<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 THE QUARTER ENDED SEPTEMBER 30, 1996
REGISTRANTS; STATE OF
COMMISSION INCORPORATION; ADDRESS; AND I.R.S. EMPLOYER
FILE NUMBER TELEPHONE NUMBER IDENTIFICATION NO.
- ----------- ---------------------------- ------------------
1-11607 DTE Energy Company 38-3217752
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-4000
1-2198 The Detroit Edison Company 38-0478650
(a Michigan corporation)
2000 2nd Avenue
Detroit, Michigan 48226-1279
313-235-8000
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES X NO
--- ---
At October 31, 1996, 145,119,875 shares of DTE Energy's Common Stock,
substantially all held by non-affiliates, were outstanding.
<PAGE> 2
DTE ENERGY COMPANY
AND
THE DETROIT EDISON COMPANY
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
This document contains the Quarterly Reports on Form 10-Q for the quarter ended
September 30, 1996 for each of DTE Energy Company and The Detroit Edison
Company. Information contained herein relating to an individual registrant is
filed by such registrant on its own behalf. Accordingly, except for its
subsidiaries, The Detroit Edison Company makes no representation as to
information relating to any other companies affiliated with DTE Energy Company.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions ......................................................................... 3
Quarterly Report on Form 10-Q for DTE Energy Company:
Part I- Financial Information ........................................... 4
Item 1 - Financial Statements (Unaudited) ........................ 4
Notes to Consolidated Financial Statements (Unaudited) .. 14
Independent Accountants' Report ......................... 16
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 17
Part II-Other Information ................................................ 29
Item 1 - Legal Proceedings ....................................... 29
Item 5 - Other Information ....................................... 29
Quarterly Report on Form 10-Q for The Detroit Edison Company:
Part I-Financial Information ............................................. 31
Item 1 - Financial Statements (Unaudited) ........................ 31
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 31
Part II-Other Information ................................................ 31
Item 1 - Legal Proceedings ....................................... 31
Item 5 - Other Information ....................................... 31
Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit
Edison Company:
Item 6 - Exhibits and Reports on Form 8-K ....................... 32
Signature Page to DTE Energy Company Quarterly Report on Form 10-Q .................. 39
Signature Page to The Detroit Edison Company Quarterly Report on Form 10-Q .......... 40
</TABLE>
2
<PAGE> 3
DEFINITIONS
Annual Report ........... 1995 Annual Report to the Securities and Exchange
Commission on Form 10-K for DTE Energy Company or
The Detroit Edison Company, as the case may be
Annual Report Notes ..... Notes to Consolidated Financial Statements appearing
on pages 46 through 57 of the 1995 Annual Report to
the Securities and Exchange Commission on Form
10-K for DTE Energy Company and The Detroit Edison
Company
Company ................. DTE Energy Company and Subsidiary Companies
Detroit Edison .......... The Detroit Edison Company (a wholly owned
subsidiary of DTE Energy Company) and Subsidiary
Companies
EPA ..................... United States Environmental Protection Agency
FERC .................... Federal Energy Regulatory Commission
kWh ..................... Kilowatthour
MDEQ .................... Michigan Department of Environmental Quality
Mortgage Bonds .......... Detroit Edison's General and Refunding Mortgage Bonds
MPSC .................... Michigan Public Service Commission
MW ...................... Megawatts
NOPR .................... Notice of Proposed Rulemaking
Note(s) ................. Note(s) to Consolidated Financial Statements
(Unaudited) appearing herein
PSCR .................... Power Supply Cost Recovery
Quarterly Report ........ Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for quarters ended
March 31, 1996 and June 30, 1996 for DTE Energy
Company or The Detroit Edison Company, as the
case may be
Quarterly Report Notes .. Notes to Consolidated Financial Statements
(Unaudited) appearing in the Quarterly Report to
the Securities and Exchange Commission on Form
10-Q for quarters ended March 31, 1996 and
June 30, 1996 for DTE Energy Company or The
Detroit Edison Company, as the case may be
QUIDS ................... Quarterly Income Debt Securities
Registrant .............. Company or Detroit Edison, as the case may be
Renaissance ............. Renaissance Energy Company (an unaffiliated company)
3
<PAGE> 4
QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED):
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
---------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $958,439 $1,008,450 $2,703,835 $2,710,411 $3,553,894 $3,500,793
Electric - Interconnection 14,346 20,591 33,578 40,230 44,327 45,490
Steam and other 4,549 3,248 20,821 17,877 27,039 24,909
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $977,334 $1,032,289 $2,758,234 $2,768,518 $3,625,260 $3,571,192
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $184,766 $ 193,675 $ 527,120 $ 538,867 $ 704,220 $ 707,835
Purchased power 41,800 51,311 102,925 119,170 117,312 90,715
Other operation 157,582 195,323 466,831 481,694 620,434 648,325
Maintenance 65,218 66,406 217,518 178,780 278,853 253,207
Steam heating special charges 149,231 - 149,231 - 191,260 -
Depreciation and amortization 131,959 125,383 394,563 375,057 520,117 492,730
Deferred Fermi 2 amortization (1,119) (1,493) (3,359) (4,479) (4,852) (6,345)
Amortization of deferred Fermi 2
depreciation and return 25,485 23,248 76,453 69,742 99,701 90,949
Taxes other than income 65,919 64,353 195,674 188,457 259,158 244,454
Income taxes 37,853 88,969 171,628 236,238 225,077 296,384
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $858,694 $ 807,175 $2,298,584 $2,183,526 $3,011,280 $2,818,254
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $118,640 $ 225,114 $ 459,650 $ 584,992 $ 613,980 $ 752,938
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 456 $ 369 $ 1,430 $ 952 $ 1,886 $ 1,061
Other income and (deductions) - net (925) (7,637) (7,550) (25,913) (11,883) (37,906)
Income taxes 733 1,550 2,924 7,720 4,993 12,274
Accretion income 1,967 2,677 6,444 8,536 8,949 11,712
Income taxes - disallowed plant
costs and accretion income (560) (811) (1,870) (2,608) (2,617) (3,588)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Other Income and
(Deductions) $ 1,671 $ (3,852) $ 1,378 $ (11,313) $ 1,328 $ (16,447)
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 68,916 $ 69,353 $ 206,537 $ 205,873 $ 276,263 $ 273,679
Amortization of debt discount,
premium and expense 2,959 2,849 8,881 8,427 11,766 11,178
Other 1,421 1,698 3,464 7,912 5,218 5,498
Allowance for borrowed funds used
during construction (credit) (826) (594) (2,588) (1,535) (3,322) (2,241)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 72,470 $ 73,306 $ 216,294 $ 220,677 $ 289,925 $ 288,114
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCK DIVIDENDS OF
SUBSIDIARY 2,908 6,544 13,108 21,355 19,490 28,763
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 44,933 $ 141,412 $ 231,626 $ 331,647 $ 305,893 $ 419,614
===================================================================================================================================
COMMON SHARES OUTSTANDING
- - AVERAGE 145,119,875 144,905,909 145,119,875 144,882,040 144,727,881 144,876,686
EARNINGS PER COMMON SHARE $ 0.31 $ 0.98 $ 1.60 $ 2.29 $ 2.11 $ 2.90
DIVIDENDS DECLARED PER SHARE
OF COMMON STOCK $ 0.515 $ 0.515 $ 1.545 $ 1.545 $ 2.06 $ 2.06
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
4
<PAGE> 5
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
-----------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 44,933 $ 141,412 $ 231,626 $ 331,647 $ 305,893 $ 419,614
Adjustments to reconcile net income to net
cash from operating activities:
Accretion income (1,967) (2,677) (6,444) (8,536) (8,949) (11,712)
Depreciation and amortization 131,959 125,383 394,563 375,057 520,117 492,730
Deferred Fermi 2 amortization and return - net 24,366 21,755 73,094 65,263 94,849 84,604
Deferred income taxes and investment
tax credit - net (46,885) 9,328 (18,273) 49,411 (5,161) 88,622
Fermi 2 refueling outage - net (3,062) 3,058 3,454 9,813 6,716 11,080
Steam heating special charges 149,231 - 149,231 - 191,260 -
Other 23,074 8,615 13,618 7,837 11,756 (35,929)
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (7,527) (33,935) (25,253) (226,414) (17,418) (232,394)
Other accounts receivable (8,029) (4,159) (12,768) (7,633) (8,587) (22,135)
Inventories 27,594 16,117 39,815 (11,547) 32,525 (17,216)
Accounts payable (21,608) 12,495 (23,865) 7,352 (13,168) 22,219
Taxes payable 22,308 20,777 10,904 34,031 (25,776) 16,077
Interest payable (14,705) 20,273 (10,086) 19,159 (27,331) 19,624
Other 18,187 13,880 (37,799) (10,049) 3,505 8,289
- -----------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 337,869 $ 352,322 $ 781,817 $ 635,391 $1,060,231 $ 843,473
- -----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $(145,951) $(113,148) $(397,931) $(293,126) $ (558,649) $(400,480)
Nuclear decommissioning trust funds (11,978) (5,901) (34,772) (29,193) (48,930) (36,692)
Non-utility investments (260) 1,173 (6,545) 1,993 (6,673) (9,563)
Other changes in current assets and liabilities 1,753 9,413 906 5,825 855 9,596
Other (2,210) (24,668) (16,464) (30,632) (18,677) (39,306)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $(158,646) $(133,131) $(454,806) $(345,133) $ (632,074) $(476,445)
- ------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ 34,880 $ - $ 219,880 $ - $ 219,880 $ -
Funds received from Trustees: Installment sales
contracts and loan agreements - 22,175 - 22,175 179,350 62,260
Decrease in short-term borrowings (94,988) (138,877) (36,990) (36,489) (3,000) (74,472)
Redemption of long-term debt (6,500) (22,175) (75,714) (41,389) (255,064) (51,539)
Redemption of preferred stock - - (185,000) - (185,955) -
Premiums on reacquired long-term debt - (565) - (565) (5,381) (857)
Dividends on common stock (74,737) (75,474) (224,212) (224,689) (298,887) (299,292)
Other (11) (4,636) (9,986) (5,099) (11,487) (6,041)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $(141,356) $(219,552) $(312,022) $(286,056) $ (360,544) $(369,941)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ 37,867 $ (361) $ 14,989 $ 4,202 $ 67,613 $ (2,913)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 42,070 12,685 64,948 8,122 12,324 15,237
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 79,937 $ 12,324 $ 79,937 $ 12,324 $ 79,937 $ 12,324
==============================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 83,770 $ 49,199 $ 216,944 $ 188,898 $ 302,459 $ 255,496
Income taxes paid 51,248 60,757 165,194 137,237 258,494 183,920
New capital lease obligations 21,700 6,564 33,882 4,455 56,277 6,093
Exchange of preferred stock of subsidiary for
long-term debt - 49,878 - 49,878 - 49,878
==============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
5
<PAGE> 6
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
----------- -----------
<S> <C> <C>
UTILITY PROPERTIES
Plant in service $13,670,679 $13,303,992
Less: Accumulated depreciation and amortization (5,315,708) (4,928,316)
- --------------------------------------------------------------------------------------------------
$ 8,354,971 $ 8,375,676
Construction work in progress 137,935 142,726
- --------------------------------------------------------------------------------------------------
Net utility properties $ 8,492,906 $ 8,518,402
- --------------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $106,032 and $99,633, respectively) $ 130,081 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $473,644 and $427,831, respectively) 133,532 145,463
- --------------------------------------------------------------------------------------------------
Net property under capital leases $ 263,613 $ 282,669
- --------------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,756,519 $ 8,801,071
- --------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 63,233 $ 21,576
Investments and special funds 45,111 29,058
Nuclear decommissioning trust funds 154,615 119,843
- --------------------------------------------------------------------------------------------------
$ 262,959 $ 170,477
- --------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 79,937 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $20,000 and $22,000, respectively) 439,656 414,403
Other accounts receivable 50,432 37,664
Inventories (at average cost)
Fuel 122,580 162,796
Materials and supplies 143,310 142,782
Prepayments 45,436 12,910
- --------------------------------------------------------------------------------------------------
$ 881,351 $ 835,503
- --------------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,018,210 $ 1,155,482
Prepaid pensions 93,151 81,865
Unamortized debt expense 45,233 40,936
Other 41,583 45,257
- --------------------------------------------------------------------------------------------------
$ 1,198,177 $ 1,323,540
- --------------------------------------------------------------------------------------------------
TOTAL $11,099,006 $11,130,591
==================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
6
<PAGE> 7
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
------------ -----------
<S> <C> <C>
CAPITALIZATION
Common stock - without par value, 400,000,000 shares
authorized; 145,119,875 shares outstanding $ 1,951,437 $ 1,951,437
Retained earnings used in the business 1,489,484 1,484,871
- ------------------------------------------------------------------------------------------
Total common shareholders' equity $ 3,440,921 $ 3,436,308
Cumulative preferred stock of subsidiary 144,405 326,604
Long-term debt 3,775,301 3,756,094
- ------------------------------------------------------------------------------------------
Total Capitalization $ 7,360,627 $ 7,519,006
- ------------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 119,823 $ 128,362
Other postretirement benefits 14,256 24,381
Other 72,934 58,424
- ------------------------------------------------------------------------------------------
$ 207,013 $ 211,167
- ------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ - $ 36,990
Amounts due within one year
Long-term debt 244,214 119,214
Obligations under capital leases 143,790 154,307
Accounts payable 139,874 165,148
Property and general taxes 18,050 34,416
Income taxes 26,785 -
Accumulated deferred income taxes 52,917 51,697
Interest payable 52,042 62,128
Dividends payable 77,644 81,102
Payrolls 88,019 72,164
Fermi 2 refueling outage 17,796 14,342
Other 112,489 130,689
- ------------------------------------------------------------------------------------------
$ 973,620 $ 922,197
- ------------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,004,851 $ 2,052,875
Accumulated deferred investment tax credits 318,794 330,085
Other 234,101 95,261
- ------------------------------------------------------------------------------------------
$ 2,557,746 $ 2,478,221
- ------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- ------------------------------------------------------------------------------------------
TOTAL $11,099,006 $11,130,591
==========================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
7
<PAGE> 8
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Retained Total
Common Stock Earnings Common
------------------- Used in the Shareholders'
Shares Amount Business Equity
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 145,119,875 $ 1,951,437 $ 1,484,871 $ 3,436,308
Expense associated with subsidiary
preferred stock redeemed (2,801) (2,801)
Net income 231,626 231,626
Cash dividends declared on
Common stock - $1.545 per share (224,212) (224,212)
- -----------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1996 145,119,875 $ 1,951,437 $ 1,489,484 $ 3,440,921
===============================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
8
<PAGE> 9
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
----------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $ 958,439 $ 1,008,450 $ 2,703,835 $ 2,710,411 $ 3,553,894 $ 3,500,793
Electric - Interconnection 14,346 20,591 33,578 40,230 44,327 45,490
Steam 3,447 3,248 18,687 17,877 24,905 24,909
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 976,232 $ 1,032,289 $ 2,756,100 $ 2,768,518 $ 3,623,126 $ 3,571,192
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $ 184,766 $ 193,675 $ 527,120 $ 538,867 $ 704,220 $ 707,835
Purchased power 41,800 51,311 102,925 119,170 117,312 90,715
Other operation 155,251 195,323 461,217 481,694 614,820 648,325
Maintenance 65,218 66,406 217,518 178,780 278,853 253,207
Steam heating special charges 149,231 - 149,231 - 191,260 -
Depreciation and amortization 131,849 125,383 394,242 375,057 519,796 492,730
Deferred Fermi 2 amortization (1,119) (1,493) (3,359) (4,479) (4,852) (6,345)
Amortization of deferred Fermi 2
depreciation and return 25,485 23,248 76,453 69,742 99,701 90,949
Taxes other than income 65,916 64,353 195,566 188,457 259,050 244,454
Income taxes 38,554 88,969 173,424 236,238 226,873 296,384
- -----------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses $ 856,951 $ 807,175 $ 2,294,337 $ 2,183,526 $ 3,007,033 $ 2,818,254
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME $ 119,281 $ 225,114 $ 461,763 $ 584,992 $ 616,093 $ 752,938
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 456 $ 369 $ 1,430 $ 952 $ 1,886 $ 1,061
Other income and (deductions) - net (1,492) (7,637) (9,678) (25,913) (14,011) (37,906)
Income taxes 733 1,550 2,924 7,720 4,993 12,274
Accretion income 1,967 2,677 6,444 8,536 8,949 11,712
Income taxes - disallowed plant
costs and accretion income (560) (811) (1,870) (2,608) (2,617) (3,588)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Other Income and
(Deductions) $ 1,104 $ (3,852) $ (750) $ (11,313) $ (800) $ (16,447)
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 68,916 $ 69,353 $ 206,537 $ 205,873 $ 276,263 $ 273,679
Amortization of debt discount,
premium and expense 2,947 2,849 8,855 8,427 11,740 11,178
Other 1,327 1,698 3,268 7,912 5,022 5,498
Allowance for borrowed funds used
during construction (credit) (826) (594) (2,588) (1,535) (3,322) (2,241)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 72,364 $ 73,306 $ 216,072 $ 220,677 $ 289,703 $ 288,114
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 48,021 $ 147,956 $ 244,941 $ 353,002 $ 325,590 $ 448,377
PREFERRED STOCK DIVIDENDS 2,908 6,544 13,108 21,355 19,490 28,763
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME AVAILABLE FOR COMMON
STOCK $ 45,113 $ 141,412 $ 231,833 $ 331,647 $ 306,100 $ 419,614
====================================================================================================================================
</TABLE>
Note: Detroit Edison's financial statements are presented here for ease of
reference and are not considered to be part of Item 1 of the Company's
report.
See accompanying Notes to Consolidated Financial Statements (Unaudited).
9
<PAGE> 10
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
ASSETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
------------ -----------
<S> <C> <C>
UTILITY PROPERTIES
Plant in service $ 13,670,679 $13,303,992
Less: Accumulated depreciation and amortization (5,315,708) (4,928,316)
- -----------------------------------------------------------------------------------------------------
$ 8,354,971 $ 8,375,676
Construction work in progress 137,935 142,726
- -----------------------------------------------------------------------------------------------------
Net utility properties $ 8,492,906 $ 8,518,402
- -----------------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $106,032 and $99,633, respectively) $ 130,081 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $473,644 and $427,831, respectively) 133,532 145,463
- -----------------------------------------------------------------------------------------------------
Net property under capital leases $ 263,613 $ 282,669
- -----------------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,756,519 $ 8,801,071
- -----------------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 7,731 $ 21,576
Investments and special funds 26,489 29,058
Nuclear decommissioning trust funds 154,615 119,843
- -----------------------------------------------------------------------------------------------------
$ 188,835 $ 170,477
- -----------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 27,697 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $20,000 and $22,000, respectively) 439,656 414,403
Other accounts receivable 47,791 37,664
Inventories (at average cost)
Fuel 122,580 162,796
Materials and supplies 143,310 142,782
Prepayments 45,160 12,910
- -----------------------------------------------------------------------------------------------------
$ 826,194 $ 835,503
- -----------------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,018,210 $ 1,155,482
Prepaid pensions 93,151 81,865
Unamortized debt expense 45,233 40,936
Other 37,061 45,257
- ----------------------------------------------------------------------------------------------------
$ 1,193,655 $ 1,323,540
- ----------------------------------------------------------------------------------------------------
TOTAL $ 10,965,203 $11,130,591
====================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
10
<PAGE> 11
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
LIABILITIES
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
------------ ------------
<S> <C> <C>
CAPITALIZATION
Common stock - $10 par value, 400,000,000 shares
authorized; 145,119,875 shares outstanding $ 1,451,199 $ 1,451,199
Premium on common stock 547,799 547,799
Common stock expense (47,561) (47,561)
Retained earnings used in the business 1,391,229 1,484,871
- --------------------------------------------------------------------------------------------
Total common shareholders' equity $ 3,342,666 $ 3,436,308
Cumulative preferred stock 144,405 326,604
Long-term debt 3,740,421 3,756,094
- --------------------------------------------------------------------------------------------
Total Capitalization $ 7,227,492 $ 7,519,006
- --------------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 119,823 $ 128,362
Other postretirement benefits 14,256 24,381
Other 72,934 58,424
- --------------------------------------------------------------------------------------------
$ 207,013 $ 211,167
- --------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ - $ 36,990
Amounts due within one year
Long-term debt 244,214 119,214
Obligations under capital leases 143,790 154,307
Accounts payable 136,328 165,148
Property and general taxes 18,048 34,416
Income taxes 26,881 -
Accumulated deferred income taxes 52,918 51,697
Interest payable 52,041 62,128
Dividends payable 82,723 81,102
Payrolls 87,858 72,164
Fermi 2 refueling outage 17,796 14,342
Other 111,073 130,689
- -------------------------------------------------------------------------------------------
$ 973,670 $ 922,197
- -------------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,004,133 $ 2,052,875
Accumulated deferred investment tax credits 318,794 330,085
Other 234,101 95,261
- -------------------------------------------------------------------------------------------
$ 2,557,028 $ 2,478,221
- -------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- -------------------------------------------------------------------------------------------
TOTAL $10,965,203 $11,130,591
===========================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
11
<PAGE> 12
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30 September 30 September 30
-------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 48,021 $ 147,956 $ 244,941 $ 353,002 $ 325,590 $ 448,377
Adjustments to reconcile net income to net
cash from operating activities:
Accretion income (1,967) (2,677) (6,444) (8,536) (8,949) (11,712)
Depreciation and amortization 131,849 125,383 394,242 375,057 519,796 492,730
Deferred Fermi 2 amortization and return - net 24,366 21,755 73,094 65,263 94,849 84,604
Deferred income taxes and investment
tax credit - net (46,921) 9,328 (18,361) 49,411 (5,249) 88,622
Fermi 2 refueling outage - net (3,062) 3,058 3,454 9,813 6,716 11,080
Steam heating special charges 149,231 - 149,231 - 191,260 -
Other 10,968 8,615 4,687 7,837 2,851 (35,929)
Changes in current assets and liabilities:
Customer accounts receivable and
unbilled revenues (7,527) (33,935) (25,253) (226,414) (17,418) (232,394)
Other accounts receivable (9,185) (4,159) (10,127) (7,633) (5,946) (22,135)
Inventories 27,594 16,117 39,815 (11,547) 32,525 (17,216)
Accounts payable (14,972) 12,495 (27,411) 7,352 (16,714) 22,219
Taxes payable 24,083 20,777 10,998 34,031 (25,682) 16,077
Interest payable (14,630) 20,273 (10,087) 19,159 (27,332) 19,624
Other 30,627 13,880 (39,100) (10,049) 2,204 8,289
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 348,475 $ 358,866 $ 783,679 $ 656,746 $1,068,501 $ 872,236
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $ (130,084) $(113,148) $(355,461) $(293,126) $ (516,179) $ (400,480)
Nuclear decommissioning trust funds (11,978) (5,901) (34,772) (29,193) (48,930) (36,692)
Non-utility investments - 1,173 - 1,993 (128) (9,563)
Other changes in current assets and liabilities 1,753 9,413 906 5,825 856 9,596
Other (2,591) (24,668) (4,936) (30,632) (7,150) (39,306)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities $ (142,900) $(133,131) $(394,263) $(345,133) $ (571,531) $ (476,445)
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ - $ - $ 185,000 $ - $ 185,000 $ -
Funds received from Trustees: Installment sales
contracts and loan agreements - 22,175 - 22,175 179,350 62,260
Decrease in short-term borrowings (94,988) (138,877) (36,990) (36,489) (3,000) (74,472)
Redemption of long-term debt (6,500) (22,175) (75,714) (41,389) (255,064) (51,539)
Redemption of preferred stock - - (185,000) - (185,955) -
Premiums on reacquired long-term debt
and preferred stock - (565) (1,850) (565) (7,231) (857)
Dividends on common and preferred stock (82,724) (82,018) (249,086) (246,044) (330,169) (328,055)
Cash portion of restructuring dividend to parent - - (56,510) - (56,510) -
Other - (4,636) (6,517) (5,099) (8,018) (6,041)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities $ (184,212) $(226,096) $(426,667) $(307,411) $ (481,597) $ (398,704)
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ 21,363 $ (361) $ (37,251) $ 4,202 $ 15,373 $ (2,913)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 6,334 12,685 64,948 8,122 12,324 15,237
- ----------------------------------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 27,697 $ 12,324 $ 27,697 $ 12,324 $ 27,697 $ 12,324
==================================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 83,613 $ 49,199 $ 216,765 $ 188,898 $ 302,280 $ 255,496
Income taxes paid 51,922 60,757 167,088 137,237 260,388 183,930
New capital lease obligations 21,700 6,564 33,882 4,455 56,277 6,093
Exchange of preferred stock for long-term debt - 49,878 - 49,878 - 49,878
Non-cash portion of restructuring dividend to parent - - 26,716 - 26,716 -
==================================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements (Unaudited).
12
<PAGE> 13
THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Common Stock Premium Retained Total
---------------------- on Common Earnings Common
$10 Par Common Stock Used in the Shareholders'
Shares Value Stock Expense Business Equity
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 145,119,875 $ 1,451,199 $ 547,799 $ (47,561) $ 1,484,871 $ 3,436,308
Expense associated with preferred
stock redeemed (2,801) (2,801)
Net income 244,941 244,941
Cash dividends declared
Common stock - $1.65 per share (239,448) (239,448)
Cumulative preferred stock* (13,108) (13,108)
Restructuring dividend to parent (83,226) (83,226)
- ----------------------------------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 30, 1996 145,119,875 $ 1,451,199 $ 547,799 $ (47,561) $ 1,391,229 $ 3,342,666
======================================================================================================================
</TABLE>
*At established rate for each series
See accompanying Notes to Consolidated Financial Statements (Unaudited).
13
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTE 1 - GENERAL
These consolidated financial statements 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 preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The preceding consolidated financial statements are unaudited, but, in the
opinion of the Company and Detroit Edison, 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
Fermi 2, a nuclear generating unit, was shut down on September 27, 1996 to
replace one-third of its nuclear fuel and install three new low-pressure
turbines. With the installation of these new turbines the unit is expected to
initially operate at 1085 MW, up from 878 MW prior to this shut down. The
expected cost of replacing the turbines is between $45-50 million. The cost
will be capitalized and is expected to be recovered in rates. The plant is
scheduled to restart in November 1996.
NOTE 3 - STEAM HEATING SPECIAL CHARGES
As discussed in Note 14 of the Annual Report Notes and Note 2 of the
Quarterly Report Notes for the quarter ended June 30, 1996, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 121 in the fourth
quarter of 1995. As the result of continuing losses in the operation of its
steam heating business, upon adoption of SFAS No. 121, Detroit Edison wrote off
the remaining net book value of its steam heating plant assets of $42 million
($32 million after-tax) or $0.22 per share.
During the third quarter of 1996, following the completion of a review of
its steam heating operations, Detroit Edison recorded a special charge to net
income of $149.2 million ($97 million after-tax) or $0.67 per share. The
special charge included a reserve for steam purchase commitments during the
period from 1997 through 2008 under the agreement with the Greater Detroit
Resource Recovery Facility, the retirement and
14
<PAGE> 15
closure of a portion of the steam heating system in 1997, and the investment
of $18 million to improve service to remaining customers.
----------------------------
This Quarterly Report on Form 10-Q, including the report of Deloitte &
Touche LLP (on page 16) will automatically be incorporated by reference in the
Prospectuses constituting part of the Registration Statements on Form S-3
(Registration Nos. 33-53207 and 33-64296) of The Detroit Edison Company and
Form S-8 (Registration No. 333-00023) and Form S-3 (Registration No. 33-57545)
of DTE Energy Company, 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.
15
<PAGE> 16
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders of
DTE Energy Company and
The Detroit Edison Company
We have reviewed the accompanying condensed consolidated balance sheets of DTE
Energy Company and subsidiary companies and of The Detroit Edison Company and
subsidiary companies as of September 30, 1996, and the related condensed
consolidated statements of income and of cash flows for the three-month,
nine-month, and twelve-month periods ended September 30, 1996 and 1995, and the
condensed consolidated statements of common shareholders' equity for the
nine-month period ended September 30, 1996. These financial statements are the
responsibility of DTE Energy Company's management and of The Detroit Edison
Company's management.
We conducted our reviews 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 of 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 reviews, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheets of DTE Energy Company and subsidiary
companies and of The Detroit Edison Company and subsidiary companies as of
December 31, 1995, and the related consolidated statements of income, common
shareholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated January 22, 1996 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheets
as of December 31, 1995 is fairly stated, in all material respects, in relation
to the consolidated balance sheets from which it has been derived.
DELOITTE & TOUCHE LLP
Detroit, Michigan
November 7, 1996
16
<PAGE> 17
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
DTE ENERGY COMPANY, THE DETROIT EDISON COMPANY AND SUBSIDIARY
COMPANIES
This analysis for the three, nine and twelve months ended September 30,
1996, as compared to the same periods in 1995, should be read in conjunction
with the consolidated financial statements (unaudited), the accompanying Notes,
the Quarterly Report Notes and the Annual Report Notes.
Detroit Edison is the principal subsidiary of the Company and, as such,
this discussion explains material changes in results of operations of both the
Company and Detroit Edison and identifies recent trends and events affecting
both the Company and Detroit Edison. For the periods presented, the Company's
operations and those of Detroit Edison are not materially different.
RESULTS OF OPERATIONS
For the three months ended September 30, 1996, the Company's net income
was $44.9 million, or $0.31 per share, down 68 percent from the $141.4 million,
or $0.98 per share earned in the three months ended September 30, 1995. The
decrease in net income was due to a $149.2 million ($97 million after-tax), or
$0.67 per share, special charge to net income following completion of Detroit
Edison's review of its steam heating operations. Without the special charge,
third quarter earnings would have equaled the $0.98 per share reported for the
same period in 1995.
For the nine months ended September 30, 1996, the Company's net income was
$231.6 million, or $1.60 per share, down 30 percent from the $331.6 million, or
$2.29 per share earned in the nine months ended September 30, 1995. The
nine-month period this year included the steam heating special charge.
For the twelve months ended September 30, 1996, the Company's net income
was $305.9 million, or $2.11 per share, down 27 percent from the $419.6
million, or $2.90 per share earned in the twelve months ended September 30,
1995. The twelve-month period this year included the special charge of $149.2
million ($97 million after-tax), or $0.67 per share and the write off of the
remaining net book value of steam heating plant assets of $42 million ($32
million after-tax), or $0.22 per share.
At September 30, 1996, the book value of the Company's common stock was
$23.68 per share, an increase of $0.06 per share or 0.25 percent since December
31, 1995. Return on average total common shareholders' equity was 8.8% and
12.4% for the twelve months ended September 30, 1996 and 1995, respectively.
Detroit Edison's ratio of earnings to fixed charges was 2.68 and 3.31 for
the twelve months ended September 30, 1996 and 1995, respectively. Detroit
Edison's ratio of
17
<PAGE> 18
earnings to fixed charges and preferred stock dividends for the 1996 and 1995
twelve-month periods was 2.44 and 2.89, respectively.
OPERATING REVENUES
Total operating revenues of the Company increased (decreased) due to the
following factors:
<TABLE>
<CAPTION>
Three Nine Twelve
Months Months Months
------ ---------- ------
(Millions)
<S> <C> <C> <C>
Rate Changes
Special Manufacturing Contracts $ (3) $ (14) $ (24)
PSCR Clause (3) (27) 8
------ ----- -----
(6) (41) (16)
System sales volume and mix (45) 14 50
Interconnection sales (6) (7) (1)
Fermi 2 capacity factor performance standard reserve - 16 12
Other - net 2 8 9
----- ----- -----
Total $ (55) $ (10) $ 54
===== ===== =====
</TABLE>
SPECIAL MANUFACTURING CONTRACTS
In March 1995, the MPSC issued an order approving Detroit Edison's 10-year
special manufacturing contracts with Chrysler Corporation, Ford Motor Company
and General Motors Corporation. In return for their long-term commitments,
these companies receive a reduction in the price paid for electricity. For
additional information, see Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Annual Report.
PSCR CLAUSE
The decreases in PSCR Clause revenues for the three-month and nine-month
periods resulted from lower average unit costs of fuel and purchased power.
The increase in PSCR Clause revenue for the twelve-month period resulted from
higher fuel and purchased power expense.
18
<PAGE> 19
kWh SALES
kWh sales increased (decreased) as follows:
<TABLE>
<CAPTION>
Three Nine Twelve
Months Months Months
----------- ----------- ----------
<S> <C> <C> <C>
Residential (12.6)% (1.9)% (0.2)%
Commercial (1.1) 1.3 2.0
Industrial 5.4 3.2 3.5
Other (includes primarily sales for resale) (1.2) 2.7 2.3
Total System (3.0) 1.0 1.8
Interconnection (44.1) (28.1) (8.9)
Total (6.3) (0.8) 1.2
</TABLE>
The decreases in residential sales reflect cooler summer weather in 1996
as compared with 1995. The commercial sales decrease for the three-month
period reflects cooler summer weather, while increases in the nine-month and
twelve-month periods were due to improved economic conditions.
The increases in industrial sales reflect strong demand in the automotive
and construction sectors.
The increased sales to other customers for the nine-month and twelve-month
periods reflect increased load requirements of wholesale for resale customers.
The decreased sales to other customers for the three-month period reflect lower
weather-related demand from the wholesale for resale customers.
Interconnection sales decreases reflect a decreased demand for energy for
all periods.
FERMI 2 CAPACITY FACTOR PERFORMANCE STANDARD RESERVE
Because of a turbine-generator failure in December 1993, Fermi 2, a
nuclear generating unit, was out of service in 1994 and early 1995, and
operated at reduced capacity during the remainder of 1995 and the first three
quarters of 1996. As a result, under the MPSC capacity factor performance
standard, a disallowance of net incremental replacement power cost will be
imposed in each of the years 1994-1998 for the amount by which the Fermi 2
three-year rolling average capacity factor is less than the greater of either
the average of the top 50% of U. S. boiling water reactors or 50%. Detroit
Edison recorded a reserve for such disallowances of $31 million in 1994 and $32
million in 1995, which amounts were charged to operating revenues. For
additional information, see Notes 2 and 3 in the Annual Report.
19
<PAGE> 20
Operating revenues have increased due to the absence of Fermi 2 reserve
charges in the 1996 nine-month period, and due to a decrease in Fermi 2 reserve
charges in the 1996 twelve-month period.
OPERATING EXPENSES
FUEL AND PURCHASED POWER
Fuel and purchased power expenses increased (decreased) due to the following
factors:
<TABLE>
<CAPTION>
Three Nine Twelve
Months Months Months
------ ------ ------
(Millions)
<S> <C> <C> <C>
Net system output $ (14) $ (5) $ 9
Average unit cost (5) (32) (48)
Fermi 2 business interruption insurance - 6 59
Other 1 3 3
----- ----- ----
Total $ (18) $ (28) $ 23
===== ===== ====
</TABLE>
Net system output and average fuel and purchased power unit costs were as
follows:
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
---------------------------- ------------------------- --------------------------
1996 1995 1996 1995 1996 1995
------------- ------------- ------------ ------------ ------------ ------------
(Thousands of Megawatthours, "MWh")
<S> <C> <C> <C> <C> <C> <C>
Power plant generation
Fossil 11,052 10,830 31,208 31,517 41,328 41,961
Nuclear 1,628 1,917 4,778 3,240 6,629 3,207
Purchased power 1,190 2,018 3,177 4,724 3,876 6,077
------- ------- ------- ------- ------- -------
Net system output 13,870 14,765 39,163 39,481 51,833 51,245
======= ======= ======= ======= ======= =======
Average unit cost ($/MWh) $ 15.16 $ 15.54 $ 14.73 $ 15.54 $ 14.68 $ 15.62
======= ======= ======= ======= ======= =======
</TABLE>
Fuel and purchased power expense decreased in the three-month period due
to lower net system output, and lower average unit costs resulting from
increased usage of lower-cost western low-sulfur coal and a decrease in Fermi 2
fuel expense.
For the nine-month period, fuel and purchased power expense decreased due
to lower average unit costs resulting from increased usage of lower-cost
western low-sulfur coal and lower cost nuclear generation, and lower net system
output.
For the twelve-month period, fuel and purchased power expense increased
due to the prior-period receipt of Fermi 2 business interruption insurance and
higher net system output, partially offset by lower average unit costs
resulting from increased
20
<PAGE> 21
usage of lower cost nuclear generation and lower-cost western low-sulfur coal.
Fermi 2 was out of service in 1994 and early 1995 as a result of a
turbine-generator failure in December 1993.
OTHER OPERATION
Three Months
Other operation expense decreased due primarily to expenses recorded in
the year-earlier period for the write-off of obsolete and excess stock material
($15 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million) and Electric Power Research Institute dues ($4.8 million), lower major
storm expenses ($9 million) and lower incentive award expenses related to a
shareholder value improvement plan ($3.7 million), partially offset by higher
sales expenses ($2.7 million).
Nine Months
Other operation expense decreased due primarily to expenses recorded in
the year-earlier period for the write-off of obsolete and excess stock material
($15 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million) and Electric Power Research Institute dues ($4.8 million), lower
incentive award expenses related to a shareholder value improvement plan ($9.1
million) and lower major storm ($4 million) and injuries and damages ($3.5
million) expenses. These decreases were partially offset by higher nuclear
plant expenses ($9.1 million), lump sum payments to union employees ($4.3
million) and higher sales ($4.4 million), demand side management ($3 million),
employee retirement plan ($2.6 million) and other expenses.
Twelve Months
Other operation expense decreased due primarily to expenses recorded in
the year-earlier period for the write-off of obsolete and excess stock material
($21 million), the Ludington Pumped Storage Plant fish mortality case ($8.4
million), and Electric Power Research Institute dues ($4.8 million), lower
uncollectible expense ($6.3 million), and lower injuries and damages expense
($4.1 million). These decreases were partially offset by higher demand side
management expenses ($6 million), lump sum payments to union employees ($4.3
million) and higher sales expenses ($3.7 million).
MAINTENANCE
Three Months
Maintenance expense decreased due to lower major storm ($8.3 million),
fossil plant ($2.4 million) and nuclear plant ($1.1 million) expenses. These
decreases were partially offset by higher overhead and underground lines
support ($7.1 million), station maintenance ($1.8 million) and general property
($1.5 million) expenses.
21
<PAGE> 22
Nine Months
Maintenance expense increased due to higher overhead and underground lines
support ($22.1 million), general property ($7.7 million), station equipment
($6.7 million) and nuclear plant ($4 million) expenses, partially offset by
lower major storm expense ($2.9 million).
Twelve Months
Maintenance expense increased due to higher overhead and underground lines
support ($23.1 million), general property ($7.7 million) and station equipment
($9 million) expenses. These increases were partially offset by lower nuclear
plant ($6.7 million) and fossil plant ($5.7 million) expenses.
STEAM HEATING SPECIAL CHARGES
As the result of continuing losses in the operation of its steam heating
business, upon adoption of Statement of Financial Accounting Standards No. 121
in the fourth quarter of 1995, Detroit Edison wrote off the remaining net book
value of its steam heating plant assets of $42 million. During the third
quarter of 1996, following the completion of a review of its steam heating
operations, Detroit Edison recorded a special charge to net income of $149.2
million ($97 million after-tax). The special charge included a reserve for
steam purchase commitments during the period from 1997 through 2008 under an
agreement with the Greater Detroit Resource Recovery Facility, the retirement
and closure of a portion of the steam heating system in 1997, and an investment
of $18 million to improve service to remaining customers.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased due primarily to increases
in plant in service, including internally developed software costs.
DEFERRED FERMI 2 AMORTIZATION
Deferred Fermi 2 amortization, a non-cash item of income, was recorded
beginning with Detroit Edison'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 of deferred depreciation and return decreased
each year through
22
<PAGE> 23
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 increased due to higher payroll and property
taxes.
INCOME TAXES
Income taxes decreased due to lower pretax operating income.
OTHER INCOME AND DEDUCTIONS
OTHER INCOME AND (DEDUCTIONS) - NET
Three Months
Other deductions decreased due primarily to an increase in income from
merchandising, jobbing and contract work ($2.8 million), a decrease in
corporate contributions ($2.7 million), and a decrease in the write-off of
unamortized expenses related to the open market purchases of Mortgage Bonds
($1.2 million), partially offset by higher promotional practices expense ($1.6
million).
Nine Months
Other deductions decreased due primarily to lower promotional practices
expense ($6.2 million), expenses recorded in the year-earlier period for the
sale of accounts receivables and unbilled revenues ($3.1 million) and the
formation of a holding company ($2.6 million), a decrease in corporate
contributions ($2.7 million) and lower expenses related to merchandising,
jobbing and contract work ($1.3 million), partially offset by an increase in
the write-off of unamortized expenses related to the open market purchases of
Mortgage Bonds ($1.5 million).
Twelve Months
Other deductions decreased due primarily to expenses recorded in the
year-earlier period for the sale of accounts receivable and unbilled revenues
($5.9 million), lower promotional practices expense ($5.9 million), lower
corporate contributions ($4.8 million), a decrease in the write-off of
unamortized expenses related to the open market purchases of Mortgage Bonds
($3.7 million) and lower expenses incurred in the formation of a holding
company ($2.1 million).
23
<PAGE> 24
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.
INTEREST CHARGES
LONG-TERM DEBT
Three Months
Long-term debt interest charges were lower due to the early redemption of
Mortgage Bonds, partially offset by the issuance of QUIDS.
Nine Months and Twelve Months
Long-term debt interest charges were higher due to the issuance of QUIDS,
partially offset by the early redemption of Mortgage Bonds.
OTHER
Other interest charges were lower due primarily to lower levels of
short-term borrowings.
PREFERRED STOCK DIVIDENDS OF DETROIT EDISON
Preferred stock dividends of Detroit Edison decreased due to the
redemption of all of the outstanding Cumulative Preferred Stock, 7.68% Series,
7.45% Series and 7.36% Series and the exchange of a portion of the 7.75% Series
for QUIDS and the redemption and/or conversion of all shares of the convertible
5.50% Series.
LIQUIDITY AND CAPITAL RESOURCES
PRIVATE SECURITIES LITIGATION REFORM ACT -
FORWARD-LOOKING STATEMENTS
Certain information presented in this Quarterly Report on Form 10-Q is
based upon the expectations of the Company and Detroit Edison and, as such, is
forward-looking. The Private Securities Litigation Reform Act of 1995
encourages reporting companies to provide analyses and estimates of future
prospects and also permits reporting companies to point out that actual results
may differ from those anticipated.
24
<PAGE> 25
Actual results for the Company and Detroit Edison may differ from those
expected due to a number of variables including, but not limited to, the impact
of newly-required FERC tariffs, actual sales, the effects of competition,
pending regulatory proceedings, pending and proposed statutory changes, the
recovery of stranded costs, environmental and nuclear requirements and the
success of non-utility projects. While the Company and Detroit Edison believe
that estimates given accurately measure the expected outcome, actual results
could vary materially due to the variables mentioned as well as others.
COMPETITION
THE DETROIT EDISON COMPANY
FERC. On April 24, 1996, the FERC issued Orders 888 and 889. Order 888
requires public utilities to file open access transmission tariffs for
wholesale transmission services in accordance with non-discriminatory terms and
conditions established by the FERC. On July 9, 1996, Detroit Edison filed its
Pro-Forma Open Access Transmission Tariff in compliance with FERC Order 888.
The tariff sets forth the terms and conditions under which Detroit Edison will
supply wholesale Firm and Non-Firm Point-to-Point Transmission Service as well
as Network Integration Transmission Service (a service which allows the network
customer to integrate, economically dispatch and regulate its network resources
to serve its network load in a manner comparable to that in which the
transmission provider utilizes its transmission system to serve its native load
customers). Detroit Edison's filing also included the development and cost
support for the rates to be charged for transmission service and the various
ancillary services that are required to be offered. Order 888 permits the
recovery of stranded costs on a case by case basis. The FERC has initiated
proceedings to review Detroit Edison's tariff filing.
Effective with the filing, Detroit Edison must take transmission service
(including ancillary services) under the open access tariff for any new
wholesale sales or purchases. Existing economy energy coordination agreements
must be unbundled to take service under the transmission tariff after December
31, 1996. Effective October 1996, all bills submitted to wholesale
requirements customers must include unbundled informational rates as a line
item in order to allow customers to compare rates and evaluate alternative
contracts. By December 31, 1996, Detroit Edison, as a member of a pool, must
file a joint pool-wide pro forma tariff and must begin to take service under
that tariff for all pool transactions. Power pool agreements must be reformed
to establish open, non-discriminatory provisions and to modify any provisions
that are unduly discriminatory or preferential.
By January 3, 1997, public utilities are required by Order 889 to obtain
transmission information for wholesale transactions through a system on the
Internet. Public utilities
25
<PAGE> 26
must separate transmission operations and reliability functions from wholesale
marketing functions.
FERC has also issued a NOPR on Capacity Reservation Transmission Tariffs
("CRT"). The NOPR requested comment by October 21, 1996 on whether there are
certain disadvantages inherent in offering transmission service on both a
network and point-to-point basis and whether comparability can be better
accomplished using a single different methodology. The proposed CRT approach
suggests that no later than December 31, 1997, all pro forma point-to-point and
network service be replaced with a single point-to-point tariff that provides
for reservation-based transmission service for all jurisdictional (wholesale
sales and wholesale and retail transmission) service.
Detroit Edison is currently unable to estimate the revenue impact, if any,
of these newly required tariffs and procedures.
MPSC. On April 12, 1996, the MPSC issued a "Scheduling Order" which
required Detroit Edison and Consumers Power Company to file "applications" by
May 15, 1996 containing proposals addressing the recommendation of Michigan
Governor Engler and the Michigan Jobs Commission ("MJC") to "allow new
industrial/commercial electrical load to be negotiated directly from the
generator and wheeled over 'common' transmission" by January 1, 1997.
Detroit Edison filed its application on May 15, 1996, stating that the
MJC's report set out a framework for a transition to a competitive environment
that included six specific recommendations associated with a near term deadline
of January 1, 1997. However, the MPSC's scheduling order only sought proposals
regarding the first recommendation. Detroit Edison indicated it does not
support piecemeal implementation of the MJC's framework. Detroit Edison also
stated that, although the MPSC has no legal authority to compel Michigan
utilities to offer retail wheeling services, it would voluntarily develop a
retail wheeling program as part of a comprehensive implementation of the MJC's
recommendations, including the development of a mechanism to recover stranded
costs.
Detroit Edison also indicated that it will take some time to develop a
tariff that, among other things, identifies and separates the transmission and
distribution facilities as required by FERC Order 888. In the interim, Detroit
Edison requested ex parte authority to immediately offer an Economic Growth
Service Rider to be used as a tool to attract new business. The proposed
rider, which is still before the MPSC, contains significant price discounts for
new commercial and industrial customers.
The MPSC conducted a series of five public hearings during the months of
July and August, 1996, to provide an opportunity for the public to address the
issues surrounding the restructuring of the electric utility industry,
including, but not limited to issues raised by the recommendations of the MJC.
26
<PAGE> 27
Detroit Edison is continuing to address its competitive status and the
needs of its customers by entering into long-term (as long as 10 years) service
contracts with large commercial and industrial customers. A number of such
contracts, which must be approved by the MPSC prior to implementation, are
pending before the MPSC.
CASH GENERATION AND CASH REQUIREMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Net cash from operating activities decreased for the three-month period
due primarily to changes in current assets and liabilities. Net cash from
operating activities increased in the nine-month and twelve-month periods due
primarily to changes in current assets and liabilities, primarily as a result
of the 1995 repurchase of customer accounts receivable and unbilled revenues.
Net cash used for investing activities was higher due to increased plant
and equipment expenditures.
Net cash used for financing activities was lower in the three-month and
twelve-month periods due primarily to a decrease in funds used to reduce
short-term borrowings. Net cash used for financing activities for the
nine-month period was higher due to higher redemptions of long-term debt. Net
cash used for financing activities for Detroit Edison was higher in the
nine-month and twelve-month periods due to the cash portion of a restructuring
dividend to the Company.
ADDITIONAL INFORMATION
During the period May through September 1996, Detroit Edison purchased a
total of $56.5 million of Mortgage Bonds on the open market, consisting of
$29.5 million of 7.74% 1993 Series J, $26.0 million of 8.24% 1993 Series C and
$1 million of 8.25% 1993 Series C. These bonds have been canceled.
Detroit Edison's 1996 cash requirements for its capital expenditure
program are estimated at $482 million, of which $351 million had been expended
as of September 30, 1996.
Detroit Edison's internal cash generation is expected to be sufficient to
meet cash requirements for capital expenditures as well as scheduled long-term
debt redemptions.
Detroit Edison had short-term credit arrangements of approximately $450
million at September 30, 1996, under which no borrowings were outstanding.
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<PAGE> 28
NON-REGULATED INVESTMENTS
Expenditures for 1996 non-regulated investments are estimated at $80
million, of which $49 million had been expended at September 30, 1996.
A project financing arrangement is in place for affiliate borrowings of up
to $50 million, of which $32.3 million was outstanding at September 30, 1996.
This arrangement is supported by specific project assets.
At September 30, 1996, DTE Capital Corporation had a $200 million
Revolving Credit Agreement, backed by a Support Agreement from the Company,
under which no borrowings were outstanding.
CAPITALIZATION
The Company's capital structure as of September 30, 1996 was 46.7% common
shareholders' equity, 2.0% cumulative preferred stock of subsidiary and 51.3%
long-term debt as compared to 45.7%, 4.3% and 50.0%, respectively, at December
31, 1995.
28
<PAGE> 29
DTE ENERGY COMPANY
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
On May 28, 1996 an order was issued by the Circuit Court for Wayne County,
Michigan certifying a plaintiff class (Gilford, et al v Detroit Edison) in a
lawsuit claiming that Detroit Edison had engaged in age and racial
discrimination. Detroit Edison has requested leave to appeal the class
certification to the Michigan Court of Appeals and has, also, filed a motion
for summary disposition of the lawsuit with the Circuit Court for Wayne County.
In October, 1996, the Michigan Court of Appeals issued an order staying
proceedings in the Circuit Court and directing that immediate consideration be
given to the issue of whether to grant Detroit Edison's application for leave
to appeal. Thereafter, the Court of Appeals dissolved the stay and denied
leave for appeal. Detroit Edison has requested reconsideration of these
rulings. Detroit Edison is of the opinion that the allegations of
discrimination are without merit.
ITEM 5 - OTHER INFORMATION.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission" of the Annual
Report, Detroit Edison is subject to the regulatory jurisdiction, including
rates, of the MPSC. On September 30, 1996, Detroit Edison filed its PSCR plan
recommending a fuel adjustment for bills rendered in 1997. Fuel and purchased
power costs are expected to decrease 10.6 percent, on average, in 1997 over the
corresponding forecast for 1996. A pre-hearing conference in this matter is
scheduled for November 1996.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Conservation and
Demand-Side Management Programs" of the Annual Report, on April 11, 1994, the
MPSC issued an order authorizing Detroit Edison to collect a surcharge to
install energy conservation measures in low-income customer households. The
MPSC, at Detroit Edison's request, approved the elimination of the surcharge
in an order dated August 22, 1996.
As discussed in part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Conservation and
Demand-Side Management Programs" of the Annual Report, the MPSC in June 1988
ordered each Michigan gas and electric utility to file a biennial energy
conservation report including a three-year plan. On August 5, 1996, Detroit
Edison filed its fourth biennial plan for 1997 and beyond. In the plan,
Detroit Edison requests that it be allowed to spend in 1997 (and 1998, if
necessary) the remaining funds collected for its 1994-1996 energy conservation
programs. An MPSC order is expected by the end of 1996.
As discussed in Part I, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission - Retail Wheeling"
of the Annual Report and in Item 5 - Other Information of the Quarterly Report
for the quarter ended June 30,
29
<PAGE> 30
1996, MascoTech Forming Technologies, Inc., a Detroit Edison industrial
customer currently purchasing approximately 25 MW of electricity annually (with
the potential for an additional 6 MW annually) petitioned the MPSC to establish
a "cost based fair and pro-competitive transportation rate" for its new and
existing electric load. On August 5, 1996, in resolution of this petition
Detroit Edison and MascoTech Forming Technologies, Inc. entered into a
long-term Large Customer Contract. The MPSC issued an order on September 12,
1996 approving the contract and an order was issued on October 7, 1996,
dismissing the MascoTech direct access case.
As discussed in Part 1 - Items 1 and 2 - Business and Properties,
"Environmental Matters - Water" of the Annual Report and Item 5 - Other
Information of the Quarterly Report for the quarter ended June 30, 1996,
National Pollution Discharge Elimination System ("NPDES") permits for Detroit
Edison's power plants are issued by the MDEQ pursuant to delegation by the EPA
under the federal Clean Water Act. The NPDES permit for the Fermi 2 Power
Plant was issued on May 31, 1996. On July 24, an anti-nuclear power group
filed a petition for a contested case hearing challenging the issuance of the
permit. In September, 1996, the MDEQ filed a briefing memo recommending
approval of the hearing request. An October 7, 1996 letter from the
Administrative Law Judge announced the matter will now be moved to hearing.
While it is unknown what the outcome of the hearing will be, the Fermi 2 permit
remains in effect. Permit renewal applications for six other plants have been
submitted (in 1994 and earlier); those existing expired permits remain
effective until new permits are issued or denied.
As discussed in Part 1 - Items 1 and 2 - Business and Properties,
"Environmental Matters - Wastes and Toxic Substances" of the Annual Report and
Item 5 - Other Information of the Quarterly Report for the quarter ended March
31, 1996, in April, 1996, the MDEQ conducted an Integrated Assessment on
Detroit Edison owned property, formerly known as the Monroe City Landfill,
located next to the Monroe Power Plant. The site was on the State of
Michigan's list of contaminated sites and the Comprehensive Environmental
Response, Compensation and Liability Act list. In October, 1996, the company
received a copy of the report and a letter from the MDEQ indicating that it was
recommending that the site be designated "No Further Remedial Action Planned."
An all time peak demand of 10,337 MW was experienced for Detroit Edison's
system on August 7, 1996. The new peak, which included certain loads on the
Company's interruptible rates, was served using a combination of installed
generation, long-term purchases, and seasonal capacity purchases without any
loss of power for firm customers. The previous peak was 10,049 MW set in
August 1995.
30
<PAGE> 31
QUARTERLY REPORT ON FORM 10-Q FOR
THE DETROIT EDISON COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED).
See pages 9 through 15.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
See the Company's and Detroit Edison's "Item 2 - Management's Discussion
and Analysis of Financial Condition and Results of Operations," which is
incorporated herein by this reference.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
See the Company's "Item 1 - Legal Proceedings," which is incorporated
herein by this reference.
ITEM 5 - OTHER INFORMATION.
By letter dated October 9, 1996, the Nuclear Regulatory Commission
requested all reactor licensees, including Detroit Edison, to submit
information concerning the adequacy and availability of nuclear power plant
design basis information. This information is due March 1997. Detroit Edison
will make its report submission on a timely basis.
See the Company's "Item 5 - Other Information," which is incorporated
herein by this reference.
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<PAGE> 32
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(i) Exhibits filed herewith.
Exhibit
Number
4-177 - First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture.
11-5 - DTE Energy Company and Subsidiary Companies Primary and Fully
Diluted Earnings Per Share of Common Stock.
15-3 - Awareness Letter of Deloitte & Touche LLP regarding their report
dated November 7, 1996.
27-7 - Financial Data Schedule for the period ended September 30, 1996
for the Company.
27-8 - Financial Data Schedule for the period ended September 30, 1996
for Detroit Edison.
99-13 - Fourth Amendment, dated as of August 29, 1996, to $200,000,000
364-Day Credit Agreement, dated as of September 1, 1990, as
amended, among Detroit Edison, Renaissance, the Banks party
thereto and Barclays Bank, PLC, New York Branch, as Agent.
99-14 - Fourth Amendment, dated as of September 1, 1996, to $200,000,000
Multi-Year (formerly Three-Year) Credit Agreement, dated as of
September 1, 1993, as amended among Detroit Edison, Renaissance,
the Banks party thereto and Barclays Bank, PLC, New York Branch,
as Agent.
(ii) Exhibits incorporated herein by reference.
3(a) - Restated Articles of Incorporation of Detroit Edison, 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).
32
<PAGE> 33
Exhibit
Number
3(b) - Certificate containing resolution of the Detroit Edison 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).
3(c) - Certificate containing resolution of the Detroit Edison 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).
3(d) - Amended and Restated Articles of Incorporation of the Company,
dated December 13, 1995 (Exhibit 3A (3.1) to the Company's Form 8-B
filed January 2, 1996, File No. 1-11607).
3(e) - Agreement and Plan of Exchange (Exhibit 1(2) to the Company's Form
8-B filed January 2, 1996, File No. 1-11607).
3(f) - Amended and Restated By-Laws, dated as of February 26, 1996, of
the Company (Exhibit 3-3 to Form 10-K for year ended December 31,
1995).
3(g) - Amended and Restated By-Laws, dated as of February 26, 1996, of
Detroit Edison (Exhibit 3-4 to Form 10-K for year ended December
31, 1995).
4(a) - Mortgage and Deed of Trust, dated as of October 1, 1924, between
Detroit Edison (File No. 1-2198) and Bankers Trust Company as
Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures
supplemental thereto, dated as of dates indicated below, and filed
as exhibits to the filings as set forth below:
September 1, 1947 Exhibit B-20 to Registration No. 2-7136
October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096
November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160
January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595
June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643
June 30, 1982 Exhibit 4-30 to Registration No. 2-78941
August 15, 1982 Exhibit 4-32 to Registration No. 2-79674
October 15, 1985 Exhibit 4-170 to Form 10-K for year ended
December 31, 1994
33
<PAGE> 34
Exhibit
Number
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 4-15 to Form 10-K for year ended
December 31, 1995
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)
34
<PAGE> 35
Exhibit
Number
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
August 1, 1995 Exhibit 4-174 to Form 10-Q for quarter ended
September 30, 1995.
4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993
(Exhibit 4-152 to Registration No. 33-50325).
4(c) - First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit
4-153 to Registration No. 33-50325).
4(d) - Second Supplemental Note Indenture, dated as of September 15, 1993
(Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993).
4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994
(Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994).
4(f) - First Amendment, dated as of December 12, 1995, to Third Supplemental
Note Indenture, dated as of August 15, 1994 (Exhibit 4-12 to
Registration No. 333-00023).
4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995
(Exhibit 4-175 to Form 10-Q for quarter ended September 30, 1995).
4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996
(Exhibit 4-14 to Form 10-K for year ended December 31, 1995).
4(i) - 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).
35
<PAGE> 36
Exhibit
Number
4(j) - Support Agreement, dated as of March 8, 1996, between the Company
and Detroit Edison (Exhibit 4-176 to Form 10-Q for quarter ended
March 31, 1996).
99(a) - Belle River Participation Agreement between Detroit Edison 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 Detroit Edison 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 Detroit Edison and Renaissance (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 Detroit Edison 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 Detroit Edison and
Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent (Exhibit 99-12 to Registration No.
33-50325).
99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among Detroit
Edison, Renaissance, 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(h) - Third Amendment, dated as of March 8, 1996, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, as amended,
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-11 to
Form 10-Q for quarter ended March 31, 1996).
36
<PAGE> 37
Exhibit
Number
99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993,
among Detroit Edison, Renaissance and Barclays Bank PLC, New York
Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325).
99(j) - First Amendment, dated as of September 1, 1994, to $200,000,000
Three-Year Credit Agreement, dated as of September 1, 1993, among
Detroit Edison, Renaissance, 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).
99(k) - Third Amendment, dated as of March 8, 1996, to $200,000,000
Three-Year Credit Agreement, dated September 1, 1993, as amended
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-12 to
Form 10-Q for quarter ended March 31, 1996).
99(l) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance
(Exhibit 99-9 to Registration No. 33-50325).
99(m) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance (Exhibit 99-10 to Registration No.
33-50325).
99(n) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance (Exhibit 99-11 to Registration No.
33-50325).
99(o) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and Renaissance (Exhibit 99-21 to Form
10-Q for quarter ended September 30, 1994).
99(p) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of
October 4, 1988, between Detroit Edison and Renaissance (Exhibit
99-10 to Form 10-Q for quarter ended March 31, 1996).
99(q) - Credit Agreement, dated as of March 1, 1996 among DTE Capital
Corporation, the Initial Lenders named therein, and Citibank, N.A.,
as Agent (Exhibit 99-9 to Form 10-Q for quarter ended March 31,
1996).
37
<PAGE> 38
(b) Reports on Form 8-K
The Registrants each filed a Current Report on Form 8-K, dated
September 9, 1996, during the third quarter of 1996 in which it was
disclosed that Detroit Edison was recording an additional non-cash
charge to net income based upon a review of steam heating operations.
38
<PAGE> 39
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.
DTE ENERGY COMPANY
--------------------------------------
(Registrant)
Date November 7, 1996 /s/ SUSAN M. BEALE
---------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date November 7, 1996 /s/ RONALD W. GRESENS
----------------------------------------
Ronald W. Gresens
Vice President and Controller
39
<PAGE> 40
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE DETROIT EDISON COMPANY
---------------------------------------
(Registrant)
Date November 7, 1996 /s/ SUSAN M. BEALE
---------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date November 7, 1996 /s/ RONALD W. GRESENS
----------------------------------------
Ronald W. Gresens
Vice President and Controller
40
<PAGE> 41
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY (FILE NO. 1-11607) AND
THE DETROIT EDISON COMPANY (FILE NO. 1-2198)
EXHIBIT INDEX
(i) Exhibits filed herewith.
Exhibit Page No.
Number --------
4-177 - First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture.
11-5 - DTE Energy Company and Subsidiary Companies Primary
and Fully Diluted Earnings Per Share of Common Stock.
15-3 - Awareness Letter of Deloitte & Touche LLP regarding
their report dated November 7, 1996.
27-7 - Financial Data Schedule for the period ended
September 30, 1996 for the Company.
27-8 - Financial Data Schedule for the period ended
September 30, 1996 for Detroit Edison.
99-13 - Fourth Amendment, dated as of August 29, 1996, to
$200,000,000 364-Day Credit Agreement, dated as of September 1,
1990, as amended, among Detroit Edison, Renaissance, the Banks
party thereto and Barclays Bank, PLC, New York Branch, as Agent.
99-14 - Fourth Amendment, dated as of September 1, 1996, to
$200,000,000 Multi-Year (formerly Three-Year) Credit Agreement,
dated as of September 1, 1993, as amended among Detroit Edison,
Renaissance, the Banks party thereto and Barclays Bank, PLC, New
York Branch, as Agent.
(ii) Exhibits incorporated by reference. See Pages _____
through ____ for
location of Exhibits
Incorporated by
Reference
3(a) - Restated Articles of Incorporation of Detroit Edison,
as filed December 10, 1991 with the State of Michigan, Department
of Commerce - Corporation and Securities Bureau.
<PAGE> 42
Exhibit
Number
- -------
3(b) - Certificate containing resolution of the Detroit
Edison 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.
3(c) - Certificate containing resolution of the Detroit
Edison 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.
3(d) - Amended and Restated Articles of Incorporation of the
Company, dated December 13, 1995.
3(e) - Agreement and Plan of Exchange.
3(f) - Amended and Restated By-Laws, dated as of February
26, 1996, of the Company.
3(g) - Amended and Restated By-Laws, dated as of February
26, 1996, of Detroit Edison.
4(a) - Mortgage and Deed of Trust, dated as of October 1,
1924, between Detroit Edison 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
<PAGE> 43
Exhibit
Number
- -------
November 30, 1987
July 15, 1989
December 1, 1989
February 15, 1990
November 1, 1990
April 1, 1991
May 1, 1991
May 15, 1991
September 1, 1991
November 1, 1991
January 15, 1992
February 29, 1992
April 15, 1992
July 15, 1992
July 31, 1992
November 30, 1992
January 1, 1993
March 1, 1993
March 15, 1993
April 1, 1993
April 26, 1993
May 31, 1993
June 30, 1993
(1993 Series AP)
June 30, 1993
(1993 Series H)
September 15, 1993
March 1, 1994
June 15, 1994
August 15, 1994
December 1, 1994
August 1, 1995
4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993.
4(c) - First Supplemental Note Indenture, dated as of June 30, 1993.
4(d) - Second Supplemental Note Indenture, dated as of September 15,
1993.
4(e) - Third Supplemental Note Indenture, dated as of August 15, 1994.
4(f) - First Amendment, dated as of December 12, 1995, to Third
Supplemental Note Indenture, dated as of August 15, 1994.
<PAGE> 44
Exhibit
Number
- -------
4(g) - Fourth Supplemental Note Indenture, dated as of August 15, 1995.
4(h) - Fifth Supplemental Note Indenture, dated as of February 1, 1996.
4(i) - 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.
4(j) - Support Agreement, dated as of March 8, 1996, between the
Company and Detroit Edison.
99(a) - Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982.
99(b) - Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency,
dated as of December 1, 1982.
99(c) - 1988 Amended and Restated Loan Agreement, dated as of October
4, 1988, between Detroit Edison and Renaissance.
99(d) - First Amendment to 1988 Amended and Restated Loan Agreement,
dated as of February 1, 1990, between Detroit Edison and
Renaissance.
99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement,
dated as of September 1, 1993, between Detroit Edison and
Renaissance.
99(f) - $200,000,000 364-Day Credit Agreement, dated as of September 1,
1993, among Detroit Edison, Renaissance and Barclays Bank PLC,
New York Branch, as Agent.
99(g) - First Amendment, dated as of August 31, 1994, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
<PAGE> 45
Exhibit
Number
- -------
99(h) - Third Amendment, dated as of March 8, 1996, to $200,000,000
364-Day Credit Agreement, dated September 1, 1993, as amended,
among Detroit Edison, Renaissance, 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 Detroit Edison, Renaissance and Barclays Bank PLC, New York
Branch, as Agent.
99(j) - First Amendment, dated as of September 1, 1994, to $200,000,000
Three-Year Credit Agreement, dated as of September 1, 1993, among
Detroit Edison, Renaissance, the Banks party thereto and Barclays
Bank, PLC, New York Branch, as Agent.
99(k) - Third Amendment, dated as of March 8, 1996, to $200,000,000
Three-Year Credit Agreement, dated September 1, 1993, as amended
among Detroit Edison, Renaissance, the Banks party thereto and
Barclays Bank, PLC, New York Branch, as Agent.
99(l) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance.
99(m) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance.
99(n) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance.
99(o) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract, dated October 4,
1988, between Detroit Edison and Renaissance.
99(p) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and
Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of
October 4, 1988, between Detroit Edison and Renaissance.
99(q) - Credit Agreement, dated as of March 1, 1996 among DTE Capital
Corporation, the Initial Lenders named therein, and Citibank, N.A.,
as Agent.
<PAGE> 1
EXHIBIT 4.177
============================================================
THE DETROIT EDISON COMPANY
AND
BANKERS TRUST COMPANY
Trustee
----------------------
FIRST AMENDMENT TO SECOND SUPPLEMENTAL INDENTURE
Dated as of August 15, 1996
----------------------
Amending the Collateral Trust Indenture
Dated as of June 30, 1993
and the Second Supplemental Indenture
Dated as of September 15, 1993
============================================================
<PAGE> 2
FIRST AMENDMENT, dated as of the 15th day of August, 1996, to the
SECOND SUPPLEMENTAL INDENTURE, dated as of the 15th day of September, 1993,
between THE DETROIT EDISON COMPANY, a corporation organized and existing under
the laws of the State of Michigan (the "Company"), and BANKERS TRUST COMPANY, a
New York banking corporation, having its principal office in The City of New
York, New York, as trustee (the "Trustee");
WHEREAS, the Company has heretofore executed and delivered to the
Trustee a Collateral Trust Indenture dated as of June 30, 1993 (the "Original
Indenture" and, together with the First Supplemental Indenture dated as of June
30, 1993, the Second Supplemental Indenture dated as of September 15, 1993 (the
"Second Supplemental Indenture" and, as amended hereby, the "Amended Second
Supplemental Indenture"), the Third Supplemental Indenture dated as of August
15, 1994, as amended on December 12, 1995, the Fourth Supplemental Indenture
dated as of August 15, 1995, and the Fifth Supplemental Indenture, dated as of
February 1, 1996, the "Indenture") providing for the issuance by the Company
from time to time of its secured notes to be issued in one or more series (in
the Original Indenture and herein called the "Securities"); and
WHEREAS, the Company, in the exercise of the power and authority
conferred upon and reserved to it under the provisions of the Original Indenture
and pursuant to appropriate resolutions of the Board of Directors, has duly
determined to make, execute and deliver to the Trustee this First Amendment to
the Second Supplemental Indenture to the Original Indenture in order to amend
the form and terms of the series of Securities designated as the "Remarketed
Secured Notes 1993 Series B Due 2033" with the consent of the Holders of not
less than a majority in principal amount of the Outstanding Securities of such
series as permitted by Section 1002 of the Original Indenture; and
WHEREAS, the Holders of not less than a majority in principal amount
of the Notes (as defined herein) outstanding as of 12:00 noon, New York City
time, on August 15, 1996, the record date for such purpose, have consented to
the amendments set forth herein; and
WHEREAS, all things necessary to make this First Amendment to the
Second Supplemental Indenture a valid, binding and legal agreement of the
Company, have been done;
NOW, THEREFORE, THIS FIRST AMENDMENT TO THE SECOND SUPPLEMENTAL
INDENTURE WITNESSETH that, in order to amend the terms of the series of
Securities designated as the "Remarketed Secured Notes 1993 Series B Due 2033",
and for and in consideration of the premises and of the covenants contained in
the Original Indenture and in this Amended Second Supplemental Indenture and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, it is mutually covenanted and agreed as follows:
1
<PAGE> 3
ARTICLE ONE
DEFINITIONS AND OTHER
PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions. Each capitalized term that is used herein
and is defined in the Original Indenture or the Second Supplemental Indenture
shall have the meaning specified in the Original Indenture or the Second
Supplemental Indenture, as the case may be, unless such term is otherwise
defined herein.
"Beneficial Owner" shall mean, for Notes in book-entry form, the
person who acquires an interest in the Notes which is reflected on the records
of DTC through its participants.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions located in the State
of Michigan or in the state in which the principal corporate trust office of the
Trustee is located, are authorized or obligated by or pursuant to law or
executive order to close; provided, however, that with respect to Notes in the
Long Term Rate Mode as to which LIBOR is an applicable Interest Rate Basis, such
day is also a London Business Day (as hereinafter defined). "London Business
Day" means (i) if the Index Currency (as hereinafter defined) is other than
European Currency Units ("ECU"), any day on which dealings in such Index
Currency are transacted in the London interbank market or (ii) if the Index
Currency is ECU, any day that does not appear as an ECU non-settlement day on
the display designated as "ISDE" on the Reuter Monitor Money Rates Service (or a
day so designated by the ECU Banking Association) or, if ECU non-settlement days
do not appear on the page (and are not so designated), is not a day on which
payments in ECU cannot be settled in the international interbank market.
"Commercial Paper Term Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a
periodic basis which shall not be less than one calendar day nor more than 364
consecutive calendar days and interest is paid as provided for such Interest
Rate Mode in Section 203 hereof.
"Daily Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a daily
basis and interest is paid as provided for such Interest Rate Mode in Section
203 hereof.
"Fixed Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is determined and in
effect until the Stated Maturity of such Note and interest is paid as provided
for such Interest Rate Mode in Section 203 hereof.
2
<PAGE> 4
Floating Interest Rate Notice" has the meaning specified in Section
203 hereof. The form of Floating Rate Interest Notice is set forth as Exhibit D
to this First Amendment to the Second Supplemental Indenture.
"Floating Rate Maximum Interest Rate" and "Floating Rate Minimum
Interest Rate" have the respective meanings specified in Section 203 hereof.
"Index Maturity" means the period to maturity of the instrument or
obligation with respect to which the related Interest Rate Basis or Bases will
be calculated.
"Interest Determination Date" has the meaning specified in Section 203
hereof.
"Interest Rate Adjustment Date" means for a particular Interest Rate
Period in any Interest Rate Mode, each date, which shall be a Business Day, on
which interest and, in the case of a floating interest rate, the Spread (if any)
and the Spread Multiplier (if any) on the Notes subject thereto commences to
accrue at the rate determined and announced by the applicable Remarketing Agent
for such Interest Rate Period and for Notes bearing interest at the Initial
Interest Rate (as hereinafter defined), the Business Day following the
expiration of the Initial Interest Rate Period (as hereinafter defined).
"Interest Rate Basis" has the meaning specified in Section 203 hereof.
"Interest Rate Mode" means the mode in which the Interest Rate on a
Note is being determined, i.e., a Commercial Paper Term Mode, a Daily Interest
Rate Mode, a Weekly Interest Rate Mode, the Long Term Rate Mode or the Fixed
Interest Rate Mode.
"Interest Rate Period" means, with respect to any Note, the period of
time commencing on the Interest Rate Adjustment Date to, but not including the
immediately succeeding Interest Rate Adjustment Date during which such Note
bears interest at a particular fixed interest rate or floating interest rate.
"Interest Reset Date", "Initial Interest Reset Date" and "Interest
Reset Period" have the respective meanings specified in Section 203 hereof.
"Liquidity Provider" means, any bank or other credit provider whose
obligations such as those under the Standby Note Purchase Agreement with respect
to any Notes are exempt from registration under the Securities Act of 1933, as
amended, with long term senior debt ratings from Standard & Poor's Corporation
and Moody's Investors Service, Inc. at least equal to those of the Company as of
the date of the Standby Note Purchase Agreement, and a minimum combined capital
and surplus of at least $50,000,000, that has entered into a Standby Note
Purchase Agreement with the Company for the purpose of purchasing unremarketed
Notes on any Interest Rate Adjustment Date.
3
<PAGE> 5
"Long Term Rate Mode" means, with respect to any Note, the Interest
Rate Mode in which the interest rate on such Note is reset in a Long Term Rate
Period and interest is paid as provided for such Interest Rate Mode in Section
203 hereof.
"Long Term Rate Period" means, with respect to any Note, any period of
more than 364 days and less than the Stated Maturity of such Note.
"Maximum Rate" means that rate of interest equal to fifteen percent
(15%) per annum or such higher rate as may be established from time to time by
the Board of Directors of the Company.
"Notes" or "Note" have the meaning specified in Section 201.
"Optional Redemption" means the redemption of any Note prior to its
maturity at the option of the Company as described herein.
"Principal Financial Center" means the capital city of the country
issuing the Index Currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs
and ECUs, the Principal Financial Center shall be The City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
"Remarketing Agent" means such agent or agents, including any standby
remarketing agent (each a "Standby Remarketing Agent"), as the Company may
appoint from time to time for the purpose of remarketing of the Notes, as set
forth in the remarketing agreement which the Company shall enter into prior to
the remarketing of such Notes.
"Spread" means, with respect to any Long Term Rate Period for any
Note, the number of basis points to be added to or subtracted from the related
Interest Rate Basis or Bases applicable to a Long Term Rate Period for such
Note.
"Spread Multiplier" means the percentage of the related Interest Rate
Basis or Bases applicable to a Long Term Rate Period by which such Interest Rate
Basis or Bases will be multiplied to determine the applicable interest rate from
time to time for such Long Term Rate Period.
"Standby Note Purchase Agreement" means the agreement which the
Company may, at its option, enter into from time to time with a Liquidity
Provider for the purpose of purchasing unremarketed Notes.
4
<PAGE> 6
"Weekly Interest Rate Mode" means, with respect to any Note, the
Interest Rate Mode in which the interest rate on such Note is reset on a
periodic basis approximating one week and interest is paid as provided for such
Interest Rate Mode in Section 203 hereof.
The foregoing Section 101 supersedes Section 101 of the Second
Supplemental Indenture in its entirety.
Section 102. Section References. Each reference to a particular
section set forth in this First Amendment to the Second Supplemental Indenture
shall, unless the context otherwise requires, refer to this First Amendment to
the Second Supplemental Indenture.
ARTICLE TWO
TITLE AND TERMS OF THE NOTES
Section 201. Title of the Notes; Amendments. This First Amendment to
the Second Supplemental Indenture hereby amends the series of Securities
designated as the "Remarketed Secured Notes 1993 Series B Due 2033" of the
Company (each referred to herein as a "Note" and collectively as the "Notes").
For purposes of the Original Indenture, the Notes shall constitute a single
series of Securities.
Section 202. Variations in Terms of Notes. Subject to the terms and
conditions set forth in the Original Indenture and in the Amended Second
Supplemental Indenture, the terms of any particular Note may vary from the terms
of any other Note as contemplated by Section 301 of the Original Indenture, and
such terms for a particular Note will be set forth in such Note as delivered to
the Trustee or an Authenticating Agent for authentication pursuant to Section
303 of the Original Indenture.
Section 203. Interest, Interest Rates and Interest Rate Modes. The
Notes will initially bear interest at 4 5/8% per annum (the "Initial Interest
Rate") through August 14, 1996 (the "Initial Interest Rate Period").
Thereafter, each Note at the option of the Company will bear interest in the
Commercial Paper Term Mode, the Daily Interest Rate Mode, the Weekly Interest
Rate Mode, the Long Term Rate Mode or may be permanently converted to the Fixed
Interest Rate Mode. Each Note may bear interest in the same or a different
Interest Rate Mode from other Notes. The interest rate for the Notes will be
established periodically as described herein by the applicable Remarketing
Agent.
Interest will be payable on any Note at Maturity and (i) bearing
interest at the Initial Interest Rate, on the date or dates set forth on the
face thereof; (ii) for any Interest Rate Period in the Commercial Paper Term
Mode, on the Interest Rate Adjustment Date commencing
5
<PAGE> 7
the next succeeding Interest Rate Period for such Note and on such other dates
(if any) as will be established upon conversion of such Note to the Commercial
Paper Term Mode or upon remarketing of the Note in a new Interest Rate Period
in the Commercial Paper Term Mode and set forth in the applicable Note; (iii)
in the Daily or Weekly Interest Rate Mode, on the first Business Day of each
month (unless such day is less than 11 days after conversion to such Interest
Rate Mode, in which case interest will be payable on the first Business Day of
the next succeeding month); and (iv) in the Long Term Rate Mode or Fixed
Interest Rate Mode, at least semiannually on such dates as will be established
upon conversion of such Note to the Long Term Rate Mode (or upon remarketing of
the Note in a new Interest Rate Period in the Long Term Rate Mode, as the case
may be) or Fixed Interest Rate Mode and set forth in the applicable Note in the
case of a fixed interest rate, or as described below under "Floating Interest
Rates" in the case of a floating interest rate, and on the Interest Rate
Adjustment Date commencing the next succeeding Interest Rate Period, in the
case of Notes in the Long Term Rate Mode. Such interest will be payable to the
holder thereof as of the related Record Date, which, for any Note (x) in the
Daily or Weekly Interest Rate Mode, is the last calendar day of the month
preceding an Interest Payment Date; (y) in the Commercial Paper Term Mode, is
the Business Day prior to the related Interest Payment Date; and (z) bearing
interest at the Initial Interest Rate or in the Long Term Rate Mode or Fixed
Interest Rate Mode, is 15 days prior to the related Interest Payment Date. If
any Interest Payment Date would otherwise be a day that is not a Business Day,
such Interest Payment Date will be postponed to the next succeeding Business
Day, and no interest will accrue on such payment for the period from and after
such Interest Payment Date to the date of such payment on the next succeeding
Business Day. Interest on Notes bearing interest in the Daily or Weekly
Interest Rate Mode, the Commercial Paper Term Mode or at a floating interest
rate during a Long Term Rate Period will be computed on the basis of actual
days elapsed over 360; provided that, if an applicable Interest Rate Basis is
the CMT Rate or Treasury Rate (each as defined below), interest will be
computed on the basis of actual days elapsed over the actual number of days in
the year. Interest on Notes bearing interest at a fixed rate in the Long Term
Rate Mode or Fixed Interest Rate Mode will be computed on the basis of a year
of 360 days consisting of twelve 30-day months. Interest on Notes at the
Initial Interest Rate will be computed on the basis of (a) actual days elapsed
over 360 if the Initial Interest Rate Period is less than one year or (b) a
year of 360 days consisting of twelve 30-day months if the Initial Interest
Rate Period is one year or more.
Determination of Interest Rates.
General. The interest rate and, in the case of a floating interest rate,
the Spread (if any) and the Spread Multiplier (if any) for any Note will be
established by the applicable Remarketing Agent in a remarketing as described in
Section 206 hereof or otherwise not later than the Interest Rate Adjustment Date
for such Note as the minimum rate of interest and, in the case of a floating
interest rate, Spread (if any) and Spread Multiplier (if any) necessary in the
judgment of such Remarketing Agent to produce a par bid in the secondary market
for such Note on the
6
<PAGE> 8
date the interest rate is established. Such rate will be effective for the
next succeeding Interest Rate Period for such Note commencing on such Interest
Rate Adjustment Date.
In the event that (i) the applicable Remarketing Agent has been
removed or has resigned and no successor has been appointed, or (ii) such
Remarketing Agent has failed to announce the appropriate interest rate, Spread,
if any, or Spread Multiplier, if any, as the case may be, on the Interest Rate
Adjustment Date for any Note for whatever reason, or (iii) the appropriate
interest rate, Spread, if any, or Spread Multiplier, if any, as the case may be,
or Interest Rate Period cannot be determined for any Note for whatever reason,
all such Notes for which such Remarketing Agent is responsible for remarketing
shall be automatically converted to the Commercial Paper Term Mode with an
Interest Rate Period of generally seven days, determined as provided below under
"Interest Rate Modes - Commercial Paper Term Period", and the rate of interest
thereon shall be equal to the rate per annum announced by NBD Bank, or such
other nationally recognized bank located in the United States as the Company may
select, as its prime lending rate, (such rate of interest being referred to
herein as the "Special Interest Rate").
The interest rate on the Notes shall not exceed the Maximum Rate.
The Trustee shall, upon request of any Beneficial Owner of a Note,
advise such Beneficial Owner or the applicable Remarketing Agent of the interest
rate and, in the case of a floating interest rate, the Interest Rate Basis or
Bases, Spread (if any) and Spread Multiplier (if any), and in each case the
other terms applicable to such Beneficial Owner's Notes for the next Interest
Rate Period. Neither the Trustee nor the Company will otherwise be required to
advise Beneficial Owners of the applicable interest rate.
Floating Interest Rates.
While any Note bears interest in the Long Term Rate Mode, the Company
may elect a floating interest rate by providing notice, which will be in or
promptly confirmed in writing (which includes facsimile or appropriate
electronic media), received by the Trustee and the Remarketing Agent for such
Note (the "Floating Interest Rate Notice") not less than ten (10) days prior to
the Interest Rate Adjustment Date for such Long Term Rate Period. The Floating
Interest Rate Notice must identify by CUSIP number or otherwise the portion of
the Note to which it relates and state the Long Term Rate Period therefor to
which it relates. Each Floating Interest Rate Notice must also state the
Interest Rate Basis or Bases, the Initial Interest Reset Date, the Interest
Reset Period and Dates, the Interest Payment Period and Dates, the Index
Maturity and the Floating Rate Maximum Interest Rate and/or Floating Rate
Minimum Interest Rate, if any. If one or more of the applicable Interest Rate
Bases is LIBOR or the CMT Rate, the Floating Interest Rate Notice shall also
specify the Index Currency and Designated LIBOR Page or the Designated CMT
Maturity Index and Designated CMT Telerate Page, respectively.
7
<PAGE> 9
If any Note bears interest at a floating rate in a Long Term Rate Period,
such Note shall bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if any,
and/or (b) multiplied by the Spread Multiplier, if any, in each case as
specified by the Remarketing Agent and recorded in Annex A to such Note.
Commencing on the Interest Rate Adjustment Date for such Long Term Rate Period,
the rate at which interest on such Note shall be payable shall be reset as of
each Interest Reset Date during such Long Term Rate Period specified in the
applicable Floating Interest Rate Notice.
The applicable floating interest rate on any Note during any Long Term Rate
Period will be determined by reference to the applicable Interest Rate Basis or
Interest Rate Bases, which may include (i) the CD Rate, (ii) the CMT Rate, (iii)
the Federal Funds Rate, (iv) LIBOR, (v) the Prime Rate, (vi) the Treasury Rate,
or (vii) such other Interest Rate Basis or interest rate formula as may be
specified in the applicable Floating Interest Rate Notice.
Unless otherwise specified in the applicable Floating Interest Rate Notice,
the interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or
in the applicable Floating Interest Rate Notice, the interest rate in effect on
each day shall be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as hereinafter defined)
immediately preceding such Interest Reset Date or (ii) if such day is not an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date. If
any Interest Reset Date would otherwise be a day that is not a Business Day,
such Interest Reset Date will be postponed to the next succeeding Business Day,
unless LIBOR is an applicable Interest Rate Basis and such Business Day falls in
the next succeeding calendar month, in which case such Interest Reset Date will
be the immediately preceding Business Day. In addition, if the Treasury Rate is
an applicable Interest Rate Basis and the Interest Determination Date would
otherwise fall on an Interest Reset Date, then such Interest Reset Date will be
postponed to the next succeeding Business Day.
The applicable Floating Interest Rate Notice will specify whether the rate
of interest will be reset daily, weekly, monthly, quarterly, semiannually or
annually or on such other specified basis (each, an "Interest Reset Period") and
the dates on which such rate of interest will be reset (each, an "Interest Reset
Date"). Unless otherwise specified in the applicable Floating Interest Rate
Notice, the Interest Reset Dates will be, in the case of a floating interest
rate which resets: (i) daily, each Business Day; (ii) weekly, the Wednesday of
each week (unless the Treasury Rate is an applicable Interest Rate Basis, in
which case the Tuesday of each week except as described below); (iii) monthly,
the third Wednesday of each month; (iv) quarterly, the third Wednesday of March,
June, September and December of each year, (v) semiannually, the third Wednesday
of the two months specified in the applicable Floating Interest Rate Notice; and
(vi) annually, the third Wednesday of the month specified in the applicable
Floating Interest Rate Notice.
8
<PAGE> 10
The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Federal Funds Rate and the Prime Rate will be the second Business Day
immediately preceding the applicable Interest Reset Date; and the "Interest
Determination Date" with respect to LIBOR shall be the second London Business
Day immediately preceding the applicable Interest Reset Date, unless the Index
Currency is British pounds sterling, in which case the "Interest Determination
Date" will be the applicable Interest Reset Date. The "Interest Determination
Date" with respect to the Treasury Rate shall be the day in the week in which
the applicable Interest Reset Date falls on which day Treasury Bills (as defined
below) are normally auctioned (Treasury Bills are normally sold at an auction
held on Monday of each week, unless that day is a legal holiday, in which case
the auction is normally held on the following Tuesday, except that such auction
may be held on the preceding Friday); provided, however, that if an auction is
held on the Friday of the week preceding the applicable Interest Reset Date, the
"Interest Determination Date" shall be such preceding Friday. If the interest
rate of any Note is a floating interest rate determined with reference to two or
more Interest Rate Bases specified in the applicable Floating Interest Rate
Notice, the "Interest Determination Date" pertaining to the Note shall be the
most recent Business Day which is at least two Business Days prior to the
applicable Interest Reset Date on which each Interest Rate Basis is
determinable. Each Interest Rate Basis shall be determined as of such date, and
the applicable interest rate shall take effect on the related Interest Reset
Date.
Either or both of the following may also apply to the floating interest
rate on any Note for a Long Term Rate Period: (i) a Floating Rate Maximum
Interest Rate, or ceiling, that may accrue during any Interest Reset Period and
(ii) a Floating Rate Minimum Interest Rate, or floor, that may accrue during any
Interest Reset Period. In addition to any Floating Rate Maximum Interest Rate
that may apply, the interest rate on any Note will in no event be higher than
the Maximum Rate established by the Company or the maximum rate permitted by New
York law, as the same may be modified by United States laws of general
application.
Except as provided below or in the applicable Floating Interest Rate
Notice, interest will be payable, in the case of floating interest rates which
reset: (i) daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified in the applicable Floating Interest Rate Notice; (ii) quarterly, on
the third Wednesday of March, June, September and December of each year; (iii)
semiannually, on the third Wednesday of the two months of each year specified in
the applicable Floating Interest Rate Notice; and (iv) annually, on the third
Wednesday of the month of each year specified in the applicable Floating
Interest Rate Notice and, in each case, on the Business Day immediately
following the applicable Long Term Rate Period. If any Interest Payment Date
for the payment of interest at a floating rate (other than following the end of
the applicable Long Term Rate Period) would otherwise be a day that is not a
Business Day, such Interest Payment Date will be postponed to the next
succeeding Business Day, except that if LIBOR is an applicable Interest Rate
Basis and such Business Day falls in the next succeeding calendar month, such
Interest Payment Date will be the immediately preceding Business Day.
9
<PAGE> 11
All percentages resulting from any calculation of floating interest rates
will be rounded to the nearest one hundred-thousandth of a percentage point,
with five one-millionths of a percentage point rounded upwards (e.g., 9.876545%
(or .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used
in or resulting from such calculation will be rounded, in the case of United
States dollars, to the nearest cent or, in the case of a foreign currency or
composite currency, to the nearest unit (with one-half cent or unit being
rounded upwards).
Accrued floating rate interest will be calculated by multiplying the
principal amount of the applicable Note by an accrued interest factor. Such
accrued interest factor will be computed by adding the interest factor
calculated for each day in the applicable Interest Reset Period. Unless
otherwise specified in the applicable Floating Interest Rate Notice, the
interest factor for each such day will be computed by dividing the interest rate
applicable to such day by 360, if an applicable Interest Rate Basis is the CD
Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number
of days in the year if an applicable Interest Rate Basis is the CMT Rate or the
Treasury Rate. Unless otherwise specified in the applicable Floating Interest
Rate Notice, if the floating interest rate is calculated with reference to two
or more Interest Rate Bases, the interest factor will be calculated in each
period in the same manner as if only one of the applicable Interest Rate Bases
applied as specified in the applicable Floating Interest Rate Notice.
Unless otherwise specified in the applicable Floating Interest Rate Notice,
Bankers Trust Company will be the "Calculation Agent." Upon request of the
Beneficial Owner of a Note, after any Interest Rate Adjustment Date, the
Calculation Agent or the Remarketing Agent shall disclose the interest rate and,
in the case of a floating interest rate, Interest Rate Basis or Bases, Spread
(if any) and Spread Multiplier (if any), and in each case the other terms
applicable to such Note then in effect and, if determined, the interest rate
that will become effective as a result of a determination made for the next
succeeding Interest Reset Date with respect to such Note. Except as described
herein with respect to a Note earning interest at floating rates, no notice of
the applicable interest rate, Spread (if any) or Spread Multiplier (if any)
shall be sent to the beneficial owner of any Note.
Unless otherwise specified in the applicable Floating Interest Rate Notice,
the "Calculation Date", if applicable, pertaining to any Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Maturity, as the case may be.
CD Rate. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as the CD Rate, the CD Rate shall be
determined as of the applicable Interest Determination Date (a "CD Rate Interest
Determination Date") as the rate on such date for negotiable United States
dollar certificates of deposit having the Index Maturity specified in
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the applicable Floating Interest Rate Notice as published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" or any successor publication ("H.15(519)") under the
heading "CDs (Secondary Market)," or, if not published by 3:00 p.m., New York
City time, on the related Calculation Date (as defined above), the rate on such
CD Rate Interest Determination Date for negotiable United States dollar
certificates of deposit of the Index Maturity specified in the applicable
Floating Interest Rate Notice as published by the Federal Reserve Bank of New
York in its daily statistical release "Composite 3:30 P.M. Quotations for
United States Government Securities" or any successor publication ("Composite
Quotations") under the heading "Certificates of Deposit." If such rate is not
yet published in either H.15(519) or Composite Quotations by 3:00 p.m., New
York City time, on the related Calculation Date, then the CD Rate on such CD
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be the arithmetic mean of the secondary market offered rates as of
10:00 a.m., New York City time, on such CD Rate Interest Determination Date, of
three leading nonbank dealers in negotiable United States dollar certificates
of deposit in The City of New York (which may include the Remarketing Agent or
its affiliates) selected by the Calculation Agent, after consultation with the
Company, for negotiable United States dollars certificates of deposit of major
United States money market banks for negotiable certificates of deposit with a
remaining maturity closest to the Index Maturity specified in the applicable
Floating Interest Rate Notice in an amount that is representative for a single
transaction in that market at that time; provided, however, that if the dealers
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate determined as of such CD Rate Interest Determination Date
will be the CD Rate in effect on such CD Rate Interest Determination Date.
CMT Rate. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as the CMT Rate, the CMT Rate shall be
determined as of the applicable Interest Determination Date (a "CMT Rate
Interest Determination Date") as the rate displayed on the Designated CMT
Telerate Page (as defined below) under the caption "...Treasury Constant
Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45
P.M.," under the column for the Designated CMT Maturity Index (as defined below)
for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the weekly or monthly average, as specified in the Floating Interest Rate
Notice, for the week or the month, as applicable, ended immediately preceding
the week in which the related CMT Rate Interest Determination Date occurs. If
such rate is no longer displayed on the relevant page or is not displayed by
3:00 p.m., New York City time, on the related Calculation Date, then the CMT
Rate for such CMT Rate Interest Determination Date will be such treasury
constant maturity rate for the Designated CMT Maturity Index as published in
H.15(519). If such rate is no longer published or is not published by 3:00
p.m., New York City time, on the related Calculation Date, then the CMT Rate on
such CMT Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Interest
Determination Date with respect to such
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Interest Reset Date as may then be published by either the Board of Governors
of the Federal Reserve System or the United States Department of the Treasury
that the Calculation Agent determines to be comparable to the rate formerly
displayed on the Designated CMT Telerate Page and published in H.15(519). If
such information is not provided by 3:00 p.m., New York City time, on the
related Calculation Date, then the CMT Rate on the CMT Rate Interest
Determination Date will be calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 p.m., New York City time, on such
CMT Rate Interest Determination Date reported, according to their written
records, by three leading primary United States government securities dealers
(each, a "Reference Dealer") in The City of New York (which may include the
Remarketing Agent or its affiliates) selected by the Calculation Agent after
consultation with the Company (from five such Reference Dealers selected by the
Calculation Agent, after consultation with the Company, and eliminating the
highest quotation (or, in the event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one of the lowest)), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less than
such Designated CMT Maturity Index minus one year. If the Calculation Agent is
unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be a yield to maturity based on the arithmetic mean of the secondary
market offer side prices as of approximately 3:30 p.m., New York City time, on
such CMT Rate Interest Determination Date of three Reference Dealers in The
City of New York (from five such Reference Dealers selected by the Calculation
Agent, after consultation with the Company, and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)), for Treasury
Notes with an original maturity of the number of years that is the next highest
to the Designated CMT Maturity Index and a remaining term to maturity closest
to the Designated CMT Maturity Index and in an amount of at least U.S.$100
million. If three or four (and not five) of such Reference Dealers are quoting
as described above, then the CMT Rate will be based on the arithmetic mean of
the offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated; provided, however, that if fewer than three Reference
Dealers so selected by the Calculation Agent, after consultation with the
Company, are quoting as mentioned herein, the CMT Rate determined as of such
CMT Rate Interest Determination Date will be the CMT Rate in effect on such CMT
Rate Interest Determination Date. If two Treasury Notes with an original
maturity as described in the second preceding sentence have remaining terms to
maturity equally close to the Designated CMT Maturity Index, the Calculation
Agent, after consultation with the Company, will obtain from five References
Dealers quotations for the Treasury Note with the shorter remaining term to
maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Floating Interest Rate Notice
(or any other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as
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<PAGE> 14
reported in H.15(519)) for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519). If no such page is specified in the
applicable Floating Interest Rate Notice, the Designated CMT Telerate Page
shall be 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Floating Interest Rate Notice with respect to which
the CMT Rate will be calculated. If no such maturity is specified in the
applicable Floating Interest Rate Notice, the Designated CMT Maturity Index
shall be 2 years.
Federal Funds Rate. If an Interest Rate Basis for any Note is specified in
the applicable Floating Interest Rate Notice as the Federal Funds Rate, the
Federal Funds Rate shall be determined as of the applicable Interest
Determination Date (a "Federal Funds Rate Interest Determination Date") as the
rate on such date for United States dollar federal funds as published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not published by
3:00 p.m., New York City time, on the Calculation Date, the rate on such Federal
Funds Rate Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If such rate is not published
in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on
the related Calculation Date, then the Federal Funds Rate on such Federal Funds
Rate Interest Determination Date shall be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of federal funds transactions in The City of New York (which may include the
Remarketing Agent or its affiliates) selected by the Calculation Agent after
consultation with the Company, prior to 9:00 a.m., New York City time, on such
Federal Funds Rate Interest Determination Date; provided, however, that if the
brokers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate determined as of such Federal Funds Rate
Interest Determination Date will be the Federal Funds Rate in effect on such
Federal Funds Rate Interest Determination Date.
LIBOR. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as LIBOR, LIBOR shall be determined by
the Calculation Agent as of the applicable Interest Determination Date (a "LIBOR
Interest Determination Date") in accordance with the following provisions:
(i) if (a) "LIBOR Reuters" is specified in the applicable Floating Interest
Rate Notice, the arithmetic mean of the offered rates (unless the Designated
LIBOR Page (as defined below) by its terms provides only for a single rate, in
which case such single rate will be used) for deposits in the Index Currency
having the Index Maturity specified in the applicable Floating Interest Rate
Notice, commencing on the applicable Interest Reset Date, that appear (or, if
only a single rate is required as aforesaid, appears) on the Designated LIBOR
Page (as defined below) as of 11:00 a.m., London time, on such LIBOR Interest
Determination Date, or (b) "LIBOR
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Telerate" is specified in the applicable Floating Interest Rate Notice, or if
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
Floating Interest Rate Notice as the method for calculating LIBOR, the rate for
deposits in the Index Currency having the Index Maturity specified in the
applicable Floating Interest Rate Notice, commencing on such Interest Reset
Date, that appears on the Designated LIBOR Page as of 11:00 a.m., London time,
on such LIBOR Interest Determination Date. If fewer than two such offered
rates appear, or if no such rate appears, as applicable, LIBOR on such LIBOR
Interest Determination Date shall be determined in accordance with the
provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on the
Designated LIBOR Page as specified in clause (i) above, the Calculation Agent
shall request the principal London offices of each of four major reference banks
in the London interbank market, as selected by the Calculation Agent, after
consultation with the Company, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity specified in the applicable Floating Interest Rate Notice, commencing
on the applicable Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 a.m., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a single
transaction in such Index Currency in such market at such time. If at least two
such quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal Financial Center, on such LIBOR Interest Determination
Date by three major banks in such Principal Financial Center selected by the
Calculation Agent, after consultation with the Company, for loans in the Index
Currency to leading European banks, having the Index Maturity specified in the
applicable Floating Interest Rate Notice and in a principal amount that is
representative for a single transaction in such Index Currency in such market at
such time; provided, however, that if the banks so selected by the Calculation
Agent are not quoting as mentioned in this sentence, LIBOR determined as of such
LIBOR Interest Determination Date shall be LIBOR in effect on such LIBOR
Interest Determination Date.
"Index Currency" means the currency or composite currency specified in the
applicable Floating Interest Rate Notice as to which LIBOR shall be calculated.
If no such currency or composite currency is specified in the applicable
Floating Interest Rate Notice, the Index Currency shall be United States
dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Floating Interest Rate Notice, the display on the Reuter Monitor
Money Rates Service (or any successor service) for the purpose of displaying the
London interbank rates of major banks for the Index Currency, or (b) if "LIBOR
Telerate" is specified in the applicable Floating Interest Rate Notice or
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
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Floating Interest Rate Notice as the method for calculating LIBOR, the display
on the Dow Jones Telerate Service (or any successor service) for the purpose of
displaying the London interbank rates of major banks for the Index Currency.
Prime Rate. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as the Prime Rate, the Prime Rate shall
be determined as of the applicable Interest Determination Date (a "Prime Rate
Interest Determination Date") as the rate on such date as such rate is published
in H.15(519) under the heading "Bank Prime Loan." If such rate is not published
prior to 3:00 p.m., New York City time, on the related Calculation Date, then
the Prime Rate shall be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen U.S. PRIME 1 Page (as
defined below) as such bank's prime rate or base lending rate as in effect for
such Prime Rate Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen U.S. PRIME 1 Page for such Prime Rate Interest
Determination Date, the Prime Rate shall be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks (which may include Bankers
Trust Company) in The City of New York selected by the Calculation Agent, after
consultation with the Company. If fewer than four such quotations are so
provided, the Prime Rate shall be the arithmetic mean of four prime rates quoted
on the basis of the actual number of days in the year divided by a 360-day year
as of the close of business on such Prime Rate Interest Determination Date as
furnished in The City of New York by the major money center banks, if any, that
have provided such quotations and by as many substitute banks or trust companies
(which may include Bankers Trust Company) as necessary in order to obtain four
such prime rate quotations, provided such substitute banks or trust companies
are organized and doing business under the laws of the United States, or any
State thereof, have total equity capital of at least U.S.$500 million and are
each subject to supervision or examination by Federal or State authority,
selected by the Calculation Agent, after consultation with the Company, to
provide such rate or rates; provided, however, that if the banks or trust
companies so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
"Reuters Screen U.S. PRIME 1 Page" means the display designated as page
"U.S. PRIME 1" on the Reuter Monitor Money Rates Service (or such other page as
may replace the U.S. PRIME 1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
Treasury Rate. If an Interest Rate Basis for any Note is specified in the
applicable Floating Interest Rate Notice as the Treasury Rate, the Treasury Rate
shall be determined as of the applicable Interest Determination Date (a
"Treasury Rate Interest Determination Date") as the rate from the auction held
on such Treasury Rate Interest Determination Date (the "Auction") of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified
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in the applicable Floating Interest Rate Notice, as such rate is published in
H.15(519) under the heading "Treasury bills-auction average (investment)" or, if
not published by 3:00 p.m., New York City time, on the related Calculation Date,
the auction average rate of such Treasury Bills (expressed as a bond equivalent
on the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of Treasury. In
the event that the results of the Auction of Treasury Bills having the Index
Maturity specified in the applicable Floating Interest Rate Notice are not
reported as provided above by 3:00 p.m., New York City time, on such Calculation
Date, or if no such Auction is held, then the Treasury Rate shall be calculated
by the Calculation Agent, and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 p.m., New York City time, on such Treasury Rate Interest
Determination Date, of three leading primary United States government securities
dealers (which may include the Remarketing Agent or its affiliates) selected by
the Calculation Agent, after consultation with the Company, for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity specified
in the applicable Floating Interest Rate Notice; provided, however, that if the
dealers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Treasury Rate determined as of such Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on such Treasury Rate
Interest Determination Date.
Interest Rate Modes.
Commercial Paper Term Period. The Interest Rate Period for any Note in the
Commercial Paper Term Mode will be a Commercial Paper Term Period, which will
be a period of not less than one nor more than 364 consecutive calendar days,
as determined by the Company or, if not so determined, by the Remarketing Agent
for such Note (in its best judgment in order to obtain the lowest interest cost
for such Note). Each Commercial Paper Term Period will commence on the
Interest Rate Adjustment Date therefor and end on the day preceding the date
specified by such Remarketing Agent as the first day of the next Interest Rate
Period for such Note. The interest rate for any Commercial Paper Term Period
relating to a Remarketed Note will be determined not later than 11:00 a.m., New
York City time, on the Interest Rate Adjustment Date for such Notes (subject to
Section 206) which is the first day of each Interest Rate Period for such
Notes; provided, however, that if such day is not a Business Day, the Interest
Rate Adjustment Date for any Note in such Commercial Paper Term Mode shall be
the next succeeding day which is a Business Day.
Daily Interest Rate Period. The Interest Rate Period for any Note in
the Daily Interest Rate Mode will commence at the beginning of each Business Day
and end at the end of the calendar day preceding the next Business Day. The
interest rate for such Notes will be determined each Business Day not later than
9:30 a.m., New York City time on such day (subject to Section 206). The Daily
Interest Rate Mode shall occur only so long as the Notes are maintained in a
book-entry system.
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Weekly Interest Rate Period. The Interest Rate Period for any Note in
the Weekly Interest Rate Mode will generally be a seven day period commencing on
any Business Day, as determined by the applicable Remarketing Agent, and ending
on the day preceding the first day of the next Interest Rate Period for such
Note. The interest rate for any Notes in the Weekly Interest Rate Mode will be
determined not later than 11:00 a.m., New York City time, on the Interest Rate
Adjustment Date for such Notes (subject to Section 206), which is the first day
of each Interest Rate Period for such Notes.
Long Term Rate Period. The Interest Rate Period for any Note in the
Long Term Rate Mode will be established by the Company as a period of more than
364 days and less than the Stated Maturity of such Note; provided, however, that
such Interest Rate Period must end on the day prior to an Interest Payment Date
for such Note; and provided further that, if so provided in a Note in the Long
Term Rate Mode and specified at the time of remarketing into a Long Term Rate
Period, the Company may shorten the Interest Rate Period and provide for payment
of a premium in respect thereof for any such Note upon written notice to the
Remarketing Agent and the Trustee not less than thirty (30) days prior to the
date upon which such shortened Interest Rate Period shall expire. Promptly upon
receipt of such notice and, in any case, not later than the close of business on
such date, the Trustee will transmit such information to DTC in accordance with
DTC's procedures as in effect from time to time. In such case, the next
Interest Rate Adjustment Date otherwise set forth in such Note shall instead be
the date upon which such Interest Rate Period shall expire. The interest rate
for any Notes in the Long Term Rate Mode will be determined not later than 11:00
a.m., New York City time, on the Interest Rate Adjustment Date for such Notes
(subject to Section 206). The Interest Rate Adjustment Date for the Long Term
Rate Mode is the first day of the Interest Rate Period; provided, however, that
if such day is not a Business Day, the Interest Rate Adjustment Date for any
Note in such Long Term Rate Mode shall be the next succeeding day which is a
Business Day.
If any Note is subject to early remarketing as provided above, the Interest
Rate Period may be shortened by the Company on any date on and after the Initial
Early Remarketing Date, if any, specified in the Note, upon prior written notice
as provided above. On and after the Initial Early Remarketing Date, if any, on
the Interest Rate Adjustment Date relating to such shortened Interest Rate
Period for such Note, the Company will pay a premium to the tendering Beneficial
Owner of the Note, together with accrued interest, if any, thereon at the
applicable rate payable to such Interest Rate Adjustment Date. Unless otherwise
specified in the Note, the premium shall be an amount equal to the Initial Early
Remarketing Premium specified therein (as adjusted by the Annual Early
Remarketing Premium Percentage Reduction, if applicable), multiplied by the
principal amount of the Note subject to early remarketing. The Initial Early
Remarketing Premium, if any, shall decline at each anniversary of the Initial
Early Remarketing Date by an amount equal to the applicable Annual Early
Remarketing Premium Percentage Reduction, if any, specified in the Note until
the premium is equal to 0.
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Fixed Interest Rate Period. The Interest Rate Period for any Note in
the Fixed Interest Rate Mode will commence on the date of conversion to such
Interest Rate Mode and continue to the final maturity or date of redemption of
such Note. The interest rate for Notes in the Fixed Interest Rate Mode will be
determined not later than 11:00 a.m., New York City time, on the Interest Rate
Adjustment Date for such Notes (subject to Section 206), which is the date of
conversion to the Fixed Interest Rate Mode for such Notes and will be set forth
on the face of such Notes.
The foregoing Section 203 supersedes Section 204 of the Second
Supplemental Indenture in its entirety.
Section 204. Conversion. As long as the Notes are not in the Fixed
Rate Mode, the Company may change the Interest Rate Mode at its option in the
manner described below.
(a) Conversion From the Daily or Weekly Interest Rate Mode. Any
Note in the Daily or Weekly Interest Rate Mode may be converted at the option of
the Company to any Interest Rate Mode on any Interest Rate Adjustment Date for
such Note upon receipt by the Trustee and the applicable Remarketing Agent of
notice, confirmed in writing, from the Company (a "Conversion Notice") not less
than ten (10) days prior to such Interest Rate Adjustment Date. The Conversion
Notice will contain the new Interest Rate Mode and the date of such conversion
(a "Conversion Date"), and will state that such Note will be subject to
mandatory tender by the Beneficial Owner thereof, as described in Section 205
hereof. Such Beneficial Owner will be deemed to have tendered such Note as of
the Conversion Date and will not be entitled to further accrual of interest on
such Note after such date. Promptly upon receipt of such notice and, in any
case, not later than the close of business on such date, the Trustee will
transmit such information to DTC in accordance with DTC's procedures as in
effect from time to time.
(b) Conversion from the Commercial Paper Term Mode or the Long Term
Rate Mode. Any Note in the Commercial Paper Term Mode or the Long Term Rate
Mode may be converted at the option of the Company to the Daily or Weekly
Interest Rate Mode or the Fixed Interest Rate Mode on any Interest Rate
Adjustment Date upon receipt by the Trustee and the applicable Remarketing Agent
of notice, confirmed in writing, from the Company not less than five Business
Days prior to such Interest Rate Adjustment Date. The Conversion Notice will
contain the new Interest Rate Mode and the Conversion Date, and will state that
such Note will be subject to mandatory tender by the Beneficial Owner thereof,
as described in Section 205 hereof. Such Beneficial Owner will be deemed to
have tendered such Note as of the Conversion Date and will not be entitled to
further accrual of interest on such Note after such date. Promptly upon receipt
of such notice and, in any case, not later than the close of business on such
date, the Trustee will transmit such information to DTC in accordance with DTC's
procedures as in effect from time to time. The Company agrees to give a
Conversion Notice for conversions between the Commercial Paper Term Mode and the
Long Term Rate Mode to
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the Trustee and applicable Remarketing Agent not less than ten (10) days prior
to the Conversion Date.
Any Note converted to the Fixed Interest Rate Mode will not be subject
to any further conversions between Interest Rate Modes.
(c) Revocation or Change of Conversion Notice or Floating Interest
Rate Notice. The Company may, upon written notice received by the Trustee, the
applicable Remarketing Agent and DTC, revoke any Conversion Notice or Floating
Interest Rate Notice or change the Interest Rate Mode to which such Conversion
Notice relates or change any Floating Interest Rate Notice up to 9:30 a.m., New
York City time, on the Conversion Date.
(d) Limitation on Conversion, Change of Conversion Notice or Floating
Interest Rate Notice and Revocation. Notwithstanding the foregoing subsections
(a), (b) and (c), the Company may not, without the consent of the applicable
Remarketing Agent, convert any Note or revoke or change any Conversion Notice or
Floating Interest Rate Notice at or after the time at which such Remarketing
Agent has determined the interest rate, or Spread (if any) and Spread Multiplier
(if any), for any Note being remarketed (i.e., the time at which such Note has
been successfully remarketed, subject to settlement on the related Interest Rate
Adjustment Date). The Remarketing Agent will advise the Company of indicative
rates from time to time, or at any time upon the request of the Company, prior
to making such determination of the interest rate, Spread or Spread Multiplier,
as the case may be.
The foregoing Section 204 supersedes Section 205 of the Second
Supplemental Indenture in its entirety.
Section 205. Tender of Notes.
(a) Demand Tender Option for Notes in the Daily or Weekly Interest
Rate Mode. Any Note in the Daily or Weekly Interest Rate Mode is subject to
tender and purchase upon demand by the Beneficial Owner thereof on any Business
Day selected by such Beneficial Owner as hereinafter provided, at the purchase
price of par plus accrued interest, upon notice to the applicable Remarketing
Agent and to such Beneficial Owner's DTC participant on a Business Day not later
than (i) one (1) Business Day prior to the specified purchase date, in the case
of any Note in the Daily Interest Rate Mode, or (ii) seven days prior to the
specified purchase date, in the case of any Note in the Weekly Interest Rate
Mode; provided, however, that in either such case if the date selected for
purchase is not a Business Day, the purchase date shall be the next succeeding
Business Day. Such notice shall (A) state the principal amount (or portion
thereof) of such Note to be purchased, (B) state the purchase date on which such
Note will be purchased, and (C) irrevocably request such purchase. Upon giving
such notice, the Beneficial Owner of such Note will be deemed to have
irrevocably tendered such Note for remarketing as described below. Notes may
only be tendered in amounts of $100,000 and
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integral multiples thereof and no Notes will be purchased in part if such
partial purchase would result in the principal amount of any Notes of a
Beneficial Owner outstanding being in any denomination of less than $100,000 or
an integral multiple thereof.
(b) Mandatory Tender of Notes at the Initial Interest Rate or in
the Long Term Rate Mode or Commercial Paper Term Mode. Any Note bearing
interest at the Initial Interest Rate or in the Long Term Rate Mode or in the
Commercial Paper Term Mode will be automatically tendered for purchase, or
deemed tendered for purchase, on each Interest Rate Adjustment Date relating
thereto. Notes will be purchased on the Interest Rate Adjustment Date relating
thereto as described in Section 206 hereof.
Section 206. Remarketing. The interest rate on each Note will be
established from time to time by each Remarketing Agent responsible for the
remarketing thereof in accordance with the following procedures:
(a) Interest Rate Adjustment Date; Determination of Interest Rate.
By 11:00 a.m., New York City time (or 9:30 a.m., New York City time, in the case
of any Note in the Daily Interest Rate Mode), on the Interest Rate Adjustment
Date for any Note, the applicable Remarketing Agent will determine the interest
rate for such Note being remarketed to the nearest one hundred-thousandth
(0.00001) of one percent per annum for the next Interest Rate Period; provided,
that between 11:00 a.m., New York City time (or 9:30 a.m., New York City time,
in the case of any Note in the Daily Interest Rate Mode), and 11:50 a.m., New
York City time, the Remarketing Agent and the Standby Agent(s), if any, shall
use their best efforts to determine the interest rate for any Notes not
successfully remarketed as of the applicable deadline specified in this
paragraph. In determining the applicable interest rate for such Note and other
terms, such Remarketing Agent will, after taking into account market conditions
as reflected in the prevailing yields on fixed and variable rate taxable debt
securities, (i) consider the principal amount of all Notes tendered or to be
tendered on such date and the principal amount of such Notes prospective
purchasers are or may be willing to purchase and (ii) contact, by telephone or
otherwise, prospective purchasers and ascertain the interest rates therefor at
which they would be willing to hold or purchase such Notes.
(b) Notification of Results; Settlement. By 12:30 p.m., New York
City time, on the Interest Rate Adjustment Date for any Notes, the applicable
Remarketing Agent will notify the Company and the Trustee in writing (which may
include facsimile or other electronic transmission), of (i) the interest rate
or, in the case of a floating interest rate, the initial interest rate, the
Spread and Spread Multiplier and the Initial Interest Reset Date, applicable to
such Notes for the next Interest Rate Period, (ii) the Interest Rate Adjustment
Date, (iii) the Interest Payment Dates, for any Notes in the Commercial Paper
Term Mode (if other than the Interest Rate Adjustment Date), the Long Term Rate
Mode or the Fixed Interest Rate Mode, (iv) the optional redemption terms, if
any, and early remarketing terms, if any, in the case of a remarketing into a
Long Term Rate Period, (v) the aggregate principal amount of tendered Notes
20
<PAGE> 22
and (vi) the aggregate principal amount of such tendered Notes which such
Remarketing Agent was able to remarket, at a price equal to 100% of the
principal amount thereof plus accrued interest, if any. Immediately after
receiving such notice, and in any case, not later than 1:30 p.m. New York City
time, the Trustee will transmit such information and any other settlement
information required by DTC to DTC in accordance with DTC's procedures as in
effect from time to time.
By telephone at approximately 1:00 p.m., New York City time, on such
Interest Rate Adjustment Date, the applicable Remarketing Agent will advise each
purchaser of such Notes (or the DTC participant of each such purchaser who it is
expected in turn will advise such purchaser) of the principal amount of such
Notes that such purchaser is to purchase.
Each purchaser of Notes in a remarketing will be required to give
instructions to its DTC participant to pay the purchase price therefor in same
day funds to the applicable Remarketing Agent against delivery of the principal
amount of such Notes by book entry through DTC by 3:00 p.m., New York City time,
on the Interest Rate Adjustment Date. Any Notes bearing interest in the Daily
or Weekly Interest Rate Mode for the Interest Rate Period immediately preceding
a remarketing will be settled at a price of 100% of the principal amount thereof
plus accrued interest from the most recent Interest Payment Date therefor to the
date of settlement.
All tendered Notes will be automatically delivered to the account of
the Trustee (or such other account meeting the requirements of DTC's procedures
as in effect from time to time), by book entry through DTC against payment of
the purchase price or redemption price therefor, on the Interest Rate Adjustment
Date relating thereto.
The applicable Remarketing Agent will make, or cause the Trustee to
make, payment to the DTC participant of each tendering Beneficial Owner of Notes
subject to a remarketing, by book entry through DTC by the close of business on
the Interest Rate Adjustment Date against delivery through DTC of such
Beneficial Owner's tendered Notes, of the purchase price for tendered Notes that
have been sold in the remarketing. If any such Notes were purchased pursuant to
a Special Mandatory Purchase, subject to receipt of funds from the Company or
the Liquidity Provider (if any), as the case may be, the Trustee will make such
payment of the purchase price of such Notes plus accrued interest, if any, to
such date.
The transactions described above for a remarketing of any Notes will
be executed on the Interest Rate Adjustment Date for such Notes through DTC in
accordance with the procedures of DTC, and the accounts of the respective DTC
participants will be debited and credited and such Notes delivered by book entry
as necessary to effect the purchases and sales thereof, in each case as
determined in the related remarketing.
21
<PAGE> 23
Except as otherwise set forth in Section 207 hereof, any Notes
tendered in a remarketing will be purchased solely out of the proceeds received
from purchasers of such Notes in such remarketing, and neither the Trustee, the
applicable Remarketing Agent nor any Standby Remarketing Agent or the Company
will be obligated to provide funds to make payment upon any Beneficial Owner's
tender in a remarketing.
Although tendered Notes will be subject to purchase by a Remarketing
Agent in a remarketing, such Remarketing Agent and any Standby Remarketing Agent
will not be obligated to purchase any such Notes.
The settlement and remarketing procedures described above, including
provisions for payment by purchasers of tendered Notes or for payment to selling
Beneficial Owners of tendered Notes, may be modified to the extent required by
DTC. In addition, each Remarketing Agent may, in accordance with the terms of
the Original Indenture, modify the settlement and remarketing procedures set
forth above in order to facilitate the settlement and remarketing process.
As long as DTC's nominee holds the certificates representing the Notes
in the book entry system of DTC, no certificates for such Notes will be
delivered by any selling Beneficial Owner to reflect any transfer of Notes
effected in any remarketing.
The Trustee shall confirm to DTC the interest rate for the following
Interest Rate Period in accordance with DTC's procedures as in effect from time
to time.
The interest rate announced by the applicable Remarketing Agent,
absent manifest error, shall be binding and conclusive upon the Beneficial
Owners, the Company and the Trustee.
(c) Failed Remarketing. By 12:00 o'clock noon, New York City time,
on any Interest Rate Adjustment Date, the applicable Remarketing Agent will
notify the Liquidity Provider, if any, the Trustee and the Company by telephone
or facsimile, confirmed in writing, of the principal amount of Notes that such
Remarketing Agent and the applicable Standby Remarketing Agent or Agents were
unable to remarket on such date. In the event that the Company has entered into
a Standby Note Purchase Agreement which is in effect on such date, such notice
will constitute a demand for the benefit of the Company to the Liquidity
Provider to purchase such unremarketed Notes at a price equal to the outstanding
principal amount thereof pursuant to the terms of such Standby Note Purchase
Agreement. If a Standby Note Purchase Agreement is not in effect on such date,
or if the Liquidity Provider fails to advance funds under the Standby Note
Purchase Agreement, the Company hereby agrees to purchase such unremarketed
Notes. In each case the Company will pay all accrued and unpaid interest, if
any, on unremarketed Notes to such Interest Rate Adjustment Date. Payment of the
principal amount of unremarketed Notes by the Company or the Liquidity Provider,
as the case may be, and
22
<PAGE> 24
payment of accrued and unpaid interest, if any, by the Company, shall be made
by deposit of same-day funds with the Trustee (or such other account meeting
the requirements of DTC's procedures as in effect from time to time)
irrevocably in trust for the benefit of the Beneficial Owners of Notes subject
to Special Mandatory Purchase by 3:00 p.m., New York City time, on such
Interest Rate Adjustment Date.
Section 207. Purchase and Redemption of Notes
(a) Special Mandatory Purchase. Subject to certain exceptions, if
by 12:00 o'clock noon, New York City time, on any Interest Rate Adjustment Date
for any Notes, the applicable Remarketing Agent and the applicable Standby
Remarketing Agent(s) have not remarketed all such Notes, the Notes that are
unremarketed are subject to Special Mandatory Purchase. Either the Company or,
subject to the terms and conditions of a Standby Note Purchase Agreement, if
any, which may be in effect on such date, the Liquidity Provider, will deposit
same-day funds in the account of the Trustee (or such other account meeting the
requirements of DTC's procedures as in effect from time to time) irrevocably in
trust for the benefit of the Beneficial Owners of Notes subject to Special
Mandatory Purchase by 3:00 p.m., New York City time, on such Interest Rate
Adjustment Date. Such funds shall be in an amount sufficient to pay the
aggregate purchase price of such unremarketed Notes, equal to 100% of the
principal amount thereof. In the event a Standby Note Purchase Agreement is in
effect but the Liquidity Provider shall fail to advance funds for whatever
reason thereunder, the Company hereby agrees to purchase such unremarketed Notes
on such Interest Rate Adjustment Date. The Company hereby agrees to pay the
accrued interest, if any, on such Notes by depositing sufficient same-day funds
therefor in the account of the Trustee (or such other account meeting the
requirements of DTC's procedures as in effect from time to time) by 3:00 p.m.,
New York City time, on such Interest Rate Adjustment Date.
Notes purchased by the Liquidity Provider ("Purchased Notes") shall
bear interest at the rates and be payable on the dates as may be agreed upon by
the Company and the Liquidity Provider, but in no event shall such rate be more
than the Maximum Rate. Upon purchase of any Note by the Liquidity Provider, all
interest accruing thereon from the last date for which interest was paid shall
accrue for the benefit of and be payable to the Liquidity Provider. Unless an
event of default under the Standby Note Purchase Agreement occurs, the
applicable Remarketing Agent shall continue its remarketing efforts with respect
to Purchased Notes until the earlier to occur of a successful remarketing of
such Purchased Notes or the expiration of the Standby Note Purchase Agreement.
In the event the Liquidity Provider holds Purchased Notes on the date the
Standby Note Purchase Agreement expires, the Company will be required to
purchase such Notes on such date at a purchase price equal to the principal
amount thereof plus accrued interest thereon to the purchase date. Such Notes
will remain outstanding and enjoy the benefits of the Original Indenture, the
Second Supplemental Indenture (as amended hereby) and this First Amendment to
the Second Supplemental Indenture until such time as the Company delivers
certificates for the Notes to the Trustee for cancellation.
23
<PAGE> 25
(b) Optional Redemption While Notes are in the Daily or Weekly
Interest Rate Mode or Commercial Paper Term Mode. Any Notes in the Daily or
Weekly Interest Rate Mode or in the Commercial Paper Term Mode are subject to
redemption at the option of the Company in whole or in part on any Interest Rate
Adjustment Date relating thereto in accordance with the terms and provisions of
the Original Indenture, upon 30 days notice to the holders thereof at a
redemption price equal to the aggregate principal amount of such Notes to be
redeemed plus accrued interest thereon to the redemption date.
(c) Redemption While Notes are in the Long Term Rate Mode. Any
Notes in the Long Term Rate Mode are subject to redemption at the option of the
Company at the times and upon the terms specified at the time of conversion to
or within such Long Term Rate Mode and set forth in the Note relating thereto.
(d) Redemption While Notes are in the Fixed Interest Rate Mode.
Any Notes in the Fixed Interest Rate Mode will be subject to redemption at the
option of the Company or pursuant to a sinking fund at the times and upon the
terms specified at the time of conversion to such Fixed Interest Rate Mode and
set forth in the Note relating thereto.
Section 208. Form and Other Terms of the Notes.
(a) Attached hereto as Exhibit A is a form of Note, which form is
hereby established as the form in which Notes may be issued bearing interest at
the Initial Interest Rate or in the Daily or Weekly Interest Rate Mode, the
Commercial Paper Term Mode, the Long Term Rate Mode or the Fixed Interest Rate
Mode. Annex A to Exhibit A is deemed to be a part of such Note and such Annex
may be changed upon the mutual agreement of the Company and the Trustee to
reflect changes occasioned by remarketings.
(b) Attached hereto as Exhibit B is a form of Liquidity Provider
Note, which form is hereby established as a form in which Notes held by the
Liquidity Provider may be issued. The form of Liquidity Provider Note may be
amended to reflect changes occasioned by remarketings upon the mutual agreement
of the Company and the Trustee, but only with the consent of the Administrative
Agent (as defined in such Exhibit B).
(c) Subject to (a) and (b) above, any Note may be issued in such
other form as may be provided by, or not inconsistent with, the terms of the
Original Indenture, the Second Supplemental Indenture and this First Amendment
to the Second Supplemental Indenture.
24
<PAGE> 26
ARTICLE THREE
ADDITIONAL EVENT OF DEFAULT
With respect to the Notes, the following will be an additional Event
of Default to follow subsection (8) under Section 601 of the Indenture:
(9) default in the performance of the Company's obligation to
purchase Notes held by the Liquidity Provider under the terms of the
Standby Note Purchase Agreement, if any, and continuance of such
default for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of that series a written notice
specifying such default and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder.
ARTICLE FOUR
AUTHENTICATION AND DELIVERY OF THE NOTES
Section 401. Security. As provided in and pursuant to Article Four of the
Original Indenture, the Notes will be secured as to payments of principal,
interest and premium, if any, by a series of general and refunding mortgage
bonds (the "General and Refunding Mortgage Bonds, 1993 Series B" or the "Bonds")
of the Company to be issued from time to time under and secured by a Mortgage
and Deed of Trust, dated as of October 1, 1924, between the Company and the
Trustee, as amended and supplemented by various supplemental indentures,
including the supplemental indenture, dated as of September 15, 1993, creating
the General and Refunding Mortgage Bonds, 1993 Series B (collectively, the
"Mortgage"), pledged by the Company for the benefit of the holders of the Notes
to the Trustee under this Indenture.
Section 402. Authentication and Delivery. As provided in and pursuant to
Section 303 of the Original Indenture, each time that the Company delivers Notes
to the Trustee or Authenticating Agent for authentication, the Company shall
deliver a Supplemental Company Order in the form of Exhibit C to this Amended
Second Supplemental Indenture for the authentication and delivery of such Notes
and the Trustee or such Authenticating Agent shall authenticate and deliver such
Notes. Authentication and delivery of any Notes shall be subject to the Company
delivering a Certificate instructing the Trustee or Authenticating Agent to
authenticate and deliver Bonds securing the payment of principal, interest and
premium, if any, in respect of such Notes, and the Trustee or Authenticating
Agent authenticating and delivering
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<PAGE> 27
such Bonds, all as provided in or pursuant to the Mortgage. Terms used in the
preceding sentence and not otherwise defined herein shall have the meanings
specified in the Mortgage.
ARTICLE FIVE
MISCELLANEOUS PROVISIONS
The Trustee makes no undertaking or representations in respect of, and
shall not be responsible in any manner whatsoever for and in respect of, the
validity or sufficiency of this First Amendment to the Second Supplemental
Indenture or the proper authorization or the due execution hereof by the Company
or for or in respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
Except as expressly amended hereby, the Original Indenture and the
Second Supplemental Indenture shall continue in full force and effect in
accordance with the provisions thereof and the Original Indenture and the Second
Supplemental Indenture are in all respects hereby ratified and confirmed. This
First Amendment to the Second Supplemental Indenture and all its provisions
shall be deemed a part of the Original Indenture, as supplemented by the Second
Supplemental Indenture, in the manner and to the extent herein and therein
provided.
This First Amendment to the Second Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New
York.
This First Amendment to the Second Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
26
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to the Second Supplemental Indenture to be duly executed, and their
respective corporate seals to be hereunto affixed and attested, all as of the
day and year first above written.
THE DETROIT EDISON COMPANY
By:______________________________
Name:
Title:
ATTEST:
By:__________________________
(Corporate Seal)
BANKERS TRUST COMPANY,
as Trustee
By:______________________________
Name:
Title:
ATTEST:
By:__________________________
(Corporate Seal)
<PAGE> 29
STATE OF MICHIGAN )
) :
COUNTY OF WAYNE )
On the _____ day of ________, 1996, before me personally came ________________,
to me known, who, being by me duly sworn, did depose and say that he is _______
of THE DETROIT EDISON COMPANY, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was
so affixed by authority of the Board of Directors of said corporation, and he
signed his name thereto by like authority.
____________________________________
Notary Public, State of Michigan
[Notarial Seal]
STATE OF NEW YORK )
) :
COUNTY OF ________ )
On the ___ day of _______, 1996, before me personally came __________________,
to me known, who, being by me duly sworn, did depose and say that he is _______
of BANKERS TRUST COMPANY, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was
so affixed by authority of the Board of Directors of said corporation, and he
signed his name thereto by like authority.
___________________________________
Notary Public, State of New York
[Notarial Seal]
<PAGE> 30
EXHIBIT A
THIS CERTIFICATE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES
IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") TO A NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
No:
THE DETROIT EDISON COMPANY
REMARKETED SECURED NOTE
1993 SERIES B DUE 2033
THIS NOTE SHALL NOT BE VALID FOR ANY PURPOSE UNLESS PRESENTED TOGETHER WITH
ANNEX A HERETO (INCLUDING ANY CONTINUATION THEREOF). REFERENCE IS MADE TO ANNEX
A FOR CERTAIN TERMS OF THIS NOTE.
THE DETROIT EDISON COMPANY, a corporation duly organized and existing under
the laws of the State of Michigan (the "Company"), for value received hereby
promises to pay to CEDE & CO., or registered assigns, the principal sum
specified in Annex A on August 15, 2033 (the "Stated Maturity"), upon the
presentation and surrender hereof at the principal corporate trust office of
Bankers Trust Company, or its successor in trust (the "Trustee") or such other
office as the Trustee has designated in writing, and to pay interest on the
unpaid principal balance hereof from the Original Issue Date specified in Annex
A to the First Interest Rate Adjustment Date specified in Annex A (the "Initial
Interest Rate Period") at the Initial Interest Rate specified therein payable on
the related Interest Payment Date or Dates specified in Annex
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<PAGE> 31
A, to the person in whose name this Note is registered at the close of business
on the related Record Date. From and after the First Interest Rate Adjustment
Date, this Note will bear interest in the Commercial Paper Term Mode, the Daily
Interest Rate Mode, the Weekly Interest Rate Mode or the Long Term Rate Mode or
may be permanently converted to the Fixed Interest Rate Mode, in each case as
provided in this Note and set forth in Annex A, and interest will be payable on
the Interest Payment Dates to the person in whose name this Note is registered
at the close of business on the related Record Date as provided below or as set
forth in Annex A. In each case, payments shall be made in accordance with the
provisions hereof and Annex A, including any additional terms specified in
Annex A, until the principal hereof is paid or duly made available for payment.
References herein to "this Note", "hereof", "herein" and comparable terms shall
include Annex A.
So long as this Note bears interest in the Daily or Weekly Interest Rate
Mode, interest will be payable on the first Business Day of each month (unless
such day is less than 11 days after conversion to such Interest Rate Mode, in
which case interest will be payable on the first Business Day of the next
succeeding month). So long as this Note bears interest in the Commercial Paper
Term Mode, interest will be payable on the Interest Rate Adjustment Date related
to such Interest Rate Mode which commences the next succeeding Interest Rate
Period for this Note and on such other dates (if any) as will be established by
the Company and set forth in Annex A upon conversion of this Note to the
Commercial Paper Term Mode or upon remarketing of this Note in a new Interest
Rate Period in the Commercial Paper Term Mode. So long as this Note bears
interest in the Long Term Rate Mode or the Fixed Interest Rate Mode, interest
will be payable at least semiannually on such dates as will be established by
the Company and set forth in Annex A upon conversion of this Note to the Long
Term Rate Mode (or upon remarketing of this Note in a new Interest Rate Period
in the Long Term Rate Mode, as the case may be) or Fixed Interest Rate Mode in
the case of a fixed interest rate, or as set forth below under "Interest Rate -
Interest Rates on Notes" in the case of a floating interest rate and on the
Interest Rate Adjustment Date commencing the next succeeding Interest Rate
Period, if this Note is bearing interest in the Long Term Rate Mode. Such
interest will be payable to the holder hereof as of the related Record Date,
which, so long as this Note bears interest (i) in the Daily or Weekly Interest
Rate Mode, is the last calendar day of the month preceding an Interest Payment
Date; (ii) in the Commercial Paper Term Mode, is the Business Day prior to the
related Interest Payment Date; and (iii) in the Long Term or Fixed Interest Rate
Mode, is 15 days prior to the related Interest Payment Date. If any Interest
Payment Date would otherwise be a day that is not a Business Day, such Interest
Payment Date will be postponed to the next succeeding Business Day, and no
interest will accrue on such payment for the period from and after such Interest
Payment Date to the date of such payment on the next succeeding Business Day.
Interest on this Note while bearing interest in a Daily or Weekly Interest Rate
Mode or the Commercial Paper Term Mode or at a floating interest rate during a
Long Term Rate Period will be computed on the basis of actual days elapsed over
360; provided that, if an applicable Interest rate Basis is the CMT Rate or
Treasury Rate (each as defined below), interest will be computed on the basis of
actual days elapsed over the actual number of days in the year.
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<PAGE> 32
Interest on this Note while bearing interest in the Long Term or Fixed Interest
Rate Mode will be computed on the basis of a year of 360 days consisting of
twelve 30-day months. Interest on this Note while bearing interest at the
Initial Interest Rate will be computed on the basis of (a) actual days elapsed
over 360 if the Initial Interest Rate Period is less than one year or (b) a
year of 360 days consisting of twelve 30-day months if the Initial Interest
Rate Period is one year or more.
Payment of the principal of and interest on this Note will be made at the
office or agency maintained for that purpose in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the person in whose name this Note is registered at
the close of business on the related Record Date.
This Note is one of a duly authorized series of Securities of the Company
(herein called the "Notes" ) issued and to be issued under a Collateral Trust
Indenture, dated as of June 30, 1993, as supplemented by the First Supplemental
Indenture, dated as of June 30, 1993 and the Second Supplemental Indenture,
dated as of September 15, 1993 (as further amended or supplemented by the First
Amendment to the Second Supplemental Indenture, dated as of August 15, 1996, the
Third Supplemental Indenture, dated as of August 15, 1994, the First Amendment
to the Third Supplemental Indenture, dated as of December 12, 1995, the Fourth
Supplemental Indenture, dated as of August 15, 1995, and the Fifth Supplemental
Indenture, dated as of February 1, 1996, the "Indenture"), between the Company
and the Trustee, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
registered owners of the Notes and of the terms upon which the Notes are, and
are to be, authenticated and delivered.
This Note is secured as to payment of principal, interest and premium, if
any, by a general and refunding mortgage bond of the Company issued under and
secured by a Mortgage and Deed of Trust, dated as of October 1, 1924, between
the Company and the Trustee, as amended and supplemented by various supplemental
indentures, pledged by the Company for the benefit of the holders of the Notes
to the Trustee under the Indenture.
DEFINITIONS
The following terms, as used herein, have the following meanings unless the
context or use clearly indicates another or different meaning or intent:
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions located in the State of
Michigan or in the state in which the principal corporate trust office of the
Trustee is located, are authorized or obligated
A-3
<PAGE> 33
by or pursuant to law or executive order to close; provided, however, that with
respect to Notes in the Long Term Rate Mode as to which LIBOR is an applicable
Interest Rate Basis, such day is also a London Business Day (as hereinafter
defined). "London Business Day" means (i) if the Index Currency (as
hereinafter defined) is other than European Currency Units ("ECU"), any day on
which dealings in such Index Currency are transacted in the London interbank
market or (ii) if the Index Currency is ECU, any day that does not appear as an
ECU non-settlement day on the display designated as "ISDE" on the Reuter
Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU non-settlement days do not appear on the page (and are
not so designated), is not a day on which payments in ECU cannot be settled in
the international interbank market.
"Commercial Paper Term Mode" means the Interest Rate Mode in which the
interest rate is reset on a periodic basis which shall not be less than one
calendar day nor more than 364 consecutive calendar days and interest is paid as
provided for such Interest Rate Mode as set forth herein.
"Daily Interest Rate Mode" means the Interest Rate Mode in which the
interest rate is reset on a daily basis and interest is paid as provided for
such Interest Rate Mode as set forth herein.
"Fixed Interest Rate Mode" means, with respect to any Note, the Interest
Rate Mode in which the interest rate on such Note is determined and in effect
until the Stated Maturity of such Note and interest is paid as provided for such
Interest Rate Mode as set forth herein.
"Floating Interest Rate Notice" has the meaning specified under "Interest
Rate - Interest Rates on Notes (c) Floating Interest Rates" below. The form of
Floating Rate Interest Notice is set forth as Exhibit D to the First Amendment
to the Second Supplemental Indenture.
"Floating Rate Maximum Interest Rate" and "Floating Rate Minimum Interest
Rate" have the respective meanings specified under "Interest Rate - Interest
Rates on Notes (c) Floating Interest Rates" below.
"Index Maturity" means the period to maturity of the instrument or
obligation with respect to which the related Interest Rate Basis or Bases will
be calculated.
"Interest Determination Date" has the meaning specified under "Interest
Rate - Interest Rates on Notes (c) Floating Interest Rates" below.
"Interest Rate Adjustment Date" means for a particular Interest Rate Period
in any Interest Rate Mode, each date, which shall be a Business Day, on which
interest and, in the case of a floating interest rate, the Spread (if any) and
the Spread Multiplier (if any) on the Notes subject thereto commences to accrue
at the rate determined and announced by the applicable
A-4
<PAGE> 34
Remarketing Agent for such Interest Rate Period and for Notes bearing interest
at the Initial Interest Rate (as hereinafter defined), the Business Day
following the expiration of the Initial Interest Rate Period (as hereinafter
defined).
"Interest Rate Basis" has the meaning specified under "Interest Rate -
Interest Rates on Notes (c) Floating Interest Rates" below.
"Interest Rate Mode" means the mode in which the Interest Rate on a Note is
being determined, i.e., the Commercial Paper Term Mode, a Daily Interest Rate
Mode, a Weekly Interest Rate Mode, the Long Term Rate Mode, or the Fixed
Interest Rate Mode.
"Interest Rate Period" means, with respect to any Note, the period of time
commencing on the Interest Rate Adjustment Date to, but not including the
immediately succeeding Interest Rate Adjustment Date during which such Note
bears interest at a particular fixed interest rate or floating interest rate. So
long as this Note bears interest in the Long Term Rate Mode, if so provided in
Annex A under "Interest Rate Period Adjustment" and if specified by the Company
at the time of remarketing into such Long Term Rate Period, the Company may
shorten the Interest Rate Period and provide for payment of a premium in respect
thereof for this Note upon written notice to the Remarketing Agent and the
Trustee not less than thirty (30) days prior to the date upon which such
shortened Interest Rate Period shall expire. Promptly upon receipt of such
notice and, in any case, not later than the close of business on such date, the
Trustee will transmit such information to DTC in accordance with DTC's
procedures as in effect from time to time. In such case, the next Interest Rate
Adjustment Date otherwise set forth in Annex A shall instead be the date upon
which such Interest Rate Period shall expire.
If this Note is subject to early remarketing as provided above, the
Interest Rate Period may be shortened by the Company on any date on and after
the Initial Early Remarketing Date, if any, specified in Annex A, upon prior
written notice as provided above. On and after the Initial Early Remarketing
Date, if any, on the Interest Rate Adjustment Date relating to such shortened
Interest Rate Period for this Note, the Company will pay a premium to the
tendering beneficial owner of this Note, together with accrued interest, if any,
hereon at the applicable rate payable to such Interest Rate Adjustment Date.
Unless otherwise specified in Annex A, the premium shall be an amount equal to
the Initial Early Remarketing Premium specified in Annex A, the premium shall
be an amount equal to the Initial Early Remarketing Premium specified in Annex A
(as adjusted by the Annual Early Remarketing Premium Percentage Reduction, if
applicable), multiplied by the principal amount of this Note subject to early
remarketing. The Initial Early Remarketing Premium, if any, shall decline at
each anniversary of the Initial Early Remarketing Date by an amount equal to the
applicable Annual Early Remarketing Premium Percentage Reduction, if any,
specified in Annex A until the premium is equal to 0.
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"Interest Reset Date", "Initial Interest Reset Date" and "Interest Reset
Period" have the respective meanings specified under "Interest Rate - Interest
Rates on Notes (c) Floating Interest Rates" below.
"Long Term Rate Mode" means, with respect to any Note, the Interest Rate
Mode in which the interest rate on such Note is reset in a Long Term Rate Period
and interest is paid as provided for such Interest Rate Mode as set forth
herein.
"Maximum Rate" means that rate of interest equal to fifteen percent (15%)
per annum or such higher rate as may be established from time to time by the
Board of Directors of the Company.
"Optional Redemption" means the redemption of any Note prior to its
maturity at the option of the Company as described herein.
"Principal Financial Center" means the capital city of the country issuing
the Index Currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs
and ECUs, the Principal Financial Center shall be The City of New York, Sydney,
Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively.
"Remarketing Agent" means such remarketing agent or agents, including any
standby remarketing agent (each a "Standby Remarketing Agent"), appointed by the
Company from time to time, for this Note.
"Spread" means, with respect to any Long Term Rate Period for this Note,
the number of basis points to be added to or subtracted from the related
Interest Rate Basis or Bases applicable to a Long Term Rate Period for this
Note.
"Spread Multiplier" means the percentage of the related Interest Rate Basis
or Bases applicable to a Long Term Rate Period by which such Interest Rate Basis
or Bases will be multiplied to determine the applicable interest rate from time
to time for such Long Term Rate Period.
"Weekly Interest Rate Mode" means, with respect to any Note, the mode in
which the interest rate on such Note is reset on a periodic basis approximating
one week as more particularly described herein and interest is paid as provided
for such Interest Rate Mode as set forth herein.
INTEREST RATE
INTEREST RATES ON NOTES
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(a) Initial Interest Rate. From the Original Issue Date set forth in
Annex A to the First Interest Rate Adjustment Date set forth in Annex A, this
Note will bear interest at the Initial Interest Rate specified therein.
Thereafter, this Note will bear interest in the Daily Interest Rate Mode, the
Weekly Interest Rate Mode, the Commercial Paper Term Mode or the Long Term Rate
Mode or may be permanently converted to the Fixed Interest Rate Mode.
(b) Interest Rates. While this Note bears interest in the Daily or Weekly
Interest Rate Mode, the Commercial Paper Term Mode or the Long Term Rate Mode,
the interest rate and, in the case of a floating interest rate, the Spread (if
any) and the Spread Multiplier (if any) announced by the Remarketing Agent on or
prior to the Interest Rate Adjustment Date for the next succeeding Interest Rate
Period will be the minimum interest rate per annum and, in the case of a
floating interest rate, the Spread (if any) and the Spread Multiplier (if any)
necessary, during the Interest Rate Period commencing on such Interest Rate
Adjustment Date, in the judgment of the Remarketing Agent, to produce a par bid
in the secondary market for this Note on the date the interest rate is
established.
(c) Floating Interest Rates. While this Note bears interest in the Long
Term Rate Mode, the Company may elect a floating interest rate by providing
notice, which will be in or promptly confirmed in writing (which includes
facsimile or appropriate electronic media), received by the Trustee and the
Remarketing Agent for this Note (the "Floating Interest Rate Notice") not less
than ten (10) days prior to the Interest Rate Adjustment Date for such Long Term
Rate Period. The Floating Interest Rate Notice must identify by CUSIP number or
otherwise the portion of this Note to which it relates and state the Long Term
Rate Period therefor to which it relates. Each Floating Interest Rate Notice
must also state the Interest Rate Basis or Bases, the Initial Interest Reset
Date, the Interest Reset Period and Dates, the Interest Payment Period and
Dates, the Index Maturity and the Floating Rate Maximum Interest Rate and/or
Floating Rate Minimum Interest Rate, if any. If one or more of the applicable
Interest Rate Bases is LIBOR or the CMT Rate, the Floating Interest Rate Notice
shall also specify the Index Currency and Designated LIBOR Page or the
Designated CMT Maturity Index and Designated CMT Telerate Page, respectively.
If this Note bears interest at a floating rate in a Long Term Rate Period,
this Note shall bear interest at the rate determined by reference to the
applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if any,
and/or (b) multiplied by the Spread Multiplier, if any, in each case as
specified by the Remarketing Agent and recorded in Annex A to such Note.
Commencing on the Interest Rate Adjustment Date for such Long Term Rate Period,
the rate at which interest on this Note shall be payable shall be reset as of
each Interest Reset Date during such Long Term Rate Period specified in the
applicable Floating Interest Rate Notice.
The applicable floating interest rate on this Note during any Long Term
Rate Period will be determined by reference to the applicable Interest Rate
Basis or Interest Rate Bases, which may include (i) the CD Rate, (ii) the CMT
Rate, (iii) the Federal Funds Rate, (iv) LIBOR, (v)
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the Prime Rate, (vi) the Treasury Rate, or (vii) such other Interest Rate Basis
or interest rate formula as may be specified in the applicable Floating
Interest Rate Notice.
Unless otherwise specified in the applicable Floating Interest Rate Notice,
the interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or
in the applicable Floating Interest Rate Notice, the interest rate in effect on
each day shall be (i) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date (as hereinafter defined)
immediately preceding such Interest Reset Date or (ii) if such day is not an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date. If
any Interest Reset Date would otherwise be a day that is not a Business Day,
such Interest Reset Date will be postponed to the next succeeding Business Day,
unless LIBOR is an applicable Interest Rate Basis and such Business Day falls in
the next succeeding calendar month, in which case such Interest Reset Date will
be the immediately preceding Business Day. In addition, if the Treasury Rate is
an applicable Interest Rate Basis and the Interest Determination Date would
otherwise fall on an Interest Reset Date, then such Interest Reset Date will be
postponed to the next succeeding Business Day.
The applicable Floating Interest Rate Notice will specify whether the rate
of interest will be reset daily, weekly, monthly, quarterly, semiannually or
annually or on such other specified basis (each, an "Interest Reset Period") and
the dates on which such rate of interest will be reset (each, an "Interest Reset
Date"). Unless otherwise specified in the applicable Floating Interest Rate
Notice, the Interest Reset Dates will be, in the case of a floating interest
rate which resets: (i) daily, each Business Day; (ii) weekly, the Wednesday of
each week (unless the Treasury Rate is an applicable Interest Rate Basis, in
which case the Tuesday of each week except as described below); (iii) monthly,
the third Wednesday of each month; (iv) quarterly, the third Wednesday of March,
June, September and December of each year, (v) semiannually, the third Wednesday
of the two months specified in the applicable Floating Interest Rate Notice; and
(vi) annually, the third Wednesday of the month specified in the applicable
Floating Interest Rate Notice.
The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Federal Funds Rate and the Prime Rate will be the second Business Day
immediately preceding the applicable Interest Reset Date; and the "Interest
Determination Date" with respect to LIBOR shall be the second London Business
Day immediately preceding the applicable Interest Reset Date, unless the Index
Currency is British pounds sterling, in which case the "Interest Determination
Date" will be the applicable Interest Reset Date. The "Interest Determination
Date" with respect to the Treasury Rate shall be the day in the week in which
the applicable Interest Reset Date falls on which day Treasury Bills (as defined
below) are normally auctioned (Treasury Bills are normally sold at an auction
held on Monday of each week, unless that day is a legal holiday, in which case
the auction is normally held on the following Tuesday, except that such auction
may be held on the preceding Friday); provided, however, that if an auction is
held on the Friday of the week preceding the applicable Interest Reset Date, the
"Interest
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Determination Date" shall be such preceding Friday. If the interest rate of
this Note is a floating interest rate determined with reference to two or more
Interest Rate Bases specified in the applicable Floating Interest Rate Notice,
the "Interest Determination Date" pertaining to this Note shall be the most
recent Business Day which is at least two Business Days prior to the applicable
Interest Reset Date on which each Interest Rate Basis is determinable. Each
Interest Rate Basis shall be determined as of such date, and the applicable
interest rate shall take effect on the related Interest Reset Date.
Either or both of the following may also apply to the floating interest
rate on this Note for a Long Term Rate Period: (i) a Floating Rate Maximum
Interest Rate, or ceiling, that may accrue during any Interest Reset Period and
(ii) a Floating Rate Minimum Interest Rate, or floor, that may accrue during any
Interest Reset Period. In addition to any Floating Rate Maximum Interest Rate
that may apply, the interest rate on this Note will in no event be higher than
the Maximum Rate established by the Company or the maximum rate permitted by New
York law, as the same may be modified by United States laws of general
application.
Except as provided below or in the applicable Floating Interest Rate
Notice, interest will be payable, in the case of floating interest rates which
reset: (i) daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified in the applicable Floating Interest Rate Notice; (ii) quarterly, on
the third Wednesday of March, June, September and December of each year; (iii)
semiannually, on the third Wednesday of the two months of each year specified in
the applicable Floating Interest Rate Notice; and (iv) annually, on the third
Wednesday of the month of each year specified in the applicable Floating
Interest Rate Notice and, in each case, on the Business Day immediately
following the applicable Long Term Rate Period. If any Interest Payment Date
for the payment of interest at a floating rate (other than following the end of
the applicable Long Term Rate Period) would otherwise be a day that is not a
Business Day, such Interest Payment Date will be postponed to the next
succeeding Business Day, except that if LIBOR is an applicable Interest Rate
Basis and such Business Day falls in the next succeeding calendar month, such
Interest Payment Date will be the immediately preceding Business Day.
All percentages resulting from any calculation of floating interest rates
will be rounded to the nearest one hundred-thousandth of a percentage point,
with five one-millionths of a percentage point rounded upwards (e.g., 9.876545%
(or .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used
in or resulting from such calculation will be rounded, in the case of United
States dollars, to the nearest cent or, in the case of a foreign currency or
composite currency, to the nearest unit (with one-half cent or unit being
rounded upwards).
Accrued floating rate interest will be calculated by multiplying the
principal amount of this Note by an accrued interest factor. Such accrued
interest factor will be computed by adding the interest factor calculated for
each day in the applicable Interest Reset Period. Unless
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otherwise specified in the applicable Floating Interest Rate Notice, the
interest factor for each such day will be computed by dividing the interest
rate applicable to such day by 360, if an applicable Interest Rate Basis is the
CD Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual
number of days in the year if an applicable Interest Rate Basis is the CMT Rate
or the Treasury Rate. Unless otherwise specified in the applicable Floating
Interest Rate Notice, if the floating interest rate is calculated with
reference to two or more Interest Rate Bases, the interest factor will be
calculated in each period in the same manner as if only one of the applicable
Interest Rate Bases applied as specified in the applicable Floating Interest
Rate Notice.
Unless otherwise specified in the applicable Floating Interest Rate Notice,
Bankers Trust Company will be the "Calculation Agent." Upon request of the
beneficial owner of this Note, after any Interest Rate Adjustment Date, the
Calculation Agent or the Remarketing Agent shall disclose the interest rate and,
in the case of a floating interest rate, Interest Rate Basis or Bases, Spread
(if any) and Spread Multiplier (if any), and in each case the other terms
applicable to this Note then in effect and, if determined, the interest rate
that will become effective as a result of a determination made for the next
succeeding Interest Reset Date with respect to this Note. Except as described
herein with respect to a Note earning interest at floating rates, no notice of
the applicable interest rate, Spread (if any) or Spread Multiplier (if any)
shall be sent to the beneficial owner of this Note.
Unless otherwise specified in the applicable Floating Interest Rate Notice,
the "Calculation Date", if applicable, pertaining to any Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Maturity, as the case may be.
CD Rate. If an Interest Rate Basis for this Note is specified in the
applicable Floating Interest Rate Notice as the CD Rate, the CD Rate shall be
determined as of the applicable Interest Determination Date (a "CD Rate Interest
Determination Date") as the rate on such date for negotiable United States
dollar certificates of deposit having the Index Maturity specified in the
applicable Floating Interest Rate Notice as published by the Board of Governors
of the Federal Reserve System in "Statistical Release H.15(519), Selected
Interest Rates" or any successor publication ("H.15(519)") under the heading
"CDs (Secondary Market)," or, if not published by 3:00 p.m., New York City time,
on the related Calculation Date (as defined above), the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates of
deposit of the Index Maturity specified in the applicable Floating Interest Rate
Notice as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for United States Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Certificates of Deposit." If such rate is not yet published in either
H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on the
related Calculation Date, then the CD Rate on such CD Rate Interest
Determination
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Date will be calculated by the Calculation Agent and will be the arithmetic
mean of the secondary market offered rates as of 10:00 a.m., New York City
time, on such CD Rate Interest Determination Date, of three leading nonbank
dealers in negotiable United States dollar certificates of deposit in The City
of New York (which may include the Remarketing Agent or its affiliates)
selected by the Calculation Agent, after consultation with the Company, for
negotiable United States dollars certificates of deposit of major United States
money market banks for negotiable certificates of deposit with a remaining
maturity closest to the Index Maturity specified in the applicable Floating
Interest Rate Notice in an amount that is representative for a single
transaction in that market at that time; provided, however, that if the dealers
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate determined as of such CD Rate Interest Determination Date
will be the CD Rate in effect on such CD Rate Interest Determination Date.
CMT Rate. If an Interest Rate Basis for this Note is specified in the
applicable Floating Interest Rate Notice as the CMT Rate, the CMT Rate shall be
determined as of the applicable Interest Determination Date (a "CMT Rate
Interest Determination Date") as the rate displayed on the Designated CMT
Telerate Page (as defined below) under the caption "...Treasury Constant
Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45
P.M.," under the column for the Designated CMT Maturity Index (as defined below)
for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the weekly or monthly average, as specified in the Floating Interest Rate
Notice, for the week or the month, as applicable, ended immediately preceding
the week in which the related CMT Rate Interest Determination Date occurs. If
such rate is no longer displayed on the relevant page or is not displayed by
3:00 p.m., New York City time, on the related Calculation Date, then the CMT
Rate for such CMT Rate Interest Determination Date will be such treasury
constant maturity rate for the Designated CMT Maturity Index as published in
H.15(519). If such rate is no longer published or is not published by 3:00
p.m., New York City time, on the related Calculation Date, then the CMT Rate on
such CMT Rate Interest Determination Date will be such treasury constant
maturity rate for the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Interest
Determination Date with respect to such Interest Reset Date as may then be
published by either the Board of Governors of the Federal Reserve System or the
United States Department of the Treasury that the Calculation Agent determines
to be comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in H.15(519). If such information is not provided by 3:00
p.m., New York City time, on the related Calculation Date, then the CMT Rate on
the CMT Rate Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean of the
secondary market closing offer side prices as of approximately 3:30 p.m., New
York City time, on such CMT Rate Interest Determination Date reported, according
to their written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of New York (which
may include the Remarketing Agent or its affiliates) selected by the Calculation
Agent after consultation with
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the Company (from five such Reference Dealers selected by the Calculation
Agent, after consultation with the Company, and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)), for the most
recently issued direct noncallable fixed rate obligations of the United States
("Treasury Notes") with an original maturity of approximately the Designated
CMT Maturity Index and a remaining term to maturity of not less than such
Designated CMT Maturity Index minus one year. If the Calculation Agent is
unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT
Rate Interest Determination Date will be calculated by the Calculation Agent
and will be a yield to maturity based on the arithmetic mean of the secondary
market offer side prices as of approximately 3:30 p.m., New York City time, on
such CMT Rate Interest Determination Date of three Reference Dealers in The
City of New York (from five such Reference Dealers selected by the Calculation
Agent, after consultation with the Company, and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)), for Treasury
Notes with an original maturity of the number of years that is the next highest
to the Designated CMT Maturity Index and a remaining term to maturity closest
to the Designated CMT Maturity Index and in an amount of at least U.S.$100
million. If three or four (and not five) of such Reference Dealers are quoting
as described above, then the CMT Rate will be based on the arithmetic mean of
the offer prices obtained and neither the highest nor the lowest of such quotes
will be eliminated; provided, however, that if fewer than three Reference
Dealers so selected by the Calculation Agent, after consultation with the
Company, are quoting as mentioned herein, the CMT Rate determined as of such
CMT Rate Interest Determination Date will be the CMT Rate in effect on such CMT
Rate Interest Determination Date. If two Treasury Notes with an original
maturity as described in the second preceding sentence have remaining terms to
maturity equally close to the Designated CMT Maturity Index, the Calculation
Agent, after consultation with the Company, will obtain from five References
Dealers quotations for the Treasury Note with the shorter remaining term to
maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Floating Interest Rate Notice
(or any other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)) for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Floating Interest Rate Notice, the
Designated CMT Telerate Page shall be 7052 for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Floating Interest Rate Notice with respect to which
the CMT Rate will be calculated. If no such maturity is specified in the
applicable Floating Interest Rate Notice, the Designated CMT Maturity Index
shall be 2 years.
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Federal Funds Rate. If an Interest Rate Basis for this Note is specified
in the applicable Floating Interest Rate Notice as the Federal Funds Rate, the
Federal Funds Rate shall be determined as of the applicable Interest
Determination Date (a "Federal Funds Rate Interest Determination Date") as the
rate on such date for United States dollar federal funds as published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not published by
3:00 p.m., New York City time, on the Calculation Date, the rate on such Federal
Funds Rate Interest Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If such rate is not published
in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on
the related Calculation Date, then the Federal Funds Rate on such Federal Funds
Rate Interest Determination Date shall be calculated by the Calculation Agent
and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of federal funds transactions in The City of New York (which may include the
Remarketing Agent or its affiliates) selected by the Calculation Agent after
consultation with the Company, prior to 9:00 a.m., New York City time, on such
Federal Funds Rate Interest Determination Date; provided, however, that if the
brokers so selected by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate determined as of such Federal Funds Rate
Interest Determination Date will be the Federal Funds Rate in effect on such
Federal Funds Rate Interest Determination Date.
LIBOR. If an Interest Rate Basis for this Note is specified in the
applicable Floating Interest Rate Notice as LIBOR, LIBOR shall be determined by
the Calculation Agent as of the applicable Interest Determination Date (a "LIBOR
Interest Determination Date") in accordance with the following provisions:
(i) if (a) "LIBOR Reuters" is specified in the applicable Floating Interest
Rate Notice, the arithmetic mean of the offered rates (unless the Designated
LIBOR Page (as defined below) by its terms provides only for a single rate, in
which case such single rate will be used) for deposits in the Index Currency
having the Index Maturity specified in the applicable Floating Interest Rate
Notice, commencing on the applicable Interest Reset Date, that appear (or, if
only a single rate is required as aforesaid, appears) on the Designated LIBOR
Page (as defined below) as of 11:00 a.m., London time, on such LIBOR Interest
Determination Date, or (b) "LIBOR Telerate" is specified in the applicable
Floating Interest Rate Notice, or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in the applicable Floating Interest Rate Notice as the
method for calculating LIBOR, the rate for deposits in the Index Currency having
the Index Maturity specified in the applicable Floating Interest Rate Notice,
commencing on such Interest Reset Date, that appears on the Designated LIBOR
Page as of 11:00 a.m., London time, on such LIBOR Interest Determination Date.
If fewer than two such offered rates appear, or if no such rate appears, as
applicable, LIBOR on such LIBOR Interest Determination Date shall be determined
in accordance with the provisions described in clause (ii) below.
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(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear, or no rate appears, as the case may be, on the
Designated LIBOR Page as specified in clause (i) above, the Calculation Agent
shall request the principal London offices of each of four major reference banks
in the London interbank market, as selected by the Calculation Agent, after
consultation with the Company, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity specified in the applicable Floating Interest Rate Notice, commencing
on the applicable Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 a.m., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a single
transaction in such Index Currency in such market at such time. If at least two
such quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in
the applicable Principal Financial Center, on such LIBOR Interest Determination
Date by three major banks in such Principal Financial Center selected by the
Calculation Agent, after consultation with the Company, for loans in the Index
Currency to leading European banks, having the Index Maturity specified in the
applicable Floating Interest Rate Notice and in a principal amount that is
representative for a single transaction in such Index Currency in such market at
such time; provided, however, that if the banks so selected by the Calculation
Agent are not quoting as mentioned in this sentence, LIBOR determined as of such
LIBOR Interest Determination Date shall be LIBOR in effect on such LIBOR
Interest Determination Date.
"Index Currency" means the currency or composite currency specified in the
applicable Floating Interest Rate Notice as to which LIBOR shall be calculated.
If no such currency or composite currency is specified in the applicable
Floating Interest Rate Notice, the Index Currency shall be United States
dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Floating Interest Rate Notice, the display on the Reuter Monitor
Money Rates Service (or any successor service) for the purpose of displaying the
London interbank rates of major banks for the Index Currency, or (b) if "LIBOR
Telerate" is specified in the applicable Floating Interest Rate Notice or
neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
Floating Interest Rate Notice as the method for calculating LIBOR, the display
on the Dow Jones Telerate Service (or any successor service) for the purpose of
displaying the London interbank rates of major banks for the Index Currency.
Prime Rate. If an Interest Rate Basis for this Note is specified in the
applicable Floating Interest Rate Notice as the Prime Rate, the Prime Rate shall
be determined as of the applicable Interest Determination Date (a "Prime Rate
Interest Determination Date") as the rate on such date as such rate is published
in H.15(519) under the heading "Bank Prime Loan." If such rate is not published
prior to 3:00 p.m., New York City time, on the related Calculation Date, then
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the Prime Rate shall be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen U.S. PRIME 1 Page
(as defined below) as such bank's prime rate or base lending rate as in effect
for such Prime Rate Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen U.S. PRIME 1 Page for such Prime Rate Interest
Determination Date, the Prime Rate shall be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks (which may include Bankers
Trust Company) in The City of New York selected by the Calculation Agent, after
consultation with the Company. If fewer than four such quotations are so
provided, the Prime Rate shall be the arithmetic mean of four prime rates
quoted on the basis of the actual number of days in the year divided by a
360-day year as of the close of business on such Prime Rate Interest
Determination Date as furnished in The City of New York by the major money
center banks, if any, that have provided such quotations and by as many
substitute banks or trust companies (which may include Bankers Trust Company)
as necessary in order to obtain four such prime rate quotations, provided such
substitute banks or trust companies are organized and doing business under the
laws of the United States, or any State thereof, have total equity capital of
at least U.S.$500 million and are each subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent, after
consultation with the Company, to provide such rate or rates; provided,
however, that if the banks or trust companies so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Prime Rate determined
as of such Prime Rate Interest Determination Date will be the Prime Rate in
effect on such Prime Rate Interest Determination Date.
"Reuters Screen U.S. PRIME 1 Page" means the display designated as page
"U.S. PRIME 1" on the Reuter Monitor Money Rates Service (or such other page as
may replace the U.S. PRIME 1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
Treasury Rate. If an Interest Rate Basis for this Note is specified in the
applicable Floating Interest Rate Notice as the Treasury Rate, the Treasury Rate
shall be determined as of the applicable Interest Determination Date (a
"Treasury Rate Interest Determination Date") as the rate from the auction held
on such Treasury Rate Interest Determination Date (the "Auction") of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Floating Interest Rate Notice, as such rate is
published in H.15(519) under the heading "Treasury bills-auction average
(investment)" or, if not published by 3:00 p.m., New York City time, on the
related Calculation Date, the auction average rate of such Treasury Bills
(expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) as otherwise announced by the
United States Department of Treasury. In the event that the results of the
Auction of Treasury Bills having the Index Maturity specified in the applicable
Floating Interest Rate Notice are not reported as provided above by 3:00 p.m.,
New York City time, on such Calculation Date, or if no such Auction is held,
then the Treasury Rate shall be calculated by the Calculation Agent, and shall
be a yield to maturity (expressed
A-15
<PAGE> 45
as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers (which may include the Remarketing
Agent or its affiliates) selected by the Calculation Agent, after consultation
with the Company, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified in the applicable Floating Interest
Rate Notice; provided, however, that if the dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Treasury
Rate determined as of such Treasury Rate Interest Determination Date will be
the Treasury Rate in effect on such Treasury Rate Interest Determination Date.
(d) Failure of Remarketing Agent or Agents to Announce Interest Rates on
the Notes. In the event that (i) the Remarketing Agent has been removed or has
resigned and no successor has been appointed, or (ii) the Remarketing Agent has
failed to announce the appropriate interest rate, Spread, if any, or Spread
Multiplier, if any, as the case may be, on an Interest Rate Adjustment Date for
whatever reason, or (iii) the appropriate interest rate, Spread, if any, or
Spread Multiplier, if any, as the case may be, or Interest Rate Period cannot be
determined for whatever reason, this Note shall be automatically converted to
the Commercial Paper Term Mode with an Interest Rate Period of generally seven
days, determined as provided in the Indenture, and the rate of interest hereon
shall be equal to the rate per annum announced by NBD Bank, or such other
nationally recognized bank located in the United States as the Company may
select, as its prime lending rate.
(e) Maximum Interest Rate on the Notes. The interest rate on the Notes
shall not exceed the Maximum Rate.
(f) Notice of Interest Rate, Binding Effect. On each Interest Rate
Adjustment Date of this Note, the Remarketing Agent will notify the Company and
the Trustee of the interest rate, Spread, if any, or Spread Multiplier, if any,
as the case may be, to be borne by this Note for the following Interest Rate
Period. After such Interest Rate Adjustment Date, any beneficial owner of this
Note may contact the Trustee or the Remarketing Agent in order to be advised of
the applicable interest rate and, in the case of a floating interest rate, the
Spread (if any) and the Spread Multiplier (if any). Immediately upon receipt of
such notice, the Trustee will transmit such information to DTC in accordance
with DTC's procedures as in effect from time to time and note such rate in Annex
A. The Trustee shall confirm to DTC the interest rate for the following
Interest Rate Period in accordance with DTC's procedures as in effect from time
to time. No notice of the applicable interest rate will be sent to the
beneficial owner of this Note.
The interest rate announced by the Remarketing Agent, absent manifest
error, is binding and conclusive upon the beneficial owner of this Note, the
Company and the Trustee.
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<PAGE> 46
(g) Conversion. Unless this Note is in the Fixed Interest Rate Mode, this
Note may be converted at the option of the Company to the Daily or Weekly
Interest Rate Mode, the Commercial Paper Term Mode or the Long Term Rate Mode or
may be permanently converted to the Fixed Interest Rate Mode on any Interest
Rate Adjustment Date for this Note, and will be subject to mandatory tender by
the beneficial owner hereof as described herein on such Interest Rate Adjustment
Date. The beneficial owner of this Note will be deemed to have tendered such
Note as of the Interest Rate Adjustment Date upon which such conversion occurs
and will not be entitled to further accrual of interest on this Note after such
date.
TENDER
If this Note is bearing interest at the Initial Interest rate or in the
Commercial Paper Term Mode or the Long Term Rate Mode, it will automatically be
tendered for purchase, or deemed tendered for purchase by the beneficial owner
hereof, on each Interest Rate Adjustment Date relating hereto. Notes will be
purchased on such Interest Rate Adjustment date as described below.
If this Note is in the Daily or Weekly Interest Rate Mode is subject to
tender and purchase upon demand by the beneficial owner hereof on any Business
Day selected by such beneficial owner as hereinafter provided, at the purchase
price of par plus accrued interest, upon notice to the Remarketing Agent for
this Note and to such beneficial owner's DTC Participant on a Business Day not
later than (i) one (1) Business Day prior to the specified purchase date, in
case this Note is in the Daily Interest Rate Mode, or (ii) seven (7) days prior
to the specified purchase date, in case this Note is in the Weekly Interest Rate
Mode; provided, however, that in either such case if the date selected for
purchase is not a Business Day, the purchase date shall be the next succeeding
Business Day. Such notice by the beneficial owner hereof shall (A) state the
principal amount (or portion hereof) of such Note to be purchased, (B) state the
purchase date on which such Note will be purchased, and (C) irrevocably request
such purchase. Upon giving such notice, the beneficial owner of this Note will
be deemed to have irrevocably tendered this Note for remarketing as described
below. Beneficial owners may only tender Notes in amounts of $100,000 and
integral multiples thereof and no Notes will be purchased in part if such
partial purchase would result in the principal amount of any Notes of such
beneficial owner outstanding being in any denomination of less than $100,000 or
an integral multiple thereof.
REMARKETING AND SETTLEMENT
By 11:00 a.m., New York City time (or 9:30 a.m., New York City time, in
case this Note is in the Daily Interest Rate Mode), on each Interest Rate
Adjustment Date for this Note, the applicable Remarketing Agent will determine
the interest rate hereon to the nearest one hundred-thousandth (0.00001) of one
percent per annum for the next Interest Rate Period; provided, that between
11:00 a.m., New York City time (or 9:30 a.m., New York City time,
A-17
<PAGE> 47
in case this Note is in the Daily Interest Rate Mode) and 11:50 a.m., New York
City time, the Remarketing Agent and the Standby Remarketing Agent(s), if any,
shall use their best efforts to determine the interest rate for this Note if it
is not successfully remarketed as of the applicable deadline specified in this
paragraph. In determining the applicable interest rate for this Note and other
terms, the Remarketing Agent will, after taking into account market conditions
as reflected in the prevailing yields on fixed and variable rate taxable debt
securities, (i) consider the principal amount of all Notes tendered or to be
tendered on such date and the principal amount of such Notes prospective
purchasers are or may be willing to purchase and (ii) contact, by telephone or
otherwise, prospective purchasers and ascertain the interest rates therefor at
which they would be willing to hold or purchase such Notes.
By 12:30 p.m., New York City time, on each Interest Rate Adjustment Date,
the applicable Remarketing Agent will notify the Company and the Trustee in
writing (which may include facsimile or other electronic transmission), of (i)
the interest rate or, in the case of a floating interest rate, the initial
interest rate, the Spread and Spread Multiplier and the Initial Interest Reset
Date, applicable to this Note for the next Interest Rate Period, (ii) the
Interest Rate Adjustment Date, (iii) the Interest Payment Dates, if this Note
will then be in the Commercial Paper Term Mode (if other than the Interest Rate
Adjustment Date), the Long Term Rate Mode or the Fixed Interest Rate Mode, (iv)
the optional redemption terms, if any, and early remarketing terms, if any, in
the case of remarketing into a Long Term Rate Period, (v) the aggregate
principal amount of all Notes tendered for remarketing on such date, and (vi)
the aggregate principal amount of such tendered Notes which such Remarketing
Agent was able to remarket, at a price equal to 100% of the principal amount
thereof plus accrued interest, if any. Immediately upon receipt of such notice
and, in any case, not later than 1:30 p.m., New York City time, the Trustee will
transmit such information and any other settlement information required by DTC
to DTC in accordance with DTC's procedures as in effect from time to time.
By telephone at approximately 1:00 p.m., New York City time, on such
Interest Rate Adjustment Date, the applicable Remarketing Agent will advise the
purchaser of this Note (or the DTC Participant of each such purchaser who it is
expected in turn will advise such purchaser) of the principal amount of such
Notes that such purchaser is to purchase.
The purchaser of this Note in a remarketing will be required to give
instructions to its DTC Participant to pay the purchase price therefor in same
day funds to the applicable Remarketing Agent against delivery of the principal
amount of this Note by book entry through DTC by 3:00 p.m., New York City time,
on the Interest Rate Adjustment Date. If this Note is bearing interest in the
Daily or Weekly Interest Rate Mode for the Interest Rate Period immediately
preceding a remarketing, this Note will be settled at a price of 100% of the
principal amount hereof plus accrued interest from the most recent Interest
Payment Date herefor to the date of settlement.
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<PAGE> 48
When tendered, or deemed tendered, this Note will be automatically
delivered to the account of the Trustee (or such other account meeting the
requirements of DTC's procedures as in effect from time to time), by book entry
through DTC against payment of the purchase price or redemption price here for,
on the Interest Rate Adjustment Date relating hereto.
The applicable Remarketing Agent will make, or cause the Trustee to make,
payment to the DTC Participant of the tendering beneficial owner hereof subject
to a remarketing, by book entry through DTC by the close of business on the
related Interest Rate Adjustment Date against delivery through DTC of the
beneficial owner's tendered Note, of the purchase price for this Note. If this
Note was purchased pursuant to a Special Mandatory Purchase, subject to receipt
of funds from the Company or the Liquidity Provider (if any), as the case may
be, the Trustee will make such payment of the purchase price for this Note plus
accrued interest, if any, to such date.
The transactions described above for a remarketing of this Note will be
executed on each Interest Rate Adjustment Date for this Note through DTC in
accordance with the procedures of DTC, and the accounts of the respective DTC
Participants will be debited and credited and this Note will be delivered by
book entry as necessary to effect the purchases and sales hereof, in each case
as determined in the related remarketing.
Except as set forth below, the purchase price for this Note to the
tendering beneficial owner shall be paid solely out of the proceeds received
from a purchaser of this Note in such remarketing, and neither the Trustee, the
Remarketing Agent nor any Standby Remarketing Agent(s) or the Company (except as
set forth below) will be obligated to provide funds to make payment upon any
beneficial owner's tender of this Note in a remarketing.
The settlement and remarketing procedures described above, including
provisions for payment by purchasers of this Note or for payment to the selling
beneficial owners of this Note, may be modified to the extent required by DTC.
In addition, each Remarketing Agent may, in accordance with the terms of the
Indenture, modify the settlement and remarketing procedures set forth above in
order to facilitate the settlement and remarketing process.
As long as DTC's nominee holds the certificates representing this Note in
the book entry system of DTC, no certificates for this Note will be delivered by
any selling beneficial owner to reflect any transfer of this Note effected in
any remarketing.
Failed Remarketing. By 12:00 o'clock noon, New York City time, on any
Interest Rate Adjustment Date for this Note, the applicable Remarketing Agent
will notify the Liquidity Provider (as hereinafter defined), if any, the Trustee
and the Company by telephone or facsimile, confirmed in writing, if it, or the
Standby Remarketing Agent or Agents were unable to remarket this Note on such
date. In the event that the Company has entered into a Standby Note Purchase
Agreement (as hereinafter defined) which is in effect on such date, such notice
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<PAGE> 49
will constitute a demand for the benefit of the Company to the Liquidity
Provider, if any, to purchase this Note at a price equal to the outstanding
principal amount hereof pursuant to the terms of such Standby Note Purchase
Agreement. If a Standby Note Purchase Agreement is not in effect on such date,
or if the Liquidity Provider fails to advance funds under the Standby Note
Purchase Agreement, the Company hereby agrees to purchase this Note. In either
case the Company will pay all accrued and unpaid interest, if any, on this Note
to such Interest Rate Adjustment Date. Payment of the principal amount of this
Note under the circumstances contemplated in this paragraph by the Company or
the Liquidity Provider, as the case may be, and payment of accrued and unpaid
interest, if any, by the Company, shall be made by deposit of same-day funds in
the account of the Trustee (or such other account meeting the requirements of
DTC's procedures as in effect from time to time) irrevocably in trust for the
benefit of the Beneficial Owners of this Note subject to Special Mandatory
Purchase by 3:00 p.m., New York City time, on the related Interest Rate
Adjustment Date. For purposes of this Note, the term "Liquidity Provider"
means any bank or other credit provider whose obligations such as those under
the Standby Note Purchase Agreement are exempt from registration under the
Securities Act of 1933, as amended, with long term senior debt ratings from
Standard & Poor's Corporation and Moody's Investors Service, Inc. at least
equal to those of the Company as of the date of the Standby Note Purchase
Agreement, and a minimum combined capital and surplus of at least $50,000,000,
that has entered into a Standby Note Purchase Agreement with the Company for
the purpose of purchasing unremarketed Notes on any Interest Rate Adjustment
Date; provided, that for purposes of any notices to be given, "Liquidity
Provider" means the Administrative Agent (as defined in such Standby Note
Purchase Agreement), and the term "Standby Note Purchase Agreement" means the
agreement which the Company may, at its option, enter into from time to time
with a Liquidity Provider for the purpose of purchasing unremarketed Notes.
THE BENEFICIAL OWNER'S RIGHTS TO TENDER THIS NOTE FOR PURCHASE WILL BE
ELIMINATED UPON CONVERSION OF THE INTEREST RATE TO A FIXED RATE.
TRANSFER OR EXCHANGE
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in any place where the principal of and premium, if any, and any
interest on this Note are payable or at such other offices or agencies as the
Company may designate, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to, the Company and the Security Registrar or
any transfer agent duly executed, by the registered owner hereof or his attorney
duly authorized in writing, and thereupon one or more new Notes of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount will be issued to the designated transferee or transferees.
A-20
<PAGE> 50
The Notes are issuable only in fully registered form in denominations of
$100,000 and integral multiples thereof. As provided in the Indenture and
subject to certain limitations therein set forth, this Note is exchangeable for
a like aggregate principal amount of Notes of this series and of like tenor of
any authorized denomination, as requested by the registered owner surrendering
the same.
No service charge shall be made for any registration of transfer or
exchange of this Note, but, subject to certain limitations set forth in the
Indenture, the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
Subject to the terms of the Indenture, prior to due presentment of this
Note for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note is
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
REDEMPTION AND ACCELERATION
Optional Redemption While This Note is in a Daily or Weekly Interest Rate Mode
or the Commercial Paper Term Mode. So long as this Note bears interest in the
Daily or Weekly Interest Rate Mode or in the Commercial Paper Term Mode, it is
subject to Optional Redemption, at the direction of the Company on any Interest
Rate Adjustment Date relating hereto, in whole or in part, at a redemption
price equal to 100% of the principal amount to be redeemed plus accrued and
unpaid interest to the date set for redemption (the "Redemption Date").
Optional Redemption While This Note is in the Long Term Rate Mode or the Fixed
Interest Rate Mode. So long as this Note bears interest in the Long Term Rate
Mode or the Fixed Interest Rate Mode, this Note is subject to Optional
Redemption at the written direction of the Company if so specified at the time
of conversion to or within such Interest Rate Mode (a) commencing on the
Commencement Date, if any, specified in Annex A, in whole or in part at any
time, at the applicable redemption prices for any Redemption Date (dates
inclusive) (i) from the Commencement Date to but not including the first
anniversary of the Commencement Date, (ii) from the first anniversary of the
Commencement Date to but not including the second anniversary of the
Commencement Date, and (iii) from the second anniversary of the Commencement
Date and thereafter (expressed as percentage of the principal amount so
redeemed) set forth in Annex A, plus accrued interest to the Redemption Date or
(b) otherwise as set forth in Annex A. If this Note is in the Fixed Interest
Rate Mode, it may be subject to redemption pursuant to a sinking fund on the
terms specified in Annex A.
A-21
<PAGE> 51
Notice of redemption shall be given by mail to the registered owner of this
Note, 30 days prior to the Redemption Date, all as provided in the Indenture. As
provided in the Indenture, notice of redemption as aforesaid may state that such
redemption shall be conditioned upon the receipt by the Trustee of the
redemption monies on or before the date fixed for such redemption; a notice of
redemption so conditioned shall be of no force or effect if such money is not so
received.
The Company shall not be required to (a) issue, register the transfer of or
exchange Notes of this series during a period beginning at the opening of
business 15 days before any selection of Notes of this series to be redeemed and
ending at the close of business on the day of the mailing of the relevant notice
of redemption or (b) register the transfer of or exchange any Notes selected for
redemption, in whole or in part, except the unredeemed portion of any Note being
redeemed in part.
In the event of redemption of this Note in part only, a new Note or Notes
of this series, of like tenor, for the unredeemed portion hereof will be issued
in the name of the registered owner hereof upon the cancellation hereof.
If any Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
OTHER PROVISIONS
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the registered owners of the securities of each series
thereunder to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the registered owners of not less than a majority in
principal amount of such securities then Outstanding of each series to be
affected. The Indenture also contains provisions permitting the registered
owners of specified percentages in principal amount of the securities of each
series thereunder at the time Outstanding, on behalf of the registered owners of
all securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the registered owner of this
Note shall be conclusive and binding upon such registered owner and upon all
future registered owners of this Note Issued upon the registration of transfer
hereof or in exchange for or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
As set forth in, and subject to the provisions of, the Indenture, no
registered owner of any Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless (i) such
registered owner shall have previously given to the Trustee
A-22
<PAGE> 52
written notice of a continuing Event of Default with respect to the Notes of
this series, (ii) the registered owners of not less than 25% in principal
amount of the Outstanding Notes of this series shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding
as trustee, (iii) the Trustee shall have failed to institute such proceeding
within 60 days and (iv) the Trustee shall not have received from the registered
owners of a majority in principal amount of the Outstanding Notes of this
series a direction inconsistent with such request within such 60 day period;
provided, however, that such limitations do not apply to a suit instituted by
the registered owner hereof for the enforcement of payment of the principal of
and premium, if any, or any interest on this Note on or after the respective
due dates expressed herein.
No reference to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and premium, if any, and any interest
including additional amounts, on this Note at the times, places and rate, and in
the coin or currency, herein prescribed.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Note which are not defined herein and which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
This Note shall not be valid or become obligatory for any purpose until the
Trustee's Certificate of Authentication hereon shall have been executed by the
Trustee.
IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument
to be duly executed under its corporate seal.
THE DETROIT EDISON COMPANY
BY __________________________________
Name:
Title:
Attest:
BY _________________________
Name:
Title:
A-23
<PAGE> 53
This is one of the Notes of the series designated herein, referred to in
the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By ____________________________
Authorized Signatory
Date:
A-24
<PAGE> 54
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
Please insert Social Security or Other Identifying Number of Assignee
________________________________________________________________________________
(please print or type name and address of transferee)
the within Note and all rights thereunder and does hereby irrevocably
constitute and appoint attorney to transfer the within Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: ________________________ ______________________
In the presence of:
_______________________________
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without
alteration or enlargement or any change whatever. When assignment is made by a
guardian, trustee, executor or administrator, an officer of a corporation, or
anyone in a representative capacity, proof of his authority to act must
accompany the Note.
A-25
<PAGE> 55
EXHIBIT B
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") TO A NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
LIQUIDITY PROVIDER NOTE
No: $
THE DETROIT EDISON COMPANY
REMARKETED SECURED NOTE
1993 SERIES B DUE 2033
<TABLE>
<CAPTION>
Facility
Expiration Date of Original
Date Maturity Issue Date CUSIP
---------- -------- ---------- -----
<S> <C> <C> <C>
August 15, 2033 October 14,1993
</TABLE>
THE DETROIT EDISON COMPANY, a corporation duly organized and existing
under the laws of the State of Michigan (the "Company"), for value received
hereby promises to pay to or registered assigns, the
principal sum of $ on August 15, 2033, upon the presentation and
surrender hereof at the principal office of Bankers Trust Company, or its
successor in trust (the "Trustee"), and to pay interest on the unpaid principal
B-1
<PAGE> 56
balance hereof from the Original Issue Date specified above or such date to
which interest has been paid or duly provided for at the rate equal to a
fluctuating interest rate per annum as shall be in effect from time to time
which rate per annum shall at all times be equal to the higher of: (a) the rate
of interest (which may not be the lowest rate of interest for loans to
borrowers) established by , from time to time, as
U.S. base, prime, reference or other similar rate; (b) 1/2 of one percent per
annum above the Federal Funds Rate in effect from time to time; but, (c) in no
event, may the rate of interest payable on the note exceed 15% per annum or
such higher rate as may be established from time to time by the Company's Board
of Directors as the maximum rate of interest payable by the Company hereunder
(which actions shall be evidenced by a Company Order to the Trustee), computed
on the basis of a year of 365 or 366 days, as the case may be, for the actual
number of days (including the first day but excluding the last day) occurring
in the period, payable on the fifteenth day of each , ,
and (or on such other dates as the Company and the person in whose
name this Note is registered may agree from time to time), each an "Interest
Payment Date", to the person in whose name this Note is registered at the close
of business on the Record Date, until the earlier to occur of a remarketing of
this Note as described below or purchase by the Company on the Facility
Expiration Date set forth above. The Record Date is the last calendar day of
the month preceding each Interest Payment Date. "Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions located in the State of Michigan or in the state in which
the principal corporate trust office of the Trustee is located, are authorized
or obligated by or pursuant to law or executive order to close. Payment of the
principal of and interest on this Note will be made at the office or agency
maintained for that purpose in the Borough of Manhattan, The City of New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the person in whose name this Note is registered at the close
of business on the Record Date.
This Note is one of a duly authorized series of Securities of the Company
(the "Notes"), issued and to be issued under a Collateral Trust Indenture, dated
as of June 30, 1993, as amended and supplemented by the First Supplemental
Indenture, dated as of June 30, 1993, and the Second Supplemental Indenture,
dated as of September 15, 1993 (together, the "Indenture" ), between the Company
and the Trustee, to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
registered owners of the Notes and of the terms upon which the Notes are, and
are to be, authenticated and delivered.
This Note is secured as to payment of principal, interest and premium, if
any, by a general and refunding mortgage bond of the Company issued under and
secured by a Mortgage and Deed of Trust, dated as of October 1, 1924, between
the Company and the Trustee, as
B-2
<PAGE> 57
amended and supplemented by various supplemental indentures, pledged by the
Company for the benefit of the holders of the Notes to the Trustee under the
Indenture.
REMARKETING, TENDER AND SETTLEMENT
In the event of a successful remarketing, this Note will automatically be
tendered for purchase, or deemed tendered for purchase, by the beneficial owner
hereof on the day set forth in a notice by the Remarketing Agent to the Company,
the Liquidity Provider and the Trustee (the "Tender Date"). The Remarketing
Agent will make payment to the DTC Participant of the tendering beneficial owner
hereof subject to a remarketing, by book entry through DTC by the close of
business such Tender Date against delivery through DTC of the beneficial owner's
tendered Note, of the purchase price for this Note, plus accrued interest, if
any, to such date.
The transactions described above for a remarketing of this Note will be
executed through DTC in accordance with the procedures of DTC, and the accounts
of the respective DTC Participants will be debited and credited and this Note
will be delivered by book entry as necessary to effect the purchases and sales
hereof, in each case as determined in the related remarketing.
The purchase price for this Note to the beneficial owner hereof shall be
paid solely out of the proceeds received from a purchaser of this Note in such
remarketing, and neither the Remarketing Agent nor the Company will be obligated
to provide funds to make payment upon any beneficial owner's tender of this Note
in a remarketing.
The settlement procedures described above, including provisions for payment
by purchasers of this Note or for payment to the beneficial owner of this Note,
may be modified to the extent required by DTC. In addition, the Remarketing
Agent may, in accordance with the terms of the Indenture, modify the settlement
procedures set forth above in order to facilitate the settlement process.
As long as DTC's nominee holds the certificates representing this Note in
the book entry system of DTC, no certificates for this Note will be delivered by
the beneficial owner hereof to reflect any transfer of this Note effected in any
remarketing.
TRANSFER OR EXCHANGE
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in any place where the principal of and premium, if any, and any
interest on this Note are payable or at such other offices or agencies as the
Company may designate, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to, the Company and the Security Registrar or
any
B-3
<PAGE> 58
transfer agent duly executed, by the registered owner hereof or his attorney
duly authorized in writing, and thereupon one or more new Notes of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount will be issued to the designated transferee or transferees.
The Notes are issuable only in fully registered form in denominations of
$100,000 and integral multiples thereof. As provided in the Indenture and
subject to certain limitations therein set forth, this Note is exchangeable for
a like aggregate principal amount of Notes of this series and of like tenor of
any authorized denomination, as requested by the registered owner surrendering
the same.
No service charge shall be made for any registration of transfer or
exchange of this Note, but, subject to certain limitations set forth in the
Indenture, the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
Subject to the terms of the Indenture, prior to due presentment of this
Note for registration of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note is
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
ACCELERATION
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and to the effect provided in the Indenture.
OTHER PROVISIONS
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the registered owners of the securities of each series
thereunder to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the registered owners of not less than a majority in
principal amount of such securities then Outstanding of each series to be
affected. The Indenture also contains provisions permitting the registered
owners of specified percentages in principal amount of the securities of each
series thereunder at the time Outstanding, on behalf of the registered owners of
all securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the registered owner of this
Note shall be conclusive and binding upon such registered owner and upon all
future registered owners of this Note issued upon the registration of transfer
hereof or in
B-4
<PAGE> 59
exchange for or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note.
As set forth in, and subject to the provisions of, the Indenture, no
registered owner of any Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless (i) such
registered owner shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to the Notes of this series, (ii) the
registered owners of not less than 25% in principal amount of the Outstanding
Notes of this series shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, (iii) the
Trustee shall have failed to institute such proceeding within 60 days and (iv)
the Trustee shall not have received from the registered owners of a majority in
principal amount of the Outstanding Notes of this series a direction
inconsistent with such request within such 60 day period; provided, however,
that such limitations do not apply to a suit instituted by the registered owner
hereof for the enforcement of payment of the principal of and premium, if any,
or any interest on this Note on or after the respective due dates expressed
herein.
No reference to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of and premium, if any, and any interest
on this Note at the times, places and rate, and in the coin or currency, herein
prescribed.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them In the Indenture.
This Note shall not be valid or become obligatory for any purpose until the
Trustee's Certificate of Authentication hereon shall have been executed by the
Trustee.
IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument
to be duly executed under its corporate seal.
THE DETROIT EDISON COMPANY
By _____________________________
L.L. Loomans
Vice President and Treasurer
B-5
<PAGE> 60
Attest:
By __________________________________
Susan M. Beale
Corporate Secretary
This Note is one of the Notes of the series designated herein, referred to
in the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By _________________________
Authorized Signatory
Date:
B-6
<PAGE> 61
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
Please insert Social Security or Other Identifying Number of Assignee
________________________________________________________________________________
(please print or type name and address of transferee)
the within Note and all rights thereunder and does hereby irrevocably
constitute and appoint attorney to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated: ______________________ _________________________
In the presence of:
________________________________________________________________________________
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement or any change whatever. When assignment is made by a guardian,
trustee, executor or administrator, an officer of a corporation, or anyone in a
representative capacity, proof of his authority to act must accompany the Note.
B-7
<PAGE> 62
EXHIBIT C
THE DETROIT EDISON COMPANY
REMARKETED SECURED NOTES 1993 SERIES B DUE 2033
SUPPLEMENTAL COMPANY ORDER
Pursuant to Article Four of the First Amendment, dated as of
August 15, 1996, to the Second Supplemental Indenture, dated as of September
15, 1993, to Collateral Trust Indenture, dated as of June 30, 1993, as amended,
you are instructed to prepare and authenticate a Note, of the series identified
above, in the principal amount of $____________. The Note is being delivered
in exchange for issued and outstanding Notes of the series identified above.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day
of ___________, 1996.
___________________________
R. J. Giaier
Assistant Treasurer
The Detroit Edison Company
C-1
<PAGE> 63
EXHIBIT D
[The Detroit Edison Company Letterhead]
FLOATING INTEREST RATE NOTICE
[Date]
To: [Remarketing Agent(s)]
[Address]
Bankers Trust Company
4 Albany Street
New York, New York 10006
Attention:
Telecopy: (212) 250-6961
Re: Remarketed Secured Notes 1993 Series B Due 2033 (the "Notes")
Ladies and Gentlemen:
This Floating Interest Rate Notice relates to (i) $__________________
principal amount of the Notes (CUSIP No. ____________) and (ii) the proposed
Long Term Rate Period of the Note (the "Interest Rate Period") commencing on
______________ and ending on ___________. Capitalized terms used and not other-
wise defined herein shall have their respective meanings assigned to them in
the Notes.
We hereby notify you that the above-referenced Notes will bear the
following floating rate terms during the Interest Rate Period specified above:
1. The Interest Rate Basis(es) shall be:
[ ] CD Rate, where the Index Maturity will be __________;
[ ] CMT Rate, where the Designated CMT Maturity Index
will be ______________, and the Designated CMT
Telerate Page will be _______________;
[ ] Federal Funds Rate;
[ ] LIBOR Reuters, where the Index Currency will be
__________, and the Designated LIBOR Page will be
____________;
[ ] LIBOR Telerate, where the Index Currency will be
__________, and the Designated LIBOR Page will be
____________;
D-1
<PAGE> 64
[ ] Prime Rate;
[ ] Treasury Rate ____________.
2. The floating interest rate will be reset as follows:
[ ] Initial Interest Reset Date will be _____________;
[ ] Interest Reset Dates will be _____________;
[ ] Interest Reset Period will be ______________.
3. The interest will be paid as follows:
[ ] Interest Payment Dates will be _____________;
[ ] Interest Payment Period will be _____________;
[ ] Index Maturity will be _____________;
[ ] Floating Rate Maximum Interest Rate will be
_____________;
[ ] Floating Rate Minimum Interest Rate will be
______________.
4. Day Count Convention:
[ ] Actual/360 _____________;
[ ] Actual/Actual _____________;
[ ] 30/360.
Applicable Interest Rate Basis:
5. Other terms: [ ]
Each beneficial owner of the Note will be deemed to have tendered such
Note as of the Interest Rate Adjustment Date and will not be entitled to
further accrual of interest after the Interest Rate Adjustment Date.
THE DETROIT EDISON COMPANY
By: ______________________
Name:
Title:
D-2
<PAGE> 1
EXHIBIT 11.5
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
OF COMMON STOCK
<TABLE>
<CAPTION>
Three Nine Twelve
Months Months Months
Ended Ended Ended
September 30, 1996 September 30, 1996 September 30, 1996
------------------ ------------------ ------------------
(Thousands, except per share amounts)
<S> <C> <C> <C>
PRIMARY:
Net Income $44,933 $231,626 $305,893
Weighted average number
of common shares
outstanding (a) 145,120 145,120 144,728
Earnings per share of
Common Stock based on
weighted average number
of shares outstanding $0.31 $1.60 $2.11
FULLY DILUTED:
Net Income $44,933 $231,626 $305,893
Convertible Preferred Stock
dividends - - 12
-------- --------- ---------
$44,933 $231,626 $305,905
======== ========= =========
Weighted average number
of common shares
outstanding (a) 145,120 145,120 144,728
Conversion of convertible
Preferred Stock - - 58
-------- --------- ---------
145,120 145,120 144,786
======== ========= =========
Earnings per share of Common
Stock assuming conversion of
outstanding convertible
Preferred Stock $0.31 $1.60 $2.11
</TABLE>
- -----------------------------------------
(a) Based on a daily average.
<PAGE> 1
EXHIBIT 15.3
November 7, 1996
DTE Energy Company and
The Detroit Edison Company
Detroit, Michigan
We have made reviews, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim financial information of DTE Energy Company and subsidiary
companies and of The Detroit Edison Company and subsidiary companies for
the three-month, nine-month and twelve-month periods ended September 30,
1996, as indicated in our report dated November 7, 1996. Because we did
not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in
your Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, is incorporated by reference in the following Registration
Statements:
FORM REGISTRATION NUMBER
DTE Energy Company
Form S-3 33-57545
Form S-8 333-00023
The Detroit Edison Company
Form S-3 33-53207
Form S-3 33-64296
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 is 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 DTE
ENERGY COMPANY AD SUBSIDIARY COMPANIES 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>
<CIK> 0000936340
<NAME> DTE ENERGY COMPANY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,492,906
<OTHER-PROPERTY-AND-INVEST> 526,572
<TOTAL-CURRENT-ASSETS> 881,351
<TOTAL-DEFERRED-CHARGES> 1,198,177
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 11,099,006
<COMMON> 1,951,437
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,489,484
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,440,921
0
144,405
<LONG-TERM-DEBT-NET> 3,775,301
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 244,214
0
<CAPITAL-LEASE-OBLIGATIONS> 119,823
<LEASES-CURRENT> 143,790
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,230,552
<TOT-CAPITALIZATION-AND-LIAB> 11,099,006
<GROSS-OPERATING-REVENUE> 2,758,234
<INCOME-TAX-EXPENSE> 171,628
<OTHER-OPERATING-EXPENSES> 2,126,956
<TOTAL-OPERATING-EXPENSES> 2,298,584
<OPERATING-INCOME-LOSS> 459,650
<OTHER-INCOME-NET> 1,378
<INCOME-BEFORE-INTEREST-EXPEN> 461,028
<TOTAL-INTEREST-EXPENSE> 216,294
<NET-INCOME> 231,626
13,108
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 224,212
<TOTAL-INTEREST-ON-BONDS> 206,537
<CASH-FLOW-OPERATIONS> 781,817
<EPS-PRIMARY> 1.60
<EPS-DILUTED> 1.60
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DETROIT
EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME,
BALANCE SHEET, STATEMENT OF CASH FLOWS AND STATEMENT OF COMMON SHAREHOLDERS'
EQUITY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000028385
<NAME> DETROIT EDISON COMPANY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,492,906
<OTHER-PROPERTY-AND-INVEST> 452,448
<TOTAL-CURRENT-ASSETS> 826,194
<TOTAL-DEFERRED-CHARGES> 1,193,655
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 10,965,203
<COMMON> 1,451,199
<CAPITAL-SURPLUS-PAID-IN> 500,238
<RETAINED-EARNINGS> 1,391,229
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,342,666
0
144,405
<LONG-TERM-DEBT-NET> 3,740,421
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 244,214
0
<CAPITAL-LEASE-OBLIGATIONS> 119,823
<LEASES-CURRENT> 143,790
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,229,884
<TOT-CAPITALIZATION-AND-LIAB> 10,965,203
<GROSS-OPERATING-REVENUE> 2,756,100
<INCOME-TAX-EXPENSE> 173,424
<OTHER-OPERATING-EXPENSES> 2,120,913
<TOTAL-OPERATING-EXPENSES> 2,294,337
<OPERATING-INCOME-LOSS> 461,763
<OTHER-INCOME-NET> (750)
<INCOME-BEFORE-INTEREST-EXPEN> 461,013
<TOTAL-INTEREST-EXPENSE> 216,072
<NET-INCOME> 244,941
13,108
<EARNINGS-AVAILABLE-FOR-COMM> 231,833
<COMMON-STOCK-DIVIDENDS> 234,369
<TOTAL-INTEREST-ON-BONDS> 206,537
<CASH-FLOW-OPERATIONS> 783,679
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.13
[EXECUTION COPY]
FOURTH AMENDMENT
364-DAY CREDIT AGREEMENT
FOURTH AMENDMENT (this "AMENDMENT"), dated as of August 29, 1996, to the
364-DAY CREDIT AGREEMENT dated as of September 1, 1993, as amended by the First
Amendment, dated as of August 31, 1994, certain extension letters, each dated
June 30, 1995, and the Third Amendment, dated as of March 8, 1996, by and among
RENAISSANCE ENERGY COMPANY, a Delaware corporation (the "BORROWER"), THE
DETROIT EDISON COMPANY, a Michigan corporation (the "GUARANTOR"), the banks
referred to therein (the "BANKS"), and BARCLAYS BANK PLC, New York Branch, as
agent (the "AGENT") for the Banks (such Credit Agreement, as heretofore
amended, being hereinafter referred to as the "EXISTING CREDIT AGREEMENT", and,
as amended by this Amendment, as the "AMENDED CREDIT AGREEMENT" or the "CREDIT
AGREEMENT").
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantor, the Banks and the Agent have
previously entered into the Existing Credit Agreement; and
WHEREAS, the Borrower, the Guarantor, the Banks and the Agent now wish to
amend the Existing Credit Agreement to extend the Termination Date described
therein;
NOW THEREFORE, the Borrower, the Guarantor, the Banks and the Agent agree
as follows (capitalized terms used but not defined in this Amendment having the
meanings assigned them in the Existing Credit Agreement):
SECTION a) AMENDMENTS TO EXISTING CREDIT AGREEMENT. a) EXTENSION OF
TERMINATION DATE. Effective as of the date hereof, and subject to the
satisfaction of the conditions precedent set forth in Section 2 hereof, the
Termination Date is hereby extended to August 28, 1997.
b) By a Fourth Amendment thereto dated as of September 1, 1996, the 3-Year
Credit Agreement has been renamed the"MULTI-YEAR CREDIT AGREEMENT". From
and after the effective date of this
<PAGE> 2
Amendment, all references to the "the 3-Year Credit Agreement" (or words of
like import) contained in the Financing Documents, any amendment thereto or
any document delivered thereunder, whether executed or delivered before or
after the effective date of this Amendment, shall be deemed to be references
to the Multi-Year Credit Agreement, except where (and then only to the
extent that) to do so would adversely affect the validity or effectiveness
thereof.
SECTION 1. Conditions of Effectiveness. THIS AMENDMENT SHALL BECOME
EFFECTIVE AS OF THE DATE SET FORTH ABOVE WHEN, AND ONLY WHEN, THE AGENT SHALL
HAVE RECEIVED (IN SUFFICIENT COPIES FOR EACH BANK) THE FOLLOWING:
a) Counterparts of this Amendment executed by the Borrower, the
Guarantor and all of the Banks.
b) Certified copies of the resolutions of the Board of Directors of
the Borrower authorizing this Amendment and of all documents
evidencing other necessary corporate action and governmental and
regulatory approvals required to be obtained by it in connection
therewith, certified by the Secretary or Assistant Secretary of the
Borrower.
c) Certified copies of the resolutions of the Board of Directors of
the Guarantor authorizing this Amendment and of all documents
evidencing other necessary corporate action and governmental and
regulatory approvals required to be obtained by it in connection
therewith, certified by the Secretary or Assistant Secretary of the
Guarantor.
d) A favorable opinion of counsel to the Borrower, to the effect set
forth in Annex I to this Amendment and as to such other matters
relating to the transactions contemplated hereby as any Bank through
the Agent may reasonably request.
e) A favorable opinion of the General Counsel of the Guarantor, to
the effect set forth in Annex II to this Amendment and as to such
other matters relating to the transactions contemplated hereby as any
Bank through the Agent may reasonably request.
f) Evidence that the Guarantor has extended, through the Termination
Date as extended hereby, the Guarantee set forth in Section 6.02 of
the Existing Agreement.
<PAGE> 3
g) Evidence that the "Expiration Date" of the Heat Purchase Contract has
been extended to August 28, 1997 and that the "Outside Expiration Date" of
the Heat Purchase Contract has been extended to September 1, 2000.
h) Such other instruments, opinions or documents as any Bank through the
Agent may reasonably request.
SECTION 2. Representations and Warranties. EACH OF THE BORROWER AND THE
GUARANTOR REPRESENTS AND WARRANTS, AS TO ITSELF ONLY, AS FOLLOWS:
(1) THE EXECUTION AND DELIVERY BY IT OF THIS AMENDMENT, AND THE
PERFORMANCE BY IT OF THE AMENDED CREDIT AGREEMENT AND THE OTHER
FINANCING DOCUMENTS TO WHICH IT IS A PARTY ARE WITHIN ITS CORPORATE
POWERS, HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE OR OTHER
SIMILAR ACTION, AND DO NOT AND WILL NOT CONTRAVENE (1) ITS CHARTER OR
BY-LAWS, AS THE CASE MAY BE, OR ANY LAW OR LEGAL RESTRICTION OR (1) ANY
CONTRACTUAL RESTRICTION BINDING ON OR AFFECTING IT OR ITS PROPERTIES;
a) This Amendment has been duly executed and delivered by it, and,
assuming the due execution and delivery by the Banks pursuant to due
authority of this Amendment, this Amendment, the Amended Credit Agreement
and the other Financing Documents to which it is a party are its legal,
valid and binding obligations, enforceable against it in accordance with
their respective terms; subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally;
b) No consent, license, order, authorization or approval or other action
by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by it of this
Amendment;
c) Its representations and warranties contained in Section 4.01 (in the
case of the Borrower) or Section 4.02 (in the case of the Guarantor) of the
Existing Credit Agreement are true and correct in all material respects on
and as of the date of this Amendment, as though made on and as of such date;
d) No event in respect of it has occurred and is continuing, which
constitutes an Event of Default or a Default; and
<PAGE> 4
(a) In the case of the Guarantor: (a) the FERC Authorization is in full
force and effect, (a) although scheduled by its terms to expire on
December 31, 1996, the Guarantor intends to seek extension of the FERC
Authorization and (a) without regard to any extension thereof, the FERC
Authorization as presently in effect is sufficient to authorize: (a) the
creation, validity and performance of the Guarantee described in Section
6.01 of the Amended Credit Agreement in respect of each Advance made on
or prior to December 31, 1996 or any later date to which the FERC
Authorization may be extended, (a) the Guarantor to perform its
obligations under the Credit Agreement and the other Financing Documents
in respect of each such Advance and the corresponding Guarantee, and (a)
the Guarantor to extend through the Termination Date as extended hereby
the Guarantee set forth in Section 6.02 of the Credit Agreement and to
perform its obligations thereunder.
SECTION e) REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. e) Upon the
effectiveness of this Amendment in accordance with Section 2 hereof, on and
after the date hereof each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Existing Credit Agreement, and each reference in the Notes and the other
Financing Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Existing Credit Agreement, shall mean
and be a reference to the Amended Credit Agreement.
f) Except as specifically amended above, the Credit Agreement and all
other Financing Documents are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
g) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Bank or the Agent under any of the Financing Documents,
nor constitute a waiver of any provision of any of the Financing Documents.
SECTION 3. Costs and Expenses. THE BORROWER AGREES TO PAY ON DEMAND
ALL REASONABLE COSTS AND EXPENSES OF THE AGENT IN CONNECTION WITH THE
PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION AND AMENDMENT OF
THIS AMENDMENT AND THE OTHER INSTRUMENTS AND DOCUMENTS TO BE DELIVERED
HEREUNDER, INCLUDING,
<PAGE> 5
WITHOUT LIMITATION, THE REASONABLE FEES AND OUT-OF-POCKET EXPENSES OF COUNSEL
FOR THE AGENT WITH RESPECT THERETO AND WITH RESPECT TO ADVISING THE AGENT AND
THE BANKS AS TO THEIR RESPECTIVE RIGHTS AND RESPONSIBILITIES HEREUNDER AND
THEREUNDER.
SECTION 4. Execution in Counterparts. THIS AMENDMENT MAY BE EXECUTED IN
ANY NUMBER OF COUNTERPARTS AND BY DIFFERENT PARTIES HERETO IN SEPARATE
COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND DELIVERED SHALL BE DEEMED TO
BE AN ORIGINAL AND ALL OF WHICH TAKEN TOGETHER SHALL CONSTITUTE BUT ONE AND THE
SAME AGREEMENT.
SECTION 5. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written,
RENAISSANCE ENERGY COMPANY
By
Title:
THE DETROIT EDISON COMPANY,
as Guarantor
By
Title:
<PAGE> 7
ANNEX I
[SCOPE OF OPINION OF COUNSEL TO THE BORROWER]
The Opinion of Counsel to the Borrower referred to in Section 2(d) of this
Amendment shall re-affirm, as of the date of this Amendment, the opinions
expressed in the opinion of such counsel previously delivered pursuant to
Section 3.01(m) of the Existing Credit Agreement, except that, for purposes of
such re-affirmation, (i) the "Transaction Documents" shall be stated to include
this Amendment and (ii) references in such opinions to the "Credit Agreement"
shall be stated to refer to the Amended Credit Agreement.
<PAGE> 8
ANNEX II
[SCOPE OF OPINION OF COUNSEL TO THE GUARANTOR]
The Opinion of Counsel to the Guarantor referred to in Section 2(e) of this
Amendment shall be to the effect that:
(1) THE EXECUTION AND DELIVERY BY THE GUARANTOR OF THIS AMENDMENT, AND
THE PERFORMANCE BY THE GUARANTOR OF THE AMENDED CREDIT AGREEMENT AND THE
OTHER FINANCING DOCUMENTS TO WHICH IT IS A PARTY ARE WITHIN ITS CORPORATE
POWERS, HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE OR OTHER
SIMILAR ACTION, AND DO NOT AND WILL NOT CONTRAVENE (1) ITS CHARTER OR
BY-LAWS, AS THE CASE MAY BE, OR ANY LAW OR LEGAL RESTRICTION OR (1) ANY
CONTRACTUAL RESTRICTION BINDING ON OR AFFECTING IT OR ITS PROPERTIES;
a) This Amendment has been duly executed and delivered by it, and,
assuming the due execution and delivery by the Banks pursuant to due
authority of this Amendment, this Amendment, the Amended Credit Agreement
and the other Financing Documents to which the Guarantor is a party are the
Guarantor's legal, valid and binding obligations, enforceable against the
Guarantor in accordance with their respective terms; subject to the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally;
b) No consent, license, order, authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by the
Guarantor of this Amendment;
(a) (a) the FERC Authorization is in full force and effect, and without
regard to any extension thereof, the FERC Authorization as presently in
effect is sufficient to authorize: (a) the creation, validity and
performance of the Guarantee described in Section 6.01 of the Amended Credit
Agreement in respect of each Advance made on or prior to December 31, 1996
or any later date to which the FERC Authorization may be extended,(a) the
Guarantor to perform its obligations under the Credit Agreement and the
other Financing Documents in respect of each such Advance and the
corresponding Guarantee, and (a) the Guarantor to extend through the
Termination Date as extended by this Amendment the Guarantee set forth in
Section 6.02 of the Credit Agreement and to perform its obligations
thereunder;
<PAGE> 9
AND such opinion of counsel to the Guarantor shall re-affirm, as of the date of
this Amendment, the opinions expressed in paragraphs 1, 4, 5 and 6 of the
opinion of such counsel previously delivered pursuant to Section 3.01(n) of the
Existing Credit Agreement.
<PAGE> 1
EXHIBIT 99.14
[EXECUTION COPY]
FOURTH AMENDMENT
3-YEAR CREDIT AGREEMENT
FOURTH AMENDMENT (this "AMENDMENT"), dated as of September 1, 1996, to the
3-YEAR CREDIT AGREEMENT dated as of September 1, 1993, as amended by the First
Amendment, dated as of September 1, 1994, certain extension letters, each dated
June 30, 1995, and the Third Amendment, dated as of March 8, 1996, by and among
RENAISSANCE ENERGY COMPANY, a Delaware corporation (the "BORROWER"), THE
DETROIT EDISON COMPANY, a Michigan corporation (the "GUARANTOR"), the banks
referred to therein (the "BANKS"), and BARCLAYS BANK PLC, New York Branch, as
agent (the "AGENT") for the Banks (such Credit Agreement, as heretofore
amended, being hereinafter referred to as the "EXISTING CREDIT AGREEMENT", and,
as amended by this Amendment, as the "AMENDED CREDIT AGREEMENT" or the "CREDIT
AGREEMENT").
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantor, the Banks and the Agent have
previously entered into the Existing Credit Agreement; and
WHEREAS, the Borrower, the Guarantor, the Banks and the Agent now wish to
amend the Existing Credit Agreement to extend the Termination Date described
therein and to rename the Credit Agreement;
NOW THEREFORE, the Borrower, the Guarantor, the Banks and the Agent agree
as follows (capitalized terms used but not defined in this Amendment having the
meanings assigned them in the Existing Credit Agreement):
SECTION A) AMENDMENTS TO EXISTING CREDIT AGREEMENT. a) EXTENSION OF
TERMINATION DATE. Effective as of the date hereof, and subject to the
satisfaction of the conditions precedent set forth in Section 2 hereof, the
Termination Date is hereby extended to September 1, 2000.
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b) The Credit Agreement is hereby renamed the "MULTI-YEAR CREDIT
AGREEMENT". From and after the effective date of this Amendment, all references
to the "the 3-Year Credit Agreement" (or words of like import) contained in the
Financing Documents, any amendment thereto or any document delivered thereunder,
whether executed or delivered before or after the effective date of this
Amendment, shall be deemed to be references to the Multi-Year Credit Agreement,
except where (and then only to the extent that) to do so would adversely affect
the validity or effectiveness thereof.
SECTION 1. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective as of the date set forth above when, and only when, the Agent shall
have received (in sufficient copies for each Bank) the following:
a) Counterparts of this Amendment executed by the Borrower,
the Guarantor and all of the Banks.
b) Certified copies of the resolutions of the Board of Directors
of the Borrower authorizing this Amendment and of all documents evidencing
other necessary corporate action and governmental and regulatory approvals
required to be obtained by it in connection therewith, certified by the
Secretary or Assistant Secretary of the Borrower.
c) Certified copies of the resolutions of the Board of Directors
of the Guarantor authorizing this Amendment and of all documents evidencing
other necessary corporate action and governmental and regulatory approvals
required to be obtained by it in connection therewith, certified by the
Secretary or Assistant Secretary of the Guarantor.
d) A favorable opinion of counsel to the Borrower, to the effect
set forth in Annex I to this Amendment and as to such other matters
relating to the transactions contemplated hereby as any Bank through the
Agent may reasonably request.
e) A favorable opinion of the General Counsel of the Guarantor,
to the effect set forth in Annex II to this Amendment and as to such other
matters relating to the transactions contemplated hereby as any Bank
through the Agent may reasonably request.
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f) Evidence satisfactory to the Agent and its counsel that the
Guarantor has extended, through September 1, 1997, the Guarantee set forth
in Section 6.02 of the Existing Agreement.
g) Evidence that the "Expiration Date" of the Heat Purchase Contract
has been extended to August 28, 1997 and that the "Outside Expiration Date"
of the Heat Purchase Contract has been extended to September 1, 2000.
h) Such other instruments, opinions or documents as any Bank through
the Agent may reasonably request.
SECTION 2. Representations And Warranties. EACH OF THE BORROWER AND THE
GUARANTOR REPRESENTS AND WARRANTS, AS TO ITSELF ONLY, AS FOLLOWS:
(1) THE EXECUTION AND DELIVERY BY IT OF THIS AMENDMENT, AND THE
PERFORMANCE BY IT OF THE AMENDED CREDIT AGREEMENT AND THE OTHER FINANCING
DOCUMENTS TO WHICH IT IS A PARTY ARE WITHIN ITS CORPORATE POWERS, HAVE BEEN
DULY AUTHORIZED BY ALL NECESSARY CORPORATE OR OTHER SIMILAR ACTION, AND DO NOT
AND WILL NOT CONTRAVENE (1) ITS CHARTER OR BY-LAWS, AS THE CASE MAY BE, OR ANY
LAW OR LEGAL RESTRICTION (1)OR ANY CONTRACTUAL RESTRICTION BINDING ON OR
AFFECTING IT OR ITS PROPERTIES;
a) This Amendment has been duly executed and delivered by it, and, assuming
the due execution and delivery by the Banks pursuant to due authority of this
Amendment, this Amendment, the Amended Credit Agreement and the other Financing
Documents to which it is a party are its legal, valid and binding obligations,
enforceable against it in accordance with their respective terms; subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally;
b) No consent, license, order, authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution and delivery by it of this Amendment;
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c) Its representations and warranties contained in Section 4.01 (in the
case of the Borrower) or Section 4.02 (in the case of the Guarantor) of the
Existing Credit Agreement are true and correct in all material respects on and
as of the date of this Amendment, as though made on and as of such date; and
d) No event in respect of it has occurred and is continuing, which
constitutes an Event of Default or a Default;
(a) In the case of the Guarantor: (a) the FERC Authorization is in
full force and effect, (a) although scheduled by its terms to expire on
December 31, 1996, the Guarantor intends to seek extension of the FERC
Authorization and (a) without regard to any extension thereof, the FERC
Authorization as presently in effect is sufficient to authorize: (a) the
creation, validity and performance of the Guarantee described in Section
6.01 of the Amended Credit Agreement in respect of each Advance made on or
prior to December 31, 1996 or any later date to which the FERC
Authorization may be extended, (a) the Guarantor to perform its
obligations under the Credit Agreement and the other Financing Documents
in respect of each such Advance and the corresponding Guarantee, (a) and
the Guarantor to extend through the Termination Date as extended hereby
the Guarantee set forth in Section 6.02 of the Credit Agreement and to
perform its obligations thereunder.
SECTION E) REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. e) Upon the
effectiveness of this Amendment in accordance with Section 2 hereof, on and
after the date hereof each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Existing Credit Agreement, and each reference in the Notes and the other
Financing Documents to "the Credit Agreement", "thereunder", "thereof" or words
of like import referring to the Existing Credit Agreement, shall mean and be a
reference to the Amended Credit Agreement.
f) Except as specifically amended above, the Credit Agreement and all other
Financing Documents are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed.
g) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as
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a waiver of any right, power or remedy of any Bank or the Agent under any
of the Financing Documents, nor constitute a waiver of any provision of any
of the Financing Documents.
SECTION 3. COSTS AND EXPENSES. THE BORROWER AGREES TO PAY ON DEMAND ALL
REASONABLE COSTS AND EXPENSES OF THE AGENT IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION AND AMENDMENT OF THIS
AMENDMENT AND THE OTHER INSTRUMENTS AND DOCUMENTS TO BE DELIVERED HEREUNDER,
INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND OUT-OF-POCKET EXPENSES
OF COUNSEL FOR THE AGENT WITH RESPECT THERETO AND WITH RESPECT TO ADVISING THE
AGENT AND THE BANKS AS TO THEIR RESPECTIVE RIGHTS AND RESPONSIBILITIES
HEREUNDER AND THEREUNDER.
SECTION 4. EXECUTION IN COUNTERPARTS. THIS AMENDMENT MAY BE EXECUTED IN
ANY NUMBER OF COUNTERPARTS AND BY DIFFERENT PARTIES HERETO IN SEPARATE
COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND DELIVERED SHALL BE DEEMED TO
BE AN ORIGINAL AND ALL OF WHICH TAKEN TOGETHER SHALL CONSTITUTE BUT ONE AND THE
SAME AGREEMENT.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written,
RENAISSANCE ENERGY COMPANY
By
Title:
THE DETROIT EDISON COMPANY,
as Guarantor
By
Title:
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ANNEX I
[SCOPE OF OPINION OF COUNSEL TO THE BORROWER]
The Opinion of Counsel to the Borrower referred to in Section 2(d) of this
Amendment shall re-affirm, as of the date of this Amendment, the opinions
expressed in the opinion of such counsel previously delivered pursuant to
Section 3.01(m) of the Existing Credit Agreement, except that, for purposes of
such re-affirmation, (i) the "Transaction Documents" shall be stated to include
this Amendment and (ii) references in such opinions to the "Credit Agreement"
shall be stated to refer to the Amended Credit Agreement.
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ANNEX II
[SCOPE OF OPINION OF COUNSEL TO THE GUARANTOR]
The Opinion of Counsel to the Guarantor referred to in Section 2(e) of this
Amendment shall be to the effect that:
(1) THE EXECUTION AND DELIVERY BY THE GUARANTOR OF THIS AMENDMENT, AND
THE PERFORMANCE BY THE GUARANTOR OF THE AMENDED CREDIT AGREEMENT AND THE
OTHER FINANCING DOCUMENTS TO WHICH IT IS A PARTY ARE WITHIN ITS CORPORATE
POWERS, HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE OR OTHER
SIMILAR ACTION, AND DO NOT AND WILL NOT CONTRAVENE (1) ITS CHARTER OR
BY-LAWS, AS THE CASE MAY BE, OR ANY LAW OR LEGAL RESTRICTION OR (1) ANY
CONTRACTUAL RESTRICTION BINDING ON OR AFFECTING IT OR ITS PROPERTIES;
a) This Amendment has been duly executed and delivered by it, and,
assuming the due execution and delivery by the Banks pursuant to due
authority of this Amendment, this Amendment, the Amended Credit Agreement
and the other Financing Documents to which the Guarantor is a party are the
Guarantor's legal, valid and binding obligations, enforceable against the
Guarantor in accordance with their respective terms; subject to the effect
of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally;
b) No consent, license, order, authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by the
Guarantor of this Amendment;
(a) (a) the FERC Authorization is in full force and effect, and
without regard to any extension thereof, the FERC Authorization as
presently in effect is sufficient to authorize: (a) the creation,
validity and performance of the Guarantee described in Section 6.01 of
the Amended Credit Agreement in respect of each Advance made on or prior
to December 31, 1996 or any later date to which the FERC Authorization
may be extended, (a) the Guarantor to perform its obligations under the
Credit Agreement and the other Financing Documents in respect of each
such Advance and the corresponding Guarantee, and (a) the Guarantor
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to extend through the Termination Date as extended by this Amendment the
Guarantee set forth in Section 6.02 of the Credit Agreement and to perform
its obligations thereunder;
AND such opinion of counsel to the Guarantor shall re-affirm, as of the date of
this Amendment, the opinions expressed in paragraphs 1, 4, 5 and 6 of the
opinion of such counsel previously delivered pursuant to Section 3.01(n) of the
Existing Credit Agreement.
