<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED COMMISSION FILE NUMBER
SEPTEMBER 30, 1995 1-2198
__________________________________
THE DETROIT EDISON COMPANY
(Exact name of registrant as specified in its charter)
MICHIGAN 38-0478650
(State of incorporation) (I.R.S. Employer
Identification No.)
2000 SECOND AVENUE, DETROIT, MICHIGAN 48226
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(313) 237-8000
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
----- -----
AT OCTOBER 31, 1995, 145,119,826 SHARES OF THE COMPANY'S $10 PAR VALUE COMMON
STOCK WERE OUTSTANDING.
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TABLE OF CONTENTS
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Page
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Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1 - Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . . 8
Independent Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Part II - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 26
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
DEFINITIONS
ABATE . . . . . . . . . . . . Association of Businesses Advocating Tariff Equity
Annual Report . . . . . . . . The Company's 1994 Annual Report to the Securities and
Exchange Commission on Form 10-K
Annual Report Notes . . . . . Notes to Consolidated Financial Statements appearing on
pages 37 through 48 of the Company's 1994 Annual Report
to the Securities and Exchange Commission on Form 10-K
Company . . . . . . . . . . . The Detroit Edison Company and subsidiary companies
Consumers . . . . . . . . . . Consumers Power Company
FERC . . . . . . . . . . . . Federal Energy Regulatory Commission
kWh . . . . . . . . . . . . . Kilowatthour
MPSC . . . . . . . . . . . . Michigan Public Service Commission
MW . . . . . . . . . . . . . Megawatts
Note(s) . . . . . . . . . . . Note(s) to Consolidated Financial Statements (Unaudited)
appearing herein
PSCR . . . . . . . . . . . . Power Supply Cost Recovery
Quarterly Report . . . . . . The Company's Quarterly Report to the Securities and
Exchange Commission on Form 10-Q for quarters ended
March 31, 1995 and June 30, 1995
Quarterly Report Notes . . . Notes to Consolidated Financial Statements (Unaudited)
appearing in the Company's Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for
quarters ended March 31, 1995 and June 30, 1995
QUIDS . . . . . . . . . . . . Quarterly Income Debt Securities
Registrant . . . . . . . . . The Detroit Edison Company
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED).
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
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1995 1994 1995 1994 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $ 1,008,450 $ 933,558 $ 2,710,411 $ 2,657,970 $ 3,500,793 $3,502,083
Electric - Interconnection 20,591 7,560 40,230 37,881 45,490 55,117
Steam 3,248 3,271 17,877 20,817 24,909 28,413
- ------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 1,032,289 $ 944,389 $ 2,768,518 $ 2,716,668 $ 3,571,192 $3,585,613
- ------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $ 193,675 $ 179,587 $ 538,867 $ 550,247 $ 707,835 $ 737,086
Purchased power 51,311 54,528 119,170 145,402 90,715 163,879
Other operation 195,323 166,588 481,694 454,435 648,325 633,658
Maintenance 66,406 65,177 178,780 187,982 253,207 248,193
Depreciation and amortization 125,383 122,696 375,057 358,743 492,730 466,497
Deferred Fermi 2 amortization (1,493) (1,866) (4,479) (5,599) (6,345) (7,839)
Amortization of deferred Fermi 2
depreciation and return 23,248 21,207 69,742 63,621 90,949 71,342
Taxes other than income 64,353 59,323 188,457 199,877 244,454 260,913
Income taxes 88,969 76,851 236,238 210,511 296,384 253,154
- ------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $ 807,175 $ 744,091 $ 2,183,526 $ 2,165,219 $ 2,818,254 $2,826,883
- ------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $ 225,114 $ 200,298 $ 584,992 $ 551,449 $ 752,938 $ 758,730
- ------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS
Allowance for other funds used
during construction $ 369 $ 581 $ 952 $ 1,574 $ 1,061 $ 2,372
Other income and (deductions) - net (7,637) (7,368) (25,913) (12,979) (37,906) (26,928)
Income taxes 1,550 1,632 7,720 3,557 12,274 8,651
Accretion income 2,677 3,332 8,536 10,468 11,712 21,387
Income taxes - disallowed plant costs and
accretion income (811) (1,037) (2,608) (3,272) (3,588) (6,934)
- ------------------------------------------------------------------------------------------------------------------------
Net Other Income and Deductions $ (3,852) $ (2,860) $ (11,313) $ (652) $ (16,447) $ (1,452)
- ------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 69,353 $ 66,353 $ 205,873 $ 205,957 $ 273,679 $ 277,955
Amortization of debt discount,
premium and expense 2,849 2,845 8,427 8,082 11,178 10,697
Other 1,698 4,361 7,912 13,584 5,498 14,929
Allowance for borrowed funds used
during construction (credit) (594) (502) (1,535) (1,360) (2,241) (1,508)
- ------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 73,306 $ 73,057 $ 220,677 $ 226,263 $ 288,114 $ 302,073
- ------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 147,956 $ 124,381 $ 353,002 $ 324,534 $ 448,377 $ 455,205
PREFERRED STOCK DIVIDEND REQUIREMENTS 6,544 7,409 21,355 22,232 28,763 29,645
- ------------------------------------------------------------------------------------------------------------------------
EARNINGS FOR COMMON STOCK $ 141,412 $ 116,972 $ 331,647 $ 302,302 $ 419,614 $ 425,560
========================================================================================================================
COMMON SHARES OUTSTANDING -
AVERAGE 144,905,909 145,669,721 144,882,040 146,586,449 144,876,686 146,701,827
EARNINGS PER SHARE $0.98 $0.80 $ 2.29 $ 2.06 $ 2.90 $ 2.90
DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK $0.515 $0.515 $1.545 $ 1.545 $ 2.06 $ 2.06
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
3
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THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
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UTILITY PROPERTIES
Plant in service
Electric $ 13,140,182 $ 12,941,414
Steam 70,890 69,813
- --------------------------------------------------------------------------------------------------------------
$ 13,211,072 $ 13,011,227
Less: Accumulated depreciation and amortization (4,855,888) (4,529,692)
- --------------------------------------------------------------------------------------------------------------
$ 8,355,184 $ 8,481,535
Construction work in progress 172,367 104,431
- --------------------------------------------------------------------------------------------------------------
Net utility properties $ 8,527,551 $ 8,585,966
- --------------------------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $99,130 and $94,678, respectively) $ 127,488 $ 134,542
Nuclear fuel under capital lease (less accumulated amortization
of $409,922 and $374,405, respectively) 162,349 193,411
- --------------------------------------------------------------------------------------------------------------
Net property under capital leases $ 289,837 $ 327,953
- --------------------------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,817,388 $ 8,913,919
- --------------------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 14,289 $ 11,281
Investments and special funds 29,216 18,722
Nuclear decommissioning trust funds 105,685 76,492
- --------------------------------------------------------------------------------------------------------------
$ 149,190 $ 106,495
- --------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 12,324 $ 8,122
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $27,000 and $30,000, respectively) 422,238 195,824
Other accounts receivable 41,845 34,212
Inventories (at average cost)
Fuel 155,667 136,331
Materials and supplies 142,432 155,921
Prepayments 42,660 10,516
- --------------------------------------------------------------------------------------------------------------
$ 817,166 $ 540,926
- --------------------------------------------------------------------------------------------------------------
DEFERRED DEBITS
Unamortized debt expense $ 45,458 $ 42,876
Unamortized loss on reacquired debt 122,035 123,996
Recoverable income taxes 626,546 663,101
Other postretirement benefits 26,126 36,562
Fermi 2 phase-in plan 321,022 390,764
Fermi 2 deferred amortization 56,738 52,259
Other 137,907 122,080
- --------------------------------------------------------------------------------------------------------------
$ 1,335,832 $ 1,431,638
- --------------------------------------------------------------------------------------------------------------
TOTAL $ 11,119,576 $ 10,992,978
==============================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
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THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
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CAPITALIZATION
Common stock - $10 par value, 400,000,000 shares authorized;
145,034,139 and 144,863,447 shares outstanding, respectively
(139,854 and 311,804 shares, respectively, reserved for conversion
of preferred stock) $ 1,450,341 $ 1,448,635
Premium on common stock 547,139 545,825
Common stock expense (47,528) (47,461)
Retained earnings used in the business 1,485,345 1,379,081
- ----------------------------------------------------------------------------------------------------------------
Total common shareholders' equity $ 3,435,297 $ 3,326,080
Cumulative preferred stock - $100 par value, 6,747,484 shares
authorized; 3,376,103 and 3,905,470 shares outstanding,
respectively (1,539,827 shares unissued)
Redeemable solely at the option of the Company 329,037 380,283
Long-term debt 3,855,687 3,825,296
- ----------------------------------------------------------------------------------------------------------------
Total Capitalization $ 7,620,021 $ 7,531,659
- ----------------------------------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 118,642 $ 126,076
Other postretirement benefits 42,595 37,143
Other 50,305 48,707
- ----------------------------------------------------------------------------------------------------------------
$ 211,542 $ 211,926
- ----------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ 3,000 $ 39,489
Amounts due within one year
Long-term debt 19,214 19,214
Obligations under capital leases 171,195 201,877
Accounts payable 152,967 147,020
Property and general taxes 17,733 31,608
Income taxes 52,606 5,304
Accumulated deferred income taxes 32,712 32,625
Interest 79,373 60,214
Dividends payable 81,083 82,012
Payrolls 83,254 71,958
Fermi 2 refueling outage 11,080 1,267
Other 110,148 97,215
- ----------------------------------------------------------------------------------------------------------------
$ 814,365 $ 789,803
- ----------------------------------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,038,917 $ 2,014,821
Accumulated deferred investment tax credits 335,101 346,379
Other 99,630 98,390
- ----------------------------------------------------------------------------------------------------------------
$ 2,473,648 $ 2,459,590
- ----------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 6)
- ----------------------------------------------------------------------------------------------------------------
TOTAL $ 11,119,576 $ 10,992,978
================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
5
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THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
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1995 1994 1995 1994 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 147,956 $ 124,381 $ 353,002 $ 324,534 $ 448,377 $ 455,205
Adjustments to reconcile net income
to net cash from operating activities:
Accretion income (2,677) (3,332) (8,536) (10,468) (11,712) (21,387)
Depreciation and amortization 125,383 122,696 375,057 358,743 492,730 466,497
Deferred Fermi 2 amortization,
depreciation and return - net 21,755 19,341 65,263 58,022 84,604 63,503
Deferred income taxes and investment
tax credit - net 9,328 4,001 49,411 54,076 88,622 61,395
Fermi 2 refueling outage - net 3,058 (7,634) 9,813 (20,774) 11,080 (16,856)
Other 8,615 42,061 7,837 12,674 (35,929) 48,497
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (33,935) 1,669 (226,414) 5,475 (232,394) (369)
Other accounts receivable (4,159) 9,260 (7,633) 6,909 (22,135) 11,292
Inventories 16,117 (2,654) (11,547) 3,895 (17,216) (5,799)
Accounts payable 12,495 (19,799) 7,352 (28,725) 22,219 (973)
Taxes payable 20,777 5,940 34,031 (77) 16,077 (27,344)
Interest payable 20,273 (8,478) 19,159 (6,639) 19,624 (10,327)
Other 13,880 8,836 (10,049) (20,527) 8,289 18,449
- ------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 358,866 $ 296,288 $ 656,746 $ 737,118 $ 872,236 $1,041,783
- ------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $(113,148) $ (87,863) $(293,126) $(259,038) $(400,480) $ (386,511)
Purchase of leased equipment - - - (11,500) - (11,500)
Nuclear decommissioning trust funds (5,901) (10,428) (29,193) (39,064) (36,692) (40,451)
Non-utility investments 1,173 (767) 1,993 (1,287) (9,563) (1,337)
Changes in current assets and liabilities 9,413 3,761 5,825 1,271 9,596 8,315
Other (24,668) (11,980) (30,632) (2,863) (39,306) (7,342)
- ------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $(133,131) $(107,277) $(345,133) $(312,481) $(476,445) $ (438,826)
- ------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Sale of long-term debt $ - $ 200,000 $ - $ 200,000 $ - $ 360,000
Funds received from trustees 22,175 2,850 22,175 10,385 62,260 75,385
Decrease in short-term borrowings (138,877) (14,464) (36,489) (60,732) (74,472) (25,502)
Redemption of long-term debt (22,175) (221,135) (41,389) (247,884) (51,539) (587,599)
Premiums on reacquired long-term debt
and preferred stock (565) (11,058) (565) (11,271) (857) (27,766)
Purchase of common stock - (59,855) - (59,855) - (59,855)
Dividends on common and preferred stock (82,018) (83,146) (246,044) (249,434) (328,055) (332,575)
0ther (4,636) (1,147) (5,099) (1,680) (6,041) (3,309)
- ------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $(226,096) $(187,955) $(307,411) $(420,471) $(398,704) $ (601,221)
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND
TEMPORARY CASH INVESTMENTS $ (361) $ 1,056 $ 4,202 $ 4,166 $ (2,913) $ 1,736
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 12,685 14,181 8,122 11,071 15,237 13,501
- ------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF THE PERIOD $ 12,324 $ 15,237 $ 12,324 $ 15,237 $ 12,324 $ 15,237
========================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest
capitalized) $ 49,199 $ 77,993 $ 188,898 $ 222,777 $ 255,496 $ 298,112
Income taxes paid 60,757 67,274 137,237 136,479 183,930 219,979
New capital lease obligations 6,564 1,787 4,455 7,689 6,093 11,426
Exchange of preferred stock for
long-term debt 49,878 - 49,878 - 49,878 -
========================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Common Stock Premium Retained
------------------------- on Common Earnings
$10 Par Common Stock Used in the
Shares Value Stock Expense Business
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<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 144,863,447 $1,448,635 $545,825 $ (47,461) $ 1,379,081
Issuance of common stock on conversion
of convertible cumulative preferred
stock, 5 1/2% series 170,692 1,706 1,314 (67)
Expense associated with preferred
stock redeemed (1,624)
Net income 353,002
Cash dividends declared
Common stock - $1.545 per share (223,897)
Cumulative preferred stock* (21,217)
- ---------------------------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1995 145,034,139 $1,450,341 $547,139 $ (47,528) $ 1,485,345
===============================================================================================================
*At established rate for each series.
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
7
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - ANNUAL REPORT NOTES
These consolidated financial statements (unaudited) should be read in
conjunction with the Quarterly Report Notes and the Annual Report Notes. The
Notes contained herein update and supplement matters discussed in the Quarterly
Report Notes and the Annual Report Notes.
The preceding consolidated financial statements are unaudited, but, in
the opinion of the Company, include all adjustments necessary for a fair
statement of the results for the interim periods. 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.
NOTE 2 - FERMI 2
As discussed in Note 2 of the Annual Report Notes and Note 2 of the
Quarterly Report Notes, Fermi 2 was out of service in 1994. On December 25,
1993, the reactor automatically shut down following a turbine-generator
failure. Major repairs were completed in 1994 and early 1995. The unit was
operating at 878 MW at the end of September 1995 and the unit's capacity factor
was 44% for the nine-month period ended September 30, 1995. The Company
expects that most repair costs related to returning the Fermi 2
turbine-generator to service will be covered by insurance. These costs are
estimated to be approximately $80 million. The Company has received partial
insurance payments of $45 million for property damage through September 30,
1995. In addition, the Company has received insurance payments of $71.5
million for replacement power costs through September 30, 1995.
The Company is currently operating Fermi 2 without the large seventh and
eighth stage turbine blades. The new turbine shafts and blades are being
manufactured for the plant's three low-pressure turbines and will be installed
during the next refueling outage in 1996.
The expected cost of replacing the major turbine components in 1996 has
been increased from between $30 million and $40 million to between $45 million
and $50 million. These costs will not be covered by insurance. These costs
will be capitalized and are expected to be recovered in rates because such
costs are less than the cumulative amount available under the cap on Fermi 2
capital expenditures, a provision of the MPSC's December 1988 order.
NOTE 3 - RATE MATTERS
As discussed in Note 3 of the Annual Report Notes and Note 3 of the
Quarterly Report Notes, Fermi 2 was out of service in 1994 and will operate at
a reduced power output until the installation of major turbine components
during the next refueling
8
<PAGE> 9
outage in 1996. Therefore, the three-year rolling average capacity factor
utilized in the Fermi 2 performance standard calculation will be unfavorably
affected in 1995-1998, which will result in an estimated capacity factor
disallowance in the range of $40 million to $55 million. The plant's
three-year rolling average capacity factor was 53.7% for 1994 utilizing a
capacity of 1,093 MW for 1992 and 1993 and 1,139 MW for 1994. The three-year
rolling average capacity factor for the top 50% of U.S. boiling water reactors
was 78.6% for 1994. At September 30, 1995, the Company had accrued $45.5
million for the Fermi 2 capacity factor performance standard disallowances that
are expected to be imposed by the MPSC during the period 1995-1998, based on
the following assumptions:
a. Fermi 2 estimated three-year rolling average capacity factor of
44.4% in 1995, 34.6% in 1996, 64.1% in 1997 and 72.7% in 1998;
b. Estimated three-year rolling average capacity factor for the top
50% of U.S. boiling water reactors of 79% in 1995, 79.5% in 1996,
79.5% in 1997 and 80% in 1998;
c. Estimated incremental cost of replacement power of $8 per
megawatthour in 1995 and increasing to $11 per megawatthour in 1998.
NOTE 4 - SALE OF ACCOUNTS RECEIVABLE AND UNBILLED REVENUES
As discussed in Note 5 of the Annual Report Notes and Note 4 of the
Quarterly Report Notes, the Company has an agreement providing for the sale,
assignment and repurchase, from time to time, of an undivided ownership
interest in up to $200 million of the Company's customer accounts receivable
and unbilled revenues. At December 31, 1994, customer accounts receivable and
unbilled revenues in the Consolidated Balance Sheet were reduced by $200
million reflecting such sales. During the nine-month period ended September
30, 1995, customer accounts receivable and unbilled revenues increased as the
Company repurchased the $200 million. Therefore, at September 30, 1995, there
were no sales under this agreement.
NOTE 5 - LONG-TERM DEBT
In July 1995, the Company announced an offer to exchange up to 4,200,000
depositary shares, each representing a one-quarter interest in a share of the
Cumulative Preferred Stock, 7.75% Series, for up to $105,000,000 of the
Company's new 8.50% Deeply Subordinated QUIDS. On August 15, 1995, 1,995,108
depositary shares were accepted for exchange of $49,877,700 aggregate principal
amount of QUIDS.
The QUIDS will mature on September 30, 2025 and will bear interest at an
annual rate of 8.50%. Interest will be payable quarterly 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 New York Stock Exchange rules at any
time, to extend the interest payment period at any
9
<PAGE> 10
time and from time to time on the QUIDS for up to 20 consecutive quarterly
interest payment periods. As a consequence, quarterly interest payments on the
QUIDS would be deferred but would continue to accrue 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 DTE
Energy Company (formerly known as DTE Holdings, Inc.), for the purpose of, or
to enable the payment of, directly or indirectly, dividends on any equity
securities of DTE Energy Company.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
As discussed in Note 12 of the Annual Report Notes and in Note 5 of the
Quarterly Report Notes, on October 5, 1994, the Company (a 49% co-owner of the
Ludington Pumped Storage Plant) and all other parties to a 1986 state lawsuit
and a related FERC proceeding reached a tentative settlement. The settlement
remains contingent upon FERC and MPSC approval. FERC's decision, originally
expected by the end of the summer, is not anticipated before the end of the
year.
As discussed in Note 12 of the Annual Report Notes and in Note 5 of the
Quarterly Report Notes, the Company and 23 other potentially responsible
parties ("PRPs") have been involved since January 1989 with the Carter
Industrial superfund site in Detroit, Michigan. On May 22, 1995, the U.S.
District Court for the Eastern District of Michigan approved an Environmental
Protection Agency ("EPA") amendment to the Record of Decision regarding the
method of remediation of the site to allow removal and landfilling of the
contaminated soil, which will reduce the Company's portion of the cleanup costs
by $3-4 million. On July 14, 1995, the PRP group awarded a contract to
complete the remediation. There continues to be the possibility that EPA may,
through subsequent proceedings, require a cleanup of the sewer and sewer
outfall emptying into the Detroit River. At this time, it is impossible to
predict what further impact, if any, this matter will have upon the Company.
NOTE 7 - NEW ACCOUNTING STANDARD
As discussed in Note 6 of the Quarterly Report Notes for the quarter
ended June 30, 1995, in March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. This statement, which is effective for 1996 financial statements,
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The statement also requires that a loss be recognized whenever
a regulator excludes all or part of a regulatory asset from a company's
allowable costs. The Company is continuing to review SFAS 121,
10
<PAGE> 11
but does not expect that the application of this statement will have a material
impact on its financial position or results of operations based on the current
regulatory structure in which the Company operates.
_______________________________________
This Quarterly Report on Form 10-Q, including the report of Deloitte &
Touche LLP (on page 12) will automatically be incorporated by reference in the
Prospectuses constituting part of the Company's Registration Statements on Form
S-3 (Registration Nos. 33-50325, 33-53207, 33-57095 and 33-64296), and Form S-8
(Registration No. 33-32449), and Form S-4 (Registration No. 33-57545) of DTE
Holdings, Inc., filed under the Securities Act of 1933. Such report of
Deloitte & Touche LLP, however, is not a "report" or "part of the Registration
Statement" within the meaning of Sections 7 and 11 of the Securities Act of
1933 and the liability provisions of Section 11(a) of such Act do not apply.
11
<PAGE> 12
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
The Detroit Edison Company
We have reviewed the accompanying consolidated balance sheet of The
Detroit Edison Company and subsidiary companies as of September 30, 1995, and
the related consolidated statements of income and of cash flows for the
three-month, nine-month and twelve-month periods then ended, and the
consolidated statement of common shareholders' equity for the nine-month period
then ended. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
The interim financial statements as of September 30, 1994, and for the
three-month, nine-month and twelve-month periods then ended were reviewed by
other accountants whose report dated November 7, 1994 stated that they were not
aware of any material modifications that should be made to those statements in
order for them to be in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Detroit, Michigan
November 6, 1995
12
<PAGE> 13
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This analysis for the three, nine and twelve months ended September 30,
1995, as compared to the same periods in 1994, should be read in conjunction
with the consolidated financial statements (unaudited), the accompanying Notes,
the Quarterly Report Notes and the Annual Report Notes.
RESULTS OF OPERATIONS
Total and per share earnings for common stock increased in the three- and
nine-month periods due to higher electricity sales, reflecting the impact of
record summer temperatures and continued strong economic activity on the demand
for electricity. Operating revenues increased due to higher system sales, a
revenue reserve in 1994 for estimated Fermi 2 performance disallowances in
1994-1998 and higher revenues from interconnection sales, partially offset by
lower PSCR clause revenues and lower rates.
For the twelve-month period, as compared to the same period a year ago,
total earnings for common stock were slightly lower, while per share earnings
for common stock were the same as the prior period due to a decrease in average
common shares. A January 1994 order by the MPSC reduced rates by $78 million
annually and increased depreciation and other operation expenses. In addition,
accretion income decreased and amortization of the Fermi 2 nuclear power plant
phase-in plan increased significantly. Also, since Fermi 2 was down for repair
during 1994, the Company elected to upgrade various plant facilities, which
increased maintenance expense, and also established a revenue reserve for
estimated performance disallowances in 1994-1998. The decrease in earnings for
common stock was limited by higher system sales, lower property and Michigan
Single Business tax expenses and lower net interest charges.
At September 30, 1995, the book value of the Company's common
stock was $23.63 per share, an increase of $0.74 per share or 3.2% since
December 31, 1994. Return on average total common shareholders' equity was
12.4% and 12.8% for the twelve months ended September 30, 1995 and 1994,
respectively.
The ratio of earnings to fixed charges was 3.31 and 3.14 for the twelve
months ended September 30, 1995 and 1994, respectively. The ratio of earnings
to fixed charges and preferred stock dividend requirements for the 1995 and
1994 twelve-month periods was 2.89 and 2.76, respectively.
13
<PAGE> 14
OPERATING REVENUES
- ------------------------------------------------------------------------------
Total operating revenues increased (decreased), as compared to the same period
a year ago, due to the following factors:
<TABLE>
<CAPTION>
Three Nine Twelve
Months Months Months
------ ------ ------
(Millions)
<S> <C> <C> <C>
Rate changes
MPSC rate reduction $ - $ (5) $ (26)
Special manufacturing contracts (9) (18) (18)
PSCR Clause (17) (45) (83)
-----------------------------
(26) (68) (127)
System sales volume and mix 86 117 138
Interconnection sales 13 2 (10)
Fermi 2 capacity factor performance
standard reserve (see Note 3) 20 4 (7)
Other - net (5) (3) (8)
-----------------------------
Total $ 88 $ 52 $ (14)
=============================
</TABLE>
RATE CHANGES
The January 1994 MPSC rate order reduced the Company's rates by $78
million annually. In keeping with the MPSC's recognition of the need for
industrial customers to be competitive, the January 1994 rate reduction was
allocated among the various classes of customers approximately as follows:
Industrial - $43 million, Commercial - $24 million, Residential - $10 million
and Governmental - $1 million.
On March 23, 1995, the MPSC issued an order approving the Company's
10-year special manufacturing contracts with Chrysler Corporation, Ford Motor
Company and General Motors Corporation. The revenue reductions from these
contracts initially will amount to approximately $30 million annually and
increase to $50 million annually in 1999-2004, which the Company expects to
offset by further reducing its operating expenses.
The decreases in PSCR Clause revenues resulted from lower fuel and
purchased power expenses.
14
<PAGE> 15
kWh SALES
kWh sales increased (decreased), as compared to the same period a year
ago, as follows:
<TABLE>
<CAPTION>
Three Nine Twelve
Months Months Months
------ ------ ------
<S> <C> <C> <C>
Residential 20.8 % 7.3 % 5.5 %
Commercial 2.6 2.1 2.1
Industrial 0.5 3.2 3.6
Other (includes primarily sales for resale) 16.1 6.9 0.8
Total System 7.6 4.0 3.4
Interconnection 196.1 34.2 (5.3)
Total 13.4 5.5 2.9
</TABLE>
The increases in residential and commercial sales reflect substantially
warmer summer weather. Commercial sales also reflect an improvement in
economic conditions.
The increases in industrial sales reflect higher sales to automotive
customers, increased sales to other industrial customers and higher steel sales
for the nine-month and twelve-month periods due to strong demand from the
automotive and construction sectors and growth in exports. The increased sales
to other customers reflect increased load requirements of wholesale for resale
customers.
Interconnection sales increased in the three- and nine-month periods due
to the improved availability of energy for sale in meeting the increased demand
for energy during the warmer summer period.
OPERATING EXPENSES
- --------------------------------------------------------------------------------
FUEL AND PURCHASED POWER
Fuel and purchased power expenses increased (decreased), as compared to the
same period a year ago, due to the following factors:
<TABLE>
<CAPTION>
Three Nine Twelve
Months Months Months
------ ------ ------
(Millions)
<S> <C> <C> <C>
Net system output $ 33 $ 39 $ 29
Average unit cost (22) (68) (59)
Fermi 2 business interruption
insurance proceeds - (5) (71)
Other - (4) (1)
----------------------------------------------------
Total $ 11 $ (38) $ (102)
====================================================
</TABLE>
15
<PAGE> 16
Net system output and average unit costs were as follows:
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
------------ ----------- -------------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
(Thousands of Megawatthours, "MWh")
<S> <C> <C> <C> <C> <C> <C>
Power plant generation
Fossil 10,830 10,738 31,517 31,999 41,961 41,866
Nuclear 1,917 - 3,240 - 3,207 2,086
Purchased power 2,018 2,083 4,724 5,245 6,077 5,586
-----------------------------------------------------------------------
Net system output 14,765 12,821 39,481 37,244 51,245 49,538
======================================================================
Average unit cost ($/MWh) $15.54 $17.04 $15.54 $17.27 $15.62 $16.77
======================================================================
</TABLE>
Fuel and purchased power expenses increased for the three-month period
due to higher net system output, partially offset by lower average unit cost.
For the nine- and twelve-month periods, fuel and purchased power expenses
decreased due to lower average unit costs resulting from the increased use of
lower-cost low sulfur western coal, an increase in lower cost nuclear
generation and the receipt of Fermi 2 business interruption insurance proceeds.
Fermi 2 was out of service in 1994 and early 1995 as a result of a
turbine-generator failure in December 1993.
OTHER OPERATION
Three Months
Other operation expense increased due to a reserve for the write-off of
obsolete and excess stock material ($15.0 million), higher storm expenses
($11.6 million), a reserve for settlement of the Ludington fish mortality case
($8.4 million), Electric Power Research Institute dues ($4.8 million) and
employee reorganization expenses ($2.6 million). These increases were
partially offset by expenses recorded in the year-earlier period for service
quality claims expenses ($8.7 million) and to lower nuclear plant ($4.6
million) and postretirement health care and life insurance benefits ($3.8
million) expenses.
Nine Months
Other operation expense increased due to a reserve for the write-off of
obsolete and excess stock material ($15.0 million), higher storm expenses
($10.7 million), a reserve for settlement of the Ludington fish mortality case
($8.4 million), incentive award expenses related to a shareholder value
improvement plan ($6.2 million), higher demand-side management expenses ($5.6
million), Electric Power Research Institute dues ($4.8 million) and higher
sales expenses ($4.2 million). These increases were partially offset by
expenses recorded in the year-earlier period for service quality claims ($8.7
million) and employee reorganization ($5.0 million) and by lower nuclear plant
($6.8 million) and employee retirement plan ($3.1 million) expenses.
16
<PAGE> 17
Twelve Months
Other operation expense increased due to a reserve for the write-off of
obsolete and excess stock material ($17.6 million), higher postretirement
health care and life insurance benefits ($17.4 million), higher storm expenses
($10.7 million), a reserve for settlement of the Ludington fish mortality case
($8.4 million), higher demand-side management expenses ($7.7 million), Electric
Power Research Institute dues ($4.8 million) and higher sales expenses ($4.2
million). These increases were partially offset by expenses recorded in the
year-earlier period for employee reorganizations ($18.2 million), a reserve for
steam purchases under the agreement with the Greater Detroit Resource Recovery
Authority ($11.0 million), and service quality claims ($8.7 million) and by
lower injuries and damages ($8.3 million), employee retirement plan ($4.0
million) and uncollectible customer account ($2.8 million) expenses.
MAINTENANCE
Three Months
Maintenance expense increased due to higher storm ($6.3 million) and
other transmission and distribution ($1.8 million) expenses, partially offset
by lower nuclear plant expenses ($7.4 million).
Nine Months
Maintenance expense decreased due to lower nuclear plant ($6.4 million)
and line clearance ($3.0 million) expenses.
Twelve Months
Maintenance expense increased due to higher nuclear plant ($4.8 million)
and fossil plant ($3.6 million) expenses, partially offset by lower line
clearance expenses ($4.3 million).
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased due to increases in plant
in service and increased Fermi 2 decommissioning costs authorized by a January
1994 MPSC rate order.
DEFERRED FERMI 2 AMORTIZATION
Deferred Fermi 2 amortization, a non-cash item of income, was recorded
beginning with the Company's purchase of the Wolverine Power Supply
Cooperative, Inc.'s ownership interest in Fermi 2 in February 1990. The annual
amount of deferred amortization decreases each year through 1999.
17
<PAGE> 18
AMORTIZATION OF DEFERRED FERMI 2 DEPRECIATION AND RETURN
Deferred Fermi 2 depreciation and return, non-cash items of income, were
recorded beginning with the implementation of the Fermi 2 rate phase-in plan in
January 1988. The annual amounts of deferred depreciation and return decreased
each year through 1992. Beginning in 1993 and continuing through 1998, these
deferred amounts will be amortized to operating expense as the cash recovery is
realized through revenues.
TAXES OTHER THAN INCOME TAXES
Three Months
Taxes other than income taxes increased due to higher property taxes,
partially offset by lower payroll and Michigan Single Business taxes.
Nine Months and Twelve Months
Taxes other than income taxes decreased due to lower property, payroll and
Michigan Single Business taxes.
INCOME TAXES
Three Months
Income taxes increased due to higher pretax income.
Nine Months
Income taxes increased due to higher pretax income and a tax reduction
recorded in the prior period related to the 1987-1988 Internal Revenue Service
audit.
Twelve Months
Income taxes increased due to higher pretax income, higher prior years'
federal income tax accrual and a tax reduction recorded in the prior period
related to the 1987-1988 Internal Revenue Service audit.
OTHER INCOME AND DEDUCTIONS
- -------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS) - NET
Nine Months
Other deductions increased due to promotional practices expenses ($8.9
million), expenses incurred in the formation of a holding company ($2.5
million) and the write-off of
18
<PAGE> 19
premiums and expenses ($1.7 million) related to a $20 million portion of 1989
Series A General and Refunding Mortgage Bonds not refinanced.
Twelve Months
Other deductions increased due to promotional practices expenses ($8.9
million), the write-off of premiums and expenses ($6.9 million) related to the
$70 million portion of 1989 Series A General and Refunding Mortgage Bonds not
refinanced and expenses incurred in the formation of a holding company ($2.5
million), partially offset by the accrual for decommissioning expenses for
Fermi 1 in the prior period ($7.6 million).
ACCRETION INCOME
Accretion income, a non-cash item of income, was recorded beginning in
January 1988 to restore to income, over the period 1988-1998, losses recorded
due to discounting indirect disallowances of plant costs. The annual amount of
accretion income recorded decreases each year through 1998. Also, effective in
January 1994, accretion income decreased due to the return to rate base of
Greenwood Unit No. 1.
INTEREST CHARGES
- --------------------------------------------------------------------------------
LONG-TERM DEBT
Three Months
Interest expense on long-term debt increased due to the timing of the
early redemption and refinancing of securities when economic and the additional
issuance of long-term debt.
Nine Months and Twelve Months
Interest expense on long-term debt decreased due to the early redemption
and refinancing of securities when economic and the redemption of maturing
securities.
OTHER
Three Months
Other interest expense decreased due primarily to lower levels of short-
term borrowings.
Nine Months and Twelve Months
Other interest expense decreased due to expense recorded in the
year-earlier period for prior years' Michigan Single Business Tax audits and
the settlement of 1987 and 1988 federal income tax audits and lower levels of
short-term borrowings.
19
<PAGE> 20
LIQUIDITY AND CAPITAL RESOURCES
FERMI 2
Fermi 2 was out of service during 1994. On December 25, 1993, the reactor
automatically shut down following a turbine-generator failure. The Company is
currently operating Fermi 2 without the large seventh and eighth stage turbine
blades. The new turbine shafts and blades are being manufactured for the
plant's three low-pressure turbines and will be installed during the next
refueling outage in 1996.
The expected cost of replacing the major turbine components in 1996 has
been increased from between $30 million and $40 million to between $45 million
and $50 million. These costs will not be covered by insurance. These costs
will be capitalized and are expected to be recovered in rates because such
costs are less than the cumulative amount available under the cap on Fermi 2
capital expenditures, a provision of the MPSC's December 1988 order.
CASH GENERATION AND CASH REQUIREMENTS
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Net cash from operating activities increased in the three-month period due
to changes in current assets and liabilities and higher net income.
Net cash from operating activities decreased in the nine- and twelve-month
periods due primarily to changes in current assets and liabilities, primarily
as a result of the repurchase of $200 million of customer accounts receivable
and unbilled revenues.
Net cash used for investing activities was higher in the three-month
period due primarily to increased plant and equipment expenditures. Net cash
used for investing activities was higher in the nine- and twelve-month periods
due to increased funding of utility investments, increased plant and equipment
expenditures and, for the twelve-month period, higher non-utility investments,
partially offset by purchases of leased equipment in the prior periods.
Net cash used for financing activities increased in the three-month period
due primarily to a decrease in short-term borrowings, partially offset by the
one-time purchase in the prior period of common stock from the trustee of the
Detroit Edison Savings & Investment Plans as a result of a plan change. Net
cash used for financing activities decreased in the nine- and twelve-month
periods due to reduced activity in the Company's extensive debt refinancing
program and the one-time purchase in the prior period of common stock from the
trustee of the Detroit Edison Savings & Investment Plans as a result of a plan
change.
20
<PAGE> 21
ADDITIONAL INFORMATION
In July 1995, the Company announced an offer to exchange up to 4,200,000
depositary shares, each representing a one-quarter interest in a share of the
Cumulative Preferred Stock, 7.75% Series, for up to $105,000,000 of the
Company's new 8.50% Deeply Subordinated QUIDS. On August 15, 1995, 1,995,108
depositary shares were accepted for exchange of $49,877,700 aggregate principal
amount of QUIDS.
On August 1, 1995, the Company issued $22,175,000 of its 1995 Series BP
Mortgage Bonds, 6.20%, due August 15, 2025, to collateralize its obligations
with respect to the Limited Obligation Refunding Revenue Bonds, Collateralized
Series 1995BB issued by the Michigan Strategic Fund. The proceeds of this
issue were used to refund $2,175,000 of the Michigan Strategic Fund Limited
Obligation Refunding Revenue Bonds, Series 1990 CC, 7%, on August 15, 1995, and
$20,000,000 of the County of Monroe, Michigan Pollution Control Revenue Bonds,
Series I-1985, 10.125%, on September 1, 1995.
On September 1, 1995, the Company issued $97,000,000 of its 1995 Series AP
Mortgage Bonds, 6.40%, due September 1, 2025, to collateralize its obligations
with respect to the Limited Obligation Refunding Revenue Bonds, Collateralized
Series 1995AA issued by the Michigan Strategic Fund. The Company intends to
use the proceeds of this issue to refund $97,000,000 of the County of Monroe,
Michigan Pollution Control Revenue Bonds, Series A-1985, 10.5%, on December 1,
1995.
On September 28, 1995, the Michigan Strategic Fund issued $82,350,000 of
Adjustable Rate Demand Limited Obligation Refunding Revenue Bonds, Series 1995
CC, due September 1, 2030, which are obligations of the Company under a Loan
Agreement. The bonds are in a floating interest rate mode. The proceeds of
this issue were used to refund $7,350,000 of the Michigan Strategic Fund
Limited Obligation Refunding Revenue Bonds, Series 1990 AA, 7.75%, on October
15, 1995, and will also be used to refund $75,000,000 of the County of Monroe,
Michigan Pollution Control Revenue Bonds, Series A-1985, 9.625%, on December 1,
1995.
The Company called for redemption, all of its outstanding shares of 5 1/2%
Series Convertible Cumulative Preferred Stock on October 15, 1995. The
redemption price was $100 per share. Stockholders had the right to convert
shares of the 5 1/2% Series Preferred Stock into shares of the Company's Common
Stock until the close of business on October 15, 1995. The conversion ratio
was 5.62 shares of Common Stock for each share of the 5 1/2% Series Preferred
Stock.
The Company's 1995 cash requirements for its capital expenditure program
are estimated at $422 million, of which $288 million had been expended as of
September 30, 1995.
The Company's internal cash generation in 1995 is expected to be
sufficient to meet cash requirements for capital expenditures as well as
scheduled redemptions not subject to refinancing.
21
<PAGE> 22
The Company had short-term credit arrangements of approximately $405
million at September 30, 1995, under which $3 million of borrowings were
outstanding.
CAPITALIZATION
- --------------------------------------------------------------------------------
The Company's capital structure as of September 30, 1995 was 45.1% common
shareholders' equity, 4.3% preferred stock and 50.6% long-term debt (including
$49,877,700 or 0.7% of Deeply Subordinated QUIDS) as compared to 44.2%, 5.0%
and 50.8%, respectively, at December 31, 1994.
COMPETITION
- --------------------------------------------------------------------------------
On December 5, 1994, the Company's Board of Directors approved the
formation of a holding company. The Company's shareholders approved this
organizational structure at the Company's April 24, 1995 Annual Meeting of
Common Shareholders. Since all regulatory approvals have been received, the
holding-company structure will be established January 1, 1996 as DTE Energy
Company ("DTE").
The Company's Common Stock will be exchanged share-for-share for the
common stock of DTE. The Company will become a subsidiary of DTE with DTE
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.
JULY 13-16, 1995 STORMS
- --------------------------------------------------------------------------------
On July 13, 15 and 16, severe weather conditions damaged property within
the Company's service area and caused numerous customer outages. As a result
of the severe weather, the Company incurred storm costs totaling approximately
$27 million. Of this amount, $19 million was charged to other operation and
maintenance expense, $3 million was capitalized and $5 million was recorded as
an insurance claim receivable.
The MPSC held public hearings during August 1995 to solicit public
comments on the Company's response to electric outages caused by the storm. On
October 6, 1995, the MPSC Staff filed its report reviewing the July 1995
storm-related distribution outages. The MPSC Staff report is generally
favorable concerning the performance of the Company in response to the storm,
but does include several recommendations that additional attention be directed
toward pockets of customers who are experiencing an unacceptably high frequency
of outages. In a report filed on October 20, 1995, the Company responded to
the MPSC that while it had fulfilled its storm-related reliability commitment
and in 1991 had put forth a three year plan to further improve reliability for
customers that had experienced outages, further improvements were essential.
In its report, the Company specifically recommended improvements to overall
service reliability and customer satisfaction with reliability through
implementing an enhanced reliability improvement plan for 1995-1997 and
specific service recovery strategies, establishing a customer ombudsman, and
improving
22
<PAGE> 23
customer communications and restoration estimates. Also, the Company
recommended establishing service standards for basic electric service
reliability of two or fewer sustained, non-catastrophic storm outages per year.
The MPSC may schedule further proceedings after review of the reports.
23
<PAGE> 24
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
On September 7, 1995, the Company, along with two other utilities,
filed a petition for review in the United States Court of Appeals for the
District of Columbia Circuit. The petition seeks to overturn a decision of the
United States Department of Energy ("DOE") that it does not have a legal
obligation to begin accepting spent nuclear fuel from nuclear utilities
commencing January 31, 1998. The petition seeks to affirm that such an
obligation exists and to establish court oversight of the development of a
schedule by the DOE to accept spent nuclear fuel by that date. This action has
been consolidated with existing litigation brought by a number of other
utilities as well as a number of states. The United States Court of Appeals
has granted a motion to expedite the briefing schedule and set oral arguments
for January 17, 1996.
See Note 6.
ITEM 5 - OTHER INFORMATION.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Competitive
Bidding" of the Annual Report and in Item 5 - Other Information of the
Quarterly Report for the quarter ended June 30, 1995, on May 1, 1995, the
Company filed its preliminary Request for Proposal ("RFP") to solicit bids for
the acquisition of new capacity starting in the year 2004. The filing
describes Detroit Edison's future requirements for additional generating
capacity and addresses the role competitive bidding will play in meeting that
capacity need. To better serve its customers in an increasingly competitive
marketplace, the Company is proposing customer load management options which
have the potential to provide an additional 500 MW of peak reduction by the
year 2003. On July 14, 1995, the Company updated its case to reflect the
MPSC's June 19, 1995 Retail Wheeling order. The Company filed, as required by
that MPSC order, a proposed retail wheeling tariff and proposal for
implementing the retail wheeling program. The need for capacity will determine
the retail wheeling program start date. On October 13, 1995, the MPSC Staff
submitted its direct testimony suggesting that Detroit Edison will need more
capacity by 1997 and that the experiment should begin in 1998.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Retail Wheeling"
of the Annual Report and in Item 5 - Other Information of the Quarterly Report
for the quarter ended June 30, 1995, the MPSC has been considering the
propriety of an experimental retail wheeling program. On May 8, 1995, the U.S.
District Court, Western District of Michigan, Southern Division, issued an
order granting the MPSC's Motion to Dismiss the Company's declaratory judgment
action in connection with the MPSC's April 11, 1994 interim order. On June 19,
1995, the MPSC issued a final order finding that an experimental retail
wheeling program is in the public interest and establishing rates and charges
for the five-year experimental program. Under the program, retail wheeling
customers would make their own
24
<PAGE> 25
arrangements to procure power. Implementation of the experimental program
would be limited to 90 MW for Detroit Edison and will be coordinated with the
Company's next solicitation of new capacity. On July 19, 1995, the Company
filed a claim of appeal with the Michigan Court of Appeals. Also, on July 19,
1995, Consumers, ABATE and Dow Chemical Company filed petitions for rehearing
and/or clarification of the June 19, 1995 order with the MPSC. On September 7,
1995, the MPSC issued an Order on Rehearing which left its previous orders
substantially unchanged. Consumers, ABATE and Dow Chemical Company have joined
Detroit Edison in filing claims of appeal with the Michigan Court of Appeals.
Briefs of Appellants are due on December 4, 1995.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission" of the Annual
Report and in Item 5 - Other Information of the Quarterly Report for the
quarter ended March 31, 1995, in 1994 the MPSC issued an order approving a
settlement agreement resolving the issues concerning the reconciliation of the
Company's 1993 PSCR plan. On March 30, 1995, the Company submitted its 1994
PSCR reconciliation filing with the MPSC. The application states that expenses
exceeded revenues by $49.9 million. However, after calculation of the Fermi 2
performance standard disallowance pursuant to the methodology approved by the
MPSC in a January 25, 1995 settlement agreement, the Company experienced a net
over-recovery of approximately $5 million. Subsequently, a partial settlement
agreement of $7.7 million is pending approval before the MPSC. The remaining
dispute, involving the Fermi 2 performance standard, is in litigation and a
MPSC order is expected in December 1995 or January 1996.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Conservation and
Demand-Side Management Programs" of the Annual Report, the January 21, 1994
MPSC order authorized a three-year $41.5 million Demand-Side Management ("DSM")
program. On September 1, 1994, the Company filed for approval of a DSM
surcharge for 1995. The Company's 1995 DSM plan includes measures which pass
the Ratepayer Impact Measure test and customer value DSM measures totaling $4.9
million. An MPSC order approving the Company's plan was issued July 31, 1995.
On September 1, 1995, the Company filed for approval to eliminate the DSM
surcharge, effective January 1, 1996.
On September 11, 1995, the Company filed an application with the MPSC
requesting ex parte approval of a long-term purchase of capacity and energy
from Ontario Hydro. The purchase is for 300 MW, on a seasonal basis from
mid-May through mid-September for the years 1996 through 2001. This purchase
will offset a concomitant agreement to lease 312 MW, of the Company's 917 MW
Ludington Pumped Storage Plant capacity entitlement, to the Toledo Edison
Company for essentially the same time period. The net economic effect of the
Ludington lease and the Ontario Hydro purchase will be to provide the Company's
customers with an estimated reduction in PSCR expense of $74 million which will
be passed through to customers through the PSCR clause. On October 25, 1995,
the MPSC issued an order approving the Company's long-term capacity purchase
from Ontario Hydro.
25
<PAGE> 26
An all time high peak demand of 10,049 MW was experienced for the
Company's system on August 14, 1995, with a reserve margin of 2.3%. The
previous peak was 9,878 MW set on June 19, 1995. The 1995 peak demand was
higher than projected due to extreme weather conditions. The lower than
projected reserve margin resulted from the high peak demand. Based on the
current load forecast and planned generating capability, the Company estimates
that its summer reserve margin, expressed as a percentage of peak demand, will
be approximately 17% for 1996 and 16% for 1997. Included as part of the 1996
and 1997 reserve margin projections are the Company's present and projected
capacity purchases and anticipated peak reductions due to the implementation of
various demand-side management programs, including the R-10 interruptible rate.
The 1996 and 1997 reserve margins are above the Company's current planning
criterion, which specifies a minimum reserve margin of 12%.
On October 31, 1995, Michigan Governor John Engler appointed David A.
Svanda to a term on the MPSC expiring July 2, 1997. The appointment is subject
to the advice and consent of the State Senate.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(i) Exhibits filed herewith.
Exhibit
Number
------
<TABLE>
<S> <C>
4-174 - Supplemental Indenture, dated as of August 1, 1995, establishing
the 1995 Series AP and 1995 Series BP Mortgage Bonds.
4-175 - Fourth Supplemental Note Indenture, dated as of August 15, 1995.
11-24 - Primary and Fully Diluted Earnings Per Share of Common Stock.
15-60 - Awareness Letter of Deloitte & Touche LLP regarding their report
dated November 6, 1995.
27-5 - Financial Data Schedule for the period ended September 30, 1995.
99-33 - Irrevocable Grantor Trust with respect to Deferring the payment of
Directors' Fees (August 1995).
99-34 - Irrevocable Grantor Trust with respect to Retirement Plan for Non-
Employee Directors (August 1995).
</TABLE>
26
<PAGE> 27
<TABLE>
<S> <C>
(ii) 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).
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
December 1, 1989 Exhibit 4-172 to Form 10-K for year ended December 31, 1994
February 15, 1990 Exhibit 4-173 to Form 10-K for year ended December 31, 1994
</TABLE>
27
<PAGE> 28
Exhibit
Number
------
<TABLE>
<S> <C>
November 1, 1990 Exhibit 4-110 to Form 10-K for year ended December 31, 1990
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
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
</TABLE>
28
<PAGE> 29
Exhibit
Number
-------
<TABLE>
<S> <C>
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-K 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) - 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).
99(a) - Belle River Participation Agreement between the Company and Michigan Public Power
Agency, dated as of December 1, 1982 (Exhibit 28-5 to Registration No. 2-81501).
99(b) - Belle River Transmission Ownership and Operating Agreement between the Company
and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-6 to
Registration No. 2-81501.)
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between
Renaissance Energy Company (an unaffiliated company) ("Renaissance") and the Company
(Exhibit 99-6 to Registration No. 33-50325).
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated as of
February 1, 1990, between the Company and Renaissance (Exhibit 99-7 to
Registration No. 33-50325).
</TABLE>
29
<PAGE> 30
Exhibit
Number
------
<TABLE>
<S> <C>
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement,
dated as of September 1, 1993, between the Company and
Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988,
between The Detroit Edison Company and Renaissance Energy Company
(Exhibit 99-21 to Form 10-Q for quarter ended September 30, 1994).
99(g) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993,
among the Company, Renaissance and Barclays Bank PLC, New York Branch,
as Agent (Exhibit 99-12 to Registration No. 33-50325).
99(h) - First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit
Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance
Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as
Agent (Exhibit 99-19 to Form 10-Q for quarter ended September 30, 1994).
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among the Company,
Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-13 to
Registration No. 33-50325).
99(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988,
between the Company and Renaissance (Exhibit 99-9 to Registration No. 33-50325).
99(k) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated as of February 1, 1990, between the Company and Renaissance (Exhibit 99-10 to
Registration No. 33-50325).
99(l) - Second Amendment, dated as of September 1, 1993, to 1988 Amended and Restated Nuclear
Fuel Heat Purchase Contract between the Company and Renaissance (Exhibit 99-11 to
Registration No. 33-50325).
</TABLE>
30
<PAGE> 31
Exhibit
Number
------
99(m) - First Amendment, dated as of September 1, 1994, to
$200,000,000 Three-Year Credit Agreement, dated as of
September 1, 1993, among The Detroit Edison Company,
Renaissance Energy Company, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent
(Exhibit 99-20 to Form 10-Q for quarter ended
September 30, 1994).
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the third
quarter of 1995.
31
<PAGE> 32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE DETROIT EDISON COMPANY
------------------------------------
(Registrant)
Date November 6, 1995 /s/ ELAINE M. GODFREY
---------------- ------------------------------------
Elaine M. Godfrey
Assistant Corporate Secretary
Date November 6, 1995 /s/ RONALD W. GRESENS
---------------- ------------------------------------
Ronald W. Gresens
Vice President and Controller
32
<PAGE> 33
The Detroit Edison Company
File No. 1-2198
Quarterly Report on Form 10-Q
for the Quarter ended September 30, 1995
Exhibit Index
<TABLE>
<CAPTION>
(a) Exhibits
(i) Exhibits filed herewith.
Exhibit Page
Number Number
------- ------
<S> <C>
4-174 - Supplemental Indenture, dated as of August 1, 1995, establishing
the 1995 Series AP and 1995 Series BP Mortgage Bonds.
4-175 - Fourth Supplemental Note Indenture, dated as of August 15, 1995.
11-24 - Primary and Fully Diluted Earnings Per Share of Common Stock.
15-60 - Awareness Letter of Deloitte & Touche LLP regarding their report dated
November 6, 1995.
27-5 - Financial Data Schedule for the period ended September 30, 1995.
99-33 - Irrevocable Grantor Trust with respect to Deferring the payment of
Directors' Fees (August 1995).
99-34 - Irrevocable Grantor Trust with respect to Retirement Plan for Non-Employee
Directors (August 1995).
See Page
Numbers ________
through _______
for location
of Exhibits
Incorporated
by reference
(ii) 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.
</TABLE>
1
<PAGE> 34
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.
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
December 1, 1989
February 15, 1990
November 1, 1990
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 (1993 Series AP)
June 30, 1993 (1993 Series H)
2
<PAGE> 35
September 15, 1993
March 1, 1994
June 15, 1994
August 15, 1994
December 1, 1994
<TABLE>
<CAPTION>
Exhibit
Number
- ------
<S> <C>
4(f) - Collateral Trust Indenture (notes), dated 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.
4(i) - Third Supplemental Note Indenture, dated as of August 15, 1994.
4(j) - 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.
99(a) - Belle River Participation Agreement between the Company and Michigan Public Power Agency,
dated as of December 1, 1982.
99(b) - Belle River Transmission Ownership and Operating Agreement between the Company and Michigan
Public Power Agency, dated as of December 1, 1982.
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance
Energy Company (an unaffiliated company) ("Renaissance") and the Company.
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February February 1, 1990
between the Company and Renaissance.
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993,
between the Company and Renaissance.
99(f) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated October 4, 1988, between The Detroit Edison Company and Renaissance
Energy Company.
99(g) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among the Company,
Renaissance and Barclays Bank PLC, New York Branch, as Agent.
99(h) - First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement,
dated September 1, 1993, among The Detroit Edison Company, Renaissance
</TABLE>
3
<PAGE> 36
Energy Company, the Banks party thereto and Barclays Bank,
PLC, New York Branch, as Agent.
99(i) - $200,000,000 Three-Year Credit Agreement, dated
September 1, 1993, among the Company, Renaissance and
Barclays Bank PLC, New York Branch, as Agent.
99(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase
Contract, dated October 4, 1988, between the Company and
Renaissance.
99(k) - First Amendment to 1988 Amended and Restated Nuclear Fuel
Heat Purchase Contract, dated as of February 1, 1990,
between the Company and Renaissance.
99(l) - Second Amendment, dated as of September 1, 1993, to 1988
Amended and Restated Nuclear Fuel Heat Purchase Contract
between the Company and Renaissance.
99(m) - First Amendment, dated as of September 1, 1994, to
$200,000,000 Three-Year Credit Agreement, dated as of
September 1, 1993, among The Detroit Edison Company,
Renaissance Energy Company, the Banks party thereto
and Barclays Bank, PLC, New York Branch, as Agent.
4
<PAGE> 1
EXHIBIT 4-174
THE DETROIT EDISON COMPANY
(2000 Second Avenue,
Detroit, Michigan 48226)
TO
BANKERS TRUST COMPANY
(Four Albany Street,
New York, New York 10015)
AS TRUSTEE
------------------------
INDENTURE
Dated as of August 1, 1995
------------------------
SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST
DATED AS OF OCTOBER 1, 1924
PROVIDING FOR
(A) GENERAL AND REFUNDING MORTGAGE BONDS,
1995 SERIES AP, DUE SEPTEMBER 1, 2025
(B) GENERAL AND REFUNDING MORTGAGE BONDS,
1995 SERIES BP, DUE AUGUST 15, 2025
AND
(C) RECORDING AND FILING DATA
<PAGE> 2
i
TABLE OF CONTENTS*
------------------------
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
PARTIES.............................................................. 1
RECITALS
Original Indenture and Supplementals............................... 1
Issue of Bonds under Indenture..................................... 1
Bonds heretofore issued............................................ 1
Reason for creation of new series.................................. 5
Bonds to be 1995 Series AP and 1995 Series BP...................... 5
Further Assurance.................................................. 5
Authorization of Supplemental Indenture............................ 5
Consideration for Supplemental Indenture........................... 5
PART I.
CREATION OF THREE HUNDRED EIGHTEENTH
SERIES OF BONDS
GENERAL AND REFUNDING MORTGAGE BONDS,
1995 SERIES AP
Sec. 1. Certain terms of Bonds of 1995 Series AP..................... 6
Sec. 2. Redemption of Bonds of 1995 Series AP........................ 8
Sec. 3.Redemption of Bonds of 1995 Series AP in event of acceleration
of Strategic Fund Revenue Bonds............................... 8
Sec. 4. Form of Bonds of 1995 Series AP.............................. 9
Form of Trustee's Certificate................................ 14
PART II.
CREATION OF THREE HUNDRED NINETEENTH
SERIES OF BONDS
GENERAL AND REFUNDING MORTGAGE BONDS,
1995 SERIES BP
Sec. 1. Certain terms of Bonds of 1995 Series BP..................... 15
Sec. 2. Redemption of Bonds of 1995 Series BP........................ 17
Sec. 3.Redemption of Bonds of 1995 Series BP in event of acceleration
of Strategic Fund Revenue Bonds............................... 17
Sec. 4. Form of Bonds of 1995 Series BP.............................. 18
Form of Trustee's Certificate................................ 23
PART III.
RECORDING AND FILING DATA
Recording and filing of Original Indenture........................... 24
Recording and filing of Supplemental Indentures...................... 24
Recording of Certificates of Provision for Payment................... 30
PART IV.
THE TRUSTEE
Terms and conditions of acceptance of trust by Trustee............... 30
PART V.
MISCELLANEOUS
Confirmation of Section 318(c) of Trust Indenture Act................ 30
Execution in Counterparts............................................ 30
Testimonium.......................................................... 31
Execution............................................................ 31
Acknowledgement of execution by Company.............................. 31
Acknowledgement of execution by Trustee.............................. 32
Affidavit as to consideration and good faith......................... 33
</TABLE>
- ------------------------
* This Table of Contents shall not have any bearing upon the interpretation of
any of the terms or provisions of this Indenture.
<PAGE> 3
1
<TABLE>
<S> <C>
PARTIES. SUPPLEMENTAL INDENTURE, dated as of the first day of August, in the year
one thousand nine hundred and ninety-five, between THE DETROIT EDISON
COMPANY, a corporation organized and existing under the laws of the State
of Michigan and a transmitting utility (hereinafter called the "Company"),
party of the first part, and BANKERS TRUST COMPANY, a corporation
organized and existing under the laws of the State of New York, having its
corporate trust office at Four Albany Street, in the Borough of Manhattan,
The City and State of New York, as Trustee under the Mortgage and Deed of
Trust hereinafter mentioned (hereinafter called the "Trustee"), party of
the second part.
ORIGINAL WHEREAS, the Company has heretofore executed and delivered its Mortgage
INDENTURE AND and Deed of Trust (hereinafter referred to as the "Original Indenture"),
SUPPLEMENTALS. dated as of October 1, 1924, to the Trustee, for the security of all bonds
of the Company outstanding thereunder, and pursuant to the terms and
provisions of the Original Indenture, indentures dated as of,
respectively, June 1, 1925, August 1, 1927, February 1, 1931, June 1,
1931, October 1, 1932, September 25, 1935, September 1, 1936, November 1,
1936, February 1, 1940, December 1, 1940, September 1, 1947, March 1,
1950, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954,
May 15, 1955, August 15, 1957, June 1, 1959, December 1, 1966, October 1,
1968, December 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971,
November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January
15, 1975, November 1, 1975, December 15, 1975, February 1, 1976, June 15,
1976, July 15, 1976, February 15, 1977, March 1, 1977, June 15, 1977, July
1, 1977, October 1, 1977, June 1, 1978, October 15, 1978, March 15, 1979,
July 1, 1979, September 1, 1979, September 15, 1979, January 1, 1980,
April 1, 1980, August 15, 1980, August 1, 1981, November 1, 1981, June 30,
1982, August 15, 1982, June 1, 1983, October 1, 1984, May 1, 1985, May 15,
1985, October 15, 1985, April 1, 1986, August 15, 1986, November 30, 1986,
January 31, 1987, April 1, 1987, August 15, 1987, November 30, 1987, June
15, 1989, July 15, 1989, December 1, 1989, February 15, 1990, November 1,
1990, 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, December 15, 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 and December 1, 1994
supplemental to the Original Indenture, have heretofore been entered into
between the Company and the Trustee (the Original Indenture and all
indentures supplemental thereto together being hereinafter sometimes
referred to as the "Indenture"); and
ISSUE OF WHEREAS, the Indenture provides that said bonds shall be issuable in one
BONDS UNDER or more series, and makes provision that the rates of interest and dates
INDENTURE. for the payment thereof, the date of maturity or dates of maturity, if of
serial maturity, the terms and rates of optional redemption (if
redeemable), the forms of registered bonds without coupons of any series
and any other provisions and agreements in respect thereof, in the
Indenture provided and permitted, as the Board of Directors may determine,
may be expressed in a supplemental indenture to be made by the Company to
the Trustee thereunder; and
BONDS HERETOFORE WHEREAS, bonds in the principal amount of Eight billion three hundred
ISSUED. twenty- eight million five hundred seventy-seven thousand dollars
($8,328,577,000) have heretofore been issued under the indenture as
follows, viz:
(1) Bonds of Series A -- Principal Amount $26,016,000,
(2) Bonds of Series B -- Principal Amount $23,000,000,
(3) Bonds of Series C -- Principal Amount $20,000,000,
(4) Bonds of Series D -- Principal Amount $50,000,000,
(5) Bonds of Series E -- Principal Amount $15,000,000,
(6) Bonds of Series F -- Principal Amount $49,000,000,
(7) Bonds of Series G -- Principal Amount $35,000,000,
(8) Bonds of Series H -- Principal Amount $50,000,000,
(9) Bonds of Series I -- Principal Amount $60,000,000,
(10) Bonds of Series J -- Principal Amount $35,000,000,
(11) Bonds of Series K -- Principal Amount $40,000,000,
(12) Bonds of Series L -- Principal Amount $24,000,000,
(13) Bonds of Series M -- Principal Amount $40,000,000,
</TABLE>
<PAGE> 4
2
<TABLE>
<C> <S> <C>
(14) Bonds of Series N -- Principal Amount $40,000,000,
(15) Bonds of Series O -- Principal Amount $60,000,000,
(16) Bonds of Series P -- Principal Amount $70,000,000,
(17) Bonds of Series Q -- Principal Amount $40,000,000,
(18) Bonds of Series W -- Principal Amount $50,000,000,
(19) Bonds of Series AA -- Principal Amount $100,000,000,
(20) Bonds of Series BB -- Principal Amount $50,000,000,
(21) Bonds of Series CC -- Principal Amount $50,000,000,
(22) Bonds of Series UU -- Principal Amount $100,000,000,
(23-31) Bonds of Series DDP Nos. 1-9 -- Principal Amount $14,305,000,
(32-45) Bonds of Series FFR Nos. 1-14 -- Principal Amount $45,600,000,
(46-67) Bonds of Series GGP Nos. 1-22 -- Principal Amount $42,300,000,
(68) Bonds of Series HH -- Principal Amount $50,000,000,
(69-90) Bonds of Series IIP Nos. 1-22 -- Principal Amount $3,750,000,
(91-98) Bonds of Series JJP Nos. 1-8 -- Principal Amount $6,850,000,
(99-106) Bonds of Series KKP Nos. 1-8 -- Principal Amount $14,890,000,
(107-121) Bonds of Series LLP Nos. 1-15 -- Principal Amount $8,850,000,
(122-142) Bonds of Series NNP Nos. 1-21 -- Principal Amount $47,950,000,
(143-160) Bonds of Series OOP Nos. 1-18 -- Principal Amount $18,880,000,
(161-179) Bonds of Series QQP Nos. 1-19 -- Principal Amount $13,650,000,
(180-194) Bonds of Series TTP Nos. 1-15 -- Principal Amount $3,800,000,
(195) Bonds of 1980 Series A -- Principal Amount $50,000,000,
(196-220) Bonds of 1980 Series CP Nos.
1-25 -- Principal Amount $35,000,000,
(221-231) Bonds of 1980 Series DP Nos.
1-11 -- Principal Amount $10,750,000,
(232-247) Bonds of 1981 Series AP Nos.
1-16 -- Principal Amount $124,000,000,
(248) Bonds of 1985 Series A -- Principal Amount $35,000,000,
(249) Bonds of 1985 Series B -- Principal Amount $50,000,000,
(250) Bonds of Series PP -- Principal Amount $70,000,000,
(251) Bonds of Series RR -- Principal Amount $70,000,000,
(252) Bonds of Series EE -- Principal Amount $50,000,000,
(253-254) Bonds of Series MMP and MMP No.
2 -- Principal Amount $5,430,000,
(255) Bonds of Series T -- Principal Amount $75,000,000,
(256) Bonds of Series U -- Principal Amount $75,000,000,
(257) Bonds of 1986 Series B -- Principal Amount $100,000,000,
(258) Bonds of 1987 Series D -- Principal Amount $250,000,000,
(259) Bonds of 1987 Series E -- Principal Amount $150,000,000,
(260) Bonds of 1987 Series C -- Principal Amount $225,000,000,
(261) Bonds of Series V -- Principal Amount $100,000,000,
(262) Bonds of Series SS -- Principal Amount $150,000,000,
(263) Bonds of 1980 Series B -- Principal Amount $100,000,000,
(264) Bonds of 1986 Series C -- Principal Amount $200,000,000,
(265) Bonds of 1986 Series A -- Principal Amount $200,000,000,
(266) Bonds of 1987 Series B -- Principal Amount $175,000,000,
(267) Bonds of Series X -- Principal Amount $100,000,000,
(268) Bonds of 1987 Series F -- Principal Amount $200,000,000,
(269) Bonds of 1987 Series A -- Principal Amount $300,000,000,
(270) Bonds of Series Y -- Principal Amount $60,000,000,
(271) Bonds of Series Z -- Principal Amount $100,000,000,
(272) Bonds of 1989 Series A -- Principal Amount $300,000,000,
(273) Bonds of 1984 Series AP -- Principal Amount $2,400,000
(274) Bonds of 1984 Series BP -- Principal Amount $7,750,000
all of which have either been retired and cancelled, or no longer
represent obligations of the Company, having been called for redemption
and funds necessary to effect the payment, redemption and retirement
thereof having been deposited with the Trustee as a special trust fund to
be applied for such purpose;
</TABLE>
<PAGE> 5
3
<TABLE>
<S> <C>
(275) Bonds of Series R in the principal amount of One hundred million
dollars ($100,000,000), all of which are outstanding at the date hereof;
(276) Bonds of Series S in the principal amount of One hundred fifty
million dollars ($150,000,000), all of which are outstanding at the date
hereof;
(277-283) Bonds of Series KKP Nos. 9-15 in the principal amount of One
hundred ninety-nine million five hundred ninety thousand dollars
($199,590,000), all of which are outstanding at the date hereof;
(284) Bonds of 1989 Series BP in the principal amount of Sixty-six million
five hundred sixty-five thousand dollars ($66,565,000), all of which are
outstanding at the date hereof;
(285) Bonds of 1990 Series A in the principal amount of One hundred
ninety-four million six hundred forty-nine thousand dollars
($194,649,000) of which Thirty-seven million six hundred seventy-four
thousand dollars ($37,674,000) principal amount have heretofore been
retired and One hundred fifty-six million nine hundred seventy-five
thousand dollars ($156,975,000) principal amount are outstanding at the
date hereof;
(286) Bonds of 1990 Series B in the principal amount of Two hundred
fifty-six million nine hundred thirty-two thousand dollars
($256,932,000) of which Fifty-seven million ninety-six thousand dollars
($57,096,000) principal amount have heretofore been retired and One
hundred ninety-nine million eight hundred thirty-six thousand dollars
($199,836,000) principal amount are outstanding at the date hereof;
(287) Bonds of 1990 Series C in the principal amount of Eighty-five
million four hundred seventy-five thousand dollars ($85,475,000) of
which Twenty million five hundred fourteen thousand dollars ($20,514,000)
principal amount have heretofore been retired and Sixty-four million nine
hundred sixty-one thousand dollars ($64,961,000) principal amount are
outstanding at the date hereof;
(288) Bonds of 1991 Series AP in the principal amount of Thirty-two
million three hundred seventy-five thousand dollars ($32,375,000), all
of which are outstanding at the date hereof;
(289) Bonds of 1991 Series BP in the principal amount of Twenty-five
million nine hundred ten thousand dollars ($25,910,000), all of which
are outstanding at the date hereof;
(290) Bonds of 1991 Series CP in the principal amount of Thirty-two
million eight hundred thousand dollars ($32,800,000), all of which are
outstanding at the date hereof;
(291) Bonds of 1991 Series DP in the principal amount of Thirty-seven
million six hundred thousand dollars ($37,600,000), all of which are
outstanding at the date hereof;
(292) Bonds of 1991 Series EP in the principal amount of Forty-one million
four hundred eighty thousand dollars ($41,480,000), all of which are
outstanding at the date hereof;
(293) Bonds of 1991 Series FP in the principal amount of Ninety-eight
million three hundred seventy-five thousand dollars ($98,375,000), all
of which are outstanding at the date hereof;
(294) Bonds of 1992 Series BP in the principal amount of Twenty million
nine hundred seventy-five thousand dollars ($20,975,000), all of which
are outstanding at the date hereof;
(295) Bonds of 1992 Series AP in the principal amount of Sixty-six million
dollars ($66,000,000), all of which are outstanding at the date hereof;
(296) Bonds of 1992 Series D in the principal amount of Three hundred
million dollars ($300,000,000), of which Ten million dollars
($10,000,000) principal amount have heretofore been retired and Two
hundred ninety million ($290,000,000) principal amount are outstanding at
the date hereof;
</TABLE>
<PAGE> 6
4
<TABLE>
<S> <C>
(297) Bonds of 1992 Series CP in the principal amount of Thirty-five
million dollars ($35,000,000), all of which are outstanding at the date
hereof;
(298) Bonds of 1992 Series E in the principal amount of Fifty million
dollars ($50,000,000), all of which are outstanding at the date hereof;
(299) Bonds of 1989 Series BP No. 2 in the principal amount of Thirty-six
million dollars ($36,000,000), all of which are outstanding at the date
hereof;
(300) Bonds of 1993 Series C in the principal amount of Two hundred
twenty-five million dollars ($225,000,000), all of which are outstanding
at the date hereof;
(301) Bonds of 1993 Series B in the principal amount of Fifty million
dollars ($50,000,000), all of which are outstanding at the date hereof;
(302) Bonds of 1993 Series E in the principal amount of Four hundred
million dollars ($400,000,000), of which Ten million dollars
($10,000,000) principal amount have heretofore been retired and Three
hundred ninety million ($390,000,000) principal amount are outstanding at
the date hereof;
(303) Bonds of 1993 Series D in the principal amount of One hundred
million dollars ($100,000,000), all of which are outstanding at the date
hereof;
(304) Bonds of 1993 Series FP in the principal amount of Five million six
hundred eighty-five thousand dollars ($5,685,000), all of which are
outstanding at the date hereof;
(305) Bonds of 1993 Series G in the principal amount of Two hundred
twenty-five million dollars ($225,000,000), all of which are outstanding
at the date hereof;
(306) Bonds of 1993 Series J in the principal amount of Three hundred
million dollars ($300,000,000), of which Thirty million dollars
($30,000,000) principal amount have heretofore been retired and Two
hundred seventy million ($270,000,000) principal amount are outstanding at
the date hereof;
(307) Bonds of 1993 Series IP in the principal amount of Five million
eight hundred twenty-five thousand dollars ($5,825,000), all of which
are outstanding at the date hereof;
(308) Bonds of 1993 Series AP in the principal amount of Sixty-five
million dollars ($65,000,000), all of which are outstanding at the date
hereof;
(309) Bonds of 1993 Series H in the principal amount of Fifty million
dollars ($50,000,000), all of which are outstanding at the date hereof;
(310) Bonds of 1993 Series K in the principal amount of One hundred sixty
million dollars ($160,000,000), all of which are outstanding at the date
hereof;
(311) Bonds of 1994 Series AP in the principal amount of Seven million
five hundred thirty-five thousand dollars ($7,535,000), all of which are
outstanding at the date hereof;
(312) Bonds of 1994 Series BP in the principal amount of Twelve million
nine hundred thirty-five thousand dollars ($12,935,000), all of which
are outstanding at the date hereof;
(313) Bonds of 1994 Series C in the principal amount of Two hundred
million dollars ($200,000,000), all of which are outstanding at the date
hereof;
(314) Bonds of 1994 Series DP in the principal amount of Twenty-three
million seven hundred thousand dollars ($23,700,000), all of which are
outstanding at the date hereof;
and, accordingly, of the bonds so issued, Three billion four hundred
ninety-five million one hundred twenty-two thousand dollars
($3,495,122,000) principal amount are outstanding at the date hereof; and
<CAPTION>
REASON FOR
CREATION OF
NEW SERIES.
WHEREAS,
the
Michigan
Strategic
Fund has
agreed to
issue and
sell
$97,000,000
principal
amount of
its Limited
Obligation
Refunding
Revenue
Bonds
(The
Detroit
Edison
Company
Pollution
Control
Bonds
Project),
Collateralized
Series
1995AA,
in
order
to
provide
funds
for the
refunding
of
certain
pollution
control
related
bonds
previously
issued to
finance
pollution
control
projects
of the
Company;
and
</TABLE>
<PAGE> 7
5
<TABLE>
<CAPTION>
WHEREAS, THE COMPANY WILL ENTER INTO A LOAN AGREEMENT, DATED AS OF
SEPTEMBER 1, 1995, WITH THE MICHIGAN STRATEGIC FUND IN CONNECTION WITH THE
ISSUANCE OF THE COLLATERALIZED SERIES 1995AA BONDS IN ORDER TO REFUND
CERTAIN POLLUTION CONTROL RELATED BONDS, AND PURSUANT TO SUCH LOAN
AGREEMENT THE COMPANY HAS AGREED TO ISSUE ITS GENERAL AND REFUNDING
MORTGAGE BONDS UNDER THE INDENTURE IN ORDER FURTHER TO SECURE ITS
OBLIGATIONS UNDER SUCH LOAN AGREEMENT; AND
<S> <C>
WHEREAS, THE MICHIGAN STRATEGIC FUND HAS AGREED TO ISSUE AND SELL
$22,175,000 PRINCIPAL AMOUNT OF ITS LIMITED OBLIGATION REFUNDING REVENUE
BONDS (THE DETROIT EDISON COMPANY POLLUTION CONTROL BONDS PROJECT),
COLLATERALIZED SERIES 1995BB, IN ORDER TO PROVIDE FUNDS FOR THE REFUNDING
OF CERTAIN POLLUTION CONTROL RELATED BONDS PREVIOUSLY ISSUED TO FINANCE
POLLUTION CONTROL PROJECTS OF THE COMPANY; AND
WHEREAS, THE COMPANY WILL ENTER INTO A LOAN AGREEMENT, DATED AS OF
AUGUST 1, 1995, WITH THE MICHIGAN STRATEGIC FUND IN CONNECTION WITH THE
ISSUANCE OF THE COLLATERALIZED SERIES 1995BB BONDS IN ORDER TO REFUND
CERTAIN POLLUTION CONTROL RELATED BONDS, AND PURSUANT TO SUCH LOAN
AGREEMENT THE COMPANY HAS AGREED TO ISSUE ITS GENERAL AND REFUNDING
MORTGAGE BONDS UNDER THE INDENTURE IN ORDER FURTHER TO SECURE ITS
OBLIGATIONS UNDER SUCH LOAN AGREEMENT; AND
WHEREAS, FOR SUCH PURPOSES THE COMPANY DESIRES TO ISSUE NEW SERIES OF
BONDS TO BE ISSUED UNDER THE INDENTURE AND TO BE AUTHENTICATED AND
DELIVERED PURSUANT TO SECTION 8 OF ARTICLE III OF THE INDENTURE; AND
BONDS TO BE WHEREAS, THE COMPANY DESIRES BY THIS SUPPLEMENTAL INDENTURE TO CREATE
1995 SERIES AP AND NEW SERIES OF BONDS, TO BE DESIGNATED "GENERAL AND REFUNDING MORTGAGE
1995 SERIES BP. BONDS, 1995 SERIES AP" AND "GENERAL AND REFUNDING MORTGAGE BONDS, 1995
SERIES BP"; AND
FURTHER WHEREAS, THE ORIGINAL INDENTURE, BY ITS TERMS, INCLUDES IN THE PROPERTY
ASSURANCE. SUBJECT TO THE LIEN THEREOF ALL OF THE ESTATES AND PROPERTIES, REAL,
PERSONAL AND MIXED, RIGHTS, PRIVILEGES AND FRANCHISES OF EVERY NATURE AND
KIND AND WHERESOEVER SITUATE, THEN OR THEREAFTER OWNED OR POSSESSED BY OR
BELONGING TO THE COMPANY OR TO WHICH IT WAS THEN OR AT ANY TIME THEREAFTER
MIGHT BE ENTITLED IN LAW OR IN EQUITY (SAVING AND EXCEPTING, HOWEVER, THE
PROPERTY THEREIN SPECIFICALLY EXCEPTED OR RELEASED FROM THE LIEN THEREOF),
AND THE COMPANY THEREIN COVENANTED THAT IT WOULD, UPON REASONABLE REQUEST,
EXECUTE AND DELIVER SUCH FURTHER INSTRUMENTS AS MAY BE NECESSARY OR PROPER
FOR THE BETTER ASSURING AND CONFIRMING UNTO THE TRUSTEE ALL OR ANY PART OF
THE TRUST ESTATE, WHETHER THEN OR THEREAFTER OWNED OR ACQUIRED BY THE
COMPANY (SAVING AND EXCEPTING, HOWEVER, PROPERTY SPECIFICALLY EXCEPTED OR
RELEASED FROM THE LIEN THEREOF); AND
AUTHORIZATION WHEREAS, the Company in the exercise of the powers and authority
OF SUPPLEMENTAL conferred upon and reserved to it under and by virtue of the provisions of
INDENTURE. the Indenture, and pursuant to resolutions of its Board of Directors has
duly resolved and determined to make, execute and deliver to the Trustee a
supplemental indenture in the form hereof for the purposes herein
provided; and
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid and legally binding instrument in
accordance with its terms have been done, performed and fulfilled, and the
execution and delivery hereof have been in all respects duly authorized;
CONSIDERATION NOW, THEREFORE, THIS INDENTURE WITNESSETH: That The Detroit Edison
FOR SUPPLEMENTAL Company, in consideration of the premises and of the covenants contained
INDENTURE. in the Indenture and of the sum of One Dollar ($1.00) and other good and
valuable consideration to it duly paid by the Trustee at or before the
ensealing and delivery of these presents, the receipt whereof is hereby
acknowledged, hereby covenants and agrees to and with the Trustee and its
successors in the trusts under the Original Indenture and in said
indentures supplemental thereto as follows:
</TABLE>
<PAGE> 8
6
<TABLE>
<S> <C>
PART I.
CREATION OF THREE HUNDRED EIGHTEENTH
SERIES OF BONDS.
GENERAL AND REFUNDING MORTGAGE BONDS,
1995 SERIES AP
CERTAIN TERMS SECTION 1. The Company hereby creates the Three hundred eighteenth
OF BONDS OF series of bonds to be issued under and secured by the Original Indenture
1995 SERIES AP. as amended to date and as further amended by this Supplemental Indenture,
to be designated, and to be distinguished from the bonds of all other
series, by the title "General and Refunding Mortgage Bonds, 1995 Series
AP" (elsewhere herein referred to as the "bonds of 1995 Series AP"). The
aggregate principal amount of bonds of 1995 Series AP shall be limited to
Ninety-seven million dollars ($97,000,000), except as provided in Sections
7 and 13 of Article II of the Original Indenture with respect to exchanges
and replacements of bonds.
Each bond of 1995 Series AP is to be irrevocably assigned to, and
registered in the name of, NBD Bank, as trustee, or a successor trustee
(said trustee or any successor trustee being hereinafter referred to as
the "Strategic Fund Trust Indenture Trustee"), under the Trust Indenture,
dated as of September 1, 1995 (hereinafter called the "Strategic Fund
Trust Indenture"), between the Michigan Strategic Fund (hereinafter called
"Strategic Fund"), and the Strategic Fund Trust Indenture Trustee, to
secure payment of the Michigan Strategic Fund Limited Obligation Refunding
Revenue Bonds (The Detroit Edison Company Pollution Control Bonds
Project), Collateralized Series 1995AA (hereinafter called the "Strategic
Fund Revenue Bonds"), issued by the Strategic Fund under the Strategic
Fund Trust Indenture, the proceeds of which have been provided for the
refunding of certain pollution control related bonds which the Company has
agreed to refund pursuant to the provisions of the Loan Agreement, dated
as of September 1, 1995 (hereinafter called the "Strategic Fund
Agreement"), between the Company and the Strategic Fund.
The bonds of 1995 Series AP shall be issued as registered bonds without
coupons in denominations of a multiple of $5,000. The bonds of 1995 Series
AP shall be issued in the aggregate principal amount of $97,000,000, shall
mature on September 1, 2025 and shall bear interest, payable semi-annually
on March 1 and September 1 of each year (commencing March 1, 1996), at the
rate of 6.40%, until the principal thereof shall have become due and
payable and thereafter until the Company's obligation with respect to the
payment of said principal shall have been discharged as provided in the
Indenture.
The bonds of 1995 Series AP shall be payable as to principal, premium,
if any, and interest as provided in the Indenture, but only to the extent
and in the manner herein provided. The bonds of 1995 Series AP shall be
payable, both as to principal and interest, at the office or agency of the
Company in the Borough of Manhattan, The City and State of New York, in
any coin or currency of the United States of America which at the time of
payment is legal tender for public and private debts.
Except as provided herein, each bond of 1995 Series AP shall be dated
the date of its authentication and interest shall be payable on the
principal represented thereby from the March 1 or September 1 next
preceding the date thereof to which interest has been paid on bonds of
1995 Series AP, unless the bond is authenticated on a date to which
interest has been paid, in which case interest shall be payable from the
date of authentication, or unless the date of authentication is prior to
March 1, 1996, in which case interest shall be payable from September 1,
1995.
</TABLE>
<PAGE> 9
7
<TABLE>
<S> <C>
The bonds of 1995 Series AP in definitive form shall be, at the election
of the Company, fully engraved or shall be lithographed or printed in
authorized denominations as aforesaid and numbered 1 and upwards (with
such further designation as may be appropriate and desirable to indicate
by such designation the form, series and denominations of bonds of 1995
Series AP). Until bonds of 1995 Series AP in definitive form are ready for
delivery, the Company may execute, and upon its request in writing the
Trustee shall authenticate and deliver in lieu thereof, bonds of 1995
Series AP in temporary form, as provided in Section 10 of Article II of
the Indenture. Temporary bonds of 1995 Series AP, if any, may be printed
and may be issued in authorized denominations in substantially the form of
definitive bonds of 1995 Series AP, but with such omissions, insertions
and variations as may be appropriate for temporary bonds, all as may be
determined by the Company.
Bonds of 1995 Series AP shall not be assignable or transferable except
as may be required to effect a transfer to any successor trustee under the
Strategic Fund Trust Indenture, or, subject to compliance with applicable
law, as may be involved in the course of the exercise of rights and
remedies consequent upon an Event of Default under the Strategic Fund
Trust Indenture. Any such transfer shall be made upon surrender thereof
for cancellation at the office or agency of the Company in the Borough of
Manhattan, The City and State of New York, together with a written
instrument of transfer (if so required by the Company or by the Trustee)
in form approved by the Company duly executed by the holder or by its duly
authorized attorney. Bonds of 1995 Series AP shall in the same manner be
exchangeable for a like aggregate principal amount of bonds of 1995 Series
AP upon the terms and conditions specified herein and in Section 7 of
Article II of the Indenture. The Company waives its rights under Section 7
of Article II of the Indenture not to make exchanges or transfers of bonds
of 1995 Series AP, during any period of ten days next preceding any
redemption date for such bonds.
Bonds of 1995 Series AP, in definitive and temporary form, may bear such
legends as may be necessary to comply with any law or with any rules or
regulations made pursuant thereto or as may be specified in the Strategic
Fund Agreement.
Upon payment of the principal or premium, if any, or interest on the
Strategic Fund Revenue Bonds, whether at maturity or prior to maturity by
redemption or otherwise, or upon provision for the payment thereof having
been made in accordance with Articles I or IV of the Strategic Fund Trust
Indenture, bonds of 1995 Series AP in a principal amount equal to the
principal amount of the Strategic Fund Revenue Bonds, shall, to the extent
of such payment of principal, premium or interest, be deemed fully paid
and the obligation of the Company thereunder to make such payment shall
forthwith cease and be discharged, and, in the case of the payment of
principal and premium, if any, such bonds shall be surrendered for
cancellation or presented for appropriate notation to the Trustee.
</TABLE>
<PAGE> 10
8
<TABLE>
<S> <C>
REDEMPTION SECTION 2. Bonds of 1995 Series AP shall be redeemed on the date and in
OF BONDS OF the respective principal amount which correspond to the redemption date
1995 SERIES AP. for, and the principal amount to be redeemed of, the Strategic Fund
Revenue Bonds.
In the event the Company elects to redeem any Strategic Fund Revenue Bonds
prior to maturity in accordance with the provisions of the Strategic Fund
Trust Indenture, the Company shall on the same date redeem bonds of 1995
Series AP in the principal amount and at the redemption price
corresponding to the Strategic Fund Revenue Bonds so redeemed. The Company
agrees to give the Trustee notice of any such redemption of bonds of 1995
Series AP on the same date as it gives notice of redemption of Strategic
Fund Revenue Bonds to the Strategic Fund Trust Indenture Trustee.
REDEMPTION SECTION 3. In the event of an Event of Default under the Strategic Fund
OF BONDS OF 1995 Trust Indenture and the acceleration of all Strategic Fund Revenue Bonds,
SERIES AP IN EVENT the bonds of 1995 Series AP shall be redeemable in whole upon receipt by
OF ACCELERATION the Trustee of a written demand (hereinafter called a "Redemption Demand")
OF STRATEGIC FUND from the Strategic Fund Trust Indenture Trustee stating that there has
REVENUE BONDS. occurred under the Strategic Fund Trust Indenture both an Event of Default
and a declaration of acceleration of payment of principal, accrued
interest and premium, if any, on the Strategic Fund Revenue Bonds,
specifying the last date to which interest on the Strategic Fund Revenue
Bonds has been paid (such date being hereinafter referred to as the
"Initial Interest Accrual Date") and demanding redemption of the bonds of
said series. The Trustee shall, within five days after receiving such
Redemption Demand, mail a copy thereof to the Company marked to indicate
the date of its receipt by the Trustee. Promptly upon receipt by the
Company of such copy of a Redemption Demand, the Company shall fix a date
on which it will redeem the bonds of said series so demanded to be
redeemed (hereinafter called the "Demand Redemption Date"). Notice of the
date fixed as the Demand Redemption Date shall be mailed by the Company to
the Trustee at least ten days prior to such Demand Redemption Date. The
date to be fixed by the Company as and for the Demand Redemption Date may
be any date up to and including the earlier of (x) the 60th day after
receipt by the Trustee of the Redemption Demand or (y) the maturity date
of such bonds first occurring following the 20th day after the receipt by
the Trustee of the Redemption Demand; provided, however, that if the
Trustee shall not have received such notice fixing the Demand Redemption
Date on or before the 10th day preceding the earlier of such dates, the
Demand Redemption Date shall be deemed to be the earlier of such dates.
The Trustee shall mail notice of the Demand Redemption Date (such notice
being hereinafter called the "Demand Redemption Notice") to the Strategic
Fund Trust Indenture Trustee not more than ten nor less than five days
prior to the Demand Redemption Date.
</TABLE>
<PAGE> 11
9
<TABLE>
<S> <C>
Each bond of 1995 Series AP shall be redeemed by the Company on the
Demand Redemption Date therefore upon surrender thereof by the Strategic
Fund Trust Indenture Trustee to the Trustee at a redemption price equal to
the principal amount thereof plus accrued interest thereon at the rate
specified for such bond from the Initial Interest Accrual Date to the
Demand Redemption Date plus an amount equal to the aggregate premium, if
any, due and payable on such Demand Redemption Date on all Strategic Fund
Revenue Bonds; provided, however, that in the event of a receipt by the
Trustee of a notice that, pursuant to Section 604 of the Strategic Fund
Trust Indenture, the Strategic Fund Trust Indenture Trustee has terminated
proceedings to enforce any right under the Strategic Fund Trust Indenture,
then any Redemption Demand shall thereby be rescinded by the Strategic
Fund Trust Indenture Trustee, and no Demand Redemption Notice shall be
given, or, if already given, shall be automatically annulled; but no such
rescission or annulment shall extend to or affect any subsequent default
or impair any right consequent thereon.
Anything herein contained to the contrary notwithstanding, the Trustee
is not authorized to take any action pursuant to a Redemption Demand and
such Redemption Demand shall be of no force or effect, unless it is
executed in the name of the Strategic Fund Trust Indenture Trustee by its
President or one of its Vice Presidents.
FORM OF BONDS SECTION 4. The bonds of 1995 Series AP and the form of Trustee's
OF 1995 SERIES AP. Certificate to be endorsed on such bonds shall be substantially in the
following forms, respectively:
</TABLE>
<PAGE> 12
10
<TABLE>
<S> <C>
[FORM OF FACE OF BOND]
THE DETROIT EDISON COMPANY
General and Refunding Mortgage Bond
1995 Series AP, 6.40% due September 1, 2025
Notwithstanding any provisions hereof or in the Indenture, this bond is
not assignable or transferable except as may be required to effect a
transfer to any successor trustee under the Trust Indenture, dated as of
September 1, 1995 between the Michigan Strategic Fund and NBD Bank, as
trustee, or, subject to compliance with applicable law, as may be involved
in the course of the exercise of rights and remedies consequent upon an
Event of Default under said Trust Indenture.
$......... No..........
THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a
corporation of the State of Michigan, for value received, hereby promises
to pay to the Michigan Strategic Fund, or registered assigns, at the
Company's office or agency in the Borough of Manhattan, The City and State
of New York, the principal sum of dollars ($ ) in
lawful money of the United States of America on the date specified in the
title hereof and interest thereon at the rate specified in the title
hereof, in like lawful money, from September 1, 1995, and after the first
payment of interest on bonds of this Series has been made or otherwise
provided for, from the most recent date to which interest has been paid or
otherwise provided for, semi-annually on March 1 and September 1 of each
year (commencing March 1, 1996), until the Company's obligation with
respect to payment of said principal shall have been discharged, all as
provided, to the extent and in the manner specified in the Indenture
hereinafter mentioned on the reverse hereof and in the supplemental
indenture pursuant to which this bond has been issued.
Under a Trust Indenture, dated as of September 1, 1995 (hereinafter
called the "Strategic Fund Trust Indenture"), between the Michigan
Strategic Fund (hereinafter called "Strategic Fund"), and NBD Bank, as
trustee (hereinafter called the "Strategic Fund Trust Indenture Trustee"),
the Strategic Fund has issued Limited Obligation Refunding Revenue Bonds
(The Detroit Edison Company Pollution Control Bonds Project),
Collateralized Series 1995AA (hereinafter called the "Strategic Fund
Revenue Bonds"). This bond was originally issued to the Strategic Fund and
simultaneously irrevocably assigned to the Strategic Fund Trust Indenture
Trustee so as to secure the payment of the Strategic Fund Revenue Bonds.
Payments of principal of, or premium, if any, or interest on, Strategic
Fund Revenue Bonds shall constitute like payments on this bond as further
provided herein and in the supplemental indenture pursuant to which this
bond has been issued.
Reference is hereby made to such further provisions of this bond set
forth on the reverse hereof and such further provisions shall for all
purposes have the same effect as though set forth at this place.
This bond shall not be valid or become obligatory for any purpose until
Bankers Trust Company, the Trustee under the Indenture hereinafter
mentioned on the reverse hereof, or its successor thereunder, shall have
signed the form of certificate endorsed hereon.
</TABLE>
<PAGE> 13
11
<TABLE>
<S> <C>
IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this
instrument to be executed by its Chairman of the Board and its Vice
President and Treasurer, with their manual or facsimile signatures, and
its corporate seal, or a facsimile thereof, to be impressed or imprinted
hereon and the same to be attested by its Corporate Secretary or an
Assistant Corporate Secretary with his or her manual or facsimile
signature.
</TABLE>
<TABLE>
<CAPTION>
Dated: THE DETROIT EDISON COMPANY
<S> <C> <C>
By ............................
Chairman of the Board
............................
Vice President
Attest: and Treasurer
............................
Vice President and
Corporate Secretary
</TABLE>
<PAGE> 14
12
<TABLE>
<S> <C>
[FORM OF REVERSE OF BOND]
This bond is one of an authorized issue of bonds of the Company,
unlimited as to amount except as provided in the Indenture hereinafter
mentioned or any indentures supplemental thereto, and is one of a series
of General and Refunding Mortgage Bonds known as 1995 Series AP, limited
to an aggregate principal amount of $97,000,000, except as otherwise
provided in the Indenture hereinafter mentioned. This bond and all other
bonds of said series are issued and to be issued under, and are all
equally and ratably secured (except insofar as any sinking, amortization,
improvement or analogous fund, established in accordance with the
provisions of the Indenture hereinafter mentioned, may afford additional
security for the bonds of any particular series and except as provided in
Section 3 of Article VI of said Indenture) by an Indenture, dated as of
October 1, 1924, duly executed by the Company to Bankers Trust Company, a
corporation of the State of New York, as Trustee, to which Indenture and
all indentures supplemental thereto (including the Supplemental Indenture
dated as of August 1, 1995) reference is hereby made for a description of
the properties and franchises mortgaged and conveyed, the nature and
extent of the security, the terms and conditions upon which the bonds are
issued and under which additional bonds may be issued, and the rights of
the holders of the bonds and of the Trustee in respect of such security
(which Indenture and all indentures supplemental thereto, including the
Supplemental Indenture dated as of August 1, 1995, are hereinafter
collectively called the "Indenture"). As provided in the Indenture, said
bonds may be for various principal sums and are issuable in series, which
may mature at different times, may bear interest at different rates and
may otherwise vary as in said Indenture provided. With the consent of the
Company and to the extent permitted by and as provided in the Indenture,
the rights and obligations of the Company and of the holders of the bonds
and the terms and provisions of the Indenture, or of any indenture
supplemental thereto, may be modified or altered in certain respects by
affirmative vote of at least eighty-five percent (85%) in amount of the
bonds then outstanding, and, if the rights of one or more, but less than
all, series of bonds then outstanding are to be affected by the action
proposed to be taken, then also by affirmative vote of at least
eighty-five percent (85%) in amount of the series of bonds so to be
affected (excluding in every instance bonds disqualified from voting by
reason of the Company's interest therein as specified in the Indenture);
provided, however, that, without the consent of the holder hereof, no such
modification or alteration shall, among other things, affect the terms of
payment of the principal of or the interest on this bond, which in those
respects is unconditional.
This bond is redeemable upon the terms and conditions set forth in the
Indenture, including provision for redemption upon demand of the Strategic
Fund Trust Indenture Trustee following the occurrence of an Event of
Default under the Strategic Fund Trust Indenture and the acceleration of
the principal of the Strategic Fund Revenue Bonds.
Under the Indenture, funds may be deposited with the Trustee (which
shall have become available for payment), in advance of the redemption
date of any of the bonds of 1995 Series AP (or portions thereof), in trust
for the redemption of such bonds (or portions thereof) and the interest
due or to become due thereon, and thereupon all obligations of the Company
in respect of such bonds (or portions thereof) so to be redeemed and such
interest shall cease and be discharged, and the holders thereof shall
thereafter be restricted exclusively to such funds for any and all claims
of whatsoever nature on their part under the Indenture or with respect to
such bonds (or portions thereof) and interest.
In case an event of default, as defined in the Indenture, shall occur,
the principal of all the bonds issued thereunder may become or be declared
due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
</TABLE>
<PAGE> 15
13
<TABLE>
<S> <C>
Upon payment of the principal of, or premium, if any, or interest on,
the Strategic Fund Revenue Bonds, whether at maturity or prior to maturity
by redemption or otherwise or upon provision for the payment thereof
having been made in accordance with Articles I or IV of the Strategic Fund
Trust Indenture, bonds of 1995 Series AP in a principal amount equal to
the principal amount of such Strategic Fund Revenue Bonds and having both
a corresponding maturity date and interest rate shall, to the extent of
such payment of principal, premium or interest, be deemed fully paid and
the obligation of the Company thereunder to make such payment shall
forthwith cease and be discharged, and, in the case of the payment of
principal and premium, if any, such bonds of said series shall be
surrendered for cancellation or presented for appropriate notation to the
Trustee.
This bond is not assignable or transferable except as may be required to
effect a transfer to any successor trustee under the Strategic Fund Trust
Indenture, or, subject to compliance with applicable law, as may be
involved in the course of the exercise of rights and remedies consequent
upon an Event of Default under the Strategic Fund Trust Indenture. Any
such transfer shall be made by the registered holder hereof, in person or
by his attorney duly authorized in writing, on the books of the Company
kept at its office or agency in the Borough of Manhattan, The City and
State of New York, upon surrender and cancellation of this bond, and
thereupon, a new registered bond of the same series of authorized
denominations for a like aggregate principal amount will be issued to the
transferee in exchange therefor, and this bond with others in like form
may in like manner be exchanged for one or more new bonds of the same
series of other authorized denominations, but of the same aggregate
principal amount, all as provided and upon the terms and conditions set
forth in the Indenture, and upon payment, in any event, of the charges
prescribed in the Indenture.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or for any claim based hereon or otherwise in
respect hereof or of the Indenture, or of any indenture supplemental
thereto, against any incorporator, or against any past, present or future
stockholder, director or officer, as such, of the Company, or of any
predecessor or successor corporation, either directly or through the
Company or any such predecessor or successor corporation, whether for
amounts unpaid on stock subscriptions or by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty
or otherwise howsoever; all such liability being, by the acceptance hereof
and as part of the consideration for the issue hereof, expressly waived
and released by every holder or owner hereof, as more fully provided in
the Indenture.
</TABLE>
<PAGE> 16
14
<TABLE>
<S> <C>
[FORM OF TRUSTEE'S CERTIFICATE]
FORM OF This bond is one of the bonds, of the series designated therein,
TRUSTEE'S described in the within-mentioned Indenture.
CERTIFICATE.
</TABLE>
BANKERS TRUST COMPANY,
as Trustee
By ...........................
Authorized Officer
<PAGE> 17
15
<TABLE>
<S> <C>
PART II.
CREATION OF THREE HUNDRED NINETEENTH
SERIES OF BONDS.
GENERAL AND REFUNDING MORTGAGE BONDS,
1995 SERIES BP
CERTAIN TERMS SECTION 1. The Company hereby creates the Three hundred nineteenth
OF BONDS OF series of bonds to be issued under and secured by the Original Indenture
1995 SERIES BP. as amended to date and as further amended by this Supplemental Indenture,
to be designated, and to be distinguished from the bonds of all other
series, by the title "General and Refunding Mortgage Bonds, 1995 Series
BP" (elsewhere herein referred to as the "bonds of 1995 Series BP"). The
aggregate principal amount of bonds of 1995 Series BP shall be limited to
Twenty-two million one hundred seventy-five thousand dollars
($22,175,000), except as provided in Sections 7 and 13 of Article II of
the Original Indenture with respect to exchanges and replacements of
bonds.
Each bond of 1995 Series BP is to be irrevocably assigned to, and
registered in the name of, Comerica Bank, as trustee, or a successor
trustee (said trustee or any successor trustee being hereinafter referred
to as the "Strategic Fund Trust Indenture Trustee"), under the Trust
Indenture, dated as of August 1, 1995 (hereinafter called the "Strategic
Fund Trust Indenture"), between the Michigan Strategic Fund (hereinafter
called "Strategic Fund"), and the Strategic Fund Trust Indenture Trustee,
to secure payment of the Michigan Strategic Fund Limited Obligation
Refunding Revenue Bonds (The Detroit Edison Company Pollution Control
Bonds Project), Collateralized Series 1995BB (hereinafter called the
"Strategic Fund Revenue Bonds"), issued by the Strategic Fund under the
Strategic Fund Trust Indenture, the proceeds of which have been provided
for the refunding of certain pollution control related bonds which the
Company has agreed to refund pursuant to the provisions of the Loan
Agreement, dated as of August 1, 1995 (hereinafter called the "Strategic
Fund Agreement"), between the Company and the Strategic Fund.
The bonds of 1995 Series BP shall be issued as registered bonds without
coupons in denominations of a multiple of $5,000. The bonds of 1995 Series
BP shall be issued in the aggregate principal amount of $22,175,000, shall
mature on August 15, 2025 and shall bear interest, payable semi-annually
on February 15 and August 15 of each year (commencing February 15, 1996),
at the rate of 6.20%, until the principal thereof shall have become due
and payable and thereafter until the Company's obligation with respect to
the payment of said principal shall have been discharged as provided in
the Indenture.
The bonds of 1995 Series BP shall be payable as to principal, premium,
if any, and interest as provided in the Indenture, but only to the extent
and in the manner herein provided. The bonds of 1995 Series BP shall be
payable, both as to principal and interest, at the office or agency of the
Company in the Borough of Manhattan, The City and State of New York, in
any coin or currency of the United States of America which at the time of
payment is legal tender for public and private debts.
Except as provided herein, each bond of 1995 Series BP shall be dated
the date of its authentication and interest shall be payable on the
principal represented thereby from the February 15 or August 15 next
preceding the date thereof to which interest has been paid on bonds of
1995 Series BP, unless the bond is authenticated on a date to which
interest has been paid, in which case interest shall be payable from the
date of authentication, or unless the date of authentication is prior to
February 15, 1996, in which case interest shall be payable from August 1,
1995.
</TABLE>
<PAGE> 18
16
<TABLE>
<S> <C>
The bonds of 1995 Series BP in definitive form shall be, at the election
of the Company, fully engraved or shall be lithographed or printed in
authorized denominations as aforesaid and numbered 1 and upwards (with
such further designation as may be appropriate and desirable to indicate
by such designation the form, series and denominations of bonds of 1995
Series BP). Until bonds of 1995 Series BP in definitive form are ready for
delivery, the Company may execute, and upon its request in writing the
Trustee shall authenticate and deliver in lieu thereof, bonds of 1995
Series BP in temporary form, as provided in Section 10 of Article II of
the Indenture. Temporary bonds of 1995 Series BP, if any, may be printed
and may be issued in authorized denominations in substantially the form of
definitive bonds of 1995 Series BP, but with such omissions, insertions
and variations as may be appropriate for temporary bonds, all as may be
determined by the Company.
Bonds of 1995 Series BP shall not be assignable or transferable except
as may be required to effect a transfer to any successor trustee under the
Strategic Fund Trust Indenture, or, subject to compliance with applicable
law, as may be involved in the course of the exercise of rights and
remedies consequent upon an Event of Default under the Strategic Fund
Trust Indenture. Any such transfer shall be made upon surrender thereof
for cancellation at the office or agency of the Company in the Borough of
Manhattan, The City and State of New York, together with a written
instrument of transfer (if so required by the Company or by the Trustee)
in form approved by the Company duly executed by the holder or by its duly
authorized attorney. Bonds of 1995 Series BP shall in the same manner be
exchangeable for a like aggregate principal amount of bonds of 1995 Series
BP upon the terms and conditions specified herein and in Section 7 of
Article II of the Indenture. The Company waives its rights under Section 7
of Article II of the Indenture not to make exchanges or transfers of bonds
of 1995 Series BP, during any period of ten days next preceding any
redemption date for such bonds.
Bonds of 1995 Series BP, in definitive and temporary form, may bear such
legends as may be necessary to comply with any law or with any rules or
regulations made pursuant thereto or as may be specified in the Strategic
Fund Agreement.
Upon payment of the principal or premium, if any, or interest on the
Strategic Fund Revenue Bonds, whether at maturity or prior to maturity by
redemption or otherwise, or upon provision for the payment thereof having
been made in accordance with Articles I or IV of the Strategic Fund Trust
Indenture, bonds of 1995 Series BP in a principal amount equal to the
principal amount of the Strategic Fund Revenue Bonds, shall, to the extent
of such payment of principal, premium or interest, be deemed fully paid
and the obligation of the Company thereunder to make such payment shall
forthwith cease and be discharged, and, in the case of the payment of
principal and premium, if any, such bonds shall be surrendered for
cancellation or presented for appropriate notation to the Trustee.
</TABLE>
<PAGE> 19
17
<TABLE>
<S> <C>
REDEMPTION SECTION 2. Bonds of 1995 Series BP shall be redeemed on the date and in
OF BONDS OF the respective principal amount which correspond to the redemption date
1995 SERIES BP. for, and the principal amount to be redeemed of, the Strategic Fund
Revenue Bonds.
In the event the Company elects to redeem any Strategic Fund Revenue Bonds
prior to maturity in accordance with the provisions of the Strategic Fund
Trust Indenture, the Company shall on the same date redeem bonds of 1995
Series BP in the principal amount and at the redemption price
corresponding to the Strategic Fund Revenue Bonds so redeemed. The Company
agrees to give the Trustee notice of any such redemption of bonds of 1995
Series BP on the same date as it gives notice of redemption of Strategic
Fund Revenue Bonds to the Strategic Fund Trust Indenture Trustee.
REDEMPTION SECTION 3. In the event of an Event of Default under the Strategic Fund
OF BONDS OF 1995 Trust Indenture and the acceleration of all Strategic Fund Revenue Bonds,
SERIES BP IN EVENT the bonds of 1995 Series BP shall be redeemable in whole upon receipt by
OF ACCELERATION the Trustee of a written demand (hereinafter called a "Redemption Demand")
OF STRATEGIC FUND from the Strategic Fund Trust Indenture Trustee stating that there has
REVENUE BONDS. occurred under the Strategic Fund Trust Indenture both an Event of Default
and a declaration of acceleration of payment of principal, accrued
interest and premium, if any, on the Strategic Fund Revenue Bonds,
specifying the last date to which interest on the Strategic Fund Revenue
Bonds has been paid (such date being hereinafter referred to as the
"Initial Interest Accrual Date") and demanding redemption of the bonds of
said series. The Trustee shall, within five days after receiving such
Redemption Demand, mail a copy thereof to the Company marked to indicate
the date of its receipt by the Trustee. Promptly upon receipt by the
Company of such copy of a Redemption Demand, the Company shall fix a date
on which it will redeem the bonds of said series so demanded to be
redeemed (hereinafter called the "Demand Redemption Date"). Notice of the
date fixed as the Demand Redemption Date shall be mailed by the Company to
the Trustee at least ten days prior to such Demand Redemption Date. The
date to be fixed by the Company as and for the Demand Redemption Date may
be any date up to and including the earlier of (x) the 60th day after
receipt by the Trustee of the Redemption Demand or (y) the maturity date
of such bonds first occurring following the 20th day after the receipt by
the Trustee of the Redemption Demand; provided, however, that if the
Trustee shall not have received such notice fixing the Demand Redemption
Date on or before the 10th day preceding the earlier of such dates, the
Demand Redemption Date shall be deemed to be the earlier of such dates.
The Trustee shall mail notice of the Demand Redemption Date (such notice
being hereinafter called the "Demand Redemption Notice") to the Strategic
Fund Trust Indenture Trustee not more than ten nor less than five days
prior to the Demand Redemption Date.
</TABLE>
<PAGE> 20
18
<TABLE>
<S> <C>
Each bond of 1995 Series BP shall be redeemed by the Company on the
Demand Redemption Date therefore upon surrender thereof by the Strategic
Fund Trust Indenture Trustee to the Trustee at a redemption price equal to
the principal amount thereof plus accrued interest thereon at the rate
specified for such bond from the Initial Interest Accrual Date to the
Demand Redemption Date plus an amount equal to the aggregate premium, if
any, due and payable on such Demand Redemption Date on all Strategic Fund
Revenue Bonds; provided, however, that in the event of a receipt by the
Trustee of a notice that, pursuant to Section 604 of the Strategic Fund
Trust Indenture, the Strategic Fund Trust Indenture Trustee has terminated
proceedings to enforce any right under the Strategic Fund Trust Indenture,
then any Redemption Demand shall thereby be rescinded by the Strategic
Fund Trust Indenture Trustee, and no Demand Redemption Notice shall be
given, or, if already given, shall be automatically annulled; but no such
rescission or annulment shall extend to or affect any subsequent default
or impair any right consequent thereon.
Anything herein contained to the contrary notwithstanding, the Trustee
is not authorized to take any action pursuant to a Redemption Demand and
such Redemption Demand shall be of no force or effect, unless it is
executed in the name of the Strategic Fund Trust Indenture Trustee by its
President or one of its Vice Presidents.
FORM OF BONDS SECTION 4. The bonds of 1995 Series BP and the form of Trustee's
OF 1995 SERIES BP. Certificate to be endorsed on such bonds shall be substantially in the
following forms, respectively:
</TABLE>
<PAGE> 21
19
<TABLE>
<S> <C>
[FORM OF FACE OF BOND]
THE DETROIT EDISON COMPANY
General and Refunding Mortgage Bond
1995 Series BP, 6.20% due August 15, 2025
Notwithstanding any provisions hereof or in the Indenture, this bond is
not assignable or transferable except as may be required to effect a
transfer to any successor trustee under the Trust Indenture, dated as of
August 1, 1995 between the Michigan Strategic Fund and Comerica Bank, as
trustee, or, subject to compliance with applicable law, as may be involved
in the course of the exercise of rights and remedies consequent upon an
Event of Default under said Trust Indenture.
$......... No..........
THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a
corporation of the State of Michigan, for value received, hereby promises
to pay to the Michigan Strategic Fund, or registered assigns, at the
Company's office or agency in the Borough of Manhattan, The City and State
of New York, the principal sum of dollars ($ ) in
lawful money of the United States of America on the date specified in the
title hereof and interest thereon at the rate specified in the title
hereof, in like lawful money, from August 1, 1995, and after the first
payment of interest on bonds of this Series has been made or otherwise
provided for, from the most recent date to which interest has been paid or
otherwise provided for, semi-annually on February 15 and August 15 of each
year (commencing February 15, 1996), until the Company's obligation with
respect to payment of said principal shall have been discharged, all as
provided, to the extent and in the manner specified in the Indenture
hereinafter mentioned on the reverse hereof and in the supplemental
indenture pursuant to which this bond has been issued.
Under a Trust Indenture, dated as of August 1, 1995 (hereinafter called
the "Strategic Fund Trust Indenture"), between the Michigan Strategic Fund
(hereinafter called "Strategic Fund"), and Comerica Bank, as trustee
(hereinafter called the "Strategic Fund Trust Indenture Trustee"), the
Strategic Fund has issued Limited Obligation Refunding Revenue Bonds (The
Detroit Edison Company Pollution Control Bonds Project), Collateralized
Series 1995BB (hereinafter called the "Strategic Fund Revenue Bonds").
This bond was originally issued to the Strategic Fund and simultaneously
irrevocably assigned to the Strategic Fund Trust Indenture Trustee so as
to secure the payment of the Strategic Fund Revenue Bonds. Payments of
principal of, or premium, if any, or interest on, Strategic Fund Revenue
Bonds shall constitute like payments on this bond as further provided
herein and in the supplemental indenture pursuant to which this bond has
been issued.
Reference is hereby made to such further provisions of this bond set
forth on the reverse hereof and such further provisions shall for all
purposes have the same effect as though set forth at this place.
This bond shall not be valid or become obligatory for any purpose until
Bankers Trust Company, the Trustee under the Indenture hereinafter
mentioned on the reverse hereof, or its successor thereunder, shall have
signed the form of certificate endorsed hereon.
</TABLE>
<PAGE> 22
20
<TABLE>
<S> <C>
IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this
instrument to be executed by its Chairman of the Board and its Vice
President and Treasurer, with their manual or facsimile signatures, and
its corporate seal, or a facsimile thereof, to be impressed or imprinted
hereon and the same to be attested by its Corporate Secretary or an
Assistant Corporate Secretary with his or her manual or facsimile
signature.
</TABLE>
<TABLE>
<CAPTION>
Dated: THE DETROIT EDISON COMPANY
<S> <C> <C>
By ............................
Chairman of the Board
............................
Vice President
Attest: and Treasurer
............................
Vice President and
Corporate Secretary
</TABLE>
<PAGE> 23
21
<TABLE>
<S> <C>
[FORM OF REVERSE OF BOND]
This bond is one of an authorized issue of bonds of the Company,
unlimited as to amount except as provided in the Indenture hereinafter
mentioned or any indentures supplemental thereto, and is one of a series
of General and Refunding Mortgage Bonds known as 1995 Series BP, limited
to an aggregate principal amount of $22,175,000, except as otherwise
provided in the Indenture hereinafter mentioned. This bond and all other
bonds of said series are issued and to be issued under, and are all
equally and ratably secured (except insofar as any sinking, amortization,
improvement or analogous fund, established in accordance with the
provisions of the Indenture hereinafter mentioned, may afford additional
security for the bonds of any particular series and except as provided in
Section 3 of Article VI of said Indenture) by an Indenture, dated as of
October 1, 1924, duly executed by the Company to Bankers Trust Company, a
corporation of the State of New York, as Trustee, to which Indenture and
all indentures supplemental thereto (including the Supplemental Indenture
dated as of August 1, 1995) reference is hereby made for a description of
the properties and franchises mortgaged and conveyed, the nature and
extent of the security, the terms and conditions upon which the bonds are
issued and under which additional bonds may be issued, and the rights of
the holders of the bonds and of the Trustee in respect of such security
(which Indenture and all indentures supplemental thereto, including the
Supplemental Indenture dated as of August 1, 1995, are hereinafter
collectively called the "Indenture"). As provided in the Indenture, said
bonds may be for various principal sums and are issuable in series, which
may mature at different times, may bear interest at different rates and
may otherwise vary as in said Indenture provided. With the consent of the
Company and to the extent permitted by and as provided in the Indenture,
the rights and obligations of the Company and of the holders of the bonds
and the terms and provisions of the Indenture, or of any indenture
supplemental thereto, may be modified or altered in certain respects by
affirmative vote of at least eighty-five percent (85%) in amount of the
bonds then outstanding, and, if the rights of one or more, but less than
all, series of bonds then outstanding are to be affected by the action
proposed to be taken, then also by affirmative vote of at least
eighty-five percent (85%) in amount of the series of bonds so to be
affected (excluding in every instance bonds disqualified from voting by
reason of the Company's interest therein as specified in the Indenture);
provided, however, that, without the consent of the holder hereof, no such
modification or alteration shall, among other things, affect the terms of
payment of the principal of or the interest on this bond, which in those
respects is unconditional.
This bond is redeemable upon the terms and conditions set forth in the
Indenture, including provision for redemption upon demand of the Strategic
Fund Trust Indenture Trustee following the occurrence of an Event of
Default under the Strategic Fund Trust Indenture and the acceleration of
the principal of the Strategic Fund Revenue Bonds.
Under the Indenture, funds may be deposited with the Trustee (which
shall have become available for payment), in advance of the redemption
date of any of the bonds of 1995 Series BP (or portions thereof), in trust
for the redemption of such bonds (or portions thereof) and the interest
due or to become due thereon, and thereupon all obligations of the Company
in respect of such bonds (or portions thereof) so to be redeemed and such
interest shall cease and be discharged, and the holders thereof shall
thereafter be restricted exclusively to such funds for any and all claims
of whatsoever nature on their part under the Indenture or with respect to
such bonds (or portions thereof) and interest.
In case an event of default, as defined in the Indenture, shall occur,
the principal of all the bonds issued thereunder may become or be declared
due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
</TABLE>
<PAGE> 24
22
<TABLE>
<S> <C>
Upon payment of the principal of, or premium, if any, or interest on,
the Strategic Fund Revenue Bonds, whether at maturity or prior to maturity
by redemption or otherwise or upon provision for the payment thereof
having been made in accordance with Articles I or IV of the Strategic Fund
Trust Indenture, bonds of 1995 Series BP in a principal amount equal to
the principal amount of such Strategic Fund Revenue Bonds and having both
a corresponding maturity date and interest rate shall, to the extent of
such payment of principal, premium or interest, be deemed fully paid and
the obligation of the Company thereunder to make such payment shall
forthwith cease and be discharged, and, in the case of the payment of
principal and premium, if any, such bonds of said series shall be
surrendered for cancellation or presented for appropriate notation to the
Trustee.
This bond is not assignable or transferable except as may be required to
effect a transfer to any successor trustee under the Strategic Fund Trust
Indenture, or, subject to compliance with applicable law, as may be
involved in the course of the exercise of rights and remedies consequent
upon an Event of Default under the Strategic Fund Trust Indenture. Any
such transfer shall be made by the registered holder hereof, in person or
by his attorney duly authorized in writing, on the books of the Company
kept at its office or agency in the Borough of Manhattan, The City and
State of New York, upon surrender and cancellation of this bond, and
thereupon, a new registered bond of the same series of authorized
denominations for a like aggregate principal amount will be issued to the
transferee in exchange therefor, and this bond with others in like form
may in like manner be exchanged for one or more new bonds of the same
series of other authorized denominations, but of the same aggregate
principal amount, all as provided and upon the terms and conditions set
forth in the Indenture, and upon payment, in any event, of the charges
prescribed in the Indenture.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or for any claim based hereon or otherwise in
respect hereof or of the Indenture, or of any indenture supplemental
thereto, against any incorporator, or against any past, present or future
stockholder, director or officer, as such, of the Company, or of any
predecessor or successor corporation, either directly or through the
Company or any such predecessor or successor corporation, whether for
amounts unpaid on stock subscriptions or by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty
or otherwise howsoever; all such liability being, by the acceptance hereof
and as part of the consideration for the issue hereof, expressly waived
and released by every holder or owner hereof, as more fully provided in
the Indenture.
</TABLE>
<PAGE> 25
23
<TABLE>
<S> <C>
[FORM OF TRUSTEE'S CERTIFICATE]
FORM OF This bond is one of the bonds, of the series designated therein,
TRUSTEE'S described in the within-mentioned Indenture.
CERTIFICATE.
</TABLE>
BANKERS TRUST COMPANY,
as Trustee
By ...........................
Authorized Officer
<PAGE> 26
24
<TABLE>
<CAPTION>
PART III.
RECORDING AND FILING DATA
<S> <C>
RECORDING AND The Original Indenture and indentures supplemental thereto have been
FILING OF ORIGINAL recorded and/or filed and Certificates of Provision for Payment have been
INDENTURE. recorded as hereinafter set forth.
The Original Indenture has been recorded as a real estate mortgage and
filed as a chattel mortgage in the offices of the respective Registers of
Deeds of certain counties in the State of Michigan as set forth in the
Supplemental Indenture dated as of September 1, 1947, has been recorded as
a real estate mortgage in the office of the Register of Deeds of Genesee
County, Michigan as set forth in the Supplemental Indenture dated as of
May 1, 1974, has been filed in the Office of the Secretary of State of
Michigan on November 16, 1951 and has been filed and recorded in the
office of the Interstate Commerce Commission on December 8, 1969.
RECORDING AND Pursuant to the terms and provisions of the Original Indenture,
FILING OF indentures supplemental thereto heretofore entered into have been recorded
SUPPLEMENTAL as a real estate mortgage and/or filed as a chattel mortgage or as a
INDENTURES. financing statement in the offices of the respective Registers of Deeds of
certain counties in the State of Michigan, the Office of the Secretary of
State of Michigan and the Office of the Interstate Commerce Commission, as
set forth in supplemental indentures as follows:
</TABLE>
<TABLE>
<CAPTION>
RECORDED AND/OR
FILED AS SET FORTH
IN
SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL
INDENTURE SUPPLEMENTAL INDENTURE
DATED AS OF INDENTURE DATED AS OF:
---------------------------------- ------------------------ ------------------
<S> <C> <C>
June 1, 1925(a)(b)................ Series B Bonds February 1, 1940
August 1, 1927(a)(b).............. Series C Bonds February 1, 1940
February 1, 1931(a)(b)............ Series D Bonds February 1, 1940
June 1, 1931(a)(b)................ Subject Properties February 1, 1940
October 1, 1932(a)(b)............. Series E Bonds February 1, 1940
September 25, 1935(a)(b).......... Series F Bonds February 1, 1940
September 1, 1936(a)(b)........... Series G Bonds February 1, 1940
November 1, 1936(a)(b)............ Subject Properties February 1, 1940
February 1, 1940(a)(b)............ Subject Properties September 1, 1947
December 1, 1940(a)(b)............ Series H Bonds and Ad- September 1, 1947
ditional Provisions
September 1, 1947(a)(b)(c)........ Series I Bonds, November 15, 1951
Subject Properties and
Additional Provisions
March 1, 1950(a)(b)(c)............ Series J Bonds November 15, 1951
and Additional Provi-
sions
November 15, 1951(a)(b)(c)........ Series K Bonds January 15, 1953
Additional Provisions
and Subject Properties
January 15, 1953(a)(b)............ Series L Bonds May 1, 1953
May 1, 1953(a).................... Series M Bonds March 15, 1954
and Subject Properties
March 15, 1954(a)(c).............. Series N Bonds May 15, 1955
and Subject Properties
May 15, 1955(a)(c)................ Series O Bonds August 15, 1957
and Subject Properties
August 15, 1957(a)(c)............. Series P Bonds June 1, 1959
Additional Provisions
and Subject Properties
June 1, 1959(a)(c)................ Series Q Bonds December 1, 1966
and Subject Properties
December 1, 1966(a)(c)............ Series R Bonds October 1, 1968
Additional Provisions
and Subject Properties
</TABLE>
<PAGE> 27
25
<TABLE>
<CAPTION>
RECORDED AND/OR
FILED AS SET FORTH
IN
SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL
INDENTURE SUPPLEMENTAL INDENTURE
DATED AS OF INDENTURE DATED AS OF:
---------------------------------- ------------------------ ------------------
<S> <C> <C>
October 1, 1968(a)(c)............. Series S Bonds December 1, 1969
and Subject Properties
December 1, 1969(a)(c)............ Series T Bonds July 1, 1970
and Subject Properties
July 1, 1970(c)................... Series U Bonds December 15, 1970
and Subject Properties
December 15, 1970(c).............. Series V and June 15, 1971
Series W Bonds
June 15, 1971(c).................. Series X Bonds November 15, 1971
and Subject Properties
November 15, 1971(c).............. Series Y Bonds January 15, 1973
and Subject Properties
January 15, 1973(c)............... Series Z Bonds May 1, 1974
and Subject Properties
May 1, 1974....................... Series AA Bonds October 1, 1974
and Subject Properties
October 1, 1974................... Series BB Bonds January 15, 1975
and Subject Properties
January 15, 1975.................. Series CC Bonds November 1, 1975
and Subject Properties
November 1, 1975.................. Series DDP Nos. 1-9 December 15, 1975
Bonds and Subject
Properties
December 15, 1975................. Series EE Bonds February 1, 1976
and Subject Properties
February 1, 1976.................. Series FFR Nos. 1-13 June 15, 1976
Bonds
June 15, 1976..................... Series GGP Nos. 1-7 July 15, 1976
Bonds and Subject
Properties
July 15, 1976..................... Series HH Bonds February 15, 1977
and Subject Properties
February 15, 1977................. Series MMP Bonds and March 1, 1977
Subject Properties
March 1, 1977..................... Series IIP Nos. 1-7 June 15, 1977
Bonds, Series JJP Nos.
1-7 Bonds, Series KKP
Nos. 1-7 Bonds and
Series LLP Nos. 1-7
Bonds
June 15, 1977..................... Series FFR No. 14 Bonds July 1, 1977
and Subject Properties
July 1, 1977...................... Series NNP Nos. 1-7 October 1, 1977
Bonds and Subject
Properties
October 1, 1977................... Series GGP Nos. 8-22 June 1, 1978
Bonds and Series OOP
Nos. 1-17 Bonds and
Subject Properties
June 1, 1978...................... Series PP Bonds, October 15, 1978
Series QQP Nos. 1-9
Bonds and Subject
Properties
October 15, 1978.................. Series RR Bonds March 15, 1979
and Subject Properties
March 15, 1979.................... Series SS Bonds July 1, 1979
and Subject Properties
</TABLE>
<PAGE> 28
26
<TABLE>
<CAPTION>
RECORDED AND/OR
FILED AS SET FORTH
IN
SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL
INDENTURE SUPPLEMENTAL INDENTURE
DATED AS OF INDENTURE DATED AS OF:
---------------------------------- ------------------------ ------------------
<S> <C> <C>
July 1, 1979...................... Series IIP Nos. 8-22 September 1, 1979
Bonds, Series NNP Nos.
8-21 Bonds and Series
TTP Nos. 1-15 Bonds
and Subject Properties
September 1, 1979................. Series JJP No. 8 Bonds, September 15, 1979
Series KKP No. 8
Bonds, Series LLP Nos.
8-15 Bonds, Series MMP
No. 2 Bonds and Series
OOP No. 18 Bonds and
Subject Properties
September 15, 1979................ Series UU Bonds January 1, 1980
January 1, 1980................... 1980 Series A Bonds and April 1, 1980
Subject Properties
April 1, 1980..................... 1980 Series B Bonds August 15, 1980
August 15, 1980................... Series QQP Nos. 10-19 August 1, 1981
Bonds, 1980 Series CP
Nos. 1-12 Bonds and
1980 Series DP No.
1-11 Bonds and Subject
Properties
August 1, 1981.................... 1980 Series CP Nos. November 1, 1981
13-25 Bonds and
Subject Properties
November 1, 1981.................. 1981 Series AP Nos. 1-12 June 30, 1982
Bonds
June 30, 1982..................... Article XIV August 15, 1982
Reconfirmation
August 15, 1982................... 1981 Series AP Nos. June 1, 1983
13-14 and Subject
Properties
June 1, 1983...................... 1981 Series AP Nos. October 1, 1984
15-16 and Subject
Properties
October 1, 1984................... 1984 Series AP and 1984 May 1, 1985
Series BP Bonds and
Subject Properties
May 1, 1985....................... 1985 Series A Bonds May 15, 1985
May 15, 1985...................... 1985 Series B Bonds and October 15, 1985
Subject Properties
October 15, 1985.................. Series KKP No. 9 Bonds April 1, 1986
and Subject Properties
April 1, 1986..................... 1986 Series A and August 15, 1986
Subject Properties
August 15, 1986................... 1986 Series B and November 30, 1986
Subject Properties
November 30, 1986................. 1986 Series C January 31, 1987
January 31, 1987.................. 1987 Series A April 1, 1987
April 1, 1987..................... 1987 Series B and 1987 August 15, 1987
Series C
August 15, 1987................... 1987 Series D and 1987 November 30, 1987
Series E and Subject
Properties
November 30, 1987................. 1987 Series F June 15, 1989
June 15, 1989..................... 1989 Series A July 15, 1989
</TABLE>
<PAGE> 29
27
<TABLE>
<CAPTION>
RECORDED AND/OR
FILED AS SET FORTH
IN
SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL
INDENTURE SUPPLEMENTAL INDENTURE
DATED AS OF INDENTURE DATED AS OF:
---------------------------------- ------------------------ ------------------
<S> <C> <C>
July 15, 1989..................... Series KKP No. 10 December 1, 1989
December 1, 1989.................. Series KKP No. 11 and February 15, 1990
1989 Series BP
February 15, 1990................. 1990 Series A, 1990 November 1, 1990
Series B, 1990 Series
C, 1990 Series D, 1990
Series E and 1990
Series F
November 1, 1990.................. Series KKP No. 12 April 1, 1991
April 1, 1991..................... 1991 Series AP May 1, 1991
May 1, 1991....................... 1991 Series BP and 1991 May 15, 1991
Series CP
May 15, 1991...................... 1991 Series DP September 1, 1991
September 1, 1991................. 1991 Series EP November 1, 1991
November 1, 1991.................. 1991 Series FP January 15, 1992
January 15, 1992.................. 1992 Series BP February 29, 1992
and April 15, 1992
February 29, 1992................. 1992 Series AP April 15, 1992
April 15, 1992.................... Series KKP No. 13 July 15, 1992
July 15, 1992..................... 1992 Series CP November 30, 1992
July 31, 1992..................... 1992 Series D November 30, 1992
April 1, 1986..................... 1986 Series A and August 15, 1986
Subject Properties
August 15, 1986................... 1986 Series B and November 30, 1986
Subject Properties
November 30, 1986................. 1986 Series C January 31, 1987
January 31, 1987.................. 1987 Series A April 1, 1987
April 1, 1987..................... 1987 Series B and 1987 August 15, 1987
Series C
August 15, 1987................... 1987 Series D and 1987 November 30, 1987
Series E and Subject
Properties
November 30, 1987................. 1987 Series F June 15, 1989
June 15, 1989..................... 1989 Series A July 15, 1989
July 15, 1989..................... Series KKP No. 10 December 1, 1989
December 1, 1989.................. Series KKP No. 11 and February 15, 1990
1989 Series BP
February 15, 1990................. 1990 Series A, 1990 November 1, 1990
Series B, 1990 Series
C, 1990 Series D, 1990
Series E and 1990
Series F
November 1, 1990.................. Series KKP No. 12 April 1, 1991
April 1, 1991..................... 1991 Series AP May 1, 1991
May 1, 1991....................... 1991 Series BP and 1991 May 15, 1991
Series CP
May 15, 1991...................... 1991 Series DP September 1, 1991
September 1, 1991................. 1991 Series EP November 1, 1991
November 1, 1991.................. 1991 Series FP January 15, 1992
</TABLE>
<PAGE> 30
28
<TABLE>
<CAPTION>
RECORDED AND/OR
FILED AS SET FORTH
IN
SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL
INDENTURE SUPPLEMENTAL INDENTURE
DATED AS OF INDENTURE DATED AS OF:
---------------------------------- ------------------------ ------------------
<S> <C> <C>
January 15, 1992.................. 1992 Series BP February 29, 1992
and April 15, 1992
February 29, 1992................. 1992 Series AP April 15, 1992
April 15, 1992.................... Series KKP No. 13 July 15, 1992
July 15, 1992..................... 1992 Series CP November 30, 1992
November 30, 1992................. 1992 Series E and 1993 March 15, 1993
Series D
December 15, 1992................. Series KKP No. 14 and March 15, 1992
1989 Series BP No. 2
January 1, 1993................... 1993 Series C April 1, 1993
March 1, 1993..................... 1993 Series E June 30, 1993
March 15, 1993.................... 1993 Series D September 15, 1993
April 1, 1993..................... 1993 Series FP and 1993 September 15, 1993
Series IP
April 26, 1993.................... 1993 Series G and September 15, 1993
Amendment of Article
II, Section 5
May 31, 1993...................... 1993 Series J September 15, 1993
September 15, 1993................ 1993 Series K March 1, 1994
March 1, 1994..................... 1994 Series AP June 15, 1994
June 15, 1994..................... 1994 Series BP December 1, 1994
August 15, 1994................... 1994 Series C December 1, 1994
December 1, 1994.................. Series KKP No. 15 and August 1, 1995
1994 Series DP
</TABLE>
------------------------------------------
(a) See Supplemental Indenture dated as of July 1, 1970 for
Interstate Commerce Commission filing and recordation
information.
(b) See Supplemental Indenture dated as of May 1, 1953 for
Secretary of State of Michigan filing information.
(c) See Supplemental Indenture dated as of May 1, 1974 for
County of Genesee, Michigan recording and filing
information.
<PAGE> 31
29
<TABLE>
<S> <C>
Further, pursuant to the terms and provisions of the Original
Indenture, a Supplemental Indenture dated as December 1, 1994 providing
for the terms of bonds to be issued thereunder of Series KKP No. 15 and
1994 Series DP has heretofore been entered into between the Company and
the Trustee and has been filed in the Office of the Secretary of State of
Michigan as a financing statement on March 29, 1994 (Filing No. 41262B),
has been filed and recorded in the Office of the Interstate Commerce
Commission (Recordation No. 5485-MMMM) on March 29, 1994, and has been
recorded as a real estate mortgage in the offices of the respective
Register of Deeds of certain counties in the State of Michigan, as
follows:
</TABLE>
<TABLE>
<CAPTION>
LIBER OF
MORTGAGES
OR COUNTY
COUNTY RECORDED RECORDS PAGE
----------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Genesee........................................ 3-30-94 3013 800-823
Huron.......................................... 3-29-94 623 481-504
Ingham......................................... 3-30-94 2164 976-999
Lapeer......................................... 3-29-94 850 362-385
Lenawee........................................ 3-29-94 1306 122-145
Livingston..................................... 3-29-94 1812 0662-0685
Macomb......................................... 3-29-94 06275 627-650
Mason.......................................... 3-29-94 438 1607-1630
Monroe......................................... 3-30-94 1371 0909-0932
Oakland........................................ 3-29-94 14565 148-171
St. Clair...................................... 3-29-94 1338 776-799
Sanilac........................................ 3-29-94 454 784-807
Tuscola........................................ 3-30-94 656 497-520
Washtenaw...................................... 3-29-94 2956 926-949
Wayne.......................................... 3-29-94 27268 90-113
</TABLE>
<PAGE> 32
30
<TABLE>
<S> <C>
RECORDING OF All the bonds of Series A which were issued under the Original
CERTIFICATES Indenture dated as of October 1, 1924, and of Series B, C, D, E, F, G, H,
OF PROVISION I, J, K, L, M, N, O, P, Q, W, Y, Z, AA, BB, CC, DDP Nos. 1-9, FFR Nos.
FOR PAYMENT. 1-14, GGP Nos. 1-22, HH, IIP Nos. 1-22, JJP Nos. 1-8, KKP Nos. 1-8, LLP
Nos. 1-15, NNP Nos. 1-21, OOP Nos. 1-18, QQP Nos. 1-17, TTP Nos. 1-15, UU,
1980 Series A, 1980 Series CP Nos. 1-25, 1980 Series DP Nos. 1-11, 1981
Series AP Nos. 1-16, 1984 Series AP, 1984 Series BP, 1985 Series A, 1985
Series B, 1987 Series A, PP, RR, EE, MMP, MMP No. 2 and 1989 Series A
which were issued under Supplemental Indentures dated as of, respectively,
June 1, 1925, August 1, 1927, February 1, 1931, October 1, 1932, September
25, 1935, September 1, 1936, December 1, 1940, September 1, 1947, November
15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955,
August 15, 1957, December 15, 1970, November 15, 1971, January 15, 1973,
May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, February
1, 1976, June 15, 1976, July 15, 1976, October 1, 1977, March 1, 1977,
July 1, 1979, March 1, 1977, March 1, 1977, March 1, 1977, September 1,
1979, July 1, 1977, July 1, 1979, September 15, 1979, October 1, 1977,
June 1, 1978, October 1, 1977, July 1, 1979, January 1, 1980, August 15,
1980, November 1, 1981, October 1, 1984, May 1, 1985, May 15, 1985,
January 31, 1987, June 1, 1978, October 15, 1978, December 15, 1975,
February 15, 1977, September 1, 1979 and June 15, 1989 have matured or
have been called for redemption and funds sufficient for such payment or
redemption have been irrevocably deposited with the Trustee for that
purpose; and Certificates of Provision for Payment have been recorded in
the offices of the respective Registers of Deeds of certain counties in
the State of Michigan, with respect to all bonds of Series A, B, C, D, E,
F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP Nos. 1
and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1 and GGP No. 8.
PART IV.
THE TRUSTEE.
TERMS AND The Trustee hereby accepts the trust hereby declared and provided, and
CONDITIONS OF agrees to perform the same upon the terms and conditions in the Original
ACCEPTANCE OF Indenture, as amended to date and as supplemented by this Supplemental
TRUST BY TRUSTEE. Indenture, and in this Supplemental Indenture set forth, and upon the
following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for and
in respect of the validity or sufficiency of this Supplemental Indenture
or the due execution hereof by the Company or for or in respect of the
recitals contained herein, all of which recitals are made by the Company
solely.
PART V.
MISCELLANEOUS.
CONFIRMATION OF Except to the extent specifically provided therein, no provision of
SECTION 318(C) OF this supplemental indenture or any future supplemental indenture is
TRUST INDENTURE intended to modify, and the parties do hereby adopt and confirm, the
ACT provisions of Section 318(c) of the Trust Indenture Act which amend and
supercede provisions of the Indenture in effect prior to November 15,
1990.
EXECUTION IN THIS SUPPLEMENTAL INDENTURE MAY BE SIMULTANEOUSLY EXECUTED IN ANY NUM-
COUNTERPARTS. BER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED TO BE
AN ORIGINAL; BUT SUCH COUNTERPARTS SHALL TOGETHER CONSTITUTE BUT ONE AND
THE SAME INSTRUMENT.
</TABLE>
<PAGE> 33
31
<TABLE>
<S> <C>
TESTIMONIUM. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY AND BANKERS TRUST
COMPANY HAVE CAUSED THESE PRESENTS TO BE SIGNED IN THEIR RESPECTIVE
CORPORATE NAMES BY THEIR RESPECTIVE CHAIRMEN OF THE BOARD, PRESIDENTS,
VICE PRESIDENTS, ASSISTANT VICE PRESIDENTS, TREASURERS OR ASSISTANT
TREASURERS AND IMPRESSED WITH THEIR RESPECTIVE CORPORATE SEALS, ATTESTED
BY THEIR RESPECTIVE SECRETARIES, ASSISTANT SECRETARIES, TREASURERS OR
ASSISTANT TREASURERS ALL AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
THE DETROIT EDISON COMPANY,
(Corporate Seal) By
C. C. Arvani
Assistant Treasurer
EXECUTION. Attest:
Elaine M. Godfrey
Assistant Corporate Secretary
Signed, sealed and delivered by THE
DETROIT EDISON COMPANY, in the
presence of
Jack L. Somers
Cathy M. Lewis
STATE OF MICHIGAN
SS.:
COUNTY OF WAYNE
ACKNOWLEDGEMENT On this 1st day of August, 1995, before me, the subscriber, a Notary
OF EXECUTION Public within and for the County of Wayne, in the State of Michigan,
BY COMPANY. personally appeared C. C. Arvani, to me personally known, who, being by me
duly sworn, did say that he does business at 2000 Second Avenue, Detroit,
Michigan 48226 and is the Assistant Treasurer of THE DETROIT EDISON
COMPANY, one of the corporations described in and which executed the
foregoing instrument; that he knows the corporate seal of the said
corporation and that the seal affixed to said instrument is the corporate
seal of said corporation; and that said instrument was signed and sealed
in behalf of said corporation by authority of its Board of Directors and
that he subscribed his name thereto by like authority; and said C. C.
Arvani, acknowledged said instrument to be the free act and deed of said
corporation.
(Notarial Seal) Judith Thun, Notary Public
Wayne County, MI
My Commission Expires 6-6-99
</TABLE>
<PAGE> 34
32
<TABLE>
<S> <C> <C>
BANKERS TRUST COMPANY,
(Corporate Seal) By
James McDonough
Assistant Vice President
Attest:
Scott Thiel
Assistant Treasurer
Signed, sealed and delivered by
BANKERS TRUST COMPANY, in the
presence of
Gina Evangelista
Jason C. Theriault
STATE OF NEW YORK
SS.:
COUNTY OF NEW YORK
ACKNOWLEDGEMENT On this 2nd day of August, 1995, before me, the subscriber, a Notary
OF EXECUTION Public within and for the County of New York, in the State of New York,
BY TRUSTEE. personally appeared James McDonough, to me personally known, who, being by
me duly sworn, did say that his business office is located at Four Albany
Street, New York, New York 10015, and he is Assistant Vice President of
BANKERS TRUST COMPANY, one of the corporations described in and which
executed the foregoing instrument; that he knows the corporate seal of the
said corporation and that the seal affixed to said instrument is the
corporate seal of said corporation; and that said instrument was signed
and sealed in behalf of said corporation by authority of its Board of
Directors and that he subscribed his name thereto by like authority; and
said James McDonough acknowledged said instrument to be the free act and
deed of said corporation.
(Notarial Seal)
Carol Allen
Notary Public, State of New York
No. 24-4820187
Qualified in Kings County
Commission Expires 2-16-96
</TABLE>
<PAGE> 35
33
STATE OF MICHIGAN
SS.:
COUNTY OF WAYNE
<TABLE>
<CAPTION>
<S> <C>
AFFIDAVIT AS TO C. C. Arvani, being duly sworn, says: that he is the Assistant Treasurer
CONSIDERATION of THE DETROIT EDISON COMPANY, the Mortgagor named in the foregoing
AND GOOD FAITH. instrument, and that he has knowledge of the facts in regard to the making
of said instrument and of the consideration therefor; that the
consideration for said instrument was and is actual and adequate, and that
the same was given in good faith for the purposes in such instrument set
forth.
</TABLE>
<TABLE>
<CAPTION>
C. C. Arvani
<S> <C> <C>
Sworn to before me this 1st day of
August, 1995
Judith Thun, Notary Public
Wayne County, MI
My Commission Expires 6-6-99
(Notarial Seal)
This instrument was drafted by Frances B. Rohlman, Esq., 2000 Second Avenue,
Detroit, Michigan 48226
</TABLE>
<PAGE> 1
EXHIBIT 4-175
- --------------------------------------------------------------------------------
THE DETROIT EDISON COMPANY
AND
BANKERS TRUST COMPANY
TRUSTEE
------------------------
FOURTH SUPPLEMENTAL INDENTURE
DATED AS OF AUGUST 15, 1995
------------------------
SUPPLEMENTING THE COLLATERAL TRUST INDENTURE
DATED AS OF JUNE 30, 1993
PROVIDING FOR
8.50% QUARTERLY INCOME DEBT SECURITIES
("QUIDS") (JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES, DUE 2025)
- --------------------------------------------------------------------------------
<PAGE> 2
FOURTH SUPPLEMENTAL INDENTURE, dated as of the 15th day of August 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 8.50% Quarterly Income Debt Securities (the "QUIDS") (Junior Subordinated
Deferrable Interest Debentures Due 2025); 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 8.50%
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 September 30, 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 $49,877,700. 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 8.50% per annum from August 15, 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 August 15,
1995 and from and after August 15, 1995 at the rate of 8.50% 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 without reduction in amount due to such early payment
(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 interest 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
<PAGE> 7
6
redemption. On the Interest 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: /s/ L. L. Loomans
-------------------------------
Name: L. L. Loomans
Title: Vice President and
Treasurer
ATTEST:
By: /s/ Susan M. Beale
-------------------------------
Susan M. Beale
Vice President and
Corporate Secretary
(Corporate Seal)
BANKERS TRUST COMPANY,
as Trustee
By: /s/ James McDonough
-------------------------------
Name: James McDonough
Title: Assistant Vice President
ATTEST:
By: /s/ Scott Thiel
-------------------------------
Scott Thiel
Assistant Treasurer
(Corporate Seal)
</TABLE>
<PAGE> 17
16
STATE OF MICHIGAN)
) :
COUNTY OF WAYNE )
On the 18th day of August 1995, before me personally came L. L. Loomans, to
me known, who, being by me duly sworn, did depose and say that he is Vice
President and Treasurer 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.
-------------------------------------
Judith Thun, Notary Public
Wayne County, MI
My Commission Expires 6-6-99
[Notarial Seal]
STATE OF NEW YORK )
) :
COUNTY OF NEW YORK )
On the 18th day of August 1995, before me personally came James McDonough,
to me known, who, being by me duly sworn, did depose and say that he is
Assistant Vice President 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.
-------------------------------------
Carol Allen
Notary Public, State of New York
No. 24-4920187
Qualified in Kings County
Commission Expires 2-16-96
[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:
No. R-1 $49,877,700
THE DETROIT EDISON COMPANY
8.50% JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE 2025
<TABLE>
<CAPTION>
ISSUE PRICE ISSUE DATE CUSIP NO.
------------ ---------------- ---------
<S> <C> <C>
$25.00 August 15, 1995 250847720
</TABLE>
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
<PAGE> 19
2
Indenture hereinafter referred to), for value received, hereby promises to
pay to Cede & Co., or registered assigns, the principal sum of Forty-nine
million eight hundred seventy-seven thousand seven hundred Dollars ($49,877,700)
on September 30, 2025 and to pay interest on said principal sum from July 15,
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 Debenture ("Note") will receive interest at a rate of 7.75% per annum from
and including July 15, 1995 to but excluding August 15, 1995 and from and after
August 15, 1995 at the rate of 8.50% per annum. Interest on this Note 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 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 preceding Business Day
without reduction in the amount due to such early payment (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 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 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
<PAGE> 20
3
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 as his or her
attorney-in-fact for any and all such purposes. Each registered holder 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.
<PAGE> 21
4
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 herein, 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 August 15,
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 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
<PAGE> 22
5
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 of said Fourth Supplemental
Indenture shall not constitute an Event of Default under Section 601(1) of the
Original 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 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.
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
<PAGE> 23
6
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 registered holder of each Note so affected
or (ii) reduce the aforesaid percentage of Notes, the registered holders of
which are required to consent to any such supplemental indenture, without the
consent of the registered holders of each Note then outstanding and affected
thereby. The Indenture also contains provisions permitting (i) the registered
holders of at least 66 2/3% 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 of the Indenture and (ii) 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 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 compounded
quarterly at the rate of interest
<PAGE> 24
7
on the Notes, except as provided by law) during any 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 right, the Company shall not declare or
pay any dividends 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 registered 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 therein set forth, Notes of this series 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.
<PAGE> 27
10
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
THE DETROIT EDISON COMPANY
By
------------------------------
L. L. Loomans
Vice President and Secretary
Attest:
By
-----------------------------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
[Corporate Seal]
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
By
------------------------------
Authorized Signatory
Date:
<PAGE> 28
11
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
EXHIBIT 11-24
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
OF COMMON STOCK
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
Ended Ended Ended
September 30, 1995 September 30, 1995 September 30, 1995
------------------ ------------------ ------------------
(Thousands, except per share amounts)
<S> <C> <C> <C>
PRIMARY:
Earnings for Common Stock . . . . . . . . . . . $ 141,412 $ 331,647 $ 419,614
Weighted average number of
common shares outstanding (a) . . . . . . . . 144,906 144,882 144,877
Earnings per share of Common Stock
based on weighted average number
of shares outstanding . . . . . . . . . . . . $0.98 $2.29 $2.90
FULLY DILUTED:
Earnings for Common Stock . . . . . . . . . . . $ 141,412 $ 331,647 $ 419,614
Convertible Preferred Stock dividends . . . . . 40 188 265
---------- ---------- ----------
$ 141,452 $ 331,835 $ 419,879
========== ========== ==========
Weighted average number of common
shares outstanding (a) . . . . . . . . . . . . 144,906 144,882 144,877
Conversion of convertible Preferred
Stock . . . . . . . . . . . . . . . . . . . . 267 292 298
---------- ---------- ----------
145,173 145,174 145,175
========== ========== ==========
Earnings per share of Common Stock
assuming conversion of outstanding
convertible Preferred Stock . . . . . . . . . $0.97 $2.29 $2.89
</TABLE>
- --------------------------------------
(a) Based on a daily average.
<PAGE> 1
EXHIBIT 15-60
November 6, 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, nine-month and twelve-month periods ended September 30,
1995, as indicated in our report dated November 6, 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 September 30, 1995, is
incorporated by reference in Registration Statement No. 33-57545 on Form S-4
of DTE Holdings, Inc., and is also incorporated by reference in the following
Registration Statements of The Detroit Edison Company:
FORM REGISTRATION NUMBER
Form S-3 33-50325
Form S-3 33-53207
Form S-3 33-57095
Form S-3 33-64296
Form S-8 33-32449
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
Statements listed above which are 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
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
The Schedule contains summary financial information extracted from the
Consolidated Statement of Income, Balance Sheet, Statement of Cash Flows,
Statement of Common Shareholders' Equity and Primary and Fully Diluted
Earnings per Share of Common Stock and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,527,551
<OTHER-PROPERTY-AND-INVEST> 439,027
<TOTAL-CURRENT-ASSETS> 817,166
<TOTAL-DEFERRED-CHARGES> 1,335,832
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 11,119,576
<COMMON> 1,450,341
<CAPITAL-SURPLUS-PAID-IN> 499,611
<RETAINED-EARNINGS> 1,485,345
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,435,297
0
329,037
<LONG-TERM-DEBT-NET> 3,855,687
<SHORT-TERM-NOTES> 3,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 19,214
0
<CAPITAL-LEASE-OBLIGATIONS> 118,642
<LEASES-CURRENT> 171,195
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,187,504
<TOT-CAPITALIZATION-AND-LIAB> 11,119,576
<GROSS-OPERATING-REVENUE> 2,768,518
<INCOME-TAX-EXPENSE> 236,238
<OTHER-OPERATING-EXPENSES> 1,947,288
<TOTAL-OPERATING-EXPENSES> 2,183,526
<OPERATING-INCOME-LOSS> 584,992
<OTHER-INCOME-NET> (11,313)
<INCOME-BEFORE-INTEREST-EXPEN> 573,679
<TOTAL-INTEREST-EXPENSE> 220,677
<NET-INCOME> 353,002
21,355
<EARNINGS-AVAILABLE-FOR-COMM> 331,647
<COMMON-STOCK-DIVIDENDS> 223,897
<TOTAL-INTEREST-ON-BONDS> 205,873
<CASH-FLOW-OPERATIONS> 656,746
<EPS-PRIMARY> 2.29
<EPS-DILUTED> 2.29
</TABLE>
<PAGE> 1
EXHIBIT 99-33
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
EFFECTIVE AUGUST 7, 1995
<PAGE> 2
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
TABLE OF CONTENTS
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 2
1.1 Beneficiary 2
1.2 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Company . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 Excess Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Funding Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 General Creditors . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Insolvent . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 IRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.15 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . 5
1.17 Potential Change of Control . . . . . . . . . . . . . . . . . . . 5
1.18 Potential Change of Control Period . . . . . . . . . . . . . . . . 6
1.19 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.20 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.21 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.22 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2
<PAGE> 3
1.23 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . 7
II. ESTABLISHMENT OF THE TRUST . . . . . . . . . . . . . 7
2.1 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Description of Trust . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Irrevocability . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Acceptance by the Trustee . . . . . . . . . . . . . . . . . . . . 9
III. CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 9
3.1 Calculations of Funding Amount . . . . . . . . . . . . . . . . . . 9
3.2 Contributions as of Each Valuation Date . . . . . . . . . . . . . 9
3.3 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 No Dilution of Trust . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
IV. ACCOUNTING AND ADMINISTRATION . . . . . . . . . . . . 11
4.1 Trustee Recordkeeping . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Company Recordkeeping . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Periodic Accounting . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Administrative Powers of Trustee . . . . . . . . . . . . . . . . . 12
V. INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 15
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Investment Powers of Trustee . . . . . . . . . . . . . . . . . . . 15
5.3 Investment Managers . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Single Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
VI. PAYMENTS FROM THE TRUST . . . . . . . . . . . . . . . 20
6.1 Obligation of Trustee to Make Payments to Participants . . . . . . 20
6.2 Obligation of the Company to Make Payments to Participants . . . . 20
6.3 Distributions to Participants . . . . . . . . . . . . . . . . . . 21
6.4 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Insufficient Trust Fund Assets . . . . . . . . . . . . . . . . . . 21
3
<PAGE> 4
6.6 Payment of Excess Assets to Company . . . . . . . . . . . . . . . 21
6.7 Company to Pay Withholding and Employment Taxes . . . . . . . . . 22
6.8 Payment in Reversion to Company . . . . . . . . . . . . . . . . . 22
6.9 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
VII. PAYMENTS ON INSOLVENCY OF THE COMPANY . . . . . . . . 23
7.1 No Security Interest . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Determination of Insolvency . . . . . . . . . . . . . . . . . . 23
7.3 Payments When Company Is Insolvent . . . . . . . . . . . . . . . 24
7.4 Resumption of Duties after Insolvency . . . . . . . . . . . . . 24
7.5 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
VIII. RESIGNATION OR REMOVAL OF TRUSTEE . . . . . . . . . . 25
8.1 Resignation or Removal of Trustee . . . . . . . . . . . . . . . 25
8.2 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Duties of Retiring and Successor Trustees . . . . . . . . . . . 26
8.4 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
IX. AMENDMENT AND TERMINATION OF TRUST . . . . . . . . . 27
9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
X. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 28
10.1 Coordination with Plan . . . . . . . . . . . . . . . . . . . . . 28
10.2 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3 Trustee's Action Conclusive . . . . . . . . . . . . . . . . . . 28
10.4 No Guarantee or Responsibility . . . . . . . . . . . . . . . . . 29
10.5 Liabilities Mutually Exclusive . . . . . . . . . . . . . . . . . 29
10.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 29
10.7 Expenses and Compensation . . . . . . . . . . . . . . . . . . . 29
10.8 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4
<PAGE> 5
10.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.10 Antiassignment Clause . . . . . . . . . . . . . . . . . . . . . 30
10.11 True and Correct Document . . . . . . . . . . . . . . . . . . . 30
10.12 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . 30
10.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.14 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . 31
10.15 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.17 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXHIBIT A The Detroit Edison Company
IRREVOCABLE GRANTOR TRUST
FOR THE DETROIT EDISON COMPANY PLAN FOR DEFERRING THE PAYMENT OF DIRECTORS'
FEES
EXHIBIT B The Detroit Edison Company
IRREVOCABLE GRANTOR TRUST
PARTICIPANTS (as defined in the Trust)
<PAGE> 6
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
THIS TRUST AGREEMENT is made this 7th day of August, 1995 by and
between The Detroit Edison Company, a Michigan corporation, and The Northern
Trust Company, an Illinois corporation, of Chicago, Illinois ("Trustee"), and
any successor provided for in the Trust hereby evidenced, as Trustee.
WITNESSETH THAT:
WHEREAS, the Company has established and maintains The Detroit Edison
Company Plan for Deferring the Payment of Directors' Fees ("Plan"), an unfunded
benefit plan, a copy of which is attached hereto as Exhibit A, for the benefit
of certain Company Directors listed on Exhibit B hereto, which Exhibits may be
amended from time to time by the Company prior to a potential Change of Control
and/or Change of Control, and without the Trustee's consent; and
WHEREAS, the Company has incurred and expects to continue to incur
liabilities pursuant to the terms of the Plan, and wishes to establish an
irrevocable trust by placing assets in trust, subject to the claims of the
Company's creditors in the event the Company becomes Insolvent, to pay benefits
under the Plan or to be applied as otherwise provided for herein; and
WHEREAS, it is the intention of the Company that amounts transferred
to the Trust and the earnings thereon shall be used by the Trustee, subject to
the claims of the Company's creditors in the event the Company becomes
Insolvent, to satisfy the liabilities of the Company in accordance with the
provisions hereof; and, upon satisfaction of all liabilities of the Company
with respect to all Participants (and their Beneficiaries, if applicable), the
assets, if any, remaining in the Trust shall revert to the Company; and
WHEREAS, the Company intends that the existence of the Trust shall not
alter the characteristics of the Plan as an unfunded plan maintained primarily
for the purpose of providing deferred compensation for certain non-employe
members of the Board of Directors, and shall not be construed to provide income
for federal income tax purposes to a Participant (or his or her Beneficiary)
prior to the actual payment of benefits under the Plans; and
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WHEREAS, the Trustee has agreed to serve as trustee of such trust;
NOW, THEREFORE, in consideration of the mutual undertakings of the Company and
the Trustee, the parties do hereby establish the Trust, and agree that the
Trust shall be comprised, held, and disposed of as follows:
I. DEFINITIONS Unless the context requires otherwise, definitions as
used herein shall have the same meaning as in the Plan when applied to said
Plan.
1.1 "Beneficiary" means the beneficiary designated as provided in
the Plan as set forth in Exhibit A.
1.2 "Board of Directors" means the Company's Board of Directors,
as constituted from time to time.
1.3 "Change of Control" 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 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
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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 1.3 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.
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The Company shall promptly notify the Trustee of a Change of Control and the
Trustee may conclusively rely upon such notice and shall have no duty to
independently determine whether a Change of Control has occurred.
1.4 "Company" means The Detroit Edison Company, a Michigan
corporation, its successors and assigns.
1.5 "Effective Date" means August 7, 1995.
1.6 Reserved.
1.7 "Excess Assets" means assets of the Trust in excess of one
hundred and twenty-five per cent (125%) of the Funding Amount.
1.8 "Funding Amount" means the actual benefit obligation on the
books of the Company as of the most recent Valuation Date, certified by the
Company to the Trustee. Upon any Potential Change of Control and during any
Potential Change of Control Period, "Funding Amount" means one hundred and
twenty per cent (120%) of the actual benefit obligation on the books of the
Company as of the most recent Valuation Date, as certified by the Company to
the Trustee.
1.9 "General Creditors" means the unsecured general creditors of
the Company, including the Participants.
1.10 Reserved.
1.11 "Insolvent" and "Insolvency" mean that the Company
(a) is unable to pay its debts as they become due; or
(b) is subject to a pending proceeding as a debtor under the
Bankruptcy Code.
1.12 "Investment Manager" means the investment manager(s) appointed
by the Company in the manner provided in Section 5.3 to direct the investment
of any part or all of the assets of the Trust Fund in accordance with Article
V.
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1.13 "IRC" means the Internal Revenue Code of 1986, as amended.
1.14 "Participant" means a Participant in the Plan and includes an
individual who is otherwise eligible to participate in the Plan but cannot due
to age, years of service or active employment. The Company agrees to list all
Participants on Exhibit B attached hereto. Except after a Change of Control as
provided in Section 3.4, the Company may add or delete Participants by
delivering a new Exhibit B to the Trustee.
1.15 Reserved.
1.16 "Plan Administrator" means the party designated under the Plan
as responsible for the management, operation, and administration of the Plan.
1.17 "Potential Change of Control" means the date of the earliest
occurrence of any of the following events:
(a) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change of Control of the
Company; 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 employee
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 9.5% or more
of the combined voting 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) the public announcement by any individual or entity,
other than the Company, that such individual or entity intends to take
or to consider taking actions which, if consummated, would constitute a
Change of Control of the Company; or
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(d) the public announcement of any merger, acquisition,
consolidation, or reorganization 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 transaction in which the
holders of the Company's common stock immediately prior to the merger,
acquisition, consolidation, or reorganization have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, acquisition, consolidation, or
reorganization, including, but not limited to, the creation of a
parent entity to oversee the Company; or
(e) the public announcement of the sale or other
transfer of substantially all of the assets of the Company to
any third party; or
Notwithstanding the foregoing provisions of this Section 1.17, a "Potential
Change of Control" shall not be deemed to have occurred by reason of the
Reorganization (as defined in Section 1.3).
1.18 "Potential Change of Control Period" means the one (1) year
period immediately following the date of a Potential Change of Control. If a
subsequent Potential Change of Control occurs during any Potential Change of
Control Period, the Potential Change of Control Period shall end one (1) year
following the date of the most recent Potential Change of Control.
The Company shall promptly notify the Trustee of a Potential
Change of Control and the Trustee may conclusively rely upon such notice and
shall have no duty to independently determine whether a Potential Change of
Control has occurred.
1.19 Reserved.
1.20 "Trust" means the irrevocable trust established pursuant to
this Trust Agreement and all of the terms and conditions of this Trust
Agreement, which is intended to constitute a grantor trust under IRC Section
Section 671 et seq.
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1.21 "Trust Fund" means all moneys, securities, and other property
held by the Trustee, any custodian, or any insurance company under this Trust.
1.22 "Trustee" shall mean the trustee named herein, and any
successor trustee appointed pursuant to Article VIII.
1.23 "Valuation Date" means the day in each calendar year which is
the last day of the Company's fiscal year in each year, and such other times as
the Company may determine. Each of (a) any date of a Potential Change of
Control, (b) the date of a Change of Control, (c) the effective date of a
Trustee's resignation or removal, and (d) the date of termination of the Trust
shall also be a Valuation Date if any such date occurs other than on the last
business day of the Company's fiscal Year. Notwithstanding the foregoing,
however, the first Valuation Date shall be January 31, 1995.
II. ESTABLISHMENT OF THE TRUST
2.1 Trust. The Company hereby establishes the Trust with the
Trustee, which Trust shall consist of such sums of money and other property
acceptable to the Trustee as from time to time have been and shall be paid or
delivered by the Company to the Trustee as provided herein. All such money and
other property, all investments and reinvestments made therewith, or the
proceeds thereof, and all investment earnings and profits thereon, less all
payments and charges as authorized herein, shall constitute the Trust Fund. The
Trust Fund shall be held in trust by the Trustee, and shall be dealt with in
accordance with the provisions of this Trust.
2.2 Description of Trust. The Company represents and agrees that:
(a) the Trust is intended to be a grantor trust under IRC
Section Section 671-678, and shall be construed accordingly. The
Company intends and agrees that it is the "owner" or grantor of the
Trust in its entirety, as that term is defined in subpart E, part I,
subchapter J, chapter 1, subtitle A of the IRC and that, for income
tax purposes, all income, deductions, and credits of the Trust Fund
belong to it as owner, and will be included on its income tax or other
required tax returns, and any income tax determined to be payable as a
result thereof will be the sole obligation of, and will be paid by,
the Company;
(b) a true and correct copy of the Plan, as in effect on
the Effective Date hereof, is attached hereto as Exhibit A. The Company
shall file with the
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Trustee, promptly upon its adoption, a true and correct copy of each
amendment to the Plan;
(c) the Trust Fund is to be used to satisfy the legal
obligations of the Company to Participants under the Plan as provided
herein, subject to the claims of General Creditors in the event of
Insolvency, and the balance of the Trust Fund, if any, remaining after
payment of the Company's obligation to Participants under the Plan
will revert to the Company in accordance with the Trust;
(d) contributions by the Company to the Trust which are made
coincident with and subsequent to the Effective Date shall be in
amounts determined under Article III hereof. The Company agrees
to fund the Trust as provided therein;
(e) the principal of the Trust, and any earnings thereon
shall be held by the Trustee separate and apart from other funds of
Company, and shall be used exclusively for the uses and purposes as
herein set forth;
(f) the Trust established under this agreement does not
fund and is not intended to fund the Plan, or any other benefit plan
or program of the Company. Neither the establishment of the Trust,
nor the payment or delivery of assets to the Trustee shall vest any
Participant in any right, title, or interest in or to any assets of
the Trust Fund;
(g) participants shall have no preferred claim on, or any
beneficial ownership interest in, assets of the Trust. To the extent
that any Participant acquires the right to receive payment(s) under
the Plan, any such right shall be mere unsecured contractual rights of
Participants against the Company, and such Participants (or their
Beneficiary(ies)) shall have only the unsecured promise of the Company
that such payment(s) will be made. Any assets held by the Trust will
be subject to the claims of General Creditors under federal and state
law in the event of Insolvency, as defined herein, with no preference
whatsoever given to claims of Participants over claims of other
unsecured creditors of the Company; and
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(h) to the extent the Plan is covered by ERISA, the Plan is
a plan for a select group of management or highly compensated
employes, and as such are exempt from the application of ERISA except
for the disclosure requirements applicable to such plan, for which the
Company bears full responsibility as to compliance. The Company
further represents that the Plan is not qualified under IRC Section
401 and therefore, is not subject to any IRC requirements applicable
to tax-qualified plans.
2.3 Irrevocability. Except as provided in Article 9 and this
Section 2.3, the Trust shall be irrevocable from the effective date, and the
assets of the Trust Fund shall be held in accordance with the provisions hereof
for the exclusive purpose of providing for the payment of the Company's
obligations to pay benefits to Participants under the Plan and to satisfy the
claims of General Creditors in the event of Insolvency, and defraying the
expenses of the Trust. Except as provided in Section 6.6 and Section 6.8 and
in the event of Insolvency, no part of the income or corpus of the Trust Fund
shall be recoverable by or for the benefit of the Company.
2.4 Acceptance by the Trustee. The Trustee accepts the Trust
established under this Trust Agreement on the terms and subject to the
provisions set forth herein, and agrees to discharge and perform fully and
faithfully all of the duties and obligations imposed upon it under this Trust.
III. CONTRIBUTIONS
3.1 Calculations of Funding Amount. By September 30, 1995, the
Company shall contribute to the Trust the Funding Amount as determined on the
first Valuation Date. As of each Valuation Date, and until the entire Trust
Fund has been distributed, the Company (or, after a Change of Control, the
Company's independent public accountants) shall recalculate the Funding
Amounts.
3.2 Contributions as of Each Valuation Date. During the life of
the Trust but no later than September 30 of each year, commencing no later than
September 30, 1996, the Company shall contribute to the Trust such amount as is
necessary to make trust assets equal the Funding Amount as of the previous
Valuation Date. The Plan Administrator or its delegate (or, after a Change of
Control, the Company's independent public accountants) shall provide the
Trustee with written notice of the amount of the necessary contribution on or
before the date such contribution is due to the Trust. Any such payments to the
Trustee do not discharge or release the Company of its obligation under the
Plan or Section 6.2 to pay benefits to Participants under the Plan, and shall
at all times be subject to the provisions of Article VII.
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3.3 Reserved.
3.4 No Dilution of Trust. After a Change of Control, the Exhibit
B in effect on the date of a Change of Control shall not be amended to include
a Participant not named in the Exhibit B in effect on the date of a Change of
Control, unless pursuant to the requirements of this Section 3.4, at the time
of delivery to the Trustee of a proposed amended Exhibit B (the "Delivery
Date"), the Company shall deliver to the Trustee a determination by the
Company's independent public accountants as of the Delivery Date of the
proposed amended Exhibit B of the Funding Amount calculated based on the
Participants named in the Exhibit B in effect on the Date of the Change of
Control and any new or additional Participants named in the proposed amended
Exhibit B (the "New Funding Amount") and (b), assets in an amount necessary to
make the trust assets equal the New Funding Amount. If the Trustee determines
that assets of the Trust Fund, including such assets as are delivered by the
Company on the Delivery Date, equal or exceed the New Funding Amount, the
Trustee shall accept the amended Exhibit B. Any amended Exhibit B so accepted
shall be deemed incorporated with the same effect as if otherwise included
herein. Unless an Exhibit B amended after a Change of Control is accepted by
the Trustee as provided in this Section, the Trustee shall have no liability,
responsibility, or obligation with respect to a Participant named in any
amended Exhibit B unless such Participant is named in the Exhibit B then in
effect on the date of a Change of Control.
3.5 Collection. In the event the Company fails to pay over to the
Trustee within one hundred and twenty (120) days of notice and demand from the
Trustee (or, upon the occurrence of a Potential Change of Control or a Change
of Control, within seven (7) days of notice and demand from the Trustee), any
amount determined to be payable by the Company to the Trustee under Sections
3.2, 6.5 or 7.4(a) of the Trust, the Trustee may commence legal action, (which
is expressly deemed to include without limitation an alternate dispute
resolution proceeding), to compel the Company to pay to the Trustee any amount
determined to be payable to it under the Trust. The Trustee may bring such
action against the Company in any court of competent jurisdiction, and shall be
entitled to recover for the benefit of the Trust from the Company such amount,
plus interest for each day at the rate of interest per annum of five (5)
percentage points in excess of the prime lending rate as announced by NBD Bank,
from the due date specified in the Trustee's notice and demand (or the date(s)
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from which pro rata payments were made, if such action is brought by the
Trustee pursuant to Section 6.5 hereof) to the date of payment, plus all costs
of collection, including reasonable attorneys fees and costs of litigation. The
Trustee is authorized to bring action to compel payment by the Company, and, in
connection with reasonable claims for delinquent contributions by the Company,
to retain, at the expense of the Company, counsel and other appropriate
experts, including actuaries and accountants, to aid it in pursuing litigation
for collection against the Company. The Trustee's anticipated reasonable costs
and expenses incurred pursuant to this Section 3.5 are payable by the Company
in advance; and should the Company not make timely payment, the Trustee may
charge the Trust Fund for such reasonably anticipated costs and expenses. The
Trustee shall in no event be required to advance or expend its own funds in
order to comply with the provisions of this Section 3.5.
IV. ACCOUNTING AND ADMINISTRATION
4.1 Trustee Recordkeeping. The Trustee shall keep or cause to be
kept accurate and detailed records of any investments, receipts, disbursements,
and all other transactions required to be made by the Trustee hereunder, in
accordance with such rules as may be established by the Company, including such
specific records as shall be agreed upon in writing between the Company and the
Trustee. All accounts, books, and records relating thereto shall be open to
inspection and audit at all reasonable times by any person designated by the
Company. All such accounts, books, and records shall be preserved (in original
form, or on microfilm, magnetic tape, or any other similar process) for such
period as the Company may determine, and the Trustee may only destroy such
accounts, books, and records after first notifying the Company in writing of
its intention to so, and transferring to the Company any of such accounts,
books, and records requested by the Company.
4.2 Company Recordkeeping. The Company shall keep full, accurate,
and detailed books and records with respect to the Participants and benefits
paid and payable under the Plan, which records shall be made available to the
Trustee at its request.
4.3 Periodic Accounting. Within sixty (60) days following a
Valuation Date, the Trustee shall deliver to Company a written accounting,
dated as of the Valuation Date, of its administration of the Trust Fund during
such year or during the period from the most recent Valuation Date to the date
of such current Valuation Date, which accounting shall be in accordance with
the following provisions:
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(a) Such accounting shall set forth all investments, receipts,
disbursements, and other transactions effected the by Trust Fund
during the preceding year, or during the period from the most
recent Valuation Date to the date of such current Valuation Date,
including a description of all securities and investments purchased
and sold, with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and
showing all cash, securities or other property held in the Trust Fund,
less liabilities known to the Trustee (other than liabilities to
Participants entitled to benefits under the Plans) at the end of such
year or other period, as the case may be. In making a valuation, all
cash, securities or other property held in the Trust Fund shall be
valued at their then fair market value, and shall be in a format as
may be established by the Company. A copy of each accounting so
delivered to the Company shall be open to inspection at the office of
the Trustee during normal business hours.
(b) If within ninety (90) days after the filing of such written
accounting, the Company has not delivered to the Trustee notice of any
objection to any act or transaction of the Trustee, the initial
accounting shall become an account stated as between the Trustee and
the Company. If any objection has been delivered to the Trustee by the
Company, and if the Company is satisfied that it should be withdrawn,
the Company shall signify its approval of the accounting in writing
filed with the Trustee, and the accounting shall become an account
stated as between the Trustee and the Company. If the accounting is
adjusted following an objection thereto, the Trustee shall file and
deliver the adjusted accounting to the Company. If within fifteen (15)
days after such filing of an adjusted accounting, the Company has not
delivered to the Trustee notice of any objection to the transactions
as so adjusted, the adjusted accounting shall become an account stated
as between the Trustee and the Company.
(c) Unless an accounting is fraudulent, when it becomes an account
stated, it shall be finally settled, and the Trustee shall, to the
extent permitted by applicable law, be forever released and discharged
from all liability and accountability with respect to the propriety
of its acts and transactions shown in such accounting.
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4.4 Administrative Powers of Trustee. Except to the extent that
authority with respect to the administration of the Trust has been allocated to
others in accordance with this Trust, and subject to Article V, the Trustee
shall have exclusive authority and discretion to manage and administer the
Trust. The Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of
like character and with like aims, provided, however, that Trustee shall incur
no liability to any person for any action taken pursuant to a direction,
request or approval given by Company which is contemplated by, and in
conformity with, the terms of the Trustee's responsibilities under this Trust,
and is given in writing by Company. The responsibility for maintenance of
individual benefit records shall be retained by the Company, and may be
delegated to such person or entity as the Company may employ from time to time.
Except as otherwise provided herein, the Trustee shall have, without exclusion,
all powers conferred on trustees by law and, without limiting the foregoing,
shall have the following administrative powers, rights, and duties in addition
to those provided elsewhere in this Trust:
(a) to manage, sell, insure, and otherwise deal with all
assets held by the Trustee on such terms and conditions as the Trustee
shall decide; provided however, that if the Company delivers written
instructions to the Trustee, the Trustee shall follow such
instructions;
(b) when directed by the Company or requested by a
Participant pursuant to Article VI, to make payments from the Trust
Fund to Participants and, when required by Article VII, to make
payments from the Trust Fund to General Creditors entitled to payments
thereunder;
(c) except as provided in Article VI and Article VII, to
waive, modify, reduce, compromise, release, contest, submit to
arbitration, or settle or extend the time of payment of any claims,
debts, damages, or demands of any nature in favor of or against the
Trustee or all or any part of the Trust Fund;
(d) to retain any disputed property until an appropriate
final adjudication or release is obtained, and to represent the Trust
in, or commence or defend, any litigation the Trustee considers in its
discretion necessary in connection with the Trust Fund;
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(e) to withhold, if the Company so directs, all or any part
of any payment required to be made hereunder as may be necessary and
proper to protect the Trustee or the Trust Fund against any liability
or claim on account of any estate, inheritance, income or other tax or
assessment attributable to any amount payable hereunder, and to
discharge any such liability with any part or all of such payment so
withheld in accordance with Section 6.7;
(f) to maintain records reflecting all receipts and
payments under this Trust and such other records as the Company may
specify and to which the Trustee agrees, which records may be audited
from time to time by the Company or anyone named by the Company; and
to furnish a written accounting to the Company as of each Valuation
Date, as provided in Section 4.3;
(g) if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary of the policy
other than the Trust, to assign the policy (as distinct from
conversion of the policy from a different form) other than to a
successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy. Notwithstanding the preceding sentence,
the Trustee may loan to the Company the proceeds of any borrowing
against an insurance policy held as an asset of the Trust;
(h) to furnish the Company with such information for tax or
other purposes which the Company may reasonably request and which the
Trustee may not unreasonably withhold;
(i) to employ accountants, advisors, agents, legal counsel
(who, except following a Change of Control, may be legal counsel to
the Company and who are not in the Company's reasonable judgment
deemed to have a conflict of interest), consultants, custodians,
depositories, experts and other providers of services, to consult with
them with respect to the implementation and construction of this
Trust, the duties of the Trustee hereunder, the transactions
contemplated by this Trust, or any act which the Trustee proposes to
take or omit, and to rely upon the advice of and services performed by
such persons; to delegate discretionary powers to such persons and to
reasonably rely upon information and advice furnished by such persons;
provided that each such
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delegation and the acceptance thereof by each such person shall
be in writing; and provided further that the Trustee may not delegate
its responsibilities as to the management or control of the assets of
the Trust Fund;
(j) to determine whether the Company is Insolvent, and to
hold assets of the Trust Fund for the benefit of General Creditors in
the event of Insolvency, as provided in Article VII hereof;
(k) to make payments to Participants, including after a
Change of Control, as provided in Article VI hereof;
(l) to perform all other acts which in the Trustee's
judgment are appropriate for the proper protection, management,
investment, and distribution of the Trust Fund, and to carry out the
purposes of the Trust.
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V. INVESTMENTS
5.1 Generally. With respect to assets for which the Trustee has
investment responsibility, the Trustee shall invest and reinvest the principal
and income of the Trust Fund and keep the Trust Fund invested, without
distinction between principal and income, in accordance with the written
investment guidelines established by the Company and provided to the Trustee by
the Company. If no such written investment guidelines are received by the
Trustee, the assets of the Trust Fund shall be invested in such investments as
determined by the Trustee in accordance with the powers contained herein.
5.2 Investment Powers of Trustee. Except to the extent that
authority with respect to the management of all or a portion of the Trust Fund
has been allocated to others in accordance with this Trust, the Trustee shall
have exclusive authority and discretion to manage and control the Trust Fund,
subject only to broad investment guidelines the Company may establish from time
to time. The authority to assume responsibility for investment of assets of the
Trust Fund has been retained by the Company, and the authority to hold assets
of the Trust Fund may be allocated to one or more custodians or insurance
companies. Except as otherwise provided herein, the Trustee shall have, without
exclusion, all powers conferred on trustees by applicable law and, without
limiting the foregoing, shall have the following powers, rights, and duties in
addition to those provided elsewhere in this Trust:
(a) to invest and reinvest in any property wherever
situated, whether real, personal, mixed, foreign or domestic,
including common and preferred stocks, bonds, notes, and debentures
(including convertible stocks and securities, but not including any
stock, securities, or debt instruments of the Company [unless held in
a collective or commingled fund and such Company securities comprise
5% or less of the assets of such fund]), leaseholds, mortgages
(including, without limitation, any collective or part interest in any
bond and mortgage or note and mortgage), certificates of deposit, life
insurance contracts, guaranteed investment contracts, and guaranteed
annuity contract, all regardless of diversification and without being
limited to investments authorized by law for the investment of trust
funds;
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(b) to invest and reinvest, without distinction between
principal and income, in contracts for future delivery of United
States Treasury Bills, other financial instruments, or indices based
on any group of securities, and in options to buy or sell indices
based on any group of securities or any kind of evidences of ownership
or indebtedness, including financial instruments or futures contracts
relating thereto;
(c) to invest and reinvest part or all of the Trust Fund
in any deposit accounts, deposit administration fund maintained by a
legal reserve life insurance company in accordance with an agreement
between the Trustee and such insurance company, a group annuity
contract or life insurance policies issued by such insurance company
to the Trustee as contract holder, any interest bearing deposits held
by any financial institution having total capital and surplus of at
least Fifty Million Dollars ($50,000,000), investments in any stocks,
bonds, debentures, mutual fund shares, notes, commercial paper,
treasury bills, and any mutual, common, commingled or collective trust
funds or pooled investment funds, and to diversify such investments so
as to minimize the risk of losses;
(d) to commingle assets of the Trust Fund, for investment
purposes only, with assets of any common, collective, or commingled
trust fund which has been or may hereafter be established and
maintained by the Trustee, or by any other financial institution;
provided that to the extent that any part or all of the assets of the
Trust Fund for which the Trustee has investment responsibility are
invested in any such common, collective or commingled trust fund or
pooled investment fund which is maintained by a bank or trust company
(including a bank or trust company acting as Trustee), the provisions
of the documents under which such common, collective or commingled
trust fund or pooled investment fund are maintained shall govern any
investment therein and provided further that prior to investing any
portion of the Trust Fund for the first time in any such common,
collective, or commingled trust fund, the Trustee shall advise the
Company of its intent to make such an investment, and furnish to the
Company any information it may reasonably request with respect to such
common, collective, or commingled trust fund (other than a trust fund
established by the Company), and provided further that the Trustee
shall maintain separate records with respect to each other trust of
the Trust Fund;
(e) to vote stock and other voting securities personally
or by proxy (and to delegate the Trustee's powers and discretion with
respect to such stock or other voting securities to such proxy), to
exercise subscription, conversion
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and other rights and options (and make payments from the Trust
Fund in connection therewith), to take any action and to abstain from
taking any action with respect to any reorganization, consolidation,
merger, dissolution, recapitalization, refinancing and any other plan
or change affecting any property constituting a part of the Trust Fund
(and in connection therewith to delegate the Trustee's discretionary
powers and pay assessments, subscriptions and other charges from the
Trust Fund), to hold or register any property from time to time in the
Trustee's name or in the name of a nominee or to hold it unregistered
or in such form that title shall pass by delivery; and to borrow from
anyone, including itself (to the extent permitted by law), such
amounts from time to time as the Trustee considers desirable to carry
out this Trust (and to mortgage or pledge all or part of the Trust
Fund as security); to participate in any plan or reorganization,
consolidation, merger, combination, liquidation, or other similar plan
relating to any such property, and to consent to or oppose any such
plan or any action thereunder, or any contract, lease, mortgage,
purchase, sale, or other action by any corporation or other entity any
of the securities of which may at any time be held in the Trust Fund,
and to do any act with reference thereto;
(f) to retain in cash such amounts as the Trustee
considers advisable and as are permitted by applicable law, and to
deposit any cash so retained in any depository (including any bank
acting as Trustee) which the Trustee may select, provided such
depository must have total capital and surplus of at least Fifty
Million Dollars ($50,000,000);
(g) when directed by the Company, and subject to Section
4.4(g), to apply for, pay premiums on, and maintain in force
individual, ordinary or universal life insurance policies on the lives
of Participants, which policies may contain provisions which the
Company may approve or direct; to receive or acquire such policy or
policies from the Company, but the Trustee may purchase a life
insurance policy from a person other than the insurer which issues a
policy only if the Trustee pays, transfers, or otherwise exchanges an
amount no more than the cash surrender value of the policy or
policies, and the policy or policies is (are) not subject to a
mortgage or similar lien which the Trustee would be required to
assume; to have with respect to such policy or policies any rights,
powers, options, privileges, and benefits usually comprised
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in the term "incidents of ownership", and normally vested in an
owner of such policy or policies to be exercised only pursuant to
Company direction;
(h) to retain any property at any time received by it;
(i) to sell, to exchange, to convey, to transfer, or to
dispose of, and to grant options for the purchase or exchange with
respect to it, any property at any time held by it, by public or
private sale, for cash or on credit, or partly for cash and partly for
credit;
(j) to deposit any such property with any protective,
reorganization, or similar committee; to delegate discretionary power
to any such committee; and to pay part of the expenses and
compensation of any such committee and any assessments levied with
respect to any property so deposited;
(k) to exercise any conversion privilege or subscription
right available in connection with any such property, and to do any
act with reference thereto, including the exercise of options, the
making of agreements or subscription, and the payment of expenses,
assessment or subscription, which may be deemed necessary or advisable
in connection therewith, and to hold and retain any securities or
other property which it may so acquire;
(l) to extend the time of payment of any obligation held
in the Trust Fund;
(m) to enter into standby agreements for future
investment, either with or without a standby fee;
(n) to acquire, renew, or extend, or participate in the
renewal or extension of any mortgage, and to agree to a reduction in
the rate of interest on any indebtedness or mortgage or to any other
modification or change in the terms of any indebtedness or mortgage,
or of any guarantee pertaining thereto, in any manner and to any
extent that may be deemed advisable for the protection of the Trust
Fund or the preservation of any covenant or condition of any
indebtedness or mortgage or in the performance of any guarantee, or to
enforce any default in such manner and to such extent as may be deemed
advisable; and to exercise and enforce any and all rights of
foreclosure, to bid on any property in foreclosure, to take a deed in
lieu of foreclosure with or without paying a consideration therefor,
and in connection therewith to release the obligation on the bond
secured by such mortgage; and to exercise and
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enforce in any action, suit or proceeding at law or in equity any
rights or remedies in respect of any such indebtedness or mortgage or
guarantee;
(o) to make, execute, and deliver, as Trustee, any and all deeds,
leases, notes, bonds, guarantees, mortgage, conveyance, contracts,
waivers, releases, or other instruments in writing necessary or proper
for the accomplishment of any of the foregoing powers;
(p) to organize under the laws of any state one or more
corporations, partnerships, or trusts for the purpose of acquiring and
holding title to any property that it is authorized to acquire under
this Trust, and to exercise with respect thereto any or all of the
powers set forth in this Trust;
(q) notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee shall not have
any power that could give this Trust the objective of carrying on a
business and dividing the gains therefrom, within the meaning of
Section 301.7701-2 of the Procedure and Administrative Regulations
promulgated under the IRC; and
(r) generally to do all acts, whether or not expressly authorized,
that the Trustee deems necessary or desirable for the protection of
the Trust Fund, and to carry out the purposes of the Trust.
5.3 Investment Managers. The Company may appoint one or more
Investment Managers to direct the investment of any part or all of the assets
of the Trust Fund by the Trustee. Appointment of an Investment Manager shall be
made by written notice to the Investment Manager(s) and to the Trustee, which
notice shall specify those powers, rights, and duties of the Trustee under this
Trust that are allocated to the Investment Manager(s) and the portion of the
assets of the Trust Fund subject to the Investment Manager(s). After it
receives written notice of such appointment, the Trustee shall have no
obligation or responsibility for those investment duties which are allocated to
an Investment Manager. An Investment Manager so appointed pursuant to this
paragraph shall be either a registered investment adviser under the Investment
Advisers Act of 1940, a bank, as defined in said Act, or an insurance company
qualified to manage, acquire and dispose of the assets of the Plans under the
laws of more than one state of the United States. Any
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such Investment Manager shall acknowledge to the Company in writing that is
accepts such appointment. The Trustee shall not be liable for any loss or
diminution of any assets managed by an Investment Manager, including without
limitation, any loss or diminution caused by any action or inaction taken or
omitted by it at the direction of an Investment Manager. In addition, the
Trustee shall not be liable for the diversification of any assets managed by
Investment Managers of the Company, each of which shall be solely the
responsibility of the Company. An Investment Manager may resign at any time
upon written notice to the Trustee and the Company. The Company may remove an
Investment Manager at any time by written notice to the Investment Manager and
the Trustee.
The Company may by written notice to the Trustee assume investment
responsibility for any portion or all of the Trust assets. The Trustee shall
have no responsibility for any investments or review of such investments and
shall act with respect to such assets only as directed by the Company.
5.4 Reserved.
5.5 Single Fund. All assets of the Trust Fund and of each
investment fund, and the income thereon, shall be held and invested as a single
fund, and the Trustee shall not make any separate investment of the Trust Fund,
or make any separate investment fund, for the account of any Participant or
other General Creditors prior to receipt of directions to make payments to such
Participant or other General Creditors in accordance with Article VI or Article
VII. All rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no event be
exercisable by or rest with Participants.
VI. PAYMENTS FROM THE TRUST
6.1 Obligation of Trustee to Make Payments to Participants. The
Trustee's obligation to distribute to any Participant out of the assets of the
Trust Fund shall be limited to payment at such times and in such amounts as are
properly in conformance with the provisions of Section 6.3. Payments to
Participants pursuant to this Article VI shall be made by the Trustee to the
extent that funds in the Trust Fund are sufficient for such purpose, and shall
at all times be subject to the provisions of Article VII. In the event the
Company determines that it will pay benefits directly to Participants as they
become due under the terms of the Plan, the Company shall notify Trustee of its
decision prior to the time amounts are payable to Participants.
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6.2 Obligation of the Company to Make Payments to Participants.
Notwithstanding anything in the Trust to the contrary, the Company shall remain
primarily liable to pay benefits under the Plan. Distributions to Participants
from the Trust Fund shall discharge, reduce, and offset the Company's
obligation to pay benefits to or on behalf of the Participant, to the extent of
the distributions, with respect to the Plan. If the Company's obligation to pay
a benefit under the Plan is not fully discharged, reduced, and offset by a
distribution from the Trust, then the Company shall make the balance of each
such benefit payment as it becomes due.
6.3 Distributions to Participants. Distributions which shall be
made from the Trust Fund to pay benefits in accordance with the Plan shall be
initiated by:
(a) written direction to the Trustee from the Plan
Administrator, which direction shall certify that such distribution(s)
is(are) in accordance with the Plan, and specify the timing, form,
payee, and amount of such benefit payments, including any federal,
state, or local income taxes to be withheld, and the Trustee shall
make or commence the directed distributions after receipt of such
written direction; or
(b) by the submission to the Trustee by a Participant of a
certified copy of the non-appealable order of an appropriate forum
with jurisdiction to settle a claim for payment(s) under the Plan.
6.4 Reserved.
6.5 Insufficient Trust Fund Assets. If at any time the Trustee
determines or is advised that the Trust Fund does not have sufficient assets to
permit the Trustee to make a payment property directed pursuant to this Trust,
including a payment provided for under Section 10.7 of this Trust, the Trustee
shall pay any benefits due (if otherwise payable hereunder) to Participants on
a pro rata basis as directed by the Plan Administrator, and the Company shall
make the balance of such payments as they become due. If the Plan Administrator
determines that the Trust Fund does not have sufficient funds to provide for
the payment of all amounts otherwise payable to Participants (or their
Beneficiary(ies)) from the Trust under the Plans, it shall notify the Company
and the Trustee of the amount of the deficiency, and, within forty-five (45)
days of such notice, the Company deposit in trust with the Trustee the
additional
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amounts needed to make such payments. Upon receipt of such amount
by the Trustee from the Company, proceeds shall first be used by the Trustee to
pay any benefits previously due remaining unpaid, in the order in which they
were due, pursuant to Plan Administrator instructions.
6.6 Payment of Excess Assets to Company. Subject to Article VII,
and except as otherwise provided in this Section and Section 6.8 hereof, the
Company shall have no right or power to direct the Trustee to return to the
Company or to divert to others any of the Trust Fund before payment of all
benefits due or to become due have been made to Participants (or their
Beneficiary(ies)) pursuant to the terms of the Plan. If, as of a Valuation
Date, and based on the fair market value of the Trust Fund as determined by the
Trustee in accordance with Section 4.3 hereof, the Trust Fund holds Excess
Assets, then in the event the Trustee has received within ninety (90) days
after the most recent Valuation Date a written request executed by the Company,
the Trustee shall transfer to the Company, within thirty (30) days after the
receipt of the request, and provided that a Potential Change of Control Period
does not exist on the date of the transfer, such assets of the Trust Fund
selected by the Company which have a fair market value equal to the amount of
such Excess Assets, after converting such assets to cash if requested by the
Company. Any payment of Excess Assets to the Company under this Section shall
not discharge or release the Company of its obligation to make any contribution
required under Article III (including the requirement of a Company contribution
to the Trust upon the occurrence of a Potential Change of Control or a Change
of Control), and its obligation to pay benefits to Participants under the Plan.
Any payment of Excess Assets in accordance with this Section shall be subject
to the provisions of Article VII.
6.7 Company to Pay Withholding and Employment Taxes. Any amount
paid to a Participant by the Trustee in accordance with this Article VI shall
be reduced by the amount of taxes required to be withheld pursuant to Plan
Administrator instructions, and the Trustee shall inform the Company of all
amounts so withheld. The Company shall direct that the Trustee shall either
(a) pay to the Company a sum equal to the amount of such
taxes as are required to be withheld, whereupon the Company shall have
full responsibility for the payment of all withholding taxes to the
appropriate taxing authorities, or
(b) pay such taxes directly to the appropriate taxing
authorities for the benefit of the Company.
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The Company shall be solely responsible for the payment of any employment taxes
for which it is directly liable as a result of payments by the Trustee. The
Company shall furnish each Participant with the appropriate tax information
form evidencing payments under the Trust and the amount(s) thereof.
6.8 Payment in Reversion to Company. Subject to Article VII, upon
receipt of written certification from the Company that all obligations of the
Company to Participants with respect to the Plan have been satisfied, and if
the Trust Fund shall have any assets remaining, the Trustee shall distribute
such remaining assets of the Trust Fund to the Company, after converting such
assets to cash if requested by the Company, subject to the Trustee's right to
retain such reasonable amount for compensation and expenses as provided in
Section 10.7. The Trust shall thereafter terminate as provided in Section 9.2.
6.9 Reserved.
VII. PAYMENTS ON INSOLVENCY OF THE COMPANY
7.1 No Security Interest. No Participant shall have any claim on
or beneficial ownership interest in the Trust Fund before such assets are paid
to the Participant, except as an unsecured creditor of the Company. The Company
shall not create a security interest in the Trust Fund in favor of any
Participant or any other General Creditor. At all times during the continuance
of this Trust, as provided in this Article VII hereof, the principal and income
of the Trust Fund shall be subject to the claims of General Creditors under
federal and state law. If at any time the Trustee has received notice as
provided below that Company is Insolvent, Trustee shall discontinue payments to
Participants, and shall hold assets of the Trust Fund for the benefit of the
Company's General Creditors, pursuant to the provisions of Section 7.3, with no
preference whatsoever given claims of Participants over claims of other
unsecured creditors of the Company.
7.2 Determination of Insolvency. Notwithstanding any other
provisions of this Trust, the following provisions shall apply:
(a) The Board of Directors and the Chief Executive Officer
of the Company shall have the fiduciary duty and responsibility on
behalf of General
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Creditors to notify the Trustee promptly in writing in the event the
Company is Insolvent, and the Trustee shall have the right to rely
thereon to the exclusion of all directions or claims for payment made
thereafter by Participants.
(b) If the Trustee has actual knowledge that the Company
is Insolvent, the Trustee shall act in accordance with Section 7.3
hereof.
(c) Unless the Trustee receives written notice from the
Board of Directors or the Chief Executive Officer of the Company that
the Company is Insolvent, or from a person claiming to be a General
Creditor and claiming that the Company is Insolvent, the Trustee shall
have no duty to inquire whether the Company is Insolvent. If the
Trustee receives a written allegation from a person claiming to be a
General Creditor that the Company is Insolvent, the Trustee's only
duty of inquiry shall be to request that the Company's independent
public accountants determine whether the Company is Insolvent, and
shall suspend benefit payments pending such determination. If the
Company's independent public accountants advise the Trustee that the
Company is not Insolvent, it shall resume payments in accordance with
this Trust. If the Trustee receives notice of the Company's Insolvency
pursuant to this Section 7.2(c), it shall act in accordance with this
Section and Section 7.3 hereof.
7.3 Payments When Company Is Insolvent. Notwithstanding any other
provision of this Trust to the contrary, if the Trustee has actual knowledge as
described in 7.2(b), has been advised pursuant to 7.2(c) or receives actual
notice described in Section 7.2(a) that the Company is Insolvent
(a) by reason of Section 1.11(b), the Trustee shall suspend
payments to Participants and shall notify Participants of the
suspension, and shall hold the Trust Fund for the benefit of the
General Creditors, and shall pay and deliver the entire amount of the
Trust Fund only as a court competent jurisdiction, or duly appointed
receiver or other person authorized to act by such court, may order
or direct to make the Trust Fund available to satisfy the claims of
the General Creditors (payments to Participants in accordance with the
terms of the Plan may be resumed only pursuant to Section 7.4 hereof);
or
(b) by reason of Section 1.11(a), the Trustee shall suspend
payments to Participants and shall notify Participants of the
suspension, and shall (i) hold the Trust Fund for the benefit of
General Creditors or (ii) pay over all or a portion of the
Trust Fund to General Creditors if directed by the Company or an
appropriate judicial forum.
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Nothing in this Trust Agreement shall in any way diminish any rights of
Participants to pursue their rights as unsecured creditors of Company with
respect to benefits under the Plan, or otherwise.
7.4 Resumption of Duties after Insolvency. In the absence of notice of a
Court order to the contrary, the Trustee shall resume all of its duties and
responsibilities under the Trust, including payments to Participants if
otherwise provided for herein, within thirty (30) days of the Trustee's receipt
of a determination from the Company's independent public accounting firm that
the Company is no longer Insolvent.
(a) Trust Recovery of Payments to Creditors. In the event that
amounts are paid from the Trust Fund to General Creditors of the
Company, then as soon as practicable after the Company is no longer
Insolvent, the Company shall deposit into the Trust Fund a sum to
equal to the Funding Amount, determined as of the date the Company is
no longer Insolvent, which date shall be a Valuation Date. The Company
(or, after a Change of Control, the Company's independent public
accountants) shall provide the Trustee with written certification of
such Funding Amount. If the Funding Amount is not paid by the Company
within ninety (90) days of the Trustee's receipt of such notice, the
Trustee shall demand payment and the provisions of Section 3.5 shall
apply.
(b) Determination of Payment Amount; Resumption of Payments.
Provided that there are sufficient assets of the Trust Fund, if
Trustee discontinues the payment of benefits from the Trust pursuant
to Section 7.3 and subsequently resumes such payments, the first
payment following such discontinuance shall include the aggregate
amount of all payments due to Participants under the terms of the Plan
for the period of such discontinuance, as determined by the Plan
Administrator, less the aggregate amount of any payments made to
Participants by the Company in lieu of the payments provided for
hereunder during any such period of discontinuance. If the Trustee
suspends a payment to a Participant under this Section, and
subsequently makes such payment, the payment shall include interest at
the rate of interest per annum equal to the prime rate as published by
NBD Bank for each day from the date of suspension to the date of
payment, as calculated by the Plan Administrator.
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7.5 Reserved.
VIII. RESIGNATION OR REMOVAL OF TRUSTEE
8.1 Resignation or Removal of Trustee. The Trustee may resign for
any reason or for no reason and at any time by giving thirty (30) days prior
written notice to the Company (or such shorter notice as may be agreed to by
the Company and the Trustee). Subject to Section 8.2(b) hereof, the Company may
remove the Trustee, for any reason and with or without cause, by giving thirty
(30) days prior written notice to the Trustee (or such shorter notice as may be
agreed to by the Company and the Trustee).
8.2 Successor Trustee. In the event of the resignation or removal
of a Trustee, a successor Trustee shall be appointed. Any successor Trustee
appointed pursuant to this Section must be a corporation which is not an
affiliate of the Company and which is authorized under the laws of the United
States or of any state to administer trusts and has at the time of its
appointment total capital and surplus of at least Fifty Million Dollars
($50,000,000). The Company shall give notice of any such appointment to the
retiring Trustee and the successor Trustee. A successor Trustee shall be
appointed in accordance with the following provisions:
(a) At any time prior to a Change of Control, a successor Trustee
shall be appointed by the Company. If a Trustee should resign or be
removed, and the Company does not notify the Trustee of the
appointment of a successor Trustee within forty-five (45) days of its
notice of its resignation or removal, then the Company shall be
deemed to have failed to have appointed a successor Trustee, and the
Trustee shall apply to a court of competent jurisdiction for
appointment of a successor Trustee.
(b) After the occurrence of a Change of Control, the Trustee
who is the Trustee on the date of the Change of Control may be removed
by the Company for three (3) years from the date of the Change of
Control. If a Trustee resigns or is removed at any time after the date
of a Change of Control, the Trustee shall apply to a court of
competent jurisdiction for appointment of a successor Trustee.
Notwithstanding Section 8.1, no resignation by or removal of the Trustee shall
be effective prior to the effective date of the appointment of a successor
Trustee by the Company or a court of competent jurisdiction.
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8.3 Duties of Retiring and Successor Trustees. In the event of
the resignation or removal of a Trustee, the retiring Trustee shall within
thirty (30) days after the effective date of resignation or removal furnish to
the successor Trustee and the Company a final accounting of its administration
of the Trust. A successor Trustee shall succeed to the right and title of the
predecessor Trustee in the assets of the Trust Fund and the retiring Trustee
shall deliver the property comprising the assets of the Trust Fund (less any
unpaid fees and expenses of the retiring trustee) to the successor Trustee,
together with any instruments of transfer, conveyance, assignment, and further
assurance as the successor Trustee may reasonably require. All of the
provisions of the Trust set forth herein with respect to the Trustee shall
relate to each successor Trustee with the same force and effect as if such
successor Trustee had been originally named as the Trustee hereunder. To the
extent permitted by law, neither the Trustee nor the successor Trustee shall be
liable for any act or failure to act, and shall not be required to examine the
accounts, records, or acts of the other.
8.4 Reserved.
IX. AMENDMENT AND TERMINATION OF TRUST
9.1 Amendment. Except as otherwise provided in Section 2.3 of this
Trust, the Trust may be amended (but may not be not revoked unless all of the
Company's obligations with respect to the Plan have been satisfied) in writing
from time to time by delivery to the Trustee of such amendment executed by the
Company, which amendment shall include the effective date of such amendment.
Any amendment of the Trust may be made:
(a) prior to a Change of Control, without limitation and in any
manner and effective as of any date, including a retroactive effective
date, if accompanied by the written certification that no Change of
Control has occurred;
(b) after a Change of Control, only if a period of three (3)
years has elapsed since the Change of Control, and either:
(1) such amendment is accompanied by the specific written
consent to the amendment by Participants whose actuarial
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<PAGE> 34
interests under the Plan, computed by the Company's independent
public accountants as of the effective date of such amendment,
represent at least 51% of the total of all actuarial interests
under the Plan; or
(2) such amendment is accompanied by the opinion of legal
counsel satisfactory to the Trustee that the amendment is
necessary for the purpose of conforming the Trust to any present
or future federal or state law (including revenue laws) relating
to trusts of this or similar nature, as such laws may be amended
from time to time, and a certification that a copy of such notice
and opinion of counsel has been delivered to each Participant.
No amendment shall conflict with the terms of the Plan subject to amendment,
and no amendment may reduce the "Funding Amount" or the contribution
requirements of Article III to less than 50% of the actual benefit obligation
on the books of the Company; provided such amendment shall be effective prior
to a Potential Change of Control or a Change of Control. No amendment shall
operate to change the duties and liabilities of the Trustee without its
consent, or make the Trust revocable after it has become irrevocable in
accordance with Section 2.3 hereof unless the Company has satisfied all
obligations it may have with respect to the Plan as of the date of such
amendment. The Company and the Trustee shall execute such amendments of the
Trust as shall be necessary to give effect to any amendment made in accordance
with this Section.
9.2 Termination. After all assets of the Trust Fund have been
distributed by the Trustee to the Participants or their Beneficiaries in
accordance with Article VI, the Trustee shall render an accounting, which shall
be the final accounting, in the manner provided for in Section 4.3. Upon
acceptance of the accounting by the Company, any assets remaining in the Trust
Fund, after deduction of such reasonable amount for compensation and expenses
as provided for in Section 10.7, shall be returned to the Company in the manner
provided in Section 6.8, and the Trust shall terminate thereupon. The Trust and
all the rights, titles, powers, duties, discretions and immunities imposed on
or reserved to the Trustee and the Company, shall continue in effect until all
assets of the Trust Fund have been distributed as provided herein.
9.3 Reserved.
X. GENERAL PROVISIONS
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10.1 Coordination with Plan. The responsibilities of the Trustee
shall be governed solely by the terms of this Trust Agreement.
10.2 Litigation. In any action or proceeding regarding the Trust,
the Company, any assets of the Trust Fund, or the administration of the Trust,
any creditors who are not parties to such action or proceedings and any other
persons having or claiming to have a beneficial interest in the Trust shall not
be necessary parties and shall not be entitled to any notice of process. Any
final judgment which is not appealed or appealable and which may be entered in
any such action or proceeding shall be binding and conclusive on the parties
hereto and all persons having or claiming to have a beneficial interest in the
Trust. Acceptance by a creditor of assets of the Trust Fund shall constitute a
release of an equal amount of any obligations of the Company to such creditor.
10.3 Trustee's Action Conclusive. The Trustee's exercise or
non-exercise of its powers and discretion in good faith shall be conclusive on
all persons. No one other than the Company shall be obliged to see to the
application of any money paid or property delivered to the Trustee. The
certificate of the Trustee that it is acting according to this Trust will fully
protect all persons dealing with the Trustee.
10.4 No Guarantee or Responsibility. Notwithstanding any other
provision of this Trust to the contrary, the Trustee does not guarantee payment
of any amount which may become due and payable to a Participant. The Trustee
shall have no responsibility for the disclosure to Participants regarding the
terms of the Plan or of this Trust, or for the validity thereof. The Trustee
shall not be responsible for administrative functions under the Plan and shall
have only such responsibilities under this Trust Agreement as specifically set
forth herein. The Trustee will be under no liability or obligation to anyone
with respect to any failure on the part of the Company, the Plan Administrator,
the Company's independent public accounting firm, an Investment Manager, or a
Participant to perform any of their respective obligations under the Plan or
this Trust. The Trustee shall be fully protected in relying upon any notice or
direction provided to it from any party in connection with the Trustee's duties
hereunder which the Trustee in good faith believes to be genuine, and executed
and delivered in accordance with this Trust. Nothing in this Trust shall be
construed as requiring the Trustee to make any payment in excess of the amounts
held in the Trust Fund at the time of such payment or otherwise to risk or
expend its own funds.
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10.5 Liabilities Mutually Exclusive. Each of the Trustee and the
Company shall be responsible only for its own acts or omissions.
10.6 Indemnification. The Company agrees to indemnify to the
extent permitted by law the Trustee and hold it harmless against Trustee's
costs, expenses and liabilities (including, without limitation, attorneys' fees
and expenses) arising out of or in connection with the performance of the
Trustee's duties arising hereunder (but excluding costs arising as a result of
the Trustee's bad faith or gross negligence in the performance of its
responsibilities hereunder), and to be primarily liable for such payments. If
the Company does not pay such costs, expenses and liabilities in a reasonably
timely manner, Trustee may obtain payment from the Trust. This Section shall
survive the termination of the Trust.
10.7 Expenses and Compensation. The Trustee shall be paid
compensation by the Company in an amount agreed to by the Company and the
Trustee. The Trustee shall be reimbursed by the Company for reasonable expenses
incurred by it in the management and administration of this Trust Agreement,
including the reasonable compensation of the Trustee's counsel and other
agents; and if the Trustee is not timely reimbursed with respect to amounts due
pursuant to this Section 10.7 (or in the case of expenses to be incurred
pursuant to Section 3.5 hereof), the Trustee may charge such amounts against
the Trust Fund. Any compensation or expenses so agreed upon or otherwise
payable not paid by the Company on a timely basis may be charged to the Trust
Fund no more frequently than quarter-annually upon notice to the Company.
10.8 Reserved.
10.9 Notice. Any notice to the Trustee or to the Company required
or permitted under this Trust shall be duly and properly given and delivered if
sent by certified United States mail, return receipt requested, to the Trustee
at:
The Northern Trust Company
Attn: Trust Department
Fifty South LaSalle Street
Chicago, Illinois 60675
31
<PAGE> 37
and to the Company at:
The Detroit Edison Company
Attn: Vice President and Treasurer
2000 Second Street
Detroit, Michigan 48226
or to such other address as the Trustee or the Company may specify by written
notice to the other.
10.10 Antiassignment Clause. Benefits payable to Participants
and their Beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged, encumbered or
subjected to attachment, garnishment, levy, execution or other legal or
equitable process.
10.11 True and Correct Document. Any persons dealing with the
Trustee may rely upon a copy of this Trust and any amendments thereto certified
to be true and correct by the Trustee.
10.12 Waiver of Notice. Any notice required under this Trust may
be waived by the person entitled to such notice.
10.13 Counterparts. This Trust may be executed in two or more
counterparts, any one of which will be an original without reference to the
others.
10.14 Gender and Number. Words denoting the masculine gender
shall include the feminine and neuter genders and the singular shall include
the plural and the plural shall include the singular wherever required by the
context.
32
<PAGE> 38
10.15 Successors. This Trust shall be binding on all persons
entitled to payments hereunder and their respective heirs and legal
representatives, and on the Company, the Trustee, and their respective
successors.
10.16 Severability. If any provision of this Trust is held to be
illegal or invalid, such illegality or invalidity shall not affect the
remaining provisions of this Trust, which shall be construed and enforced as if
such illegal or invalid provisions had never been inserted herein.
10.17 Applicable Law. The Trust shall be governed by and
construed in accordance with the laws of the State of Michigan with respect to
the Company's obligations and in accordance with the laws of the State of
Illinois with respect to the Trustee's obligations and Trust Administration.
IN WITNESS WHEREOF, the Company and the Trustee have caused this trust
agreement to be signed by their duly authorized representatives, and have
caused their respective seals to be hereunto affixed, as of the Effective Date.
THE DETROIT EDISON COMPANY
By _________________________
Its_________________________
THE NORTHERN TRUST COMPANY
as Trustee
By _________________________
Its_________________________
33
<PAGE> 39
EXHIBIT A
The Detroit Edison Company
IRREVOCABLE GRANTOR TRUST
FOR THE DETROIT EDISON COMPANY PLAN FOR DEFERRING THE PAYMENT OF DIRECTORS'
FEES
The Company has established an Irrevocable Grantor Trust to pay benefits under
The Detroit Edison Company Plan for Deferring the Payment of Directors' Fees. A
copy of such Plan, including any amendment(s), is attached hereto.
34
<PAGE> 40
EXHIBIT B
The Detroit Edison Company
IRREVOCABLE GRANTOR TRUST
PARTICIPANTS (as defined in the Trust)
as of January 31, 1995
Name [Date of Birth]
------ ---------------
<PAGE> 1
EXHIBIT 99-34
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
EFFECTIVE AUGUST 7, 1995
<PAGE> 2
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
1.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 Excess Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Funding Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 General Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Insolvent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 IRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.15 Reserved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.16 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.17 Potential Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 Potential Change of Control Period . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.19 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.20 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.21 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.22 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C> <C>
1.23 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
II. ESTABLISHMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Description of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Irrevocability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Acceptance by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
III. CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Calculations of Funding Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Contributions as of Each Valuation Date . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 No Dilution of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
IV. ACCOUNTING AND ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Trustee Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Company Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Periodic Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Administrative Powers of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
V. INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Investment Powers of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Investment Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Single Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
VI. PAYMENTS FROM THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Obligation of Trustee to Make Payments to Participants . . . . . . . . . . . . . . . . 20
6.2 Obligation of the Company to Make Payments to Participants . . . . . . . . . . . . . . 20
6.3 Distributions to Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Insufficient Trust Fund Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
6.6 Payment of Excess Assets to Company . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 Company to Pay Withholding and Employment Taxes . . . . . . . . . . . . . . . . . . . 22
6.8 Payment in Reversion to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
VII. PAYMENTS ON INSOLVENCY OF THE COMPANY . . . . . . . . . . . . . . . . . . 23
7.1 No Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Determination of Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Payments When Company Is Insolvent . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Resumption of Duties after Insolvency . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
VIII. RESIGNATION OR REMOVAL OF TRUSTEE . . . . . . . . . . . . . . . . . . . . 25
8.1 Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Duties of Retiring and Successor Trustees . . . . . . . . . . . . . . . . . . . . . 26
8.4 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
IX. AMENDMENT AND TERMINATION OF TRUST . . . . . . . . . . . . . . . . . . . 27
9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
X. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1 Coordination with Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3 Trustee's Action Conclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.4 No Guarantee or Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.5 Liabilities Mutually Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.7 Expenses and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.8 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C> <C>
10.9 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.10 Antiassignment Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.11 True and Correct Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.12 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.14 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.15 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.17 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
EXHIBIT A The Detroit Edison Company
IRREVOCABLE GRANTOR TRUST
FOR THE SECOND RESTATEMENT OF THE DETROIT
EDISON COMPANY RETIREMENT PLAN FOR NON-
EMPLOYE DIRECTORS
EXHIBIT B The Detroit Edison Company
IRREVOCABLE GRANTOR TRUST
PARTICIPANTS (as defined in the Trust)
<PAGE> 6
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
THIS TRUST AGREEMENT is made this 7th day of August, 1995 by and
between The Detroit Edison Company, a Michigan corporation, and The Northern
Trust Company, an Illinois corporation, of Chicago, Illinois ("Trustee"), and
any successor provided for in the Trust hereby evidenced, as Trustee.
WITNESSETH THAT:
WHEREAS, the Company has established and maintains the Second
Restatement of The Detroit Edison Company Retirement Plan for Non-Employe
Directors ("Plan"), an unfunded benefit plan, a copy of which is attached
hereto as Exhibit A, for the benefit of certain Company Directors listed on
Exhibit B hereto, which Exhibits may be amended from time to time by the
Company prior to a potential Change of Control and/or Change of Control, and
without the Trustee's consent; and
WHEREAS, the Company has incurred and expects to continue to incur
liabilities pursuant to the terms of the Plan, and wishes to establish an
irrevocable trust by placing assets in trust, subject to the claims of the
Company's creditors in the event the Company becomes Insolvent, to pay benefits
under the Plan or to be applied as otherwise provided for herein; and
WHEREAS, it is the intention of the Company that amounts transferred
to the Trust and the earnings thereon shall be used by the Trustee, subject to
the claims of the Company's creditors in the event the Company becomes
Insolvent, to satisfy the liabilities of the Company in accordance with the
provisions hereof; and, upon satisfaction of all liabilities of the Company
with respect to all Participants (and their Beneficiaries, if applicable), the
assets, if any, remaining in the Trust shall revert to the Company; and
WHEREAS, the Company intends that the existence of the Trust shall not
alter the characteristics of the Plan as an unfunded plan maintained primarily
for the purpose of providing deferred compensation for certain non-employe
members of the Board of Directors, and shall not be construed to provide income
for federal income
<PAGE> 7
tax purposes to a Participant (or his or her Beneficiary) prior to the actual
payment of benefits under the Plans; and
WHEREAS, the Trustee has agreed to serve as trustee of such trust;
NOW, THEREFORE, in consideration of the mutual undertakings of the Company and
the Trustee, the parties do hereby establish the Trust, and agree that the
Trust shall be comprised, held, and disposed of as follows:
I. DEFINITIONS Unless the context requires otherwise, definitions as
used herein shall have the same meaning as in the Plan when applied to said
Plan.
1.1 "Beneficiary" means the beneficiary designated as provided in
the Plan as set forth in Exhibit A.
1.2 "Board of Directors" means the Company's Board of Directors,
as constituted from time to time.
1.3 "Change of Control" 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 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
2
<PAGE> 8
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 1.3 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
<PAGE> 9
be amended or supplemented from time to time), whereby it is proposed that a
corporation will become the parent holding company of the Company.
The Company shall promptly notify the Trustee of a Change of Control and the
Trustee may conclusively rely upon such notice and shall have no duty to
independently determine whether a Change of Control has occurred.
1.4 "Company" means The Detroit Edison Company, a Michigan
corporation, its successors and assigns.
1.5 "Effective Date" means August 7, 1995.
1.6 Reserved.
1.7 "Excess Assets" means assets of the Trust in excess of one
hundred and twenty-five per cent (125%) of the Funding Amount.
1.8 "Funding Amount" means the actual benefit obligation on the
books of the Company as of the most recent Valuation Date, certified by the
Company to the Trustee. Upon any Potential Change of Control and during any
Potential Change of Control Period, "Funding Amount" means one hundred and
twenty per cent (120%) of the actual benefit obligation on the books of the
Company as of the most recent Valuation Date, as certified by the Company to
the Trustee.
1.9 "General Creditors" means the unsecured general creditors of
the Company, including the Participants.
1.10 Reserved.
1.11 "Insolvent" and "Insolvency" mean that the Company
(a) is unable to pay its debts as they become due; or
(b) is subject to a pending proceeding as a debtor under
the Bankruptcy Code.
4
<PAGE> 10
1.12 "Investment Manager" means the investment manager(s) appointed
by the Company in the manner provided in Section 5.3 to direct the investment
of any part or all of the assets of the Trust Fund in accordance with Article
V.
1.13 "IRC" means the Internal Revenue Code of 1986, as amended.
1.14 "Participant" means a Participant in the Plan and includes an
individual who is otherwise eligible to participate in the Plan but cannot due
to age, years of service or active employment. The Company agrees to list all
Participants on Exhibit B attached hereto. Except after a Change of Control as
provided in Section 3.4, the Company may add or delete Participants by
delivering a new Exhibit B to the Trustee.
1.15 Reserved.
1.16 "Plan Administrator" means the party designated under the Plan
as responsible for the management, operation, and administration of the Plan.
1.17 "Potential Change of Control" means the date of the earliest
occurrence of any of the following events:
(a) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change of
Control of the Company; 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 employee
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 9.5% or more of
the combined voting 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
<PAGE> 11
(c) the public announcement by any individual or entity,
other than the Company, that such individual or entity intends to take
or to consider taking actions which, if consummated, would constitute
a Change of Control of the Company; or
(d) the public announcement of any merger, acquisition,
consolidation, or reorganization 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 transaction in which the
holders of the Company's common stock immediately prior to the merger,
acquisition, consolidation, or reorganization have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, acquisition, consolidation, or
reorganization, including, but not limited to, the creation of a
parent entity to oversee the Company; or
(e) the public announcement of the sale or other transfer
of substantially all of the assets of the Company to any third party;
or
Notwithstanding the foregoing provisions of this Section 1.17, a "Potential
Change of Control" shall not be deemed to have occurred by reason of the
Reorganization (as defined in Section 1.3).
1.18 "Potential Change of Control Period" means the one (1) year
period immediately following the date of a Potential Change of Control. If a
subsequent Potential Change of Control occurs during any Potential Change of
Control Period, the Potential Change of Control Period shall end one (1) year
following the date of the most recent Potential Change of Control.
The Company shall promptly notify the Trustee of a Potential
Change of Control and the Trustee may conclusively rely upon such notice and
shall have no duty to independently determine whether a Potential Change of
Control has occurred.
1.19 Reserved.
6
<PAGE> 12
1.20 "Trust" means the irrevocable trust established pursuant to
this Trust Agreement and all of the terms and conditions of this Trust
Agreement, which is intended to constitute a grantor trust under IRC Section
Section 671 et seq.
1.21 "Trust Fund" means all moneys, securities, and other property
held by the Trustee, any custodian, or any insurance company under this Trust.
1.22 "Trustee" shall mean the trustee named herein, and any
successor trustee appointed pursuant to Article VIII.
1.23 "Valuation Date" means the day in each calendar year which is
the last day of the Company's fiscal year in each year, and such other times as
the Company may determine. Each of (a) any date of a Potential Change of
Control, (b) the date of a Change of Control, (c) the effective date of a
Trustee's resignation or removal, and (d) the date of termination of the Trust
shall also be a Valuation Date if any such date occurs other than on the last
business day of the Company's fiscal Year. The first Valuation Date shall be
December 31, 1994.
II. ESTABLISHMENT OF THE TRUST
2.1 Trust. The Company hereby establishes the Trust with the
Trustee, which Trust shall consist of such sums of money and other property
acceptable to the Trustee as from time to time have been and shall be paid or
delivered by the Company to the Trustee as provided herein. All such money and
other property, all investments and reinvestments made therewith, or the
proceeds thereof, and all investment earnings and profits thereon, less all
payments and charges as authorized herein, shall constitute the Trust Fund. The
Trust Fund shall be held in trust by the Trustee, and shall be dealt with in
accordance with the provisions of this Trust.
2.2 Description of Trust. The Company represents and agrees that:
(a) the Trust is intended to be a grantor trust under IRC
Section Section 671-678, and shall be construed accordingly. The
Company intends and agrees that it is the "owner" or grantor of the
Trust in its entirety, as that term is defined in subpart E, part I,
subchapter J, chapter 1, subtitle A of the IRC and that, for income
tax purposes, all income, deductions, and credits of the Trust Fund
belong to it as owner, and will be included on its income tax or other
required tax returns, and any income tax determined to be payable as
a result thereof will be the sole obligation of, and will be paid by,
the Company;
<PAGE> 13
(b) a true and correct copy of the Plan, as in effect on
the Effective Date hereof, is attached hereto as Exhibit A. The
Company shall file with the Trustee, promptly upon its adoption, a
true and correct copy of each amendment to the Plan;
(c) the Trust Fund is to be used to satisfy the legal
obligations of the Company to Participants under the Plan as provided
herein, subject to the claims of General Creditors in the event of
Insolvency, and the balance of the Trust Fund, if any, remaining after
payment of the Company's obligation to Participants under the Plan
will revert to the Company in accordance with the Trust;
(d) contributions by the Company to the Trust which are
made coincident with and subsequent to the Effective Date shall be in
amounts determined under Article III hereof. The Company agrees to
fund the Trust as provided therein;
(e) the principal of the Trust, and any earnings thereon
shall be held by the Trustee separate and apart from other funds of
Company, and shall be used exclusively for the uses and purposes as
herein set forth;
(f) the Trust established under this agreement does not
fund and is not intended to fund the Plan, or any other benefit plan
or program of the Company. Neither the establishment of the Trust, nor
the payment or delivery of assets to the Trustee shall vest any
Participant in any right, title, or interest in or to any assets of
the Trust Fund;
(g) participants shall have no preferred claim on, or any
beneficial ownership interest in, assets of the Trust. To the extent
that any Participant acquires the right to receive payment(s) under
the Plan, any such right shall be mere unsecured contractual rights of
Participants against the Company, and such Participants (or their
Beneficiary(ies)) shall have only the unsecured promise of the Company
that such payment(s) will be made. Any assets held by the Trust will
be subject to the claims of General Creditors under federal and state
law in the event of Insolvency, as defined herein, with no preference
8
<PAGE> 14
whatsoever given to claims of Participants over claims of other
unsecured creditors of the Company; and
(h) to the extent the Plan is covered by ERISA, the Plan
is a plan for a select group of management or highly compensated
employes, and as such are exempt from the application of ERISA except
for the disclosure requirements applicable to such plan, for which the
Company bears full responsibility as to compliance. The Company
further represents that the Plan is not qualified under IRC Section
401 and therefore, is not subject to any IRC requirements applicable
to tax-qualified plans.
2.3 Irrevocability. Except as provided in Article 9 and this
Section 2.3, the Trust shall be irrevocable from the effective date, and the
assets of the Trust Fund shall be held in accordance with the provisions hereof
for the exclusive purpose of providing for the payment of the Company's
obligations to pay benefits to Participants under the Plan and to satisfy the
claims of General Creditors in the event of Insolvency, and defraying the
expenses of the Trust. Except as provided in Section 6.6 and Section 6.8 and
in the event of Insolvency, no part of the income or corpus of the Trust Fund
shall be recoverable by or for the benefit of the Company.
2.4 Acceptance by the Trustee. The Trustee accepts the Trust
established under this Trust Agreement on the terms and subject to the
provisions set forth herein, and agrees to discharge and perform fully and
faithfully all of the duties and obligations imposed upon it under this Trust.
III. CONTRIBUTIONS
3.1 Calculations of Funding Amount. By September 30, 1995, the
Company shall contribute to the Trust the Funding Amount as determined on the
first Valuation Date. As of each Valuation Date, and until the entire Trust
Fund has been distributed, the Company (or, after a Change of Control, the
Company's independent public accountants) shall recalculate the Funding
Amounts.
3.2 Contributions as of Each Valuation Date. During the life of
the Trust but no later than September 30 of each year, commencing no later than
September 30, 1996, the Company shall contribute to the Trust such amount as is
necessary to make trust assets equal the Funding Amount as of the previous
Valuation Date. The Plan Administrator or its delegate (or, after a Change of
Control, the Company's independent public accountants) shall provide the
Trustee with written notice of the amount of the necessary contribution on or
before the date such contribution is due
<PAGE> 15
to the Trust. Any such payments to the Trustee do not discharge or release the
Company of its obligation under the Plan or Section 6.2 to pay benefits to
Participants under the Plan, and shall at all times be subject to the
provisions of Article VII.
3.3 Reserved.
3.4 No Dilution of Trust. After a Change of Control, the Exhibit
B in effect on the date of a Change of Control shall not be amended to include
a Participant not named in the Exhibit B in effect on the date of a Change of
Control, unless pursuant to the requirements of this Section 3.4, at the time
of delivery to the Trustee of a proposed amended Exhibit B (the "Delivery
Date"), the Company shall deliver to the Trustee a determination by the
Company's independent public accountants as of the Delivery Date of the
proposed amended Exhibit B of the Funding Amount calculated based on the
Participants named in the Exhibit B in effect on the Date of the Change of
Control and any new or additional Participants named in the proposed amended
Exhibit B (the "New Funding Amount") and (b), assets in an amount necessary to
make the trust assets equal the New Funding Amount. If the Trustee determines
that assets of the Trust Fund, including such assets as are delivered by the
Company on the Delivery Date, equal or exceed the New Funding Amount, the
Trustee shall accept the amended Exhibit B. Any amended Exhibit B so accepted
shall be deemed incorporated with the same effect as if otherwise included
herein. Unless an Exhibit B amended after a Change of Control is accepted by
the Trustee as provided in this Section, the Trustee shall have no liability,
responsibility, or obligation with respect to a Participant named in any
amended Exhibit B unless such Participant is named in the Exhibit B then in
effect on the date of a Change of Control.
3.5 Collection. In the event the Company fails to pay over to the
Trustee within one hundred and twenty (120) days of notice and demand from the
Trustee (or, upon the occurrence of a Potential Change of Control or a Change
of Control, within seven (7) days of notice and demand from the Trustee), any
amount determined to be payable by the Company to the Trustee under Sections
3.2, 6.5 or 7.4(a) of the Trust, the Trustee may commence legal action, (which
is expressly deemed to include without limitation an alternate dispute
resolution proceeding), to compel the Company to pay to the Trustee any amount
determined to be payable to it under the Trust. The Trustee may bring such
action against the Company in any court of competent jurisdiction, and shall be
entitled to recover for the benefit of the Trust from the
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<PAGE> 16
Company such amount, plus interest for each day at the rate of interest per
annum of five (5) percentage points in excess of the prime lending rate as
announced by NBD Bank, from the due date specified in the Trustee's notice and
demand (or the date(s) from which pro rata payments were made, if such action
is brought by the Trustee pursuant to Section 6.5 hereof) to the date of
payment, plus all costs of collection, including reasonable attorneys fees and
costs of litigation. The Trustee is authorized to bring action to compel
payment by the Company, and, in connection with reasonable claims for
delinquent contributions by the Company, to retain, at the expense of the
Company, counsel and other appropriate experts, including actuaries and
accountants, to aid it in pursuing litigation for collection against the
Company. The Trustee's anticipated reasonable costs and expenses incurred
pursuant to this Section 3.5 are payable by the Company in advance; and should
the Company not make timely payment, the Trustee may charge the Trust Fund for
such reasonably anticipated costs and expenses. The Trustee shall in no event
be required to advance or expend its own funds in order to comply with the
provisions of this Section 3.5.
IV. ACCOUNTING AND ADMINISTRATION
4.1 Trustee Recordkeeping. The Trustee shall keep or cause to be
kept accurate and detailed records of any investments, receipts, disbursements,
and all other transactions required to be made by the Trustee hereunder, in
accordance with such rules as may be established by the Company, including such
specific records as shall be agreed upon in writing between the Company and the
Trustee. All accounts, books, and records relating thereto shall be open to
inspection and audit at all reasonable times by any person designated by the
Company. All such accounts, books, and records shall be preserved (in original
form, or on microfilm, magnetic tape, or any other similar process) for such
period as the Company may determine, and the Trustee may only destroy such
accounts, books, and records after first notifying the Company in writing of
its intention to so, and transferring to the Company any of such accounts,
books, and records requested by the Company.
4.2 Company Recordkeeping. The Company shall keep full, accurate,
and detailed books and records with respect to the Participants and benefits
paid and payable under the Plan, which records shall be made available to the
Trustee at its request.
4.3 Periodic Accounting. Within sixty (60) days following a
Valuation Date, the Trustee shall deliver to Company a written accounting,
dated as of the Valuation Date, of its administration of the Trust Fund during
such year or during the period
<PAGE> 17
from the most recent Valuation Date to the date of such current Valuation Date,
which accounting shall be in accordance with the following provisions:
(a) Such accounting shall set forth all investments,
receipts, disbursements, and other transactions effected the by Trust
Fund during the preceding year, or during the period from the most
recent Valuation Date to the date of such current Valuation Date,
including a description of all securities and investments purchased
and sold, with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and
showing all cash, securities or other property held in the Trust Fund,
less liabilities known to the Trustee (other than liabilities to
Participants entitled to benefits under the Plans) at the end of such
year or other period, as the case may be. In making a valuation, all
cash, securities or other property held in the Trust Fund shall be
valued at their then fair market value, and shall be in a format as
may be established by the Company. A copy of each accounting so
delivered to the Company shall be open to inspection at the office of
the Trustee during normal business hours.
(b) If within ninety (90) days after the filing of such
written accounting, the Company has not delivered to the Trustee
notice of any objection to any act or transaction of the Trustee, the
initial accounting shall become an account stated as between the
Trustee and the Company. If any objection has been delivered to the
Trustee by the Company, and if the Company is satisfied that it should
be withdrawn, the Company shall signify its approval of the accounting
in writing filed with the Trustee, and the accounting shall become an
account stated as between the Trustee and the Company. If the
accounting is adjusted following an objection thereto, the Trustee
shall file and deliver the adjusted accounting to the Company. If
within fifteen (15) days after such filing of an adjusted accounting,
the Company has not delivered to the Trustee notice of any objection
to the transactions as so adjusted, the adjusted accounting shall
become an account stated as between the Trustee and the Company.
(c) Unless an accounting is fraudulent, when it becomes
an account stated, it shall be finally settled, and the Trustee shall,
to the extent permitted by applicable law, be forever released and
discharged from all liability and
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<PAGE> 18
accountability with respect to the propriety of its acts and
transactions shown in such accounting.
4.4 Administrative Powers of Trustee. Except to the extent that
authority with respect to the administration of the Trust has been allocated to
others in accordance with this Trust, and subject to Article V, the Trustee
shall have exclusive authority and discretion to manage and administer the
Trust. The Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of
like character and with like aims, provided, however, that Trustee shall incur
no liability to any person for any action taken pursuant to a direction,
request or approval given by Company which is contemplated by, and in
conformity with, the terms of the Trustee's responsibilities under this Trust,
and is given in writing by Company. The responsibility for maintenance of
individual benefit records shall be retained by the Company, and may be
delegated to such person or entity as the Company may employ from time to time.
Except as otherwise provided herein, the Trustee shall have, without exclusion,
all powers conferred on trustees by law and, without limiting the foregoing,
shall have the following administrative powers, rights, and duties in addition
to those provided elsewhere in this Trust:
(a) to manage, sell, insure, and otherwise deal with all
assets held by the Trustee on such terms and conditions as the Trustee
shall decide; provided however, that if the Company delivers written
instructions to the Trustee, the Trustee shall follow such
instructions;
(b) when directed by the Company or requested by a
Participant pursuant to Article VI, to make payments from the Trust
Fund to Participants and, when required by Article VII, to make
payments from the Trust Fund to General Creditors entitled to payments
thereunder;
(c) except as provided in Article VI and Article VII, to
waive, modify, reduce, compromise, release, contest, submit to
arbitration, or settle or extend the time of payment of any claims,
debts, damages, or demands of any nature in favor of or against the
Trustee or all or any part of the Trust Fund;
(d) to retain any disputed property until an appropriate
final adjudication or release is obtained, and to represent the Trust
in, or commence
<PAGE> 19
or defend, any litigation the Trustee considers in its discretion
necessary in connection with the Trust Fund;
(e) to withhold, if the Company so directs, all or any
part of any payment required to be made hereunder as may be necessary
and proper to protect the Trustee or the Trust Fund against any
liability or claim on account of any estate, inheritance, income or
other tax or assessment attributable to any amount payable hereunder,
and to discharge any such liability with any part or all of such
payment so withheld in accordance with Section 6.7;
(f) to maintain records reflecting all receipts and
payments under this Trust and such other records as the Company may
specify and to which the Trustee agrees, which records may be audited
from time to time by the Company or anyone named by the Company; and
to furnish a written accounting to the Company as of each Valuation
Date, as provided in Section 4.3;
(g) if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary of the policy
other than the Trust, to assign the policy (as distinct from
conversion of the policy from a different form) other than to a
successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy. Notwithstanding the preceding sentence,
the Trustee may loan to the Company the proceeds of any borrowing
against an insurance policy held as an asset of the Trust;
(h) to furnish the Company with such information for tax
or other purposes which the Company may reasonably request and which
the Trustee may not unreasonably withhold;
(i) to employ accountants, advisors, agents, legal
counsel (who, except following a Change of Control, may be legal
counsel to the Company and who are not in the Company's reasonable
judgment deemed to have a conflict of interest), consultants,
custodians, depositories, experts and other providers of services, to
consult with them with respect to the implementation and construction
of this Trust, the duties of the Trustee hereunder, the transactions
contemplated by this Trust, or any act which the Trustee proposes
14
<PAGE> 20
to take or omit, and to rely upon the advice of and services performed
by such persons; to delegate discretionary powers to such persons and
to reasonably rely upon information and advice furnished by such
persons; provided that each such delegation and the acceptance thereof
by each such person shall be in writing; and provided further that the
Trustee may not delegate its responsibilities as to the management or
control of the assets of the Trust Fund;
(j) to determine whether the Company is Insolvent, and to
hold assets of the Trust Fund for the benefit of General Creditors in
the event of Insolvency, as provided in Article VII hereof;
(k) to make payments to Participants, including after a
Change of Control, as provided in Article VI hereof;
(1) to perform all other acts which in the Trustee's
judgment are appropriate for the proper protection, management, investment, and
distribution of the Trust Fund, and to carry out the purposes of the Trust.
<PAGE> 21
V. INVESTMENTS
5.1 Generally. With respect to assets for which the Trustee has
investment responsibility, the Trustee shall invest and reinvest the principal
and income of the Trust Fund and keep the Trust Fund invested, without
distinction between principal and income, in accordance with the written
investment guidelines established by the Company and provided to the Trustee by
the Company. If no such written investment guidelines are received by the
Trustee, the assets of the Trust Fund shall be invested in such investments as
determined by the Trustee in accordance with the powers contained herein.
5.2 Investment Powers of Trustee. Except to the extent that
authority with respect to the management of all or a portion of the Trust Fund
has been allocated to others in accordance with this Trust, the Trustee shall
have exclusive authority and discretion to manage and control the Trust Fund,
subject only to broad investment guidelines the Company may establish from time
to time. The authority to assume responsibility for investment of assets of the
Trust Fund has been retained by the Company, and the authority to hold assets
of the Trust Fund may be allocated to one or more custodians or insurance
companies. Except as otherwise provided herein, the Trustee shall have, without
exclusion, all powers conferred on trustees by applicable law and, without
limiting the foregoing, shall have the following powers, rights, and duties in
addition to those provided elsewhere in this Trust:
(a) to invest and reinvest in any property wherever
situated, whether real, personal, mixed, foreign or domestic,
including common and preferred stocks, bonds, notes, and debentures
(including convertible stocks and securities, but not including any
stock, securities, or debt instruments of the Company [unless held in
a collective or commingled fund and such Company securities comprise
5% or less of the assets of such fund]), leaseholds, mortgages
(including, without limitation, any collective or part interest in any
bond and mortgage or note and mortgage), certificates of deposit, life
insurance contracts, guaranteed investment contracts, and guaranteed
annuity contract, all regardless of diversification and without being
limited to investments authorized by law for the investment of trust
funds;
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<PAGE> 22
(b) to invest and reinvest, without distinction between
principal and income, in contracts for future delivery of United
States Treasury Bills, other financial instruments, or indices based
on any group of securities, and in options to buy or sell indices
based on any group of securities or any kind of evidences of ownership
or indebtedness, including financial instruments or futures contracts
relating thereto;
(c) to invest and reinvest part or all of the Trust Fund
in any deposit accounts, deposit administration fund maintained by a
legal reserve life insurance company in accordance with an agreement
between the Trustee and such insurance company, a group annuity
contract or life insurance policies issued by such insurance company
to the Trustee as contract holder, any interest bearing deposits held
by any financial institution having total capital and surplus of at
least Fifty Million Dollars ($50,000,000), investments in any stocks,
bonds, debentures, mutual fund shares, notes, commercial paper,
treasury bills, and any mutual, common, commingled or collective trust
funds or pooled investment funds, and to diversify such investments so
as to minimize the risk of losses;
(d) to commingle assets of the Trust Fund, for investment
purposes only, with assets of any common, collective, or commingled
trust fund which has been or may hereafter be established and
maintained by the Trustee, or by any other financial institution;
provided that to the extent that any part or all of the assets of the
Trust Fund for which the Trustee has investment responsibility are
invested in any such common, collective or commingled trust fund or
pooled investment fund which is maintained by a bank or trust company
(including a bank or trust company acting as Trustee), the provisions
of the documents under which such common, collective or commingled
trust fund or pooled investment fund are maintained shall govern any
investment therein and provided further that prior to investing any
portion of the Trust Fund for the first time in any such common,
collective, or commingled trust fund, the Trustee shall advise the
Company of its intent to make such an investment, and furnish to the
Company any information it may reasonably request with respect to such
common, collective, or commingled trust fund (other than a trust fund
established by the Company), and provided further that the Trustee
shall maintain separate records with respect to each other trust of
the Trust Fund;
(e) to vote stock and other voting securities personally
or by proxy (and to delegate the Trustee's powers and discretion with
respect to such stock or other voting securities to such proxy), to
exercise subscription, conversion
<PAGE> 23
and other rights and options (and make payments from the Trust Fund in
connection therewith), to take any action and to abstain from taking
any action with respect to any reorganization, consolidation, merger,
dissolution, recapitalization, refinancing and any other plan or
change affecting any property constituting a part of the Trust Fund
(and in connection therewith to delegate the Trustee's discretionary
powers and pay assessments, subscriptions and other charges from the
Trust Fund), to hold or register any property from time to time in the
Trustee's name or in the name of a nominee or to hold it unregistered
or in such form that title shall pass by delivery; and to borrow from
anyone, including itself (to the extent permitted by law), such
amounts from time to time as the Trustee considers desirable to carry
out this Trust (and to mortgage or pledge all or part of the Trust
Fund as security); to participate in any plan or reorganization,
consolidation, merger, combination, liquidation, or other similar plan
relating to any such property, and to consent to or oppose any such
plan or any action thereunder, or any contract, lease, mortgage,
purchase, sale, or other action by any corporation or other entity any
of the securities of which may at any time be held in the Trust Fund,
and to do any act with reference thereto;
(f) to retain in cash such amounts as the Trustee
considers advisable and as are permitted by applicable law, and to
deposit any cash so retained in any depository (including any bank
acting as Trustee) which the Trustee may select, provided such
depository must have total capital and surplus of at least Fifty
Million Dollars ($50,000,000);
(g) when directed by the Company, and subject to Section
4.4(g), to apply for, pay premiums on, and maintain in force
individual, ordinary or universal life insurance policies on the lives
of Participants, which policies may contain provisions which the
Company may approve or direct; to receive or acquire such policy or
policies from the Company, but the Trustee may purchase a life
insurance policy from a person other than the insurer which issues a
policy only if the Trustee pays, transfers, or otherwise exchanges an
amount no more than the cash surrender value of the policy or
policies, and the policy or policies is (are) not subject to a
mortgage or similar lien which the Trustee would be required to
assume; to have with respect to such policy or policies any rights,
powers, options, privileges, and benefits usually comprised
18
<PAGE> 24
in the term "incidents of ownership", and normally vested in an owner
of such policy or policies to be exercised only pursuant to Company
direction;
(h) to retain any property at any time received by it;
(i) to sell, to exchange, to convey, to transfer, or to
dispose of, and to grant options for the purchase or exchange with
respect to it, any property at any time held by it, by public or
private sale, for cash or on credit, or partly for cash and partly for
credit;
(j) to deposit any such property with any protective,
reorganization, or similar committee; to delegate discretionary power
to any such committee; and to pay part of the expenses and
compensation of any such committee and any assessments levied with
respect to any property so deposited;
(k) to exercise any conversion privilege or subscription
right available in connection with any such property, and to do any
act with reference thereto, including the exercise of options, the
making of agreements or subscription, and the payment of expenses,
assessment or subscription, which may be deemed necessary or advisable
in connection therewith, and to hold and retain any securities or
other property which it may so acquire;
(l) to extend the time of payment of any obligation held
in the Trust Fund;
(m) to enter into standby agreements for future
investment, either with or without a standby fee;
(n) to acquire, renew, or extend, or participate in the
renewal or extension of any mortgage, and to agree to a reduction in
the rate of interest on any indebtedness or mortgage or to any other
modification or change in the terms of any indebtedness or mortgage,
or of any guarantee pertaining thereto, in any manner and to any
extent that may be deemed advisable for the protection of the Trust
Fund or the preservation of any covenant or condition of any
indebtedness or mortgage or in the performance of any guarantee, or to
enforce any default in such manner and to such extent as may be deemed
advisable; and to exercise and enforce any and all rights of
foreclosure, to bid on any property in foreclosure, to take a deed in
lieu of foreclosure with or without paying a consideration therefor,
and in connection therewith to release the obligation on the bond
secured by such mortgage; and to exercise and
<PAGE> 25
enforce in any action, suit or proceeding at law or in equity any
rights or remedies in respect of any such indebtedness or mortgage or
guarantee;
(o) to make, execute, and deliver, as Trustee, any and
all deeds, leases, notes, bonds, guarantees, mortgage, conveyance,
contracts, waivers, releases, or other instruments in writing
necessary or proper for the accomplishment of any of the foregoing
powers;
(p) to organize under the laws of any state one or more
corporations, partnerships, or trusts for the purpose of acquiring and
holding title to any property that it is authorized to acquire under
this Trust, and to exercise with respect thereto any or all of the
powers set forth in this Trust;
(q) notwithstanding any powers granted to the Trustee
pursuant to this Trust Agreement or to applicable law, the Trustee
shall not have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom, within the
meaning of Section 301.7701-2 of the Procedure and Administrative
Regulations promulgated under the IRC; and
(r) generally to do all acts, whether or not expressly
authorized, that the Trustee deems necessary or desirable for the
protection of the Trust Fund, and to carry out the purposes of the
Trust.
5.3 Investment Managers. The Company may appoint one or more
Investment Managers to direct the investment of any part or all of the assets
of the Trust Fund by the Trustee. Appointment of an Investment Manager shall be
made by written notice to the Investment Manager(s) and to the Trustee, which
notice shall specify those powers, rights, and duties of the Trustee under this
Trust that are allocated to the Investment Manager(s) and the portion of the
assets of the Trust Fund subject to the Investment Manager(s). After it
receives written notice of such appointment, the Trustee shall have no
obligation or responsibility for those investment duties which are allocated to
an Investment Manager. An Investment Manager so appointed pursuant to this
paragraph shall be either a registered investment adviser under the Investment
Advisers Act of 1940, a bank, as defined in said Act, or an insurance company
qualified to manage, acquire and dispose of the assets of the Plans under the
laws of more than one state of the United States. Any
20
<PAGE> 26
such Investment Manager shall acknowledge to the Company in writing that is
accepts such appointment. The Trustee shall not be liable for any loss or
diminution of any assets managed by an Investment Manager, including without
limitation, any loss or diminution caused by any action or inaction taken or
omitted by it at the direction of an Investment Manager. In addition, the
Trustee shall not be liable for the diversification of any assets managed by
Investment Managers of the Company, each of which shall be solely the
responsibility of the Company. An Investment Manager may resign at any time
upon written notice to the Trustee and the Company. The Company may remove an
Investment Manager at any time by written notice to the Investment Manager and
the Trustee.
The Company may by written notice to the Trustee assume investment
responsibility for any portion or all of the Trust assets. The Trustee shall
have no responsibility for any investments or review of such investments and
shall act with respect to such assets only as directed by the Company.
5.4 Reserved.
5.5 Single Fund. All assets of the Trust Fund and of each
investment fund, and the income thereon, shall be held and invested as a single
fund, and the Trustee shall not make any separate investment of the Trust Fund,
or make any separate investment fund, for the account of any Participant or
other General Creditors prior to receipt of directions to make payments to such
Participant or other General Creditors in accordance with Article VI or Article
VII. All rights associated with assets of the Trust shall be exercised by
Trustee or the person designated by Trustee, and shall in no event be
exercisable by or rest with Participants.
VI. PAYMENTS FROM THE TRUST
6.1 Obligation of Trustee to Make Payments to Participants. The
Trustee's obligation to distribute to any Participant out of the assets of the
Trust Fund shall be limited to payment at such times and in such amounts as are
properly in conformance with the provisions of Section 6.3. Payments to
Participants pursuant to this Article VI shall be made by the Trustee to the
extent that funds in the Trust Fund are sufficient for such purpose, and shall
at all times be subject to the provisions of Article VII. In the event the
Company determines that it will pay benefits directly to Participants as they
become due under the terms of the Plan, the Company shall notify Trustee of its
decision prior to the time amounts are payable to Participants.
<PAGE> 27
6.2 Obligation of the Company to Make Payments to Participants.
Notwithstanding anything in the Trust to the contrary, the Company shall remain
primarily liable to pay benefits under the Plan. Distributions to Participants
from the Trust Fund shall discharge, reduce, and offset the Company's
obligation to pay benefits to or on behalf of the Participant, to the extent of
the distributions, with respect to the Plan. If the Company's obligation to pay
a benefit under the Plan is not fully discharged, reduced, and offset by a
distribution from the Trust, then the Company shall make the balance of each
such benefit payment as it becomes due.
6.3 Distributions to Participants. Distributions which shall be
made from the Trust Fund to pay benefits in accordance with the Plan shall be
initiated by:
(a) written direction to the Trustee from the Plan
Administrator, which direction shall certify that such distribution(s)
is(are) in accordance with the Plan, and specify the timing, form,
payee, and amount of such benefit payments, including any federal,
state, or local income taxes to be withheld, and the Trustee shall
make or commence the directed distributions after receipt of such
written direction; or
(b) by the submission to the Trustee by a Participant of
a certified copy of the non-appealable order of an appropriate forum
with jurisdiction to settle a claim for payment(s) under the Plan.
6.4 Reserved.
6.5 Insufficient Trust Fund Assets. If at any time the Trustee
determines or is advised that the Trust Fund does not have sufficient assets to
permit the Trustee to make a payment property directed pursuant to this Trust,
including a payment provided for under Section 10.7 of this Trust, the Trustee
shall pay any benefits due (if otherwise payable hereunder) to Participants on
a pro rata basis as directed by the Plan Administrator, and the Company shall
make the balance of such payments as they become due. If the Plan Administrator
determines that the Trust Fund does not have sufficient funds to provide for
the payment of all amounts otherwise payable to Participants (or their
Beneficiary(ies)) from the Trust under the Plans, it shall notify the Company
and the Trustee of the amount of the deficiency, and, within forty-five (45)
days of such notice, the Company deposit in trust with the Trustee the
additional
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<PAGE> 28
amounts needed to make such payments. Upon receipt of such amount by the
Trustee from the Company, proceeds shall first be used by the Trustee to pay
any benefits previously due remaining unpaid, in the order in which they were
due, pursuant to Plan Administrator instructions.
6.6 Payment of Excess Assets to Company. Subject to Article VII,
and except as otherwise provided in this Section and Section 6.8 hereof, the
Company shall have no right or power to direct the Trustee to return to the
Company or to divert to others any of the Trust Fund before payment of all
benefits due or to become due have been made to Participants (or their
Beneficiary(ies)) pursuant to the terms of the Plan. If, as of a Valuation
Date, and based on the fair market value of the Trust Fund as determined by the
Trustee in accordance with Section 4.3 hereof, the Trust Fund holds Excess
Assets, then in the event the Trustee has received within ninety (90) days
after the most recent Valuation Date a written request executed by the Company,
the Trustee shall transfer to the Company, within thirty (30) days after the
receipt of the request, and provided that a Potential Change of Control Period
does not exist on the date of the transfer, such assets of the Trust Fund
selected by the Company which have a fair market value equal to the amount of
such Excess Assets, after converting such assets to cash if requested by the
Company. Any payment of Excess Assets to the Company under this Section shall
not discharge or release the Company of its obligation to make any contribution
required under Article III (including the requirement of a Company contribution
to the Trust upon the occurrence of a Potential Change of Control or a Change
of Control), and its obligation to pay benefits to Participants under the Plan.
Any payment of Excess Assets in accordance with this Section shall be subject
to the provisions of Article VII.
6.7 Company to Pay Withholding and Employment Taxes. Any amount
paid to a Participant by the Trustee in accordance with this Article VI shall
be reduced by the amount of taxes required to be withheld pursuant to Plan
Administrator instructions, and the Trustee shall inform the Company of all
amounts so withheld. The Company shall direct that the Trustee shall either
(a) pay to the Company a sum equal to the amount of such
taxes as are required to be withheld, whereupon the Company shall have
full responsibility for the payment of all withholding taxes to the
appropriate taxing authorities, or
(b) pay such taxes directly to the appropriate taxing
authorities for the benefit of the Company.
<PAGE> 29
The Company shall be solely responsible for the payment of any employment taxes
for which it is directly liable as a result of payments by the Trustee. The
Company shall furnish each Participant with the appropriate tax information
form evidencing payments under the Trust and the amount(s) thereof.
6.8 Payment in Reversion to Company. Subject to Article VII, upon
receipt of written certification from the Company that all obligations of the
Company to Participants with respect to the Plan have been satisfied, and if
the Trust Fund shall have any assets remaining, the Trustee shall distribute
such remaining assets of the Trust Fund to the Company, after converting such
assets to cash if requested by the Company, subject to the Trustee's right to
retain such reasonable amount for compensation and expenses as provided in
Section 10.7. The Trust shall thereafter terminate as provided in Section 9.2.
6.9 Reserved.
VII. PAYMENTS ON INSOLVENCY OF THE COMPANY
7.1 No Security Interest. No Participant shall have any claim on
or beneficial ownership interest in the Trust Fund before such assets are paid
to the Participant, except as an unsecured creditor of the Company. The Company
shall not create a security interest in the Trust Fund in favor of any
Participant or any other General Creditor. At all times during the continuance
of this Trust, as provided in this Article VII hereof, the principal and income
of the Trust Fund shall be subject to the claims of General Creditors under
federal and state law. If at any time the Trustee has received notice as
provided below that Company is Insolvent, Trustee shall discontinue payments to
Participants, and shall hold assets of the Trust Fund for the benefit of the
Company's General Creditors, pursuant to the provisions of Section 7.3, with no
preference whatsoever given claims of Participants over claims of other
unsecured creditors of the Company.
7.2 Determination of Insolvency. Notwithstanding any other
provisions of this Trust, the following provisions shall apply:
(a) The Board of Directors and the Chief Executive
Officer of the Company shall have the fiduciary duty and
responsibility on behalf of General
24
<PAGE> 30
Creditors to notify the Trustee promptly in writing in the event the
Company is Insolvent, and the Trustee shall have the right to rely
thereon to the exclusion of all directions or claims for payment made
thereafter by Participants.
(b) If the Trustee has actual knowledge that the Company
is Insolvent, the Trustee shall act in accordance with Section 7.3
hereof.
(c) Unless the Trustee receives written notice from the
Board of Directors or the Chief Executive Officer of the Company that
the Company is Insolvent, or from a person claiming to be a General
Creditor and claiming that the Company is Insolvent, the Trustee shall
have no duty to inquire whether the Company is Insolvent. If the
Trustee receives a written allegation from a person claiming to be a
General Creditor that the Company is Insolvent, the Trustee's only
duty of inquiry shall be to request that the Company's independent
public accountants determine whether the Company is Insolvent, and
shall suspend benefit payments pending such determination. If the
Company's independent public accountants advise the Trustee that the
Company is not Insolvent, it shall resume payments in accordance with
this Trust. If the Trustee receives notice of the Company's Insolvency
pursuant to this Section 7.2(c), it shall act in accordance with this
Section and Section 7.3 hereof.
7.3 Payments When Company Is Insolvent. Notwithstanding any other
provision of this Trust to the contrary, if the Trustee has actual knowledge as
described in 7.2(b), has been advised pursuant to 7.2(c) or receives actual
notice described in Section 7.2(a) that the Company is Insolvent
(a) by reason of Section 1.11(b), the Trustee shall
suspend payments to Participants and shall notify Participants of the
suspension, and shall hold the Trust Fund for the benefit of the
General Creditors, and shall pay and deliver the entire amount of the
Trust Fund only as a court competent jurisdiction, or duly appointed
receiver or other person authorized to act by such court, may order
or direct to make the Trust Fund available to satisfy the claims of
the General Creditors (payments to Participants in accordance with the
terms of the Plan may be resumed only pursuant to Section 7.4 hereof);
or
(b) by reason of Section 1.11(a), the Trustee shall
suspend payments to Participants and shall notify Participants of the
suspension, and shall (i) hold the Trust Fund for the benefit of
General Creditors or (ii) pay over all or a portion of the Trust Fund
to General Creditors if directed by the Company or an appropriate
judicial forum.
<PAGE> 31
Nothing in this Trust Agreement shall in any way diminish any rights of
Participants to pursue their rights as unsecured creditors of Company with
respect to benefits under the Plan, or otherwise.
7.4 Resumption of Duties after Insolvency. In the absence of notice of a
Court order to the contrary, the Trustee shall resume all of its duties and
responsibilities under the Trust, including payments to Participants if
otherwise provided for herein, within thirty (30) days of the Trustee's receipt
of a determination from the Company's independent public accounting firm that
the Company is no longer Insolvent.
(a) Trust Recovery of Payments to Creditors. In the event
that amounts are paid from the Trust Fund to General Creditors of the
Company, then as soon as practicable after the Company is no longer
Insolvent, the Company shall deposit into the Trust Fund a sum to
equal to the Funding Amount, determined as of the date the Company is
no longer Insolvent, which date shall be a Valuation Date. The
Company (or, after a Change of Control, the Company's independent
public accountants) shall provide the Trustee with written
certification of such Funding Amount. If the Funding Amount is not
paid by the Company within ninety (90) days of the Trustee's receipt
of such notice, the Trustee shall demand payment and the provisions of
Section 3.5 shall apply.
(b) Determination of Payment Amount; Resumption of
Payments. Provided that there are sufficient assets of the Trust Fund,
if Trustee discontinues the payment of benefits from the Trust
pursuant to Section 7.3 and subsequently resumes such payments, the
first payment following such discontinuance shall include the
aggregate amount of all payments due to Participants under the terms
of the Plan for the period of such discontinuance, as determined by
the Plan Administrator, less the aggregate amount of any payments made
to Participants by the Company in lieu of the payments provided for
hereunder during any such period of discontinuance. If the Trustee
suspends a payment to a Participant under this Section, and
subsequently makes such payment, the payment shall include interest at
the rate of interest per annum equal to the prime rate as published by
NBD Bank for each day from the date of suspension to the date of
payment, as calculated by the Plan Administrator.
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<PAGE> 32
7.5 Reserved.
VIII. RESIGNATION OR REMOVAL OF TRUSTEE
8.1 Resignation or Removal of Trustee. The Trustee may resign for
any reason or for no reason and at any time by giving thirty (30) days prior
written notice to the Company (or such shorter notice as may be agreed to by
the Company and the Trustee). Subject to Section 8.2(b) hereof, the Company may
remove the Trustee, for any reason and with or without cause, by giving thirty
(30) days prior written notice to the Trustee (or such shorter notice as may be
agreed to by the Company and the Trustee).
8.2 Successor Trustee. In the event of the resignation or removal
of a Trustee, a successor Trustee shall be appointed. Any successor Trustee
appointed pursuant to this Section must be a corporation which is not an
affiliate of the Company and which is authorized under the laws of the United
States or of any state to administer trusts and has at the time of its
appointment total capital and surplus of at least Fifty Million Dollars
($50,000,000). The Company shall give notice of any such appointment to the
retiring Trustee and the successor Trustee. A successor Trustee shall be
appointed in accordance with the following provisions:
(a) At any time prior to a Change of Control, a successor
Trustee shall be appointed by the Company. If a Trustee should resign
or be removed, and the Company does not notify the Trustee of the
appointment of a successor Trustee within forty-five (45) days of its
notice of its resignation or removal, then the Company shall be deemed
to have failed to have appointed a successor Trustee, and the Trustee
shall apply to a court of competent jurisdiction for appointment of a
successor Trustee.
(b) After the occurrence of a Change of Control, the
Trustee who is the Trustee on the date of the Change of Control may be
removed by the Company for three (3) years from the date of the Change
of Control. If a Trustee resigns or is removed at any time after the
date of a Change of Control, the Trustee shall apply to a court of
competent jurisdiction for appointment of a successor Trustee.
Notwithstanding Section 8.1, no resignation by or removal of the Trustee shall
be effective prior to the effective date of the appointment of a successor
Trustee by the Company or a court of competent jurisdiction.
<PAGE> 33
8.3 Duties of Retiring and Successor Trustees. In the event of
the resignation or removal of a Trustee, the retiring Trustee shall within
thirty (30) days after the effective date of resignation or removal furnish to
the successor Trustee and the Company a final accounting of its administration
of the Trust. A successor Trustee shall succeed to the right and title of the
predecessor Trustee in the assets of the Trust Fund and the retiring Trustee
shall deliver the property comprising the assets of the Trust Fund (less any
unpaid fees and expenses of the retiring trustee) to the successor Trustee,
together with any instruments of transfer, conveyance, assignment, and further
assurance as the successor Trustee may reasonably require. All of the
provisions of the Trust set forth herein with respect to the Trustee shall
relate to each successor Trustee with the same force and effect as if such
successor Trustee had been originally named as the Trustee hereunder. To the
extent permitted by law, neither the Trustee nor the successor Trustee shall be
liable for any act or failure to act, and shall not be required to examine the
accounts, records, or acts of the other.
8.4 Reserved.
IX. AMENDMENT AND TERMINATION OF TRUST
9.1 Amendment. Except as otherwise provided in Section 2.3 of this
Trust, the Trust may be amended (but may not be not revoked unless all of the
Company's obligations with respect to the Plan have been satisfied) in writing
from time to time by delivery to the Trustee of such amendment executed by the
Company, which amendment shall include the effective date of such amendment.
Any amendment of the Trust may be made:
(a) prior to a Change of Control, without limitation and
in any manner and effective as of any date, including a retroactive
effective date, if accompanied by the written certification that no
Change of Control has occurred;
(b) after a Change of Control, only if a period of three
(3) years has elapsed since the Change of Control, and either:
(1) such amendment is accompanied by the specific
written consent to the amendment by Participants whose
actuarial
28
<PAGE> 34
interests under the Plan, computed by the Company's
independent public accountants as of the effective date of
such amendment, represent at least 51% of the total of all
actuarial interests under the Plan; or
(2) such amendment is accompanied by the opinion
of legal counsel satisfactory to the Trustee that the
amendment is necessary for the purpose of conforming the Trust
to any present or future federal or state law (including
revenue laws) relating to trusts of this or similar nature, as
such laws may be amended from time to time, and a
certification that a copy of such notice and opinion of
counsel has been delivered to each Participant.
No amendment shall conflict with the terms of the Plan subject to amendment,
and no amendment may reduce the "Funding Amount" or the contribution
requirements of Article III to less than 50% of the actual benefit obligation
on the books of the Company; provided such amendment shall be effective prior
to a Potential Change of Control or a Change of Control. No amendment shall
operate to change the duties and liabilities of the Trustee without its
consent, or make the Trust revocable after it has become irrevocable in
accordance with Section 2.3 hereof unless the Company has satisfied all
obligations it may have with respect to the Plan as of the date of such
amendment. The Company and the Trustee shall execute such amendments of the
Trust as shall be necessary to give effect to any amendment made in accordance
with this Section.
9.2 Termination. After all assets of the Trust Fund have been
distributed by the Trustee to the Participants or their Beneficiaries in
accordance with Article VI, the Trustee shall render an accounting, which shall
be the final accounting, in the manner provided for in Section 4.3. Upon
acceptance of the accounting by the Company, any assets remaining in the Trust
Fund, after deduction of such reasonable amount for compensation and expenses
as provided for in Section 10.7, shall be returned to the Company in the manner
provided in Section 6.8, and the Trust shall terminate thereupon. The Trust and
all the rights, titles, powers, duties, discretions and immunities imposed on
or reserved to the Trustee and the Company, shall continue in effect until all
assets of the Trust Fund have been distributed as provided herein.
9.3 Reserved.
X. GENERAL PROVISIONS
<PAGE> 35
10.1 Coordination with Plan. The responsibilities of the Trustee
shall be governed solely by the terms of this Trust Agreement.
10.2 Litigation. In any action or proceeding regarding the Trust,
the Company, any assets of the Trust Fund, or the administration of the Trust,
any creditors who are not parties to such action or proceedings and any other
persons having or claiming to have a beneficial interest in the Trust shall not
be necessary parties and shall not be entitled to any notice of process. Any
final judgment which is not appealed or appealable and which may be entered in
any such action or proceeding shall be binding and conclusive on the parties
hereto and all persons having or claiming to have a beneficial interest in the
Trust. Acceptance by a creditor of assets of the Trust Fund shall constitute a
release of an equal amount of any obligations of the Company to such creditor.
10.3 Trustee's Action Conclusive. The Trustee's exercise or
non-exercise of its powers and discretion in good faith shall be conclusive on
all persons. No one other than the Company shall be obliged to see to the
application of any money paid or property delivered to the Trustee. The
certificate of the Trustee that it is acting according to this Trust will fully
protect all persons dealing with the Trustee.
10.4 No Guarantee or Responsibility. Notwithstanding any other
provision of this Trust to the contrary, the Trustee does not guarantee payment
of any amount which may become due and payable to a Participant. The Trustee
shall have no responsibility for the disclosure to Participants regarding the
terms of the Plan or of this Trust, or for the validity thereof. The Trustee
shall not be responsible for administrative functions under the Plan and shall
have only such responsibilities under this Trust Agreement as specifically set
forth herein. The Trustee will be under no liability or obligation to anyone
with respect to any failure on the part of the Company, the Plan Administrator,
the Company's independent public accounting firm, an Investment Manager, or a
Participant to perform any of their respective obligations under the Plan or
this Trust. The Trustee shall be fully protected in relying upon any notice or
direction provided to it from any party in connection with the Trustee's duties
hereunder which the Trustee in good faith believes to be genuine, and executed
and delivered in accordance with this Trust. Nothing in this Trust shall be
construed as requiring the Trustee to make any payment in excess of the amounts
held in the Trust Fund at the time of such payment or otherwise to risk or
expend its own funds.
30
<PAGE> 36
10.5 Liabilities Mutually Exclusive. Each of the Trustee and the
Company shall be responsible only for its own acts or omissions.
10.6 Indemnification. The Company agrees to indemnify to the
extent permitted by law the Trustee and hold it harmless against Trustee's
costs, expenses and liabilities (including, without limitation, attorneys' fees
and expenses) arising out of or in connection with the performance of the
Trustee's duties arising hereunder (but excluding costs arising as a result of
the Trustee's bad faith or gross negligence in the performance of its
responsibilities hereunder), and to be primarily liable for such payments. If
the Company does not pay such costs, expenses and liabilities in a reasonably
timely manner, Trustee may obtain payment from the Trust. This Section shall
survive the termination of the Trust.
10.7 Expenses and Compensation. The Trustee shall be paid
compensation by the Company in an amount agreed to by the Company and the
Trustee. The Trustee shall be reimbursed by the Company for reasonable expenses
incurred by it in the management and administration of this Trust Agreement,
including the reasonable compensation of the Trustee's counsel and other
agents; and if the Trustee is not timely reimbursed with respect to amounts due
pursuant to this Section 10.7 (or in the case of expenses to be incurred
pursuant to Section 3.5 hereof), the Trustee may charge such amounts against
the Trust Fund. Any compensation or expenses so agreed upon or otherwise
payable not paid by the Company on a timely basis may be charged to the Trust
Fund no more frequently than quarter-annually upon notice to the Company.
10.8 Reserved.
10.9 Notice. Any notice to the Trustee or to the Company required
or permitted under this Trust shall be duly and properly given and delivered if
sent by certified United States mail, return receipt requested, to the Trustee
at:
The Northern Trust Company
Attn: Trust Department
Fifty South LaSalle Street
Chicago, Illinois 60675
<PAGE> 37
and to the Company at:
The Detroit Edison Company
Attn: Vice President and Treasurer
2000 Second Street
Detroit, Michigan 48226
or to such other address as the Trustee or the Company may specify by written
notice to the other.
10.10 Antiassignment Clause. Benefits payable to Participants
and their Beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged, encumbered or
subjected to attachment, garnishment, levy, execution or other legal or
equitable process.
10.11 True and Correct Document. Any persons dealing with the
Trustee may rely upon a copy of this Trust and any amendments thereto certified
to be true and correct by the Trustee.
10.12 Waiver of Notice. Any notice required under this Trust may
be waived by the person entitled to such notice.
10.13 Counterparts. This Trust may be executed in two or more
counterparts, any one of which will be an original without reference to the
others.
10.14 Gender and Number. Words denoting the masculine gender
shall include the feminine and neuter genders and the singular shall include
the plural and the plural shall include the singular wherever required by the
context.
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<PAGE> 38
10.15 Successors. This Trust shall be binding on all persons
entitled to payments hereunder and their respective heirs and legal
representatives, and on the Company, the Trustee, and their respective
successors.
10.16 Severability. If any provision of this Trust is held to be
illegal or invalid, such illegality or invalidity shall not affect the
remaining provisions of this Trust, which shall be construed and enforced as if
such illegal or invalid provisions had never been inserted herein.
10.17 Applicable Law. The Trust shall be governed by and
construed in accordance with the laws of the State of Michigan with respect to
the Company's obligations and in accordance with the laws of the State of
Illinois with respect to the Trustee's obligations and Trust Administration.
IN WITNESS WHEREOF, the Company and the Trustee have caused this trust
agreement to be signed by their duly authorized representatives, and have
caused their respective seals to be hereunto affixed, as of the Effective Date.
THE DETROIT EDISON COMPANY
By
___________________________________
Its
___________________________________
___________________________________
THE NORTHERN TRUST COMPANY
as Trustee
By
___________________________________
Its
___________________________________
<PAGE> 39
EXHIBIT A
The Detroit Edison Company
IRREVOCABLE GRANTOR TRUST
FOR THE SECOND RESTATEMENT OF THE DETROIT EDISON
COMPANY RETIREMENT PLAN FOR NON-EMPLOYE DIRECTORS
The Company has established an Irrevocable Grantor Trust to pay benefits under
the Second Restatement of The Detroit Edison Company Retirement Plan for
Non-Employe Directors . A copy of such Plan, including any amendment(s), is
attached hereto.
34
<PAGE> 40
EXHIBIT B
The Detroit Edison Company
IRREVOCABLE GRANTOR TRUST
PARTICIPANTS (as defined in the Trust)
as of December 31, 1994
Name [Date of Birth]