<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
JUNE 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 JULY 31, 1995, 144,883,349 SHARES OF THE COMPANY'S $10 PAR VALUE COMMON
STOCK WERE OUTSTANDING.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1 - Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . 8
Independent Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Part II - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 4 - Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 20
Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . 23
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
DEFINITIONS
<TABLE>
<S> <C>
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
NRC . . . . . . . . . . . . . Nuclear Regulatory Commission
PSCR . . . . . . . . . . . . Power Supply Cost Recovery
Quarterly Report . . . . . . The Company's Quarterly Report to the Securities
and Exchange Commission on Form 10-Q for quarter ended
March 31, 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
quarter ended March 31, 1995
Registrant . . . . . . . . . The Detroit Edison Company
</TABLE>
2
<PAGE> 3
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 Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $ 838,913 $ 853,906 $ 1,701,961 $ 1,724,412 $ 3,425,899 $ 3,522,913
Electric - Interconnection 12,300 13,682 19,639 30,321 32,459 65,440
Steam 4,742 5,102 14,629 17,546 24,933 29,120
-----------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 855,955 $ 872,690 $ 1,736,229 $ 1,772,279 $ 3,483,291 $ 3,617,473
-----------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $ 175,532 $ 175,630 $ 345,192 $ 370,660 $ 693,747 $ 763,539
Purchased power 32,747 47,068 67,859 90,874 93,931 135,510
Other operation 148,998 147,506 286,371 287,847 619,590 626,423
Maintenance 59,903 66,634 112,374 122,805 251,979 240,915
Depreciation and amortization 124,630 120,064 249,674 236,047 490,042 449,663
Deferred Fermi 2 amortization (1,493) (1,867) (2,986) (3,733) (6,718) (8,212)
Amortization of deferred Fermi 2
depreciation and return 23,247 21,207 46,494 42,414 88,908 57,857
Taxes other than income 61,459 71,240 124,104 140,554 239,424 269,106
Income taxes 65,218 63,376 147,269 133,660 284,266 295,804
-----------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $ 690,241 $ 710,858 $ 1,376,351 $ 1,421,128 $ 2,755,169 $ 2,830,605
-----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $ 165,714 $ 161,832 $ 359,878 $ 351,151 $ 728,122 $ 786,868
-----------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS
Allowance for other funds used
during construction $ 268 $ 550 $ 583 $ 993 $ 1,274 $ 2,280
Other income and (deductions) - net (4,941) (2,538) (18,276) (5,611) (37,695) (24,282)
Income taxes 1,172 1,000 6,170 1,925 12,413 8,440
Accretion income 2,845 3,491 5,859 7,136 12,367 29,044
Income taxes - disallowed plant
costs and accretion income (868) (1,091) (1,797) (2,235) (3,814) (8,737)
-----------------------------------------------------------------------------------------------------------------------
Net Other Income and Deductions $ (1,524) $ 1,412 $ (7,461) $ 2,208 $ (15,455) $ 6,745
-----------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 68,096 $ 69,659 $ 136,520 $ 139,604 $ 270,679 $ 287,667
Amortization of debt discount,
premium and expense 2,779 2,620 5,578 5,237 11,174 10,463
Other 2,313 4,230 6,214 9,223 8,161 12,801
Allowance for borrowed funds used
during construction (credit) (554) (548) (941) (858) (2,148) (1,507)
-----------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 72,634 $ 75,961 $ 147,371 $ 153,206 $ 287,866 $ 309,424
-----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 91,556 $ 87,283 $ 205,046 $ 200,153 $ 424,801 $ 484,189
PREFERRED STOCK DIVIDEND REQUIREMENTS 7,404 7,411 14,811 14,823 29,627 29,651
-----------------------------------------------------------------------------------------------------------------------
EARNINGS FOR COMMON STOCK $ 84,152 $ 79,872 $ 190,235 $ 185,330 $ 395,174 $ 454,538
=======================================================================================================================
COMMON SHARES OUTSTANDING -
AVERAGE 144,875,672 147,054,370 144,869,919 147,052,410 145,069,229 147,045,359
EARNINGS PER SHARE $ 0.58 $ 0.54 $ 1.31 $ 1.26 $ 2.72 $ 3.09
DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK $ 0.515 $0.515 $ 1.03 $ 1.03 $ 2.06 $ 2.06
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
3
<PAGE> 4
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
------- -----------
<S> <C> <C>
UTILITY PROPERTIES
Plant in service
Electric $ 13,079,251 $ 12,941,414
Steam 70,654 69,813
------------- ------------
$ 13,149,905 $ 13,011,227
Less: Accumulated depreciation and amortization (4,756,464) (4,529,692)
------------- ------------
$ 8,393,441 $ 8,481,535
Construction work in progress 129,271 104,431
------------- ------------
Net utility properties $ 8,522,712 $ 8,585,966
------------- ------------
Property under capital leases (less accumulated amortization
of $97,037 and $94,678, respectively) $ 129,581 $ 134,542
Nuclear fuel under capital lease (less accumulated amortization
of $390,685 and $374,405, respectively) 175,022 193,411
------------- ------------
Net property under capital leases $ 304,603 $ 327,953
------------- ------------
Total owned and leased properties $ 8,827,315 $ 8,913,919
------------- ------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 11,181 $ 11,281
Investments and special funds 23,225 18,722
Nuclear decommissioning trust funds 99,784 76,492
------------- ------------
$ 134,190 $ 106,495
------------- ------------
CURRENT ASSETS
Cash and temporary cash investments $ 12,685 $ 8,122
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $28,000 and $30,000, respectively) 388,303 195,824
Other accounts receivable 37,686 34,212
Inventories (at average cost)
Fuel 161,309 136,331
Materials and supplies 159,390 155,921
Prepayments 35,720 10,516
------------- ------------
$ 795,093 $ 540,926
------------- ------------
DEFERRED DEBITS
Unamortized debt expense $ 42,167 $ 42,876
Unamortized loss on reacquired debt 119,621 123,996
Recoverable income taxes 638,731 663,101
Other postretirement benefits 29,029 36,562
Fermi 2 phase-in plan 344,270 390,764
Fermi 2 deferred amortization 55,245 52,259
Other 138,758 122,080
------------- ------------
$ 1,367,821 $ 1,431,638
------------- ------------
TOTAL $ 11,124,419 $ 10,992,978
============= ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
<PAGE> 5
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
--------------- ----------------
<S> <C> <C>
CAPITALIZATION
Common stock - $10 par value, 400,000,000 shares authorized;
144,882,760 and 144,863,447 shares outstanding, respectively
(292,423 and 311,804 shares, respectively, reserved for conversion
of preferred stock) $ 1,448,828 $ 1,448,635
Premium on common stock 545,975 545,825
Common stock expense (47,468) (47,461)
Retained earnings used in the business 1,420,095 1,379,081
--------------- --------------
Total common shareholders' equity $ 3,367,430 $ 3,326,080
Cumulative preferred stock - $100 par value, 6,747,484 shares
authorized; 3,902,022 and 3,905,470 shares outstanding,
respectively (1,539,827 shares unissued)
Redeemable solely at the option of the Company 379,946 380,283
Long-term debt 3,806,112 3,825,296
--------------- --------------
Total Capitalization $ 7,553,488 $ 7,531,659
--------------- --------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 120,838 $ 126,076
Other postretirement benefits 33,536 37,143
Other 54,252 48,707
--------------- --------------
$ 208,626 $ 211,926
--------------- --------------
CURRENT LIABILITIES
Short-term borrowings $ 141,877 $ 39,489
Amounts due within one year
Long-term debt 19,214 19,214
Obligations under capital leases 183,765 201,877
Accounts payable 139,562 147,020
Property and general taxes 15,772 31,608
Income taxes 33,712 5,304
Accumulated deferred income taxes 30,742 32,625
Interest 59,100 60,214
Dividends payable 82,017 82,012
Payrolls 72,969 71,958
Fermi 2 refueling outage 8,022 1,267
Other 97,671 97,215
--------------- --------------
$ 884,423 $ 789,803
--------------- --------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,039,935 $ 2,014,821
Accumulated deferred investment tax credits 338,860 346,379
Other 99,087 98,390
--------------- --------------
$ 2,477,882 $ 2,459,590
--------------- --------------
COMMITMENTS AND CONTINGENCIES (Note 5)
TOTAL $ 11,124,419 $ 10,992,978
=============== ==============
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
5
<PAGE> 6
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
-----------------------------------------------------------------------------
1995 1994 1995 1994 1995 1994
--------- -------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 91,556 $ 87,283 $ 205,046 $ 200,153 $ 424,801 $ 484,189
Adjustments to reconcile net income
to net cash from operating activities:
Accretion income (2,845) (3,491) (5,859) (7,136) (12,367) (29,044)
Depreciation and amortization 124,630 120,064 249,674 236,047 490,042 449,663
Deferred Fermi 2 amortization,
depreciation and return - net 21,754 19,340 43,508 38,681 82,190 49,645
Deferred income taxes and investment
tax credit - net 13,807 38,230 40,083 50,075 83,295 83,147
Fermi 2 refueling outage - net 2,955 (15,937) 6,755 (13,140) 388 (4,992)
Premiums on reacquired long-term debt
and preferred stock - (213) - (213) (11,350) (33,962)
Other 21,111 (12,009) (778) (29,387) (2,481) 11,148
Changes in current assets and
liabilities:
Customer accounts receivable and
unbilled revenues (68,086) (29,035) (192,479) 3,806 (196,790) (16,354)
Other accounts receivable (8,756) 4,431 (3,474) (2,351) (8,716) 1,933
Inventories (22,788) (17,998) (27,664) 6,549 (35,987) 27,699
Accounts payable 2,059 9,016 (5,143) (8,926) (10,075) 22,238
Taxes payable (32,882) (37,247) 13,254 (6,017) 1,240 12,728
Interest payable (204) 5,476 (1,114) 1,839 (9,127) (13,887)
Other 48,191 53,000 (23,929) (29,363) 3,245 (6,702)
--------- --------- ---------- ---------- ---------- -----------
Net cash from operating activities 190,502 220,910 297,880 440,617 798,308 1,037,449
--------- --------- ---------- ---------- ---------- -----------
INVESTING ACTIVITIES
Plant and equipment expenditures (94,744) (94,792) (179,978) (171,175) (375,195) (394,479)
Purchase of leased equipment - - - (11,500) - (13,902)
Nuclear decommissioning trust funds (11,321) (8,122) (23,292) (28,636) (41,219) (31,270)
Non-utility investments (2,013) (842) (552) (1,198) (13,384) (157)
Changes in current assets and liabilities (4,441) 2,312 (3,588) (2,490) 3,944 17,324
Other (3,511) 8,207 (4,592) 9,795 (24,737) (1,363)
--------- --------- ---------- ---------- ---------- -----------
Net cash used for investing activities (116,030) (93,237) (212,002) (205,204) (450,591) (423,847)
--------- --------- ---------- ---------- ---------- -----------
FINANCING ACTIVITIES
Sale of general and refunding mortgage
bonds - - - - 200,000 210,000
Funds received from Trustees:
Installment sales contracts and
loan agreements - 7,535 - 7,535 42,935 78,360
Increase (decrease) in short-term
borrowings 3,941 (40,485) 102,388 (46,268) 49,941 91,936
Redemption of long-term debt - (7,535) (19,214) (26,749) (250,499) (689,289)
Purchase of common stock - - - - (59,855) -
Dividends on common and preferred stock (82,013) (83,145) (164,026) (166,288) (329,183) (332,438)
0ther (304) (427) (463) (533) (2,552) (4,767)
--------- --------- ---------- ---------- ---------- -----------
Net cash used for financing activities (78,376) (124,057) (81,315) (232,303) (349,213) (646,198)
--------- --------- ---------- ---------- ---------- -----------
NET INCREASE (DECREASE) IN CASH AND
TEMPORARY CASH INVESTMENTS (3,904) 3,616 4,563 3,110 (1,496) (32,596)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 16,589 10,565 8,122 11,071 14,181 46,777
--------- --------- ---------- ---------- ---------- -----------
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF THE PERIOD $ 12,685 $ 14,181 $ 12,685 $ 14,181 $ 12,685 $ 14,181
========= ========= ========== ========== ========== ===========
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest
capitalized) $ 69,907 $ 67,301 $ 139,699 $ 144,784 $ 284,290 $ 309,715
Income taxes paid 76,240 66,948 76,480 69,205 190,447 203,470
New capital lease obligations 100 1,525 427 5,902 1,316 39,877
========= ========= ========== ========== ========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
6
<PAGE> 7
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
---------- -------- -------- ------- -----------
<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 19,313 193 150 (7)
Net income 205,046
Cash dividends declared
Common stock - $1.03 per share (149,221)
Cumulative preferred stock* (14,811)
----------- ---------- -------- -------- ----------
BALANCE AT JUNE 30, 1995 144,882,760 $1,448,828 $545,975 $(47,468) $1,420,095
=========== ========== ======== ======== ==========
</TABLE>
*At established rate for each series.
See accompanying Notes to Consolidated Financial Statements (Unaudited).
7
<PAGE> 8
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 866 MW at the end of June 1995 and the unit's capacity factor was
27.6% for the six-month period ended June 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 June 30, 1995. In addition, the Company has
received insurance payments of $71.5 million for replacement power costs
through June 30, 1995.
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 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 June 30, 1995, the Company had accrued
$45.7 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:
8
<PAGE> 9
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 six-month period ended June 30,
1995, customer accounts receivable and unbilled revenues increased as the
Company repurchased the $200 million. Therefore, at June 30, 1995, there were
no sales under this agreement.
NOTE 5 - 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, 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.
9
<PAGE> 10
NOTE 6 - NEW ACCOUNTING STANDARD
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 an asset's cost from a company's rate base.
The Company is continuing to review SFAS 121, 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 11) will automatically be incorporated by reference in the
Prospectuses constituting part of the Company's Registration Statements on Form
S-3 (Registration Nos. 33-30809, 33-50325, 33-53207, 33-57095 and 33-64296),
Form S-4 (Registration No. 33-60333), 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.
10
<PAGE> 11
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 June 30, 1995, and the
related consolidated statements of income and of cash flows for the
three-month, six-month and twelve-month periods then ended, and the
consolidated statement of common shareholders' equity for the six-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 June 30, 1994, and for the
three-month, six-month and twelve-month periods then ended were reviewed by
other accountants whose report dated August 8, 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
August 7, 1995
11
<PAGE> 12
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This analysis for the three, six and twelve months ended June 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
six-month periods due to higher electricity sales and lower operating expenses,
including reduced fuel and purchased power expenses. However, operating
revenues decreased due to lower PSCR clause revenues resulting from lower fuel
and purchased power expenses, a reduction in revenues from interconnection
sales, an additional reserve for estimated future Fermi 2 nuclear power plant
performance and lower rates. The operating revenue decreases were partially
offset by higher system sales.
For the twelve-month period, total and per share earnings for common
stock decreased due in part to a January 1994 order by the MPSC which reduced
rates by $78 million annually and increased depreciation and 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
reserve for estimated performance disallowances in 1994-1998. The earnings
drop was limited by higher system sales, lower property and Michigan Single
Business tax expenses and lower interest expense on long-term debt.
At June 30, 1995, the book value of the Company's common stock was $23.17
per share, an increase of $0.28 per share or 1.2% since December 31, 1994.
Return on average total common shareholders' equity was 11.7% and 13.8% for the
twelve months ended June 30, 1995 and 1994, respectively.
The ratio of earnings to fixed charges was 3.20 and 3.31 for the twelve
months ended June 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 2.79 and 2.91, respectively.
12
<PAGE> 13
OPERATING REVENUES
Total operating revenues increased (decreased) due to the following factors:
<TABLE>
<CAPTION>
Three Six Twelve
Months Months Months
------ ------ ------
(Millions)
<S> <C> <C> <C>
Rate changes
MPSC rate reduction $ -- $ (5) $ (49)
Special manufacturing contracts (8) (9) (9)
PSCR Clause (14) (29) (60)
------ ----- -----
(22) (43) (118)
System sales volume and mix 15 32 66
Interconnection sales (1) (11) (33)
Fermi 2 capacity factor performance
standard reserve (see Note 3) (11) (16) (47)
Other - net 2 2 (2)
------ ----- -----
Total $ (17) $ (36) $(134)
====== ===== =====
</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 $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.
13
<PAGE> 14
kWh SALES
kWh sales increased (decreased) as follows:
<TABLE>
<CAPTION>
Three Six Twelve
Months Months Months
------ ------ ------
<S> <C> <C> <C>
Residential 0.4 % (0.4) % (1.4) %
Commercial 2.6 1.8 2.3
Industrial 5.1 4.6 5.5
Other (includes primarily sales for resale) 4.1 2.9 (7.3)
Total System 2.9 2.1 1.8
Interconnection 21.9 (12.2) (46.1)
Total 4.0 1.3 (1.6)
</TABLE>
The decreases in residential sales for the six-month and twelve-month
periods were due to warmer weather in the first quarter of 1995 decreasing
heating related sales while cooler weather in the third quarter of 1994 reduced
cooling related sales for the twelve-month period. The increases in commercial
sales reflect an improvement in economic conditions.
The increases in industrial sales reflect higher sales to automotive
customers and increased sales to steel and other industrial customers due to
strong demand from the automotive and construction sectors and growth in
exports. The increased sales to other customers for the three-month and
six-month periods reflect increased load requirements of wholesale for resale
customers while sales to these customers decreased for the twelve-month period.
Interconnection sales decreased for the six-month and twelve-month
periods due to reduced availability of energy for sale as a result of the Fermi
2 outage and warmer winter weather, and increased for the second quarter due to
increased availability of energy for sale.
OPERATING EXPENSES
FUEL AND PURCHASED POWER
Fuel and purchased power expenses increased (decreased) due to the following
factors:
<TABLE>
<CAPTION>
Three Six Twelve
Months Months Months
------ ------ ------
(Millions)
<S> <C> <C> <C>
Net system output $ 8 $ 5 $ (15)
Average unit cost (20) (45) (25)
Fermi 2 business interruption
insurance proceeds -- (5) (71)
Other (2) (3) --
------ ----- ------
Total $ (14) $ (48) $ (111)
====== ===== ======
</TABLE>
14
<PAGE> 15
Net system output and average unit costs were as follows:
<TABLE>
<CAPTION>
Three Months Six Months Twelve Months
------------ ---------- -------------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
(Thousands of Megawatthours, "MWh")
<S> <C> <C> <C> <C> <C> <C>
Power plant generation
Fossil 10,355 10,473 20,687 21,262 41,836 41,833
Nuclear 1,078 - 1,323 - 1,323 4,122
Purchased power 1,143 1,669 2,706 3,161 6,143 4,228
------- ------ ------ ------ ------ ------
Net system output 12,576 12,142 24,716 24,423 49,302 50,183
======= ====== ====== ====== ====== ======
Average unit cost ($/MWh) $ 15.31 $16.87 $15.54 $17.39 $16.02 $16.52
======= ====== ====== ====== ====== ======
</TABLE>
Fuel and purchased power expenses decreased due to lower average fuel and
purchased power unit costs primarily resulting from the use of lower-cost low
sulfur western coal. For the twelve-month period, fuel and purchased power
expenses also decreased due to lower net system output and the receipt of Fermi
2 business interruption insurance proceeds. Fermi 2 was out of service in 1994
as a result of a turbine-generator failure in December 1993.
OTHER OPERATION
Three Months
Other operation expense increased due to higher postretirement health
care and life insurance benefits expenses ($3.2 million), higher demand-side
management expenses ($2.2 million) and higher incentive award expenses related
to a shareholder value improvement plan ($1.8 million), partially offset by
expenses recorded in the year-earlier period for employee reorganization
expenses ($4.6 million) and lower employee retirement plan expenses ($1.3
million).
Six Months
Other operation expense decreased due to expenses recorded in the
year-earlier period for lump sum payments to non-represented employees ($7.2
million) and for employee reorganization expenses ($4.6 million) and to lower
labor ($3.0 million), retirement plan ($2.7 million) and injuries and damages
($2.3 million) expenses. These decreases were partially offset by higher
postretirement health care and life insurance benefits expenses ($6.5 million),
higher incentive award expenses related to a shareholder value improvement plan
($5.2 million) and higher demand-side management ($3.7 million) and sales ($3.0
million) expenses.
Twelve Months
Other operation expense decreased due to expenses recorded in the
year-earlier period for employee reorganizations ($17.7 million), the write-off
of obsolete and excess
15
<PAGE> 16
stock material ($12.4 million), a reserve for steam purchases under the
agreement with the Greater Detroit Resource Recovery Authority ($11.0 million)
and lump sum payments to non-represented employees ($7.2 million), and to lower
incentive awards related to a shareholder value improvement plan ($7.5 million)
and lower uncollectibles ($7.1 million), injuries and damages ($6.1 million),
and employee retirement plan ($4.6 million) expenses. These decreases were
partially offset by higher postretirement health care and life insurance
benefits ($37.0 million), nuclear plant ($9.2 million), service quality claims
($8.7 million), and demand-side management ($6.9 million) expenses.
MAINTENANCE
Three Months and Six Months
Maintenance expense decreased due to lower storm and line clearance
expenses.
Twelve Months
Maintenance expense increased due to higher nuclear plant expenses ($22.4
million), partially offset by lower line clearance and storm expenses ($11.6
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 deferred decreases each year through 1999.
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 deferred 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
Taxes other than income taxes decreased due to lower property, payroll and
Michigan Single Business taxes.
16
<PAGE> 17
INCOME TAXES
Three Months
Income taxes increased due to higher pretax income.
Six 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 decreased due to lower pretax income, partially offset by
higher prior years' federal income tax accrual, higher taxes due to the
increase in amortization of deferred Fermi 2 depreciation and return 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
Three Months and Six Months
Other deductions increased in both periods due to expenses incurred in the
formation of a holding company ($2.1 million) and in the six- month period due
to promotional practices expenses ($7.2 million).
Twelve Months
Other deductions increased due to promotional practices expenses ($7.2
million), a contribution to the Detroit Edison Foundation ($5.0 million), the
write-off of premiums and expenses related to the $50 million portion of 1989
Series A General and Refunding Mortgage Bonds not refinanced ($5.2 million) and
expenses incurred in the formation of a holding company ($2.1 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.
17
<PAGE> 18
INTEREST CHARGES
LONG-TERM DEBT
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
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.
LIQUIDITY AND CAPITAL RESOURCES
CASH GENERATION AND CASH REQUIREMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Net cash from operating activities decreased due to changes in current
assets and liabilities, primarily as a result of the repurchase of $200 million
of customer accounts receivable and unbilled revenues under the agreement for
the sale, assignment and repurchase from time to time of the Company's
customer accounts receivable and unbilled revenues, and for the twelve-month
period, lower net income.
Net cash used for investing activities was higher in the three-month
period due primarily to increased funding of utility investments and the
nuclear decommissioning trust funds. Net cash used for investing activities
was higher in the six-month period due to increased funding of utility
investments and higher plant and equipment expenditures, partially offset by
purchases of leased equipment in the prior period. Net cash used for investing
activities was higher in the twelve-month period due to increased funding of
utility and non-utility investments and nuclear decommissioning trust funds,
partially offset by lower plant and equipment expenditures and purchases of
leased equipment in the prior period.
Net cash used for financing activities decreased due to reduced activity
in the Company's extensive debt refinancing program, partially offset in the
twelve-month period by the one-time purchase of common stock from the trustee
of the Detroit Edison Savings & Investment Plans as a result of a plan change.
ADDITIONAL INFORMATION
The Company's 1995 cash requirements for its capital expenditure program
are estimated at $422 million, of which $177 million had been expended as of
June 30, 1995.
18
<PAGE> 19
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.
The Company had short-term credit arrangements of approximately $409
million at June 30, 1995, under which $142 million of borrowings were
outstanding.
CAPITALIZATION
The Company's capital structure as of June 30, 1995 was 44.6% common
shareholders' equity, 5.0% preferred stock and 50.4% long-term debt as compared
to 44.2%, 5.0% and 50.8%, respectively, at December 31, 1994.
COMPETITION
On March 29, 1995, the FERC issued a Notice of Proposed Rulemaking on
Promoting Wholesale Competition Through Open Access Non-discriminatory
Transmission Services by Public Utilities. According to the FERC, the goals of
the new rules are to facilitate the development of a competitive market by
insuring that wholesale buyers and sellers can reach each other and to
eliminate anticompetitive and discriminatory practices in transmission services
which, in turn, should lead to lower electric rates.
During June 1995, the Staff of the MPSC issued a discussion draft
entitled, PROPOSAL "M" A MICHIGAN PLAN FOR FLEXIBLE AND COMPETITIVE ENERGY
UTILITY SERVICES. Discussions are proceeding as to the development of a new
Michigan energy regulatory framework.
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. It is
estimated that the total cost associated with this severe weather will be
approximately $25-30 million. The Company has storm insurance which provides
for coverage after incurring costs of $10 million for a storm. The Company
will be filing a claim for costs incurred as a result of the severe weather.
At this time, the Company is unable to predict how much will ultimately be
recovered from insurance. Since the Company will not recover all of the storm
costs, earnings for the third quarter of 1995 will be negatively impacted by
the storms.
19
<PAGE> 20
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS. SEE NOTE 5.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The annual meeting of the holders of Common Stock of the Company
was held on April 24, 1995. Proxies for the meeting were
solicited pursuant to Regulation 14(a).
(b) There was no solicitation in opposition to the Board of Directors'
nominees, as listed in the proxy statement, for directors to be
elected at the meeting and all such nominees were elected.
The terms of the previously elected nine directors listed below
continue until the annual meeting dates shown after each name:
Lillian Bauder April 22, 1996
David Bing April 22, 1996
Larry G. Garberding April 22, 1996
Alan E. Schwartz April 22, 1996
William Wegner April 22, 1996
John E. Lobbia April 28, 1997
Patricia S. Longe April 28, 1997
Eugene A. Miller April 28, 1997
Dean E. Richardson April 28, 1997
(c) At the annual meeting of the holders of Common Stock of the
Company held on April 24, 1995, the following four directors were
elected to serve until the 1998 annual meeting with the votes
shown:
<TABLE>
<CAPTION>
Total Vote
Total Vote Withheld
for Each From Each
Director Director
---------- ---------
<S> <C> <C>
Terence E. Adderley 113,508,494 2,872,751
Anthony F. Earley, Jr. 113,494,737 2,886,766
Allan D. Gilmour 113,516,707 2,866,583
Theodore S. Leipprandt 113,433,908 2,947,382
</TABLE>
Shareholders ratified the appointment of Deloitte & Touche LLP as
the Company's independent accountants for the year 1995 with the
votes shown:
<TABLE>
<CAPTION>
For Against Abstain
----------- --------- ---------
<S> <C> <C>
113,090,661 1,371,522 1,919,649
</TABLE>
20
<PAGE> 21
Shareholders also voted on the two items below:
(1) An agreement and plan of exchange which will result in
Detroit Edison becoming a subsidiary of a newly formed
holding company, and in the shareholders of Detroit Edison
becoming shareholders of the holding company.
<TABLE>
<CAPTION>
For Against Abstain
----------- --------- ---------
<S> <C> <C>
106,204,308 5,705,957 4,471,567
</TABLE>
(2) A Long-Term Incentive Plan
<TABLE>
<CAPTION>
For Against Abstain
---------- ---------- ----------
<S> <C> <C>
92,572,687 19,929,759 3,879,386
</TABLE>
(d) Not applicable.
ITEM 5 - OTHER INFORMATION.
As discussed in Part I, Items 1 and 2 - Business Properties,
"Environmental Matters - Wastes and Toxic Substances" of the Annual Report, a
nationwide environmental problem is the discovery of improperly disposed of
hidden or buried hazardous wastes. The Company has been found responsible for
cleanup of wastes found on its property, even in cases where the dumping
occurred without the Company's knowledge or permission. On June 5, 1995,
Governor John Engler signed P.A. 71 of 1995, which amended the Michigan
Environmental Response Act, now part of the Natural Resources and Environmental
Protection Act. Among other changes, P.A. 71 amended the liability standards
to hold a person liable for remediation only if they are responsible for an
activity causing a release of a substance to the environment. Since the
previous standard of liability was simply ownership of the property, the
Company believes the amendment will remove deterrences to development in its
service territory and more fairly allocate cleanup costs to those responsible.
However, companies are still liable under federal law.
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, 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. The Company also
filed, as required by Commission order, a proposed retail wheeling tariff and
proposal for implementing the retail wheeling program.
21
<PAGE> 22
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, 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 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 14, 1995, the
Company filed testimony supporting its proposal for implementing the MPSC's
experimental retail wheeling program including requirements for collecting data
and evaluating the experiment. The Company's identified need date for new
capacity is 2004. 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 July 21, 1995, ABATE filed a letter with
the Michigan Court of Appeals seeking to dismiss the Company's appeal until
such time as the MPSC acts on the petitions.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Nuclear Regulatory Commission" of the Annual Report and
in Item 5 - Other Information of the Quarterly Report, on May 18, 1994, the
NRC issued the fourteenth Systematic Assessment of Licensee Performance
("SALP") report on Fermi 2 operations. The next SALP period is expected to end
in March 1996.
An all time high peak demand of 9,878 MW was experienced for the Company's
system on June 19, 1995, with a reserve margin of 4.2%. The previous peak was
9,684 MW set in June 1994. 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 15% 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%.
22
<PAGE> 23
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(i) Exhibits filed herewith.
Exhibit
Number
-------
10-61 - Plan for Deferring the Payment of Directors' Fees
(June 1995).
10-62 - Retirement Plan for Non-Employe Directors (June 1995).
10-63 - Savings Reparation Plan (June 1995).
10-64 - Retirement Reparation Plan (June 1995).
10-65 - Benefit Equalization Plan (June 1995).
10-66 - Management Supplemental Benefit Plan (June 1995).
11-23 - Primary and Fully Diluted Earnings Per Share of Common
Stock.
15-59 - Awareness Letter of Deloitte & Touche LLP regarding
their report dated August 7, 1995.
27-4 - Financial Data Schedule for the period ended
June 30, 1995.
99-29 - Irrevocable Grantor Trust with respect to Savings
Reparation Plan (July 1995).
99-30 - Irrevocable Grantor Trust with respect to Retirement
Reparation Plan (July 1995).
99-31 - Irrevocable Grantor Trust with respect to Benefit
Equalization Plan (July 1995).
99-32 - Irrevocable Grantor Trust with respect to the
Management Supplemental Benefit Plan (July 1995).
(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).
23
<PAGE> 24
Exhibit
Number
------
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:
<TABLE>
<S> <C>
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
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
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
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
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
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
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).
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).
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
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).
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).
</TABLE>
27
<PAGE> 28
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the
second quarter of 1995.
28
<PAGE> 29
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 August 7, 1995 /s/ SUSAN M. BEALE
--------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date August 7, 1995 /s/ RONALD W. GRESENS
--------------------------------------
Ronald W. Gresens
Vice President and Controller
29
<PAGE> 30
THE DETROIT EDISON COMPANY
QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTER ENDED JUNE 30, 1995
EXHIBIT INDEX
FILE NO. 1-2198
Page No.
(i) Exhibits filed herewith.
Exhibit
Number
------
10 - 61 Plan for Deferring the Payment of Directors' Fees
(June 1995).
10 - 62 Retirement Plan for Non-Employe Directors (June 1995).
10 - 63 Savings Reparation Plan (June 1995).
10 - 64 Retirement Reparation Plan (June 1995).
10 - 65 Benefit Equalization Plan (June 1995).
10 - 66 Management Supplemental Benefit Plan (June 1995).
11 - 23 Primary and Fully Diluted Earnings Per Share of
Common Stock.
15 - 59 Awareness Letter of Deloitte & Touche LLP regarding
their report dated August 7, 1995.
27 - 4 Financial Data Schedule for the period ended
June 30, 1995.
99 - 29 Irrevocable Grantor Trust with respect to Savings
Reparation Plan (July 1995).
99 - 30 Irrevocable Grantor Trust with respect to Retirement
Reparation Plan (July 1995).
99 - 31 Irrevocable Grantor Trust with respect to Benefit
Equalization Plan (July 1995).
99 - 32 Irrevocable Grantor Trust with respect to Management
Supplemental Benefit Plan (July 1995).
<PAGE> 31
See Page Nos.
_____ through
_____ for
location
of Exhibits
Incorporated
by Reference
-------------
(ii) Exhibits incorporated hereby by reference.
4 (a) - Restated Articles of Incorporation of the
Company, as filed December 10, 1991 with the
State of Michigan.
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.
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.
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
2
<PAGE> 32
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)
September 15, 1993
March 1, 1994
June 15, 1994
August 15, 1994
December 1, 1994
4 (f) - Collateral Trust Indenture (Notes), dated as of
June 30, 1993.
4 (g) - First Supplemental Note Indenture, dated as of
June 30, 1993.
4 (h) - Second Supplemental Note Indenture, dated as of
September 15, 1993.
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.
3
<PAGE> 33
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 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 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.
4
<PAGE> 34
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.
5
<PAGE> 1
EXHIBIT 10.61
SECOND RESTATEMENT OF
THE DETROIT EDISON COMPANY
PLAN FOR DEFERRING THE
PAYMENT OF DIRECTORS' FEES
The Detroit Edison Company Plan for Deferring the Payment of Directors'
Fees (the "Plan") established by The Detroit Edison Company (the "Company) as
amended and restated effective January 23, 1995, is hereby amended and restated
as of June 26, 1995, by this Second Restatement.
SECTION I - PURPOSE
The purpose of The Detroit Edison Company Plan for Deferring the Payment of
Directors' Fees (the "Plan") is to enable each Director to defer all or a
portion of his or her fees for future services as a member of the Board of
Directors or as a member of any committee thereof.
SECTION II - ELIGIBILITY
Any Director of the Company who is not a Company employe shall be eligible to
participate in the Plan.
SECTION III - ELECTION, MODIFICATION, AND TERMINATION
PROCEDURES
Any Director wishing to participate in the Plan must file with the Corporate
Secretary of the Company at 2000 Second Avenue, Detroit, MI 48226, a written
Notice of Election on the form attached as Exhibit "A" to defer payment of all
or a portion of his or her Director's fees. Such an election to participate in
the Plan must be made prior to the beginning of the month for which fees are
payable. An effective election with respect to Directors' fees that have been
deferred under the terms of this Plan and fees that have already been earned
may not be modified or revoked. An effective election with regard to fees that
have not been deferred or earned may be modified by filing a new Notice of
Election or may be terminated by filing a Notice of Termination on the form
attached as Exhibit "B". A Director who shall have terminated an effective
election may thereafter file a new election covering a subsequent period.
<PAGE> 2
SECTION IV - ESTABLISHMENT AND ADMINISTRATION OF DEFERRED
DIRECTORS' FEE ACCOUNT
The amount of any Director's fees deferred in accordance with an election shall
be credited to a deferred Director's fee account maintained by the Company.
Such account shall remain a part of the general funds of the Company, and
nothing contained in this Plan shall be deemed to create a trust or fund of any
kind or create any fiduciary relationship.
As of the last day of each month for each Director participating in this Plan,
the deferred Director's fee account for such Director shall be adjusted as
follows:
(a) The account shall first be charged with any distributions made
during the month.
(b) The account balance shall then be credited with interest for
that month. Commencing January 1, 1995, such interest shall
be computed by multiplying the applicable portion of the
account balance after the adjustment provided for in
Subsection (a) of this Section by a fraction, the numerator of
which is the 5-Year United States Treasury Bond rate, as
reported in The Wall Street Journal as of the last business
day of each month, and the denominator of which is 12.
(c) Finally, the account shall be credited with the amount, if
any, of Director's fees deferred during that month.
A separate record of deferred Director's fees and applicable interest shall be
maintained by the Company for each participant in this Plan.
SECTION V - PAYMENT OF DEFERRED DIRECTORS' FEES
Deferred fees shall be paid to a Director or, in the event of death, to his or
her designated beneficiary in accordance with the Notice of Election and
Beneficiary Designation forms that have been filed with the Corporate Secretary
of the Company. If a Director elects to receive payment of his or her deferred
fees in installments rather than in a lump sum, the payment period shall not
exceed ten years following the payment commencement date. The amount of any
installment payment shall be determined by multiplying the balance of the
Director's unpaid deferred fees and applicable interest on the date of such
installment by a fraction, the numerator of which is one and the denominator of
which is the number of remaining unpaid installments. Such balance shall be
appropriately reduced to reflect the installment payments made hereunder.
2
<PAGE> 3
SECTION VI - WHEN PAYMENT OF DEFERRED DIRECTORS' FEES
COMMENCES
The payment in a lump sum or installments of amounts deferred pursuant to an
election under this Plan shall commence on January 15 of the first year to
which payment has been deferred and shall be paid in accordance with the terms
of such election. If a Director shall die prior to the first year to which
payment has been deferred, such payment shall commence on January 15 of the
calendar year immediately following the year of death and shall be paid in the
manner specified in such election.
In the event a participating Director receives an assessment of income taxes
from the Internal Revenue Service which treats any amount payable under this
Plan as being includible in such Director's gross income prior to the actual
payment of such amount to such Director, the Company shall pay an amount equal
to such income taxes to such Director within 30 days after written notice from
such Director of such assessment, and such Director's fee account shall be
reduced by an amount equal to such income taxes.
Each payment under this Plan shall be reduced by any federal, state, or local
taxes which the Company determines should be withheld from such payment.
Benefits under this Plan shall be payable solely from the general assets of the
Company. Each participant in this Plan shall have the status of a general
unsecured creditor of the Company. This Plan constitutes a promise by the
Company to make benefit payments in the future. It is intended that this Plan
be unfunded for tax purposes and that this Plan shall remain unfunded for the
entire period of its existence.
SECTION VII - DESIGNATION OF BENEFICIARY
Each Director, on becoming a participant, shall file with the Corporate
Secretary of the Company a beneficiary designation on the form attached as
Exhibit "C" form designating one or more beneficiaries to whom payments
otherwise due the participant shall be made in the event of his or her death
while serving as a Director or after leaving the Board. A beneficiary
designation will be effective only if the signed beneficiary designation form
is filed with the Corporate Secretary of the Company while the Director is
alive, and will cancel all beneficiary designations signed and filed
previously. If the primary beneficiary shall survive the Director but dies
before receiving all the amounts due hereunder, the deferred amounts remaining
unpaid at the time of death shall be paid in one lump sum to the legal
representative of the primary beneficiary's estate. If the primary beneficiary
shall predecease the Director, amounts remaining unpaid at the time of the
Director's death shall be paid in the order specified by the Director to the
contingent beneficiary(s) surviving the Director. If the contingent
beneficiary(s) dies before receiving all the amounts due hereunder, the unpaid
amount shall be paid in one lump sum to the legal representative of such
contingent beneficiary(s) estate. If the Director shall fail to designate a
beneficiary(s) as provided in this Section, or if all designated beneficiaries
shall predecease the Director, the deferred amounts remaining
3
<PAGE> 4
unpaid at the time of such Director's death shall be paid in one lump sum to
the legal representative of the Director's estate.
SECTION VIII - NON-ALIENABILITY AND NON-TRANSFERABILITY
No Director, beneficiary designated by the Director, or creditors of the
Director shall have any right to, directly or indirectly, anticipate, alienate,
sell, transfer, assign, pledge, encumber, attach, or garnish any amount that is
or may be payable hereunder.
SECTION IX - ADMINISTRATION OF PLAN; ARBITRATION
(a) Full power and authority to construe, interpret, and administer the
Plan shall be vested in the Nominating Committee. Decisions of the
Nominating Committee shall be final, conclusive, and binding upon all
parties.
(b) Notwithstanding Section IX(a) hereof, in the event of any dispute,
claim, or controversy (hereinafter referred to as a "Grievance")
between a Director who is eligible to elect to receive the benefits
provided under this Plan and the Company with respect to the payment
of benefits to such Director under this Plan, the computation of
benefits under this Plan, or any of the terms and conditions of this
Plan, such Grievance shall be resolved by arbitration in accordance
with this Section IX(b).
(1) Arbitration shall be the sole and exclusive remedy to
redress any Grievance.
(2) The arbitration decision shall be final and binding,
and a judgment on the arbitration award may be
entered in any court of competent jurisdiction and
enforcement may be had according to its terms.
(3) The arbitration shall be conducted by the American
Arbitration Association in accordance with the
Commercial Arbitration Rules of the American
Arbitration Association and expenses of the
arbitrators and the American Arbitration Association
shall be borne by the Company. Neither the Company
nor such Director shall be entitled to attorneys'
fees, expert witness fees, or other expenses expended
in the course of such arbitration or the enforcement
of any award rendered thereunder.
(4) The place of the arbitration shall be the offices of
the American Arbitration Association in the Detroit
Metropolitan area, Michigan.
(5) The arbitrator(s) shall not have the jurisdiction or
authority to change any of the provisions of this
Plan by alteration of, addition
4
<PAGE> 5
to, or subtraction from the terms thereof. The
arbitrator(s)' sole authority shall be to apply any
terms and conditions of this Plan. Since arbitration
is the exclusive remedy with respect to any
Grievance, no Director eligible to receive benefits
provided under this Plan has the right to resort to
any federal court, state court, local court, or
administrative agency concerning breaches of any
terms and provisions hereunder, and the decision of
the arbitrator(s) shall be a complete defense to any
suit, action, or proceeding instituted in any federal
court, state court, local court or administrative
agency by such Director or the Company with respect
to any Grievance which is arbitrable as herein set
forth.
(6) The arbitration provisions shall, with respect to any
Grievance, survive the termination of this Plan.
SECTION X - AMENDMENT OR TERMINATION OF PLAN
The Board of Directors may amend or terminate this Plan at any time. Any
amendment or termination of this Plan shall not affect the rights of
participants or beneficiaries to the amounts in the deferred Directors' fee
accounts at the time of such amendment or termination.
SECTION XI - APPLICABLE LAW
The provisions of this Plan shall be interpreted and construed in accordance
with the laws of the State of Michigan.
5
<PAGE> 1
EXHIBIT 10.62
SECOND RESTATEMENT OF
THE DETROIT EDISON COMPANY
RETIREMENT PLAN
FOR NON-EMPLOYE DIRECTORS
The Detroit Edison Company Retirement Plan For Non-Employe Directors
(the "Plan"), established by The Detroit Edison Company (the "Company")
effective January 1, 1990, as amended and restated on February 27, 1995, is
hereby amended and restated as of June 26, 1995, by this Second Restatement.
1. PURPOSE
This Plan is to provide a retirement allowance for service as a director while
not an employe.
2. ELIGIBILITY
This Plan provides a monthly retirement allowance to each director
("participant") who has served (a) on the Board as a director for five or more
years and (b) as a non-employe director at any time on or after January 1,
1990.
3. AMOUNT AND PAYMENTS OF DISTRIBUTIONS
(a) The monthly retirement allowance will be equal to one-twelfth (1/12th)
of the annual retainer (not including Board meeting, Board committee
meeting, or Company-related meeting fees) in effect on the date of the
participant's termination of service on the Board.
(b) Payments shall be made monthly commencing with the month following
such participant's termination of service on the Board.
(c) In the event a participant receives an assessment of income taxes from
the Internal Revenue Service which treats any amounts payable under
this Plan as being includible in such participant's gross income prior
to the actual payment of such amount to such participant, the Company
shall pay an amount equal to such income taxes to such participant
within 30 days after written notice from such participant of such
assessment. The amount of the monthly retirement allowance which
would otherwise be paid following such participant's termination of
service on the Board shall be reduced, dollar for dollar, starting
with the first such payment, by the
<PAGE> 2
amount of income taxes previously advanced to the participant
hereunder, until such amount has been fully recovered by the Company.
(d) Each payment under this Plan shall be reduced by any federal, state,
or local taxes which the Company determines should be withheld from
such payment.
(e) Benefits under this Plan should be payable solely from the general
assets of the Company. Each participant in this Plan shall have a
status of a general unsecured creditor of the Company. This Plan
constitutes a promise by the Company to make benefit payments in the
future. It is intended that this Plan be unfunded for tax purposes
and that this Plan shall remain unfunded during the entire period of
its existence.
4. DURATION
The monthly retirement allowance payments will continue for a period equal to
the number of months served on the Board while not an employe, or until the
participant's death, whichever occurs first. In the event of death prior to
the conclusion of scheduled payments under this Plan, any and all liability of
the Company under this Plan is terminated. The participant's estate shall have
no rights hereunder. There is no allowance to a surviving spouse or other
beneficiary.
5. SUSPENSION OF PAYMENTS
Payment of the retirement allowance to a participant who is again elected to
the Board will be suspended. Any future allowance will be recalculated based
on the annual retainer in effect at the time of the participant's subsequent
termination of service on the Board. The duration of payments will be
determined by the cumulative number of whole months served on the Board minus
the number of retirement allowance payments received prior to re-election of
the Board.
6. NON-ALIENATION OF BENEFITS
The right of a participant to payment of a retirement allowance hereunder shall
not be anticipated, alienated, sold, assigned, transferred, pledged,
encumbered, attached, or garnished by a participant or a participant's
creditors and shall not be subject to garnishment, execution, attachment, or
similar process. Any attempted anticipation, sale, assignment, transfer,
pledge, levy, encumbrance, attachment, garnishment, or similar process shall be
null and void and without effect.
2
<PAGE> 3
7. ADMINISTRATION; ARBITRATION
(a) This Plan shall be administered by the Nominating Committee of the
Board of Directors (the "Nominating Committee"), who shall have full
power and authority to make each determination provided for in this
Plan, to interpret this Plan, and to establish rules, regulations, and
procedures for carrying out its purpose.
(b) The Secretary of the Company shall be responsible for recordkeeping
under this Plan and shall also be responsible for making all payments
provided for by this Plan.
(c) Notwithstanding Section 7(a) hereof, in the event of any dispute,
claim, or controversy (hereinafter referred to as a "Grievance")
between a director who is eligible to elect to receive the benefits
provided under this Plan and the Company with respect to the payment
of benefits to such director under this Plan, the computation of
benefits under this Plan, or any of the terms and conditions of this
Plan, such Grievance shall be resolved by arbitration in accordance
with this Section 7(c).
(1) Arbitration shall be the sole and exclusive remedy to
redress any Grievance.
(2) The arbitration decision shall be final and binding,
and a judgment on the arbitration award may be
entered in any court of competent jurisdiction and
enforcement may be had according to its terms.
(3) The arbitration shall be conducted by the American
Arbitration Association in accordance with the
Commercial Arbitration Rules of the American
Arbitration Association and expenses of the
arbitrators and the American Arbitration Association
shall be borne by the Company. Neither the Company
nor such director shall be entitled to attorneys'
fees, expert witness fees, or other expenses expended
in the course of such arbitration or the enforcement
of any award rendered thereunder.
(4) The place of the arbitration shall be the offices of
the American Arbitration Association in the Detroit
Metropolitan area, Michigan.
(5) The arbitrator(s) shall not have the jurisdiction or
authority to change any of the provisions of this
Plan by alteration of, addition to, or subtraction
from the terms thereof. The arbitrator(s)' sole
authority shall be to apply any terms and conditions
of this Plan. Since arbitration is the exclusive
remedy with respect to any Grievance, no director
eligible to receive benefits provided under this Plan
has the
3
<PAGE> 4
right to resort to any federal court, state court,
local court, or any administrative agency concerning
breaches of any terms and provisions hereunder, and
the decision of the arbitrator(s) shall be a complete
defense to any suit, action, or proceeding instituted
in any federal court, state court, local court or
administrative agency by such director or the Company
with respect to any Grievance which is arbitrable as
herein set forth.
(6) The arbitration provisions shall, with respect to any
Grievance, survive the termination of this Plan.
(d) This Plan is a non-contributory, non-qualified and unfunded plan and
represents only an unsecured general obligation of the Company.
8. AMENDMENT OR TERMINATION
The Company reserves the right to amend, modify, supplement, suspend or
terminate the Plan at any time, provided, however, that no such amendment,
modification, supplement, or termination shall affect the right of any
participant who is immediately eligible to receive an allowance hereunder to
receive benefits theretofore accrued.
4
<PAGE> 1
EXHIBIT 10.63
SECOND RESTATEMENT OF
THE DETROIT EDISON COMPANY
SAVINGS REPARATION PLAN
The Detroit Edison Company Savings Reparation Plan (the "Plan"), established by
The Detroit Edison Company (the "Company") effective May 22, 1989, as amended
and restated effective June 27, 1994, is hereby amended and restated as of June
26, 1995, by this Second Restatement.
SECTION 1 - PURPOSE
The purpose of this Plan is to offer a retirement savings alternative for those
executives whose permissible contributions to The Detroit Edison Company
Savings & Investment Plan (hereinafter the "Savings & Investment Plan" and
"Plan") are subject to the compensation limitation of Section 401(a)(17) of the
Internal Revenue Code. The benefits provided under this Plan to any individual
shall be separate from and in addition to any benefit provided under the
Savings & Investment Plan and any other plan or program maintained by the
Company. The amount of benefit under this Plan is to be determined solely in
accordance with Section 4 hereof and is not dependent or conditioned on
participation in the Savings & Investment Plan. Therefore, this Plan is not
intended to and shall not be construed so as to provide the same
dollar-for-dollar benefit as a participant would have received under the
Savings & Investment Plan if contributions had not been limited by Section
401(a)(17), nor is this Plan intended to compensate an employe for the benefit
loss which results if the employe elects not to participate in the Savings &
Investment Plan to the full extent permitted thereunder.
SECTION 2 - ELIGIBILITY
Persons whose benefits under the Savings & Investment Plan are subject to
limitation by the provisions set forth therein to conform to Section 401(a)(17)
of the Internal Revenue Code shall be eligible to elect to participate and
receive the benefits provided under this Plan. However, if an eligible employe
hereunder obtains a hardship distribution under the Savings & Investment Plan,
his or her right to elect to participate hereunder shall be suspended for
twelve months after receipt of the hardship distribution. In no event shall a
person who is not eligible to participate in the Savings & Investment Plan be
eligible to elect to participate and receive the benefits provided under this
Plan.
1
<PAGE> 2
SECTION 3 - PARTICIPATION AND AMOUNT OF BENEFITS
(a) Any employe who is eligible to elect to receive the benefits provided
under this Plan may participate in this Plan by irrevocably electing
to defer 1% to 10% of his or her Basic Compensation, as defined in the
Savings & Investment Plan, in excess of the compensation limitations
of Section 401(a)(17) of the Internal Revenue Code. Deferrals must be
made in whole percents. The amount by which an employe's Basic
Compensation exceeds the compensation limitations of Section
401(a)(17) shall hereinafter be referred to as "excess basic
compensation". The amount of compensation which the employe defers
hereunder shall hereinafter be referred to as "deferred excess basic
compensation".
An election to defer a percentage of excess basic compensation will
become effective on January 1 of the calendar year subsequent to the
calendar year during which the election is received by the
Administrator. An election to defer a percentage of excess basic
compensation will remain in effect until an election to change the
percentage of excess basic compensation deferred or a revocation of
the election becomes effective. An election to change the percentage
of excess basic compensation deferred or a revocation of an election
to defer a percentage of excess basic compensation will become
effective on January 1 of the calendar year subsequent to the calendar
year during which the election to change the percentage of excess
basic compensation deferred or the revocation of the election is
received by the Administrator.
All elections and revocations of elections must be made on forms
provided by the Company and will become effective only after they are
received by the Administrator. In no event shall an employe be
permitted to elect to defer excess basic compensation, to elect to
change the percentage of excess basic compensation deferred, or to
revoke an election to defer excess basic compensation which has
already been earned by the employe. The actual deferral of deferred
excess basic compensation will not commence until the employe
compensation to date for the calendar year exceeds the compensation
limitation of Section 401(a)(17) of the Internal Revenue Code.
Notwithstanding the foregoing, in the first plan year in which a
participant becomes eligible to participate in this Plan, the
participant may make an election to defer a percentage of excess basic
compensation for services to be performed subsequent to the election
within 30 days after the employe becomes eligible to participate in
this Plan. Such election shall be effective with the pay period
commencing immediately after the election is timely received by the
Administrator.
2
<PAGE> 3
(b) An employe's deferred excess basic compensation will be deemed to be
invested in an investment option(s) available to employes under the
Savings & Investment Plan. Currently, the Savings & Investment Plan
allows participants to invest in the funds listed below:
(a) Fidelity Retirement Money Market Portfolio
(b) Fidelity Intermediate Bond Fund
(c) Fidelity Asset Manager
(d) Fidelity U.S. Equity Index Portfolio
(e) Fidelity Growth & Income Portfolio
(f) Fidelity Magellan Fund
(g) Fidelity ContraFund
(h) Fidelity OTC Portfolio
(i) Fidelity Overseas Fund
(j) Detroit Edison Common Stock Fund
As part of the employe election to defer excess basic compensation,
the employe shall make an investment designation, which shall indicate
(1) the investment option(s) in which the employe deferred excess
basic compensation will be deemed to be invested each month and (2)
the percentage of deferred excess basic compensation to be deemed to
be invested in each of the investment options selected each month. The
distribution may be 100 percent in one fund, or divided among any
combination of the ten funds in multiples of 10 percent, as long as
the combination of deemed fund investments equals 100 percent.
Notwithstanding the foregoing, the Company matching contribution
credited to an employe's account each month, pursuant to paragraph (c)
of Section 3 of this Plan, will always be deemed to be invested
entirely in the Detroit Edison Common Stock Fund.
If a change in investment options available to participants in the
Savings & Investment Plan eliminates an investment option previously
selected by a participating employe hereunder as part of his or her
deemed investment option, the amount of deferred excess basic
compensation which is deemed to be invested (including earnings, if
any, deemed to be applicable) in the discontinued investment option on
the last business day of the month immediately preceding the date that
it is discontinued shall be deemed to be transferred to participating
units in the Detroit Edison Common Stock Fund valued as of the last
business day of the month immediately preceding the effective date of
the investment option's discontinuance unless, in the opinion of the
Savings Plan Committee (as defined in the Savings & Investment Plan)
it is determined that the discontinued investment option has been
replaced by an equivalent investment option. In this case, the amount
of the employe's excess
3
<PAGE> 4
basic compensation that is deemed to be invested in the discontinued
investment option shall be transferred to the equivalent investment
option at the time such investment option is discontinued and all
additional deferred excess basic compensation that the employe elected
to be deemed to be invested in the discontinued investment option
shall be deemed to be invested in the investment option determined to
be equivalent by the Savings Plan Committee. In the event that the
Savings Plan Committee has not determined that there is an equivalent
investment option with respect to the discontinued investment option,
then all additional deferred excess basic compensation that the
employe elected to be deemed to be invested in the discontinued
investment option shall be deemed to be invested in the Detroit Edison
Common Stock Fund and such deemed investment shall continue until the
effective date of a change in investment designation which is received
by the Administrator pursuant to Section 3(d).
The aforementioned deemed investment options available hereunder are
merely intended to serve as tools to measure the value of the amount
to be paid to the employe under Section 4 of this Plan. They are not
intended to and shall not be construed to require the Company to make
actual investments of the type anticipated by the deemed investment
option selected by the employe. If and to the extent the Company
chooses to actually invest in the investment option selected by the
employe, any assets acquired by the Company shall remain the sole
property of the Company, subject to the claims of its general
creditors and shall not be deemed to form part of the employe account.
Notwithstanding anything herein to the contrary, in no event shall
anything be done under this Plan by reference to the Savings &
Investment Plan which would cause any participating employe to be in
constructive receipt of amounts credited to his or her account under
this Plan.
(c) An unfunded bookkeeping account will be established and maintained for
each participating employe which shall be credited with the employe's
deferred excess basic compensation paid as of the last business day of
each month. In addition, as of the last business day of the month, the
Company will credit an amount to the employe's account equal to fifty
cents for each dollar the employe defers of up to eight percent of his
or her excess basic compensation for that month. The employe's
contribution for that month will be converted into participating
units/shares equivalent in value to the corresponding participating
units/shares on the last business day of that month in the Savings &
Investment Plan investment option(s) which have been designated by the
employe as his or her deemed investment option(s). In the case of the
Company's matching contributions, the amount attributable to that
month shall be converted into participating units equivalent in value
to participating units on the last business day of that month in the
Savings & Investment Plan Detroit Edison Common Stock Fund. The number
of participating units/shares (rounded to the nearest
4
<PAGE> 5
hundredth) will be determined by dividing the total amount credited to
the employe's account for the month, which is deemed to be invested in
an investment option, by the actual value of a participating
unit/share in that investment option under the Savings & Investment
Plan. The value of the applicable participating unit/share in the
Savings & Investment Plan investment option shall be determined on the
last business day of the month during which the deferred excess basic
compensation to be converted has been credited to the employe's
account. Unless otherwise specified herein, the valuation of the
employe's unfunded bookkeeping account will follow the procedures
utilized by the Savings & Investment Plan Trustee in determining the
valuation of contributions and investments in the Savings & Investment
Plan.
(d) Subject to the procedures identified in Section 3(b) hereof, an
investment designation made by an employe will remain in effect until
changed by the employe. The employe may change his or her investment
designation by giving written notice to the Administrator on a form
provided for such purpose. A change of an investment designation may
be made once each calendar quarter. The participant must designate
whether the change applies (1) to amounts already credited to the
participant's account, (2) to the participant's future contributions
to the Plan or (3) to the amounts already credited to the
participant's account and to the participant's future contributions to
the Plan. A change of an investment designation shall be effective on
the last business day of the month during which written notice of such
change is received by the Administrator.
SECTION 4 - PAYMENT OF BENEFITS
(a) An employe's unfunded bookkeeping account will be valued upon
termination of employment. The account value will be determined by
multiplying the number of participating units/shares in the employe
account relative to each investment option in which the employe
deferred excess basic compensation and the Company's matching
contribution have been deemed to have been invested by the value of a
participating unit/share in the applicable investment option of the
Savings & Investment Plan in which the deferred excess basic
compensation and the Company's matching contribution have been deemed
to have been invested. The value of the participating units/shares in
this Plan shall be determined on the business day preceding the day on
which termination of employment occurs. The account will be
distributed to the employe in one lump-sum payment as soon as
practicable, but no later than 30 days, after the employe's
termination of employment.
5
<PAGE> 6
(b) In the event that an employe receives an assessment of income taxes
from the Internal Revenue Service which treats any amount in the
employe's unfunded bookkeeping account as being includible in such
employe's gross income prior to actual payment under Section 4(a)
hereof, the Company shall pay an amount equal to such income taxes to
such employe within thirty days after the Company receives written
notice from such employe of such assessment, and such employe's
unfunded bookkeeping account shall be reduced by an amount equal to
such income taxes.
(c) Each payment under the Plan shall be reduced by any federal, state, or
local income taxes which the Company determines should be withheld
from such payment.
(d) An employe may name any beneficiary or beneficiaries (subject to
restrictions imposed by law, if any) to whom amounts credited to his
or her account under this Plan are to be paid in case of the employe's
death before the employe receives all amounts credited to his or her
account. Each designation will revoke all prior designations by the
employe, shall be on a form prescribed by the Company and will be
effective only when received by the Administrator. In the absence of
any such designation, the unpaid amount in an employe's account at the
time of the employe's death shall be paid to the employe's estate.
(e) An employe will not be permitted to defer excess basic compensation
and will not be credited with the Company's matching contribution for
a month unless he or she is employed by the Company on the last
business day of the month. Therefore, if an employe terminates
employment with the Company prior to the last business day of the
month, the employe shall receive what would have been that month's
deferred excess basic compensation in his or her final paycheck and
will not receive any matching contribution from the Company for the
month of termination of employment.
(f) The amount of each employe's excess basic compensation which he or she
elects to defer under the plan shall be deemed to be compensation for
the purpose of calculating the amount of an employe's benefits or
contributions under a pension or a retirement plan qualified under
Section 401(a) of the Internal Revenue Code, and under any
non-qualified deferred compensation arrangements maintained by the
Company, except to the extent specifically provided to the contrary in
any such plan.
(g) Benefits under this Plan shall be payable solely from the general
assets of the Company. The Plan shall remain unfunded during the
entire period of its existence for purposes of the Federal income tax
laws and Title I of ERISA.
6
<PAGE> 7
The Company intends that this Plan be maintained primarily for a
select group of management or highly compensated employes.
SECTION 5 - RIGHTS OF EMPLOYES
Except to the extent provided in Section 7 herein below, no employe or an
employe's spouse or beneficiary shall at any time have any vested right to
receive the benefits provided by this Plan. An employe, employe's spouse or
beneficiary shall not have any interest in the deferred excess basic
compensation or the Company's monthly award credited to his or her unfunded
bookkeeping account until such account is distributed in accordance with the
Plan. All deferred excess basic compensation and any other amounts otherwise
credited to the unfunded bookkeeping account of an employe under the Plan shall
remain the sole property of the Company, subject to the claims of its general
creditors and available for its use for whatever purposes are desired. The
employe, employe's spouse or beneficiary is merely a general unsecured creditor
of the Company and the obligation of the Company hereunder is purely
contractual and shall not be funded or secured in any way.
The right of an employe, employe's spouse or beneficiary to payment of any
benefit or deferred compensation hereunder shall not be alienated, assigned,
transferred, pledged or encumbered and shall not be subject to execution,
attachment or similar process. No employe may borrow against the unfunded
bookkeeping account established for his or her benefit hereunder. No account
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, whether voluntary or involuntary, including but not limited to any
liability which is for alimony or other payments for the support of a spouse or
former spouse, or for any other relative of any employe. Any attempted
assignment, pledge, levy or similar process shall be null and void and without
effect.
Employes who participate in this Plan assume the risks associated with
fluctuations in the value of all deemed investment options, including the
Fidelity Retirement Money Market Portfolio, Fidelity Intermediate Bond Fund,
Fidelity Asset Manager, Fidelity U.S. Equity Index Portfolio, Fidelity Growth &
Income Portfolio, Fidelity Magellan Fund, Fidelity ContraFund, Fidelity OTC
Portfolio, Fidelity Overseas Fund, and Detroit Edison Common Stock Fund.
SECTION 6 - ADMINISTRATION; ARBITRATION
(a) This Plan shall be administered by the Director of Benefit Plan
Administration of the Company (the "Administrator") as an unfunded
plan which is not intended to meet the qualification requirements of
Section 401 of the Internal
7
<PAGE> 8
Revenue Code. The Administrator's decisions in all matters involving
the interpretation, application and administration of this Plan shall
be conclusive.
(b) The Plan shall at all times be maintained by the Company and
administered by the Administrator as a plan wholly separate from the
Savings & Investment Plan, and any other plan or program maintained by
the Company.
(c) Notwithstanding Section 6(a) hereof, in the event of any dispute,
claim, or controversy (hereinafter referred to as a "Grievance")
between an employe who is eligible to elect to receive the benefits
provided under this Plan and the Company with respect to the payment
of benefits to such employe under this Plan, the computation of
benefits under this Plan, or any of the terms and conditions of this
Plan, such Grievance shall be resolved by arbitration in accordance
with this Section 6(c).
(1) Arbitration shall be the sole and exclusive remedy to
redress any Grievance.
(2) The arbitration decision shall be final and binding,
and a judgment on the arbitration award may be
entered in any court of competent jurisdiction and
enforcement may be had according to its terms.
(3) The arbitration shall be conducted by the American
Arbitration Association with the Commercial
Arbitration Rules of the American Arbitration
Association and expenses of the arbitrators and the
American Arbitration Association shall borne by the
Company. Neither the Company nor such employe shall
be entitled to attorneys' fees, expert witness fees,
or other expenses expended in the course of such
arbitration or the enforcement of any award rendered
thereunder.
(4) The place of the arbitration shall be the offices of
the American Arbitration Association in the Detroit
Metropolitan area, Michigan.
(5) The arbitrator(s) shall not have the jurisdiction or
authority to change any of the provisions of this
Plan by alteration of, addition to, or subtraction
from the terms thereof. The arbitrator(s)' sole
authority shall be to apply any terms and conditions
of this Plan. Since arbitration is the exclusive
remedy with respect to any Grievance, no employe
eligible to receive benefits provided under this Plan
has the right to resort to any
8
<PAGE> 9
federal court, state court, local court, or
administrative agency concerning breaches of any
terms and provisions hereunder, and the decision of
the arbitrator(s) shall be a complete defense to any
suit, action, or proceeding instituted in any federal
court, state court, local court, or administrative
agency by such employe or the Company with respect to
any Grievance which is arbitrable as herein set
forth.
(6) The arbitration provisions shall, with respect to any
Grievance, survive the termination of this Plan.
SECTION 7 - AMENDMENT AND DISCONTINUANCE
The Company expects to continue this Plan indefinitely, but reserves the right
to amend or discontinue the Plan. The Vice President - Human Resources, or,
should the Vice President - Human Resources become a Participant in this Plan,
the Manager - Human Resources Operations, shall review the Plan from time to
time and as part of such review is hereby directed and authorized to amend such
Plan to the extent necessary for ease of administration and/or to comply with
applicable federal and state laws. If the Plan should be amended or
discontinued, the Company shall be liable for any benefits that have accrued
under this Plan (determined on the basis of each employe's presumed termination
of employment as of the date of such amendment or discontinuance) as of the
date of such action.
9
<PAGE> 1
EXHIBIT 10.64
SECOND RESTATEMENT OF
THE RETIREMENT REPARATION PLAN
FOR CERTAIN EMPLOYES OF
THE DETROIT EDISON COMPANY
The Retirement Reparation Plan for Certain Employes of The Detroit Edison
Company (the "Plan"), established by The Detroit Edison Company (the "Company")
effective January 1, 1989, as amended and restated effective May 22, 1989, is
hereby amended and restated as of June 26, 1995 by this Second Restatement.
SECTION 1 - PURPOSE
The sole purpose of this Plan is to assure that all persons who become eligible
to and do receive benefits under the Employes' Retirement Plan of The Detroit
Edison Company (the "Retirement Plan") will receive the same aggregate dollar
amount of benefits (after taking into account any benefits such persons are
eligible to receive under the Benefit Equalization Plan for Certain Employes of
The Detroit Edison Company (the "BEP")) as they would have received under the
Retirement Plan, but for the limitations on contributions and benefits imposed
from time to time by the compensation limitation of Section 401(a)(17) of the
Internal Revenue Code, whether such limitations result solely from the
application of Section 401(a)(17) of the Internal Revenue Code or result from
the combination of the application of Section 401(a)(17) of the Internal
Revenue Code and the application of the limitations on contributions and
benefits imposed from time to time by Section 415 of the Internal Revenue Code.
This Plan is not intended to and shall not be construed so as to provide any
person receiving benefits under the Retirement Plan, the BEP, if applicable,
and this Plan, if applicable, with benefits in the aggregate which are either
larger or smaller than the benefit which would result from the calculation made
under the applicable provisions of the Retirement Plan, and the BEP, if
applicable, without giving effect to or recognition of the contribution and
benefit limitation provisions of Section 401(a) (17) of the Internal Revenue
Code, whether such limitations result solely from the application of Section
401(a)(17) of the Internal Revenue Code or result from the combination of the
application of Section 401(a)(17) of the Internal Revenue Code and the
application of the limitations on contributions and benefits under Section 415
of the Internal Revenue Code. The benefit provided under this Plan to any
person shall be separate from and in addition to any benefit provided under the
Retirement Plan, the BEP, if applicable, and any other plan or program
maintained by the Company.
SECTION 2 - ELIGIBILITY
Persons whose benefits under the Retirement Plan are limited by the provisions
set forth therein to conform to Section 401(a)(17) of the Internal Revenue Code
shall be
<PAGE> 2
eligible for the benefits provided under this Plan. In no event shall a person
who is not entitled to benefits under the Retirement Plan be eligible for any
benefits under this Plan.
SECTION 3 - AMOUNT OF BENEFITS
The benefits payable under this Plan shall equal the excess, if any, of:
(a) the aggregate benefits which would have been paid to such retired
employe, an employe's spouse or beneficiary under the Retirement Plan
and the BEP, if applicable, if the provisions of such plans were
administered and benefits paid without regard to either the
limitations on contributions and benefits imposed by the compensation
limitation of Section 401(a)(17) of the Internal Revenue Code, or the
special benefit limitations added to the Retirement Plan to conform it
to Section 415 of the Internal Revenue Code, over
(b) the aggregate benefits which are payable to such retired employe, an
employe's spouse or beneficiary under the Retirement Plan and the BEP,
if applicable.
SECTION 4 - PAYMENT OF BENEFITS
(a) Payment of benefits under this Plan shall be made coincident with the
payment of benefits under the Retirement Plan or as soon as
practicable thereafter.
(b) In the event an employe receives an assessment of income taxes from
the Internal Revenue Service which treats any amount payable under
this Plan as being includible in such employe's gross income prior to
the actual payment of such amount to such employe, the Company shall
pay an amount equal to such income taxes to the employe within 30 days
after written notice from such employe of such assessment. The amount
of income taxes paid to the employe hereunder shall be considered an
advance of and shall reduce the benefits ultimately paid to the
employe under this Plan.
(c) Each payment under this Plan shall be reduced by any federal, state,
or local taxes which the Company determines should be withheld from
such payment.
(d) Benefits under this Plan shall be payable solely from the general
assets of the Company. Each participant in this Plan shall have the
status of an unsecured creditor of the Company. This Plan constitutes
a promise by the Company to make benefit payments in the future. It
is intended that this Plan be unfunded for tax purposes and for
purposes of Title I of ERISA and that this Plan shall remain unfunded
during the entire period of its existence. The Company intends that
this Plan be maintained primarily for a select group of management or
highly compensated employes.
2
<PAGE> 3
SECTION 5 - RIGHTS OF EMPLOYES
Except to the extent provided in Section 7 herein below, no employe or an
employe's spouse or beneficiary shall at any time have any vested right to
receive the benefits provided by this Plan. The employe, employe's spouse or
beneficiary is merely a general creditor of the Company and the obligation of
the Company hereunder is purely contractual and shall not be funded or secured
in any way.
The right of an employe, employe's spouse or beneficiary to payment of any
benefit hereunder shall not be anticipated, alienated, sold, assigned,
transferred, pledged, encumbered, attached, or garnished by an employe, an
employe's spouse or beneficiary, or creditors of an employe and shall not be
subject to garnishment, execution, attachment, or similar process. Any
attempted anticipation, sale, assignment, transfer, pledge, levy, encumbrance,
attachment, garnishment or similar process shall be null and void and without
effect.
SECTION 6 - ADMINISTRATION; ARBITRATION
(a) This Plan shall be administered by the Organization and Compensation
Committee of the Board of Directors (the "Administrator") as an
unfunded plan which is not intended to meet the qualification
requirements of Section 401 of the Internal Revenue Code. The
Administrator's decisions in all matters involving the interpretation
and application of this Plan shall be conclusive.
(b) The Plan shall at all times be maintained by the Company and
administered by the Administrator as a plan wholly separate from the
Retirement Plan, the BEP and any other plan or program maintained by
the Company.
(c) Notwithstanding Section 6(a) hereof, in the event of any dispute,
claim, or controversy (hereinafter referred to as a "Grievance")
between an employe who is eligible to elect to receive the benefits
provided under this Plan and the Company with respect to the payment
of benefits to such employe under this Plan, the computation of
benefits under this Plan, or any of the terms and conditions of this
Plan, such Grievance shall be resolved by arbitration in accordance
with this Section 6(c).
(1) Arbitration shall be the sole and exclusive remedy to
redress any Grievance.
(2) The arbitration decision shall be final and binding,
and a judgment on the arbitration award may be
entered in any court of competent jurisdiction and
enforcement may be had according to its terms.
(3) The arbitration shall be conducted by the American
Arbitration
3
<PAGE> 4
Association with the Commercial Arbitration Rules of
the American Arbitration Association and expenses of
the arbitrators and the American Arbitration
Association shall be borne by the Company. Neither
the Company nor such employe shall be entitled to
attorneys' fees, expert witness fees, or any other
expenses expended in the course of such arbitration
or the enforcement of any award rendered thereunder.
(4) The place of the arbitration shall be the offices of
the American Arbitration Association in the Detroit
Metropolitan area, Michigan.
(5) The arbitrator(s) shall not have the jurisdiction or
authority to change any of the provisions of this
Plan by alteration of, addition to, or subtraction
from the terms thereof. The arbitrator(s)' sole
authority shall be to apply any terms and conditions
of this Plan. Since arbitration is the exclusive
remedy with respect to any Grievance, no employe
eligible to receive benefits provided under this Plan
has the right to resort to any federal court, state
court, local court, or administrative agency
concerning breaches of any terms and provisions
hereunder, and the decision of the arbitrator(s)
shall be a complete defense to any suit, action, or
proceeding instituted in any federal court, state
court, local court, or administrative agency by such
employe or the Company with respect to any Grievance
which is arbitrable as herein set forth.
(6) The arbitration provisions shall, with respect to any
Grievance, survive the termination of this Plan.
SECTION 7 - AMENDMENT AND DISCONTINUANCE
The Company expects to continue this Plan indefinitely, but reserves the right
to amend or discontinue it. The Vice President, Human Resources, or, should
the Vice President, Human Resources, become a Participant in this Plan, the
Manager, Human Resources Operations, shall review the Plan from time to time
and as part of such review is hereby directed and authorized to amend such Plan
to the extent necessary for ease of administration and/or to comply with
applicable federal and state laws. If the Plan should be amended or
discontinued, the Company shall be liable for any benefits that have accrued
under this Plan (determined on the basis of each employe 's presumed
termination of employment as of the date of such amendment or discontinuance)
as of the date of such action.
4
<PAGE> 1
EXHIBIT 10.65
SECOND RESTATEMENT OF
THE BENEFIT EQUALIZATION PLAN
FOR CERTAIN EMPLOYES OF
THE DETROIT EDISON COMPANY
The Benefit Equalization Plan for Certain Employes of The Detroit Edison
Company (the "Plan"), established by The Detroit Edison Company (the "Company")
effective March 1, 1978, as amended and restated effective May 22, 1989, is
hereby amended and restated as of June 26, 1995, by this Second Restatement.
SECTION 1 - PURPOSE
The sole purpose of this Plan is to assure that all persons who become eligible
to and do receive benefits under the Employes' Retirement Plan of The Detroit
Edison Company (the "Retirement Plan") will receive the same dollar amount of
benefits as they would have received but for the limitations on contributions
and benefits imposed from time to time solely by Section 415 of the Internal
Revenue Code. This Plan is not intended to and shall not be construed so as to
provide any person receiving benefits under the Retirement Plan and, where
applicable, this Plan with benefits in the aggregate which are either larger or
smaller than the benefit which would result from the calculation made under the
applicable provisions of the Retirement Plan without giving effect to or
recognition of solely the benefit limitation provisions of Section 415 of the
Internal Revenue Code. The benefit under this Plan provided to any person
shall be separate from and in addition to any benefit provided under the
Retirement Plan or any other plan or program maintained by the Company.
SECTION 2 - ELIGIBILITY
Persons whose benefits under the Retirement Plan are limited by the provisions
set forth therein to conform to Section 415 of the Internal Revenue Code shall
be eligible for the benefits provided by this Plan. In no event shall a person
who is not entitled to benefits under the Retirement Plan be eligible for any
benefits under this Plan.
SECTION 3 - AMOUNT OF BENEFITS
The benefits payable hereunder shall equal the excess, if any, of:
(a) the benefits which would have been paid to a retired employe, such
employe's spouse or beneficiary under the Retirement Plan if the
provisions of such plan
1
<PAGE> 2
were administered and benefits paid without regard solely to the
special benefit limitations added to such plan to conform it to
Section 415 of the Internal Revenue Code, over
(b) the benefits which would be otherwise payable to such retired employe,
such employe's spouse or beneficiary under the Retirement Plan taking
into account solely the special benefit limitations added to such plan
to conform it to Section 415 of the Internal Revenue Code.
SECTION 4 - PAYMENT OF BENEFITS; AMENDMENTS
(a) Payment of benefits under this Plan shall be made coincident with the
payment of benefits under the Retirement Plan or as soon as
practicable thereafter.
(b) In the event an employe receives an assessment of income taxes from
the Internal Revenue Service which treats any amount payable under
this Plan as being includible in such employe's gross income prior to
the actual payment of such amount to such employe, the Company shall
pay an amount equal to such income taxes to such employe within thirty
days after written notice from such employe of such assessment. The
amount of income taxes paid to the employe hereunder shall be
considered an advance of and shall reduce the benefits ultimately paid
to the employe under this Plan.
(c) Each payment under this Plan shall be reduced by any federal, state,
or local taxes which the Company determines should be withheld from
such payment.
(d) Benefits under this Plan shall be payable solely from the general
assets of the Company. Each participant in this Plan shall have the
status of a general unsecured creditor of the Company. This Plan
constitutes a promise by the Company to make benefit payments in the
future. It is intended that this Plan be unfunded for tax purposes
and that this Plan shall remain unfunded during the entire period of
its existence. The Company intends to maintain this Plan similarly
for a select group of management or highly compensated employes.
Payments under the Plan as they become due shall be paid by the
Company from its general assets.
The Company reserves the right to amend, modify, or discontinue this
Plan at any time; provided, however, that no such amendment,
modification, or termination shall affect the rights of participants
or beneficiaries who are receiving or are immediately eligible to
receive benefits from the Plan at the time of such amendment,
modification, or termination.
2
<PAGE> 3
SECTION 5 - RIGHTS OF EMPLOYES
Except as to the extent provided in Section 7 herein, no employe or an
employe's spouse or beneficiary shall at any time have any vested right to
receive the benefits provided by this Plan. The rights of any participant to
receive benefits under this Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by such participant, the creditors of such participant, such
participant's spouse or such participant's beneficiary.
SECTION 6 - ADMINISTRATION; ARBITRATION
(a) This Plan shall be administered by the Organization and Compensation
Committee of the Board of Directors (the "Administrator") as an
unfunded plan which is not intended to meet the qualification
requirements of Section 401 of the Internal Revenue Code. The
Administrator's decisions in all matters involving the interpretation
and application of this Plan shall be conclusive.
(b) The Plan shall at all times be maintained by the Company and
administered by the Administrator as a plan wholly separate from the
Retirement Plan and any other plan or program maintained by the
Company.
(c) Notwithstanding Section 6(a) hereof, in the event of any dispute,
claim, or controversy (the "Grievance") between an employe whose
eligible to elect to receive the benefits provided under this Plan and
the Company with respect to the payment of benefits to such employe
under this Plan, the computation of benefits under this Plan, or any
of the terms and conditions of this Plan, such Grievance shall be
resolved by arbitration and in accordance with this Section 6(c).
(1) Arbitration shall be the sole and exclusive remedy to redress
any Grievance.
(2) The arbitration decision shall be final and binding, and a
judgment on the arbitration award may be entered in any court of
competent jurisdiction and enforcement may be had according to
its terms.
(3) The arbitration shall be conducted by the American Arbitration
Association in accordance with the Commercial Arbitration Rules
of the American Arbitration Association and expenses of the
arbitrators and the American Arbitration Association shall be
borne by the Company. Neither the Company nor such employe
shall be entitled to attorneys' fees, expert witness fees, or
other expenses expended in the course of such arbitration or the
enforcement of any award rendered thereunder.
3
<PAGE> 4
(4) The place of the arbitration shall be the offices of the
American Arbitration Association in the Detroit Metropolitan
area, Michigan.
(5) The arbitrator(s) shall not have the jurisdiction or authority
to change any provisions of this Plan by alteration of, addition
to, or subtraction from the terms thereof. The arbitrator(s)'
sole authority shall be to apply any terms and conditions of
this Plan. Since arbitration is the exclusive remedy with
respect to any Grievance, no employe eligible to receive
benefits provided under this Plan has the right to resort to any
federal court, state court, local court, or administrative
agency concerning breeches of any terms and provisions
hereunder, and the decision of the arbitrator(s) shall be a
complete defense to any suit, action, or proceeding instituted
in any federal court, state court, local court, or
administrative agency by such employe or the Company with
respect to any Grievance which is arbitrable as herein set
forth.
(6) The arbitration provision shall, with respect to any Grievance,
survive the termination of this Plan.
SECTION 7 - AMENDMENT AND DISCONTINUANCE
The Company expects to continue this Plan indefinitely, but reserves the right
to amend or discontinue it. The Vice President, Human Resources, or, should
the Vice President, Human Resources, become a Participant in this Plan, the
Manager, Human Resources Operations, shall review the Plan from time to time
and as part of such review is hereby directed and authorized to amend such Plan
to the extent necessary for ease of administration and/or to comply with
applicable federal and state laws. If the Plan should be amended or
discontinued, the Company shall be liable for any benefits that have accrued
under this Plan (determined on the basis of each employe's presumed termination
of employment as of the date of such amendment or discontinuance) as of the
date of such action.
4
<PAGE> 1
EXHIBIT 10.66
MANAGEMENT
SUPPLEMENTAL
BENEFIT
PLAN
---------------------------------------------------------------
<PAGE> 2
SECOND RESTATEMENT OF
THE DETROIT EDISON COMPANY
MANAGEMENT SUPPLEMENTAL BENEFIT PLAN
The Detroit Edison Company Management Supplemental Benefit Plan (the "Plan"),
established by The Detroit Edison Company (the "Company") effective July 24,
1989, as amended and restated effective January 22, 1990, is hereby amended and
restated as of June 26, 1995, by this Second Restatement.
PURPOSE
The Management Supplemental Benefit Plan ("Plan") is designed to supplement
pension benefits for eligible management employes. The Plan has the objective
of making the Company's retirement program more competitive within the electric
utility industry and general industry, which will facilitate the attraction and
retention of management employes.
DEFINITION
AVERAGE FINAL COMPENSATION. Equals one-fifth of normal pay during the 260
weeks of Company service that results in the highest average, calculated
without regard to any limitation imposed by Section 401(a)(17) of the Internal
Revenue Code.
AWARDED SERVICE. Years of service that may be imputed to an otherwise eligible
Plan participant by the Organization and Compensation Committee ("Committee")
of the Board of Directors, having taken into account the value to the Company
of such participant's prior experience.
COMPANY SERVICE. All years of service with the Company calculated to the
nearest month.
EXECUTIVE POST-EMPLOYMENT INCOME ARRANGEMENT. Individual arrangements that
were entered into with certain executives upon initial employment with the
Company. The arrangements may provide for additional benefits upon retirement.
KEY EMPLOYE DEFERRED COMPENSATION PLAN. The Key Employe Deferred Compensation
Plan initiated in 1964 which provides a supplemental pension benefit to certain
management employes.
NORMAL PAY. The employe's salary for a standard forty-hour work week
calculated without regard to any limitation imposed by Section 401(a)(17) of
the Internal Revenue Code
1
<PAGE> 3
including amounts deferred by the employe under the Company's qualified and
non-qualified savings plans. It does not include any bonuses, special pay, or
premium for overtime work.
RETIREMENT PLAN. The Employes' Retirement Plan of The Detroit Edison Company
("Detroit Edison"). The Retirement Plan is a defined benefit pension plan
sponsored by Detroit Edison for eligible employes.
RETIREMENT ALLOWANCE FACTOR. The multiplier used in the basic formula of the
Retirement Plan.
ELIGIBILITY
Eligibility to participate in this Plan is determined no later than the latest
to occur of:
(1) 90 days from the date hereof; or
(2) 90 days subsequent to an otherwise eligible participant's 55th
birthday; or
(3) In the case of an otherwise eligible participant who does not
have at least 10 years of Company service at age 55, 90 days
subsequent to the otherwise eligible participant's having 10
years of Company service.
Participation in the Plan is limited to those management employes who
(1) Are members of Management Council (pursuant to OR3, Management
Groups, as may be amended from time to time) at the time of
termination from the Company (or death while actively employed
by the Company); and
(2) Are not personally eligible to receive a benefit from the Key
Employe Deferred Compensation (KEDC) Plan although a court of
competent jurisdiction may have recognized spousal rights;
(3) Do not have an effective Executive Post-Employment Income
Arrangement; and
(4) At the time of termination from the Company (or death while
actively employed), are at least 55 years of age and have at
least 10 years of Company service.
Employes who are eligible to receive a benefit from KEDC or who have entered
into Post-Employment Income Arrangements with the Company may elect to
participate in this Plan in accordance with the first paragraph of this section
by filing an election to waive any rights to
2
<PAGE> 4
a benefit from KEDC and/or any rights under a Post-Employment Income
Arrangement with the Vice President-Human Resources, who will provide an
election form upon request.
TARGET PERCENTAGE OF AVERAGE FINAL COMPENSATION
Payments from the Plan are based upon the calculated target percentage of
average final compensation. The target percentage of average final
compensation is determined by years of Company service and awarded service, if
any, and by the management group in which the participant is a member at the
time of termination from the Company (or death while actively employed by the
Company) as specified in Exhibit A.
Participants awarded service under the Plan must certify any retirement income
expected or being received from a previous employer. Payments from the Plan to
participants with awarded service will be reduced by the non-contributory
portion of any retirement income expected or being received from a previous
employer.
Payments from the Plan will be reduced by any KEDC spousal payments required by
a court of competent jurisdiction. Payments from the Plan may also be affected
by the employe's age at termination (see Early Retirement) and the payment
option selected by the employe (see Payment Options).
EARLY RETIREMENT
The Plan provides for an unreduced target percentage for those terminating
employment at age 60 or older. A reduced or adjusted target percentage is
provided for those terminating employment (including death) who are at least
age 55 but prior to age 60. The early retirement adjustment schedule is as
follows:
<TABLE>
<CAPTION>
AGE AT EARLY RETIREMENT
TERMINATION ADJUSTMENT PERCENTAGE
<S> <C>
55 50%
56 60%
57 70%
58 80%
59 90%
60 or older 100%
</TABLE>
Age at termination is calculated to the nearest whole month and the early
retirement adjustment percentage is determined accordingly.
3
<PAGE> 5
PAYMENT OPTIONS
At the time of employment termination, an eligible employe must elect one of
the following payment options: (a) Guaranteed Term Plus Life, (b)
Actuarial-Adjusted Life with a 100% Joint and Survivor Benefit and (c)
Actuarial-Adjusted Life with a 50% Joint and Survivor Benefit. In the event
that an employe dies during active employment, and at the time of death was
eligible for a benefit as provided herein, the payment option is deemed to be
Guaranteed Term Plus Life.
GUARANTEED TERM PLUS LIFE
If the employe elects the Guaranteed Term Plus Life payment option, the
employe, at the time of employment termination, must also elect a survivor
benefit of either monthly payments or an adjusted lump sum payment. In the
event that such an election is not made by the employe, or in the event that
the employe dies during active employment and at the time of death was eligible
for a Plan benefit as provided herein, the survivor benefit is assumed to be
the adjusted lump sum payment.
The Guaranteed Term Plus Life payment option provides for a minimum of 15 years
of payments to the employe or, if the employe lives beyond the 15-year period,
the payments continue to be made to the employe for the life of the employe.
If the employe elects the monthly payment survivor benefit and dies prior to
the end of the 15-year period, payments will continue to be made to the
employe's beneficiary or estate for the balance of the 15-year period. At the
end of this 15-year period, all payments cease and liability of the Company
under the Plan is terminated.
If the employe elects the lump sum payment survivor benefit and dies prior to
the end of the 15-year period, an adjusted lump sum payment is made to the
employe's designated beneficiary or estate. The adjusted lump sum payment is
determined by a standard annuity calculation where the adjusted lump sum is the
present worth of the remaining monthly benefits in the 15-year period. The
methodology and other relevant factors for determining the amount of the
adjusted lump sum payment are provided in Exhibit B. Upon payment of the lump
sum payment, all payments cease and liability of the Company under the Plan is
terminated.
ACTUARIAL-ADJUSTED LIFE WITH A 100% JOINT AND SURVIVOR BENEFIT
This option provides for the actuarial equivalent to the benefit payment under
the Guaranteed Term Plus Life option. Upon the death of the employe and the
designated beneficiary, all
4
<PAGE> 6
payments cease and the liability of the Company under the Plan is terminated.
The actuarial equivalent benefit is provided for the life of the employe and
upon the death of the employe, 100% of the benefit is provided to the employe's
designated beneficiary for the duration of the beneficiary's life. If the
employe's designated beneficiary should die prior to the employe, payments
continue from the life of the employe and upon the death of the employe all
payments cease and liability of the Company under the Plan is terminated. If
the employe and designated beneficiary are the same age, the actuarial
equivalent benefit equals 97.94% of the Guaranteed Term Plus Life benefit.
If the beneficiary is younger than the employe, this percentage is reduced by
1.2% for each 12 full months of difference in age. If the beneficiary is older
than the employe, this percentage is increased 1.2% for each 12 full months in
difference in age up to a maximum of 100%.
ACTUARIAL-ADJUSTED LIFE WITH A 50% JOINT AND SURVIVOR BENEFIT
This option provides for the actuarial equivalent to the benefit payable under
the Guaranteed Term Plus Life option. Upon the death of the employe and the
designated beneficiary, all payments cease and the liability of the Company
under the Plan is terminated. The actuarial equivalent benefit is provided for
the life of the employe and upon the death of the employe, 50% of the benefit
is provided to the employe's designated beneficiary for the duration of the
beneficiary's life. If the employe's designated beneficiary should die prior to
the employe, payments continue for the life of the employe and upon the death
of the employe all payments cease and liability of the Company under the Plan
is terminated. If the employe and designated beneficiary are the same age, the
actuarial equivalent benefit equals 107.72% of the Guaranteed Term Plus Life
benefit. If the beneficiary is younger than the employe, this percentage is
reduced by 1% for each 12 full months of difference in age. If the beneficiary
is older than the employe, there is no adjustment to the percentage. If the
employe does not designate a beneficiary, the actuarial equivalent benefit
equals 107.72% of the Guaranteed Term Plus Life benefit, and upon the death of
the employe all payments cease and the liability of the Company under the Plan
is terminated.
PAYMENT CALCULATION
Monthly payments from the Plan are determined as follows:
STEP 1. DETERMINE GROSS TARGET AMOUNT
The gross target amount results from multiplying the target percentage
by average final compensation (see Exhibit A to determine the target
percentage).
5
<PAGE> 7
STEP 2. DETERMINE RETIREMENT PLAN BENEFIT
The Retirement Plan benefit results from multiplying the retirement
allowance factor by average final compensation and by Company service,
calculated for purposes hereof, without regard to any limitations
imposed by Section 401(a)(17) or Section 415 of the Internal Revenue
Code.
STEP 3. DETERMINE BASE ANNUAL TARGET BENEFIT AMOUNT
The base annual target benefit amount results from subtracting the
Retirement Plan benefit from the gross target amount.
STEP 4. DETERMINE ADJUSTED ANNUAL TARGET BENEFIT AMOUNT
The adjusted annual target benefit amount results from multiplying the
base annual target benefit amount by the early retirement adjustment
percentage (see page 4 to determine the early retirement adjustment
percentage).
STEP 5. DETERMINE MONTHLY TARGET BENEFIT AMOUNT UNDER THE
GUARANTEED TERM PLUS LIFE PAYMENT OPTION
The monthly target benefit amount under the Guaranteed Term Plus Life
payment option is determined by dividing the adjusted annual target
benefit amount by 12.
STEP 6. ACTUARIAL-ADJUSTED PAYMENT OPTION
If an actuarial-adjusted payment option is selected, the actuarial
adjustment is applied to the monthly target benefit amount under the
Guaranteed Term Plus Life payment option.
Exhibit C displays examples of the Plan payment calculation procedure.
In the event an employe receives an assessment of income taxes from the
Internal Revenue Service which treats any amount under this Plan as includible
in such employe's gross income prior to payment of such amount to such employe,
the Company shall pay an amount equal to such income taxes to such employe
within 30 days after receipt of written notice from such employe about such
assessment. The base annual target benefit amount (Step 3) shall be reduced by
an amount equal to such income taxes and Steps 4, 5 and 6 shall be reduced
accordingly.
Each payment under this Plan shall be reduced by any federal, state or local
taxes which the Company determines should be withheld from such payment.
6
<PAGE> 8
SCHEDULE OF PAYMENTS
Plan payments, if any, are made to the employe or to the designated beneficiary
on a monthly basis. The schedule will follow the provisions for payment under
the Retirement Plan. The accompanying examples show the effect of Retirement
Plan benefits at different times.
BENEFICIARY DESIGNATION
Each eligible participant may name any beneficiary to whom payments under the
Plan are to be paid in case of the employe's death. Each designation will
revoke all prior designations by the employe and shall be on a form prescribed
by the Company and will be effective only when filed by the employe with the
Treasurer. In the absence of any such designation, payments due shall be paid
to the employe's estate.
TAXATION
The Company makes no representation as to the tax consequences of individual
payment options. Plan participants are urged to consult tax advisors of their
choice for information and advice.
NON-SECURED PROMISE; AMENDMENTS
Eligible participants have the status of general unsecured creditors of the
Company. This Plan constitutes a promise by the Company to make benefit
payments in the future. The Company intends that this Plan be unfunded for tax
purposes and for purposes of Title I of ERISA. The Company intends that this
Plan be maintained primarily for a select group of management or highly
compensated employes.
Payments under this Plan as they become due shall be paid by the Company from
its general assets.
The Company reserves the right to amend, modify, or discontinue this Plan at
any time; provided, however, that no such amendment, modification, or
termination shall affect the rights of participants or beneficiaries who are
receiving or are immediately eligible to receive benefits from this Plan at the
time of such amendment, modification, or termination.
7
<PAGE> 9
ADMINISTRATION; ARBITRATION
The Vice President-Human Resources is responsible for the administration of the
Plan. The Vice President-Human Resources has the authority to interpret the
provisions of the Plan and prescribe any regulations relating to its
administration. The decisions of the Vice President-Human Resources with
respect thereto shall be conclusive. The Vice President-Human Resources shall
review the Plan from time to time and as part of such review is hereby directed
and authorized to amend such Plan to the extent necessary for ease of
administration and/or to comply with applicable federal and state laws.
The Treasurer of the Company shall be responsible for the administration of
benefits under the Plan.
Notwithstanding any provision in this Plan to the contrary, in the event of any
dispute, claim or controversy (hereinafter referred to as a "Grievance")
between an employe who is eligible to receive benefits under this Plan and the
Company with respect to the payment of benefits to such employe under this
Plan, the computation of benefits under this Plan, or any of the terms or
conditions of this Plan, such Grievance shall be resolved by arbitration.
Arbitration shall be the sole exclusive remedy to redress any Grievance. The
arbitration decision shall be final and binding, and a judgment on the
arbitration award may be entered in any court of competent jurisdiction and
enforcement may be had according to its terms. The arbitration shall be
conducted by American Arbitration Association in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and expenses of the
arbitrator(s) and the American Arbitration Association shall be borne by the
Company. Neither the Company nor such employe shall be entitled to attorneys'
fees, expert witness fees, or other expenses expended in the course of such
arbitration or the enforcement of any award rendered thereunder. The place of
the arbitration shall be the offices of the American Arbitration Association in
the Detroit Metropolitan area, Michigan. The arbitrator(s) shall not have the
jurisdiction or authority to change any of the provisions of this Plan by
alteration of, addition to, or subtraction from the terms thereof. The
arbitrator(s)' sole authority shall be to apply any terms and conditions of
this Plan. Since arbitration is the exclusive remedy with respect to any
Grievance, no employe eligible to receive benefits under this Plan has the
right to resort to any federal court, state court, local court, or
administrative agency concerning breaches of any terms and provisions
hereunder, and the decision of the arbitrator(s) shall be a complete defense to
any suit, action, or proceeding instituted in any federal court, state court,
local court, or administrative agency by such employe or the Company with
respect to any Grievance which is arbitrable as herein set forth. The
arbitration provisions shall, with respect to any Grievance, survive the
termination of this Plan.
8
<PAGE> 10
NON-ALIENABILITY AND NON-TRANSFERABILITY
The right of a participant, participant's spouse or beneficiary to payment of
any benefit hereunder shall not be alienated, assigned, transferred, pledged or
encumbered and shall not be subject to execution, attachment or similar
process. No account shall be subject in any manner to alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution or
levy of any kind, whether voluntary or involuntary, including but not limited
to any liability which is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of any employe. Any
attempted assignment, pledge, levy or similar process shall be null and void
and without effect.
9
<PAGE> 11
EXHIBIT A
TARGET PERCENTAGE
<TABLE>
<CAPTION>
TARGET PERCENTAGE
MANAGEMENT OF AVERAGE FINAL
INDEX GROUP COMPENSATION SERVICE
----- ----- ------------ -------
<S> <C> <C> <C>
1. Chairman of the Board 60% 25
President
Executive Vice President
2. Senior Vice President 60% 30
Vice President
3. Management Council members 55% 35
other than those included
in Groups 1 and 2 above
</TABLE>
If the sum of Company service and awarded service is greater than the
corresponding service index, the target percentage is increased by 0.5% for
each year of service above the index. If the sum of Company service and
awarded service is less than the corresponding service index, the target
percentage is reduced by 1% for each year of service below the index for
employes in Groups 1 and 2 and by 1.5% for each year of service below the index
for employes in Group 3.
Company service is calculated to the nearest whole month. Awarded service is
determined by the sole discretion of the Committee. The target percentage is
adjusted accordingly if the service index results in fractional years.
10
<PAGE> 12
EXHIBIT B
Table for Determining the Adjusted Lump Sum Payment Under the Guaranteed Term
Plus Life Payment Option (Per $1,000 of Adjusted Annual Target Benefit Amount)
<TABLE>
<CAPTION>
Remaining
Years Of
Guaranteed
Term
Payment
Interest Rate
6% 7% 8% 9% 10% 11% 12%
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
15 $9,875 $9,271 $8,720 $8,216 $7,755 $7,332 $6,943
14 9,456 8,909 8,406 7,945 7,520 7,128 6,767
13 9,012 8,520 8,067 7,648 7,260 6,901 6,569
12 8,540 8,103 7,699 7,323 6,973 6,648 6,345
11 8,038 7,656 7,300 6,967 6,656 6,365 6,093
10 7,506 7,177 6,868 6,578 6,306 6,050 5,808
9 6,941 6,663 6,401 6,153 5,919 5,698 5,488
8 6,341 6,112 5,895 5,688 5,492 5,305 5,127
7 5,704 5,521 5,347 5,179 5,020 4,867 4,721
6 5,028 4,888 4,753 4,623 4,498 4,378 4,263
5 4,310 4,208 4,110 4,014 3,922 3,833 3,746
4 3,548 3,480 3,413 3,349 3,286 3,224 3,164
3 2,739 2,699 2,659 2,621 2,583 2,545 2,509
2 1,880 1,861 1,843 1,824 1,806 1,788 1,770
1 968 963 958 953 948 943 938
0 0 0 0 0 0 0 0
</TABLE>
NOTES: (1) Interest rate is determined by the current prime interest rate
of the NBD Bank less 2%.
(2) Apply linear interpolation for partial years remaining in
guaranteed term period and adjustments for fractional interest
rates.
(3) Exhibit B shows the information to perform a standard annuity
due calculation. It is the present worth of a stream of
monthly payments of $1,000/12 per month made at the end of the
month and continuing for the number of months remaining.
11
<PAGE> 13
EXHIBIT B (CONTINUED)
The formula is:
Adjusted Lump Sum = Pmt x (1 -(1 + i) -n)/i
Where i is the NBD Bank Prime rate less 2% divided by 12 and n is
the number of months remaining. Pmt is $1,000/12 or $83.33.
12
<PAGE> 14
EXHIBIT C
EXAMPLE 1
Assumptions:
<TABLE>
<S> <C>
Date of Termination: January 31,1994
Age at Termination: 65 Years, 0 Months
Position: Vice President
Average Final Compensation: $180,000
Company Service & Awarded Service: 25 Years, 0 Months
Retirement Allowance Factor: .014
Payment Option: Guaranteed Term Plus Life
(Survivor benefit -
monthly payments)
</TABLE>
(Given the above, the target percentage is 55%)
Step 1: 55% x $180,000 = $99,000
Step 2: .014% x $180,000 x 25 = $63,000
Step 3: $99,000 - $63,000 = $36,000
Step 4: $36,000 x 100% = $36,000
Step 5: $36,000/12 = $3,000
Monthly payments of $3,000 will be made for 15 years, or for the life
of the employe if greater than 15 years.
EXAMPLE 1A
Assumptions listed for Example 1 apply with the exception of the
following:
Payment Option: Guaranteed Term Plus Life
(Survivor benefit - lump sum payment)
NBD Bank 9%
Prime Interest Rate:
Date of Employe's Death January 31,1999
13
<PAGE> 15
EXHIBIT C (CONTINUED)
Monthly payments of $3,000 are made for the life of the employe (see
Example 1). Upon the death of the employe (January 31,1999), a lump
sum payment of $258,277.20 is made to the beneficiary (see Exhibit B).
EXAMPLE 2
Assumptions:
<TABLE>
<S> <C>
Date of Termination: January 31,1994
Age at Termination: 58 Years, 6 Months
Position: Vice President
Average Final Compensation: $180,000
Company Service & Awarded Service: 25 Years, 6 Months
Retirement Allowance Factor: .014
Payment Option: Guaranteed Term Plus Life
(Survivor benefit-monthly
payments)
</TABLE>
(Given the above, the target percentage is 55.5%)
Step 1: 55.5% x $180,000 = $99,900
Step 2: .014 x $180,000 x 25.5 x 88% = $56,549
Step 3: $99,900 - $56,549 = $43,351
Step 4: $43,351 x 85% = $36,848.35
Step 5: $36,848.35/12 = $3,070.70
Monthly payments of $3,070.70 will be made for 15 years, or for the
life of the employe if greater than 15 years.
14
<PAGE> 16
EXHIBIT C (CONTINUED)
EXAMPLE 2A
Assumptions listed for Example 2 apply with the exception of the
following:
Payment Option: Actuarial-Adjusted Life with a
100% Joint and Survivor Benefit
Employe/Beneficiary Beneficiary is two years younger
Age Difference: than the employe
Step 1 - Step 5: Same as Example 2. The monthly
benefit under the Guaranteed
Term Plus Life option is $3,070.70
Step 6: $3,070.70 x .9554 = $2,933.75
Monthly payments of $2,933.75 are made for the life of the employe.
Upon the death of the employe, monthly payments of $2,933.75 are made for the
life of the designated beneficiary. Upon the death of the designated
beneficiary, all payments cease.
EXAMPLE 2B
Assumptions listed for Example 2A apply with the exception of the
following:
Payment Option: Actuarial-Adjusted Life with a 50%
Joint and Survivor Benefit
Step 1 - Step 5: Same as Example 2. The monthly
benefit under the Guaranteed
Term Plus Life option is $3,070.70
Step 6: $3.070.70 x 1.0572 = $3,246.34
Monthly payments of $3,246.34 are made for the life of the employe.
Upon the death of the employe, monthly payments of $1,623.17
($3,246.34 x 50%) are made for the life of the designated beneficiary.
Upon the death of the designated beneficiary, all payments cease.
15
<PAGE> 17
EXAMPLE 3
Assumptions:
Date of Termination: January 31,1994
Age at Termination: 58 Years, 6 Months
Position: Vice President
Average Final Compensation: $180,000
Company Service & Awarded Service: 14 Years, 0 Months
Retirement Allowance Factor: .014
Payment Option: Guaranteed Term Plus Life
(Survivor benefit -
monthly payments)
(Given the above, the target percentage is 44%)
Step 1: 44% x $180,000 = $79,200
Step 2: $0 (Employe is ineligible for an immediate
benefit under the Retirement Plan)
Step 3: $79,200 - $0 = $79,200
Step 4: $79,200 x 85% = $67,320
Step 5: $67,320/12 = $5,610.00
Monthly payments of $5,610.00 will be made until a benefit is payable
under the Retirement Plan. At that time the benefit payable under the
MSBP will be offset by an amount equivalent to the benefit paid under
the Retirement Plan (Step 6 - Option III assumed).
Step 6: .014 x $180,000 x 14 = $35,280
Step 7: $67,320 - $35,280 = $32,040
Step 8: $32,040/12 = $2,670.00
Monthly payments of $2,670.00 will be made for the years remaining of
the 15 years guaranteed (i.e., 8.5 years) or for the life of the
employe if greater.
16
<PAGE> 18
EXAMPLE 3A
Assumptions listed for Example 3 apply with the exception of the
following:
<TABLE>
<S> <C>
Age at Termination: 60
Employe/Beneficiary Beneficiary is two years younger
Age Difference: than the employee
Step 1 - Step 3: Same as Example 3.
Step 4: $79,200 x 100% = $79,200
Step 5: $79,200/12 = $6,600.00
</TABLE>
Monthly payments of $6,600.00 will be made to the employe until a benefit
is payable under the Retirement Plan. At that time the benefit payable under
the MSBP will be offset by an amount equivalent to the benefit paid under the
Retirement Plan (Step 6 - Option II assumed).
<TABLE>
<S> <C>
Step 6: .014 x $180,000 x 14 x 88% = $31,046.40
Step 7: $79,200 - $31,046.40 = $48,153.60
Step 8: $48,153.60/12 = $4,012.80
</TABLE>
Monthly payments of $4,012.80 will be made for the years remaining of the 15
years guaranteed (i.e., 10 years) or for the life of the employe if greater.
17
<PAGE> 1
EXHIBIT 11-23
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
OF COMMON STOCK
<TABLE>
<CAPTION>
Three Months Six Months Twelve Months
Ended Ended Ended
June 30, 1995 June 30, 1995 June 30, 1995
------------- ------------- -------------
(Thousands, except per share amounts)
<S> <C> <C> <C>
PRIMARY:
Earnings for Common Stock ............... $ 84,152 $ 190,235 $ 395,174
Weighted average number of common
shares outstanding (a) ............... 144,876 144,870 145,069
Earnings per share of Common Stock
based on weighted average number....... $0.58 $1.31 $2.72
FULLY DILUTED:
Earnings for Common Stock ............... $ 84,152 $ 190,235 $ 395,174
Convertible Preferred Stock dividends.... 72 148 302
---------- --------- ---------
$ 84,224 $ 190,383 $ 395,476
========== ========= =========
Weighted average number of common
shares outstanding (a) ............... 144,876 144,870 145,069
Conversion of convertible Preferred
Stock................................. 299 305 311
---------- --------- ---------
145,175 145,175 145,380
========== ========= =========
Earnings per share of Common Stock
assuming conversion of outstanding
convertible Preferred Stock .......... $0.58 $1.31 $2.72
</TABLE>
---------------
(a) Based on a daily average.
<PAGE> 1
Exhibit 15-59
August 7, 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, six-month and twelve-month periods ended June 30, 1995, as
indicated in our report dated August 7, 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 June 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 33-30809
Form S-3 33-50325
Form S-3 33-53207
Form S-3 33-57095
Form S-3 33-64296
Form S-4 33-60333
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,522,712
<OTHER-PROPERTY-AND-INVEST> 438,793
<TOTAL-CURRENT-ASSETS> 795,093
<TOTAL-DEFERRED-CHARGES> 1,367,821
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 11,124,419
<COMMON> 1,448,828
<CAPITAL-SURPLUS-PAID-IN> 498,507
<RETAINED-EARNINGS> 1,420,095
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,367,430
0
379,946
<LONG-TERM-DEBT-NET> 3,806,112
<SHORT-TERM-NOTES> 20,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 121,877
<LONG-TERM-DEBT-CURRENT-PORT> 19,214
0
<CAPITAL-LEASE-OBLIGATIONS> 120,838
<LEASES-CURRENT> 183,765
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,105,237
<TOT-CAPITALIZATION-AND-LIAB> 11,124,419
<GROSS-OPERATING-REVENUE> 1,736,229
<INCOME-TAX-EXPENSE> 147,269
<OTHER-OPERATING-EXPENSES> 1,229,082
<TOTAL-OPERATING-EXPENSES> 1,376,351
<OPERATING-INCOME-LOSS> 359,878
<OTHER-INCOME-NET> (7,461)
<INCOME-BEFORE-INTEREST-EXPEN> 352,417
<TOTAL-INTEREST-EXPENSE> 147,371
<NET-INCOME> 205,046
14,811
<EARNINGS-AVAILABLE-FOR-COMM> 190,235
<COMMON-STOCK-DIVIDENDS> 149,221
<TOTAL-INTEREST-ON-BONDS> 136,520
<CASH-FLOW-OPERATIONS> 297,880
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
</TABLE>
<PAGE> 1
EXHIBIT 99.29
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
EFFECTIVE JULY 24, 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
1.23 Valuation Date..................................................... 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
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............................................... 10
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
6.4 Reserved........................................................... 21
6.5 Insufficient Trust Fund Assets..................................... 21
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.............................. 25
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
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
10.8 Reserved......................................................... 30
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 SAVINGS REPARATION PLAN
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 24th day of July, 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 Savings
Reparation Plan ("Plan"), an unfunded benefit plan, a copy of which is attached
hereto as Exhibit A, for the benefit of certain Company Executives 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 a select group of
management and/or highly-compensated employes, and shall not be construed to
provide income
- 1 -
<PAGE> 7
for federal income 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 Stock,
and any decrease thereafter in such person's
- 2 -
<PAGE> 8
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
- 3 -
<PAGE> 9
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.
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 July 24, 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
- 5 -
<PAGE> 11
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
(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
(f) the Board of Directors of the Company adopts a
resolution to the effect that a Potential Change of Control of the
Company has occurred for purposes of this Trust.
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
- 6 -
<PAGE> 12
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 Sections
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
Sections 671-678, and shall be construed accordingly. The Company
intends and agrees that it is
- 7 -
<PAGE> 13
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 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 employe 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,
- 8 -
<PAGE> 14
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
employes 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.
- 9 -
<PAGE> 15
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.
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,
- 10 -
<PAGE> 16
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) 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.
- 11 -
<PAGE> 17
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:
(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
- 12 -
<PAGE> 18
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.
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;
- 13 -
<PAGE> 19
(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;
(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;
- 14 -
<PAGE> 20
(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 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.
- 15 -
<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;
(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
- 16 -
<PAGE> 22
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,
- 17 -
<PAGE> 23
conversion 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 in the term "incidents of
ownership", and normally vested in an
- 18 -
<PAGE> 24
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
- 19 -
<PAGE> 25
without paying a consideration therefor, and in connection therewith to
release the obligation on the bond secured by such mortgage; and to
exercise and 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
- 20 -
<PAGE> 26
assets of the Plans under the laws of more than one state of the United States.
Any 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
- 21 -
<PAGE> 27
the Company shall notify Trustee of its decision prior to the time amounts are
payable to Participants.
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
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
- 22 -
<PAGE> 28
(45) days of such notice, the Company deposit in trust with the Trustee the
additional 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
- 23 -
<PAGE> 29
(b) pay such taxes directly to the appropriate taxing authorities
for the benefit of the Company.
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 employes 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:
- 24 -
<PAGE> 30
(a) The Board of Directors and the Chief Executive Officer of the
Company shall have the fiduciary duty and responsibility on behalf of
General 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
- 25 -
<PAGE> 31
(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.
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
- 26 -
<PAGE> 32
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.
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
- 27 -
<PAGE> 33
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.
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
- 28 -
<PAGE> 34
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 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,
- 29 -
<PAGE> 35
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
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
- 30 -
<PAGE> 36
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.
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.
- 31 -
<PAGE> 37
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
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> 1
EXHIBIT 99.30
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
EFFECTIVE JULY 24, 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
1.23 Valuation Date..................................................... 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
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............................................... 10
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
6.4 Reserved........................................................... 21
6.5 Insufficient Trust Fund Assets..................................... 21
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.............................. 25
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
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
10.8 Reserved........................................................... 30
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 RETIREMENT REPARATION PLAN
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 24th day of July, 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 Retirement
Reparation Plan ("Plan"), an unfunded benefit plan, a copy of which is attached
hereto as Exhibit A, for the benefit of certain Company Executives 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 a select group of
management and/or highly-compensated employes, and shall not be construed to
provide income
- 1 -
<PAGE> 7
for federal income 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 Stock,
and any decrease thereafter in such person's
- 2 -
<PAGE> 8
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
- 3 -
<PAGE> 9
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.
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 July 24, 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
- 5 -
<PAGE> 11
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
(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
(f) the Board of Directors of the Company adopts a
resolution to the effect that a Potential Change of Control of the
Company has occurred for purposes of this Trust.
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
- 6 -
<PAGE> 12
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 Sections
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
Sections 671-678, and shall be construed accordingly. The Company
intends and agrees that it is
- 7 -
<PAGE> 13
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 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 employe 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,
- 8 -
<PAGE> 14
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
employes 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.
- 9 -
<PAGE> 15
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.
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,
- 10 -
<PAGE> 16
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) 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.
- 11 -
<PAGE> 17
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:
(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
- 12 -
<PAGE> 18
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.
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;
- 13 -
<PAGE> 19
(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;
(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;
- 14 -
<PAGE> 20
(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 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.
- 15 -
<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;
(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
- 16 -
<PAGE> 22
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,
- 17 -
<PAGE> 23
conversion 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 in the term
"incidents of ownership", and normally vested in an
- 18 -
<PAGE> 24
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
- 19 -
<PAGE> 25
without paying a consideration therefor, and in connection therewith to
release the obligation on the bond secured by such mortgage; and to
exercise and 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
- 20 -
<PAGE> 26
assets of the Plans under the laws of more than one state of the United States.
Any 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
- 21 -
<PAGE> 27
Company shall notify Trustee of its decision prior to the time amounts are
payable to Participants.
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
- 22 -
<PAGE> 28
(45) days of such notice, the Company deposit in trust with the Trustee the
additional 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
- 23 -
<PAGE> 29
(b) pay such taxes directly to the appropriate taxing authorities
for the benefit of the Company.
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 employes 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:
- 24 -
<PAGE> 30
(a) The Board of Directors and the Chief Executive Officer of the
Company shall have the fiduciary duty and responsibility on behalf of
General 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
- 25 -
<PAGE> 31
(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.
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
- 26 -
<PAGE> 32
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.
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
- 27 -
<PAGE> 33
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.
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
- 28 -
<PAGE> 34
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 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,
- 29 -
<PAGE> 35
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
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
- 30 -
<PAGE> 36
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.
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.
- 31 -
<PAGE> 37
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
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> 1
EXHIBIT 99.31
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
EFFECTIVE JULY 24, 1995
<PAGE> 2
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
TABLE OF CONTENTS
<TABLE>
<S> <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
1.23 Valuation Date................................................. 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
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........................................... 10
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
6.4 Reserved....................................................... 21
6.5 Insufficient Trust Fund Assets................................. 21
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........................ 25
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
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
10.8 Reserved..................................................... 30
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 BENEFIT EQUALIZATION PLAN
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 24th day of July, 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 Benefit
Equalization Plan ("Plan"), an unfunded benefit plan, a copy of which is
attached hereto as Exhibit A, for the benefit of certain Company Executives
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 a select group of
management and/or highly-compensated employes, and shall not be construed to
provide income
-1-
<PAGE> 7
for federal income 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 Stock,
and any decrease thereafter in such person's
-2-
<PAGE> 8
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
-3-
<PAGE> 9
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.
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 July 24, 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
-5-
<PAGE> 11
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
(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
(f) the Board of Directors of the Company adopts a resolution
to the effect that a Potential Change of Control of the Company has
occurred for purposes of this Trust.
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
-6-
<PAGE> 12
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 sections 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
sections 671-678, and shall be construed accordingly. The Company
intends and agrees that it is
-7-
<PAGE> 13
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 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 employe 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,
-8-
<PAGE> 14
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
employes 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 ss. 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.
-9-
<PAGE> 15
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.
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,
-10-
<PAGE> 16
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) 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.
-11-
<PAGE> 17
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:
(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
-12-
<PAGE> 18
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.
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;
-13-
<PAGE> 19
(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;
(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;
-14-
<PAGE> 20
(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 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.
-15-
<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;
(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
-16-
<PAGE> 22
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,
-17-
<PAGE> 23
conversion 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 in the term "incidents of
ownership", and normally vested in an
-18-
<PAGE> 24
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
-19-
<PAGE> 25
without paying a consideration therefor, and in connection therewith to
release the obligation on the bond secured by such mortgage; and to
exercise and 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
-20-
<PAGE> 26
assets of the Plans under the laws of more than one state of the United States.
Any 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
-21-
<PAGE> 27
Company shall notify Trustee of its decision prior to the time amounts are
payable to Participants.
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
-22-
<PAGE> 28
(45) days of such notice, the Company deposit in trust with the Trustee the
additional 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
-23-
<PAGE> 29
(b) pay such taxes directly to the appropriate taxing
authorities for the benefit of the Company.
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 employes 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:
-24-
<PAGE> 30
(a) The Board of Directors and the Chief Executive Officer of
the Company shall have the fiduciary duty and responsibility on behalf
of General 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
-25-
<PAGE> 31
(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.
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
-26-
<PAGE> 32
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.
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
-27-
<PAGE> 33
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.
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
-28-
<PAGE> 34
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 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,
-29-
<PAGE> 35
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
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
-30-
<PAGE> 36
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.
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.
-31-
<PAGE> 37
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
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> 1
EXHIBIT 99.32
THE DETROIT EDISON COMPANY
IRREVOCABLE GRANTOR TRUST
EFFECTIVE JULY 17, 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
1.23 Valuation Date................................................. 7
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
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........................................... 10
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
6.4 Reserved....................................................... 21
6.5 Insufficient Trust Fund Assets................................. 21
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........................ 25
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
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
10.8 Reserved..................................................... 30
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 MANAGEMENT SUPPLEMENTAL BENEFIT PLAN
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 17th day of July, 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 Management
Supplemental Benefit Plan ("Plan"), an unfunded benefit plan, a copy of which is
attached hereto as Exhibit A, for the benefit of certain Company Executives
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 a select group of
management and/or highly-compensated employes, and shall not be construed to
provide income
-1-
<PAGE> 7
for federal income 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 Stock, and any decrease thereafter in
such person's
-2-
<PAGE> 8
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
-3-
<PAGE> 9
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.
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 July 17, 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
-5-
<PAGE> 11
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
(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
(f) the Board of Directors of the Company adopts a resolution to the
effect that a Potential Change of Control of the Company has occurred for
purposes of this Trust.
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
-6-
<PAGE> 12
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 ss. ss. 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 ss. ss.
671-678, and shall be construed accordingly. The Company intends and agrees
that it is
-7-
<PAGE> 13
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 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 employe 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,
-8-
<PAGE> 14
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 employes 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 ss. 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.
-9-
<PAGE> 15
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.
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,
-10-
<PAGE> 16
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) 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.
-11-
<PAGE> 17
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:
(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
-12-
<PAGE> 18
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.
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;
-13-
<PAGE> 19
(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;
(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;
-14-
<PAGE> 20
(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 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.
-15-
<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;
(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
-16-
<PAGE> 22
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,
-17-
<PAGE> 23
conversion 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 in the term "incidents of ownership", and
normally vested in an
-18-
<PAGE> 24
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
-19-
<PAGE> 25
without paying a consideration therefor, and in connection therewith to
release the obligation on the bond secured by such mortgage; and to exercise
and 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
-20-
<PAGE> 26
assets of the Plans under the laws of more than one state of the United States.
Any 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
-21-
<PAGE> 27
Company shall notify Trustee of its decision prior to the time amounts are
payable to Participants.
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
-22-
<PAGE> 28
(45) days of such notice, the Company deposit in trust with the Trustee the
additional 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
-23-
<PAGE> 29
(b) pay such taxes directly to the appropriate taxing authorities for
the benefit of the Company.
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 employes 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:
-24-
<PAGE> 30
(a) The Board of Directors and the Chief Executive Officer of the
Company shall have the fiduciary duty and responsibility on behalf of
General 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
-25-
<PAGE> 31
(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.
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
-26-
<PAGE> 32
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.
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
-27-
<PAGE> 33
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.
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
-28-
<PAGE> 34
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 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,
-29-
<PAGE> 35
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
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
-30-
<PAGE> 36
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.
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.
-31-
<PAGE> 37
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
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-
