change in the terms of the Exchange Offer
or the information concerning the Exchange Offer, or waives any condition of the
Exchange Offer that results in a material change to the circumstances of the
Exchange Offer, the Company will disseminate additional exchange offer materials
to the extent required under the Exchange Act, and will extend the Exchange
Offer to the extent required in order to permit holders of Depositary Shares
adequate time to consider such materials. The minimum period during which the
Exchange Offer must remain open following material changes in the terms of the
Exchange Offer or information concerning the Exchange Offer, other than a change
in price or percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the terms or information.
PROCEDURE FOR TENDERING DEPOSITARY SHARES
The acceptance by a holder of Depositary Shares of the Exchange Offer
pursuant to one of the procedures set forth below will constitute an agreement
between the holder of such shares and the Company in accordance with the terms
and subject to the conditions set forth in this Prospectus and in the Letter of
Transmittal.
THE QUIDS WILL BE ISSUED ONLY IN BOOK-ENTRY FORM THROUGH THE FACILITIES OF
DTC. ACCORDINGLY, IN ORDER TO PARTICIPATE IN THE EXCHANGE OFFER, HOLDERS OF
DEPOSITARY SHARES WHO ARE NOT DTC PARTICIPANTS MUST EITHER (I) MAKE ARRANGEMENTS
WITH A DTC PARTICIPANT TO HAVE SUCH PARTICIPANT VALIDLY TENDER SUCH DEPOSITARY
SHARES IN ACCORDANCE WITH THE TERMS OF THE EXCHANGE OFFER AND TO RECEIVE QUIDS
ISSUED IN EXCHANGE THEREFOR OR (II) VALIDLY TENDER SUCH DEPOSITARY SHARES IN
ACCORDANCE WITH THE TERMS OF THE EXCHANGE OFFER AND MAKE USE OF THE FACILITIES
PROVIDED BY THE CUSTODIAN, SO THAT, IN EITHER CASE, SUCH HOLDERS MAY BECOME
BENEFICIAL OWNERS OF QUIDS ISSUED IN THE EXCHANGE OFFER. UNDER THE TERMS OF THE
EXCHANGE OFFER, NO CERTIFICATED QUIDS WILL BE ISSUED IN EXCHANGE FOR DEPOSITARY
SHARES.
For Depositary Shares to be validly tendered pursuant to the Exchange
Offer, the Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's Message (as
hereinafter defined) in connection with a book-entry transfer of Depositary
Shares, and any other required documents, must be received by the Exchange Agent
at one of its addresses set forth on the back cover page of this Prospectus
prior to the Expiration Time. In addition, either (i) the certificates
representing tendered Depositary Shares must be received by the Exchange Agent
or such Depositary Shares must be tendered pursuant to the procedure for
book-entry transfer described below and a confirmation of receipt of such
19
<PAGE> 22
tendered Depositary Shares must be received by the Exchange Agent, in each case
prior to the Expiration Time, or (ii) the tendering holder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF DEPOSITARY SHARES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER TENDERING SUCH SHARES AND, EXCEPT AS OTHERWISE PROVIDED HEREIN,
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF SENT BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE PROPERLY INSURED
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE
SUFFICIENTLY IN ADVANCE OF THE EXPIRATION TIME TO PERMIT DELIVERY TO THE
EXCHANGE AGENT ON OR BEFORE THE EXPIRATION TIME.
If a holder desires to tender Depositary Shares pursuant to the Exchange
Offer but is unable to locate the certificates representing such shares to be
tendered, such holder should write to or telephone Chemical Bank, as Depositary
(the "Depositary"), Chemical Bank, J.A.F. Building, P.O. Box 2862, New York, NY
10116-2862, Attention: Lost Securities Department, telephone number (800)
851-9677, about procedures for obtaining a replacement certificate for
Depositary Shares and arranging for indemnification.
NO LETTERS OF TRANSMITTAL AND NO CERTIFICATES REPRESENTING DEPOSITARY
SHARES SHOULD BE SENT TO THE COMPANY, THE DEALER MANAGERS OR THE INFORMATION
AGENT. SUCH DOCUMENTS SHOULD ONLY BE SENT TO THE EXCHANGE AGENT.
Any beneficial owner whose Depositary Shares are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf.
Book-Entry Transfer. The Exchange Agent will make a request promptly after
the date of this Prospectus to establish accounts with respect to the Depositary
Shares at DTC for the purpose of facilitating the Exchange Offer, and, subject
to the establishment thereof, any financial institution that is a participant in
DTC's system may make book-entry delivery of Depositary Shares by causing DTC to
transfer such shares into the Exchange Agent's account with respect to the
Depositary Shares in accordance with DTC's procedures for such transfer.
Although delivery of Depositary Shares may be effected through book-entry
transfer into the Exchange Agent's accounts at DTC pursuant to DTC's Automated
Tender Offer Program ("ATOP") procedures, a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
other required documents, must in each case be received by the Exchange Agent at
one of its addresses set forth on the back cover page of this Prospectus prior
to the Expiration Time, or, if the guaranteed delivery procedures described
below are complied with, within the time period provided under such procedures.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Depositary Shares which are the subject of such
book-entry confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Company may enforce
such agreement against such participant.
Signature Guarantees. All signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution, unless the Depositary Shares which are
the subject of such Letter of Transmittal are tendered or executed,
respectively, (i) by a registered holder (which term, for the purposes described
above, shall include any participant in DTC whose name appears on a security
position listing as the owner of Depositary Shares) of such shares who has not
completed the box entitled
20
<PAGE> 23
"Special Issuance Instructions" or "Special Delivery Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. If Depositary
Shares are registered in the name of a person other than the signer of a Letter
of Transmittal or if certificates for QUIDS and/or certificates for untendered
or unexchanged Depositary Shares are to be issued or returned to a person other
than the registered holder, then the Depositary Shares must be endorsed by the
registered holder or be accompanied by a stock power in form satisfactory to the
Company duly executed by the registered holder with such signatures guaranteed
by an Eligible Institution. If signatures on a Letter of Transmittal are
required to be guaranteed, such guarantees must be by a member firm of a
registered national securities exchange, a member of the NASD or by a commercial
bank or trust company having an office in the United States that is a
participant in the Security Transfer Agents Medallion Program or the Stock
Exchange Medallion Program (each of the foregoing being referred to as an
"Eligible Institution").
Miscellaneous. Issuance of QUIDS in exchange for Depositary Shares will be
made only against deposit of the tendered Depositary Shares. If less than the
total number of Depositary Shares evidenced by a submitted certificates for
Depositary Shares is tendered, the tendering holder of Depositary Shares should
fill in the number of shares tendered in the appropriate boxes on the Letter of
Transmittal. The Exchange Agent will then reissue and return to the tendering
holder (unless otherwise requested by the holder under "Special Issuance
Instructions" and "Special Delivery Instructions" in the Letter of Transmittal),
as promptly as practicable following the Expiration Time, Depositary Shares
equal to the number of such delivered Depositary Shares not tendered, together
with any tendered Depositary Shares that were not accepted for exchange for any
reason. The total number of Depositary Shares deposited with the Exchange Agent
will be deemed to have been tendered unless otherwise indicated.
All questions as to the form of all documents and the validity (including
the time of receipt), eligibility, acceptance and withdrawal of tendered
Depositary Shares will be determined by the Company, in its sole discretion,
which determination shall be final and binding. The Company expressly reserves
the absolute right to reject any and all tenders not in proper form and to
determine whether the acceptance of or exchange by it for such tenders would be
unlawful. The Company also reserves the absolute right, subject to applicable
law, to waive or amend any of the conditions of the Exchange Offer or to waive
any defect or irregularity in the tender of any particular Depositary Shares.
None of the Company, the Exchange Agent, the Information Agent, the Dealer
Managers or any other person will be under any duty to give notification of any
defects or irregularities in tenders or will incur any liability for failure to
give any such notification. No tender of Depositary Shares will be deemed to
have been validly made until all defects and irregularities with respect to such
shares have been cured or waived. Any Depositary Shares received by the Exchange
Agent that are not properly tendered and as to which irregularities have not
been cured or waived will be returned by the Exchange Agent to the appropriate
tendering holder as soon as practicable. The Company's interpretation of the
terms and conditions of the Exchange Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding on all parties.
GUARANTEED DELIVERY PROCEDURES
If a holder desires to tender Depositary Shares and the holder's Depositary
Shares are not immediately available or time will not permit the holder's
Depositary Shares, Letter of Transmittal or other required documents to reach
the Exchange Agent prior to the Expiration Time or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if:
(a) the tender is made by or through an Eligible Institution; and
(b) prior to the Expiration Time, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
substantially in the form provided by the Company which contains a
21
<PAGE> 24
signature guaranteed by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery (unless such tender is for the account
of an Eligible Institution) which sets forth the name and address of the
holder of the Depositary Shares and the number of Depositary Shares
tendered, states that the tender is being made thereby and guarantees that
within five NYSE trading days after the Expiration Time, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in connection
with a book-entry transfer of Depositary Shares, and any other documents
required by the Letter of Transmittal, together with the Depositary Shares
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) all tendered Depositary Shares (or a confirmation of book-entry
transfer of such shares into the Exchange Agent's account at DTC) as well
as the Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agent's
Message in connection with a book-entry transfer of Depositary Shares, and
any other documents required by the Letter of Transmittal, are received by
the Exchange Agent within five NYSE trading days after the Expiration Time.
A Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Exchange Agent and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, in all cases QUIDS will only be
issued in exchange for Depositary Shares accepted for exchange pursuant to the
Exchange Offer after timely receipt by the Exchange Agent of certificates for
such shares (or a confirmation of book-entry transfer of such shares into the
Exchange Agent's account at DTC as described above), the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other required documents.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Depositary Shares for exchange (the "Transferor")
exchanges, assigns and transfers the Preferred Stock underlying such Depositary
Shares to the Company and irrevocably constitutes and appoints the Exchange
Agent as the Transferor's agent and attorney-in-fact to cause the Depositary
Shares and such underlying Preferred Stock to be assigned, transferred and
exchanged. The Transferor specifically authorizes the Exchange Agent to withdraw
under the Deposit Agreement among the Company, the Depositary and the holders
from time to time of certificates for the Depositary Shares (the "Deposit
Agreement") the Preferred Stock underlying any tendered Depositary Shares, and
to tender such underlying Preferred Stock in the Exchange Offer. The Transferor
represents and warrants that it has the full power and authority to tender,
exchange, assign and transfer the Depositary Shares and the underlying Preferred
Stock and to acquire the QUIDS issuable upon the exchange of such tendered
Depositary Shares in accordance with the terms of the Exchange Offer, and that,
when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the Preferred Stock underlying the tendered Depositary
Shares, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The Transferor also warrants that it will,
upon request, execute and deliver any additional documents deemed by the Company
to be necessary or desirable to complete the exchange, assignment and transfer
of Preferred Stock underlying the tendered Depositary Shares or transfer
ownership of such Depositary Shares on the account books maintained by DTC. All
authority conferred by the Transferor will survive the death, bankruptcy or
incapacity of the Transferor and every obligation of the Transferor shall be
binding upon the heirs, legal representatives, successors, assigns, executors
and administrators of such Transferor.
A holder of certificated Depositary Shares who is not a DTC Participant
must either make arrangements with a DTC Participant to have such participant
receive QUIDS issued in exchange for
22
<PAGE> 25
Depositary Shares accepted for exchange in accordance with the terms of the
Exchange Offer or indicated in the Letter of Transmittal that such holder wishes
to make use of the facilities provided by the Custodian, so that, in either
case, such holder may become a beneficial owner of QUIDS issued in exchange for
Depositary Shares accepted pursuant to the Exchange Offer. Under the terms of
the Exchange Offer, no certificated QUIDS will be issued in exchange for
Depositary Shares.
WITHDRAWAL RIGHTS
Tenders of Depositary Shares pursuant to the Exchange Offer are
irrevocable, except that Depositary Shares tendered pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration Time and, unless
theretofore accepted for exchange pursuant to the Exchange Offer, may also be
withdrawn at any time after 40 business days from the date of this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at the addresses set forth in the Letter of Transmittal. The method of
notification is at the risk and election of the holder. Any such notice of
withdrawal must specify (i) the holder named in the Letter of Transmittal as
having tendered Depositary Shares to be withdrawn, (ii) if the Depositary Shares
are held in certificated form, the certificate numbers of the Depositary Shares
to be withdrawn, (iii) that such holder is withdrawing its election to have such
Depositary Shares exchanged, and the name of the registered holder of such
Depositary Shares, and such notice of withdrawal must be signed by the holder in
the same manner as the original signature on the Letter of Transmittal
(including any required signature guarantees) or be accompanied by evidence
satisfactory to the Company that the person withdrawing the tender has succeeded
to the beneficial ownership of the Depositary Shares being withdrawn. The
Exchange Agent will return the properly withdrawn Depositary Shares promptly
following receipt of notice of withdrawal. If Depositary Shares have been
tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawn Depositary Shares and otherwise comply with DTC's procedures.
All questions as to the validity of a notice of withdrawal, including the time
of receipt, will be determined by the Company, and such determination will be
final and binding on all parties. Withdrawal of tenders of Depositary Shares may
not be rescinded and any Depositary Shares withdrawn will not thereafter be
deemed to be validly tendered for the purposes of the Exchange Offer. Properly
withdrawn Depositary Shares, however, may be retendered by following the
procedures therefor described elsewhere herein at any time prior to the
Expiration Time. See "Procedure for Tendering Depositary Shares" above.
ACCEPTANCE OF DEPOSITARY SHARES; DELIVERY OF QUIDS
The acceptance for exchange of Depositary Shares validly tendered and not
properly withdrawn will be made as promptly as practicable after the Expiration
Time. Subject to the rules promulgated pursuant to the Exchange Act, however,
the Company expressly reserves the right to delay acceptance of any of the
Depositary Shares for exchange, or terminate the Exchange Offer and not accept
for exchange any Depositary Shares, if any of the conditions set forth under
"Conditions of the Exchange Offer" below shall not have been satisfied or waived
by the Company or to comply, in whole or in part, with any applicable law. For
purposes of the Exchange Offer, the Company will be deemed to have accepted for
exchange validly tendered and not properly withdrawn Depositary Shares if, as
and when the Company gives oral or written notice thereof to the Exchange Agent.
Subject to the terms and conditions of the Exchange Offer, delivery of QUIDS for
Depositary Shares accepted pursuant to the Exchange Offer will be made by the
Exchange Agent as soon as practicable after receipt of such notice. The Exchange
Agent will act as agent for the tendering holders of Depositary Shares for the
purposes of receiving QUIDS from the Company and transmitting the QUIDS to the
tendering holders. Tendered Depositary Shares not accepted for exchange by the
Company, if any, will be returned without expense to the tendering holder of
such Depositary Shares (or, in the case of Depositary Shares tendered by
book-entry transfer into the
23
<PAGE> 26
Exchange Agent's account at DTC, such shares will be credited to an account
maintained at DTC) as promptly as practicable following the Expiration Time.
The QUIDS will be issued only in book-entry form through the facilities of
DTC. Accordingly, in order to participate in the Exchange Offer, a holder of
certificated Depositary Shares who is not a DTC Participant must either make
arrangements with a DTC Participant to have such participant receive QUIDS
issued in exchange for Depositary Shares accepted for exchange in accordance
with the terms of the Exchange Offer or make use of the facilities provided by
the Custodian, so that, in either case, such holder may become a beneficial
owner of QUIDS issued in the Exchange Offer. See "DTC Book-Entry-Only System".
If the Company extends the Exchange Offer, or for any reason whatsoever,
acceptance for exchange or issuance of QUIDS in exchange for any Depositary
Shares tendered pursuant to the Exchange Offer is delayed, or the Company is
unable to accept for exchange or exchange Depositary Shares tendered pursuant to
the Exchange Offer, then, without prejudice to the Company's rights set forth
herein, the Exchange Agent may nevertheless, on behalf of the Company and
subject to rules promulgated pursuant to the Exchange Act, retain tendered
Depositary Shares and such shares may not be withdrawn except to the extent that
the tendering holder of such Depositary Shares is entitled to withdrawal rights
as described below.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders, by execution of a Letter of Transmittal (or facsimile
thereof) waive any right to receive notice of acceptance of their Depositary
Shares for exchange.
Custodial Arrangement. Under a Custodian Agreement, dated as of June ,
1995 between the Company and the Custodian (the "Custodial Agreement"), the
Company has retained Bankers Trust Company to act as custodian of QUIDS
delivered by the Company to the Custodian on behalf of the beneficial owners
thereof who are not DTC Participants (the "Account Holders"). The Custodian has
agreed to establish and maintain a custody account (the "Deposit Account") in
the name of each Account Holder requesting a custody account for QUIDS received
by the Custodian for the benefit of such holder simultaneous with the time of
the issuance of such QUIDS.
Under the Custodian Agreement, the Custodian will (i) collect all interest
and principal on the QUIDS and credit the same to the Deposit Accounts and
disburse the same to the Account Holders; (ii) present for payment all QUIDS
held in Deposit Accounts which are called, redeemed or retired or otherwise
become payable; (iii) effect such transfer of an Account Holder's QUIDS to an
institution eligible for the DTC book-entry-only system as may be properly
instructed by such Account Holder; (iv) effect, upon instructions from the
Account Holder, the sale (at a market price with customary commissions) of the
Account Holder's QUIDS held in the Deposit Account; and (v) provide the Account
Holders with notices and other information relative to any QUIDS in the Account
Holders' Deposit Accounts. The Custodian may not vote, execute any proxy, give
any consent or take any action upon or in respect of any QUIDS in the Deposit
Accounts, except upon instructions from the Account Holders thereof.
The proceeds from any sale of QUIDS effected by the Custodian upon the
instructions of an Account Holder will be disbursed to the Account Holder in
accordance with the instructions received from such Account Holder.
Notwithstanding the preceding sentence, settlement and payment for QUIDS may be
effected in accordance with customary or established trading or securities
processing practices.
The Custodian will be responsible for the performance of only such duties
as are set forth or contained in instructions given to the Custodian which are
not contrary to the provisions of the Custodian Agreement. The Custodian has the
right to assume, in the absence of notice to the contrary from the Account
Holder, that any person whose name is on file with the Custodian has been
authorized by the Custodian to give the instructions in question. The Custodian
will use all reasonable care with respect to the safekeeping of the QUIDS in the
Deposit Accounts and carrying out its obligations under the Custodian Agreement.
So long as and to the extent that it has exercised
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<PAGE> 27
reasonable care, the Custodian will not be responsible for the title, validity
or genuineness of any QUIDS received by it pursuant to the Custodian Agreement
and shall be held harmless by the Company in acting upon any instrument
reasonably believed by it to be genuine and to be signed or furnished by the
proper party, and will be indemnified, to the extent permitted by law, by the
Company for any losses and expenses incurred by the Custodian and arising out of
actions taken or omitted with reasonable care by the Custodian. The Company
reserves the right to seek reimbursement from an Account Holder for any loss it
may sustain as a result of the indemnification granted under the Custodian
Agreement.
The Company has agreed to pay the Custodian for the establishment and
maintenance of Deposit Accounts pursuant to the Custodian Agreement and to
reimburse the Custodian for its out-of-pocket and incidental expenses, as well
as reasonable counsel fees.
PRORATION
If more than 4,200,000 Depositary Shares are validly tendered and not
properly withdrawn prior to the Expiration Time, the Company will, upon the
terms and subject to the conditions of the Exchange Offer, accept for exchange
4,200,000 Depositary Shares so tendered and not properly withdrawn on a pro rata
basis from all holders of Depositary Shares, according to the number of
Depositary Shares validly tendered by each such holder and not properly
withdrawn prior to the Expiration Time (calculated in all cases based on the
number of shares tendered). If 4,200,000 or fewer Depositary Shares are validly
tendered and not properly withdrawn prior to the Expiration Time, the Company
will, upon the terms and subject to the conditions of the Exchange Offer, accept
for exchange all such shares so tendered and not properly withdrawn.
Because of the difficulty of determining the aggregate number of Depositary
Shares validly tendered and not properly withdrawn (including shares tendered by
the guaranteed delivery procedures), the Company may not be able to announce the
final results of such proration until approximately seven NYSE trading days
after the Expiration Time. Preliminary results of proration will be announced by
press release as promptly as practicable after the Expiration Time. Holders of
Depositary Shares may obtain such preliminary information from the Information
Agent and may be able to obtain such information from their brokers. THE COMPANY
WILL NOT ISSUE ANY QUIDS IN EXCHANGE FOR ANY DEPOSITARY SHARES ACCEPTED FOR
EXCHANGE PURSUANT TO THE EXCHANGE OFFER OR RETURN DEPOSITARY SHARES DELIVERED TO
THE EXCHANGE AGENT BUT NOT TENDERED OR RETURN DEPOSITARY SHARES TENDERED BUT NOT
ACCEPTED FOR EXCHANGE BECAUSE OF PRORATION UNTIL THE FINAL PRORATION FACTORS ARE
KNOWN.
ACCRUED DIVIDENDS
Holders of Depositary Shares accepted for exchange pursuant to the Exchange
Offer will not receive dividends from July 15, 1995 (the last regular dividend
payment date with respect to the Depositary Shares). Holders whose Depositary
Shares are accepted for exchange will receive interest on the QUIDS accruing
initially at a rate of 7.75% per annum (equal to the indicated dividend rate on
the Depositary Shares) from July 15, 1995 to but excluding the Issuance Date,
and thereafter at an annual rate of %, all payable on the first interest
payment on the QUIDS as described in "Description of QUIDS -- Quarterly
Payments". For United States federal income tax purposes, interest accruing from
July 15, 1995 to but excluding the Issuance Date will be treated as part of the
amount received upon the exchange. See "Certain United States Federal Income Tax
Consequences".
Dividends on Depositary Shares not exchanged in the Exchange Offer will
continue to accrue and be payable when, as and if declared in accordance with
the terms of the underlying Preferred Stock.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or, subject to any applicable
rules and regulations of the Commission,
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<PAGE> 28
including Rule 14e-1(c) (relating to the Company's obligation to exchange and
issue QUIDS for or return tendered Depositary Shares promptly after termination
of the Exchange Offer), exchange and issue QUIDS for any Depositary Shares
tendered and may postpone the acceptance for exchange of or, subject to the
restriction set forth above, exchange and issuance of QUIDS for Depositary
Shares tendered and to be exchanged and may terminate or amend the Exchange
Offer, if at any time prior to the time of acceptance for exchange of, or
exchange and issuance of QUIDS for, any such Depositary Shares (whether or not
any other Depositary Shares have theretofore been accepted for exchange or QUIDS
have been issued in respect thereof pursuant to the Exchange Offer), any of the
following events shall occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, capitalization, stockholders' equity,
financial condition, operations, results of operations or prospects of the
Company or any of its subsidiaries, or in the general economic or financial
market conditions in the United States or abroad, which is or may be
materially adverse to the Company and its subsidiaries or its stockholders
or to the value of the Depositary Shares or there shall have been a
significant decrease in the market prices of or trading in the Depositary
Shares, or the Company shall have become aware of any fact or occurrence
which is or may be materially adverse with respect to the value of the
Depositary Shares or the Exchange Offer's contemplated benefits to the
Company; or
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or the over-the-counter market, (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (3) declaration of a national emergency or a commencement of a war,
armed hostilities or other national or international calamity directly or
indirectly involving the United States, (4) any limitation (whether or not
mandatory) by any governmental or regulatory authority on, or any other
event might affect, the nature or extension of credit by banks or other
financial institutions, (5) any significant adverse change in the United
States securities or financial markets, or (6) in the case of any of the
foregoing existing at the time of the commencement of the Exchange Offer a
material acceleration, escalation or worsening thereof; or
(c) there shall have been any action taken or threatened, or any
statute, rule, regulation, pronouncement, judgment, order or injunction
proposed, sought, promulgated, enacted, entered, enforced or deemed
applicable to the Exchange Offer by any local, state, federal or foreign
government or governmental authority or by any court, domestic or foreign,
that might, directly or indirectly, (1) make the acceptance for exchange or
issuance of QUIDS for some or all of the Depositary Shares illegal or
otherwise restrict or prohibit consummation of the Exchange Offer, (2)
result in a delay in, or restrict the ability of the Company, or render the
Company unable, to accept for exchange some or all of the Depositary Shares
or to issue some or all of the QUIDS in exchange therefor, (3) adversely
affect the transactions contemplated by the Exchange Offer, (4) otherwise
adversely affect the Company or (5) result in a material limitation in the
benefits expected to be derived by the Company as a result of the
transactions contemplated by the Exchange Offer; or
(d) there shall be threatened, instituted or pending any action,
proceeding or claim by or before any court or governmental, administrative
or regulatory agency or authority or any other person or tribunal, domestic
or foreign, challenging the making of the Exchange Offer, the acquisition
by the Company of any Depositary Shares, or seeking to obtain any material
damages as a result thereof, or otherwise adversely affecting the Company
or the value of the Preferred Stock underlying the Depositary Shares;
which makes it inadvisable to proceed with the Exchange Offer or such acceptance
for exchange of Depositary Shares or the issuance of the QUIDS in exchange
therefor.
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<PAGE> 29
All the foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
such condition and may be waived by the Company, in whole or in part, at any
time and from time to time, in the sole discretion of the Company. The failure
by the Company at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. Any
determination by the Company concerning the foregoing conditions shall be final
and binding.
If any of the foregoing conditions shall not be satisfied (or, with respect
to the above enumerated events, shall have occurred), the Company may, subject
to applicable law, (i) terminate the Exchange Offer and return all Depositary
Shares tendered pursuant to the Exchange Offer to tendering security holders;
(ii) extend the Exchange Offer and retain all tendered Depositary Shares until
the Expiration Time for the extended Exchange Offer; or (iii) waive the
unsatisfied conditions with respect to the Exchange Offer and accept all
Depositary Shares tendered pursuant to the Exchange Offer.
DEALER MANAGERS
Goldman, Sachs & Co. are acting as Dealer Managers for the Exchange Offer
under a Dealer Managers Agreement dated , 1995 (the "Dealer Managers
Agreement"). Pursuant to the Dealer Managers Agreement, the Company has agreed
to pay the Dealer Managers aggregate fees of up to $840,000. In addition, the
Company has agreed to reimburse the Dealer Managers for all of their reasonable
out-of-pocket expenses, including the reasonable fees and expenses of their
legal counsel.
The Dealer Managers have agreed to use their best efforts to solicit the
exchange of Depositary Shares pursuant to the Exchange Offer.
The Company has agreed to indemnify the Dealer Managers against certain
liabilities, including liabilities under the federal securities laws.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Depositary Shares will be borne
by the Company. For compensation to be paid to the Dealer Managers, see "Dealer
Managers" above. The total cash expenditures to be incurred by the Company in
connection with the Exchange Offer, other than fees payable to the Dealer
Managers, but including the expenses of the Dealer Managers, printing,
accounting and legal fees, and the fees and expenses of the Exchange Agent, the
Information Agent and the Trustee (as hereinafter defined) under the Indenture,
and the solicitation fee to Soliciting Dealers are estimated to be up to
$ .
The Company will pay to a Soliciting Dealer (as hereinafter defined) a
solicitation fee of $0.50 per Depositary Share for any Depositary Share tendered
and accepted for exchange pursuant to the Exchange Offer if such Soliciting
Dealer has solicited and obtained such tender. "Soliciting Dealer" includes (i)
any broker or dealer in securities, including the Dealer Managers in their
capacity as a broker or dealer, which is a member of any national securities
exchange or of the National Association of Securities Dealers, Inc. (the
"NASD"), (ii) any foreign broker or dealer not eligible for membership in the
NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting
tenders outside the United States to the same extent as though it were an NASD
member or (iii) any bank or trust company. In order for a Soliciting Dealer to
receive a solicitation fee with respect to the tender of Depositary Shares, the
Exchange Agent must have received a Letter of Transmittal with the portion
thereof entitled "Notice of Solicited Tenders" properly completed and duly
executed.
No such fee shall be payable to the Soliciting Dealer with respect to the
tender of Depositary Shares by the holder of record, for the benefit of the
beneficial owner, unless the beneficial owner has designated such Soliciting
Dealer. No such fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
depositing holder. No broker, dealer, bank, trust company or fiduciary shall be
deemed to be the agent of the
27
<PAGE> 30
Company, the Exchange Agent, the Information Agent or the Dealer Manager for
purposes of the Exchange Offer. Soliciting Dealers are not entitled to a
solicitation fee for Depositary Shares beneficially owned by such Soliciting
Dealer. The maximum fee payable to Soliciting Dealers is $2,100,000, exclusive
of the amount that the Dealer Manager is entitled to.
The Company will pay any transfer taxes with respect to transfer and
exchange of shares pursuant to the Exchange Offer. If, however, the QUIDS due in
respect of the Depositary Shares accepted for exchange are to be issued to, or
(in the circumstances permitted hereby) if certificates for Depositary Shares
not tendered or not exchanged and paid for are to be registered in the name of,
any person other than the person signing the Letter of Transmittal, the amount
of any transfer taxes (whether imposed on the registered holder or such person)
payable on account of the transfer to such person will be deducted from the
QUIDS due in respect of the Depositary Shares accepted for exchange if
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
not submitted.
EXCHANGE AGENT AND INFORMATION AGENT
Bankers Trust Company will act as exchange agent for the Exchange Offer.
All correspondence in connection with the Exchange Offer, the Letter of
Transmittal and the Notice of Guaranteed Delivery should be addressed to the
Exchange Agent as follows:
BANKERS TRUST COMPANY
BY HAND/OVERNIGHT COURIER BY MAIL
Bankers Trust Company Bankers Trust Company
Corporate Trust & Agency Group Corporate Trust & Agency Group
Receipt & Delivery Window Reorganization Dept.
123 Washington St., 1st Floor P.O. Box 1458
New York, NY 10006 Church Street Station
New York, NY 10008-1458
Facsimile Transmission
(212) 250-6275
(212) 250-3290
(For Eligible Institutions Only)
Confirm by Telephone:
(212) 250-6270
Shareholder Inquiries
(212) 250-6270
Bankers Trust Company is the Trustee under the Indenture with respect to
both collateralized and uncollateralized notes, including the QUIDS. Bankers
Trust Company also serves as Trustee for the Company's Mortgage and Deed of
Trust with respect to General and Refunding Mortgage Bonds and is the Exchange
Agent for the Exchange Offer. It has also agreed to serve, at the request of
tendering holders of Depositary Shares, as Custodian for QUIDS issued as part of
the Exchange Offer.
Georgeson & Company Inc. will act as Information Agent for the Exchange
Offer. In such capacity, the Information Agent will assist with the mailing of
the Prospectus and related materials to holders of Depositary Shares, respond to
inquiries of and provide information to holders of Depositary Shares in
connection with the Exchange Offer and provide other similar advisory services
as the Company may request from time to time. All inquiries relating to the
Exchange Offer should be directed to the Information Agent as follows:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, NY 10005
Banks and Brokers call collect:
(212) 440-9800
All others call toll-free:
1-800-223-2064
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<PAGE> 31
The Company will pay the Information Agent and the Exchange Agent their
reasonable and customary compensation, which the Company estimates will total
approximately $ , for their services in connection with the Exchange
Offer. In addition, the Company will reimburse the Exchange Agent and the
Information Agent for their out-of-pocket expenses, and will indemnify the
Exchange Agent and the Information Agent against certain liabilities and
expenses in connection with their services, including liabilities under the
federal securities laws. The Company also will pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to beneficial holders of Depositary Shares, and in handling or forwarding
tenders or consents for their customers.
Directors, officers and regular employes of the Company, none of whom will
be specifically compensated for such services, may contact holders of Depositary
Shares by mail, telephone, facsimile transmission, telex, telegraph and personal
interviews regarding the Exchange Offer, and may request brokers, dealers,
commercial banks, trust companies and other nominees to forward this Prospectus
(and all related materials) to beneficial owners of Depositary Shares.
MARKET AND TRADING INFORMATION
The Depositary Shares are listed and traded on the NYSE. The following
table sets forth for the calendar periods indicated the high and low closing
sales prices for the Depositary Shares per share as reported in published
financial sources:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1993:
First Quarter....................................................... 25 3/8 25 1/8
Second Quarter...................................................... 26 24 1/2
Third Quarter....................................................... 26 5/8 25 5/8
Fourth Quarter...................................................... 26 1/2 24 7/8
1994:
First Quarter....................................................... 26 24
Second Quarter...................................................... 24 3/4 22
Third Quarter....................................................... 24 5/8 22 3/4
Fourth Quarter...................................................... 23 3/8 21
1995:
First Quarter....................................................... 24 3/4 21 3/4
Second Quarter (through June 15).................................... 25 1/2 23 5/8
</TABLE>
On April 12, 1995, the last full day the Depositary Shares traded prior to
the initial public announcement of the Exchange Offer, the closing sales price
of the Depositary Shares, as reported on the NYSE Composite Tape, was $24.00 per
share. On June , 1995, the last full day the Depositary Shares traded prior to
the commencement of the Exchange Offer, the closing sales price of the
Depositary Shares on the NYSE as reported on the Composite Tape was $ per
share. On , 1995, the last full day the Depositary Shares traded
prior to the effectiveness of the Registration Statement of which this
Prospectus is a part, the closing sales price of the Depositary Shares was
$ per share. There can be no assurance concerning the prices at which
the Depositary Shares might be traded following the Exchange Offer. The exchange
of Depositary Shares pursuant to the Exchange Offer will reduce the number of
Depositary Shares that might otherwise trade publicly and the number of holders
of such shares, and depending on the number of Depositary Shares exchanged,
could adversely effect the liquidity and market value of the remaining
Depositary Shares held by the public.
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<PAGE> 32
Holders of Depositary Shares are urged to obtain current information with
respect to the sales prices of Depositary Shares.
There has not been any public market for the QUIDS. While the Company
intends to list the QUIDS on the NYSE, there can be no assurance that an active
market for the QUIDS will develop or be sustained in the future on such
exchange. Listing will depend upon the satisfaction of the NYSE's listing
requirements with respect to the QUIDS, including requirements as to the
principal amount and distribution of the QUIDS. Although the Dealer Managers
have indicated to the Company that they intend to make a market in the QUIDS as
permitted by applicable laws and regulations, they are not obligated to do so
and may discontinue any such market-making at any time without notice.
Accordingly, no assurance can be given as to the liquidity of, or trading market
for, the QUIDS.
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<PAGE> 33
DESCRIPTION OF QUIDS
GENERAL
The QUIDS will be a series of notes to be issued under the Note Indenture,
dated as of June 30, 1993, as supplemented by a First Supplemental Indenture
dated as of June 30, 1993, a Second Supplemental Indenture dated as of September
15, 1993, a Third Supplemental Indenture dated as of August 15, 1994 and a
Fourth Supplemental Indenture dated on or about July 15, 1995 creating the QUIDS
(as supplemented, the "Indenture") between the Company and Bankers Trust
Company, as trustee (the "Trustee"). The following statements with respect to
the QUIDS are summaries and are subject to the detailed provisions of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
Indenture, a copy of the form of which has been filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all the provisions of the QUIDS and the
Indenture, including the definitions therein of certain terms capitalized and
not otherwise defined in this Prospectus. Wherever references are made to
particular provisions of the Indenture or terms defined therein, such provisions
or definitions are incorporated by reference as part of the statements made and
such statements are qualified in their entirety by such references.
The notes of the Company previously issued under the Indenture are secured
as to payment of principal, interest and premium, if any, by the Company's
General and Refunding Mortgage Bonds pledged to the Trustee for the benefit of
the holders of such securities. The QUIDS offered hereby will not have the
benefit of any Mortgage Bonds or any other security.
The QUIDS will constitute a series of unsecured, subordinated debt
securities, will be subordinated to Senior Indebtedness of the Company, as
described herein, will be limited in aggregate principal amount to the aggregate
principal amount of QUIDS issued in the Exchange Offer and will mature on
September 30, 2025 (the "Stated Maturity"). The annual interest requirement on
the QUIDS (assuming 4,200,000 Depositary Shares are exchanged) will be
$ .
The QUIDS will be issued only in book-entry form through the facilities of
DTC and will be in denominations of $25 and integral multiples thereof.
Transfers or exchanges of beneficial interests in the QUIDS may be effected only
through records maintained by DTC or its nominee. Payment on the QUIDS will be
made in same-day funds through DTC. For a description of DTC and the specific
terms of the depository arrangements, see "DTC Book-Entry-Only System".
QUARTERLY PAYMENTS
Interest on the QUIDS will accrue from the Issuance Date at a rate of
% per annum and will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each an "Interest Payment Date"),
commencing September 30, 1995 to the persons in whose names the QUIDS are
registered on the relevant record dates, which will be one Business Day (as
hereinafter defined) prior to the relevant Interest Payment Dates (each a
"Record Date"). In addition, holders of the QUIDS will receive interest at a
rate of 7.75% per annum from July 15, 1995 (the last regular dividend payment
date with respect to the Depositary Shares) to but excluding the Issuance Date
payable at the time of the first interest payment on the QUIDS.
The amount of interest payable for any period will be computed on the basis
of twelve 30-day months and a 360-day year and, for any period shorter than a
full quarterly interest period, will be computed on the basis of the actual
number of days elapsed in such period. In the event that any date on which
interest is payable on the QUIDS is not a Business Day, then payment of the
amount payable on such date will be made on (i) the next succeeding day which is
a Business Day (and without interest or other payment in respect of any such
delay) with the same force and effect as if made on such date or (ii) the
preceding Business Day if the succeeding Business Day would fall within a new
calendar year (and without reduction in amount due to such early payment) with
the
31
<PAGE> 34
same force and effect as if made on such date, subject, in each case, to certain
rights of deferral described below. A "Business Day" shall mean any day other
than a day on which banking institutions in the State of New York or the State
of Michigan are authorized or obligated pursuant to law or executive order to
close.
PAYMENT DEFERRAL
The Company shall have the right at any time, on one or more occasions, so
long as an Event of Default (as hereinafter defined) has not occurred and is not
continuing under the Indenture with respect to the QUIDS, to extend any interest
payment period on the QUIDS; provided that the aggregate interest payment
period, as extended, must end on an interest payment date and must not exceed 20
consecutive quarterly interest payment periods or extend beyond the maturity of
the QUIDS or any date on which any QUIDS are fixed for redemption. As a
consequence, the quarterly interest payments on the QUIDS would be deferred (but
would continue to accrue with interest thereon at the rate of interest on the
QUIDS) during any such Deferral Period. At the end of each Deferral Period, the
Company shall pay all interest then accrued and unpaid (compounded quarterly).
In the event the Company exercises this right, Company shall not declare or pay
any dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its Capital Stock or make any guarantee payments with respect
to the foregoing during such Deferral Period, other than redemptions of any
series of Capital Stock of the Company pursuant to the terms of any sinking fund
provisions with respect thereto. In addition, during any Deferral Period, the
Company may not make any advance or loan to, or purchase any securities of, or
make any other investment in, any affiliate of the Company, including Holdings,
for the purpose of, or to enable the payment of, directly or indirectly,
dividends on any equity securities of Holdings. The Company has no current
intention of exercising its right to extend an interest payment period. During
any Deferral Period, the Company may continue to extend the interest payment
period by extending the Deferral Period; provided that the aggregate Deferral
Period, as extended, must end on an Interest Payment Date and must not exceed 20
consecutive quarterly interest payment periods or extend beyond the maturity of
the QUIDS or any date on which the QUIDS are fixed for redemption. The Company
shall give the holders of QUIDS notice of its election to defer payments or to
extend the Deferral Period ten Business Days prior to the earlier of (i) the
next scheduled quarterly payment date and (ii) the date the Company is required
to give notice of the record date of such related interest payment to the NYSE
or other applicable self-regulatory organization or to the holders of the QUIDS,
but in any event not less than two Business Days prior to such record date.
OPTIONAL REDEMPTION
The QUIDS will be redeemable at the option of the Company, in whole or in
part, at any time on or after June 30, 1998 and prior to maturity, upon not less
than 30 nor more than 60 days' notice, at a redemption price equal to 100% of
the principal amount redeemed plus accrued and unpaid interest to the date fixed
for redemption.
SATISFACTION AND DISCHARGE
The Company shall be deemed to have paid and discharged the indebtedness on
all the QUIDS and the Trustee shall execute instruments acknowledging the
satisfaction and discharge of such indebtedness if (1) (i) the Company has
deposited or caused to be deposited with the Trustee an amount sufficient to pay
and discharge the entire indebtedness on all outstanding QUIDS for principal and
interest to the Stated Maturity or any redemption date, as the case may be; or
(ii) the Company has deposited or caused to be deposited with the Trustee such
amount of direct noncallable obligations of, or noncallable obligations the
payment of principal of and interest on which is fully guaranteed by, the United
States of America maturing as to principal and interest in such amounts and at
such times as will, without consideration of any reinvestment thereof, be
sufficient to pay and discharge the entire indebtedness on all outstanding QUIDS
for principal and
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<PAGE> 35
interest to the Stated Maturity or any redemption date, as the case may be; and
(2) the Company has paid or caused to be paid all other sums payable with
respect to the QUIDS.
EVENTS OF DEFAULT
Any one of the following events will constitute an Event of Default under
the Indenture with respect to the QUIDS offered hereby: (a) failure to pay any
interest on the QUIDS when due, continued for 30 days; (b) failure to pay
principal on the QUIDS when due; (c) failure to perform any other covenant or
warranty of the Company in the Indenture (other than a covenant or warranty
included in the Indenture solely for the benefit of a series of securities other
than the QUIDS), continued for 60 days after written notice as provided in the
Indenture; and (d) certain events of bankruptcy, insolvency or reorganization
involving the Company. With respect to the QUIDS offered hereby, the Indenture
does not contain any cross-default to any other indebtedness of the Company, and
therefore, default with respect to, or an acceleration of, any such indebtedness
will not constitute an Event of Default with respect to the QUIDS.
If an Event of Default with respect to the QUIDS occurs and is continuing,
either the Trustee or the holders of at least 25% in aggregate principal amount
of the outstanding QUIDS by notice as provided in the Indenture may declare the
principal amount of the QUIDS to be due and payable immediately. At any time
after a declaration of acceleration has been made, but before a judgment or
decree for payment of money has been obtained by the Trustee, and subject to
applicable law and certain other provisions of the Indenture, the holders of a
majority in aggregate principal amount of the QUIDS may, under certain
circumstances, rescind and annul such acceleration.
The Indenture provides that within 90 days after the occurrence of any
Event of Default thereunder with respect to the QUIDS, the Trustee shall
transmit, in the manner set forth in the Indenture, notice of such Event of
Default to the holders of the QUIDS unless such Event of Default has been cured
or waived; provided, however, that except in the case of a default in the
payment of the principal of or interest on any QUIDS of such series, the Trustee
may withhold such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or responsible officers of the
Trustee has in good faith determined that the withholding of such notice is in
the interest of the holders of QUIDS.
If an Event of Default occurs and is continuing with respect to the QUIDS,
the Trustee may in its discretion proceed to protect and enforce its rights and
the rights of the holders of QUIDS by all appropriate judicial proceedings.
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate as to the Company's compliance with all conditions and
covenants of the Indenture.
The Indenture provides that, subject to the duty of the Trustee during any
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders of QUIDS, unless such holders shall
have offered to the Trustee reasonable indemnity. Subject to such provisions for
the indemnification of the Trustee, and subject to applicable law and certain
other provisions of the Indenture, the holders of a majority in aggregate
principal amount of the outstanding QUIDS will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the QUIDS.
MODIFICATION AND WAIVER
Modification and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the holders of not less than a majority in
aggregate principal amount of each series of debt securities issued under the
Indenture ("Debt Securities") affected thereby; provided, however, that no such
modification or amendment may, without the consent of all holders of each
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such series of Debt Securities effected thereby, (a) change the stated maturity
of the principal of, or any installment of principal of or interest on, any Debt
Securities, (b) reduce the principal amount of, or premium or interest on, any
Debt Securities, (c) change the coin or currency in which any Debt Securities or
any premium or any interest thereon is payable, (d) impair the right to
institute suit for the enforcement of any payment on or after the stated
maturity of any Debt Securities (or, in the case of redemption, on or after the
redemption date), (e) reduce the percentage and principal amount of the
outstanding Debt Securities, the consent of whose holders is required in order
to take certain actions, (f) change any obligation of the Company to maintain an
office or agency in the places and for the purposes required by the Indenture,
(g) reduce the requirements for quorum or voting or (h) modify any of the above
provisions.
The holders of at least 66 2/3% in aggregate principal amount of QUIDS may,
on behalf of the holders of all QUIDS, waive compliance by the Company with
certain restrictive provisions of the Indenture. The holders of not less than a
majority in aggregate principal amount of QUIDS may, on behalf of all holders of
QUIDS, waive any past default and its consequences under the Indenture with
respect to the QUIDS, except a default (a) in the payment of principal of (or
premium, if any) or any interest on any QUIDS when due or (b) in respect of a
covenant or provision of the Indenture that cannot be modified or amended
without the consent of the holder of each QUIDS.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may, without the consent of the holders of the QUIDS,
consolidate or merge with or into, or convey, transfer or lease its properties
and assets substantially as an entirety to, any person that is a corporation,
partnership or trust organized and validly existing under the laws of any
domestic jurisdiction, or may permit any such person to consolidate with or
merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, provided that any successor person
assumes the Company's obligations on the QUIDS and under the Indenture, that
after giving effect to the transaction no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing, and that certain other conditions are met.
SUBORDINATION
The payment of the principal of and interest on the QUIDS will be expressly
subordinated, to the extent and in the manner set forth in the Indenture, in
right of payment to the prior payment in full of all existing and future Senior
Indebtedness of the Company.
Upon (i) any acceleration of the principal amount due on the QUIDS or (ii)
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution or
winding-up or total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all principal and premium, if any, and interest due upon all
Senior Indebtedness shall first be paid in full, or payment thereof provided for
in money or money's worth in accordance with its terms, before any payment is
made on account of the principal of or interest on the indebtedness evidenced by
the QUIDS, and upon any such dissolution or winding-up or liquidation or
reorganization any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the holders of
the QUIDS would be entitled, except for the provisions of the Indenture, shall
(subject to the power of a court of competent jurisdiction to make other
equitable provision reflecting the rights conferred by the provisions of the
Indenture upon the Senior Indebtedness and the holders thereof with respect to
the QUIDS and the holders thereof by a lawful plan of reorganization under
applicable bankruptcy law), be paid by the Company or any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, or by the holders of the QUIDS if received by them, directly to
the holders of Senior Indebtedness (pro rata to each such holder on the basis of
the respective amounts of Senior Indebtedness held by such holder) or their
representatives, to the
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extent necessary to pay all Senior Indebtedness (including interest thereon) in
full, in money or money's worth, after giving effect to any concurrent payments
or distribution to or for the holders of Senior Indebtedness, before any payment
or distribution is made to the holders of the indebtedness evidenced by the
QUIDS. The consolidation of the Company with or the merger of the Company into
another person or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another person upon the terms and conditions provided in the
Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for these purposes.
In the event that any payment or distribution of assets of the Company of
any kind or character not permitted by the foregoing provisions, whether in
cash, property or securities, shall be received by the holders of QUIDS before
all Senior Indebtedness is paid in full, or provision made for such payment, in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of such
Senior Indebtedness or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness.
No payment on account of principal of or interest on the QUIDS shall be
made unless full payment of amounts then due for principal, premium, if any,
sinking funds and interest on any Senior Indebtedness has been made or duly
provided for in money or money's worth in accordance with the terms of such
Senior Indebtedness. No payment on account of principal or interest on the QUIDS
shall be made if, at the time of such payment or immediately after giving effect
thereto, (i) there shall exist a default in the payment of principal, premium,
if any, sinking fund or interest with respect to any Senior Indebtedness, or
(ii) there shall have occurred an event of default (other than a default in the
payment of principal, premium, if any, sinking funds or interest) with respect
to any Senior Indebtedness, as defined therein or in the instrument under which
the same is outstanding, permitting the holders thereof to accelerate the
maturity thereof, and such event of default shall not have been cured or waived
or shall not have ceased to exist.
SUBROGATION
From and after the payment in full of all Senior Indebtedness, the holders
of the QUIDS (together with the holders of any other indebtedness of the Company
which is subordinate in right of payment to the payment in full of all Senior
Indebtedness, which is not subordinate in right of payment to the QUIDS and
which by its terms grants such right of subrogation to the holder thereof) shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets or securities of the Company applicable to
the Senior Indebtedness until the QUIDS shall be paid in full, and, for the
purposes of such subrogation, no such payments or distributions to the holders
of Senior Indebtedness of assets or securities, which otherwise would have been
payable or distributable to holders of the QUIDS, shall, as between the Company,
its creditors other than the holders of Senior Indebtedness, and the holders of
the QUIDS, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness, it being understood that these provisions of the Indenture
are and are intended solely for the purpose of defining the relative rights of
the holders of the QUIDS, on the one hand, and the holders of the Senior
Indebtedness, on the other hand, and nothing contained in the Indenture is
intended to or shall impair as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holders of the QUIDS, the obligation of
the Company, which is unconditional and absolute, to pay to the holders of the
QUIDS the principal of and interest on the QUIDS as and when the same shall
become due and payable in accordance with their terms, or to affect the relative
rights of the holders of the QUIDS and creditors of the Company other than the
holders of the Senior
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Indebtedness, nor shall anything therein prevent the holder of any QUIDS from
exercising all remedies otherwise permitted by applicable law upon default under
such QUIDS subject to the rights of the holders of Senior Indebtedness to
receive cash, property or securities of the Company otherwise payable or
deliverable to the holders of the QUIDS or to a representative of such Holders,
on their behalf.
With respect to the QUIDS offered hereby, the term "Senior Indebtedness" is
defined in the Indenture as (1) any Payment Obligation (as defined) of the
Company in respect of any indebtedness, directly or indirectly, created,
incurred or assumed for borrowed money or in connection with the acquisition of
any business, property or asset (including securities), other than any account
payable or other indebtedness created, incurred or assumed in the ordinary
course of business in connection with the obtaining of materials or services;
(2) any Payment Obligation of the Company in respect of any lease that would be
required to be classified and accounted for as a capital lease; (3) any Payment
Obligation of the Company in respect of any interest rate exchange agreement,
currency exchange agreement or similar agreement that provides for payment
(whether or not contingent) over a period or term (including any renewals or
extensions) longer than one year from the execution thereof; (4) any Payment
Obligation of the Company in respect of any agreement relating to an acquisition
(including a sale and buyback) or the lease (including a sale and leaseback) of
real or personal property and that provides for payment (whether or not
contingent) over a period or term (including any renewals or extensions) longer
than one year from the execution thereof; (5) any Payment Obligation of any
Subsidiary (as defined in the Indenture) or of others of the kind described in
the preceding clauses (1) through (4) assumed or guaranteed by the Company or
for which the Company is otherwise responsible or liable; and (6) any amendment
renewal, extension or refunding of any of the foregoing Payment Obligations.
The term "Payment Obligation", when used with respect to Senior
Indebtedness, means an obligation stated in an agreement, instrument or lease to
pay money (whether for principal, premium, interest, sinking fund, periodic
rent, stipulated value, termination value, liquidated damages or otherwise), but
excludes an obligation to pay money in respect of fees of, or as payment or
reimbursement for expenses incurred by or on behalf of, or as indemnity for
losses, damages, taxes or other indemnity claims of any kind owed to, any holder
of Senior Indebtedness or other party to such agreement, instrument or lease.
The Indenture does not restrict the amount of Senior Indebtedness that the
Company may incur.
CONCERNING THE TRUSTEE
Bankers Trust Company is the Trustee under the Indenture with respect to
both collateralized and uncollateralized notes, including the QUIDS. Bankers
Trust Company also serves as Trustee for the Company's Mortgage and Deed of
Trust with respect to General and Refunding Mortgage Bonds and is the Exchange
Agent for the Exchange Offer. It has also agreed to serve, at the request of
tendering holders of Depositary Shares, as Custodian for QUIDS issued as part of
the Exchange Offer.
DTC BOOK-ENTRY-ONLY SYSTEM
The book-entry-only system will evidence ownership interests in the QUIDS
in book-entry-only form. Purchasers of ownership interests in the QUIDS will not
receive certificates representing their interests in the QUIDS. Transfers of
ownership interests will be effected on the records of DTC and its participating
organizations (the "DTC Participants") pursuant to rules and procedures
established by DTC. While the QUIDS will be issued only in book-entry form, the
Depositary Shares were issued in fully registered form. Accordingly, in order to
participate in the Exchange Offer a holder of certificated Depositary Shares who
is not a DTC Participant must either make arrangements with a DTC Participant to
have such participant receive QUIDS issued in exchange for Depositary Shares
accepted for exchange in accordance with the terms of the Exchange Offer or make
use of the
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facilities provided by the Custodian, so that such holder, in either case, may
become a beneficial owner of QUIDS issued in exchange for Depositary Shares
accepted pursuant to the Exchange Offer.
Certain of the following information concerning the procedures and record
keeping with respect to ownership interests in the QUIDS, payment of interest
and other payments on the QUIDS to DTC Participants or Beneficial Owners (as
hereafter defined), confirmation and transfer of ownership interests in the
QUIDS and other related transactions by and between DTC, the DTC Participants
and Beneficial Owners is based solely on information contained in a published
report of DTC.
DTC, an automated clearinghouse for securities transactions, will act as
securities depository for the QUIDS. DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the 1934 Act, as amended. DTC was created to hold
securities of the DTC Participants and to facilitate the clearance and
settlement of securities transactions among DTC Participants in such securities
through electronic book-entry changes in accounts of the DTC Participants,
thereby eliminating the need for physical movement of security certificates. DTC
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of which (and/or
their representatives) own DTC. Access to the DTC system is also available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly (the "Indirect Participants").
The ownership of the fully-registered QUIDS will be registered in the name
of Cede & Co., as nominee for DTC. Ownership interests in the QUIDS may be
purchased by or through DTC Participants and will be recorded on the records of
the DTC Participants, whose interests in turn will be recorded on a computerized
book-entry-only system operated by DTC. Such DTC Participants and the persons
for whom they acquire interests in the QUIDS as nominees ("Beneficial Owners")
will not receive QUIDS certificates, but each such DTC Participant will receive
a credit balance in the records of DTC in the amount of such DTC Participant's
interest in the QUIDS, which will be confirmed in accordance with DTC's standard
procedures. Each such Beneficial Owner for whom a DTC Participant acquires an
interest in the QUIDS, as nominee, may desire to make arrangements with such DTC
Participant to have all communications of the Company and the Trustee to DTC,
which may affect such Beneficial Owner, be forwarded in writing by such DTC
Participant and to have notifications made of all payments of principal and
interest with respect to his beneficial interest. The Company and the Trustee
will treat DTC (or its nominee) as the sole and exclusive owner of the QUIDS
registered in its name for the purposes of payment of the principal and interest
on the QUIDS, giving any notice permitted or required to be given to holders
under the Indenture, registering the transfer of QUIDS, and for all other
purposes whatsoever, and shall not be affected by any notice to the contrary.
The Company and the Trustee shall not have any responsibility or obligation to
any DTC Participant, any person claiming a beneficial ownership interest in the
QUIDS under or through DTC or any DTC Participant, or any other person which is
not shown on the registration books of the Trustee as being a holder, with
respect to: the accuracy of any records maintained by DTC or any DTC
Participant; the payment by DTC or any DTC Participant of any amount in respect
of the principal or interest on the QUIDS; any notice which is permitted or
required to be given to holders thereunder or under the conditions to transfers
or exchanges adopted by the Company; or any other action taken by DTC as a
holder. Principal and interest on the QUIDS will be paid by the Trustee to DTC
or its nominee. Disbursement of such payments to the DTC Participants is the
responsibility of DTC and disbursement of such payments to the Beneficial Owners
is the responsibility of the DTC Participants or the Indirect Participants.
NEITHER THE COMPANY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS
TO SUCH DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH
RESPECT
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TO THE PAYMENTS TO OR THE PROVIDING OF NOTICE FOR THE DTC PARTICIPANTS, OR THE
INDIRECT PARTICIPANTS, OR THE BENEFICIAL OWNERS.
SO LONG AS CEDE & CO., AS NOMINEE OF DTC, IS THE REGISTERED OWNER OF THE
QUIDS, REFERENCES HEREIN TO THE SECURITYHOLDERS OR REGISTERED OWNERS OF THE
QUIDS SHALL MEAN CEDE & CO., AND SHALL NOT MEAN THE BENEFICIAL OWNERS.
For every transfer and exchange of beneficial ownership of QUIDS, a
Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in relation thereto.
When reference is made to any action which is required or permitted to be
taken by the Beneficial Owners, such reference shall only relate to action by
such Beneficial Owners or others permitted to act (by statute, regulation or
otherwise) on behalf of such Beneficial Owners for such purposes. When notices
are given, they shall be sent by the Trustee to DTC only. Conveyance of notices
and other communications by DTC to DTC Participants and Indirect Participants
and in turn by DTC Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory and
regulatory requirements then in effect.
Principal and interest payments on the QUIDS will be made to DTC or its
nominee, Cede & Co., as registered owner of the QUIDS. Upon receipt of any such
payments, DTC's current practice is to immediately credit the accounts of the
DTC Participants in accordance with their respective holdings shown on the
records of DTC. Payments by DTC Participants and Indirect Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of customers
in bearer form or registered in "street name", and will be the responsibility of
such DTC Participant or Indirect Participant.
DTC may determine to discontinue providing its services with respect to the
QUIDS at any time by giving notice to the Company and discharging its
responsibilities with respect thereto under applicable law. In addition, the
Company may determine that continuation of the system of book-entry-only
transfers through DTC (or a successor securities depository) is not in the best
interests of the Beneficial Owners or is burdensome to the Company. If for
either reason the book-entry-only system is discontinued, certificates for the
QUIDS will be delivered to the Beneficial Owners thereof.
Certain of the information contained in this sub-section has been extracted
from a report from DTC. No representation is made by the Company as to the
completeness or the accuracy of such information or as to the absence of
material adverse changes in such information subsequent to the date hereof.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the QUIDS will be made by a purchaser in immediately
available funds. While the QUIDS are in the book-entry-only system described
above, all payments of principal and interest will be made by the Trustee on
behalf of the Company to DTC in immediately available funds.
Secondary trading in long-term debt securities is generally settled in
clearing-house or next-day funds. While the QUIDS are in the book-entry-only
system described above, they will trade in DTC's Same-Day Fund Settlement System
until maturity. During such period, secondary market trading activity in the
QUIDS will settle in immediately available funds. No assurance can be gives as
to the effect, if any, of settlement in immediately available funds on the
trading activity in the QUIDS.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The following description relating to the Preferred Stock set forth herein
does not purport to be complete and is subject to, and qualified in its entirety
by, the provisions of the Company's Restated
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Articles of Incorporation ("Articles"). Copies of the Articles are available
from the Company upon request. The following statements concerning Depositary
Shares, Depositary Receipts (as defined below) and the Deposit Agreement do not
purport to be complete and are qualified in their entirety by reference to the
forms of such documents which have been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Preferred Stock ranks equally with all other series of preferred stock
of the Company and senior to the Company's preference (none of which is
currently outstanding) and common stock upon liquidation and as to dividends and
redemption. If dividends or amounts payable on liquidation are not paid in full
on the preferred stock of all series, then all series share ratably in the
amount available therefor.
DIVIDENDS
The holders of the Preferred Stock are entitled to receive, when and as
declared by the Board of Directors, out of the surplus of the Company legally
available therefor, cumulative cash dividends at the rate of 7.75% per annum.
So long as any shares of any series of preferred stock of the Company are
outstanding, no dividend shall be paid or declared other distribution made upon
any junior stock (defined to include the Company's preference and common stock),
nor shall any junior stock of the Company be acquired (except by exchange for or
through application of an amount not in excess of the proceeds of sale of junior
stock) by the Company or any Subsidiary thereof (as defined in the Articles),
unless, in each case, the full cumulative dividends on all outstanding shares of
all series of the Company's preferred stock shall have been paid or provided for
and the Company shall have made all payments, if any, then or theretofore due
under the requirements of any sinking funds for all series of the Company's
preferred stock.
VOTING
The Company's preferred stock, including the Preferred Stock, are
non-voting, except that while four quarterly dividends on any series of
preferred stock are in arrears, in whole or in part, the holders of all series
of preferred stock, voting separately as a class, are entitled to elect two
additional members of the Board of Directors. Unless provision has been made for
the redemption of all outstanding preferred stock (a) the vote or consent of the
holders of two-thirds of the outstanding preferred stocks is required to permit
the authorization of any stock senior thereto, any adverse changes in the terms
of the preferred stock, or the purchase (otherwise than pursuant to purchase
offers as provided in the Articles) or the redemption of less than all the
outstanding preferred stocks when all dividends thereon have not been declared
and provided for or paid (b) any adverse changes in the terms of any one but not
all series of preferred stocks must also be consented to by the holders of
two-thirds of the preferred stock of such series, and (c) the vote or consent of
the holders of a majority of the outstanding preferred stocks is required to
authorize any increase in the authorized amount of the Company's preferred stock
or of any stock ranking on a parity with the Company's preferred stock, or the
voluntary liquidation, dissolution or winding-up of the Company, the sale, lease
or conveyance of all or substantially all of its property or business or a
consolidation or merger of the Company (other than with a wholly-owned
subsidiary).
Shareholders possessing voting power at the time are entitled to one vote
for each share held and may cumulate their votes in the election of directors
for whom they are entitled to vote. The Company's Board of Directors is divided
into three classes, as nearly equal in number as possible, with terms currently
expiring at the 1996, 1997 and 1998 annual meetings of common shareholders. In
the event the holders of the Company's preferred stock are entitled to elect
directors as discussed above, then such directors to be elected will be for
terms expiring at the next annual meeting of shareholders and without regard to
the classification of the remaining members of the Board of Directors.
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LIQUIDATION
Upon any involuntary liquidation, dissolution or winding up of the Company,
holders of all series of the Company's preferred stock, including the Preferred
Stock, are entitled to receive $100 per share and upon any voluntary
liquidation, dissolution or winding-up, holders of the Preferred Stock together
with holders of all other series of the Company's preferred stock, are entitled
to receive an amount equal to the optional redemption price applicable at the
time, as fixed at the time series was authorized, in each case together with the
amount of any accrued and unpaid dividends and before any distribution to
holders of junior stock.
REDEMPTION
The Preferred Stock is redeemable at the option of the Company at any time
on or after April 15, 1998, in whole or in part, at a redemption price equal to
$100 per share (equivalent to $25 per Depositary Share) plus accrued and
accumulated but unpaid dividends to the redemption date.
If fewer than all the outstanding shares of the Preferred Stock are to be
redeemed, the selection of the shares to be redeemed shall be determined by lot
or pro rata as may be determined by the Company. From and after any redemption
date (unless default shall be made by the Company in providing for the payment
of the redemption price), dividends shall cease to accrue on the shares of
Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price) shall cease.
While any divided arrearages exist on any series of preferred stock, the
Company may not redeem (for a sinking fund or otherwise) less than all of the
outstanding preferred stock, or purchase any preferred stock except through a
purchase offer made to all holders of all series of preferred stock at the time
outstanding as provided in the Articles. The rights of the holders of preferred
stock called for redemption (whether for a sinking fund or otherwise) may be
terminated before any redemption date upon notice and upon deposit in trust of
funds necessary for such redemption, except the right to receive such funds.
DEPOSITARY SHARES
General. In connection with the issuance of the Preferred Stock, the
Company issued the Preferred Stock to the Depositary. The Depositary then issued
receipts for Depositary Shares, each of which represents one-quarter of a share
of the Preferred Stock.
Each owner of a Depositary Share is entitled, proportionately, to all the
rights and preferences of the Preferred Stock represented thereby (including
dividend, voting, redemption and liquidation rights).
The Depositary Shares are evidenced by depositary receipts issued pursuant
to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts are
distributed to those persons holding fractional shares of Preferred Stock.
The Depositary forwards all reports and communications from the Company
which are delivered to the Depositary and which the Company is required or
otherwise determines to furnish to the holders of the Preferred Stock.
Neither the Depositary nor the Company is liable if it is presented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement are limited to performance in good faith
of their duties thereunder and they will not be obligated to prosecute or defend
any legal proceeding in respect of any Depositary Shares or Preferred Stock
unless satisfactory indemnity is furnished. They may rely upon written advice of
counsel or accountants, or upon information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Receipts or other persons
believed to be competent and on documents believed to be genuine.
The Depositary currently acts as transfer agent and registrar for the
Depositary Receipts.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the ownership of QUIDS as of the date hereof and represents the
opinion of Simpson Thacher & Bartlett, special tax counsel to the Company,
insofar as it relates to matters of law or legal conclusions. Except where
noted, it deals only with QUIDS held as capital assets and acquired pursuant to
the Exchange Offer and does not deal with special situations, such as those of
dealers in securities or currencies, financial institutions, life insurance
companies, persons holding QUIDS as a part of a hedging or conversion
transaction or a straddle, United States Holders (as defined below) whose
"functional currency" is not the U.S. dollar, or Non-United States Holders (as
defined below) who own (actually or constructively) ten percent or more of the
combined voting power of all classes of voting stock of the Company, who are
present in the United States or who have any other special status with respect
to the United States. Furthermore, the discussion below is based upon the
provisions of the Internal Revenue Code of 1986, as amended (the "Code") and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
federal income tax consequences different from those discussed below. PERSONS
CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF QUIDS SHOULD CONSULT THEIR
OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF
THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS
OF ANY OTHER TAXING JURISDICTION.
UNITED STATES HOLDERS
As used herein, a "United States Holder" of QUIDS means a holder that is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust the income of which is
subject to United States federal income taxation regardless of its source. A
"Non-United States Holder" is a holder that is not a United States Holder.
Exchange of Depositary Shares for QUIDS
The exchange of the Depositary Shares for QUIDS pursuant to the Exchange
Offer will be a taxable transaction. In the case of a United States Holder who
owns (actually or constructively) solely Depositary Shares, or not more than one
percent of the Preferred Stock underlying the Depositary Shares and not more
than one percent of any other class of the Company's stock, gain or loss will be
recognized in an amount equal to the difference between the fair market value of
the QUIDS (including any pre-issuance accrued interest) at the time of the
exchange and the exchanging holder's tax basis in the Depositary Shares
exchanged therefor and will be long-term capital gain or loss if the Depositary
Shares have been held for more than one year as of such date. A United States
Holder's aggregate tax basis in the QUIDS will be equal to their fair market
value at the time of the exchange.
Holders of the Depositary Shares owning (actually or constructively) more
than one percent of any class of the Company's stock are advised to consult
their own tax advisers as to the income tax consequences of exchanging the
Depositary Shares for QUIDS.
Original Issue Discount, Market Discount and Acquisition Premium
Under the terms of the QUIDS, the Company has the option to defer payments
of interest for up to 20 consecutive quarterly interest payment periods and to
pay as a lump sum at the end of such period all of the interest that has accrued
during such period. Because of this option to extend the interest payment
periods, all of the stated interest payments (excluding any pre-issuance accrued
interest) on the QUIDS will be treated as "original issue discount" ("OID"). As
a result, United States Holders will, in effect, be required to accrue interest
income even if the holders are on the cash method of tax accounting. In
addition, the amount of OID will be increased or decreased if the
41
<PAGE> 44
"issue price" of the QUIDS (fair market value at the time of the exchange) is
less than or greater than their stated principal amount. Consequently, in the
event that the interest payment period is extended, a United States Holder would
be required to include OID in income on an economic accrual basis
notwithstanding that the Company will not make any interest payments on the
QUIDS. The OID accrual rules may also accelerate the timing of a holder's
recognition of income.
To the extent a holder acquires QUIDS at a price that is less than their
adjusted issue price (the fair market value of the QUIDS at the time of the
exchange adjusted for the accrual of OID and interest payments), the holder will
have purchased such QUIDS at a market discount. Under the market discount rules,
a United States Holder will be required to treat any principal payment on, or
any gain on the sale, exchange, retirement or other disposition of, QUIDS as
ordinary income to the extent of the market discount which has not previously
been included in income and is treated as having accrued on such QUIDS at the
time of such payment or disposition. Market discount accrues ratably, or, at the
election of the holder, under a constant yield method over the remaining term of
the QUIDS. In addition, the United States Holder may be required to defer, until
the maturity of the QUIDS or their earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such QUIDS. In lieu of the foregoing,
a holder may elect to include market discount in income currently as it accrues
on all market discount instruments acquired by such holder in the taxable year
of the election or thereafter, in which case the interest deferral rule will not
apply. This election to include market discount in income currently may not be
revoked without the consent of the Internal Revenue Service ("IRS").
A United States Holder that purchases QUIDS for an amount that is greater
than their adjusted issue price will be able to offset a portion of such
acquisition premium properly allocable to a taxable year against the accrual of
income on such QUIDS.
Sale, Exchange and Retirement of the QUIDS
Upon the sale, exchange or retirement of QUIDS, a United States Holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange or retirement and the adjusted tax basis of the QUIDS. A
United States Holder's adjusted tax basis in QUIDS will, in general, be the
United States Holder's initial basis therefor, increased by OID or market
discount previously included in income by the United States Holder and reduced
by any amortized premium and any cash payments on the QUIDS. Except as described
above with respect to market discount, such gain or loss will be capital gain or
loss and will be long-term capital gain or loss if at the time of sale, exchange
or retirement, the QUIDS have been held for more than one year. Under current
law, net capital gains of individuals are, under certain circumstances, taxed at
lower rates than items of ordinary income. The deductibility of capital losses
is subject to limitations.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to a Non-United States Holder upon the exchange of
the Depositary Shares for QUIDS pursuant to the Exchange Offer provided
such holder certifies to the Company that such holder owns (actually or
constructively) solely Depositary Shares, or not more than one percent of
the Preferred Stock underlying the Depositary Shares and not more than one
percent of any other class of the Company's stock. If a Non-United States
Holder does not provide the certification described in the preceding
sentence, the Company will withhold federal income tax at a rate of 30% of
the gross proceeds paid to such holder pursuant to the Exchange Offer;
(b) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any paying agent of
principal or interest (which for purposes of
42
<PAGE> 45
this discussion includes OID) on QUIDS owned by a Non-United States Holder,
provided (i) the beneficial owner is not a controlled foreign corporation
that is related to the Company through stock ownership, (ii) the beneficial
owner is not a bank whose receipt of interest on the QUIDS is described in
section 881(c)(3)(A) of the Code and (iii) either (y) the beneficial owner
certifies to the Company or its agent, under the penalties of perjury, that
it is not a U.S. person, citizen or resident and provides its name and
address or (z) a financial institution holding the QUIDS on behalf of the
beneficial owner certifies, under penalties of perjury, that such statement
has been received by it and furnishes the Company or its agent with a copy
thereof;
(c) no withholding of United States federal income tax will be
required with respect to any gain or income realized by a Non-United States
Holder upon the sale, exchange or retirement of QUIDS; and
(d) QUIDS beneficially owned by an individual who at the time of death
is a Non-United States Holder will not be subject to United States federal
estate tax as a result of such individual's death, provided that the
interest payments with respect to such QUIDS would not have been, if
received at the time of such individual's death, effectively connected with
the conduct of a trade or business by such individual in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to (i) certain
payments of principal, interest and OID paid on the QUIDS, (ii) the exchange of
the Depositary Shares for the QUIDS pursuant to the Exchange Offer and (iii) to
the proceeds of sale of the QUIDS made to United States Holders other than
certain exempt recipients (such as corporations). A 31 percent backup
withholding tax will apply to payments described in (i) and (iii) of the
preceding sentence if the United States Holder fails to provide a taxpayer
identification number or certification of foreign or other exempt status or
fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-United States
Holders if a statement described in (b)(iii) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
Payments of the proceeds from the sale by a Non-United States Holder of
QUIDS and the exchange of the Depositary Shares for the QUIDS pursuant to the
Exchange Offer made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that if the
broker is, for federal income tax purposes, a United States person, a controlled
foreign corporation or a foreign person that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States, such payments will not be subject to backup withholding but may be
subject to information reporting. Such payment of the proceeds of the sale of
QUIDS to or through the United States office of a broker is subject to
information reporting and backup withholding and the exchange of the Depositary
Shares for QUIDS is subject to information reporting unless the Non-United
States Holder or the beneficial owner certifies as to its non-United States
status or otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
43
<PAGE> 46
LEGAL OPINIONS
The validity of the QUIDS will be passed upon for the Company by
Christopher C. Nern, Esq., Vice President and General Counsel of the Company,
and for the Dealer Managers by Simpson Thacher & Bartlett (a partnership which
includes professional corporations). Simpson Thacher & Bartlett (a partnership
which includes professional corporations), special tax counsel to the Company,
has passed upon certain United States federal income tax considerations with
respect to the QUIDS.
EXPERTS
The consolidated financial statements incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1994, have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
INDEPENDENT AUDITORS
The Company has engaged Deloitte & Touche LLP as independent auditors for
the year ending December 31, 1995.
With respect to the unaudited interim financial information of The Detroit
Edison Company and subsidiary companies for the three-month and twelve-month
periods ended March 31, 1995, which is incorporated herein by reference,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their reports on the unaudited interim
financial information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
44
<PAGE> 47
Facsimile copies of the Letter of Transmittal will be accepted. Letters of
Transmittal, certificates representing shares of Preferred Stock, Notices of
Guaranteed Delivery and any other required documents should be sent by each
stockholder or his broker, dealer, commercial bank, trust company or other
nominee to the Exchange Agent at one of the addresses as set forth below:
The Exchange Agent is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C>
BY HAND/OVERNIGHT COURIER BY MAIL
Bankers Trust Company Bankers Trust Company
Corporate Trust & Agency Group Corporate Trust & Agency Group
Receipt & Delivery Window Reorganization Dept.
123 Washington St., 1st Floor P.O. Box 1458
New York, NY 10006 Church Street Station
New York, NY 10008-1458
Facsimile Transmission
(212) 250-6275
(212) 250-3290
(For Eligible Institutions Only)
Confirm by Telephone:
(212) 250-6270
Shareholder Inquiries
(212) 250-6270
</TABLE>
Any questions or requests for assistance or additional copies of this
Prospectus, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Managers at their respective
telephone numbers and locations set forth below. You may also contact your
broker, dealer, commercial bank or trust company or other nominee for assistance
concerning the Exchange Offer.
The Information Agent is:
(LOGO)Wall Street Plaza
New York, NY 10005
BANKS AND BROKERS CALL COLLECT:
(212) 440-9800
ALL OTHERS CALL TOLL-FREE:
1-800-223-2064
The Dealer Managers for the Exchange Offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(800) 838-3182 (Toll-Free)
<PAGE> 48
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Indemnification. Pursuant to Article VI of the Company's Restated
Articles of Incorporation, directors of the Company will not be personally
liable to the Company or its shareholders in the performance of their duties to
the full extent permitted by law.
Article VII of the Company's Restated Articles of Incorporation provides
that each person who is or was or had agreed to become a director or officer of
the Company, or each such person who is or was serving or who had agreed to
serve at the request of the Board of Directors as an employee or agent of the
Company or as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (including the heirs,
executors, administrators or estate of such person), shall be indemnified by the
Company to the full extent permitted by the Michigan Business Corporation Act or
any other applicable laws as presently or hereafter in effect. In addition,
pursuant to the authority granted by Article VII of the Restated Articles of
Incorporation the Company has entered into indemnification agreements with its
officers and directors which provide for indemnification to the maximum extent
permitted by law. These agreements set forth certain procedures for the
advancement by the Company of certain expenses to indemnitees.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Company pursuant to the above provisions or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted against
the Company by such director, officer or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Reference is made to Section 8 of the form of Dealer Managers Agreement
filed as Exhibit 1-35 hereto for a description of the indemnification
arrangements the Company is prepared to make in connection with the Offer to
Exchange.
(b) Insurance. The Company (with respect to indemnification liability) and
its directors and officers (in their capacities as such) are insured against
liability for wrongful acts (to the extent defined) under three insurance
policies providing aggregate coverage in the amount of $85 million.
II-1
<PAGE> 49
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits filed herewith.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ----------------------------------------------------------------------------
<S> <C>
1-35 -- Form of Dealer Managers Agreement between the Detroit Edison Company and
Goldman Sachs & Co.
4-174 -- Form of Fourth Supplemental Indenture, establishing the QUIDS, including the
form of QUIDS, as Exhibit A thereto.
5-49 -- Opinion and Consent of Christopher C. Nern, Esq., Vice President and General
Counsel of the Company.
8-1 -- Tax Opinion of Simpson Thacher & Bartlett.
10-60 -- Form of Restricted Stock Agreement between the Company and Frank E. Agosti,
Susan M. Beale, Robert J. Buckler, Michael E. Champley, Haven E. Cockerham,
Anthony F. Earley, Jr., Larry G. Garberding, Ronald W. Gresens, John E.
Lobbia, Leslie L. Loomans and Christopher C. Nern.
12-28 -- Computation of Ratio of Earnings to Fixed Charges.
12-29 -- Computation of Ratio of Earnings to Fixed Charges and Preferred and
Preference Stock Dividend Requirements.
15-59 -- Awareness Letter of Deloitte & Touche LLP.
23-8 -- Consent of Price Waterhouse LLP.
23-9 -- Consent of Simpson Thacher & Bartlett (contained in Exhibit 8-1).
25-7 -- Statement of Eligibility of Trustee (note indenture).
99-22 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
other Nominees.
99-23 -- Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
other nominees to their clients.
99-24 -- Form of Letter of Transmittal.
99-25 -- Form of Notice of Guaranteed Delivery.
99-26 -- Questions and Answers Sheet to be sent to holders of Depositary Shares and
to be used by Brokers, Dealers, Commercial Banks, Trust Companies and other
nominees in responding to inquiries from their clients.
99-27 -- Form of Custodian Agreement.
99-28 -- Form of Exchange Agreement.
(b) Exhibits incorporated herein by reference.
4(a) -- Restated Articles of Incorporation of the Company, as filed December 10,
1991 with the State of Michigan, Department of Commerce -- Corporation and
Securities Bureau (Exhibit 4-117 to Form 10-Q for quarter ended March 31,
1993).
4(b) -- Certificate containing resolution of the Board of Directors establishing the
Cumulative Preferred Stock, 7.75% Series as filed February 22, 1993 with the
State of Michigan, Department of Commerce -- Corporation and Securities
Bureau (Exhibit 4-134 to Form 10-Q for quarter ended March 31, 1993).
4(c) -- Certificate containing resolution of the Board of Directors establishing the
Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the
State of Michigan, Department of Commerce -- Corporation and Securities
Bureau (Exhibit 4-140 to Form 10-Q for quarter ended March 31, 1993).
4(d) -- By-Laws of the Company as amended November 25, 1991 (Exhibit 4-118 to Form
10-K for year ended December 31, 1991).
</TABLE>
II-2
<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ----------------------------------------------------------------------------
<S> <C> <C>
4(e) -- Mortgage and Deed of Trust, dated as of October 1, 1924, between the Company
(File No. 1-2198) and Bankers Trust Company as Trustee (Exhibit B-1 to
Registration No. 2-1630) and indentures supplemental thereto, dated as of
dates indicated below, and filed as exhibits to the filings as set forth
below:
September 1, 1947 Exhibit B-20 to Registration No. 2-7136
October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096
November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160
January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595
June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643
June 30, 1982 Exhibit 4-30 to Registration No. 2-78941
August 15, 1982 Exhibit 4-32 to Registration No. 2-79674
October 15, 1985 Exhibit 4-170 to Form 10-K for year ended December 31,
1994
November 30, 1987 Exhibit 4-139 to Form 10-K for year ended December 31,
1992
July 15, 1989 Exhibit 4-171 to Form 10-K for year ended December 31,
1994
November 1, 1990 Exhibit 4-110 to Form 10-K for year ended December 31,
1990
December 1, 1989 Exhibit 4-172 to Form 10-K for year ended December 31,
1994
February 15, 1994 Exhibit 4-173 to Form 10-K for year ended December 31,
1994
April 1, 1991 Exhibit 4-111 to Form 10-Q for quarter ended March 31,
1991
May 1, 1991 Exhibit 4-112 to Form 10-Q for quarter ended June 30,
1991
May 15, 1991 Exhibit 4-113 to Form 10-Q for quarter ended June 30,
1991
September 1, 1991 Exhibit 4-116 to Form 10-Q for quarter ended September
30, 1991
November 1, 1991 Exhibit 4-119 to Form 10-K for year ended December 31,
1991
January 15, 1992 Exhibit 4-120 to Form 10-K for year ended December 31,
1991
February 29, 1992 Exhibit 4-121 to Form 10-Q for quarter ended March 31,
1992
April 15, 1992 Exhibit 4-122 to Form 10-Q for quarter ended June 30,
1992
July 15, 1992 Exhibit 4-123 to Form 10-Q for quarter ended September
30, 1992
July 31, 1992 Exhibit 4-124 to Form 10-Q for quarter ended September
30, 1992
November 30, 1992 Exhibit 4-130 to Registration No. 33-56496
January 1, 1993 Exhibit 4-131 to Registration No. 33-56496
March 1, 1993 Exhibit 4-141 to Form 10-Q for quarter ended March 31,
1993
March 15, 1993 Exhibit 4-142 to Form 10-Q for quarter ended March 31,
1993
April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter ended March 31,
1993
</TABLE>
II-3
<PAGE> 51
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ----------------------------------------------------------------------------
<S> <C>
April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter ended March 31,
1993
May 31, 1993 Exhibit 4-148 to Registration No. 33-64296
June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter ended June 30,
1993 (1993 Series AP)
June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter ended June 30,
1993 (1993 Series H)
September 15, 1993 Exhibit 4-158 to Form 10-Q for quarter ended September
30, 1993
March 1, 1994 Exhibit 4-163 to Registration No. 33-53207.
June 15, 1994 Exhibit 4-166 to Form 10-Q for quarter ended June 30,
1994.
August 15, 1994 Exhibit 4-168 to Form 10-Q for quarter ended September
30, 1994.
December 1, 1994 Exhibit 4-169 to Form 10-Q for year ended December 31,
1994.
4(f) -- Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152
to Registration No. 33-50325).
4(g) -- First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153
to Registration No. 33-50325).
4(h) -- Second Supplemental Note Indenture, dated as of September 15, 1993 (Exhibit
4-159 to Form 10-Q for quarter ended September 30, 1993).
4(i) -- Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit
4-169 to Form 10-Q for quarter ended September 30, 1994).
4(j) -- Amended and Restated Standby Note Purchase Credit Facility, dated as of
April 26, 1994, among The Detroit Edison Company, The Bank of New York, The
Toronto-Dominion Bank, acting through its Houston Agency, Toronto-Dominion
(Texas), Inc., as Administrative Agent and Citicorp Securities, Inc., as
Remarketing Agent (Exhibit 99-5 to Registration No. 33-50325).
4(k) -- Standby Note Purchase Credit Facility, dated as of August 17, 1994, among
The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative
Agent, Bank of America, The Bank of New York, The Fuji Bank Limited, The
Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities,
Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents (Exhibit
99-18 to Form 10-Q for quarter ended September 30, 1994).
10(a) -- Form of Indemnification Agreement between the Company and (1) Frank E.
Agosti, (2) Gerard M. Anderson, (3) Robert J. Buckler, (4) Malcolm G. Dade,
Jr., (5) Ronald W. Gresens, (6) Leslie L. Loomans, (7) S. Martin Taylor, (8)
Saul J. Waldman, (9) Susan M. Beale, (10) Frederick S. Karwacki, (11)
Douglas R. Gipson, (12) Robert J. Horn, (13) Thomas A. Hughes, (14)
Christopher C. Nern, (15) Ronald J. Gdowski, (16) Elaine M. Godfrey, (17)
Allen W. Anning, (18) Christopher C. Arvani, (19) James R. McGillivary, (20)
Thomas J. Howlin, (21) Donald J. Brett, (22) Michael E. Champley, (23) T.
Michael Holton, and (24) Haven E. Cockerham (Exhibit 10-41 to Form 10-Q for
quarter ended June 30, 1993).
10(b) -- 1991 Shareholder Value Improvement Plan -- A, as amended effective January
25, 1993 (Exhibit 10-43 to Form 10-Q for quarter ended June 30, 1993).
10(c) -- 1990 Shareholder Value Improvement Plan -- A, as amended January 25, 1993
(Exhibit 10-44 to Form 10-Q for quarter ended June 30, 1993).
</TABLE>
II-4
<PAGE> 52
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ----------------------------------------------------------------------------
<S> <C>
10(d) -- 1994 Officers' Shareholder Value Improvement Plan, January, 1994 (Exhibit
10-50 to Form 10-K for year ended December 31, 1993).
10(e) -- Certain Arrangements pertaining to the Employment of S. Martin Taylor (Ex-
hibit 10-38 to Form 10-K for year ended December 31, 1992).
10(f) -- Certain arrangements pertaining to the employment of Anthony F. Earley, Jr.
(Exhibit 10-53 to Form 10-Q for quarter ended March 31, 1994).
10(g) -- Amended and Restated Savings Separation Plan, June 1994 (Exhibit 10-54 to
Form 10-Q for quarter ended June 30, 1994.)
10(h) -- Certain arrangements pertaining to the employment of Haven E. Cockerham
(Exhibit 10-55 to Form 10-Q for quarter ended September 30, 1994).
10(i) -- Key Employe Deferred Compensation Plan (January 1990). (Exhibit 10-21 to
Form 10-K for year ended December 31, 1989).
10(j) -- Retirement Reparation Plan for Certain Employes of The Detroit Edison
Company (as amended through May 22, 1989). (Exhibit 10-25 to Form 10-K for
year ended December 31, 1989).
10(k) -- Benefit Equalization Plan for Certain Employes of The Detroit Edison Company
(as amended through May 22, 1989). (Exhibit 10-26 to Form 10-K for year
ended December 31, 1989).
10(l) -- Certain Arrangements pertaining to the Employment of Larry G. Garberding
(Exhibit 28-52 to Form 10-Q for quarter ended June 30, 1990).
10(m) -- Form of Indemnification Agreement, between the Company and (1) John E.
Lobbia, (2) Larry G. Garberding and (3) Anthony F. Earley, Jr. (Exhibit 19-7
to Form 10-Q for quarter ended March 31, 1992).
10(n) -- Form of Indemnification Agreement, dated March 17, 1992, between the Company
and (1) Terence E. Adderley, (2) Wendell W. Anderson, Jr., (3) Walter J.
McCarthy, Jr., (4) Lillian Bauder, (5) David Bing, (6) Alan E. Schwartz, (7)
William Wegner, (8) Theodore S. Leipprandt, (9) Patricia S. Longe, (10)
Eugene A. Miller, (11) Dean E. Richardson, (12) David M. Gates, and (13)
Otis M. Smith (Exhibit 19-8 to Form 10-Q for quarter ended March 31, 1992).
10(o) -- Supplemental Long Term Disability Plan, dated November 5, 1991 (Exhibit
10-32 to Form 10-K for year ended December 31, 1991).
10(p) -- Executive Vehicle Program, dated October 1, 1993 (Exhibit 10-47 to Form 10-Q
for quarter ended September 30, 1993).
10(q) -- Amendment No. 1 to Executive Vehicle Plan, November 1993 (Exhibit 10-58 to
Form 10-K for year ended December 31, 1993).
10(r) -- Certain arrangements pertaining to the employment of Gerard M. Anderson (Ex-
hibit 10-40 to Form 10-K for year ended December 31, 1993).
10(s) -- Restated Management Supplemental Benefit Plan, January 1994 (Exhibit 10-57
to Form 10-K for year ended December 31, 1993).
10(t) -- Amended and Restated 1994 Officers' Shareholder Value Improvement Plan (1994
and subsequent years, January 23, 1995). (Exhibit 10-56 to Form 10-K for
year ended December 31, 1994).
10(u) -- 1995 Officers' Shareholder Value Improvement Plan (January 23, 1995)
(Exhibit 10-57 to Form 10-K for year ended December 31, 1994).
10(v) -- Plan for Deferring the Payment of Directors' Fees (January 23, 1995)
(Exhibit 10-58 to Form 10-K for year ended December 31, 1994).
10(w) -- Retirement Plan for Non-Employe Directors (February 27, 1995) (Exhibit 10-59
to Form 10-K for year ended December 31, 1994).
</TABLE>
II-5
<PAGE> 53
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's Annual Report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan annual
report pursuant to Section 15(d) of the Securities Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4), or 497(h) under the Securities Act of 1933 shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(6) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-6
<PAGE> 54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Detroit, State of Michigan, on the 16th day of June,
1995.
THE DETROIT EDISON COMPANY
(Registrant)
By: /s/ JOHN E. LOBBIA
----------------------------------
(John E. Lobbia,
Chairman of the Board and
Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Principal Executive Officer:
/s/ JOHN E. LOBBIA Chairman of the Board, Chief June 16, 1995
- ------------------------------------- Executive Officer and Director
(John E. Lobbia)
Principal Operating Officer:
/s/ ANTHONY F. EARLEY, JR. President, Chief Operating Officer June 16, 1995
- ------------------------------------- and Director
(Anthony F. Earley, Jr.)
Principal Financial Officer:
/s/ LARRY G. GARBERDING Executive Vice President, Chief June 16, 1995
- ------------------------------------- Financial Officer and Director
(Larry G. Garberding)
Principal Accounting Officer:
/s/ RONALD W. GRESENS Vice President and Controller June 16, 1995
- -------------------------------------
(Ronald W. Gresens)
</TABLE>
II-7
<PAGE> 55
DIRECTORS
/s/ T. E. ADDERLEY
---------------------------------------------------------
Terence E. Adderley
/s/ LILLIAN BAUDER
---------------------------------------------------------
Lillian Bauder
/s/ DAVID BING
---------------------------------------------------------
David Bing
---------------------------------------------------------
Allan D. Gilmour
/s/ THEODORE S. LEIPPRANDT
---------------------------------------------------------
Theodore S. Leipprandt
/s/ PATRICIA S. LONGE
---------------------------------------------------------
Patricia S. Longe
/s/ EUGENE A. MILLER
---------------------------------------------------------
Eugene A. Miller
/s/ DEAN E. RICHARDSON
---------------------------------------------------------
Dean E. Richardson
/s/ ALAN E. SCHWARTZ
---------------------------------------------------------
Alan E. Schwartz
/s/ WILLIAM WEGNER
---------------------------------------------------------
William Wegner
II-8
<PAGE> 56
EXHIBIT INDEX
(A) EXHIBITS FILED HEREWITH
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------- ------------
<S> <C> <C>
1-35 -- Form of Dealer Managers Agreement between the Detroit Edison
Company and Goldman Sachs & Co.
4-174 -- Form of Fourth Supplemental Indenture, establishing the QUIDS,
including the form of QUIDS, as Exhibit A thereto.
5-49 -- Opinion and Consent of Christopher C. Nern, Esq., Vice President
and General Counsel of the Company.
8-1 -- Tax Opinion of Simpson Thacher & Bartlett.
10-60 -- Form of Restricted Stock Agreement between the Company and Frank E.
Agosti, Susan M. Beale, Robert J. Buckler, Michael E. Champley,
Haven E. Cockerham, Anthony F. Earley, Jr., Larry G. Garberding,
Ronald W. Gresens, John E. Lobbia, Leslie L. Loomans and
Christopher C. Nern.
12-28 -- Computation of Ratio of Earnings to Fixed Charges.
12-29 -- Computation of Ratio of Earnings to Fixed Charges and Preferred and
Preference Stock Dividend Requirements.
15-59 -- Awareness Letter of Deloitte & Touche LLP.
23-8 -- Consent of Price Waterhouse LLP.
23-9 -- Consent of Simpson Thacher & Bartlett (contained in Exhibit 8-1).
25-7 -- Statement of Eligibility of Trustee (note indenture).
99-22 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and other Nominees.
99-23 -- Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and other nominees to their clients.
99-24 -- Form of Letter of Transmittal.
99-25 -- Form of Notice of Guaranteed Delivery.
99-26 -- Questions and Answers Sheet to be sent to holders of Depositary
Shares and to be used by Brokers, Dealers, Commercial Banks, Trust
Companies and other nominees in responding to inquiries from their
clients.
99-27 -- Form of Custodian Agreement.
99-28 -- Form of Exchange Agreement.
(b) Exhibits incorporated herein by reference. See page nos. to for
location of Exhibits incorporated by reference.
4(a) -- Restated Articles of Incorporation of the Company, as filed
December 10, 1991 with the State of Michigan, Department of
Commerce -- Corporation and Securities Bureau.
4(b) -- Certificate containing resolution of the Board of Directors
establishing the Cumulative Preferred Stock, 7.75% Series as filed
February 22, 1993 with the State of Michigan, Department of
Commerce -- Corporation and Securities Bureau.
4(c) -- Certificate containing resolution of the Board of Directors
establishing the Cumulative Preferred Stock, 7.74% Series, as filed
April 21, 1993 with the State of Michigan, Department of Commerce
-- Corporation and Securities Bureau.
4(d) -- By-Laws of the Company as amended November 25, 1991.
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
4(e) -- Mortgage and Deed of Trust, dated as of October 1, 1924, between
the Company and Bankers Trust Company as Trustee and indentures
supplemental thereto, dated as of dates indicated below:
September 1, 1947
October 1, 1968
November 15, 1971
January 15, 1973
June 1, 1978
June 30, 1982
August 15, 1982
October 15, 1985
November 30, 1987
July 15, 1989
November 1, 1990
December 1, 1989
February 15, 1994
April 1, 1991
May 1, 1991
May 15, 1991
September 1, 1991
November 1, 1991
January 15, 1992
February 29, 1992
April 15, 1992
July 15, 1992
July 31, 1992
November 30, 1992
January 1, 1993
March 1, 1993
March 15, 1993
April 1, 1993
April 26, 1993
May 31, 1993
June 30, 1993
June 30, 1993
September 15, 1993
March 1, 1994
June 15, 1994
August 15, 1994
December 1, 1994
4(f) -- Collateral Trust Indenture (notes), dated as of June 30, 1993.
4(g) -- First Supplemental Note Indenture, dated as of June 30, 1993.
4(h) -- Second Supplemental Note Indenture, dated as of September 15, 1993.
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------- ------------
<S> <C> <C>
4(i) -- Third Supplemental Note Indenture, dated as of August 15, 1994.
4(j) -- Amended and Restated Standby Note Purchase Credit Facility, dated
as of April 26, 1994, among The Detroit Edison Company, The Bank of
New York, The Toronto-Dominion Bank, acting through its Houston
Agency, Toronto-Dominion (Texas), Inc., as Administrative Agent and
Citicorp Securities, Inc., as Remarketing Agent.
4(k) -- Standby Note Purchase Credit Facility, dated as of August 17, 1994,
among The Detroit Edison Company, Barclays Bank PLC, as Bank and
Administrative Agent, Bank of America, The Bank of New York, The
Fuji Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union
Bank and Citicorp Securities, Inc. and First Chicago Capital
Markets, Inc. as Remarketing Agents.
10(a) -- Form of Indemnification Agreement between the Company and (1) Frank
E. Agosti, (2) Gerard M. Anderson, (3) Robert J. Buckler, (4)
Malcolm G. Dade, Jr., (5) Ronald W. Gresens, (6) Leslie L. Loomans,
(7) S. Martin Taylor, (8) Saul J. Waldman, (9) Susan M. Beale, (10)
Frederick S. Karwacki, (11) Douglas R. Gipson, (12) Robert J. Horn,
(13) Thomas A. Hughes, (14) Christopher C. Nern, (15) Ronald J.
Gdowski, (16) Elaine M. Godfrey, (17) Allen W. Anning, (18)
Christopher C. Arvani, (19) James R. McGillivary, (20) Thomas J.
Howlin, (21) Donald J. Brett, (22) Michael E. Champley, (23) T.
Michael Holton, and (24) Haven E. Cockerham.
10(b) -- 1991 Shareholder Value Improvement Plan -- A, as amended effective
January 25, 1993.
10(c) -- 1990 Shareholder Value Improvement Plan -- A, as amended January
25, 1993.
10(d) -- 1994 Officers' Shareholder Value Improvement Plan, January, 1994
(Exhibit 10-50 to Form 10-K for year ended December 31, 1993).
10(e) -- Certain Arrangements pertaining to the Employment of S. Martin
Taylor.
10(f) -- Certain arrangements pertaining to the employment of Anthony F.
Earley, Jr..
10(g) -- Amended and Restated Savings Separation Plan, June 1994 (Exhibit
10-54 to Form 10-Q for quarter ended June 30, 1994).
10(h) -- Certain arrangements pertaining to the employment of Haven E.
Cockerham.
10(i) -- Key Employe Deferred Compensation Plan (January 1990).
10(j) -- Retirement Reparation Plan for Certain Employes of The Detroit
Edison Company (as amended through May 22, 1989).
10(k) -- Benefit Equalization Plan for Certain Employes of The Detroit
Edison Company (as amended through May 22, 1989).
10(l) -- Certain Arrangements pertaining to the Employment of Larry G.
Garberding.
10(m) -- Form of Indemnification Agreement, between the Company and (1) John
E. Lobbia, (2) Larry G. Garberding and (3) Anthony F. Earley, Jr.
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------- ------------
<S> <C> <C>
10(n) -- Form of Indemnification Agreement, dated March 17, 1992, between
the Company and (1) Terence E. Adderley, (2) Wendell W. Anderson,
Jr., (3) Walter J. McCarthy, Jr., (4) Lillian Bauder, (5) David
Bing, (6) Alan E. Schwartz, (7) William Wegner, (8) Theodore S.
Leipprandt, (9) Patricia S. Longe, (10) Eugene A. Miller, (11) Dean
E. Richardson, (12) David M. Gates, and (13) Otis M. Smith.
10(o) -- Supplemental Long Term Disability Plan, dated November 5, 1991.
10(p) -- Executive Vehicle Program, dated October 1, 1993.
10(q) -- Amendment No. 1 to Executive Vehicle Plan, November 1993.
10(r) -- Certain arrangements pertaining to the employment of Gerard M.
Anderson.
10(s) -- Restated Management Supplemental Benefit Plan, January 1994.
10(t) -- Amended and Restated 1994 Officers' Shareholder Value Improvement
Plan (1994 and subsequent years, January 23, 1995).
10(u) -- 1995 Officers' Shareholder Value Improvement Plan (January 23,
1995).
10(v) -- Plan for Deferring the Payment of Directors' Fees (January 23,
1995).
10(w) -- Retirement Plan for Non-Employe Directors (February 27, 1995).
</TABLE>
<PAGE> 1
EXHIBIT 1.35
[DRAFT]
The Detroit Edison Company
DEALER MANAGERS AGREEMENT
June__, 1995
Goldman, Sachs & Co.,
As Dealer Managers
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
The Detroit Edison Company, a Michigan corporation (the "Company"),
plans to make an offer (the "Exchange Offer") for up to 4,200,000 of depositary
shares (the "Depositary Shares"), each representing a one-quarter interest in a
share of its Cumulative Preferred Stock ($100 par value), 7.75% Series (the
"Preferred Stock"), in exchange for a maximum of $105,000,000 in aggregate
principal amount of ___% Quarterly Income Debt Securities (Junior Subordinated
Deferrable Interest Debentures Due 2025) (the "QUIDS") to be issued under the
Note Indenture, dated as of June 30, 1993, as supplemented by a First
Supplemental Indenture dated as of September 15, 1993, a Second Supplemental
Indenture dated as of September 15, 1993, a Third Supplemental Indenture dated
as of August 15, 1994 and a Fourth Supplemental Indenture dated as of _____ __,
1995 (as supplemented, the "Indenture"), between the Company and Bankers Trust
Company, as trustee (the "Trustee"), on the basis of $25 principal amount of
QUIDS for every Depositary Share or $100 principal amount of QUIDS for every
share of Preferred Stock. The Exchange Offer will be conducted upon the terms
and subject to the conditions set forth in the exchange offer material (the
"Exchange Offer Material"), which the Company has caused to be prepared and
furnished to you for use in connection with the Exchange Offer, namely (a) a
Registration Statement on Form S-4 (File No. 33-__), including the Prospectus,
dated June __, 1995; (b) a Statement on Schedule 13E-4 with respect to the
Exchange Offer; (c) the form of letter from the Dealer Managers to securities
dealers, commercial banks, trust companies and other nominees; (d) the form of
letter to beneficial owners of Depositary Shares; (e) the form of letter of
transmittal (the "Letter of Transmittal"); (f) the form of notices of
guaranteed delivery (the "Notice of Guaranteed Delivery"); (g) the form of
Questions and Answers Sheet to be sent to holders and to be used by brokers,
dealers, commercial banks, trust companies and other nominees in responding to
inquiries from their clients; (h) the form of newspaper advertisements relating
to the Exchange Offer; and (i) the form of press release relating to the
Exchange Offer. Any other offering materials and
<PAGE> 2
2
information that the Company may prepare or approve in connection with the
Exchange Offer shall be called "Additional Material."
1. APPOINTMENT OF DEALER MANAGERS.
The Company hereby appoints you as Dealer Managers (the "Dealer
Managers") in connection with the Exchange Offer and authorizes you to act on
its behalf in accordance with this letter agreement and the terms of the
Exchange Offer Material and Additional Material. The Company has approved the
Exchange Offer Material and authorizes you and any other securities dealer or
any commercial bank or trust company to use the Exchange Offer Material and
Additional Material in connection with the solicitation of exchanges pursuant
to the Exchange Offer. In soliciting exchanges, you, as Dealer Managers, shall
act as independent contractors and shall not be deemed to act as agent of the
Company, and the Company shall not be deemed to act as agent of the Dealer
Managers. The Company authorizes you, as Dealer Managers, to communicate with
any agent appointed by the Company to act in such capacity with respect to
matters relating to the Exchange Offer (the "Exchange Agent") pursuant to an
Exchange Agent Agreement to be entered into between the Company and the
Exchange Agent (the "Exchange Agent Agreement").
2. MAILING OF EXCHANGE OFFER MATERIAL AND ADDITIONAL MATERIAL.
The Company shall cause to be mailed to each registered holder of
Depositary Shares, as soon as practicable, copies of appropriate Exchange Offer
Material and Additional Material, together with a return envelope. The date of
the commencement of such distribution is herein called the "Commencement Date."
Thereafter, to the extent practicable until the date of the expiration of the
Exchange Offer (the "Expiration Date"), the Company shall use its best efforts
to cause copies of such material and a return envelope to be mailed to each
person who becomes a beneficial owner of any Depositary Shares.
3. SOLICITATION OF TENDERS.
(a) You agree to use your best efforts to solicit tenders of
Depositary Shares pursuant to the Exchange Offer. You shall have no
liability, in tort, contract or otherwise, to the Company or any
person related to the Company for any act or omission on the part of
any securities broker or dealer (other than yourselves), commercial
bank or trust company that solicits exchanges, and you shall have no
liability in tort, contract or otherwise hereunder except for your
own gross negligence or bad faith. In soliciting exchanges, no
securities broker or dealer (other than yourselves), commercial bank
or trust company shall be deemed to act as your agent or the agent
of the Company, and you, as Dealer Managers, shall not be
<PAGE> 3
3
deemed the agent of any other securities broker or dealer or of
any commercial bank or trust company.
(b) The Company agrees to furnish to you as many copies as you
may reasonably request of the Exchange Offer Material and Additional
Material in final form for use by you in connection with the
Exchange Offer. The Company shall not amend or supplement the
Exchange Offer Material, or prepare or approve any Additional
Material for use in connection with the Exchange Offer, without your
consent, which consent shall not be unreasonably withheld.
(c) The Company agrees to advise you promptly of the
occurrence of any event which could cause the Company to withdraw,
rescind or modify the Exchange Offer or to amend or supplement the
Exchange Offer Material or Additional Material. In particular, the
Company will advise you promptly of (i) any proposal to amend or
supplement the Registration Statement (as defined in Section 5(a)),
the Prospectus (as defined in Section 5(a)) or the Schedule 13E-4
(as defined in Section 5(a); (ii) the filing or effectiveness of any
post-effective amendment to the Registration Statement or the filing
of any amendment or supplement to the Prospectus or the Schedule
13E-4; and (iii) the institution by the Securities and Exchange
Commission (the "Commission") of any stop order proceedings in
respect of the Registration Statement and, in the case of clause
(iii) above, will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible its lifting,
if issued.
(d) If at any time when a prospectus relating to the QUIDS is
required to be delivered under the United States Securities Act of
1933, as amended (the "Act"), any event occurs as a result of which
the Prospectus as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
is necessary at any time to amend or supplement the Prospectus so as
to comply with the Act or the United States Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission promulgated thereunder, the Company
promptly will prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an
amendment or supplement which will effect such compliance.
(e) The Company will not use or publish any material in
connection with the Exchange Offer, or refer to you in any such
material, without first
<PAGE> 4
4
consulting you. The Company will promptly inform you of any
litigation or administrative or governmental action with respect to
the Exchange Offer.
(f) The Company agrees to furnish to you, to the extent the
same is available to the Company, cards or lists or copies thereof
showing the names and addresses of, and aggregate number of shares
held by, the holders of record of Depositary Shares and shares of
Preferred Stock, as of a recent date, and shall use its best efforts
to advise you from day to day during the period of the Exchange
Offer as to any transfers of record of Depositary Shares and shares
of Preferred Stock. Additionally, the Company shall advise you, to
the extent known and available to the Company, of the names and
addresses of beneficial owners of the Depositary Shares and shares
of Preferred Stock. You agree to use such information only in
connection with the Exchange Offer and not to furnish such
information to any other person except in connection with the
Exchange Offer.
(g) The Company shall arrange for the Exchange Agent orally to
inform you during each business day during the Exchange Offer (to be
followed on a daily basis by written confirmation) as to the number
of shares of Preferred Stock or Depositary Shares, as the case may
be, that have been tendered for exchange pursuant to the Exchange
Offer during the interval since its previous daily report to you
under this provision, and the names and addresses of any beneficial
owners tendering ____ or more Depositary Shares. You agree to use
such information only in connection with the Exchange Offer and not
to furnish such information to any other person except in connection
with the Exchange Offer.
(h) The Company agrees to use its best efforts to have the
QUIDS approved for listing on the New York Stock Exchange.
4. COMPENSATION AND EXPENSES.
(a) The Company shall pay to you, as compensation for your
services as Dealer Managers, a fee of 0.8% of the aggregate
principal amount of the QUIDS offered in exchange for tendered
Preferred Stock pursuant to the Exchange Offer, which fee shall be
payable to you upon the consummation of the Exchange Offer in
Federal Funds to a bank account previously designated by you.
(b) Whether or not any shares of Preferred Stock or Depositary
Shares, as the case may be, are tendered in exchange for QUIDS
pursuant to the Exchange Offer, the Company shall pay (i) all
expenses of the
<PAGE> 5
5
preparation, printing, mailing and publishing of the Exchange
Offer Material and Additional Material, including all fees and
disbursements of the Company's counsel and accountants; (ii) all
expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus (as defined
herein) and the Prospectus and amendments and supplements thereto;
(iii) the cost of printing or producing this letter agreement, any
Blue Sky Memoranda, closing documents (including any compilations
thereof) and any other documents in connection with the Exchange
Offer; (iv) all expenses in connection with the qualification of the
QUIDS for offering under state securities laws and securities laws
of such other jurisdictions as may be necessary to effect the
Exchange Offer, including the reasonable fees and disbursements of
counsel for the Dealer Managers in connection with such
qualification and any Blue Sky survey; (v) any filing fees incident
to, and the reasonable fees and disbursements of counsel for the
Dealer Managers in connection with, any required review by the
National Association of Securities Dealers, Inc. of the terms of the
Exchange Offer; (vi) the cost of preparing the QUIDS; (vii) the fees
and expenses of the Trustee and the fees and disbursements of
counsel for the Trustee in connection with the Indenture and the
QUIDS; (viii) the fees and expenses of the Exchange Agent and the
Information Agent and the fees and disbursements of counsel for the
Exchange Agent and the Information Agent in connection with the
Exchange Offer; (ix) all expenses in connection with the tendering
and cancellation of the Preferred Stock and the Depositary Shares;
(x) all fees payable to securities dealers (including you),
commercial banks, trust companies and nominees as reimbursement of
their customary mailing and handling expenses incurred in forwarding
the Exchange Offer Material and Additional Material to their
customers and all solicitation fees or commissions payable to such
entities; (xi) all fees and expenses of Chemical Bank, as Depositary
(the "Depositary"), and any information agent; (xii) all advertising
charges; (xiii) any applicable transfer taxes payable by the Company
in connection with the Exchange Offer; (xiv) all fees in connection
with the listing of the QUIDS on the New York Stock Exchange; (xv)
all other costs and expenses in connection with the Exchange Offer,
and shall reimburse you for all expenses incurred by you in
connection with your serving as Dealer Managers, including your
reasonable expenses and the reasonable fees and the disbursements of
your counsel; and (xvi) any expenses incurred as a result of
presenting testimony or evidence, or preparing to present testimony
or evidence, in
<PAGE> 6
6
connection with any court or administrative proceeding arising
out of the Exchange Offer.
5. REPRESENTATIONS AND WARRANTIES BY THE COMPANY.
The Company represents and warrants to, and agrees with, you that:
(a) the Company's Registration Statement on Form S-4 (File
No. 33-__) with respect to the QUIDS and the Exchange Offer and the
Schedule 13E-4 have been filed with the Commission; such
Registration Statement and Schedule 13E-4 and any post-effective
amendment thereto, each in the form heretofore delivered or to be
delivered to you, have been declared effective by the Commission in
such form; no other document with respect to such Registration
Statement or the Schedule 13E-4 has heretofore been filed with the
Commission (other than prospectuses filed pursuant to Rule 424(b) of
the form heretofore delivered to you); and no stop order suspending
the effectiveness of such Registration Statement or Schedule 13E-4
has been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary
prospectus included in such Registration Statement or filed with the
Commission pursuant to Rule 424(a) under the Act is hereinafter
called a "Preliminary Prospectus"; the various parts of such
Registration Statement, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in
such Registration Statement, at the time such part of the
Registration Statement became effective but excluding the Statements
of Eligibility and Qualification of the Trustee (the "Forms T-1"),
each as amended at the time such part of the Registration Statement
became effective, are hereinafter collectively referred to as the
"Registration Statement"; the Schedule 13E-4, as amended,
supplemented or modified at any time is hereinafter called the
"Schedule 13E-4"; the prospectus relating to the QUIDS and the
Exchange Offer, in the form in which it has most recently been filed
with the Commission on or prior to the date of this letter
agreement, being hereinafter referred to as the "Prospectus"; any
reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Exchange Act, and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to the Prospectus
as amended or
<PAGE> 7
7
supplemented shall be deemed to refer to the Prospectus as
amended or supplemented in relation to the Exchange Offer in the
form in which it is filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof,
including any documents incorporated by reference therein as of the
date of such filing);
(b) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading; and any further documents so
filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder and will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Company by the Dealer Managers expressly for use in the Prospectus
as amended or supplemented relating to the Exchange Offer;
(c) The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by you, as Dealer Managers of the Exchange
Offer, expressly for
<PAGE> 8
8
use in the Prospectus as amended or supplemented relating to
such Exchange Offer;
(d) The Schedule 13E-4, as originally filed and subsequently
amended, the other Exchange Offer Materials and any amendment or
supplement thereto conform, or will conform, in all material
respects with all applicable requirements of the Act and the
Exchange Act and the rules and regulations of the Commission
thereunder; and none of the Schedule 13E-4, the other Exchange Offer
Materials or any amendment or supplement thereto includes, or will
include, an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished to the Company in
writing by the Dealer Managers expressly for use therein;
(e) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
[material] change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any material adverse change,
or any development involving a prospective material adverse change,
in or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus;
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business
as described in the Prospectus;
<PAGE> 9
9
(g) The Company has good and marketable title to all
properties standing of record in its name (which includes, without
limitation, all of those properties, except pollution control
facilities standing in the names of certain municipalities which are
being purchased by the Company pursuant to installment sales
contracts and the undivided ownership interest of Michigan Public
Power Agency in a portion of the Belle River Power Plant, in each
case as described in the Prospectus, which constitute or on which
there are erected its principal plants, generating stations and
substations and on which its general office and service buildings
are constructed and all other important parcels of real estate) and
improvements thereon, subject to the lien of the Mortgage and Deed
of Trust between the Company and the Trustee and to minor exceptions
and minor defects, irregularities and deficiencies which, in the
opinion of the Company, do not materially impair the use of such
property for the purpose for which it is held by the Company, and
the Company has adequate rights to maintain and operate such of its
transmissions and distribution facilities as are located on public
or other property not owned by the Company;
(h) The execution and delivery of this letter agreement and
all other documents to be executed and delivered by the Company
hereunder have been duly authorized by the Company, and this letter
agreement constitutes the valid and binding agreement of the Company
enforceable against the Company in accordance with its terms;
(i) The making and consummation of the Exchange Offer have
been duly authorized by all necessary corporate action on the part
of the Company;
(j) The QUIDS have been duly authorized, and, when issued and
delivered pursuant to the Exchange Offer, will have been duly
executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture, substantially in the form filed
as an exhibit to the Registration Statement; the Indenture has been
duly authorized and duly qualified under the Trust Indenture Act and
constitutes a valid and legally binding instrument, enforceable in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; and the Indenture conforms, and the QUIDS
will conform, to the descriptions thereof
<PAGE> 10
10
contained in the Prospectus as amended or supplemented with
respect to the Exchange Offer;
(k) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse
effect on the consolidated financial position, shareholders' equity
or results of operations of the Company and its subsidiaries; and,
to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others;
(l) The making and consummation of the Exchange Offer, the
execution, delivery and performance by the Company of this letter
agreement, the issuance and delivery of the QUIDS and the compliance
by the Company with all of the provisions of the QUIDS, the
Indenture and this letter agreement and the consummation of the
transactions herein and therein contemplated do not and will not
conflict with or result in a violation or breach of any of the terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement to which
the Company is a party or by which it is bound or to which any of
the property or assets of the Company is subject, nor will such
action result in any violation of the provisions of the Restated and
Amended Articles of Incorporation or By-laws of the Company or any
statute or any order, rule or regulation of any court or
governmental agency including, without limitation, the Michigan
Public Service Commission, or body having jurisdiction over the
Company or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue
and delivery of the QUIDS or the consummation by the Company of the
transactions contemplated by this letter agreement or the Indenture,
except such as have been, or will have been prior to the Expiration
Date, obtained under the Act, the Exchange Act and the Trust
Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the QUIDS by you; and
(m) The Company has an authorized capitalization as set forth
in the Prospectus and all of the issued shares of capital stock of
the Company have been duly
<PAGE> 11
11
and validly authorized and issued and are fully paid and
non-assessable;
(n) On the Commencement Date, the Company will have filed an
application for the listing of the QUIDS on the New York Stock
Exchange (the "NYSE");
(o) The Company has made or will make appropriate arrangements
with the Exchange Agent to allow for delivery of tendered Depositary
Shares in exchange for QUIDS by book-entry movement in the security
clearance and cash accounts operated by the Exchange Agent; and
(p) The Exchange Agent Agreement has been duly authorized by
the Company and, when executed and delivered, will constitute a
valid and legally binding agreement of the Company enforceable in
accordance with its terms, except as limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization and other similar
laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in
equity or at law).
6. CONDITIONS.
Your obligation to act as Dealer Managers hereunder shall at all
times be subject, in your discretion, to the conditions that:
(a) All representations, warranties and other statements of
the Company contained herein are now, and at all times during the
Exchange Offer and until the date of settlement of the Exchange
Offer (the "Exchange Date") will be, true and correct;
(b) The Company at all times during the Exchange Offer shall
have performed all of its obligations hereunder theretofore required
to have been performed;
(c) The Prospectus as amended or supplemented in relation to
the Exchange Offer shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
<PAGE> 12
12
(d) On each of the Commencement Date and the Exchange Date,
Christopher C. Nern, Vice President and General Counsel of the
Company; shall have furnished to you, as Dealer Managers, his
opinion, dated the respective date of delivery thereof,
substantially in the form of Exhibit A hereto;
(e) On each of the Commencement Date and the Exchange Date,
Simpson Thacher & Bartlett, your counsel, shall have furnished to
you, as Dealer Managers, an opinion or opinions, dated the
respective date of delivery thereof, with respect to the validity of
the Indenture and the QUIDS, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request,
and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such
matters;
(f) On each of the Commencement Date and the Exchange Date,
the independent accountants of the Company who have certified the
financial statements of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement, the
Prospectus and the Schedule 13E-4 shall have furnished to you a
letter, dated the respective date of delivery thereof, each in a
form satisfactory to you;
(g) The Company shall have furnished to you on each of the
Commencement Date and the Exchange Date, a certificate or
certificates of officers of the Company satisfactory to you as to
the accuracy of the representations and warranties of the Company in
this letter agreement, as to the performance by the Company of all
of its obligations hereunder to be performed at or prior to such
date, as to the matters set forth in subsections (c) and (h) of this
Section and as to such other matters as you may reasonably request;
(h) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus
as amended or supplemented any loss or interference with its
business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented, and (ii)
since the respective dates as of which information is given in the
Prospectus as amended or supplemented there shall not have been any
[material] change in the capital stock or long-term debt of the
Company or any
<PAGE> 13
13
of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented, the
effect of which, in any such case described in clause (i) or (ii),
is in the judgment of the Dealer Managers, so material and adverse
as to make it impracticable or inadvisable to proceed with the
Exchange Offer or the delivery of the QUIDS on the terms and in the
manner contemplated in the Prospectus as amended or supplemented;
(i) On or after the date hereof (A) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization," as that
term is defined by the Commission for purposes of Rule 436(g)(2)
under the Act and (B) none of them shall have publicly announced
that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
(j) On or after the date hereof there shall not have occurred
any of the following: (A) a suspension or material limitation in
trading in securities generally on the NYSE; (B) trading of any
securities of the Company shall have been formally suspended on any
exchange or in any over-the-counter market; provided that, in
connection with the formation of DTE Holdings, Inc. as described in
the Prospectus, the Company's common stock may be formally suspended
on the NYSE or other exchanges on which it is traded; provided that
Holdings' common stock shall have been duly listed on the NYSE; (C)
a general moratorium on commercial banking activities in New York or
the Company declared by either Federal or New York State
authorities; (D) the outbreak or escalation of hostilities involving
the United States or the declaration by the United States of a
national emergency or war if the effect of any such event specified
in this clause (D) in the judgment of the Dealer Managers makes it
impracticable or inadvisable to proceed with the Exchange Offer or
the delivery of the QUIDS on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;
(k) The Company shall have furnished to you on each of the
Commencement Date and the Exchange Date,
<PAGE> 14
14
such further information, certificates and documents as you may
reasonably request;
(l) On each of the Commencement Date and the Exchange Date,
the Exchange Agent shall have furnished to you, as Dealer Managers,
a certificate, dated the respective date of delivery thereof, of an
appropriate officer of the Exchange Agent, in form and substance
satisfactory to you, to the effect that:
(i) the Exchange Agent has been duly incorporated and
is validly existing as a trust company in good standing
under the laws of the State of New York, with full power,
authority and legal right under such law to execute, deliver
and carry out the terms of the Exchange Agent Agreement;
(ii) the Exchange Agent Agreement has been duly authorized,
executed and delivered by the Exchange Agent; and
(iii) the Exchange Agent Agreement constitutes a valid and
binding obligation of the Exchange Agent;
(m) On or prior to the Exchange Date, the QUIDS shall have
been duly listed, subject to notice of issuance, on the NYSE;
(n) On or prior to the Exchange Date, the Exchange Agent
Agreement shall be in full force and effect; and
(o) On or prior to the Exchange Date, Moody's Investors
Service, Inc. and Standard & Poor's Ratings Group shall have
publicly assigned to the QUIDS ratings acceptable to the Dealer
Managers.
7. COVENANTS.
The Company agrees with you:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this letter agreement or, if
applicable, such earlier time as may be required by Rule 424(b); to
make no further amendment or any supplement to the Registration
Statement or Prospectus as amended or supplemented after the date of
this letter agreement and prior to the Expiration Date for the QUIDS
which shall be disapproved by you for such
<PAGE> 15
15
QUIDS promptly after reasonable notice thereof; to advise you
promptly of any such amendment or supplement after such Expiration
Date and furnish you with copies thereof; to file promptly all
reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the QUIDS; and during such same period to advise you,
promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission, of the issuance by
the Commission of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Exchange Offer,
of the suspension of the qualification of the QUIDS for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the
issuance of any such stop order or of any such order preventing or
suspending the use of any prospectus relating to the QUIDS or
suspending any such qualification, to use promptly its best efforts
to obtain its withdrawal;
(b) Promptly from time to time during and following the
Expiration Date to take such action as you may reasonably request to
qualify the Exchange Offer under the securities laws of such
jurisdictions as you may request and to comply with such laws so as
to permit the continuance of the Exchange Offer therein in such
jurisdictions for as long as may be necessary to complete the
Exchange Offer, provided that in connection therewith the Company
shall not be required to file a general consent to service of
process in any jurisdiction;
(c) Not to offer, sell, contract to sell or otherwise
dispose of any debt securities of the Company which (i) have terms
similar to those of the QUIDS or (ii) accrue interest at a rate
similar to that of the QUIDS, from the date hereof and continuing
until 7 days following the Exchange Date without your prior
written consent;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as defined
in Rule 158(c)), an earning statement of the
<PAGE> 16
16
Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including at the option of
the Company Rule 158);
(e) To furnish you with copies of the Prospectus and the
Schedule 13E-4, each as amended or supplemented, in such quantities
as you may from time to time reasonably request, and, if the
delivery of a prospectus is required at any time in connection with
the Exchange Offer and if at such time any event shall have occurred
as a result of which the Prospectus or the Schedule 13E-4, as then
amended or supplemented, would include an untrue statement of a
material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during
such same period to amend or supplement the Prospectus or the
Schedule 13E-4 or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with
the Act, the Exchange Act or the Trust Indenture Act and the rules
and regulations of the Commission thereunder, to notify you and upon
your request to file such document and to prepare and furnish
without charge to you and to the dealer through which QUIDS may have
been exchanged as many copies as you may from time to time
reasonably request of an amended Schedule 13E-4 or Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance;
(f) The Company will promptly after the date hereof, in the
event it has not already done so, file an application for the
listing of the QUIDS on the NYSE and will use its best efforts
to cause such QUIDS to be duly authorized for listing
thereon, subject to official notice of issuance, and to be
registered under the Exchange Act;
(g) The Company shall promptly give you notice of any change
of the record date with respect to the Preferred Stock and notice of
any change in the Expiration Date; and
(h) The Company will promptly enter into an agreement with the
Exchange Agent substantially in the form of such agreement
previously furnished to you.
<PAGE> 17
17
8. INDEMNITY AND SURVIVAL OF CERTAIN PROVISIONS.
(a) The Company agrees (i) to indemnify and hold you harmless against
any loss, damage, expense, liability or claim (or action in respect thereof)
(A) which arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus
as amended or supplemented, or any amendment or supplement thereto, the
Schedule 13E-4, as amended or supplemented, or any amendment or supplement
thereto, the Exchange Offer Material, Additional Material or any of the
documents referred to therein or in any amendment or supplement to any of the
foregoing, or which arises out of or is based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the Dealer
Managers expressly for use in the Prospectus as amended or supplemented, (B)
which arises out of or is based upon any breach by the Company of any
representation or warranty or failure to comply with any of the agreements set
forth herein or (C) which arises out of or is based upon a withdrawal,
rescission, termination or modification of or a failure to make or consummate
the Exchange Offer; and (ii) to indemnify and hold you harmless against any
other loss, damage, expense, liability or claim (or action in respect thereof)
which otherwise arises out of or is based upon or asserted against you in
connection with your acting as Dealer Managers in connection with the Exchange
Offer or rendering any financial advisory services to the Company in connection
with the transactions contemplated by the Exchange Offer or which arises in
connection with any other matter referred to in this letter agreement, except
to the extent that any such loss, damage, expense, liability or claim referred
to in clause (ii) of this Section 8(a) results from your gross negligence or
bad faith in performing the services that are the subject of this letter
agreement. In the event that you become involved in any capacity in any
action, proceeding or investigation brought by or against any person, including
stockholders of the Company, in connection with any matter referred to in this
agreement, the Company also agrees periodically to reimburse you for your
reasonable legal and other expenses (including the reasonable cost of any
investigation and preparation) incurred in connection therewith. The Company
also agrees that neither you nor any of your affiliates, nor any partners,
directors, agents, employees or controlling persons (if any), as the case may
be, of you or any
<PAGE> 18
18
such affiliates, shall have any liability to the Company or any person
asserting claims on behalf of or in right of the Company for or in connection
with any matter referred to in this letter agreement except to the extent that
any loss, damage, expense, liability or claims incurred by the Company results
from your gross negligence or bad faith in performing the services that are the
subject of this letter agreement. The Company also agrees to indemnify and
hold you harmless against and reimburse you for any and all reasonable expenses
whatsoever (including legal and other fees and expenses) incurred by you in
connection with investigating, preparing for or defending against any such
losses, damages, expenses, liabilities or claims (or actions in respect
thereof), whether or not resulting in any liability, and any amount paid in
settlement of any litigation, commenced or threatened, or of any claim
whatsoever as set forth herein if such settlement is effected with the written
consent of the Company. The Company also agrees that neither you nor any of
your affiliates, nor any partners, directors, agents, employees or controlling
persons (if any), as the case may be, of you or any of your affiliates, shall
have any liability, in tort or contract or otherwise, to the Company or any
person asserting claims on behalf of or in right of the Company for or in
connection with any matter referred to in this letter agreement except to the
extent that any loss, damage, expense, liability or claim incurred by the
Company results from your gross negligence or bad faith in performing the
services that are the subject of this letter agreement.
(b) Promptly after receipt by you of notice of your involvement in
any action, proceeding or investigation, you shall, if a claim in respect
thereof is to be made against the Company under paragraph (a) of this Section
8, notify the Company in writing of such involvement, but the omission so to
notify the Company shall not relieve it from any liability which it may
otherwise have to you. In case any such action, proceeding or investigation
shall be brought against or otherwise involve you and you shall notify the
Company of the commencement thereof or your involvement therein, the Company
shall be entitled to participate therein, and, to the extent that it shall
wish, to assume the defense of such action, proceeding or investigation with
counsel satisfactory to you (who shall not, except with your additional
consent, be counsel to the Company). Upon assumption by the Company of the
defense of such action, proceeding or investigation, the Company shall not be
liable to you under this paragraph (b) of this Section 8 for any legal expenses
of other counsel or any other expenses, in each case subsequently incurred by
you, in connection with the defense thereof other than reasonable costs of
investigation and preparation, unless the Company and you are named parties to
any such action, proceeding or investigation (including any impleaded parties)
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them.
<PAGE> 19
19
(c) If for any reason the indemnification provided for in paragraph
(a) of this Section 8 is unavailable or insufficient to hold you harmless, then
the Company shall contribute to the amount paid or payable by you as a result
of such loss, damage, expense, liability or claim (or actions in respect
thereof) referred to therein in such proportion as is appropriate to reflect
the relative economic interests of the Company on the one hand and you on the
other hand from the acquisition of the Depositary Shares and underlying
Preferred Stock as well as the relative fault of the Company and you (or
actions in respect thereof) and any other relevant equitable considerations.
The relative economic interests of the Company on the one hand and you on the
other hand shall be deemed to be in the same proportion as the maximum
aggregate value of the QUIDS proposed, on the date hereof, to be issued and
provided in exchange for Depositary Shares and underlying Preferred Stock by
the Company pursuant to the Exchange Offer bears to the maximum aggregate fee
proposed to be paid to you pursuant to Section 4(a) of this letter agreement as
a result of such Exchange Offer. The relative fault of the Company and you
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by, or relating to,
the Company or you and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and you agree that it would not be just and equitable if
contribution pursuant to this paragraph (c) of this Section 8 were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this paragraph (c) of
this Section 8.
(d) The agreements contained in Section 4, Section 7 and in this
Section 8 and the representations and warranties of the Company set forth in
Section 5 hereof shall survive any termination or cancellation of this letter
agreement, any completion of the engagement provided by this letter agreement
or any investigation made by or on behalf of you and any of your officers or
partners or any person controlling you and shall survive the issuance and
delivery of the QUIDS, whether pursuant to the Exchange Offer or otherwise.
(e) The reimbursement, indemnity and contribution obligations of the
Company under this Section 8 shall be in addition to any liability that the
Company may otherwise have, shall extend upon the same terms and conditions to
your affiliates and the partners, directors, agents, employees and controlling
persons (if any), as the case may be, of you and any such affiliate, and shall
be binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of you, any such affiliate and any such person. If
after all or substantially all of the Company's assets are sold or the Company
is merged into another person and the obligations of the Company set forth in
this Section 8 are not
<PAGE> 20
20
assumed by operation of law or by contract by a party or parties satisfactory
to you, the purchaser of such assets or the person into which the Company is
merged agrees to arrange alternative means of providing for such obligations,
including providing insurance or creating an escrow, in each case in an amount
and upon terms and conditions satisfactory to you.
9. MISCELLANEOUS.
(a) This letter agreement is made solely for the benefit of you, the
Company and any partner, director, agent, employee, controlling person or
affiliate referred to in Section 8 hereof, and their respective successors,
assigns, and legal representatives, and no other person shall acquire or have
any right under or by virtue of this letter agreement.
(b) In the event that any provision hereof shall be determined to be
invalid or unenforceable in any respect, such determination shall not affect
such provision in any other respect or any other provision hereof, which shall
remain in full force and effect.
(c) Except as otherwise expressly provided in this letter agreement,
whenever notice is required by the provisions of this letter agreement to be
given to (i) the Company, such notice shall be in writing addressed to the
Company, at its office at 2000 Second Avenue, Detroit, Michigan 48226,
Attn: Treasurer, Facsimile No.: 313-237-6743 and (ii) you, such notice shall
be in writing addressed to you, at 85 Broad Street, New York, New York 10004,
facsimile number (212) 902-4103, Attention: Registration Department.
<PAGE> 21
21
(d) This letter agreement contains the entire understanding of the
parties with respect to your acting as Dealer Managers of the Exchange Offer,
superseding all prior agreements, understandings and negotiations with respect
to such activities by you. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. This letter
agreement may be executed in any number of counterparts, each of which shall be
an original, but all such counterparts shall together constitute one and the
same agreement.
Please sign and return to us a duplicate of this letter agreement,
whereupon it will become a binding agreement.
Very truly yours,
THE DETROIT EDISON COMPANY
By:________________________
Name:
Title:
The undersigned hereby confirms that
the foregoing letter agreement, as of the
date thereof, correctly sets forth the
agreement between The Detroit Edison
Company and the undersigned.
_____________________________________
(Goldman, Sachs & Co.)
<PAGE> 22
EXHIBIT A
June __, 1995
Goldman, Sachs & Co.,
As Dealer Managers,
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
I am Vice President and General Counsel of The Detroit Edison Company
(the "Company"), which intends to make an offer (the "Exchange Offer") for up
to 4,200,000 of depositary shares (the "Depositary Shares"), each representing
a one-quarter interest in a share of its Cumulative Preferred Stock, 7.75%
Series, par value $100 per share (the "Preferred Stock" and, together with the
Depositary Shares, the "Securities"), in exchange for a maximum of $105,000,000
in aggregate principal amount of ___% Quarterly Income Debt Securities (the
"QUIDS"). Such exchange offer, on the terms and subject to the conditions set
forth in the Exchange Offer Material and Additional Material described in the
Dealer Managers Agreement referred to below, is hereinafter referred to as the
"Exchange Offer". Terms used in the Dealer Managers Agreement are used herein
as therein defined.
In that connection, I, in conjunction with the members of the Legal
Department of the Company, have examined the Exchange Offer Material and
Additional Material, a signed copy of the agreement, dated June __, 1995,
between the Company and you providing for your services as Dealer Managers for
the Exchange Offer (the "Dealer Managers Agreement" or "Letter Agreement") and
such other documents as I have deemed necessary or appropriate for the purpose
of this opinion and advise you as follows:
(1) The Registration Statement, the Prospectus and the Schedule 13E-4
and any further amendments and supplements thereto made by the
Company prior to the Expiration Date (other than the financial
statements and related schedules, other financial data therein and
the Forms T-1, as to which I express no opinion) comply as to form
in all material respects with the requirements of the Act and the
Trust Indenture Act and the rules and regulations thereunder; I have
no reason to believe, after due inquiry, that, as of its effective
date, the Registration Statement or any further amendment thereto
made by the Company prior to the Exchange Date (other than the
financial statements and related schedules therein and except for
that part of the Registration Statement that constitutes the Forms
T-1, as to which I express no opinion) contained an untrue
statement of a material fact or omitted to
<PAGE> 23
2
state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date,
the Prospectus as amended or supplemented or any further amendment
or supplement thereto made by the Company prior to the Exchange Date
(other than the financial statements and related schedules therein
and except for that part of the Registration Statement that
constitutes the Forms T-1, as to which I need express no opinion)
contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading
or that, as of the Exchange Date, either the Registration
Statement or the Prospectus as amended or supplemented or any
further amendment or supplement thereto made by the Company prior to
the Exchange Date (other than the financial statements and related
schedules therein and except for that part of the Registration
Statement that constitutes the Forms T-1, as to which I express no
opinion) contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made not misleading;
and I do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be incorporated by reference into the
Prospectus or required to be described in the Registration Statement
or the Prospectus which are not filed or incorporated by reference
or described as required;
(2) The documents incorporated by reference in the Prospectus as amended
or supplemented (other than the financial statements and related
schedules therein and except for those parts of the Registration
Statement which constitute the Forms T-1, as to which I express no
opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and I have no reason to believe that any of such
documents, when they became effective or were so filed, as the case
may be, contained, in the case of a Registration Statement when it
became effective under the Act, an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
or, in the case of other documents which were filed under the Act or
the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statement therein, in the light of the
<PAGE> 24
3
circumstances under which they were made when such documents
were so filed, not misleading; and
(3) Nothing has come to my attention, after due inquiry, to
indicate that either the Company or any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any
material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated
in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, to the best of my knowledge, after due inquiry, there
has not been any change in the capital stock or long-term debt of
the Company or any of its subsidiaries (other than increases or
decreases in the long-term debt of the Company; provided that the
maximum amount of any such increases or decreases has not exceeded
$100 million) or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus;
(4) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other)
to own its properties and conduct its business as described in the
Prospectus as amended or supplemented;
(5) The Company has good and marketable title to all properties
standing of record in its name (which includes, without limitation,
all of those properties, except pollution control facilities
standing in the names of certain municipalities which are being
purchased by the Company pursuant to installment sales contracts and
the undivided ownership interest of Michigan Public Power Agency in
a portion of the Belle River Power Plant, in each case as described
in the Prospectus, which constitute or on which there are erected
its principal plants, generating stations and substations and on
which its general office and service buildings are constructed and
all other important parcels of real estate) and improvements
thereon, subject to the lien of the Mortgage and Deed of Trust
between the Company and the Trustee and to minor exceptions and
minor defects, irregularities and deficiencies which, in the opinion
of the Company, do not materially impair the use of such property
for the
<PAGE> 25
4
purpose for which it is held by the Company, and the Company
has adequate rights to maintain and operate such of its transmission
and distribution facilities as are located on public or other
property owned by the Company;
(6) The execution and delivery of the Letter Agreement and all
other documents to be executed and delivered by the Company pursuant
to the Letter Agreement have been duly authorized by the Company
and, assuming that the Letter Agreement constitutes a valid and
legally binding agreement under New York law, which assumption is
made with your express approval;
(7) The QUIDS have been duly authorized, and, when issued and
delivered pursuant to the Exchange Offer and the Indenture, will
have been duly executed, authenticated, issued and delivered and
will constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture, substantially in
the form filed as an exhibit to the Registration Statement; the
Indenture has been duly authorized and duly qualified under the
Trust Indenture Act and, on the Commencement Date, assuming due
authorization, execution and delivery thereof by the Trustee and
that the Indenture constitutes a valid and legally binding agreement
under New York law, which assumption is made with your express
approval, will constitute valid and legally binding obligations,
enforceable in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Indenture conforms,
and the QUIDS will conform, to the descriptions thereof contained in
the Prospectus as amended or supplemented with respect to the
Exchange Offer;
(8) To the best of my knowledge, after due inquiry, and other than
as set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries; and, to the best of my knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(9) The Company is not (x) in violation of its Restated Articles of
Incorporation or By-laws or (y) in default
<PAGE> 26
5
in the performance or observance of any material obligation,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument known
to me, after due inquiry, to which it is a party or by which it or
any of its properties may be bound;
(10) The making and consummation of the Exchange Offer, the
execution, delivery and performance by the Company of the Letter
Agreement, the issuance and delivery of the QUIDS and the compliance
by the Company with all of the provisions of the QUIDS, the
Indenture and the Letter Agreement and the consummation of the
transactions contemplated therein do not and will not conflict with,
violate or result in a breach of any of the terms, conditions or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to me, after due inquiry, to which the Company is a
party or by which it is bound or to which any of the property or
assets of the Company is subject, nor will such action result in any
violation of the provisions of the Restated Articles of
Incorporation or By-laws of the Company or any statute or any order,
rule or regulation known to me of any court or governmental agency,
including, without limitation, the Michigan Public Service
Commission ("MPSC") or any body having jurisdiction over the Company
or any of its properties, except that I express no opinion as to
rights of indemnity which may be limited by applicable law; and no
consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency
including, or body having jurisdiction over the Company or any of
its subsidiaries is required for the issue and delivery of the QUIDS
or the consummation by the Company of the transactions contemplated
by the Letter Agreement or the Indenture, except such as have been,
or will have been prior to the Expiration Date, obtained under the
Act, the Exchange Act and the Trust Indenture Act and from the MPSC
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the distribution of the QUIDS pursuant to
the Exchange Offer (as to which I express no opinion).
I am licensed to practice in the State of Michigan and under the
Federal law of the United States. This opinion is for your benefit and is not
to be relied upon by any other parties without my express written consent.
Very truly yours,
[NAME OF GENERAL COUNSEL]
<PAGE> 1
EXHIBIT 4-174
[Draft of June 16, 1995]
[FORM OF SUPPLEMENTAL INDENTURE FOR QUIDS]
- --------------------------------------------------------------------------------
THE DETROIT EDISON COMPANY
AND
BANKERS TRUST COMPANY
TRUSTEE
------------------------
FOURTH SUPPLEMENTAL INDENTURE
DATED AS OF , 1995
------------------------
SUPPLEMENTING THE COLLATERAL TRUST INDENTURE
DATED AS OF JUNE 30, 1993
TO PROVIDE FOR A
SERIES OF UNSECURED SUBORDINATED DEBT SECURITIES
- --------------------------------------------------------------------------------
<PAGE> 2
FOURTH SUPPLEMENTAL INDENTURE, dated as of the day of
1995, between THE DETROIT EDISON COMPANY, a corporation organized and existing
under the laws of the State of Michigan (the "Company"), and BANKERS TRUST
COMPANY, a New York banking corporation, having its principal office in The City
of New York, New York, as trustee (the "Trustee");
WHEREAS, the Company has heretofore executed and delivered to the Trustee a
Collateral Trust Indenture dated as of June 30, 1993 (the "Original Indenture"),
as supplemented by a First Supplemental Indenture dated as of June 30, 1993, a
Second Supplemental Indenture dated as of September 15, 1993 and a Third
Supplemental Indenture dated as of August 15, 1994 (the "Prior Supplemental
Indentures") providing for the issuance by the Company from time to time of its
secured notes (the "Secured Securities"); and
WHEREAS, the Company now desires to provide for the issuance of a series of
its unsecured, subordinated debt securities pursuant to the Original Indenture;
and
WHEREAS, the Company intends hereby to designate a series of debt
securities which shall not have the benefit of the provisions of Article Four of
the Original Indenture and the other related provisions of the Original
Indenture relating to the grant of security and which shall have the terms and
variations from the provisions of the Original Indenture as set forth herein;
and
WHEREAS, the Company, in the exercise of the power and authority conferred
upon and reserved to it under the provisions of the Original Indenture,
including Section 1001 thereof, and pursuant to appropriate resolutions of the
Board of Directors, has duly determined to make, execute and deliver to the
Trustee this Fourth Supplemental Indenture to the Original Indenture as
permitted by Sections 201 and 301 of the Original Indenture in order to
establish the form or terms of, and to provide for the creation and issue of, a
series of its debt securities under the Original Indenture, which shall be known
as the % Quarterly Income Debt Securities (Junior Subordinated Deferrable
Interest Debentures Due 2025) (the "QUIDS"); and
WHEREAS, all things necessary to make such debt securities, when executed
by the Company and authenticated and delivered by the Trustee or any
Authenticating Agent and issued upon the terms and subject to the
<PAGE> 3
2
conditions hereinafter and in the Original Indenture set forth against
payment therefor, the valid, binding and legal obligations of the Company and to
make this Fourth Supplemental Indenture a valid, binding and legal agreement of
the Company, have been done;
NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH that, in
order to establish the terms of a series of debt securities, and for and in
consideration of the premises and of the covenants contained in the Original
Indenture and in this Fourth Supplemental Indenture and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed as follows:
ARTICLE ONE
Definitions and Other
Provisions of General Application
SECTION 101. Definitions. Each capitalized term that is used herein and is
defined in the Original Indenture shall have the meaning specified in the
Original Indenture unless such term is otherwise defined herein.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions located in the State of
Michigan or in the state in which the principal corporate trust office of the
Trustee is located, are authorized or obligated by or pursuant to law or
executive order to close.
"Capital Stock" means any and all shares of the Company's Preferred Stock,
Preference Stock or Common Stock or any other equity securities of the Company.
"Payment Obligation", when used with respect to Senior Indebtedness, means
an obligation stated in an agreement, instrument or lease to pay money (whether
for principal, premium, interest, sinking fund, periodic rent, stipulated value,
termination value, liquidated damages or otherwise), but excluding an obligation
to pay money in respect of fees of, or as payment or reimbursement for expenses
incurred by or on behalf of, or as indemnity for losses, damages, taxes or other
indemnity claims of any kind owed to, any holder of Senior Indebtedness or other
party to such agreement, instrument or lease.
<PAGE> 4
3
"Senior Indebtedness" means each of the following, whether outstanding on
the date hereof or hereafter created, incurred or assumed:
(a) any Payment Obligation of the Company in respect of any
indebtedness, directly or indirectly, created, incurred or assumed (i) for
borrowed money or (ii) in connection with the acquisition of any business,
property or asset (including securities), other than any account payable or
other indebtedness created, incurred or assumed in the ordinary course of
business in connection with the obtaining of materials or services;
(b) any Payment Obligation of the Company in respect of any lease that
would, in accordance with generally accepted accounting principles, be
required to be classified and accounted for as a capital lease;
(c) any Payment Obligation of the Company in respect of any interest
rate exchange agreement, currency exchange agreement or similar agreement
that provides for payment (whether or not contingent) over a period or term
(including any renewals or extensions) longer than one year from the
execution thereof;
(d) any Payment Obligation of the Company in respect of any agreement
relating to the acquisition (including a sale and buyback) or lease
(including a sale and leaseback) of real or personal property that provides
for payment (whether or not contingent) over a period or term (including
any renewals or extensions) longer than one year from the execution
thereof;
(e) any Payment Obligation of any Subsidiary or of others of the kind
described in the preceding clauses (a) through (d) assumed or guaranteed by
the Company or for which the Company is otherwise responsible or liable;
and
(f) any amendment, renewal, extension or refunding of any Payment
Obligation described in the preceding subparagraphs (a) through (e);
unless in the agreement, instrument or lease in which any such Payment
Obligation is stated it is expressly provided that such Payment Obligation is
not senior in right of payment to the QUIDS.
<PAGE> 5
4
SECTION 102. Section References. Each reference to a particular section set
forth in this Supplemental Indenture shall, unless the context otherwise
requires, refer to this Fourth Supplemental Indenture.
ARTICLE TWO
Title and Terms of the QUIDS
SECTION 201. Title of the QUIDS. This Fourth Supplemental Indenture hereby
establishes a series of QUIDS, which shall be known as the Company's %
Quarterly Income Debt Securities (Junior Subordinated Deferrable Interest
Debentures, Due 2025) (referred to herein as the "QUIDS"). For purposes of the
Original Indenture, the QUIDS shall constitute a single series of Securities.
The stated maturity of the QUIDS will be , 2025.
SECTION 202. Variations from the Original Indenture. Notwithstanding the
provisions of the Original Indenture, the QUIDS shall be without benefit of any
security and shall be subordinated to Senior Indebtedness as and to the extent
provided in Article Four of this Supplemental Indenture. The QUIDS shall not
have the benefit of the provisions of Article Four of the Original Indenture and
shall not have the benefit of, or be subject to, the other related provisions of
the Original Indenture relating to the grant of security, including (for
avoidance of doubt and not for purposes of limitation) the Granting Clause, the
definitions of "Deliverable Mortgage Bonds," Deliverable Securities,"
"Designated Mortgage Bonds," "Grant," "Mortgage," "Mortgage Bonds," "Mortgage
Trustee," "Previously Delivered Mortgage Bonds," and "Trust Estate," Section
301(20), Sections 301(a)(v), (ix), (x) and (xi), Sections 301(b)(ii) and (iii),
Section 301(d), and Sections 601(4) and (8).
SECTION 203. Amount and Denominations; DTC. The aggregate principal amount
of QUIDS that may be issued under this Fourth Supplemental Indenture is limited
to $ . The QUIDS shall be issuable only in fully registered form and, as
permitted by Sections 301 and 302 of the Original Indenture, in denominations of
$25 and integral multiples thereof. The QUIDS will initially be issued under a
book-entry system, registered in the name of The Depository Trust Company, as
depositary ("DTC"), or its nominee, who is hereby designated as "U.S.
Depository" under the Original Indenture.
<PAGE> 6
5
Section 204. Interest Rate and Interest Payment Dates. (a) The QUIDS will
bear interest at the rate of % per annum from , 1995 until the
principal thereof becomes due and payable, and on any overdue principal and (to
the extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum during such
overdue period; provided, however, that the QUIDS will bear interest at the rate
of 7.75% per annum from and including July 15, 1995 to but excluding [first day
after Expiration Time] and from and after [first day after Expiration Time] at
the rate of % per annum. Interest on the QUIDS will be payable quarterly
(subject to deferral as set forth herein) in arrears on March 31, June 30,
September 30 and December 31 of each year (each an "Interest Payment Date"),
commencing September 30, 1995 to the persons in whose names the QUIDS are
registered at the close of business on the relevant record date for such
interest installment, which will be one Business Day prior to the relevant
Interest Payment Date or, in the case of a Deferral Period (as described
herein), one Business Day prior to the Interest Payment Date for such Deferral
Period (each a "Record Date"); provided, however, that, in the event that any
Interest Payment Date shall not be a Business Day, then interest shall be
payable on the next day that is a Business Day (but without interest or other
payment in respect of such delay), except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day (and in which case the relevant Record Date shall be on
the Business Day immediately preceding such Interest Payment Date), in each case
with the same force and effect as if made on such Interest Payment Date, subject
to certain rights of deferral described in Section 204(b) hereof.
The amount of interest payable any period will be computed on the basis of
twelve 30-day months and a 360-day year and, for any period shorter than a full
quarterly interest period, will be computed on the basis of the actual number of
days elapsed in such period.
(b) The provisions of Section 204(a) notwithstanding, the Company shall
have the right at any time, on one or more occasions so long as an Event of
Default with respect to the QUIDS has not occurred and is not continuing, to
extend any payment period on the QUIDS for a period (a "Deferral Period") not to
exceed 20 consecutive quarterly interest payment periods; provided that the date
on which such Deferral Period ends must be an Interest Payment Date and must be
no later than September 30, 2025 or any date on which any QUIDS are fixed for
redemption. On the Interest
<PAGE> 7
6
Payment Date at the end of the Deferral Period, the Company shall pay all
interest then accrued and unpaid, which shall be compounded quarterly at the
rate of interest on the QUIDS (except to the extent prohibited by law) to the
date of payment, to the persons in whose names the QUIDS are registered on the
Record Date for such Deferral Period. The Company shall give the Holders of the
QUIDS notice of its election to defer interest payments or to extend the
Deferral Period ten Business Days prior to the earlier of (1) the next scheduled
quarterly payment date and (2) the date the Company is required to give notice
of the record date of such related interest payment to the New York Stock
Exchange or other applicable self-regulatory organization or to the Holders of
the QUIDS, but in any event not less than two Business Days prior to such record
date. During the Deferral Period the Company shall not declare or pay any
dividend on or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its Capital Stock or make any guaranty payment with respect
to the foregoing, other than redemptions of any series of Capital Stock of the
Company pursuant to the terms of any sinking fund provisions with respect
thereto. During any Deferral Period, the Company may not (i) make any
distributions, loans or guarantees for the benefit of, (ii) purchase, defease,
redeem or otherwise acquire or retire for value any securities of or (iii) make
any other investment in, any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, for
the purpose of, or to enable the payment of, directly or indirectly, dividends
on any equity securities of DTE Holdings, Inc. and its successors or assigns.
During any Deferral Period, the Company may continue to extend the interest
payment period by extending the Deferral Period, on one or more occasions, by
notice given as aforesaid in this paragraph (b), provided that such Deferral
Period, as extended, must end on an Interest Payment Date and in no event shall
the aggregate Deferral Period, as extended, exceed 20 consecutive quarterly
interest payment periods or extend beyond September 30, 2025 or any date on
which QUIDS are fixed for redemption. No interest shall be due and payable
during a Deferral Period except at the end thereof.
SECTION 205. Redemption of QUIDS. The QUIDS shall not be redeemable prior
to June 30, 1998. Thereafter, upon notice given by mailing the same, postage
prepaid, at least 30 days and not more than 60 days prior to the date fixed for
redemption, any or all of the QUIDS may be redeemed by the Company, at its
option, at any time and from time to time, at a Redemption Price equal to 100%
of the principal amount of the QUIDS to
<PAGE> 8
7
be redeemed plus accrued and unpaid interest thereon to the date fixed for
redemption.
SECTION 206. Form of QUIDS. Attached hereto as Exhibit A is a form of the
definitive QUIDS.
ARTICLE THREE
Additional Events of Default and Covenants
SECTION 301. Inapplicability of Certain Events of Default. The Events of
Default set forth in Sections 601(4) and 601(8) of the Original Indenture shall
not apply to the QUIDS. The omission by the Company to pay interest on the QUIDS
during a Deferral Period as permitted by Section 204 shall not constitute an
Event of Default under Section 601(1) of the Original Indenture.
ARTICLE FOUR
Subordination of Quids
SECTION 401. QUIDS Subordinate to Senior Indebtedness. The Company for
itself, its successors and assigns, covenants and agrees, and each Holder of
QUIDS issued, whether upon original issue or upon transfer or assignment
thereof, by its acceptance thereof likewise covenants and agrees, that the
payment of principal of and interest on each and all of the QUIDS is hereby
expressly subordinated, to the extent and in the manner hereinafter in this
Article set forth, in right of payment to the prior payment in full of all
existing and future Senior Indebtedness of the Company.
SECTION 402. Payments to Securityholders. (a) Upon (i) any acceleration of
the principal amount due on the QUIDS or (ii) any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution or winding-up or total or partial
liquidation or reorganization of the Company, whether voluntary or involuntary
or in bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest, if any, due upon all Senior Indebtedness shall
first be paid in full, or payment thereof provided for in money or money's worth
in accordance with its terms, before any payment is made on account of the
principal of or interest on the indebtedness evidenced by the QUIDS, and upon
any such dissolution or winding-up or liquidation or reorganization any payment
or distribution of assets of the
<PAGE> 9
8
Company of any kind or character, whether in cash, property or securities, to
which the Holders of the QUIDS under the terms of this Supplemental Indenture
would be entitled, except for the provisions hereof, shall (subject to the power
of a court of competent jurisdiction to make other equitable provision
reflecting the rights conferred by the provisions hereof upon the Senior
Indebtedness and the holders thereof with respect to the QUIDS and the Holders
thereof by a lawful plan of reorganization under applicable bankruptcy law), be
paid by the Company or any receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, or by the Holders of
the QUIDS if received by them, directly to the holders of Senior Indebtedness
(pro rata to each such holder on the basis of the respective amounts of Senior
Indebtedness held by such holder) or their representatives, to the extent
necessary to pay all Senior Indebtedness (including interest thereon) in full,
in money or money's worth, in accordance with its terms, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the Holders of the
indebtedness evidenced by the QUIDS. The consolidation of the Company with, or a
merger of the Company into, another Person or the liquidation or dissolution of
the Company following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, to another Person upon the terms and conditions
provided in Section 901 of the Original Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 402(a).
(b) In the event that any payment or distribution of assets of the Company
of any kind or character not permitted by Section 402(a), whether in cash,
property or securities, shall be received by the Trustee or the Holders of QUIDS
before all Senior Indebtedness is paid in full, or provision made for such
payment, in accordance with its terms, upon written notice to the Trustee or, as
the case may be, such Holder, such payment or distribution shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
such Senior Indebtedness or their representative or representatives, or to the
Trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness.
Nothing in this
<PAGE> 10
9
Article shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 706 of the Original Indenture. In addition, nothing in this Article
shall prevent the Company from making or the Trustee from receiving or applying
any payment in connection with the redemption of the QUIDS if the first
publication of notice of such redemption (whether by mail or otherwise in
accordance with this Supplemental Indenture) has been made, and the Trustee has
received such payment from the Company, prior to the occurrence of any of the
contingencies specified in this Section 402.
(c) No payment on account of principal of or interest on the QUIDS shall be
made unless full payment of amounts then due for principal, premium, if any,
sinking funds and interest on any Senior Indebtedness has been made or duly
provided for in money or money's worth in accordance with the terms of such
Senior Indebtedness. No payment on account of principal or interest on the QUIDS
shall be made if, at the time of such payment or immediately after giving effect
thereto, (i) there shall exist a default in the payment of principal, premium,
if any, sinking fund or interest with respect to any Senior Indebtedness, or
(ii) there shall have occurred an event of default (other than a default in the
payment of principal, premium, if any, sinking funds or interest) with respect
to any Senior Indebtedness, as defined therein or in the instrument under which
the same is outstanding, permitting the holders thereof to accelerate the
maturity thereof and upon written notice thereof given to the Trustee, with a
copy to the Company (the delivery of which shall not affect the validity of the
notice to the Trustee), and such event of default shall not have been cured or
waived or shall not have ceased to exist, provided, however, that if the holders
of the Senior Indebtedness to which the default relates have not declared such
Senior Indebtedness to be immediately due and payable within 180 days after the
occurrence of such default (or have declared such Senior Indebtedness to be
immediately due and payable and within such period have rescinded such
declaration of acceleration), then the Company shall resume making any and all
required payments in respect of the QUIDS (including any missed payments). Only
one payment blockage period under the immediately preceding sentence may be
commenced within any consecutive 365-day period with respect to the QUIDS of any
series. No event of default which existed or was continuing on the date of the
commencement of any 180-day payment blockage period with respect to the Senior
Indebtedness initiating such payment blockage period shall be, or be made, the
basis for the commencement of a second payment blockage period
<PAGE> 11
10
by a Holder or representative of such Senior Indebtedness whether or not
within a period of 365 consecutive days unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days (and, in
the case of any such waiver, no payment shall be made by the Company to the
holders of Senior Indebtedness in connection with such waiver other than amounts
due pursuant to the terms of the Senior Indebtedness as in effect at the time of
such default).
SECTION 403. Subrogation to Rights of Holders of Senior Indebtedness. From
and after the payment in full of all Senior Indebtedness, the Holders of the
QUIDS (together with the holders of any other indebtedness of the Company which
is subordinate in right of payment to the payment in full of all Senior
Indebtedness, which is not subordinate in right of payment to the QUIDS and
which by its terms grants such right of subrogation to the holder thereof) shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets or securities of the Company applicable to
the Senior Indebtedness until the QUIDS shall be paid in full, and, for the
purposes of such subrogation, no such payments or distributions to the holders
of Senior Indebtedness of assets or securities, which otherwise would have been
payable or distributable to Holders of the QUIDS, shall, as between the Company,
its creditors other than the holders of Senior Indebtedness, and the Holders of
the QUIDS, be deemed to be a payment by the Company to or on account of the
Senior Indebtedness, it being understood that the provisions of this Article are
and are intended solely for the purpose of defining the relative rights of the
Holders of the QUIDS, on the one hand, and the holders of the Senior
Indebtedness, on the other hand, and nothing contained herein is intended to or
shall impair as between the Company, its creditors other than the holders of
Senior Indebtedness, and the Holders of the QUIDS, the obligation of the
Company, which is unconditional and absolute, to pay to the Holders of the QUIDS
the principal of, premium, if any, and interest, if any, on the QUIDS as and
when the same shall become due and payable in accordance with their terms, or to
affect the relative rights of the Holders of the QUIDS and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or the Holder of QUIDS from exercising all
remedies otherwise permitted by applicable law upon default hereunder with
respect to the QUIDS subject to the rights of the holders of Senior
Indebtedness, under Section 402, to receive cash, property or securities of the
Company
<PAGE> 12
11
otherwise payable or deliverable to the Trustee or the Holders of the
QUIDS or to a representative of such Holders, on their behalf.
Upon any distribution or payment in connection with any proceedings or sale
referred to in Section 402(a), the Trustee and each Holder of the QUIDS then
Outstanding, shall be entitled to rely upon a certificate of the liquidating
trustee or agent or other Person making any distribution or payment to the
Trustee or such Holder for the purpose of ascertaining the holders of Senior
Indebtedness entitled to participate in such payment or distribution, the amount
of such Senior Indebtedness or the amount payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article.
SECTION 404. No Impairment of Subordination. Nothing contained in this
Article or elsewhere in this Supplemental Indenture or the QUIDS shall prevent
at any time the Company from making payments at any time of principal of or
interest on the QUIDS, except under the conditions described in Section 402 or
during the pendency of any proceedings or sale therein referred to.
SECTION 405. Trustee to Effectuate Subordination. Each Holder of a
Subordinated Security by his acceptance thereof, whether upon original issue or
upon transfer or assignment, authorizes and directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provisions in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes.
No rights of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Trustee
or any Holder of the QUIDS then Outstanding, or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by any such holder, with
the terms, provisions and covenants of this Supplemental Indenture, regardless
of any knowledge thereof which any such holder may have or otherwise be charged
with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Holders of the QUIDS, without incurring
responsibility to the Holders of the QUIDS and without impairing or releasing
the subordination provided in this Article or the obligations of the Holders of
the QUIDS to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or
<PAGE> 13
12
supplement in any manner Senior Indebtedness of any instrument evidencing the
same or any agreement under which Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (iii) release any Person liable in any
manner for the collection of Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company and any other Person.
SECTION 406. Notice to Trustee. The Company shall give prompt written
notice to the Trustee in the form of an Officers' Certificate of any fact known
to the Company which would prohibit the making of any payment of money to or by
the Trustee in respect of the QUIDS pursuant to the provisions of this Article.
Notwithstanding the provisions of this Article or any other provisions of this
Supplemental Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee in respect of the QUIDS pursuant to the provisions of this Article,
unless and until the Trustee shall have received at its Corporate Trust Office
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor at least two Business Days prior to
such payment date; and, prior to the receipt of any such written notice, the
Trustee, shall be entitled in all respects to assume that no such facts exist.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior Indebtedness
(or a trustee on behalf of such holder) to establish that such notice has been
given by a holder of Senior Indebtedness or a trustee on behalf of any such
holder. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under the Article, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 407. Reliance on Certificate of Liquidating Agent. Upon any payment
or distribution referred to in this Article, the Trustee, and the Holders of the
QUIDS shall be entitled to rely upon any order or decree
<PAGE> 14
13
entered by any court of competent jurisdiction in which a dissolution, winding
up or total or partial liquidation or reorganization of the Company is pending,
or a certificate of the trustee in bankruptcy, liquidating trustee, custodian,
receiver, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Holders of the
QUIDS, for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article.
SECTION 408. Trustee Not Fiduciary for Holders of Senior Indebtedness. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and shall not be liable to any such holders if it shall in good
faith mistakenly pay over or distribute to Holders of the QUIDS of any series or
to the Company or to any other Person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
SECTION 409. Rights of Trustee as Holder of Senior Indebtedness. The
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article with respect to any Senior Indebtedness which may at any time be
held by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Supplemental Indenture shall deprive the Trustee of any of its
rights as such holder.
SECTION 410. Article Applicable to Paying Agent. In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context shall otherwise require) be construed as extending
to and including such Paying Agent within its meaning as fully for all intents
and purposes as if such Paying Agent were named in this Article in addition to
or in place of the Trustee; provided, however, that this Section shall not apply
to the Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
<PAGE> 15
14
ARTICLE FIVE
Miscellaneous Provisions
The Trustee makes no undertaking or representations in respect of, and
shall not be responsible in any manner whatsoever for and in respect of, the
validity or sufficiency of this Fourth Supplemental Indenture or the proper
authorization or the due execution hereof by the Company or for or in respect of
the recitals and statements contained herein, all of which recitals and
statements are made solely by the Company.
Except as expressly amended hereby, the Original Indenture shall continue
in full force and effect in accordance with the provisions thereof and the
Original Indenture is in all respects hereby ratified and confirmed. This Fourth
Supplemental Indenture and all its provisions shall be deemed a part of the
Original Indenture in the manner and to the extent herein and therein provided.
This Fourth Supplemental Indenture shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Fourth Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
<PAGE> 16
15
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
<TABLE>
<S> <C>
THE DETROIT EDISON COMPANY
By: -------------------------------
Name:
Title:
ATTEST:
By:
-------------------------------
(Corporate Seal)
BANKERS TRUST COMPANY,
as Trustee
By:
-------------------------------
Name:
Title:
ATTEST:
By:
-------------------------------
(Corporate Seal)
</TABLE>
<PAGE> 17
16
STATE OF MICHIGAN)
) :
COUNTY OF WAYNE )
On the day of 1995, before me personally came
, to me known, who, being by me duly sworn, did depose and say
that he is of THE DETROIT EDISON COMPANY, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and he signed his name thereto by like authority.
-------------------------------------
Notary Public, State of Michigan
[Notarial Seal]
STATE OF NEW YORK )
) :
COUNTY OF NEW YORK )
On the day , 1995, before me personally came ,
to me known, who, being by me duly sworn, did depose and say that she is
of BANKERS TRUST COMPANY, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and she signed her name thereto by like authority.
-------------------------------------
Notary Public, State of New York
[Notarial Seal]
<PAGE> 18
EXHIBIT A
(FORM OF FACE OF NOTE)
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO A NOMINEE OF DTC OR
BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") FOR U.S. FEDERAL
INCOME TAX PURPOSES. THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES
OF APPLYING THE FEDERAL INCOME TAX OID RULES TO THIS NOTE:
ISSUE PRICE: PER $25 OF PRINCIPAL AMOUNT.
ORIGINAL ISSUE DISCOUNT: PER $25 OF PRINCIPAL AMOUNT.
YIELD TO MATURITY: . %.
ISSUE DATE: , .
No. $
CUSIP No.
<PAGE> 19
2
THE DETROIT EDISON COMPANY
% JUNIOR SUBORDINATED
DEFERRABLE INTEREST NOTE
DUE 2025
THE DETROIT EDISON COMPANY, a corporation duly organized and existing under
the laws of the State of Michigan (herein referred to as the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to or registered
assigns, the principal sum of on September 30, 2025 and to pay
interest on said principal sum from , 1995 until the principal hereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum during such overdue period;
provided however that registered holder of this Note will receive interest at a
rate of 7.75% per annum from July 15, 1995 and including to but excluding [first
day after the Expiration Time] and from and after [first day after the
Expiration Time] at the rate of % per annum. Interest on this Note will be
payable quarterly (subject to deferral as set forth herein) in arrears on March
15, June 30, September 30 and December 31 of each year (each such date, an
"Interest Payment Date"), commencing September 30, 1995.
The amount of interest payable for any period shall be computed on the
basis of twelve 30-day months and a 360-day year and, for any period shorter
than a full quarterly interest period, will be computed on the basis of the
actual number of days elapsed in such period. In the event that any date on
which interest is payable on this Note is not a Business Day, then payment of
the amount payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceeding Business Day (and
in which case the relevant Record Date shall be on the Business Day immediately
preceeding such Interest Payment Date), in each case with the same force and
effect as if made on such date, subject to certain rights of deferral described
below. A "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions located in the State of
Michigan or in the state in which the principal corporate trust office of the
Trustee is located are authorized or obligated by or pursuant to law or
executive order to close. The interest installment so payable, and
<PAGE> 20
3
punctually paid or duly provided for, on any Interest Payment Date (other than
interest payable on redemption or maturity) will, as provided in the Indenture
(as defined herein), be paid to the person in whose name this Note (or one or
more Predecessor Notes, as defined in said Indenture) is registered at the close
of business on the relevant record date for such interest installment, which
shall be one Business Day prior to the relevant Interest Payment Date or, in the
case of a Deferral Period (as defined in the Indenture), one Business Day prior
to Interest Payment Date for such Deferral Period (each a "Record Date").
Interest payable on redemption or maturity shall be payable to the person to
whom the principal is paid. Any such interest installment not punctually paid or
duly provided for shall forthwith cease to be payable to the registered holders
on such Record Date, and may be paid to the person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on a
special record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered holders of this series
of Notes not less than 10 days prior to such special record date, or may be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the
Indenture. The principal of and the interest on this Note shall be payable at
the office or agency of the Company maintained for that purpose in the Borough
of Manhattan, The City of New York, in any coin or currency of the United States
of America which at the time of payment is legal tender for payment of public
and private debts; provided, however, that payment of interest may be made at
the option of the Company by check mailed to the registered holder at the close
of business on the Record Date at such address as shall appear in the Security
Register.
Payment of the principal of and interest on this Note is, to the extent
provided in the Indenture, subordinated and subject in right of payment to the
prior payment in full of all existing and future Senior Indebtedness, as defined
in the Indenture, of the Company and this Note is issued subject to the
provisions of the Indenture with respect thereto. Each registered holder of this
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each registered holder
<PAGE> 21
4
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
Unless the Certificate of Authentication hereon has been executed by the
Trustee or a duly appointed Authentication Agent referred to on the reverse side
hereof, this Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
This Note is one of a duly authorized series of Notes of the Company
(herein sometimes referred to as the "Notes"), specified in the Indenture, all
issued or to be issued in one or more series under and pursuant to a Collateral
Trust Indenture dated as of June 30, 1993 (the "Original Indenture") duly
executed and delivered between the Company and Bankers Trust Company, a national
banking association organized and existing under the laws of the United States,
as Trustee (herein referred to as the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of June 30, 1993, a Second Supplemental
Indenture dated as of September 15, 1993, a Third Supplemental Indenture dated
as August 15, 1994 and a Fourth Supplemental Indenture dated as of
, , 1995 (together with the Original Indenture, the
"Indenture") between the Company and the Trustee, to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the registered holders of the Notes
and of the terms upon which the Notes are, and are to be, authenticated and
delivered. By the terms of the Indenture, the Notes are issuable in series which
may vary as to amount, date of maturity, rate of interest and in other respects
as in the Indenture provided. This series of Notes is limited in aggregate
principal amount as specified in said Fourth Supplemental Indenture.
Notwithstanding the provisions of the Original Indenture, this Note shall
be without benefit of any security and shall be subordinated to Senior
Indebtedness (as defined in the Indenture) as and to the extent provided in
Article Four of said Fourth Supplemental Indenture. This Note shall not
<PAGE> 22
5
have the benefit of the provisions of Article Four of the Original Indenture and
shall not have the benefit of, or be subject to, the other related provisions of
the Original Indenture relating to the grant of security, including (for
avoidance of doubt and not for purposes of limitation) the Granting Clause, the
definitions of "Deliverable Mortgage Bonds," "Deliverable Securities,"
"Designated Mortgage Bonds," "Grant," "Mortgage," "Mortgage Bonds," "Mortgage
Trustee," "Previously Delivered Mortgage Bonds," and "Trust Estate," Section
301(20), Section 301(a)(v), (ix), (x) and (xi), Sections 301(b)(ii) and (iii),
and Section 301(d). In addition, the Events of Default set forth in Sections
601(4) and 601(8) of the Original Indenture shall not apply to this Note. The
omission by the Company to pay interest on this Note during a Deferral Period as
permitted by Section 204 shall not constitute an Event of Default under Section
601(1) of the Original Indenture.
Subject to the terms of Article Three of the Indenture, the Company shall
have the right to redeem this Note at the option of the Company, without premium
or penalty, in whole or in part, at any time on or after June 30, 1998 and prior
to maturity at a redemption price equal to 100% of the principal amount redeemed
plus the accrued and unpaid interest thereon any accrued but unpaid interest to
the date fixed for redemption. Any redemption pursuant to this paragraph will be
made upon not less than 30 nor more than 60 days notice. If the Notes are only
partially redeemed by the Company, the Notes will be redeemed pro rata or by lot
or by any other method utilized by the Trustee; provided that if at the time of
redemption, the Notes are registered as a Global Note, the Depositary shall
determine by lot the principal amount of such Notes held by each Note holder to
be redeemed.
In the event of redemption of this Note in part only, a new Note or Notes
of this series for the unredeemed portion hereof will be issued in the name of
the registered holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Note upon compliance by the Company with certain conditions
set forth therein.
<PAGE> 23
6
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the registered holders of not less than a majority in
aggregate principal amount of the outstanding Notes of each series affected at
the time, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the registered holders of the Notes;
provided, however, that no such supplemental indenture shall (i) extend the
fixed maturity of any Notes of any series, or reduce the principal amount
thereof, or reduce the rate of or extend the time of payment of interest
thereon, or reduce any premium payable upon the redemption thereof, without the
consent of the holder of each Note so affected or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of each Note then
outstanding and affected thereby. The Indenture also contains provisions
permitting the registered holders of a majority in aggregate principal amount of
the Notes of all series at the time outstanding affected thereby, on behalf of
the registered holders of the Notes of such series, to waive compliance by the
Company with certain provisions the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the
registered holder of this Note (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such registered holder and upon all future
registered holders and owners of this Note and of any Note issued in exchange
hereof or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the time and place and at the rate and in the coin or currency herein
prescribed.
The Company shall have the right at any time, on one or more occasions, so
long as an Event of Default has not occurred and is not continuing under the
Indenture with respect to the Notes, to extend any interest payment period on
this Note to a period not to exceed 20 consecutive quarterly interest payment
periods and, as a consequence, the quarterly interest payment on the Notes would
be deferred (but would continue to accrue with interest thereon at the rate of
interest on the Note) during any
<PAGE> 24
7
such Deferral Period (as defined in the Indenture). At the end of each
Deferral Period, the Company shall pay all interest then accrued and unpaid
(compounded quarterly, at the rate of interest on the Notes, except to the
extent provided by law) to the persons in whose name the QUIDS are registered on
the Record Date for such Deferral Period. In the event the Company exercises
this the right during the Deferral Period, Company shall not declare or pay any
dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its Capital Stock (as defined in the Indenture) or make any
guarantee payments with respect to the foregoing during such Deferral Period,
other than redemptions of any series of Capital Stock of the Company pursuant to
the terms of any sinking fund provisions with respect thereto. In addition,
during any Deferral Period, the Company may not (i) make any distributions,
loans or guarantees for the benefit of, (ii) purchase, defease, redeem or
otherwise acquire or retire for value any securities of or (iii) make any other
investment in, any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, for the purpose of, or
to enable the payment of, directly or indirectly, dividends on any equity
security of DTE Holdings, Inc. and its successors or assigns. During any
Deferral Period, the Company may continue to extend the interest payment period
by extending the Deferral Period; provided that the aggregate Deferral Period,
as extended, must end on an Interest Payment Date and in no event shall the
aggregate Deferral Period exceed 20 consecutive quarterly interest payment
periods or extend beyond the maturity of the Notes or any date on which any of
the Notes are fixed for redemption. No interest shall be due and payable on the
Notes during a Deferral Period except at the end thereof. The Company shall give
the holders of Notes notice of its election to defer interest payments or to
extend the Deferral Period ten Business Days prior to the earlier of (i) the
next scheduled quarterly payment date or (ii) the date the Company is required
to give notice of the record date of such related interest payment to the New
York Stock Exchange or other applicable self-regulatory organization or to the
holders of the Notes, but in any event not less than two Business Days prior to
such record date.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company in any place where the principal of and any interest on
this Note are payable or at such other offices or agencies as the
<PAGE> 25
8
Company may designate, duly endorsed by or accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company and the Security
Registrar or any transfer agent duly executed by the registered holder hereof or
his or her attorney duly authorized in writing, and thereupon one or more new
Notes of this series and of like tenor, of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and any Note Registrar may deem and treat
the registered holder hereof as the absolute owner hereof (whether or not this
Note shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Note Registrar) for the purpose of
receiving payment of or on account of the principal hereof and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Note Registrar shall be affected by any notice to the
contrary.
The Notes of this series are issuable only in fully registered form without
coupons in denominations of $25 and any integral multiple thereof. This Global
Note is exchangeable for Notes in definitive form only under certain limited
circumstances set forth in the Indenture. Notes of this series so issued are
issuable only in registered form without coupons in denominations of $25 and any
integral multiple thereof. As provided in the Indenture and subject to certain
limitations [herein and] therein set forth, Notes of this series [so issued] are
exchangeable for a like aggregate principal amount of Notes of this series of a
different authorized denomination, as requested by the registered holder
surrendering the same.
As set forth in, and subject to the provisions of, the Indenture, no
registered owner of any Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless (i) such
registered owner shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to the Notes of this series, (ii) the
registered owners of not less than 25% in principal amount of the outstanding
Notes of this series shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, (iii) the
Trustee shall have failed to institute such proceeding
<PAGE> 26
9
within 60 days and (iv) the Trustee shall not have received from the registered
owners of a majority in principal amount of the outstanding Notes of this series
a direction inconsistent with such request within such 60-day period; provided,
however, that such limitations do not apply to a suit instituted by the
registered owner hereof for the enforcement of payment of the principal of or
any interest on this Note on or after the respective due dates expressed herein,
subject to deferral as set forth herein.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
Dated
THE DETROIT EDISON
COMPANY
By
-------------------------------------
Attest:
By
- ----------------------------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series of Notes described in the within-
mentioned Indenture.
BANKERS TRUST COMPANY
as Trustee or as Authentication Agent
By
- ----------------------------------------
Authorized Signatory
<PAGE> 27
10
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
- --------------------------------------------------------------------------------
(PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE)
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPE NAME AND ADDRESS,
INCLUDING ZIP CODE OF ASSIGNEE)
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorneys to transfer the within Note on the books of the
Issuer, with full power of substitution in the premises.
Dated:
- ------------------------------------------ ------------------------------------
NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the within Note in every particular, without
alteration or enlargement or any change whatever and NOTICE:
Signature(s) must be guaranteed by a financial institution that is a
member of the Securities Transfer Agents Medallion Program ("STAMP"),
the Stock Exchange, Inc. Medallion Signature Program ("MSP"). When
assignment is made by a guardian, trustee, executor or administrator, an
officer of a corporation, or anyone in a representative capacity, proof
of his or her authority to act must accompany this Note.
<PAGE> 1
CHRISTOPHER C. NERN
Vice President
and General Counsel
(LOGO) 2000 Second Avenue
Detroit, Michigan 48226
(313) 237-8000
EXHIBIT 5-49
June , 1995
The Detroit Edison Company
2000 Second Avenue
Detroit, Michigan 48226
Gentlemen:
With respect to the Registration Statement on Form S-4
(the "Registration Statement") filed by The Detroit
Edison Company, a Michigan corporation (the "Company"),
with the Securities and Exchange Commission for the
purpose of registering under the Securities Act of 1933,
as amended, an Offer to Exchange up to $105,000,000
aggregate principal amount of its Quarterly Income Debt
Securities ("QUIDS") for up to 4,200,000 Depositary
Shares, each representing a one-quarter interest in a
share of the Company's Cumulative Preferred Stock, 7.75%
Series ("Preferred Stock") I, as Vice President and
General Counsel of the Company, in conjunction with the
members of the Legal Department of the Company, have
examined such certificates, instruments and documents
and reviewed such questions of law as I have considered
necessary or appropriate for the purposes of this
opinion.
Based upon the foregoing examination and review, it is
my opinion that:
1. The Company is duly incorporated and validly
existing as a corporation under the laws of the
State of Michigan;
2. When (a) the Registration Statement has become
effective under the Securities Act of 1933, as
amended, (b) the proposed Supplemental Indenture
to be dated on or about June 15, 1995
supplementing the Collateral Trust Indenture dated
as of June 30, 1993, as amended June 30, 1993,
September 15, 1993, and August 15, 1994, between
the Company and Bankers Trust Company, Trustee,
pursuant to which the QUIDS are to be issued, has
been duly authorized, executed and delivered and
shall have been qualified under the Trust
Indenture Act of 1939, as amended and (c) the
QUIDS shall have been duly executed,
authenticated, issued and delivered in exchange
for an equal principal amount of the Company's
Preferred Stock, the QUIDS will thereupon be
validly issued and binding obligations of the
Company.
I consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to me
under the caption "Legal Opinions" in the Prospectus,
forming a part of the Registration Statement.
Very truly yours,
C. C. Nern
<PAGE> 1
EXHIBIT 8.1
Simpson Thacher & Bartlett
A Partnership which Includes Professional Corporation
425 Lexington Avenue
New York, N.Y. 10017-3909
212-455-2000
June 16, 1995
The Detroit Edison Company
2000 Second Avenue
Detroit, Michigan 48226
Dear Sirs:
We have acted as special United States tax counsel to The Detroit Edison
Company (the "Company") in connection with the preparation and filing of the
Registration Statement on Form S-4 with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, in respect of QUIDS to be
offered by the Company. In that connection, we have given the opinions contained
in the section entitled "Certain United States Federal Income Tax Consequences"
in the Registration Statement and related prospectuses.
We hereby confirm that our opinions referenced in this letter are accurate
and hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to the use of our name in the section entitled
"Certain United States Federal Income Tax Consequences" in the Registration
Statement and related prospectuses.
We do not express any opinion herein concerning any law other than the
federal law of the United States.
Very truly yours,
SIMPSON THACHER & BARTLETT
<PAGE> 1
Exhibit 10.60
THE DETROIT EDISON COMPANY
Restricted Stock Agreement
WHEREAS, (the "Grantee") is an employe of The
Detroit Edison Company, a Michigan corporation (the "Company"); and
WHEREAS, the execution of an agreement in the form hereof (this
"Agreement") has been authorized by a resolution of the Organization and
Compensation Committee (the "Committee") of the Board of Directors of the
Company that was duly adopted on May 22, 1995, (the "Date of Grant");
NOW, THEREFORE, pursuant to the Company's Long-Term Incentive Plan (the
"Plan"), which was approved by the shareholders of the Company on April 24,
1995, the Company hereby grants to the Grantee ___________ shares of Restricted
Stock (as defined in the Plan), effective as of the Date of Grant and subject
to the terms and conditions of the Plan and the following additional terms,
conditions, limitations and restrictions:
ARTICLE I
DEFINITIONS
All terms used herein with initial capital letters that are defined in the
Plan shall have the meanings assigned to them in the Plan, and the following
additional terms, when used herein with initial capital letters, shall have the
following meanings:
1 . "Change in Control of the Company" means the occurrence of any of the
following events:
a. A change of control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A under
the Securities Act of 1934, as amended (the "Exchange Act"), or any successor
provisions, whether or not the Company is then subject to such reporting
requirement; or
b. Any "person" (as such term is used in sections 13(d) and
14(d) of the Exchange Act), other than the Company or an employe benefit plan
maintained by the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 30% or more of the combined voting
<PAGE> 2
power of the Company's then outstanding securities ordinarily (and apart from
rights accruing under special circumstances) having the right to vote at
elections of the Board of Directors (the "Base Capital Stock"); provided,
however, that any change in the relative beneficial ownership of securities of
any person resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any decrease thereafter in such
person's ownership of securities, shall be disregarded until such person
increases in any manner, directly or indirectly, such person's beneficial
ownership of any securities of the Company; or
c. A change in the composition of the Company's Board of
Directors, as a result of which fewer than two-thirds of the incumbent
directors are directors who either
(1) had been directors of the Company 24 months prior to
such change,or
(2) were elected, or nominated for election, to the
Company's Board of Directors with the affirmative votes of at least a majority
of the directors who had been directors of the Company 24 months prior to such
change and who were still in office at the time of the election or nomination;
or
d. there shall be consummated
(1) any consolidation or merger of the Company in
which the Company is not the continuing or
surviving corporation or pursuant to which shares
of the Company's common stock would be converted
into cash, securities, or other property, other
than a merger of the Company in which the holders
of the Company's common stock immediately prior
to the merger have the same proportionate
ownership of common stock of the surviving
corporation immediately after the merger, or
(2) any sale, lease, exchange, or other transfer (in
one transaction or a series of related
transactions) of all, or substantially all, of
the assets of the Company, or
(3) the stockholders of the Company approve a plan or
proposal for the liquidation or dissolution of
the Company.
Notwithstanding the foregoing provisions of this Section, a "Change of Control"
shall not be deemed to have occurred by reason of the corporate reorganization
(the "Reorganization") of the Company implemented pursuant to the resolution
adopted by the Board of Directors of the Company on December 5, 1994 (as such
resolution may be amended or supplemented from time to time), whereby it is
proposed that a corporation will become the parent holding company of the
Company.
2
<PAGE> 3
2. "Comparison Companies" means the companies set forth in Attachment A.
3. "Customer Satisfaction Factor" or "CS Factor" means a percentage
rounded to the nearest half percentage, determined in accordance with the
table below based upon the CS Level for the last year of a Vesting Cycle;
provided, however, that the CS Factor for a particular vesting Cycle shall be
zero unless the CS Level is in the top 40th percentile of comparison companies.
<TABLE>
<CAPTION>
CS Level CS Factor
-------- ---------
<S> <C>
95% satisfied or better 100%
89% satisfied to 94.5% satisfied 50%-96%
86% satisfied or better, but less than 25%
89% satisfied
Less than 86% satisfied 0%
</TABLE>
The CS Factor for CS Levels between 89% and 94.5% only shall be determined by
mathematical interpolation.
4. "Customer Satisfaction Level" or "CS Level" for a Vesting Cycle
means the annual percentage of customers determined to be satisfied at the end
of such Cycle based upon the results of surveys of electric utility customers
conducted by Market Strategies Inc. or any other independent survey agency
selected by the Committee.
5. "DJEU" means the Dow Jones Electric Utility Group, as constituted
at the relevant time.
6. "Manufacturing Customer Price" or "MCP" for a Vesting Cycle means
the latest available base price charged to manufacturing customers as of the
end of such Vesting Cycle, as filed annually by each company in the MCP Peer
Group in its FERC Form 1 Report.
7. "Manufacturing Customer Price Factor" or "MCP Factor" means a percentage
determined in accordance with the table below based upon the percentile in
which the Company's MCP for the Vesting Cycle ranks in comparison to the MCP's
of the other companies in the MCP Peer Group for such period, treating the
lowest MCP as representing the highest percentile:
<TABLE>
<CAPTION>
MCP Percentile MU Factor
-------------- ---------
<S> <C>
50th percentile or above 100%
26th percentile or above, but below the 50th 25%-less than 100%
percentile
Below the 26th percentile 0%
</TABLE>
3
<PAGE> 4
The MCP Factor for percentiles between the 26th and 50th percentiles only shall
be determined by mathematical interpolation.
8. "MCP Peer Group" means the companies set forth in Attachment B.
9. "Performance Measures" means the Total Shareholder Return Factor, the
Customer Satisfaction Factor and the Manufacturing Customer Price Factor.
10. "Restriction Period" means the period commencing June 1, 1995, and
ending on December 31, 1998, with vesting cycles ending on December 31, 1996,
December 31, 1997, and December 31, 1998.
11. "Total Shareholder Return" or "TSR" means the percentage change in
the cumulative total shareholder return on the common stock of the Company or
other member of the DJEU during a Vesting Cycle, as measured by dividing (i)
the sum of: (A) the cumulative amount of dividends paid during such Vesting
Cycle, assuming dividend reinvestment, and (B) the difference between the
closing prices of such stock on the last trading day before the beginning and
the last trading day before the end of such Vesting Cycle; by (ii) the
closing price of such common stock on the last trading day before the beginning
of such Vesting Cycle.
12. "Total Shareholder Return Factor" or "TSR Factor" means a percentage
determined in accordance with the table below based upon the percentile in
which the Company's TSR for a Vesting Cycle ranks in comparison to the TSR's of
the other companies in the DJEU for the same period; provided, however, that
the TSR Factor for a particular Vesting Cycle shall be zero if the Company's
TSR for such period is a negative number:
<TABLE>
<CAPTION>
TSR Percentile TSR Factor
-------------- ----------
<S> <C>
90th percentile or above 100%
50th percentile or above, but below the 50%-75%
90th percentile
25th percentile or above, but below the 25%
50th percentile
Below the 25th percentile 0%
</TABLE>
The TSR Factor for percentiles between the 50th and 90th percentiles only shall
be determined by mathematical interpolation.
13. "Vesting Cycle" means each of the following three periods during the
Restriction Period: the period commencing March 31, 1995 and ending December
31, 1996, the period
4
<PAGE> 5
commencing March 31, 1995 and ending December 31, 1997, and the period
commencing March 31, 1995 and ending December 31, 1998.
14. "Vesting Percentage" means, with respect to any Vesting Cycle 60% of
the TSR Factor for such Vesting Cycle plus 20% of the CS Factor for such
Vesting Cycle plus 20% of the MCP Factor for such Vesting Cycle.
ARTICLE II
CERTAIN TERMS OF RESTRICTED STOCK
1 . Issuance of Restricted Stock. The shares of Restricted Stock
covered by this Agreement shall be shares of Common Stock purchased by the
Company in the open market for the Grantee. Such shares shall be represented
by a certificate or certificates registered in the Grantee's name, which shall
be endorsed with an appropriate legend referring to the restrictions
hereinafter set forth.
2. Restrictions on Transfer of Shares. The shares of Common Stock
subject to this grant of Restricted Stock may not be sold, exchanged, assigned,
transferred, pledged, encumbered or otherwise disposed of by the Grantee except
to the Company until the shares of Restricted Stock have become nonforfeitable
as provided in Section 3 hereof; provided, however, that the Grantee's rights
with respect to such shares of Common Stock may be transferred by will or
pursuant to the laws of descent and distribution. Any purported transfer or
encumbrance in violation of the provisions of this Section 2 of this Article II
shall be void, and the other party to any such purported transaction shall not
obtain any rights to or interest in such shares of Common Stock. The Company
in its sole discretion, when and as permitted by the Plan, may waive the
restrictions on transferability with respect to all or a portion of the shares
of Common Stock subject to this grant of shares of Restricted Stock.
3. Vesting of Restricted Stock.
a) So long as the Grantee shall have remained in the
continuous employ of the Company or a Subsidiary during a Vesting Cycle,
one-third of the shares of Restricted Stock granted by this Agreement shall be
eligible to become nonforfeitable on the last day of such Vesting Cycle. The
number of shares of Restricted Stock that become nonforfeitable at the end of
each Vesting Cycle shall be determined by multiplying the Vesting Percentage
for such Vesting Cycle, as determined by the Committee, times one-third of the
total number of shares of Restricted Stock granted hereunder. The Vesting
Percentage for each Vesting Cycle shall be
5
<PAGE> 6
determined by the Committee not later than the end of the month of March
following the end of each such Vesting Cycle.
b) Notwithstanding the provisions of Section 3(a) hereof, the
Restricted Stock shall become immediately and fully vested upon any "change in
control of the company" that shall occur while the Grantee is an employee of
the Company or a subsidiary.
4. Forfeiture of Shares. To the extent that any shares of Restricted
Stock covered by this Agreement and eligible to become nonforfeitable at the
end of a Vesting Cycle fail to become nonforfeitable, they shall be forfeited
immediately. Moreover, unless otherwise determined by the Committee, all of
the shares of Restricted Stock covered by this Agreement shall be forfeited if
the Grantee ceases to be employed by the Company or a Subsidiary for any reason
at any time prior to such shares becoming nonforfeitable. In the event
of a forfeiture, the certificate(s) representing the shares of Restricted Stock
covered by this Agreement shall be cancelled and such shares shall be retired
by the Company if then required by applicable law, and otherwise shall be added
to the Company's treasury.
5. Adjustments. If the Committee determines that a change in the
business, operations, corporate structure or capital structure of the Company
or a Subsidiary, or the manner in which it conducts its business, or other
events or circumstances render the Performance Measures unsuitable, the
Committee may modify such Performance Measures, in whole or in part, as the
Committee deems appropriate and equitable; provided, however, that no
modification of the Performance Measures shall be permitted in respect of any
shares of Restricted Stock granted to an employee who is, or is determined by
the Committee to be likely to become, a "covered employee" within the meaning
of Section 162(m) of the Code (or any successor provision), if the effect of
such modification would be to increase any Vesting Percentage.
6. Dividend, Voting and Other Rights. Except as otherwise provided
herein, from and after the Date of Grant, the Grantee shall have all of the
rights of a shareholder with respect to the shares of Restricted Stock covered
by this Agreement, including the right to vote such shares of Restricted Stock
and receive any dividends that may be paid thereon; provided, however, that any
additional shares of Common Stock or other securities that the Grantee may
become entitled to receive pursuant to a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, separation or
reorganization or any other change in the capital structure of the Company
shall be subject to the same restrictions as the shares of Restricted Stock
covered by this Agreement.
7. Retention of Stock Certificate(s) by the Company. The
certificate(s) representing the Restricted Stock covered by this Agreement
shall be held in custody by the Company,
6
<PAGE> 7
together with a stock power endorsed in blank by the Grantee with respect
thereto, until those shares have become nonforfeitable in accordance with
Section 3 of this Article II.
ARTICLE III
GENERAL PROVISIONS
1. Compliance with Law. The Company shall make reasonable efforts to
comply with all applicable law; provided, however, notwithstanding any other
provision of this Agreement, the Company shall not be obligated to issue any
shares of Common Stock pursuant to this Agreement if the issuance thereof
would result in a violation of any federal or state securities laws or any
other regulatory requirement.
2. Withholding Taxes. If the Company or any Subsidiary shall be
required to withhold any federal, state, local or foreign tax in connection
with any issuance or vesting of shares of Common Stock or other securities
pursuant to this Agreement, the Grantee shall remit such tax to the Company or
Subsidiary for deposit with the applicable taxing authority under the
applicable tax withholding rules or make provisions that are satisfactory to
the Company or such Subsidiary for the payment thereof. The Grantee may elect
to satisfy all or any part of any such withholding obligation by surrendering
to the Company or such Subsidiary a portion of the shares of Common Stock that
are issued or transferred or that become nontransferable by the Grantee
hereunder, and the shares of Common Stock so surrendered by the Grantee shall
be credited against any such withholding obligation at the Fair Market Value
per share of the Common Stock on the date of such surrender; provided, however,
if the Grantee is subject to Section 16 of the Securities Exchange Act of 1934
(the "Exchange Act"), such election (if then required by Rule 16b-3 under the
Exchange Act) shall be subject to approval by the Committee.
3. Continuous Employment. For purposes of this Agreement, the
continuous employment of the Grantee with the Company or a Subsidiary shall not
be deemed to have been interrupted, and the Grantee shall not be deemed to have
ceased to be an employe of the Company or a Subsidiary, by reason of the
transfer of his employment among the Company and its Subsidiaries or, if so
determined by the Committee, a leave of absence.
4. Right to Terminate Employment. No provision of this Agreement
shall limit in any way whatsoever any right that the Company or a Subsidiary
may otherwise have to terminate the employment of the Grantee at any time.
5. Relation to Other Benefits. Awards under the Plan are not
considered compensation for purposes of the Company's qualified and
non-qualified savings plans, the
7
<PAGE> 8
Company's qualified and non-qualified retirement plans, insurance or any other
Company-sponsored qualified or non-qualified employe benefit programs.
6. Amendments. Any amendment to the Plan shall be deemed to be an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of the Grantee under this Agreement without the Grantee's consent.
7. Severability. In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.
8. Governing Law. This agreement is made under, and shall be
construed in accordance with, the internal substantive laws of the State of
Michigan.
This Agreement is executed by the Company as of the day of
1995.
THE DETROIT EDISON COMPANY
By
Name, John E. Lobbia
Title: Chairman and Chief Executive Officer
The undersigned hereby acknowledges receipt of an executed original of this
Restricted Stock Agreement and accepts the award of Restricted Stock granted
thereunder on the terms and conditions set forth herein and in the Long-Term
Incentive Plan.
Date:
Grantee
8
<PAGE> 9
ATTACHMENT A
Comparison Companies
Alabama Power Massachusetts Electric
Appalachian Power Michigan Consolidated Gas Company
Arizona Public Service Company Midwest Resources
Arkansas Power & Light Minnegasco
Atlantic City Electric Mississippi Power & Light
Baltimore Gas & Electric National Fuel Gas
Boston Edison New Orleans Public Service
Brooklyn Union Gas New York State Electric & Gas
Carolina Power & Light Niagara Mohawk Power Corporation
Central Hudson Gas & Electric Northern Indiana Public Service Co
Central Maine Power Northern States Power
Central Power & Light Ohio Edison
Central Vermont Public Service Ohio Power
Cincinnati Gas & Electric Orange & Rockland
Citizens Gas and Coke Orlando Utilities
Cleveland Electric Illuminating Co Pacific Gas & Electric
Coldwater Board of Public Utilities Pacific Power & Light
Columbus Southern Power Pennsylvania Electric
Commonwealth Edison Pennsylvania Power & Light
Commonwealth Gas Peoples Gas
Connecticut Light & Power PEPCO
Consolidated Edison of New York Philadelphia Electric
Consumers Power Portland General Electric
Dayton Power and Light PSI Energy
Delmarva Power Public Service Company of Colorado
Detroit Edison Public Service Company of New Mexico
Duke Power Public Service Electric &
Gas of New Jersey
Duquesne Public Service of Oklahoma
East Ohio Gas Rochester Gas & Electric
Eastern Utilities Salt River Project
Florida Power San Diego Gas & Electric
Florida Power & Light Sierra Pacific Resources
Gas Company of New Mexico Southern California Edison
Georgia power Southern California Gas Company
Gulf Power Southwestern Electric Power
Houston Industries Tampa Electric
Illinois Power Toledo Edison
Indiana Energy Union Electric
Indiana Michigan Power Union Gas
Indianapolis Power & Light United Illuminating
Iowa Illinois Gas & Electric Utah Power & Light
Jersey Central Power & Light Virginia Power
Kansas Power & Light West Penn Power
Kentucky Power West Texas Utilities
Kentucky Utilities Wheeling Power
Kingsport Power Wisconsin Electric
Lansing Board of Water & Light Wisconsin Gas
Long Island Lighting Company Wisconsin Natural Gas
Louisiana Power & Light Wisconsin Power & Light
Louisville Gas & Electric
<PAGE> 10
ATTACHMENT B
MCP PEER GROUP
1. Ohio Power Co.Co.
2. Kentucky Power Co..
3. Kentucky Utilities Co.
4. Public Service Co of Indiana, Inc.
5. Louisville Gas & Electric
6. Appalachian Power Co.
7. Indianapolis Power & Light
8. Indiana Michigan Power Co.
9. Duke Power Co.
10. West Penn Power Co.
11. Virginia Electric & Power
12. Illinois Power Co.
13. Cincinnati Gas & Electric
14. Northern Indiana Public Service
15. Central Illinois Public Service
16. Columbus Southern Power
17. Pennsylvania Electric Co.
18. Consumers Power Co.
19. Niagara Mohawk Power
20. Carolina Power & Light Co.
21. Potomac Electric Power
22. Detroit Edison Co.
23. Pennsylvania Power & Light
24. Duquesne Light Co.
25. Baltimore Gas & Electric
26. Ohio Edison Co.
27. Commonwealth Edison Co.
28. Cleveland Electric Illuminating Co.
29. Toledo Edison Co.
30. PECO Energy Co.
<PAGE> 1
EXHIBIT 12-28
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED YEAR ENDED DECEMBER 31
MARCH 31, --------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS, EXCEPT FOR RATIO)
<S> <C> <C> <C> <C> <C> <C>
Net income.............. $ 420,529 $ 419,909 $ 521,903 $ 588,047 $ 568,037 $ 514,459
---------- ---------- ---------- ---------- ---------- ----------
Taxes based on income:
Current income
taxes.............. 166,407 169,381 217,363 179,047 148,423 115,373
Deferred taxes
-- net............. 122,707 110,243 99,801 148,947 103,321 56,712
Investment tax credit
adjustments --
net................ (14,989) (12,826) (14,227) (16,768) 13,458 43,740
Municipal and state... 2,841 2,566 3,373 3,353 4,182 2,367
---------- ---------- ---------- ---------- ---------- ----------
Total taxes based
on income........ 276,966 269,364 306,310 314,579 269,384 218,192
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest on long-term
debt............... 272,242 273,763 325,194 388,580 437,337 472,369
Amortization of debt
discount, premium
and expense........ 11,015 10,832 9,114 3,952 4,467 4,539
Other interest........ 10,077 11,170 4,928 5,169 4,233 4,853
Interest factor of
rents.............. 28,000 28,000 29,200 34,400 34,900 32,500
---------- ---------- ---------- ---------- ---------- ----------
Total fixed
charges.......... 321,334 323,765 368,436 432,101 480,937 514,261
---------- ---------- ---------- ---------- ---------- ----------
Earnings before taxes
based on income and
fixed charges......... $1,018,829 $1,013,038 $1,196,649 $1,334,727 $1,318,358 $1,246,912
========== ========== ========== ========== ========== ==========
Ratio of earnings to
fixed charges......... 3.17 3.13 3.25 3.09 2.74 2.42
</TABLE>
<PAGE> 1
EXHIBIT 12-29
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED YEAR ENDED DECEMBER 31
MARCH 31, --------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS, EXCEPT FOR RATIO AND PERCENT)
<S> <C> <C> <C> <C> <C> <C>
Net income....................... $ 420,529 $ 419,909 $ 521,903 $ 588,047 $ 568,037 $ 514,459
---------- ---------- ---------- ---------- ---------- ----------
Taxes based on income:
Current income taxes........... 166,407 169,381 217,363 179,047 148,423 115,373
Deferred taxes -- net.......... 122,707 110,243 99,801 148,947 103,321 56,712
Investment tax credit
adjustments -- net........... (14,989) (12,826) (14,227) (16,768) 13,458 43,740
Municipal and state............ 2,841 2,566 3,373 3,353 4,182 2,367
---------- ---------- ---------- ---------- ---------- ----------
Total taxes based on
income.................. 276,966 269,364 306,310 314,579 269,384 218,192
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest on long-term debt..... 272,242 273,763 325,194 388,580 437,337 472,369
Amortization of debt discount,
premium and expense.......... 11,015 10,832 9,114 3,952 4,467 4,539
Other interest................. 10,077 11,170 4,928 5,169 4,233 4,853
Interest factor of rents....... 28,000 28,000 29,200 34,400 34,900 32,500
---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges........ 321,334 323,765 368,436 432,101 480,937 514,261
---------- ---------- ---------- ---------- ---------- ----------
Earnings before taxes based on
income and fixed charges....... $1,018,829 $1,013,038 $1,196,649 $1,334,727 $1,318,358 $1,246,912
========= ========= ========= ========= ========= =========
Preferred and preference stock
dividend requirements.......... $ 29,634 $ 29,640 $ 30,837 $ 30,498 $ 32,832 $ 35,179
Dividends meeting requirement of
IRC Section 247................ 3,870 3,870 4,383 4,651 4,651 4,651
Percent deductible for income tax
purposes....................... 40.00% 40.00% 40.00% 41.18% 41.18% 41.18%
Amount deductible................ 1,548 1,548 1,753 1,915 1,915 1,915
Amount not deductible............ 28,086 28,092 29,084 28,583 30,917 33,264
Ratio of pretax income to net
income......................... 1.66 1.64 1.58 1.53 1.47 1.42
Dividend factor for amount not
deductible..................... 46,623 46,071 45,953 43,732 45,448 47,235
Amount deductible................ 1,548 1,548 1,753 1,915 1,915 1,915
---------- ---------- ---------- ---------- ---------- ----------
Total preferred and preference
stock dividend factor........ 48,171 47,619 47,706 45,647 47,363 49,150
Total fixed charges............ 321,334 323,765 368,436 432,101 480,937 514,261
---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges and
preferred and preference
stock dividends.............. $ 369,505 $ 371,384 $ 416,142 $ 477,748 $ 528,300 $ 563,411
========= ========= ========= ========= ========= =========
Ratio of earnings to fixed
charges and preferred and
preference stock dividend
requirements................... 2.76 2.73 2.88 2.79 2.50 2.21
</TABLE>
<PAGE> 1
Exhibit 15-59
June 16, 1995
The Detroit Edison Company
Detroit, Michigan
We have conducted a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of The Detroit Edison Company and subsidiary companies
for the three-month and twelve-month periods ended March 31, 1995, as indicated
in our report dated May 8, 1995. Because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, is
incorporated by reference in this Registration Statement.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Deloitte & Touche LLP
<PAGE> 1
Exhibit 23-8
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of The Detroit
Edison Company of our report dated January 23, 1995 appearing on page 31 of The
Detroit Edison Company's Annual Report on Form 10-K for the year ended
December 31, 1994. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Detroit, Michigan
June 15, 1995
<PAGE> 1
Exhibit 25-7
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER
THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305 (b)(2)_____
------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
------------------------
THE DETROIT EDISON COMPANY
(Exact name of obligor as specified in the charter)
MICHIGAN 38-0478650
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) Identification no.)
2000 SECOND AVENUE
DETROIT, MICHIGAN 48226
(Address of principal (Zip Code)
executive offices)
------------------------
QUARTERLY INCOME DEBT SECURITIES
(Title of the indenture securities)
<PAGE> 2
- --------------------------------------------------------------------------------
-2-
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the Trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
NAME ADDRESS
---- -------
Federal Reserve Bank (2nd District) New York, N.Y.
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, N.Y.
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers
Trust Company dated August 7, 1990 and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
March 28, 1994 - Incorporated herein by
reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-79862.
EXHIBIT 2 - Certificate of Authority to commence business
- Incorporated herein by reference to Exhibit
2 filed with Form T-1 Statement, Registration
No. 33-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein
by reference to Exhibit 3 filed with Form T-1
Statement, Registration No. 33-21047.
EXHIBIT 4 - A copy of existing By-Laws of Bankers Trust
Company, dated as amended on September 21,
1993. - Incorporated herein by reference to
Exhibit 4 filed with Form T-1 Statement,
Registration No. 33-52359.
<PAGE> 3
-3-
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by
Section 321(b) of the Act. - Incorporated
herein by reference to Exhibit 4 filed with
Form T-1 Statement, Registration No.
22-18864.
EXHIBIT 7 - A copy of the latest report of condition of
Bankers Trust Company - Incorporated herein
by reference to Exhibit 7 to Form T-1 filed
with Registration Statement No. 33-57835.
EXHIBIT 8 - Not Applicable
EXHIBIT 9 - Not Applicable
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Bankers Trust Company, a corporation organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
The City of New York, and State of New York, on the 14th day of June, 1995.
BANKERS TRUST COMPANY
By Scott Thiel
--------------------
Scott Thiel
Assistant Treasurer
<PAGE> 1
EXHIBIT 99-22
THE DETROIT EDISON COMPANY
Offer to Exchange
% Quarterly Income Debt Securities
(QUIDS(SM))
(Junior Subordinated Deferrable Interest Debentures Due 2025)
for up to
4,200,000 DEPOSITARY SHARES,
each representing a
ONE-QUARTER INTEREST
in a Share of its
CUMULATIVE PREFERRED STOCK, 7.75% SERIES
June , 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
We are enclosing the materials listed below relating to the offer of The
Detroit Edison Company (the "Company") to exchange $105,000,000 in aggregate
principal amount of % Quarterly Income Debt Securities (the "QUIDS") for up
to 4,200,000 depositary shares (the "Depositary Shares"), each representing a
one-quarter interest in a share of the Cumulative Preferred Stock ($100 par
value), 7.75% Series (the "Preferred Stock"), of the Company, upon the terms and
subject to the conditions set forth in the Prospectus dated June , 1995 (the
"Prospectus") and in the related Letter of Transmittal (which together with the
Prospectus constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. The Prospectus;
2. The Letter of Transmittal to be used by holders of Depositary
Shares in accepting the Exchange Offer;
3. A printed form of letter which may be sent to your clients for
whose account you hold Depositary Shares in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Exchange Offer;
4. The Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if depositary receipts representing Depositary Shares are not
immediately available or if the procedure for book-entry transfer cannot be
completed on a timely basis;
5. A Questions and Answers sheet which has been sent to holders and
which may be used by you in responding to inquiries from your clients; and
6. A return envelope addressed to Bankers Trust Company, the Exchange
Agent.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY.
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JULY , 1995, UNLESS EXTENDED.
- ---------------
(SM) QUIDS is a service mark of Goldman, Sachs & Co.
<PAGE> 2
The Company will reimburse brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding the Prospectus and the related documents to the beneficial owners of
Depositary Shares held by them as nominees or in a fiduciary capacity and in
handling or forwarding tenders for their customers.
The Company will pay to a Soliciting Dealer (as herein defined) a
solicitation fee of $0.50 per Depositary Share for any Depositary Share tendered
and accepted for exchange pursuant to the Exchange Offer if such Soliciting
Dealer has solicited and obtained such tender. "Soliciting Dealer" includes (i)
any broker or dealer in securities, including the Dealer Managers in their
capacity as a broker or dealer, which is a member of any national securities
exchange or of the National Association of Securities Dealers, Inc. (the
"NASD"), (ii) any foreign broker or dealer not eligible for membership in the
NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting
tenders outside the United States to the same extent as though it were an NASD
member or (iii) any bank or trust company. In order for a Soliciting Dealer to
receive a solicitation fee with respect to the tender of Depositary Shares, the
Exchange Agent must have received a Letter of Transmittal with the portion
thereof entitled "Notice of Solicited Tenders" properly completed and duly
executed.
No such fee shall be payable to a Soliciting Dealer if such Soliciting
Dealer is required for any reason to transfer the amount of such fee to a
tendering holder (other than itself). The Dealer Managers may not, until the
Expiration Time, buy, sell, deal or trade in the Depositary Shares for their
account. No broker, dealer, bank, trust company or fiduciary shall be deemed to
be the agent of the Company, the Exchange Agent, the Dealer Managers or the
Information Agent for purposes of the Exchange Offer.
The Company expressly reserves the right, in its sole discretion, to (i)
extend, amend or modify the terms of the Exchange Offer in any manner and (ii)
withdraw or terminate the Exchange Offer and not accept for exchange any
Depositary Shares, at any time for any reason. See "The Exchange Offer --
Expiration; Extension; Termination; Amendment" in the Prospectus.
Additional copies of the enclosed materials may be obtained by contacting
Georgeson & Company Inc., the Information Agent, Wall Street Plaza, New York,
New York 10005, (212) 440-9800 (for banks and brokers) or 1-800-223-2064 (for
all others).
Very truly yours,
GOLDMAN, SACHS & CO.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE DETROIT EDISON COMPANY, THE DEALER MANAGERS, THE EXCHANGE AGENT
OR THE INFORMATION AGENT, OR AUTHORIZE YOU TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE ENCLOSED DOCUMENTS
AND THE STATEMENTS CONTAINED THEREIN.
Enclosures
2
<PAGE> 1
EXHIBIT 99-23
THE DETROIT EDISON COMPANY
Offer to Exchange
% Quarterly Income Debt Securities
(QUIDS(SM))
(Junior Subordinated Deferrable Interest Debentures Due 2025)
for up to
4,200,000 DEPOSITARY SHARES,
each representing a
ONE-QUARTER INTEREST
in a Share of its
CUMULATIVE PREFERRED STOCK, 7.75% SERIES
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME,
ON JULY , 1995, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Prospectus dated June , 1995 (the
"Prospectus") and the related Letter of Transmittal (which, together with the
Prospectus, constitute the "Exchange Offer") whereby The Detroit Edison Company,
a Michigan corporation (the "Company"), is offering to exchange up to
$105,000,000 aggregate principal amount of its % Quarterly Income Debt
Securities ("QUIDS") for up to 4,200,000 depositary shares (the "Depositary
Shares"), each representing a one-quarter interest in a share of the Cumulative
Preferred Stock ($100 par value), 7.75% Series, of the Company, upon the terms
and subject to the conditions set forth in the Exchange Offer.
The QUIDS are offered in minimum denominations of $25 and integral
multiples thereof, and the Depositary Shares have a liquidation preference of
$25 per share. Consequently, the Exchange Offer will be effected on a basis of
$25 principal amount of QUIDS for each Depositary Share validly tendered and
accepted for exchange. See "The Exchange Offer -- General" in the Prospectus.
We are the registered holder of the Depositary Shares held by us for your
account. A TENDER OF SUCH DEPOSITARY SHARES CAN BE MADE ONLY BY US AS THE
REGISTERED HOLDER AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL
IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO
TENDER DEPOSITARY SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all
Depositary Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Exchange Offer.
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender Depositary Shares in accordance with the provisions
of the Exchange Offer. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK
TIME, ON JULY , 1995, UNLESS EXTENDED.
WE URGE YOU TO READ THE ENCLOSED PROSPECTUS CAREFULLY BEFORE CONVEYING YOUR
INSTRUCTIONS TO US.
- ---------------
(SM) QUIDS is a service mark of Goldman, Sachs & Co.
<PAGE> 2
If you wish to have us tender any or all of your Depositary Shares, please
so instruct us by completing, executing, detaching and returning to us the
instruction form set forth in the next page of this letter. An envelope to
return your instructions to us is enclosed. If you authorize us to tender your
Depositary Shares, all such Depositary Shares will be tendered, unless otherwise
specified on the next page of this letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED
TO US IN SUFFICIENT TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO
THE EXPIRATION OF THE EXCHANGE OFFER.
<PAGE> 3
Instructions with Respect to
THE DETROIT EDISON COMPANY
Offer to Exchange
% Quarterly Income Debt Securities
(QUIDS(SM))
(Junior Subordinated Deferrable Interest Debentures Due 2025)
for up to
4,200,000 DEPOSITARY SHARES,
each representing a
ONE-QUARTER INTEREST
in a Share of its
CUMULATIVE PREFERRED STOCK, 7.75% SERIES
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus dated June , 1995 (the "Prospectus") and the related Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer") relating to the offer by The Detroit Edison Company, a Michigan
corporation (the "Company"), to exchange up to $105,000,000 aggregate principal
amount of % Quarterly Income Debt Securities ("QUIDS") for up to 4,200,000
depositary shares (the "Depositary Shares"), each representing a one-quarter
interest in a share of its Cumulative Preferred Stock ($100 par value), 7.75%
Series (the "Preferred Stock"), of the Company, upon the terms and subject to
the conditions set forth in the Exchange Offer.
This will instruct you to tender the Depositary Shares indicated below held
by you for the account of the undersigned, pursuant to the terms and subject to
the conditions set forth in the Exchange Offer.
SIGN HERE
- ---------------------------------------------
Depositary Shares which are to be
Tendered:
(1) Number of Shares
--------------------
(2) Number of Shares Tendered
--------------
(only if different amount from column (1))*
- ---------------------------------------------
<TABLE>
<S> <C>
----------------------------------------
----------------------------------------
Signature(s)
----------------------------------------
Dated: , 1995 ----------------------------------------
Names(s) (Please Print)
----------------------------------------
Address
----------------------------------------
Zip Code
----------------------------------------
Area Code and Telephone No.
</TABLE>
- ------------------
* Unless otherwise indicated, it will be assumed that all Depositary Shares
listed in column (1) are to be tendered.
(SM) QUIDS is a service mark of Goldman, Sachs & Co.
<PAGE> 1
EXHIBIT 99-24
LETTER OF TRANSMITTAL
TO TENDER DEPOSITARY SHARES REPRESENTING A ONE-QUARTER INTEREST IN A SHARE OF
CUMULATIVE PREFERRED STOCK, 7.75% SERIES, OF
THE DETROIT EDISON COMPANY
PURSUANT TO THE PROSPECTUS DATED JUNE , 1995
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER, WITHDRAWAL RIGHTS AND THE PRORATION PERIOD
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON JULY , 1995, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
The Exchange Agent:
BANKERS TRUST COMPANY
<TABLE>
<S> <C>
BY HAND/OVERNIGHT COURIER: BY MAIL
Bankers Trust Company Bankers Trust Company
Corporate Trust & Agency Group Corporate Trust & Agency Group
Receipt & Delivery Window Reorganization Dept.
123 Washington St., 1st Floor P.O. Box 1458
New York, NY 10006 Church Street Station
New York, NY 10008-1458
</TABLE>
Facsimile Transmission
(212) 250-6275
(212) 250-3290
(For Eligible Institutions Only)
Confirm by Telephone:
(212) 250-6270
Shareholder Inquiries
(212) 250-6270
<PAGE> 2
List below the Depositary Shares to which this Letter of Transmittal
relates. If the space below is inadequate, the depositary receipt numbers and/or
the number of Depositary Shares tendered should be listed on a separate signed
schedule attached hereto.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DESCRIPTION OF DEPOSITARY SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------
(1) (2) (3) (4)
- ----------------------------------------------------------------------------------------------------------
DEPOSITARY NUMBER OF
RECEIPT DEPOSITARY
NUMBER(S)* SHARES NUMBER OF
NAME(S) AND ADDRESS(ES) OF (ATTACH SIGNED REPRESENTED BY DEPOSITARY
REGISTERED HOLDER(S) LIST IF DEPOSITARY SHARES
(PLEASE FILL IN, IF BLANK) NECESSARY.) RECEIPT(S)* TENDERED**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Total
Amount
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Holders.
** Unless otherwise indicated, it will be assumed that the full number of
Depositary Shares represented by tendered depositary receipts is being
tendered. See Instruction 4. Depositary Shares may be tendered and will be
accepted for exchange only in denominations of $25 principal amount and
integral multiples thereof. See Instruction 1.
- --------------------------------------------------------------------------------
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of this Letter of Transmittal via facsimile other
than as set forth above will not constitute a valid delivery.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
This Letter of Transmittal is to be used if depositary receipts
representing depositary shares (the "Depositary Shares"), each of which
represents a one-quarter interest in a share of the Company's Cumulative
Preferred Stock ($100 par value), 7.75% Series (the "Preferred Stock"), are to
be forwarded herewith or if delivery of Depositary Shares is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company ("DTC"), pursuant to the procedures set forth in "The
Exchange Offer--Procedure for Tendering Depositary Shares" in the Prospectus (as
defined below). Although delivery of Depositary Shares may be effected through
book-entry transfer into the Exchange Agent's account at DTC pursuant to DTC's
Automated Tender Offer Program ("ATOP") procedures, a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and other required documents, must in each case be
received by the Exchange Agent at one of its addresses set forth above prior to
the Expiration Time, or, if the guaranteed delivery procedures described below
are complied with, within the time period provided under such procedures.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
<PAGE> 3
SPECIAL ISSUANCE AND PAYMENT
INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if the QUIDS to be issued in exchange for Depositary
Shares accepted for exchange, or depositary receipts for Depositary Shares not
tendered or not accepted for exchange, are to be issued or reissued, in the name
of someone other than the undersigned.
Issue to:
Name
--------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
- -------------------------------------------------------------------------------
Address or Account Number
-----------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(ZIP CODE)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY if the QUIDS to be issued in exchange for Depositary
Shares accepted for exchange, or depositary receipts for Depositary Shares not
tendered or not accepted for exchange, are to be sent to someone other than the
undersigned at an address other than that appearing above under "Description of
Depositary Shares Tendered."
Issue to:
Name
- -------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
- -------------------------------------------------------------------------------
Address or Account Number
-----------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(ZIP CODE)
<PAGE> 4
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Depositary Shares which are the subject of such
book-entry confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Company may enforce
such agreement against such participant.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Depositary Shares are
registered on the books of Chemical Bank, as depositary for the Preferred Stock
underlying the Depositary Shares (the "Depositary"), or any other person who has
obtained a properly completed stock power from the registered holder or any
person whose Depositary Shares are held of record by DTC who desires to deliver
such Depositary Shares by book-entry transfer at DTC. Holders who tender
Depositary Shares by book-entry transfer are referred to herein as "Book Entry
Holders" and other holders are referred to herein as "Receipt Holders." Holders
of Depositary Shares whose depositary receipts are not immediately available or
who cannot deliver their depositary receipts and all other documents required
hereby to the Exchange Agent prior to the Expiration Time (as defined in the
Prospectus) or comply with book-entry transfer procedures on a timely basis must
tender their Depositary Shares according to the guaranteed delivery procedures
set forth in "The Exchange Offer--Guaranteed Delivery Procedures" in the
Prospectus. See Instruction 1.
(BOX BELOW FOR USE BY RECEIPT HOLDERS WHO ARE NOT DTC PARTICIPANTS)
THE QUIDS WILL BE ISSUED ONLY IN BOOK-ENTRY FORM THROUGH THE FACILITIES OF
DTC. ACCORDINGLY, IN ORDER TO PARTICIPATE IN THE EXCHANGE OFFER, RECEIPT HOLDERS
WHO ARE NOT DTC PARTICIPANTS (AS DEFINED IN THE PROSPECTUS) MUST EITHER (I) MAKE
ARRANGEMENTS WITH A DTC PARTICIPANT TO HAVE SUCH PARTICIPANT VALIDLY TENDER SUCH
DEPOSITARY SHARES IN ACCORDANCE WITH THE TERMS OF THE EXCHANGE OFFER AND TO
RECEIVE QUIDS ISSUED IN EXCHANGE THEREFOR OR (II) VALIDLY TENDER SUCH DEPOSITARY
SHARES IN ACCORDANCE WITH THE TERMS OF THE EXCHANGE OFFER AND CHECK THE
FOLLOWING BOX TO INDICATE THAT IT WISHES TO MAKE USE OF THE FACILITIES PROVIDED
BY THE BANKERS TRUST COMPANY, AS CUSTODIAN (THE "CUSTODIAN"), SO THAT, IN EITHER
CASE, SUCH HOLDERS MAY BECOME BENEFICIAL OWNERS OF QUIDS ISSUED IN EXCHANGE FOR
DEPOSITARY SHARES ACCEPTED PURSUANT TO THE EXCHANGE OFFER. FOR A DESCRIPTION OF
THE ARRANGEMENTS PROVIDED BY THE CUSTODIAN, SEE "THE EXCHANGE OFFER --
ACCEPTANCE OF DEPOSITARY SHARES; DELIVERY OF QUIDS -- CUSTODIAL ARRANGEMENTS" IN
THE PROSPECTUS.
/ / CHECK HERE IF YOU ARE A RECEIPT HOLDER WHO IS NOT A DTC PARTICIPANT AND WISH
TO HAVE THE CUSTODIAN ESTABLISH AND MAINTAIN A CUSTODY ACCOUNT FOR QUIDS
RECEIVED BY THE CUSTODIAN FOR YOUR BENEFIT AT OR ABOUT THE TIME OF THE
ISSUANCE OF SUCH QUIDS.
<PAGE> 5
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
---------------------------------------
Account Number
------------------------------------------------------
Transaction Code Number
----------------------------------------------
/ / CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT PRIOR TO
THE DATE HEREOF AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
---------------------------------------
Window Ticket Number (if any)
----------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-------------------
Name of Eligible Institution that Guaranteed Delivery
----------------
Complete the Following If Delivered by Book-Entry Transfer:
Account Number
----------------------------------------
Transaction Code Number
--------------------------------
<PAGE> 6
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
Ladies and Gentlemen:
The undersigned hereby tenders to The Detroit Edison Company, a Michigan
corporation (the "Company"), the above-described number of Depositary Shares, in
accordance with the Company's offer to exchange up to $105,000,000 aggregate
principal amount of its QUIDS for up to 4,200,000 Depositary Shares, each
representing a one-quarter interest in a share of its Preferred Stock, upon the
terms and subject to the conditions set forth in the Prospectus dated June ,
1995 (the "Prospectus") and in this Letter of Transmittal (which, together with
the Prospectus, constitute the "Exchange Offer"), receipt of which is hereby
acknowledged.
On the terms and subject to the conditions of the Exchange Offer, subject
to, and effective upon, acceptance for exchange of the Depositary Shares
tendered herewith in accordance with the terms of the Exchange Offer, the
undersigned hereby exchanges, assigns and transfers to, or upon the order of,
the Company all right, title and interest in and to all such Depositary Shares
as are being tendered hereby and that are accepted for exchange pursuant to the
Exchange Offer and all shares of Preferred Stock underlying such Depositary
Shares, and irrevocably constitutes and appoints the Exchange Agent as its agent
and attorney-in-fact to cause the Preferred Stock underlying such Depositary
Shares to be assigned, transferred and exchanged to the Company. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent as the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
the Exchange Agent also acts as the agent of the Company) with respect to the
Depositary Shares tendered hereby and accepted for exchange pursuant to the
Exchange Offer and all shares of Preferred Stock underlying such Depositary
Shares, with full power of substitution (such power of attorney being deemed to
be an irrevocable power coupled with an interest), to (a) deliver the Depositary
Shares tendered hereby to the Depositary or transfer ownership of such
Depositary Shares on the account books maintained by DTC together, in either
case, with all accompanying evidences of transfer and authenticity to, or upon
the order of, the Company, (b) present such Depositary Shares for transfer on
the books of the Depositary, (c) withdraw under the Deposit Agreement, among the
Company, the Depositary and the holders from time to time of depositary receipts
of Depositary Shares, the Preferred Stock underlying any tendered Depositary
Shares, (d) tender such underlying Preferred Stock in the Exchange Offer and (e)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Depositary Shares and all shares of Preferred Stock underlying such
Depositary Shares, all in accordance with the terms and subject to the
conditions of the Exchange Offer.
The name and address of the registered holder(s) should be printed above
under "Description of Depositary Shares Tendered", if not already printed
thereunder, exactly as they appear on the depositary receipts representing the
Depositary Shares tendered hereby. The depositary receipt number(s) and the
number of Depositary Shares to which this Letter of Transmittal relates,
together with the number of Depositary Shares that the undersigned wishes to
tender, should be indicated in the appropriate boxes above under "Description of
Depositary Shares Tendered".
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Depositary
Shares tendered hereby and all shares of Preferred Stock underlying such
Depositary Shares and to acquire the QUIDS issuable upon exchange of such
tendered Depositary Shares in accordance with the terms of the Exchange Offer,
and that, when the same are accepted for exchange by the Company, the Company
will acquire good and marketable title thereto and all shares of Preferred Stock
underlying such Depositary Shares, free and clear of all liens, restrictions,
charges and encumbrances and that such Depositary Shares and such Preferred
Stock are not subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of
<PAGE> 7
the Depositary Shares tendered hereby and all shares of Preferred Stock
underlying such Depositary Shares.
All authority conferred, or agreed to be conferred, in this Letter of
Transmittal shall survive the death, bankruptcy or incapacity of the undersigned
and any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned. Except as stated in the Exchange Offer, this tender is irrevocable.
The undersigned understands that the tender of the Depositary Shares and
acceptance for exchange of such Depositary Shares pursuant to one of the
procedures described in the Prospectus under "The Exchange Offer -- Procedure
for Tendering Depositary Shares" and in the instructions hereto will constitute
a binding agreement between the undersigned and the Company, upon the terms and
subject to the conditions of the Exchange Offer, including the tendering
holder's representation and warranty that (i) such holder owns the Depositary
Shares being tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended, and (ii) the tender of such
Depositary Shares complies with Rule 14e-4.
The undersigned understands that the QUIDS will be issued only in
book-entry form through the facilities of DTC, and, accordingly has either (i)
made arrangements with a DTC Participant pursuant to which such participant will
record the undersigned's ownership interest in the QUIDS to be issued in
exchange therefor in accordance with the Exchange Offer or (ii) indicated hereon
that it wishes to make use of the facilities provided by the Custodian, so that,
in either case, such holder may become a beneficial owner of the QUIDS to be
issued in exchange therefor in accordance with the Exchange Offer.
Unless otherwise indicated herein under "Special Issuance and Payment
Instructions," the Company will credit the account maintained at DTC with the
QUIDS due in respect of the Depositary Shares accepted for exchange, and/or
return any depositary receipts for the Depositary Shares not tendered or not
accepted for exchange, in the name(s) of the registered holder(s) appearing
above under "Description of Depositary Shares Tendered" (or, in the case of a
book-entry delivery of Depositary Shares, the Company will credit the account
maintained at DTC with the QUIDS due in respect of the Depositary Shares
accepted for exchange and/or any Depositary Shares not accepted for exchange).
In addition, unless otherwise indicated under "Special Delivery Instructions,"
the Company will credit the account maintained at DTC with the QUIDS due in
respect of the Depositary Shares accepted for exchange, and/or return any for
the principal amount of Depositary Shares not tendered or not accepted for
exchange (and accompanying documents, as appropriate), to the registered
holder(s) at the address(es) appearing above under "Description of Depositary
Shares Tendered". If both the "Special Issuance and Payment Instructions" and
"Special Delivery Instructions" are completed, the Company will credit the
account maintained at DTC with the QUIDS due in respect of the Depositary Shares
accepted for exchange, and/or return any depositary receipts representing any
Depositary Shares not tendered or not accepted for exchange, in the name(s) of,
and credit the account maintained at DTC with the QUIDS in respect of the
Depositary Shares accepted for exchange, and/or any depositary receipts for
Depositary Shares not tendered or not accepted to, the person(s) so indicated
(or, in the case of a book-entry delivery of Depositary Shares, the Company will
credit the account maintained at DTC indicated above with the QUIDS due in
respect of the Depositary Shares accepted for exchange, and/or Depositary Shares
not accepted for exchange). The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance and Payment Instructions" to
transfer any Depositary Shares from the name(s) of the registered holder(s)
thereof if the Company does not accept for exchange any of the Depositary Shares
so tendered.
<PAGE> 8
- --------------------------------------------------------------------------------
SIGN HERE
-------------------------------------------------------------------
-------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: , 1995
--------------------------------
(Must be signed by registered holder(s) exactly as name(s)
appear(s) on depositary receipt(s) of Depositary Share(s) or on a
security position listing or by person(s) authorized to become
registered holder(s) by certificates and documents transmitted
herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, please set forth
the following information and see Instruction 6.)
Name(s)
-----------------------------------------------------------
-------------------------------------------------------------------
(PLEASE PRINT)
Capacity
----------------------------------------------------------
Address
-----------------------------------------------------------
-------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
---------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED, SEE INSTRUCTIONS 2 AND 6)
Authorized Signature
----------------------------------------------
Name
--------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
------------------------------------------------------
Address
-----------------------------------------------------------
-------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
---------------------------------------
Dated: , 1995
--------------------------------
- --------------------------------------------------------------------------------
<PAGE> 9
- --------------------------------------------------------------------------------
NOTICE OF SOLICITED TENDERS
(SEE INSTRUCTION 9)
The Company will pay to any Soliciting Dealer, as defined in
the Prospectus, a solicitation fee of $0.50 per Depositary Share
for each Depositary Share tendered and exchanged pursuant to the
Offer.
The undersigned represents that the Soliciting Dealer which
solicited and obtained this tender is:
Name of Firm:
----------------------------------------------------
(Please Print)
Name of Individual Broker or Financial Consultant:
---------------
-----------------------------------------------------------------
Identification Number (if known):
-------------------------------
Address:
---------------------------------------------------------
(Include Zip Code)
The following to be completed ONLY if customer's Depositary
Shares held in nominee names are tendered.
Name of Beneficial Owner Number of Shares Tendered
(Attach additional list if necessary)
----------------------------- -----------------------------
----------------------------- -----------------------------
----------------------------- -----------------------------
The acceptance of compensation by such Soliciting Dealer will
constitute a representation by it that: (i) it has complied with
the applicable requirements of the Securities Exchange Act of
1934, as amended, and the applicable rules and regulations
thereunder, in connection with such solicitation; (ii) it is
entitled to such compensation for such solicitation under the
terms and conditions of the Prospectus; (iii) in soliciting
tenders of Depositary Shares, it has used no soliciting materials
other than those furnished by the Company; and (iv) if it is a
foreign broker or dealer not eligible for membership in the
National Association of Securities Dealers, Inc. (the "NASD"), it
has agreed to conform to the NASD's Rules of Fair Practice in
making solicitations.
- --------------------------------------------------------------------------------
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Delivery of This Letter of Transmittal and Depositary Receipts. This
Letter of Transmittal is to be used if depositary receipts representing
Depositary Shares are to be forwarded herewith or if tenders are to be made
pursuant to the procedures for delivery by book-entry transfer set forth in the
Prospectus under "The Exchange Offer -- Procedure for Tendering Depositary
Shares". Depositary Shares may be tendered and will be accepted for exchange
only in denominations of $25 principal amount and integral multiples thereof.
Depositary receipts for all physically delivered Depositary Shares or
confirmation of any book-entry transfer to the Exchange Agent's account at DTC
of Depositary Shares tendered by book-entry transfer, as well as this Letter of
Transmittal or facsimile thereof, properly completed and duly executed, and any
required signature guarantee, or an Agent's Message in connection with a
book-entry transfer, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at one of its addresses set
forth herein prior to the Expiration Time. Holders of Depositary Shares whose
depositary receipts are not immediately available or who cannot deliver their
depositary receipts and all other required documents to the Exchange Agent
before the Expiration Time or comply with book-entry transfer procedures on a
timely basis may tender their Depositary Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer -- Guaranteed
Delivery Procedures". Pursuant to such procedures: (i) such tender must be made
by or through an Eligible Institution (as defined in the Prospectus); (ii) prior
to the Expiration Time, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) substantially in the form
provided by the Company which contains a signature guaranteed by an Eligible
Institution in the form set forth in such Notice of Guaranteed Delivery (unless
such tender is for the account of an Eligible Institution) which sets forth the
name and address of the holder of the Depositary Shares and the number of
Depositary Shares tendered, states that the tender is being made thereby and
guarantees that within five New York Stock Exchange trading days after the
Expiration Time, the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, and any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer of Depositary Shares,
and any other documents required by the Letter of Transmittal, together with the
Depositary Shares will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) all tendered Depositary Shares (or a confirmation of
any book-entry transfer of such Depositary Shares into the Exchange Agent's
account at DTC) as well as the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in connection with a book-entry transfer of Depositary
Shares, and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent within five (5) New York Stock Exchange trading
days after the Expiration Time, all as provided in the Prospectus under "The
Exchange Offer -- Guaranteed Delivery Procedures".
THE METHOD OF DELIVERY OF DEPOSITARY SHARES AND ALL OTHER REQUIRED
DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER
TENDERING DEPOSITARY SHARES AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF SENT BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE PROPERLY INSURED
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE
SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE
EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders, by execution of this Letter of Transmittal, or facsimile
thereof, waive any right to receive any notice of the acceptance of their
Depositary Shares for exchange.
The QUIDS will be issued only in book-entry form through the facilities of
DTC. Accordingly, in order to participate in the Exchange Offer, holders of
Depositary Shares must either (i) make
<PAGE> 11
arrangements with a DTC Participant to have such participant validly tender such
Depositary Shares in accordance with the terms of the Exchange Offer and to
receive QUIDS issued in exchange therefor or (ii) validly tender such Depositary
Shares in accordance with the terms of the Exchange Offer and make use of the
facilities provided by the Custodian so that such, in either case, holders may
become beneficial owners of QUIDS issued in exchange for Depositary Shares
accepted pursuant to the Exchange Offer. Under the terms of the Exchange Offer,
no certificated QUIDS will be issued in exchange for Depositary Shares.
2. Guarantee of Signatures. Except as otherwise provided below, signatures
on this Letter of Transmittal must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc. or by a commercial bank or trust company having an
office in the United States that is a participant in the Security Transfer
Medallion Program or the Stock Exchange Medallion Program (each of the foregoing
being referred to as an "Eligible Institution"), unless the Depositary Shares
tendered hereby are tendered (i) by a registered holder (which term, for
purposes of this Letter of Transmittal, shall include any participant in DTC
whose name appears on a security position listing as the owner of Depositary
Shares) of such Depositary Shares who has not completed the box entitled
"Special Issuance and Payment Instructions" or "Special Delivery Instructions"
herein or (ii) for the account of an Eligible Institution. See Instruction 6. If
the Depositary Shares are registered in the name of a person other than the
signer of this Letter of Transmittal, or if certificates for QUIDS and/or
depositary receipts for unexchanged Depositary Shares are to be issued or
returned to a person other than the registered holder, then the Depositary
Shares must be endorsed by the registered holder or be accompanied by a written
instrument or instruments of transfer or exchange in form satisfactory to the
Company duly executed by the registered holder with such signatures guaranteed
by an Eligible Institution. See Instruction 6.
3. Inadequate Space. If the space provided herein is inadequate, the
depositary receipt numbers of Depositary Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders. Issuance of QUIDS in exchange for Depositary Shares
will be made only against deposit of tendered Depositary Shares. If less than
the entire number of any Depositary Shares evidenced by a submitted depositary
receipt is tendered, the tendering holder of Depositary Shares should fill in
the number of Depositary Shares tendered in the appropriate boxes above entitled
"Number of Depositary Shares Tendered". The Exchange Agent will then issue and
send to the tendering holder (unless otherwise requested by the holder under
"Special Issuance and Payment Instructions" and "Special Delivery Instructions"
in this Letter of Transmittal), a newly issued depositary receipt for Depositary
Shares submitted but not tendered, together with any tendered Depositary Shares
that were not accepted for exchange because of proration or otherwise. The
entire number of all Depositary Shares deposited with the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
Tendered Depositary Shares not accepted for exchange by the Company,
including as a result of proration, if any, will be returned without expense to
the tendering holder of such Depositary Shares (or, in the case of the
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at DTC, such Depositary Shares will be credited to an account maintained
at DTC) as promptly as practicable following the Expiration Time, subject to
delays, if any, resulting from proration.
5. Withdrawal Rights. Tenders of Depositary Shares pursuant to the Exchange
Offer are irrevocable, except that Depositary Shares tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Time and,
unless theretofore accepted for exchange pursuant to the Exchange Offer, may
also be withdrawn at any time after 40 business days from the date of the
Prospectus.
<PAGE> 12
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at the addresses set forth in the Letter of Transmittal. The method of
notification is at the risk and election of the holder. Any such notice of
withdrawal must specify (i) the holder named in the Letter of Transmittal as
having tendered depositary receipts to the Depositary Shares to be withdrawn,
(ii) if the depositary receipts to the Depositary Shares are held in
certificated form, the certificate numbers of such receipts to be withdrawn,
(iii) that such holder is withdrawing its election to have such Depositary
Shares exchanged, and the name of the registered holder of such Depositary
Shares, and such notice of withdrawal must be signed by the holder in the same
manner as the original signature on the Letter of Transmittal (including any
required signature guarantees) or accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of the Depositary Shares being withdrawn. The Exchange Agent will
return the properly withdrawn Depositary Shares promptly following receipt of
notice of withdrawal. If Depositary Shares have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn
Depositary Shares and otherwise comply with DTC's procedures. All questions as
to the validity of a notice of withdrawal, including the time of receipt, will
be determined by the Company, and such determination will be final and binding
on all parties. Withdrawal of tenders of Depositary Shares may not be rescinded
and any Depositary Shares withdrawn will not thereafter be deemed to be validly
tendered for the purposes of the Exchange Offer. Properly withdrawn Depositary
Shares, however, may be retendered by following the procedures therefor
described elsewhere herein at any time prior to the Expiration Time. See "The
Exchange Offer -- Procedure for Tendering Depositary Shares" in the Prospectus.
6. Signatures on Letters of Transmittal, Written Instruments and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Depositary Shares tendered hereby, the signatures must
correspond with the name(s) as written on the face of the certificates without
alteration, enlargement or any change whatsoever.
If any of the Depositary Shares tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Depositary Shares are registered in different names
on several depositary receipts, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
registrations of depositary receipts.
If this Letter of Transmittal or any depositary receipts or written
instrument or instruments of transfer or exchange are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Company of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the Depositary Shares listed and transmitted hereby, no endorsements of
depositary receipts or separate written instruments of transfer or exchange are
required unless the QUIDS due in respect of the Depositary Shares accepted for
exchange are to be issued to, or depositary receipts for Depositary Shares not
tendered or not exchanged and paid for are to be issued in the name of, a person
other than the registered holder(s). Signatures on such certificates or written
instruments of transfer or exchange must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder of the depositary receipt(s) listed, the depositary receipt(s)
must be endorsed by the registered holder, or be accompanied by a written
instrument or instruments of transfer or exchange in form satisfactory to the
Company duly executed by the registered holder. Signatures on such depositary
receipts or written instrument or instruments of transfer or exchange must be
guaranteed by an Eligible Institution.
<PAGE> 13
7. Transfer Taxes. The Company will pay any transfer taxes with respect to
the transfer and exchange of Depositary Shares to it or its order pursuant to
the Exchange Offer. If, however, the QUIDS due in respect of the Depositary
Shares accepted for exchange are to be issued to, or (in the circumstances
permitted hereby) if depositary receipts for Depositary Shares not tendered or
not exchanged and paid for are to be registered in the name of, any person other
than the person(s) signing this Letter of Transmittal, the amount of any
transfer taxes (whether imposed on the registered holder or such person) payable
on account of the transfer to such person will be deducted from the QUIDS due in
respect of the Depositary Shares accepted for exchange if satisfactory evidence
of the payment of such taxes, or exemption therefrom, is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE DEPOSITARY RECEIPTS LISTED IN THIS
LETTER OF TRANSMITTAL.
8. Special Issuance and Payment Instructions and Special Delivery
Instructions. If certificates for QUIDS and/or depositary receipts for
unexchanged Depositary Shares are to be issued, reissued or returned to a person
other than the signer of this Letter of Transmittal, such certificates or
depositary receipts are to be sent or returned to someone other than the signer
of this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
9. Solicited Tenders. The Company will pay a solicitation fee of $0.50 per
Depositary Share for any Depositary Shares tendered and accepted for exchange
pursuant to the Exchange Offer, covered by the Letter of Transmittal which
designates, in the box captioned "Notice of Solicited Tenders", as having
solicited and obtained the tender, the name of (i) any broker or dealer in
securities, including the Dealer Managers in their capacity as a dealer or
broker, which is a member of any national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or
dealer not eligible for membership in the NASD which agrees to conform to the
NASD's Rules of Fair Practice in soliciting tenders outside the United States to
the same extent as though it were an NASD member, or (iii) any bank or trust
company (each of which is referred to herein as a "Soliciting Dealer"). No such
fee shall be payable to a Soliciting Dealer with respect to the tender of
Depositary Shares by the holder of record, for the benefit of the beneficial
owner, unless the beneficial owner has designated such Soliciting Dealer. No
such fee shall be payable to a Soliciting Dealer if such Soliciting Dealer is
required for any reason to transfer the amount of such fee to a depositing
holder. No broker, dealer, bank, trust company or fiduciary shall be deemed to
be the agent of the Company, the Exchange Agent, the Information Agent or the
Dealer Manager for purposes of the Exchange Offer. Soliciting Dealers are not
entitled to a solicitation fee for Depositary Shares beneficially owned by such
Soliciting Dealer.
10. Waiver of Conditions. Subject to the terms of the Exchange Offer, the
conditions of the Exchange Offer may be waived by the Company, in whole or in
part, at any time and from time to time, in the Company' sole discretion, in the
case of any Depositary Shares tendered.
11. Requests for Assistance or Additional Copies. Requests for assistance
may be directed to, or additional copies of the Prospectus, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent at its address set forth below.
12. Lost, Destroyed or Stolen Certificates. If any depositary receipts or
certificates have been lost, mutilated, destroyed or stolen, the holder should
promptly notify the Depositary for the Depositary Shares, Chemical Bank, of this
fact in writing or by telephone at Chemical Bank, J.A.F. Building, P.O. Box
2862, New York, NY 10116-2862, Attention: Lost Securities Department, telephone
number (800) 851-9677. The holder will then be instructed as to the steps that
must be taken in order to replace the depositary receipt(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing depositary receipt(s) have been followed.
13. Definitions. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
<PAGE> 14
14. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of Letters of Transmittal or
Depositary Shares will be resolved by the Company, and such determination will
be final and binding on all parties. The Company reserves the absolute right to
reject any or all Letters of Transmittal or tenders that are not in proper form
or the acceptance of which would, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to the particular Depositary Shares covered by any
Letter of Transmittal or tendered pursuant to such letter. None of the Company,
the Exchange Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Company's interpretation of the
terms and conditions of the Exchange Offer shall be final and binding on all
parties.
IMPORTANT: IN ORDER VALIDLY TO TENDER DEPOSITARY SHARES, THIS LETTER OF
TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH DEPOSITARY RECEIPTS
REPRESENTING DEPOSITARY SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ANY
REQUIRED SIGNATURE GUARANTEES AND ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME OR THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION TIME.
<PAGE> 15
IMPORTANT TAX INFORMATION
Under the federal income tax law, each tendering holder of Depositary
Shares is required to provide the Exchange Agent (as payer) with such holder's
correct taxpayer identification number on Substitute Form W-9 below. If such
holder is an individual, the taxpayer identification number is his/her social
security number. If the Exchange Agent is not provided with the correct taxpayer
identification number, the holder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such holder
with respect to QUIDS acquired pursuant to the Exchange Offer may be subject to
federal income tax backup withholding.
Certain holders (including, among others, corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. A corporation must, however, complete the Substitute Form W-9,
providing its taxpayer identification number and indicating that it is exempt
from backup withholding to establish its exemption from backup withholding. In
order for a foreign individual to qualify as an exempt recipient, that holder
must submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. This may be accomplished by executing the
certification for foreign holders at the bottom of the Substitute Form W-9
below. See the enclosed Guidelines for Certification of Taxpayer Identification
Number for additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any consideration payable to the holder. Backup withholding is not an
additional tax. Rather, the amount of tax withheld will be a credit against the
tax liability of persons subject to backup withholding. If withholding results
in an overpayment of taxes, a refund may be obtained.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The holder of Depositary Shares is required to give the Exchange Agent the
social security number or employer identification number of the record owner of
the Depositary Shares. If the Depositary Shares are in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
<PAGE> 16
PAYER'S NAME: BANKERS TRUST COMPANY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S><C>
Name as shown above on account (If joint account, list first and circle the name of the person or
entity whose number you enter in Part I below).
- ------------------------------------------------------------------------------------------------------------------------------
Address (If the holder of Depositary Shares does not complete, signature in Part I below will constitute
that the above address is correct.
- ------------------------------------------------------------------------------------------------------------------------------
City, State and Zip Code
- ------------------------------------------------------------------------------------------------------------------------------
PART I--PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER IN Social Security Number
SUBSTITUTE THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.
FORMW-9 OR
Employer Identification Number
- ------------------------------------------------------------------------------------------------------------------------------
DEPARTMENT OF THE
TREASURY INTERNAL PART II--For Payees exempt from backup withholding, see the enclosed instructions for Taxpayer
REVENUE SERVICE Identification and Certification and complete as instructed under "Important Tax Information"
above.
PAYER'S REQUEST
FOR TAXPAYER
IDENTIFICATION
NUMBER (TIN)
- ------------------------------------------------------------------------------------------------------------------------------
Certification. UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to
me) and
(2) I am not subject to backup withholding either because I have not been notified by the internal revenue service (the
"IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or the IRS
has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS. You must cross out item (2) above if you have been notified by the IRS that you are subject to
backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by
the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer
subject to backup withholding, do not cross out item (2). (Also see the enclosed Guidelines for Certification of Taxpayer
Identification on Substitute Form W-9)
- ------------------------------------------------------------------------------------------------------------------------------
SIGNATURE: DATE:
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CERTIFICATE FOR NON-UNITED STATES HOLDERS
Under penalties of perjury, I certify that I am not a United States
citizen or resident.
SIGNATURE: DATE:
---------------------- -------------------------
CERTIFICATE FOR NON-UNITED STATES HOLDERS* FOR NO
UNITED STATES FEDERAL INCOME TAX WITHHOLDING
HOLDERS OF DEPOSITARY SHARES WITH A MAILING ADDRESS OUTSIDE OF THE
UNITED STATES MUST CERTIFY TO ONE OF THE FOLLOWING STATEMENTS TO AVOID THE
WITHHOLDING OF UNITED STATES FEDERAL INCOME TAX AT A RATE OF 30% (OR LOWER
TREATY RATE IF APPLICABLE) OF THE GROSS PROCEEDS PAYABLE TO SUCH HOLDERS
PURSUANT TO THE EXCHANGE OFFER:
A. I certify under penalties of perjury that I own either (a) solely
Depositary Shares or (b) not more than one percent of Preferred Stock
underlying the Depositary Shares and not more than one percent of any
other class of the Company's stock. I understand that if I certify to
either (a) or (b) of the preceding sentence, the Company will not
withhold United States federal income tax with respect to the gross
proceeds payable to me pursuant to the Exchange Offer.
SIGNATURE: DATE:
---------------------- -------------------------
* A "Non-United States Holder" means a holder that is not (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or
any political subdivision thereof, or (iii) an estate or trust the
income of which is subject to United States federal income taxation
regardless of its source.
Under penalties of perjury, I certify that I am not a United States
citizen or resident.
SIGNATURE: DATE:
---------------------- -------------------------
<PAGE> 17
<TABLE>
<S><C>
FORM W-8 CERTIFICATE OF FOREIGN STATUS GIVE THIS FORM TO THE
(JANUARY 1984) PAYER, MIDDLEMAN,
Use to notify payers, middlemen, brokers, and barter exchanges not to BROKER OR BARTER
DEPARTMENT OF THE withhold or report on payments of interest, broker transactions, or EXCHANGE
TREASURY INTERNAL barter exchanges.
REVENUE SERVICE
- -------------------------------------------------------------------------------------------------------------------------------
Name as shown on account (if joint account also give joint owner's name) U.S. taxpayer identification number (if any)
PLEASE ------------------------------------------------------------------------------------------------------------------------
PRINT Address
OR
TYPE ------------------------------------------------------------------------------------------------------------------------
City, State and ZIP code (or country)
- -------------------------------------------------------------------------------------------------------------------------------
List account number(s)
here (see instructions)
- -------------------------------------------------------------------------------------------------------------------------------
PART I QUALIFICATIONS FOR EXEMPTION.--CHECK APPLICABLE BOX(ES) PART II Notice of Change in Status--To
- --------------------------------------------------------------------- notify the payer, broker, or barter
INTEREST PAYMENTS.--If this form was sent to you because you are exchange that you no longer qualify
receiving interest payments and if you are not a U.S. citizen or for exemption, check here. . . . . . / /
resident (or if you are a foreign corporation, partnership, estate
or trust), check here . . . . . . . . . . . . . . . . . . . . . . . / /
BROKER TRANSACTIONS OR BARTER EXCHANGES.--If your broker or barter If you check this box, reporting will
exchange sent you this form and if you are an "exempt foreign begin on the account(s) listed.
person" (see the instructions below for definition), check here . . / /
- -------------------------------------------------------------------------------------------------------------------------------
PLEASE CERTIFICATION.-- Under the penalties of perjury, I certify that, to the best of my knowledge and belief, I qualify
SIGN as a foreign person as indicated in the box(es) checked above.
HERE
------------------------------------------------------------------------------------------------------------------
Signature Date
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS
(Section references are to the Internal Revenue Code, unless otherwise stated.)
PURPOSE OF FORM.--Use this form to tell the payer, middleman, broker or barter
exchange that you are a nonresident alien or foreign entity that is not subject
to U.S. information return reporting or backup withholding rules. Beginning
January 1, 1984, payers of interest, brokers, and barter exchanges may have to
withhold 20% of each payment or transaction if payees do not tell the payer or
broker their correct taxpayer identification number or if they fail to report
the interest as income on their U.S. Federal income tax return. This is referred
to as "backup withholding." (The taxpayer identification number is either a U.S.
social security or Federal employer identification number.) Also, the law
requires that:
- - payments of interest;
- - sales of securities, commodities, regulated futures contracts and forward
contracts through a broker; and
- - exchanges of property or services through a barter exchange
must generally be reported to the Internal Revenue Service.
/ / Nonresident aliens (individuals who are neither citizens nor residents of
the United States) and foreign partnerships, corporations, estates and trusts
are not generally required to have a U.S. taxpayer identification number, nor
are they subject to any backup withholding because they do not furnish such a
number to a payer or broker. Also, payments to these account holders are
generally not subject to U.S. reporting requirements.
INTEREST PAYMENTS.--Interest paid to you is not subject to the new withholding
or reporting requirements if you are not a U.S. citizen or resident, or if you
are a foreign corporation, partnership, estate or trust. Use this form to notify
the payer of your foreign status.
BROKER TRANSACTIONS AND BARTER EXCHANGES.--You are exempt from U.S. withholding
and reporting requirements and may use Form W-8 to notify the broker or barter
exchange if you meet the following definition of an "exempt foreign person" for
the calendar year in which the transaction occurs:
Individuals.--
- - You are not a citizen or resident of the United States;
- - You have not been present in the United States for 183 days or more during the
calendar year, and don't plan to be (or your country has a tax treaty with the
United States that exempts your transactions from U.S. taxes); and
- - The gains from your transactions with the broker or barter exchange are not
effectively connected (related) to any U.S. trade or business you are engaged
in or plan to engage in during the year, or your country has a tax treaty with
the United States that exempts your transactions from U.S. taxes.
Nonresident Alien Married to a U.S. Citizen or Resident.--If you are married to
a U.S. citizen or resident and have made an election under section 6013(g) or
(h), you are treated as a U.S. resident and may not file Form W-8.
Corporations, Partnerships, Estates and Trusts.--
- - You are not a U.S. corporation, partnership, estate or trust; and
- - The gains from your transactions with the broker or barter exchange are not
effectively connected (related) to any U.S. trade or business you are engaged
in or plan to engage in during the year, or your country has a tax treaty with
the United States that exempts your transactions from U.S. taxes.
NOTE: Filing Form W-8 with the payer will not exempt you from the 30% (or lower
treaty) flat rate tax on nonresident aliens and foreign corporations.
WHEN TO FILE.--File this certificate with the payer (or broker or barter
exchange) in the calendar year in which the payment is made or collected (or for
brokerage sales or barter exchanges, the year the transaction took place),
unless you have already done this in either of the two preceding calendar years.
ADDRESS.--
<TABLE>
<CAPTION>
Then show the
If you are-- address of--
<S> <C>
An individual........ Your permanent
residence
A Partnership
or corporation....... Principal office
An estate or trust... Permanent residence
or principal office
of any fiduciary
</TABLE>
(Continued on back)
<PAGE> 18
The Information Agent is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, NY 10005
BANKS AND BROKERS CALL COLLECT:
(212) 440-9800
ALL OTHERS CALL TOLL-FREE:
1-800-223-2064
The Dealer Managers for the Exchange Offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(800) 838-3182 (Toll-Free)
<PAGE> 1
EXHIBIT 99-25
NOTICE OF GUARANTEED DELIVERY
in Respect of Depositary Shares Representing a One-Quarter
Interest in a Share of Cumulative Preferred Stock, 7.75% Series,
of
THE DETROIT EDISON COMPANY
As set forth in the Exchange Offer (as defined below), this form or one
substantially equivalent hereto must be used to accept the Exchange Offer if
certificates representing depositary shares (the "Depositary Shares"), each
representing a one-quarter interest in a share of Cumulative Preferred Stock
($100 par value), 7.75% Series (the "Preferred Stock"), of The Detroit Edison
Company, a Michigan corporation (the "Company"), are not immediately available
or time will not permit a holder's Depositary Shares, the Letter of Transmittal
or other required documents to reach Bankers Trust Company, as Exchange Agent
(the "Exchange Agent"), prior to the Expiration Time (as defined in the
Prospectus (as defined below)), or the procedure for book-entry transfer cannot
be completed on a timely basis. Such form may be delivered by facsimile
transmission, mail or hand delivery to the Exchange Agent. See "The Exchange
Offer -- Guaranteed Delivery Procedures" in the Prospectus.
The Exchange Agent for the Exchange Offer is:
BANKERS TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand/Overnight Delivery:
Bankers Trust Company (212) 250-6275 Bankers Trust Company
Corporate Trust & (212) 250-3290 Corporate Trust &
Agency Group (For Eligible Institutions Agency Group
Reorganization Dept. Only) Receipt & Delivery Window
P.O. Box 1458 123 Washington St., 1st Fl.
Church Street Station New York, NY 10006
New York, NY 10008-1458
Confirm by Telephone:
(212) 250-6270
Shareholder Inquiries:
(212) 250-6270
</TABLE>
------------------
DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS NOTICE VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY OR CONSENT.
1
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, in accordance with the
Company's offer to exchange up to $105,000,000 aggregate principal amount of its
% Quarterly Income Debt Securities ("QUIDS") for up to 4,200,000 Depositary
Shares, each representing a one-quarter interest in a share of its Preferred
Stock, upon the terms and subject to the conditions set forth in the Prospectus
dated June , 1995 (the "Prospectus"), and in the related Letter of Transmittal
(which, together with the Prospectus, constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the Depositary Shares set forth below pursuant
to the guaranteed delivery procedures set forth in "The Exchange Offer --
Guaranteed Delivery Procedures" in the Prospectus.
Number of Shares Tendered
---------
SIGN AND DATE HERE
Pursuant to the Prospectus and the Exchange Offer, the undersigned hereby
tenders to the Company the Depositary Shares set forth above.
<TABLE>
<S> <C>
Dated: , 1995 Name(s)
--------------------------------
- --------------------------------------------- ---------------------------------------------
- --------------------------------------------- ---------------------------------------------
(SIGNATURE(S) OF HOLDER(S)) (PLEASE TYPE OR PRINT)
Depositary Receipt Number(s) for
Depositary Shares (if available) Address
---------------------------------------------
- --------------------------------------------- ---------------------------------------------
(ZIP CODE)
Area Code and Tel. No.
----------------------
Complete the following if Delivered
by Book-Entry Transfer:
The Depository Trust Company
Account Number
</TABLE>
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED WITH
RESPECT TO THE TENDER OF SHARES
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office in the United States,
guarantees (a) that the above named person(s) "own(s)" the Depositary Shares
tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange
Act of 1934, as amended, (b) that such tender of such Depositary Shares complies
with Rule 14e-4, and (c) to deliver to the Exchange Agent the depositary
receipts representing the Depositary Shares tendered hereby or confirmation of
book-entry transfer of such Depositary Shares into the Exchange Agent's account
at The Depository Trust Company, in proper form for transfer, together with the
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in the Prospectus) in connection with a book-entry transfer of
Depositary Shares, and any other required documents, within five (5) New York
Stock Exchange trading days after the Expiration Time.
<TABLE>
<S> <C>
Name of Firm
--------------------------- ------------------------------------------
(AUTHORIZED SIGNATURE)
Address Title
-------------------------------- ------------------------------------
Name
- ---------------------------------------- -------------------------------------
(ZIP CODE) PLEASE TYPE OR PRINT
Area Code and Tel. No. Dated , 1995
----------------- ------------------------------
</TABLE>
NOTE: DO NOT SEND DEPOSITARY RECEIPTS REPRESENTING DEPOSITARY SHARES WITH THIS
FORM. DEPOSITARY RECEIPTS REPRESENTING DEPOSITARY SHARES SHOULD BE SENT
ONLY WITH A LETTER OF TRANSMITTAL.
3
<PAGE> 1
EXHIBIT 99-26
THE DETROIT EDISON COMPANY
EXCHANGE OFFER
QUESTIONS AND ANSWERS
Q. WHY IS DETROIT EDISON OFFERING TO EXCHANGE UP TO $105 MILLION OF ITS %
QUARTERLY INCOME DEBT SECURITIES (QUIDS) FOR UP TO 4,200,000 DEPOSITARY
SHARES (THE "DEPOSITARY SHARES"), EACH REPRESENTING A ONE-QUARTER INTEREST IN
A SHARE OF ITS CUMULATIVE PREFERRED STOCK ($100 PAR VALUE), 7.75% SERIES (THE
"PREFERRED STOCK")?
A. The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing Depositary Shares with the QUIDS. The
potential cash flow benefit to the Company arises because interest payable on
the QUIDS will be deductible by the Company for federal income tax purposes,
while the dividends payable on the Depositary Shares are not deductible.
Q. WHAT DO THE TERMS "BENEFICIAL OWNER," "REGISTERED HOLDER," "NOMINEE" AND
"CUSTODIAN" MEAN?
A. Beneficial Owner. If a holder's Depositary Shares are held by a broker,
dealer, bank, trust company or other institution and registered in the name
of such institution (including The Depository Trust Company ("DTC")), such
holder is the beneficial owner of the Depositary Shares even though its name
is not the name in which such shares are registered. Such holder will need to
tender such shares through the institution that holds them.
A beneficial owner whose Depositary Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender such shares should contact such registered holder promptly
and instruct it whether or not to tender such shares on behalf of such
beneficial owner.
Registered Holder. The registered holder of Depositary Shares is the person
or institution in whose name such shares are actually registered on the
register kept or caused to be kept by the Company at its office or agency for
such purpose. If Depositary Shares are registered directly in the name of the
holder who is the beneficial owner of such shares, such beneficial holder is
also the registered holder. If Depositary Shares are registered in the name
of a broker, dealer, bank, trust company or other institution, such
institution is the registered holder of such shares. Generally, the
registered holder of Depositary Shares completes the Letter of Transmittal in
order to tender such shares. However, if the beneficial owner of Depositary
Shares is the registered holder and does not want to complete the Letter of
Transmittal itself, such holder may ask any broker, dealer, bank or trust
company to complete the Letter of Transmittal on its behalf and effect the
tender of such shares.
Nominees and Custodian. These terms refer to the broker, dealer, bank, trust
company or other institution that holds Depositary Shares on behalf of a
beneficial owner of such shares. Although such shares belong to such
beneficial owner, such institution is the registered holder of such shares
and, accordingly, such shares are registered in the name of such institution
(including, if such nominee holds the Depositary Shares through the DTC, in
the name of the DTC) and such beneficial holder will need to contact such
institution and provide it with a completed Instructions with Respect to the
Tender of Depositary Shares form in order to tender such shares.
Q. WHAT ARE QUIDS?
A. The QUIDS are unsecured debt securities to be issued by Detroit Edison which
are subordinate in right to payment to its senior indebtedness and to all
obligations of its subsidiaries. However, the QUIDS are senior to the claims
of the holders of Detroit
<PAGE> 2
Edison's capital stock, including the Depositary Shares. In addition, the
QUIDS will have the following terms:
- The QUIDS will have a 30 year stated maturity whereas the Depositary Shares
have no stated final maturity.
- The QUIDS will bear interest at % per annum and are payable quarterly on
the same dates you would have received dividend payments on the Depositary
Shares, if they were not tendered.
- The QUIDS may be called for redemption by Detroit Edison at any time after
June 30, 1998 at $25 per bond. The redemption provisions for the QUIDS are
substantially similar to the Depositary Shares.
- The QUIDS regular quarterly interest payments may be deferred for a period
(defined in the Prospectus as a "Deferral Period") of up to 20 consecutive
quarters at the option of Detroit Edison. Although the quarterly dividend
payments for the Depositary Shares may also be suspended, such a suspension
period may be indefinite. Another distinction between the provision to defer
interest payments on the QUIDS and suspension of dividend payments on the
Depositary Shares is that the deferred QUIDS interest payments will
accumulate interest at a compounding rate equal to the stated interest rate
on the QUIDS whereas the Depositary Shares suspended dividend payments do not
have such a compounding feature. In addition, the interest received on the
QUIDS will not be eligible for the dividends received deduction for corporate
holders, whereas dividends on the Depositary Shares are eligible for the
dividends received deduction for corporate holders. Lastly, the covenants
under which the QUIDS are issued do not provide any voting rights to holders
during the Deferral Period, while, under certain circumstances, the holders
of the Depositary Shares may have certain limited voting rights.
- The QUIDS will be issued only in book-entry form through the facilities of
DTC.
Q. HOW DOES THE INTEREST RATE ON THE QUIDS COMPARE TO THE DIVIDEND RATE ON THE
DEPOSITARY SHARES?
A. The effective yield for the Depositary Shares, at its stated liquidation
preference of $25 per share, is 7.75% per annum. The coupon on the QUIDS is
% or % higher than the Depositary Shares.
Q. THE DIVIDEND PAYMENT DATE (SUBJECT TO BOARD DECLARATION) FOR THE DEPOSITARY
SHARES WILL BE OCTOBER 15, 1995. WILL THE HOLDERS THAT PARTICIPATE IN THE
EXCHANGE OFFER BE ELIGIBLE FOR THAT DIVIDEND?
A. No. However, such holders will be entitled to interest at a rate of 7.75% per
annum from and including July 15, 1995 (the last dividend payment date with
respect to the Depositary Shares) to but excluding the Issuance Date of the
QUIDS.
Q. WILL THE QUIDS BE LISTED?
A. Like the Depositary Shares, the QUIDS are expected to be listed on the New
York Stock Exchange.
Q. WILL THE EXCHANGE CONSTITUTE A TAXABLE EVENT?
A. The Exchange Offer will be a taxable event to those holders that tender their
Depositary Shares in exchange for the QUIDS. Detroit Edison recommends that
each holder read the description on "Certain United States Federal Income Tax
Consequences" within the Prospectus and/or consult their tax advisor to
determine their specific circumstances.
Furthermore, the QUIDS will be treated as having been issued with original
issue discount whereas the Depositary Shares were not issued with original
issue discount.
<PAGE> 3
Q. WHAT IS THE PROCESS FOR A HOLDER TO PARTICIPATE IN THE EXCHANGE OFFER?
A. Each holder of the Depositary Shares should receive a copy of the Prospectus,
a Letter of Transmittal, a Notice of Guaranteed Delivery, a letter addressed
to Clients and Guidelines for Certification of Taxpayer Identification Number
on Substitute Forms W-9 and W-8 along with this Question and Answer letter.
Detroit Edison encourages each holder to review each document and to contact
their broker and tax advisor for assistance. In the event holders require
other sources of information they should contact the Information Agent or the
Dealer Managers at the toll-free numbers listed in the Prospectus or the
Letter of Transmittal.
If the Depositary Shares are registered in the name of a broker, dealer,
bank, trust company or other nominee, the holder must instruct such nominee
to complete the Letter of Transmittal on its behalf. Detroit Edison
recommends that holders contact the Information Agent before beginning the
process.
Since the QUIDS will be issued only in book-entry form through the facilities
of DTC, holders of certificated Depositary Shares who are not DTC
Participants must either (i) make arrangements with a financial institution
that participates in DTC's book-entry-only system to have such institution
validly tender such Depositary Shares and to receive QUIDS issued in exchange
therefor or (ii) validly tender such Depositary Shares and make use of the
facilities provided by Bankers Trust Company, as Custodian, so that such
holders, in either case, may become beneficial owners of QUIDS issued in
exchange for Depositary Shares. Under the terms of the Exchange Offer, no
certificated QUIDS will be issued in exchange for Depositary Shares.
The Letter of Transmittal must be mailed in time to reach the Exchange Agent
by the Expiration Time of the Exchange Offer. In the event the holder is
unable to fulfill the requirements of the Letter of Transmittal, the holder
must submit the Notice of Guaranteed Delivery prior to the Expiration Time.
Q. ARE THERE ANY COSTS THAT A PARTICIPATING HOLDER WILL BEAR IN CONTEXT OF THE
EXCHANGE OFFER?
A. A fee of $0.50 per share will be paid to brokers that successfully solicit
tenders on behalf of Detroit Edison. In addition, the dealer managers, the
Custodian, the information agent and the exchange agent will be paid fees for
assisting with this transaction. All such fees will be paid by Detroit
Edison. However, if such holder's shares are held by a broker, dealer, bank
or trust company, the holder may be charged a fee for their services. Holders
of certificated Depositary Shares who are not DTC Participants will not be
obligated to pay fees charged by the Custodian related to the establishment
and maintenance of accounts opened by such holders to receive QUIDS issued in
exchange for Depositary Shares.
Q. MAY A BENEFICIAL OWNER OF QUIDS HELD BY THE CUSTODIAN WITHDRAW SUCH QUIDS?
A. No. QUIDS are issued only in book-entry-form. However, upon instructions from
the beneficial owner, the Custodian will (1) transfer the QUIDS to an account
maintained by the beneficial owner with a DTC Participant or (2) sell the
QUIDS at a market price -- charging the beneficial owner a customary
commission.
Q. WHEN WILL THE EXCHANGE OFFER EXPIRE?
A. The Exchange Offer is scheduled to expire at 5:00 p.m., New York City time,
on July , 1995 or, if extended by the Company, in its sole discretion, the
latest date and time to which extended (the "Expiration Time"). The Company
may decide to amend or terminate the Exchange Offer prior to the Expiration
Time, and it may at any time decide to extend the Exchange Offer as described
further in the accompanying Prospectus.
Q. CAN A HOLDER OF SHARES OF THE DEPOSITARY SHARES REVOKE ITS EXCHANGE OF
SHARES?
A. Tenders of Depositary Shares pursuant to the Exchange Offer may be withdrawn
at
<PAGE> 4
any time prior to the Expiration Time and, unless theretofore accepted for
exchange pursuant to the Exchange Offer, may also be withdrawn at any time
after 40 business days from the date of the Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange
Agent at the address set forth in the Letter of Transmittal. Any such notice
of withdrawal must specify (i) the holder named in the Letter of Transmittal
as having tendered certificates with respect to the Depositary Shares to be
withdrawn, (ii) if the Depositary Shares are held in certificated form, the
certificate numbers of such shares to be withdrawn, (iii) a statement that
such holder is withdrawing its election to have such Depositary Shares
exchanged, and the name of the registered holder of such Depositary Shares,
and such notice of withdrawal must be signed by the holder in the same manner
as the original signature on the Letter of Transmittal (including any
required signature guarantees) or be accompanied by evidence satisfactory to
the Company that the person withdrawing the tender has succeeded to the
beneficial ownership of the Depositary Shares being withdrawn. The Exchange
Agent will return the properly withdrawn Depositary Shares promptly following
receipt of notice of withdrawal. If Depositary Shares have been tendered
pursuant to the procedure for book-entry transfer, any notice of withdrawal
must specify the name and number of the account at DTC to be credited with
the withdrawn Depositary Shares and otherwise comply with DTC's procedures.
THE ABOVE SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT IN ALL RESPECTS
TO THE PROVISIONS OF AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
PROSPECTUS, THE LETTER OF TRANSMITTAL AND THE OTHER ACCOMPANYING DOCUMENTS.
<PAGE> 1
EXHIBIT 99-27
FORM OF
BANKERS TRUST COMPANY
CUSTODIAN AGREEMENT
CUSTODIAN AGREEMENT dated as of April , 1995 between BANKERS TRUST
COMPANY (the "Custodian") and The Detroit Edison Company (the "Issuer").
WHEREAS, the Issuer has exchanged certain shares of its Cumulative
Preferred Stock, 7.75% Series ("Preferred Stock") for its % Quarterly Income
Debt Securities (QUIDSSM) (Junior Subordinated Deferrable Interest Debentures,
Due 2025); and
WHEREAS, Depositary Receipts evidencing ownership interests in the
Preferred Stock were in certificated form and the QUIDS are issued solely
through The Depository Trust Company's ("DTC") book-entry-only system; and
WHEREAS, in order to assist certain holders of the Depositary Receipts to
participate in the exchange, the Issuer and the Custodian have agreed that the
Custodian, an institution eligible to participate in the DTC book-only-entry
system, will hold the QUIDS for certain beneficial owners thereof upon the terms
and conditions set forth below.
1. Employment of Custodian. The Issuer hereby employs the Custodian as
custodian of QUIDS issued by Issuer and delivered to Custodian by the Issuer to
Custodian on behalf of the beneficial owners ("Holder" or "Holders") thereof who
are not participants in The Depository Trust Company's Book-Entry-Only System
simultaneous with the issuance of the QUIDS, pursuant to the terms and
conditions set forth herein. After the initial issuance of QUIDS, the Custodian
shall not accept QUIDS for custody pursuant to this Agreement. The Custodian
shall not be responsible for any QUIDS not delivered to and accepted by the
Custodian or any of its subcustodians as hereinafter provided.
2. Custody Account. The Custodian agrees to establish and maintain a
custody account in the name of each Holder requesting a custody account (the
"Deposit Account") for any and all QUIDS received and accepted by the Custodian
or any of its subcustodians for the account of the Holder simultaneous with the
time of issuance. QUIDS received and accepted by the Custodian or any of its
subcustodians for the account of the Holder shall be credited to the Holder's
Deposit Account on the books of the Custodian. The Issuer agrees that the
Custodian shall not be subject to, nor shall its rights and obligations under
this Agreement or with respect to any Deposit Account be affected by, any
agreement between the Issuer and any other person.
The Custodian shall hold, keep safe and protect as custodian of the Deposit
Accounts, on behalf of the Holders, all QUIDS received by Custodian from Holders
simultaneous with issuance. All transactions involving the QUIDS in the Deposit
Accounts shall be executed or settled solely in accordance with Instructions (as
that term is defined in Section 7 hereof), except that until the Custodian
receives Instructions to the contrary, the Custodian will:
(a) collect all interest and principal and all other income and
payments on the QUIDS, as the same become payable and credit the same to
the applicable Deposit Account and disburse the same to the applicable
Holders;
(b) present for payment all QUIDS held in the Deposit Accounts which
are called, redeemed or retired or otherwise become payable;
(c) effect such transfer of a Holder's QUIDS to an institution
eligible for the DTC book-entry-only system as may be properly instructed
by the Holder;
- ---------------
(SM) QUIDS is a service mark of Goldman, Sachs & Co.
<PAGE> 2
(d) effect, upon Instructions (as defined in Section 7) from the
Holder, the sale (at a market price and with customary commissions) of a
Holder's QUIDS held in a Deposit Account; and
(e) provide the Holders with the notices and other information
contemplated by Section 5 hereof.
3. Records, Ownership of Property and Statements. The ownership of the
QUIDS, and whether held by the Custodian or a subcustodian as hereinafter
authorized, shall be clearly recorded on the Custodian's books as belonging to
the Holder and not for the Custodian's own interest. The Custodian shall keep
accurate and detailed accounts of all receipts, disbursements and other
transactions for the Deposit Accounts. All accounts, books and records of the
Custodian relating thereto shall be open upon reasonable notice from the Issuer
to the Custodian to inspection and audit at all reasonable times during normal
business hours by any person designated by the Issuer.
The Custodian will supply to the Issuer from time to time, as mutually
agreed upon, a statement in respect to the number of Deposit Accounts held by
the Custodian or by a subcustodian.
4. Subcustodians and Securities Depositories. With the prior written
consent of the Issuer, the Custodian may employ, directly or indirectly, one or
more subcustodians to assist in the performance of its obligations hereunder;
provided, however, that the employment of any such subcustodian (other than any
such subcustodian which is a securities depository or clearing agency) shall not
relieve the Custodian of its responsibilities or liabilities hereunder;
provided, further, that with respect to a subcustodian which is a securities
depository or clearing agency, the Custodian shall only be responsible or liable
for losses arising from such employment caused by the Custodian's own failure to
exercise reasonable care.
5. Notices, etc. If the Custodian shall receive any notices, reports or
other communications relative to any of the QUIDS in the Deposit Accounts, the
Custodian shall as soon as practicable transmit to the Holders, or notify the
Holders of the receipt of, such notices, reports or other communication. Neither
the Custodian nor its nominees or agents shall vote upon or in respect of any of
the QUIDS in the Deposit Accounts, execute any form of proxy to vote thereon, or
give any consent or take any action (except as provided in Section 2) with
respect thereto except upon the receipt of Instructions relative thereto.
6. Settlement Procedures. The proceeds from any sale of QUIDS will be
disbursed to selling Holders in accordance with Instructions (as defined in
Section 7) received from such Holders. Notwithstanding the preceding sentence,
settlement and payment for QUIDS may be effected in accordance with the
customary or established securities trading or securities processing practices
and procedures in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering QUIDS to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such QUIDS from such
purchaser or dealer.
7. Instructions. The term "Instructions" means instructions from the Holder
in respect of any of the Custodian's duties hereunder which have been received
by the Custodian at its address set forth in Section 13 below in writing and
acceptable to the Custodian. The Custodian may follow customary practices with
respect to the terms and content of Instructions. The Custodian shall have the
right to assume in the absence of notice to the contrary from the Holder that
any person whose name is on file with the Custodian pursuant to this Section 7
has been authorized by the Holder to give the Instructions in question and that
such authorization has not been revoked.
8. Standard of Care. The Custodian shall be responsible for the performance
of only such duties as are set forth herein or contained in Instructions given
to the Custodian which are not contrary to the provisions of this Agreement. The
Custodian will use reasonable care with respect to
<PAGE> 3
the safekeeping of QUIDS in the Deposit Accounts and in carrying out its
obligations under this Agreement. So long as and to the extent that it has
exercised reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any QUIDS in its capacity as Custodian received by it
or delivered by it pursuant to this Agreement and shall be held harmless in
acting upon, and may conclusively rely on, without liability for any loss
resulting therefrom, any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed or furnished
by the proper party or parties, including, without limitation, Instructions, and
shall be indemnified, to the extent permitted by law, by the Issuer for any
losses, damages, costs and expenses (including, without limitation, the
reasonable fees and expenses of counsel) incurred by the Custodian and arising
out of action taken or omitted with reasonable care by the Custodian hereunder
or under any Instructions. The Issuer reserves the right to seek reimbursement
from a Holder for any loss it may sustain as a result of the indemnification
herein granted. In the event of any loss to a Holder or the Issuer by reason of
the failure of the Custodian or its subcustodian to utilize reasonable care, the
Custodian shall be liable to the Holder or the Issuer, as the case may be to the
extent of the Holder's or Issuer's, as the case may be, actual damages at the
time such loss was discovered without reference to any special conditions or
circumstances. In no event shall the Custodian or Issuer be liable for any
consequential or special damages, including, but not limited to, sales of the
QUIDS at market value. The Custodian shall be entitled to rely, and may act, on
advice of counsel (who may be counsel for the Issuer) on all matters and shall
be without liability for any action reasonably taken or omitted pursuant to such
advice.
All collections of funds to or distributed from a Deposit Account in
respect of QUIDS shall be made at the risk of the Holders. Subject to the
exercise of reasonable care, the Custodian shall have no liability for any loss
occasioned by delay in the actual receipt of notice by the Custodian or by its
subcustodian of any payment, redemption or other transaction regarding QUIDS in
a Deposit Account in respect of which the Custodian has agreed to take action as
provided in Section 2 hereof. Neither the Custodian nor the Issuer shall be
liable for any loss resulting from, or caused by, or resulting from acts of
governmental authorities (whether de jure or de facto), including, without
limitation, nationalization, expropriation, and the imposition of currency
restrictions; acts of war, terrorism, insurrection or revolution; strikes or
work stoppages; the inability of a local clearing and settlement system to
settle transactions for reasons beyond the control of the Custodian or Issuer;
hurricane, cyclone, earthquake, volcanic eruption, nuclear fusion, fission or
radioactivity or other acts of God. The provisions of this Section shall survive
termination of this Agreement.
9. Fees and Expenses. The Issuer agrees to pay to the Custodian such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Custodian's out-of-pocket or
incidental expenses in connection with the performance of this Agreement,
including (but without limitation) reasonable legal fees. The Issuer hereby
agrees to hold the Custodian harmless from any liability or loss resulting from
any taxes or other governmental charges, and any expense related thereto, which
may be imposed, or assessed with respect to QUIDS in the Deposit Accounts. The
provisions of this Section shall survive the termination of this Agreement. The
Issuer reserves the right to seek reimbursement from the applicable Holder with
respect to a payment made to Custodian pursuant to this Section.
10. The Issuer reserves the right to assume custody of the Deposit Accounts
held by Custodian hereunder.
11. Amendment, Modifications, etc. No provisions of this Agreement may be
amended, modified or waived except in writing signed by the parties hereto.
12. Termination. This Agreement may be terminated by the Issuer or the
Custodian by ninety (90) days' notice to the other; provided that notice by the
Issuer shall specify the names of the persons to whom the Custodian shall
deliver the QUIDS, including the Issuer, in the Deposit Accounts. If notice of
termination is given by the Custodian, the Issuer shall, within ninety (90) days
following the giving of such notice, deliver to the Custodian a written notice
specifying the names of
<PAGE> 4
the persons to whom the Custodian shall deliver the QUIDS, including the Issuer,
in the Deposit Accounts. In either case, the Custodian will deliver such QUIDS
to the persons so specified, after payment of any amounts which the Custodian
determines to be owed to it under Section 9. If within ninety (90) days
following the giving of a notice of termination by the Custodian, the Custodian
does not receive from the Issuer a written notice specifying the names of the
persons to whom the Custodian shall deliver the QUIDS in the Deposit Accounts,
the Custodian, at its election, may deliver such QUIDS to a bank or trust
company doing business in the State of New York to be held and disposed of
pursuant to the provisions of this Agreement, or may continue to hold such QUIDS
until a written notice as aforesaid is delivered to the Custodian.
13. Notices. Except as otherwise provided in this Agreement, all requests,
demands or other communications between the parties or notices in connection
herewith (a) shall be in writing, hand delivered or sent by registered mail,
telex or facsimile addressed, if to the Issuer, to its address set forth on the
signature page hereof and, if to the Custodian, to
BANKERS TRUST COMPANY
4 Albany Street
4th Floor
New York, NY 10006
Phone: 212-250-6350
Fax: 212-250-6772
or in either case to such other address as shall have been furnished to the
receiving party pursuant to the provisions hereof and (b) shall be deemed
effective when received, or, in the case of a telex, when sent to the proper
number and acknowledged by a proper answerback.
14. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Issuer and the
Custodian.
15. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
BANKERS TRUST COMPANY
as Custodian
--------------------------------------
By:
Title:
THE DETROIT EDISON COMPANY
2000 Second Avenue
Attention Vice President and Corporate
Secretary
Detroit, Michigan 48226
Phone: 313-237-8667
Fax: 313-
--------------------------------------
By:
Title:
<PAGE> 1
EXHIBIT 99-28
FORM OF
EXCHANGE AGREEMENT
April , 1995
Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street
New York, New York 10006
Attention:
Ladies and Gentlemen:
The Detroit Edison Company a Michigan corporation (the "Company"), is
offering to exchange, upon the terms and conditions set forth in an Offer to
Exchange dated April , 1995 and in the related Letter of Transmittal (together
the "Offer") annexed hereto as Exhibits A and B, respectively, to exchange up to
$105,000,000 aggregate principal amount of its % Quarterly Income Debt
Securities (Junior Subordinated Deferrable Interest Debentures, Due 2025) (the
"QUIDS") for up to 4,200,000 depositary shares (the "Depositary Shares"), each
representing a one-quarter interest in a share of its Cumulative Preferred Stock
($100 par value), 7.75% Series (the "Preferred Stock"). The Preferred Stock is
held by Chemical Bank as Depositary pursuant to a Agreement dated as of February
1, 1993 ("Deposit Agreement").
The Company hereby appoints you to act as Exchange Agent in connection with
the exchange of the Depositary Shares and the underlying Preferred Stock for
QUIDS pursuant to the Offer and by your acknowledgment and acceptance of this
Letter Agreement you hereby accept such appointment. You hereby agree that in
carrying out your duties as Exchange Agent, you are agent for the holders of the
Depositary Shares (the "Holders") and not for the Company, although the Company
shall pay your fees and expenses.
The Letter of Transmittal that accompanies the Offer to Exchange sent to
the Holders shall be used by the Holders to accept the Offer, and contains
instructions with respect to the delivery of certificates for the Depositary
Shares (the "Certificates").
In carrying out your duties as Exchange Agent, you are to act in accordance
with the Offer to Exchange, the Letter of Transmittal and the following
instructions and shall take such additional reasonable action as from time to
time may be reasonably requested and directed in writing by the Company:
1. Expiration Date. The Offer shall expire at , New
York City time, April , 1994 (the "Initial Expiration Date"), or at any
subsequent time to which the Company may extend the Offer by notice to you.
The later to occur of (i) the Initial Expiration Date or (ii) the latest
time and date at which the Offer, as extended by the Purchaser, shall
expire, is herein called the "Expiration Date").
2. Book-Entry Transfers. You are hereby directed to establish an
account with respect to the Depositary Shares at each of The Depository
Trust Company, the Philadelphia Depository Trust Company and the Midwest
Securities Trust Company (collectively referred to as the "Book Entry
Transfer Facilities") within two business days after the date of the Offer
to Exchange, as set forth in the Letter of Transmittal and the Offer to
Exchange, and you shall comply with the provisions of Rule 17Ad-14 under
the Securities Exchange Act of 1934, as amended. Any financial institution
that is a participant of the Book Entry Transfer Facilities'
<PAGE> 2
systems may, until the Expiration Date, make book-entry delivery of the
Depositary Shares by causing a Book Entry Transfer Facility to transfer
such Depositary Shares into your account in accordance with the procedure
for such transfer established by such Book Entry Transfer Facility.
3. Examination of Tenders. You are to examine each Letter of
Transmittal, Certificate, Notice of Guaranteed Delivery and other document,
if any, as required by the Letter of Transmittal, delivered or mailed to
you (or transmitted by facsimile transmission) by or for the Holders to
ascertain whether (i) each such Letter of Transmittal is duly executed and
properly completed in accordance with the instructions set forth therein
and in the Offer to Purchase, (ii) each such Notice of Guaranteed Delivery
and each other document, if any, is duly executed and properly completed in
accordance with the instructions set forth in the Offer to Purchase and the
Letter of Transmittal, (iii) all documents that are required to accompany
the Letter of Transmittal and Certificates or otherwise to be submitted
have been transmitted, delivered or mailed to you and (iv) the Depositary
Shares otherwise have been tendered in accordance with the instructions in
the Letter of Transmittal and the Offer to Exchange. You need not pass on
the legal sufficiency of any signature or verify any signature guarantee,
although you are to ascertain whether each signature or signature guarantee
required to appear on the Letter of Transmittal does so appear. You are not
authorized to accept any defective, alternative, conditional, or contingent
tender. In the event any Letter of Transmittal, any Notice of Guaranteed
Delivery or any other required document has been improperly completed or
executed, or any Certificate is not in proper form for transfer (as
required by the instructions set forth in the Letter of Transmittal), or if
some other irregularity in connection with acceptance of the Offer exists,
you shall endeavor, after consulting with the Company, to take such action
as may be necessary to cause such irregularity to be corrected. You are
authorized to request from any person tendering Depositary Shares such
additional documents or undertakings as you may deem appropriate, and you
are authorized to request resubmission by tendering Holders of defective or
incomplete Letters of Transmittal, Notices of Guaranteed Delivery or other
documents. You shall also diligently attempt to determine proper taxpayer
identification numbers in the event that such numbers have been omitted
from the relevant documents. If any such irregularity cannot be corrected,
after consulting with the Depositary you shall return the Certificate(s)
involved (or cause the transfer of such Depositary Shares into the account
at the appropriate Book Entry Transfer Facility of the person tendering
them, as the case may be) and any related documents to the person tendering
them (in the manner prescribed in Section 7 hereof). Determination of all
questions as to validity, form, eligibility (including time of receipt) and
acceptance of any tender of Depositary Shares, including questions as to
the proper completion or execution of a Letter of Transmittal, Notice of
Guaranteed Delivery or other required documents or as to the proper form
for transfer of the Certificates or as to any other irregularity in
connection with the acceptance of the Offer shall be made by the Company,
in its sole discretion, which determination shall be final and binding on
all tendering Holders. The Company shall have the absolute right to
determine whether to reject any or all tenders not in proper form or waive
any irregularities or conditions, and the Company's interpretation of the
Offer to Exchange and the Letter of Transmittal shall be final; provided,
however, that any decision by the Company to accept a nonconforming Letter
of Transmittal or to reject a Letter of Transmittal believed by you to be a
conforming Letter of Transmittal shall be set forth in an officer's
certificate of the Company and shall be accompanied by an indemnity from
the Company satisfactory to you, in your sole discretion, against any loss
(as hereinafter defined) which you may incur by reason of such acceptance
or rejection.
4. Conditions for Valid Tender; Time of Tender. Tenders of Depositary
Shares may be made only as set forth in the Offer to Exchange. Letters of
Transmittal and telegrams, telexes or letters submitted in lieu thereof
pursuant to the Offer to Exchange shall be noted by you as to the date and
time of receipt and shall be preserved and retained by you until delivered
to the Holder or otherwise disposed of in accordance with the Holder's
instructions. Any additional
<PAGE> 3
handling, copying or retention requests from the Holder shall be at the
Holder's expense. Depositary Shares will be considered validly tendered
only upon deposit with you prior to the Expiration Date of the relevant
Certificates, together with properly completed and duly executed Letters of
Transmittal or facsimile copies thereof and any other documents required by
the Offer to Exchange (or upon receipt by you of a Notice of Guaranteed
Delivery relating to such Depositary shares from an Eligible Institution
prior to the Expiration Date and receipt by you of the relevant
Certificates (or a book-entry confirmation relating thereto) and a properly
completed and duly executed Letter of Transmittal relating thereto within 5
New York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery) and only after you have passed upon the
adequacy of the items received as provided herein.
The tendering Holders specifically authorize you to withdraw under the
Deposit Agreement among the Company, the Depositary and the holders from
time to time of certificates for the Depositary Shares the Preferred Stock
underlying any tendered Depositary Shares, and to tender such underlying
Preferred Stock in the Exchange Offer.
5. Information and Reports. On each business day up to and including
the Expiration Date, you are to notify (telephone:
), (telephone: ), and the
representatives of Goldman, Sach & Co. who are identified to you in a
written notice from the Company, and such other persons as the Company may
reasonably request, of the aggregate number of Depositary Shares which have
been properly tendered pursuant to the Offer and the number properly
tendered that day and the other information set forth on Exhibit C hereto.
6. Acceptance and Payment. As soon as practicable after a Holder
notifies you of its election to exchange its Depositary Shares for QUIDS
and upon receipt by you of advice that the QUIDS have been deposited with
DTC you shall: (a) cause the Preferred Stock exchanged for the QUIDS to be
delivered to the Company, and (b) deliver over your window or send by
first-class mail postage pre-prepaid to, or at the direction of, the person
specified in each Letter of Transmittal relating to Depositary Shares that
are being exchanged your advice as to the delivery of the QUIDS to a
DTC-eligible Institution as described in the Offer to Exchange. Any
exceptions, alterations or deviations from the delivery mechanics described
in the Letter of Transmittal and the Offer to Exchange shall only be upon
the written instructions of the Company.
7. Return of Shares. If, pursuant to the terms of the Offer, the Offer
is terminated, Depositary Shares are tendered but withdrawn in the manner
provided in the Offer to Exchange or pursuant to the proration provisions
of the Offer to Exchange, Depositary Shares tendered are not accepted by
the Company, you shall promptly return to, or, upon the order of, the
tendering Holder, Certificates for Depositary Shares not tendered or
accepted, or to the extent required, submit to the Depositary for
reissuance to, or upon the order of, the tendering Holder, Certificates for
Depositary Shares not tendered or accepted, which Certificates shall be
returned to you for distribution to the Holders of such Depositary Shares.
Certificates for returned Depositary Shares shall be forwarded by
first-class mail under an existing insurance policy protecting you and the
Company and the Depositary from loss or liability arising out of the
non-receipt or non-delivery of such Certificates or by registered mail
insured separately for the replacement value of such Certificates.
8. Compensation of Depositary. For your services as Exchange Agent
hereunder, the Company shall pay you such fees agreed to in writing by you
and the Company. The Company shall also reimburse you for your reasonable
out-of-pocket expenses (including, but not limited to, reasonable counsel's
fees and expenses) in connection with entering into this Agreement and your
services hereunder promptly after submission to the Company of an itemized
statement in reasonable detail. This paragraph shall survive any
termination of this Agreement.
<PAGE> 4
9. Duties of Exchange Agent. As Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or in the Exhibits attached hereto which
form part of this Letter Agreement;
(b) will be regarded as making no representations and having no
responsibilities regarding the validity, sufficiency, value or genuiness
of any Certificates deposited with you hereunder, and will not be
required to and will not make any representation as to the validity,
value or genuiness of the Offer;
(c) will be regarded as making no representations and having no
responsibilities regarding the validity, sufficiency, adequacy or
accuracy of the Offer or the Letter of Transmittal or any other
disclosure materials delivered in connection therewith other than with
respect to information that you have provided in writing;
(d) shall not be obligated to take any legal action hereunder
without the prior written consent of the Company, and then only if you
shall have been furnished with an indemnity from the Company
satisfactory to you;
(e) may rely on and shall be protected in acting in reliance upon
any instruction, direction, officer's certificate, certificate,
instrument, opinion, notice, letter, telegram or other document
delivered to you and believed by you to be genuine and to have been
signed by the proper party or parties;
(f) may rely on and shall be protected and fully indemnified,
pursuant to paragraph 9 hereof, in acting upon the written or oral
instructions confirmed in writing by facsimile transmission with an
original delivered by guaranteed overnight courier with respect to any
matter relating to your acting as Depositary of the Company;
(g) may consult with counsel satisfactory to you (including counsel
for the Company), and the written opinion of such counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by you in reliance upon such opinion,
provided, that you shall promptly notify the Company of any action taken
or omitted by you in reliance upon such opinion; and
(h) shall not at any time advise any person tendering pursuant to
the Offer as to the wisdom of making such tender.
10. Indemnity. The Company shall indemnify, to the extent permitted by
law, and hold you harmless from and against any and all costs, damages,
actions, losses, liabilities, expenses and claims (including, but not
limited to, the reasonable fees and expenses of counsel ("Losses") incurred
by you as a result of, in connection with or arising out of the performance
by you of your duties under this Agreement or the compliance by you with
the instructions set forth herein or delivered hereunder, other than those
Losses resulting from your gross negligence, misconduct, bad faith or
breach of this Agreement. In no case shall the Company be liable with
respect to any claim against you unless you shall have notified the Company
of the written assertion of a claim against you or of any action commenced
against you, promptly after you shall have received any such written
assertion of a claim or shall have been served with the summons or other
first legal process, giving information as to the nature and basis of the
claim. The Company shall be entitled to participate in the defense of any
such claim or legal action and if the Company so elects at any time after
receipt of such notice, the Company may assume the defense of any suit
brought to enforce any such claim. Notwithstanding anything to the contrary
set forth herein, you shall be entitled to retain counsel of your choice in
any such suit and the Company shall pay the reasonable fees, expenses and
disbursements of such counsel only if the Company fails to retain counsel
reasonably satisfactory to you to defend such suit. This paragraph shall
survive any termination of this Agreement. You shall not settle any
litigation in
<PAGE> 5
connection with any claim or liability with respect to which you may seek
indemnification from the Company without the prior consent of the Company.
11. Notices. All notices and communications hereunder shall be in
writing and shall be deemed to be duly given if delivered or mailed first
class certified or registered mail, postage prepaid, or telecopied as
follows:
If to the Company: The Detroit Edison Company
2000 Second Avenue
Detroit, Michigan 48226
Attn: Vice President and Corporate Secretary
Telephone: 313-237-8667
Telecopy: 313-
If to you: Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street - 7th Floor
New York, NY 10006
Attn: Richard Etienne
Telephone: (212) 250-6255
Telecopy: (212) 250-3290
or such other address or telecopy number as any of the above may have
furnished to the other parties in writing for such purpose.
12. This Letter Agreement shall be construed and governed by the laws
of the State of New York.
13. This Agreement may not be modified orally. Any inconsistency
between this Agreement and the Offer to Exchange and related Letter of
Transmittal, as they may from time to time be amended, with respect to the
duties, liabilities and indemnification of you as Exchange Agent shall be
governed exclusively by this Letter Agreement.
14. This Letter Agreement and all of the obligations hereunder shall
be assumed by any and all successors and assigns of the Company.
<PAGE> 6
Please acknowledge receipt of this Letter Agreement and confirm your
agreement to the arrangement herein provided by signing and returning the
enclosed copy.
Very truly yours,
The Detroit Edison Company
By:
--------------------------------
Name:
Title:
Acknowledged, accepted and agreed to:
BANKERS TRUST COMPANY, AS EXCHANGE AGENT
By:
--------------------------------------------------------
Name:
Title:
Date:
