<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 MARCH 31, 1996
<TABLE>
<CAPTION>
COMMISSION REGISTRANTS; STATE OF INCORPORATION; I.R.S. EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
- ----------- ------------------------------ ------------------
<S> <C> <C>
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
</TABLE>
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 April 30, 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 MARCH 31, 1996
This document contains the Quarterly Reports on Form 10-Q for the quarter ended
March 31, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Quarterly Report on Form 10-Q for The Detroit Edison Company:
Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Item 1 - Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 29
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . 29
Part II - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit
Edison Company:
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . 30
Signature Page to DTE Energy Company Quarterly Report on Form 10-Q . . . . . . . . . . . . . . . . . . . 36
Signature Page to The Detroit Edison Company Quarterly Report on Form 10-Q . . . . . . . . . . . . . . . 37
</TABLE>
2
<PAGE> 3
DEFINITIONS
<TABLE>
<S> <C>
ALJ . . . . . . . . . . . . . Administrative Law Judge
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
CERCLA . . . . . . . . . . . Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980
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 . . . . . . . . . . . . . Environmental Protection Agency
FERC . . . . . . . . . . . . Federal Energy Regulatory Commission
kWh . . . . . . . . . . . . . Kilowatthour
MDEQ . . . . . . . . . . . . Michigan Department of Environmental Quality
MPSC . . . . . . . . . . . . Michigan Public Service Commission
MW . . . . . . . . . . . . . Megawatts
NOPR . . . . . . . . . . . . Notice of Proposed Rulemaking
Note(s) . . . . . . . . . . . Note(s) to Consolidated Financial Statements (Unaudited) appearing herein
NRC . . . . . . . . . . . . . Nuclear Regulatory Commission
PFD . . . . . . . . . . . . . Proposal for Decision
PSCR . . . . . . . . . . . . Power Supply Cost Recovery
QUIDS . . . . . . . . . . . . Quarterly Income Debt Securities
Registrant . . . . . . . . . Company or Detroit Edison, as the case may be
Renaissance . . . . . . . . . Renaissance Energy Company (an unaffiliated company)
</TABLE>
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 Twelve Months Ended
March 31 March 31
-----------------------------------------------------------
1996 1995 1996 1995
-----------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $887,627 $863,048 $3,585,049 $3,440,893
Electric - Interconnection 11,244 7,339 54,884 33,841
Steam and other 10,708 9,887 24,916 25,292
- -------------------------------------------------------------------------------------------------------------
Total Operating Revenues $909,579 $880,274 $3,664,849 $3,500,026
- -------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $175,667 $169,660 $ 721,974 $ 693,845
Purchased power 23,496 35,112 121,941 108,253
Other operation 151,022 137,373 648,946 618,098
Maintenance 73,611 52,471 261,255 258,710
Steam plant impairment loss - - 42,029 -
Depreciation and amortization 132,011 125,044 507,578 485,476
Deferred Fermi 2 amortization (1,120) (1,493) (5,599) (7,092)
Amortization of deferred Fermi 2 depreciation
and return 25,483 23,247 95,226 86,868
Taxes other than income 66,761 62,645 256,057 249,204
Income taxes 76,104 82,051 283,740 282,425
- -------------------------------------------------------------------------------------------------------------
Total Operating Expenses $723,035 $686,110 $2,933,147 $2,775,787
- -------------------------------------------------------------------------------------------------------------
OPERATING INCOME $186,544 $194,164 $ 731,702 $ 724,239
- -------------------------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 388 $ 315 $ 1,481 $1,556
Other income and (deductions) - net (956) (13,335) (17,867) (35,387)
Income taxes 303 4,998 5,094 12,337
Accretion income 2,327 3,014 10,354 13,013
Income taxes - disallowed plant costs and
accretion income (686) (929) (3,112) (4,037)
- -------------------------------------------------------------------------------------------------------------
Net Other Income and (Deductions) $ 1,376 $ (5,937) $ (4,050) $ (12,518)
- -------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 68,360 $ 68,424 $ 275,535 $ 272,242
Amortization of debt discount, premium
and expense 2,955 2,799 11,468 11,015
Other 1,574 3,901 7,339 10,077
Allowance for borrowed funds used during
construction (credit) (702) (387) (2,584) (2,142)
- -------------------------------------------------------------------------------------------------------------
Net Interest Charges $ 72,187 $74,737 $ 291,758 $ 291,192
- -------------------------------------------------------------------------------------------------------------
PREFERRED STOCK DIVIDENDS OF SUBSIDIARY 7,293 7,407 27,623 29,634
- -------------------------------------------------------------------------------------------------------------
NET INCOME $108,440 $106,083 $ 408,271 $ 390,895
=============================================================================================================
COMMON SHARES OUTSTANDING - AVERAGE 145,119,875 144,864,103 144,613,380 145,612,411
EARNINGS PER COMMON SHARE $ 0.75 $ 0.73 $ 2.82 $ 2.68
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $ 0.515 $ 0.515 $ 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 Twelve Months Ended
March 31 March 31
--------------------------------------------
1996 1995 1996 1995
--------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 108,440 $106,083 $ 408,271 $ 390,895
Adjustments to reconcile net income to net cash
from operating activities:
Accretion income (2,327) (3,014) (10,354) (13,013)
Depreciation and amortization 132,011 125,044 507,578 485,476
Deferred Fermi 2 amortization and return - net 24,363 21,754 89,627 79,776
Deferred income taxes and investment tax credit - net 17,063 26,276 53,310 107,718
Fermi 2 refueling outage - net 3,258 3,800 12,533 (18,504)
Steam plant impairment loss - - 42,029 -
Other (21,800) (21,889) 5,202 (35,602)
Changes in current assets and liabilities:
Customer accounts receivable and unbilled revenues 1,542 (124,393) (92,644) (157,739)
Other accounts receivable (5,508) 5,282 (14,242) 4,471
Inventories 18,579 (4,876) 4,618 (31,197)
Accounts payable (270) (7,202) 24,981 (3,118)
Taxes payable 51,355 46,136 2,570 (3,125)
Interest payable 14,705 (910) 17,529 (3,447)
Other (85,602) (72,120) 17,773 8,054
- ----------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 255,809 $ 99,971 $1,068,781 $ 810,645
- ----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $(115,759) $(85,234) $ (484,369) $(375,243)
Nuclear decommissioning trust funds (13,687) (11,971) (45,067) (38,020)
Non-utility investments (5,584) 1,461 (5,184) (12,213)
Other changes in current assets and liabilities 921 853 5,842 10,697
Other 64 (1,081) (31,696) (13,019)
- ----------------------------------------------------------------------------------------------------------
Net cash used for investing activities $(134,045) $(95,972) $ (560,474) $(427,798)
- ----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ 185,000 $ - $ 185,000 $200,000
Funds received from Trustees: Installment sales
contracts and loan agreements - - 201,525 50,470
Increase (decrease) in short-term borrowings (36,990) 98,447 (137,936) 5,515
Redemption of long-term debt - (19,214) (201,525) (258,034)
Redemption of preferred stock (185,000) - (185,955) -
Premiums on reacquired long-term debt
and preferred stock (1,850) - (7,796) (11,563)
Purchase of common stock - - - (59,855)
Dividends on common stock (74,737) (74,606) (298,633) (300,681)
Other (7,958) (159) (14,399) (2,675)
- ----------------------------------------------------------------------------------------------------------
Net cash (used for) from financing activities $(121,535) $ 4,468 $ (459,719) $(376,823)
- ----------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND TEMPORARY
CASH INVESTMENTS $ 229 $ 8,467 $ 48,588 $ 6,024
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 64,948 8,122 16,589 10,565
- ----------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 65,177 $ 16,589 $ 65,177 $ 16,589
==========================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 54,557 $ 69,793 $ 259,177 $ 281,685
Income taxes paid 618 240 230,915 181,155
New capital lease obligations 297 327 29,356 2,741
Exchange of preferred stock of subsidiary for long-term debt - - 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>
March 31 December 31
1996 1995
------------ -----------
<S> <C> <C>
UTILITY PROPERTIES
Plant in service $13,432,705 $13,303,992
Less: Accumulated depreciation and amortization (5,059,724) (4,928,316)
- ---------------------------------------------------------------------------------------------
$ 8,372,981 $ 8,375,676
Construction work in progress 117,566 142,726
- ---------------------------------------------------------------------------------------------
Net utility properties $ 8,490,547 $ 8,518,402
- ---------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $100,900 and $99,633, respectively) $ 135,430 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $445,062 and $427,831, respectively) 128,530 145,463
- ---------------------------------------------------------------------------------------------
Net property under capital leases $ 263,960 $ 282,669
- ---------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,754,507 $ 8,801,071
- ---------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 35,998 $ 21,576
Investments and special funds 34,087 29,058
Nuclear decommissioning trust funds 133,530 119,843
- ---------------------------------------------------------------------------------------------
$ 203,615 $ 170,477
- ---------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 65,177 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $21,000 and $22,000, respectively) 412,861 414,403
Other accounts receivable 43,172 37,664
Inventories (at average cost)
Fuel 142,374 162,796
Materials and supplies 145,761 142,782
Prepayments 78,448 12,910
- ---------------------------------------------------------------------------------------------
$ 887,793 $ 835,503
- ---------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,110,827 $ 1,155,482
Prepaid pensions 95,963 81,865
Unamortized debt expense 46,722 40,936
Other 46,809 45,257
- ---------------------------------------------------------------------------------------------
$ 1,300,321 $ 1,323,540
- ---------------------------------------------------------------------------------------------
TOTAL $11,146,236 $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>
March 31 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 1,515,773 1,484,871
- -------------------------------------------------------------------------------
Total common shareholders' equity $ 3,467,210 $ 3,436,308
Cumulative preferred stock of subsidiary 144,405 326,604
Long-term debt 3,921,894 3,756,094
- -------------------------------------------------------------------------------
Total Capitalization $ 7,533,509 $ 7,519,006
- -------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 126,130 $ 128,362
Other postretirement benefits 5,194 24,381
Other 67,404 58,424
- -------------------------------------------------------------------------------
$ 198,728 $ 211,167
- -------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ - $ 36,990
Amounts due within one year
Long-term debt 138,428 119,214
Obligations under capital leases 137,830 154,307
Accounts payable 164,354 165,148
Property and general taxes 25,821 34,416
Income taxes 59,603 -
Accumulated deferred income taxes 52,916 51,697
Interest payable 76,833 62,128
Dividends payable 77,644 81,102
Payrolls 87,904 72,164
Fermi 2 refueling outage 17,600 14,342
Other 97,813 130,689
- -------------------------------------------------------------------------------
$ 936,746 $ 922,197
- -------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,058,833 $ 2,052,875
Accumulated deferred investment tax credits 326,322 330,085
Other 92,098 95,261
- -------------------------------------------------------------------------------
$ 2,477,253 $ 2,478,221
- -------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- -------------------------------------------------------------------------------
TOTAL $11,146,236 $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 108,440 108,440
Cash dividends declared on
Common stock - $0.515 per share (74,737) (74,737)
- -------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1996 145,119,875 $1,951,437 $1,515,773 $3,467,210
===========================================================================================
</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 Twelve Months Ended
March 31 March 31
--------------------------------------------
1996 1995 1996 1995
--------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Electric - System $887,627 $863,048 $3,585,049 $3,440,893
Electric - Interconnection 11,244 7,339 54,884 33,841
Steam 10,020 9,887 24,228 25,292
- --------------------------------------------------------------------------------------------
Total Operating Revenues $908,891 $880,274 $3,664,161 $3,500,026
- --------------------------------------------------------------------------------------------
OPERATING EXPENSES
Operation
Fuel $175,667 $169,660 $ 721,974 $ 693,845
Purchased power 23,496 35,112 121,941 108,253
Other operation 149,211 137,373 647,135 618,098
Maintenance 73,611 52,471 261,255 258,710
Steam plant impairment loss - - 42,029 -
Depreciation and amortization 131,904 125,044 507,471 485,476
Deferred Fermi 2 amortization (1,120) (1,493) (5,599) (7,092)
Amortization of deferred Fermi 2 depreciation
and return 25,483 23,247 95,226 86,868
Taxes other than income 66,761 62,645 256,057 249,204
Income taxes 76,672 82,051 284,308 282,425
- --------------------------------------------------------------------------------------------
Total Operating Expenses $721,685 $686,110 $2,931,797 $2,775,787
- --------------------------------------------------------------------------------------------
OPERATING INCOME $187,206 $194,164 $ 732,364 $ 724,239
- --------------------------------------------------------------------------------------------
OTHER INCOME AND (DEDUCTIONS)
Allowance for other funds used
during construction $ 388 $ 315 $ 1,481 $ 1,556
Other income and (deductions) - net (1,613) (13,335) (18,524) (35,387)
Income taxes 303 4,998 5,094 12,337
Accretion income 2,327 3,014 10,354 13,013
Income taxes - disallowed plant costs and
accretion income (686) (929) (3,112) (4,037)
- --------------------------------------------------------------------------------------------
Net Other Income and (Deductions) $ 719 $ (5,937) $ (4,707) $ (12,518)
- --------------------------------------------------------------------------------------------
INTEREST CHARGES
Long-term debt $ 68,360 $ 68,424 $ 275,535 $ 272,242
Amortization of debt discount, premium
and expense 2,952 2,799 11,465 11,015
Other 1,551 3,901 7,316 10,077
Allowance for borrowed funds used during
construction (credit) (702) (387) (2,584) (2,142)
- --------------------------------------------------------------------------------------------
Net Interest Charges $ 72,161 $ 74,737 $ 291,732 $ 291,192
- --------------------------------------------------------------------------------------------
NET INCOME $115,764 $113,490 $ 435,925 $ 420,529
PREFERRED STOCK DIVIDENDS 7,293 7,407 27,623 29,634
- --------------------------------------------------------------------------------------------
NET INCOME AVAILABLE FOR COMMON STOCK $108,471 $106,083 $ 408,302 $ 390,895
============================================================================================
</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>
March 31 December 31
1996 1995
----------- -----------
<S> <C> <C>
UTILITY PROPERTIES
Plant in service $13,432,705 $13,303,992
Less: Accumulated depreciation and amortization (5,059,724) (4,928,316)
- ---------------------------------------------------------------------------------------------
$ 8,372,981 $ 8,375,676
Construction work in progress 117,566 142,726
- ---------------------------------------------------------------------------------------------
Net utility properties $ 8,490,547 $ 8,518,402
- ---------------------------------------------------------------------------------------------
Property under capital leases (less accumulated amortization
of $100,900 and $99,633, respectively) $ 135,430 $ 137,206
Nuclear fuel under capital lease (less accumulated amortization
of $445,062 and $427,831, respectively) 128,530 145,463
- ---------------------------------------------------------------------------------------------
Net property under capital leases $ 263,960 $ 282,669
- ---------------------------------------------------------------------------------------------
Total owned and leased properties $ 8,754,507 $ 8,801,071
- ---------------------------------------------------------------------------------------------
OTHER PROPERTY AND INVESTMENTS
Non-utility property $ 7,723 $ 21,576
Investments and special funds 16,694 29,058
Nuclear decommissioning trust funds 133,530 119,843
- ---------------------------------------------------------------------------------------------
$ 157,947 $ 170,477
- ---------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and temporary cash investments $ 25,658 $ 64,948
Customer accounts receivable and unbilled revenues (less allowance
for uncollectible accounts of $21,000 and $22,000, respectively) 412,861 414,403
Other accounts receivable 40,936 37,664
Inventories (at average cost)
Fuel 142,374 162,796
Materials and supplies 145,761 142,782
Prepayments 78,300 12,910
- ---------------------------------------------------------------------------------------------
$ 845,890 $ 835,503
- ---------------------------------------------------------------------------------------------
DEFERRED DEBITS
Regulatory assets $ 1,110,827 $ 1,155,482
Prepaid pensions 95,963 81,865
Unamortized debt expense 46,624 40,936
Other 44,133 45,257
- ---------------------------------------------------------------------------------------------
$ 1,297,547 $ 1,323,540
- ---------------------------------------------------------------------------------------------
TOTAL $11,055,891 $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>
March 31 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 1,427,499 1,484,871
- ---------------------------------------------------------------------------------------
Total common shareholders' equity $ 3,378,936 $ 3,436,308
Cumulative preferred stock 144,405 326,604
Long-term debt 3,921,894 3,756,094
- ---------------------------------------------------------------------------------------
Total Capitalization $ 7,445,235 $ 7,519,006
- ---------------------------------------------------------------------------------------
OTHER NON-CURRENT LIABILITIES
Obligations under capital leases $ 126,130 $ 128,362
Other postretirement benefits 5,194 24,381
Other 67,404 58,424
- ---------------------------------------------------------------------------------------
$ 198,728 $ 211,167
- ---------------------------------------------------------------------------------------
CURRENT LIABILITIES
Short-term borrowings $ - $ 36,990
Amounts due within one year
Long-term debt 138,428 119,214
Obligations under capital leases 137,830 154,307
Accounts payable 157,331 165,148
Property and general taxes 25,821 34,416
Income taxes 60,300 -
Accumulated deferred income taxes 52,916 51,697
Interest payable 76,812 62,128
Dividends payable 82,723 81,102
Payrolls 87,856 72,164
Fermi 2 refueling outage 17,600 14,342
Other 97,809 130,689
- ---------------------------------------------------------------------------------------
$ 935,426 $ 922,197
- ---------------------------------------------------------------------------------------
DEFERRED CREDITS
Accumulated deferred income taxes $ 2,058,183 $ 2,052,875
Accumulated deferred investment tax credits 326,322 330,085
Other 91,997 95,261
- ---------------------------------------------------------------------------------------
$ 2,476,502 $ 2,478,221
- ---------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 2)
- ---------------------------------------------------------------------------------------
TOTAL $11,055,891 $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 Twelve Months Ended
March 31 March 31
---------------------------------------------
1996 1995 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 115,764 $113,490 $ 435,925 $ 420,529
Adjustments to reconcile net income to net cash
from operating activities:
Accretion income (2,327) (3,014) (10,354) (13,013)
Depreciation and amortization 131,904 125,044 507,471 485,476
Deferred Fermi 2 amortization and return - net 24,363 21,754 89,627 79,776
Deferred income taxes and investment tax credit - net 16,935 26,276 53,182 107,718
Fermi 2 refueling outage - net 3,258 3,800 12,533 (18,504)
Steam plant impairment loss - - 42,029 -
Other (19,125) (21,889) 7,877 (35,602)
Changes in current assets and liabilities:
Customer accounts receivable and unbilled revenues 1,542 (124,393) (92,644) (157,739)
Other accounts receivable (3,272) 5,282 (12,006) 4,471
Inventories 18,579 (4,876) 4,618 (31,197)
Accounts payable (7,293) (7,202) 17,958 (3,118)
Taxes payable 52,052 46,136 3,267 (3,125)
Interest payable 14,684 (910) 17,508 (3,447)
Other (98,395) (72,120) 4,980 8,054
- ----------------------------------------------------------------------------------------------------------
Net cash from operating activities $ 248,669 $107,378 $1,081,971 $ 840,279
- ----------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Plant and equipment expenditures $(101,225) $(85,234) $ (469,835) $(375,243)
Nuclear decommissioning trust funds (13,687) (11,971) (45,067) (38,020)
Non-utility investments - 1,461 - (12,213)
Other changes in current assets and liabilities 921 853 5,842 10,697
Other 11,369 (1,081) (19,991) (13,019)
- ----------------------------------------------------------------------------------------------------------
Net cash used for investing activities $(102,622) $(95,972) $ (529,051) $(427,798)
- ----------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Issuance of long-term debt $ 185,000 $ - $ 185,000 $ 200,000
Funds received from Trustees: Installment sales
contracts and loan agreements - - 201,525 50,470
Increase (decrease) in short-term borrowings (36,990) 98,447 (137,936) 5,515
Redemption of long-term debt - (19,214) (201,525) (258,034)
Redemption of preferred stock (185,000) - (185,955) -
Premiums on reacquired long-term debt and
preferred stock (1,850) - (7,796) (11,563)
Purchase of common stock - - - (59,855)
Dividends on common and preferred stock (85,509) (82,013) (329,735) (330,315)
Cash portion of restructuring dividend to parent (56,510) - (56,510) -
Other (4,478) (159) (10,919) (2,675)
- ----------------------------------------------------------------------------------------------------------
Net cash used for financing activities $(185,337) $(2,939) $ (543,851) $(406,457)
- ----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS $ (39,290) $ 8,467 $ 9,069 $ 6,024
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF THE PERIOD 64,948 8,122 16,589 10,565
- ----------------------------------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT END
OF THE PERIOD $ 25,658 $16,589 $ 25,658 $ 16,589
- ----------------------------------------------------------------------------------------------------------
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid (excluding interest capitalized) $ 54,557 $69,793 $ 259,177 $ 281,685
Income taxes paid 618 240 230,915 181,155
New capital lease obligations 297 327 29,356 2,741
Exchange of preferred stock for long-term debt - - 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 115,764 115,764
Cash dividends declared
Common stock - $0.55 per share (79,816) (79,816)
Cumulative preferred stock* (7,293) (7,293)
Restructuring dividend to parent (83,226) (83,226)
- --------------------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1996 145,119,875 $1,451,199 $547,799 $(47,561) $1,427,499 $3,378,936
==========================================================================================================================
</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 - ANNUAL REPORT NOTES
These consolidated financial statements should be read in conjunction with
the Annual Report Notes. The Notes contained herein update and supplement
matters discussed in the Annual Report Notes.
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 - COMMITMENTS AND CONTINGENCIES
As discussed in Note 12 of the Annual Report Notes, in January 1989, the
EPA issued an administrative order under the CERCLA ordering Detroit Edison and
23 other potentially responsible parties to begin removal activities at the
Carter Industrials Superfund site. In March 1996, it was determined that the
site met all applicable cleanup standards. Agreement has been reached with the
EPA on an appropriate remediation for the sewers related to the operation of
the Carter site. It is expected that upon completion of the sewer remediation,
the Carter site will be removed from the National Priorities List.
As discussed in Note 12 of the Annual Report Notes, in January 1996, the
FERC issued an order approving the Ludington Pumped Storage Project Settlement
Agreement. On February 22, 1996, with the MDEQ's issuance of the plant's
National Pollutant Discharge Elimination System permit, all regulatory
approvals are in place. The settlement becomes effective May 1.
NOTE 3 - EMPLOYEE BENEFITS
As discussed in Note 13 of the Annual Report Notes, the expected long-term
rate of return on retirement plan assets for pension cost determination was
9.5% for 1993, 1994 and 1995. The expected long-term rate of return assumption
was changed to 9% for 1996, which will result in an increase in pension cost of
$5.6 million.
14
<PAGE> 15
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 consolidated balance sheets of DTE
Energy Company and subsidiary companies and of The Detroit Edison Company and
subsidiary companies as of March 31, 1996, and the related consolidated
statements of income and of cash flows for the three-month and twelve-month
periods ended March 31, 1996 and 1995, and the consolidated statements of
common shareholders' equity for the three-month period ended March 31, 1996.
These financial statements are the responsibility of DTE Energy Company and 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 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 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
May 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 and twelve months ended March 31, 1996, as
compared to the same periods in 1995, should be read in conjunction with the
consolidated financial statements (unaudited), the accompanying 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 March 31, 1996, the Company's net income was
$108.4 million, or $0.75 per common share, up 2.2 percent from the $106.1
million, or $0.73 per common share earned in the three months ended March 31,
1995. For the twelve months ended March 31, 1996, the Company's net income was
$408.3 million, or $2.82 per common share, up 4.4 percent from the $390.9
million, or $2.68 per common share earned in the twelve months ended March 31,
1995. The increases in net income were due to increases in electricity sales
and decreases in non-operating expenses, partially offset by higher operating
expenses.
At March 31, 1996, the book value of the Company's common stock was $23.83
per share, an increase of $0.21 per share or 0.9% since December 31, 1995.
Return on average total common shareholders' equity was 11.8% and 11.6% for the
twelve months ended March 31, 1996 and 1995, respectively.
Detroit Edison's ratio of earnings to fixed charges was 3.22 and 3.17 for
the twelve months ended March 31, 1996 and 1995, respectively. Detroit
Edison's ratio of earnings to fixed charges and preferred stock dividends for
the 1996 and 1995 twelve-month periods was 2.83 and 2.76, respectively.
17
<PAGE> 18
OPERATING REVENUES
- ------------------------------------------------------------------------
Total operating revenues of the Company increased (decreased) due to the
following factors:
<TABLE>
<CAPTION>
Three Twelve
Months Months
------ ------
<S> <C> <C>
(Millions)
Rate Changes
Special Manufacturing Contracts $ (9) $(36)
PSCR Clause (16) (11)
--- ----
(25) (47)
System sales volume and mix 41 177
Interconnection sales 4 21
Fermi 2 capacity factor performance standard reserve 5 9
Other - net 4 5
--- ----
Total $29 $165
=== ====
</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 commitment,
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 resulted from lower average unit
costs of fuel and purchased power.
kWh SALES
kWh sales increased as follows:
<TABLE>
<CAPTION>
Three Twelve
Months Months
------ ------
<S> <C> <C>
Residential 6.0% 8.7%
Commercial 5.0 3.5
Industrial 2.2 3.0
Other (includes primarily sales for resale) 7.9 7.0
Total System 4.6 4.9
Interconnection 74.1 93.5
Total 6.8 8.2
</TABLE>
18
<PAGE> 19
The increases in residential and commercial sales reflect colder winter
weather and customer growth, and for the twelve-month period, substantially
warmer summer weather. Commercial sales also reflect an improvement in
economic conditions.
Increased industrial sales in the three-month period reflect strong demand
in the automotive and construction sectors. The increases in industrial sales
for the twelve-month period reflect higher sales to automotive, steel and other
customers due to improved economic conditions.
The increased sales to other customers reflect increased load requirements
of wholesale for resale customers.
Interconnection sales increases were due to the improved availability of
energy for sale in meeting the increased demand for energy during these
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. 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.
Operating revenues have increased due to the absence of Fermi 2 reserve
charges in the 1996 three-month period and due to a decrease in Fermi 2 reserve
charges in the 1996 twelve-month period.
19
<PAGE> 20
OPERATING EXPENSES
- ------------------------------------------------------------------------------
FUEL AND PURCHASED POWER
Fuel and purchased power expenses increased (decreased) due to the following
factors:
<TABLE>
<CAPTION>
Three Twelve
Months Months
------ ------
<S> <C> <C>
(Millions)
Net system output $ 12 $ 66
Average unit cost (23) (81)
Fermi 2 business interruption insurance 5 59
Other - (2)
---- ----
Total $ (6) $ 42
==== ====
</TABLE>
Net system output and average fuel and purchased power unit costs were as
follows:
<TABLE>
<CAPTION>
Three Months Twelve Months
----------------- --------------
1996 1995 1996 1995
------ ------ ------ ------
(Thousands of Megawatthours, "MWh")
<S> <C> <C> <C> <C>
Power plant generation
Fossil 10,503 10,331 41,809 42,012
Nuclear 1,785 245 6,630 188
Purchased power 621 1,564 4,480 6,669
------ ------ ------ ------
Net system output 12,909 12,140 52,919 48,869
====== ====== ====== ======
Average unit cost ($/MWh) $14.03 $15.79 $14.88 $16.41
====== ====== ====== ======
</TABLE>
Fuel and purchased power expense decreased in the three-month period due
to lower average unit costs resulting from increased usage of lower cost
nuclear generation and lower-cost Western low-sulfur coal, partially offset by
higher net system output.
For the twelve-month period, fuel and purchased power expense increased
due to higher net system output and the prior-period receipt of Fermi 2
business interruption insurance, partially offset by lower average unit costs
resulting from increased 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.
20
<PAGE> 21
OTHER OPERATION
Three Months
Other operation expense increased due primarily to higher major storm
($4.0 million), nuclear plant ($3.7 million), fossil plant ($3.5 million),
demand side management ($2.3 million) and employee retirement plan ($1.5
million) expenses. These increases were partially offset by lower
uncollectible ($1.3 million) and injuries and damages ($1.0 million) expenses,
and expenses recorded in the year-earlier period for competitive sales programs
($2.9 million).
Twelve Months
Other operation expense increased due primarily to higher major storm
expenses ($15.9 million), higher incentive award expenses related to a
shareholder value improvement plan ($11.2 million), demand side management
expenses ($9.4 million), an increase in a reserve for the write-off of obsolete
and excess stock material ($9.0 million), expenses related to the settlement of
the Ludington Pumped Storage Plant fish mortality case ($8.4 million) and
Electric Power Research Institute dues ($4.8 million). These increases were
partially offset by lower nuclear plant ($10.5 million) and lower uncollectible
($8.9 million) expenses, and expenses recorded in the year-earlier period for
service quality claims ($8.7 million).
MAINTENANCE
Three Months
Maintenance expense increased due to higher major storm ($7.1 million),
overhead and underground lines ($7.4 million), general property ($2.9 million),
station maintenance ($2.6 million) and nuclear plant ($1.9 million) expenses.
Twelve Months
Maintenance expense increased due primarily to higher major storm ($14.6
million) and overhead and underground lines ($2.3 million) expenses, partially
offset by lower nuclear plant expenses ($13.8 million).
STEAM PLANT IMPAIRMENT LOSS
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.
21
<PAGE> 22
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 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
Three Months
Income taxes decreased due to lower pretax operating income and lower
prior years' federal income tax accrual.
Twelve Months
Income taxes increased due to higher pretax operating income.
OTHER INCOME AND DEDUCTIONS
OTHER INCOME AND (DEDUCTIONS) - NET
Three Months
Other deductions decreased due to lower promotional practices expenses
($7.8 million) and lower expenses related to the sale of accounts receivable
and unbilled revenues ($2.6 million).
22
<PAGE> 23
Twelve Months
Other deductions decreased due to lower expenses related to the sale of
accounts receivable and unbilled revenues ($9.6 million), lower promotional
practices expense ($6.5 million), and a decrease in the write-off of premiums
and expenses related to the portion of Detroit Edison's 1989 Series A General
and Refunding Mortgage Bonds not refinanced ($3.5 million), partially offset by
expenses incurred in the formation of a holding company ($3.1 million).
ACCRETION INCOME
Accretion income, a non-cash item of income, was recorded beginning in
January 1988 to restore to income, over the period 1988-1998, losses recorded
due to discounting indirect disallowances of plant costs. The annual amount of
accretion income recorded decreases each year through 1998.
INTEREST CHARGES
LONG-TERM DEBT
Long-term debt interest charges were higher in the twelve-month period due
to the issuance of QUIDS.
OTHER
Other interest charges were lower due to lower levels of short-term
borrowings.
PREFERRED STOCK DIVIDENDS OF DETROIT EDISON
Preferred stock dividends of Detroit Edison decreased due to the exchange
of a portion of Cumulative Preferred Stock 7.75% Series for QUIDS and the
conversion and redemption of preferred stock.
LIQUIDITY AND CAPITAL RESOURCES
COMPETITION
THE DETROIT EDISON COMPANY
FERC. In March 1995, the FERC issued a NOPR seeking comments on several
proposals for encouraging more competitive wholesale electric power markets.
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 within 60 days of Federal Register
publication (approximately July 1, 1996). By July 1,
23
<PAGE> 24
1996, Detroit Edison is required to take transmission service for wholesale
transactions under the terms and conditions of the newly-established tariff.
By December 31, 1996, Detroit Edison is also required to establish a joint
transmission tariff with Consumers Power Company for coordinated joint dispatch
operations. Order 888 permits the recovery of stranded costs.
By November 1, 1996, public utilities are required by Order 889 to obtain
transmission information for wholesale transactions through a system on the
Internet. Public utilities 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 requests comment by August 1, 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. The MPSC was expected to take action with respect to a report on
economic development recommendations for Michigan electric and gas reform. On
April 12, 1996, the MPSC issued a "Scheduling Order" which requires Detroit
Edison and Consumers Power Company to file "applications" by May 15, 1996.
These applications are to contain proposals that address the recommendation of
Michigan Governor Engler and the Michigan Jobs Commission to "allow new
industrial/commercial electrical load to be negotiated directly from the
generator and wheeled over 'common' transmission." The MPSC emphasizes in its
order "that this is the first step toward consideration of the recommendations
made by the Michigan Jobs Commission. Further proceedings for both electric
and gas utilities may be ordered as necessary for consideration of all relevant
issues."
Detroit Edison is continuing to address its competitive status and the
needs of its customers by entering into long-term (10 years) service contracts
with large commercial and industrial customers. Such contracts must be
approved by the MPSC prior to implementation. In addition, Detroit Edison has
also filed an application with the MPSC requesting ex parte approval of an
industrial process heat rider. This rider will replace two existing riders
that will expire at the end of 1996. Customers who elect this service agree to
retain Detroit Edison as their supplier for 10 years. The new proposed tariff
provides for prices at or below the current rate levels.
NRC. The NRC has issued an advance NOPR on amending its regulations
relating to financial assurance requirements for the decommissioning of nuclear
power plants.
24
<PAGE> 25
The NRC believes that potential deregulation of the power generating industry
has created uncertainty with respect to decommissioning funds not contemplated
when the NRC's current financial assurance requirements were promulgated. The
NRC is considering amendments which would:
(1) require that electric utility reactor licensees provide assurance
that the full estimated cost of decommissioning will be available
through an acceptable guarantee mechanism if the licensees are no
longer subject to rate regulation by State public utility commissions
or FERC, and do not have a guaranteed source of income,
(2) allow licensees to assume a positive real rate of return on
decommissioning funds during the safe storage period, and
(3) establish periodic reporting requirements.
Detroit Edison has established external trust funds for decommissioning
costs and believes that current provisions are adequate for decommissioning.
For further information on decommissioning, see Note 2 in the Annual Report.
CASH GENERATION AND CASH REQUIREMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Net cash from operating activities increased due to changes in current
assets and liabilities, primarily as a result of the 1995 repurchase of $150
million of customer accounts receivable and unbilled revenues and higher net
income before non-cash charges.
Net cash used for investing activities was higher due to increased plant
and equipment expenditures.
Net cash used for financing activities was higher due to decreases in
short-term borrowings and the cash portion of a restructuring dividend to the
Company.
ADDITIONAL INFORMATION
On February 13, 1996, Detroit Edison issued $185 million of 7-5/8% QUIDS.
On March 21, 1996, the proceeds of this issue were used to redeem all of the
outstanding Cumulative Preferred Stock, 7.68% Series, 7.45% Series and 7.36%
Series, totaling $185 million, at per share redemption prices of $101 plus
accrued dividends.
On May 6 and 7, 1996, Detroit Edison purchased a total of $34 million of
General and Refunding Mortgage Bonds on the open market, consisting of $16
million of 8.24% 1993 Series C, $1 million of 8.25% 1993 Series C and $17
million of 7.74% 1993 Series J. These bonds will be submitted to the trustee
for cancellation.
25
<PAGE> 26
Detroit Edison's 1996 cash requirements for its capital expenditure
program are estimated at $482 million, of which $100 million had been expended
as of March 31, 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.
Expenditures for 1996 non-regulated investments are estimated to range
from $100 million to $200 million of which $15 million had been expended as of
March 31, 1996.
The Company had short-term credit arrangements of approximately $662
million at March 31, 1996, under which no borrowings were outstanding. Of the
total amount, $200 million represents a DTE Capital Corporation Revolving
Credit Agreement, backed by a Support Agreement from the Company. The
remaining $462 million results from Detroit Edison arrangements.
CAPITALIZATION
The Company's capital structure as of March 31, 1996 was 46.0% common
shareholders' equity, 1.9% cumulative preferred stock of subsidiary and 52.1%
long-term debt as compared to 45.7%, 4.3% and 50.0%, respectively, at December
31, 1995.
26
<PAGE> 27
DTE ENERGY COMPANY
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
As discussed in Part I, Item 3 - Legal Proceedings of the Annual Report,
the amortized costs of Detroit Edison's abandoned Greenwood Unit Nos. 2 and 3
were the subject of pending appeals. By stipulation of the parties to these
proceedings, all appeals have been dismissed.
ITEM 5 - OTHER INFORMATION.
As discussed in Part 1, Items 1 and 2 - Business and Properties,
"Regulation and Rates - Michigan Public Service Commission" of the Annual
Report, in December 1995, the MPSC approved a partial settlement agreement
resolving most of the issues regarding the 1994 PSCR reconciliation and the
Fermi 2 capacity factor performance standard disallowance for 1994. A final
MPSC order was issued on April 10, 1996 which resolved all outstanding
contested issues. As a result of the order, no additional refunds to customers
will be required.
On March 29, 1996, Detroit Edison submitted its 1995 PSCR reconciliation
filing with the MPSC. Detroit Edison is proposing to carry its 1995 PSCR
under-recovery of approximately $14.8 million forward to its 1996 PSCR
reconciliation rather than collect the under-recovery from customers at this
time. If Detroit Edison's proposal is adopted, the under-recovery would be
banked to offset future Fermi 2 power plant performance standard disallowances.
On April 26, 1996, an MPSC ALJ issued his PFD in the Detroit Edison PSCR
Plan for 1996. The ALJ adopted the adjustment proposed by the Michigan
Attorney General to reduce 1996 PSCR expenses by $8.3 million because of lost
fuel efficiency at Fermi 2 while the unit is operated at a reduced power output
until the installation of major turbine components during a scheduled refueling
and maintenance outage in September 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, the MPSC has been considering the propriety of retail
wheeling programs. Detroit Edison proposed to implement the MPSC's
experimental program in 2004, and the MPSC Staff proposed an implementation
date in 1998. On March 29, 1996, an MPSC ALJ issued a PFD finding a capacity
need and recommending immediate implementation of the retail wheeling
experiment. The PFD did not recommend that competitive capacity solicitation
be undertaken at this time. Exceptions to the PFD have been filed and Detroit
Edison awaits the final order of the MPSC.
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, on March 1, 1996, MascoTech Forming Technologies, Inc., a
Detroit Edison industrial
27
<PAGE> 28
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. A March 19, 1996 Detroit Edison motion to
dismiss asserting that the MPSC lacks jurisdiction to establish the requested
rate is currently under advisement. The Michigan Attorney General has been
permitted to intervene and another public utility has been denied intervention.
Pending resolution of the motion to dismiss, hearings have been scheduled for
June 24, 1996.
As discussed in Part I - Items 1 and 2 - Business and Properties,
"Environmental Matters - Waste and Toxic Substances" of the Annual Report, the
Michigan Environmental Response Act ("Act 307") gives the MDEQ authority to
list sites of environmental contamination and bring about environmental
clean-ups within the State of Michigan. A portion of the Monroe Power Plant
site was listed on the MDEQ Act 307 list. On April 1, 1996, Detroit Edison
received a request from the MDEQ, acting as an agent for the EPA, for voluntary
access (under section 104(e) of the federal CERCLA) to a portion of the Monroe
Power Plant property which included the former City of Monroe Landfill. The
purpose of the access is to conduct an integrated assessment to determine
whether the property should remain active in the Federal Superfund process
toward possible inclusion on the National Priorities List. Detroit Edison is
presently working with the MDEQ to provide the access based on an appropriate
sampling plan. At this time, it is unknown what impact, if any, this situation
will have upon Detroit Edison.
On April 4, 1996, Detroit Edison received from the EPA a general notice of
potential liability and request for information on its involvement with the
Ramona Park Landfill Site in Utica, Michigan. Detroit Edison is presently
examining its records and it is unknown what impact, if any, this situation
will have.
28
<PAGE> 29
QUARTERLY REPORT ON FORM 10-Q FOR
THE DETROIT EDISON COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED).
See pages 4 through 15.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
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.
William R. Roller, an employee of Detroit Edison for in excess of five
years, was elected Vice President - Power Generation effective April 22, 1996.
See the Company's "Item 5 - Other Information" which is incorporated
herein by this reference.
29
<PAGE> 30
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
4-176 - Support Agreement, dated as of March 8, 1996,
between the Company and Detroit Edison.
10-4 - Amended and Restated Savings Reparation Plan.
11-3 - DTE Energy Company and Subsidiary Companies Primary
and Fully Diluted Earnings Per Share of Common Stock.
15-1 - Awareness Letter of Deloitte & Touche LLP regarding
their report dated May 7, 1996.
27-3 - Financial Data Schedule for the period ended March
31, 1996 for the Company.
27-4 - Financial Data Schedule for the period ended March
31, 1996 for Detroit Edison.
99-9 - Credit Agreement, dated as of March 1, 1996 among DTE
Capital Corporation, the Initial Lenders named therein, and
Citibank, N.A., as Agent.
99-10 - 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.
99-11 - 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.
30
<PAGE> 31
Exhibit
Number
------
99-12 - 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.
(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).
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 DTE Energy
Company, dated December 13, 1995 (Exhibit 3A (3.1) to DTE
Energy Form 8-B filed January 2, 1996, File No. 1-11607).
3(e) - Agreement and Plan of Exchange (Exhibit 1(2) to DTE
Energy 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).
31
<PAGE> 32
Exhibit
Number
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
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
32
<PAGE> 33
Exhibit
Number
- -------
July 31, 1992 Exhibit 4-124 to Form 10-Q for quarter ended
September 30, 1992
November 30, 1992 Exhibit 4-130 to Registration No. 33-56496
January 1, 1993 Exhibit 4-131 to Registration No. 33-56496
March 1, 1993 Exhibit 4-141 to Form 10-Q for quarter ended
March 31, 1993
March 15, 1993 Exhibit 4-142 to Form 10-Q for quarter ended
March 31, 1993
April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter ended
March 31, 1993
April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter ended
March 31, 1993
May 31, 1993 Exhibit 4-148 to Registration No. 33-64296
June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter ended
June 30, 1993 (1993 Series AP)
June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter ended
June 30, 1993 (1993 Series H)
September 15, 1993Exhibit 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).
33
<PAGE> 34
Exhibit
Number
- -------
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).
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).
34
<PAGE> 35
Exhibit
Number
- -------
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) - $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(i) - 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(j) - 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(k) - 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(l) - 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(m) - 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).
(b) Reports on Form 8-K
Detroit Edison filed a Current Report on Form 8-K, dated January 1,
1996, disclosing that DTE Energy Company had become the parent holding
company of Detroit Edison.
Registrants filed a Current Report on Form 8-K, dated January 22,
1996, discussing the write-off of the remaining net book value of
Detroit Edison's steam heating plant assets.
35
<PAGE> 36
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 May 7, 1996 /s/ SUSAN M. BEALE
-------------------- --------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date May 7, 1996 /s/ RONALD W. GRESENS
-------------------- --------------------------------------
Ronald W. Gresens
Vice President and Controller
36
<PAGE> 37
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 May 7, 1996 /s/ SUSAN M. BEALE
-------------------- ---------------------------------------
Susan M. Beale
Vice President and Corporate Secretary
Date May 7, 1996 /s/ RONALD W. GRESENS
-------------------- ---------------------------------------
Ronald W. Gresens
Vice President and Controller
37
<PAGE> 38
FILE NO.
DTE ENERGY COMPANY 1-11607
THE DETROIT EDISON COMPANY 1-2198
QUARTERLY REPORTS ON FORM 10-Q FOR
DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY
FOR QUARTER ENDED MARCH 31, 1996
Exhibits
Exhibits filed herewith.
Exhibit
Number
-------
4-176 - Support Agreement, dated as of March 8, 1996,
between the Company and Detroit Edison.
10-4 - Amended and Restated Savings Reparation Plan.
11-3 - DTE Energy Company and Subsidiary Companies Primary
and Fully Diluted Earnings Per Share of Common Stock.
15-1 - Awareness Letter of Deloitte & Touche LLP regarding
their report dated May 7, 1996.
27-3 - Financial Data Schedule for the period ended March
31, 1996 for the Company.
27-4 - Financial Data Schedule for the period ended March
31, 1996 for Detroit Edison.
99-9 - Credit Agreement, dated as of March 1, 1996 among DTE
Capital Corporation, the Initial Lenders named therein, and
Citibank, N.A., as Agent.
99-10 - 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.
<PAGE> 39
99-11 - 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.
99-12 - 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.
See Page Nos.
____ thru ____
for location of
Exhibits Incorporated
by Reference
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.
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 DTE
Energy 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.
ii
<PAGE> 40
Exhibit
Number
-------
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
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
June 30, 1993
September 15, 1993
March 1, 1994
June 15, 1994
August 15, 1994
December 1, 1994
August 1, 1995
iii
<PAGE> 41
Exhibit
Number
-------
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.
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.
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.
iv
<PAGE> 42
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.
v
<PAGE> 43
Exhibit
Number
- -------
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.
99(h) - $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(i) - 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(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract,
dated October 4, 1988, between Detroit Edison and Renaissance .
99(k) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract, dated as of February 1, 1990, between Detroit
Edison and Renaissance .
99(l) - Second Amendment to 1988 Amended and Restated Nuclear Fuel Heat
Purchase Contract dated as of September 1, 1993, between Detroit
Edison and Renaissance.
99(m) - 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.
vi
<PAGE> 1
EXHIBIT 4-176
SUPPORT AGREEMENT BETWEEN
DTE ENERGY COMPANY
AND
DTE CAPITAL CORPORATION
THIS SUPPORT AGREEMENT, dated as of March 8, 1996, is between
DTE ENERGY COMPANY, a Michigan corporation ("Parent"), and DTE CAPITAL
CORPORATION, a Michigan corporation ("Subsidiary").
WHEREAS, Parent is the owner of 100% of the outstanding common
stock of Subsidiary;
WHEREAS, Subsidiary intends from time to time to make
borrowings from the lenders party to the $200,000,000 Credit Agreement (such
agreement as it may be amended and in effect from time to time, the "Credit
Agreement"), dated on or about March 1, 1996 among the Subsidiary, the lenders
party thereto and Citibank, N.A. as Administrative Agent (such lenders and the
Administrative Agent being hereinafter collectively referred to as the
"Lenders"), and to issue debt securities to the Lenders pursuant to the Credit
Agreement (such borrowings and debt securities, including without limitation
all interest, fees, expenses and other amounts payable in accordance with the
documentation relating to such borrowings and debt securities being hereinafter
collectively referred to as "Debt");
WHEREAS, Parent and Subsidiary desire to take certain actions
to enhance and maintain the financial condition of Subsidiary as hereinafter
set forth in order to enable Subsidiary and its subsidiaries to incur
indebtedness on more advantageous and reasonable terms; and
WHEREAS, the Lenders will rely upon this Agreement in making
loans or extending credit to Subsidiary;
NOW, THEREFORE, in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Stock Ownership. During the term of this Agreement,
Parent will own all of the voting common stock of Subsidiary and The Detroit
Edison Company ("DECO") now or hereafter issued and outstanding.
2. Negative Pledge. During the term of this Agreement,
Parent will not create or suffer to exist any lien, security interest or other
charge of encumbrance, upon or with respect to any voting common stock of DECO
from time to time owned by Parent or any
<PAGE> 2
2
capital stock of Subsidiary from time to time owned by Parent, provided,
however, that any restriction on the payment of dividends by DECO or Subsidiary
contained in any subordinated debt instrument, preferred stock or preference
stock of DECO or Subsidiary shall not constitute a lien, security interest or
other charge or encumbrance.
3. Liquidity Provision. If, during the term of this
Agreement, Subsidiary is unable to make timely payment of interest, principal
or premium, if any, on any Debt owing to any Lender by Subsidiary, Parent
promptly shall provide to Subsidiary, at its request, such funds (in the form
of cash or liquid assets) in an amount sufficient to permit Subsidiary to make
timely payment in respect of such Debt as equity or as a loan, as Parent shall
determine in its sole discretion. If such funds are advanced to Subsidiary as
a loan, such loan shall be on such terms and conditions, including maturity and
rate of interest, as Parent and Subsidiary shall agree. Notwithstanding the
foregoing, any such loan shall be subordinated to any and all Debt of
Subsidiary owing to any Lender to the extent and in the manner set forth in
Section 7 below. Each of the parties hereto acknowledges that Parent's
obligations hereunder do not constitute a guarantee by Parent of Debt of the
Subsidiary.
4. Waivers. Parent hereby waives any failure or delay
on the part of Subsidiary in asserting or enforcing any of its rights or in
making any claims or demands hereunder. Subsidiary or any Lender may at any
time, without Parent's consent, without notice to Parent and without affecting
or impairing Subsidiary's or such Lender's rights or Parent's obligations
hereunder, do any of the following with respect to any Debt: (a) make changes
modifications, amendments or alterations, by operation of law or otherwise,
including, without limitation, any increase in the principal amount of such
Debt or the rate of interest payable thereon or any changes in the method of
calculating the rate of interest payable thereon, (b) grant renewals and
extensions and extensions of time, for payment or otherwise, (c) accept new or
additional documents, instruments or agreements relating to or in substitution
of said Debt, or (d) otherwise handle the enforcement of their respective
rights and remedies in accordance with their business judgment.
5. Amendment; Suspension. This Agreement may be amended
or terminated at any time by written amendment or agreement signed by both
parties; provided, however, that except as set forth in the next succeeding
sentence, no amendment to the Agreement which adversely affects the rights of
Subsidiary or any Lender and no termination of this Agreement shall be
effective as to Subsidiary or any Lender until such time as all Debt owing to
such Lender by Subsidiary on the date of such amendment or termination shall
have been paid in full unless such Lender shall consent in writing to the
contrary. Notwithstanding the foregoing, Parent's obligations under this
Agreement shall be suspended and shall be of no force and effect as to the
parties hereto and as to all Lenders if and for so long as Subsidiary shall
have (i) a long-term debt rating of not less than "A-" from Standard & Poor's
Corporation or its successor ("S&P) or a long-term debt rating of not less than
"A2" from Moody's Investors Service or its successor ("Moody's") or (ii) a
short-term debt rating of not less that "A-2" from S&P or a short-term debt
rating of not less than "Prime-2" from Moody's. For purposes of this Section
5, ratings shall be based upon unsecured non-credit enhanced debt of
Subsidiary.
<PAGE> 3
3
6. Rights of Lender. Subsidiary hereby assigns and
pledges to the Lenders, for the ratable benefit of each Lender, Subsidiary's
rights under Sections 1, 2, 3 and 4 of this Agreement, and, if Subsidiary fails
or refuses to take timely action to enforce its rights under Section 1, 2, 3 or
4 of this Agreement, any Lender may enforce such rights on behalf of Subsidiary
directly against Parent. Parent hereby consents to such assignment and pledge.
This assignment and pledge secures all obligations of Subsidiary under the
Credit Agreement and the Notes (as defined in the Credit Agreement).
Subsidiary and Parent agree, for the benefit of the Lenders, to execute and
deliver all further instruments and documents, and take all further action,
that Lenders may request in order to perfect and protect any security interest
purported to be granted hereby or to enable the Lenders to enforce their rights
and remedies hereunder.
7. Subordination. All loans made by Parent to
Subsidiary pursuant to Section 3 hereof (the "Subordinated Loans") shall be
subordinate and junior in right of payment to the prior payment in full of all
Debt from time to time outstanding owing to any Lender, to the extent and in
the manner provided below:
(a) Unless and until all Debt owing to the Lenders shall
have been paid in full,
(i) Parent will not sell, assign or otherwise
transfer any claim against Subsidiary in respect of any
Subordinated Loan unless such transfer is made expressly
subject to this Agreement and the transferee shall execute an
instrument whereby the transferee agrees to be bound by the
provisions of this Section 7;
(ii) Subsidiary will not make, and Parent will not
demand, accept or receive, any direct or indirect payment (in
cash, property, by set-off or otherwise) of or on account of
any Subordinated Loan, and no such payment shall be due,
except that nothing contained in this Section 7(a) shall
prevent Subsidiary from making, or Parent from accepting and
receiving, any payment on account of Subordinated Loans, if
there is not then in existence a default by Subsidiary under
the Credit Agreement or the Notes (as defined in the Credit
Agreement) or a default by Parent under this Agreement.
(b) In the event of (x) any insolvency, bankruptcy,
receivership, liquidation, reorganization, readjustment, composition
or other similar proceeding relative to Subsidiary or its creditors of
its property, or (y) any proceeding for the voluntary liquidation,
dissolution or other winding up of subsidiary, whether or not
involving
<PAGE> 4
4
insolvency or bankruptcy proceedings, or (z) any assignment for the
benefit of creditors or other marshalling of the assets of Subsidiary,
then and in any such event:
(i) all Debt owing to the Lenders shall be paid
in full before any payment or distribution of any character
(whether in cash, securities or other property) shall be made
in respect of any Subordinated Loans;
(ii) any payment or distribution of any character
(whether in cash, securities or other property) which would
otherwise (but for the provisions of this Section 7) be
payable or deliverable in respect of any Subordinated Loan
shall be paid or delivered directly to the Lenders until all
Debt owing to the Lenders shall have been paid in full;
(iii) Parent irrevocably authorizes and empowers
the Lenders to demand, sue for, collect and receive any such
payment or distribution and to receipt therefor and to file
all such claims and take all such other action, in the name of
Parent or the Lenders or otherwise, as the Lenders may
determine to be necessary or appropriate for the enforcement
of the provisions of this Section 7 (Parent hereby agreeing to
execute and deliver to the Lenders such further instruments
confirming such authorization and such powers of attorney,
proofs of claim, assignments of claim and other instruments as
may be requested by the Lenders in order to enable them to
enforce any and all claims with respect to any Subordinated
Loans); and
(iv) in case any payment or distribution shall,
despite the foregoing provisions, be paid or delivered to
Parent before all Debt owing to the Lenders shall have been
paid in full, such payment or distribution shall be held in
trust for, and shall be paid and delivered to, the Lenders
until all Debt owing to the Lenders shall have been paid in
full.
(c) Until all Debt shall be paid in full, Parent hereby
defers all rights of subrogation in respect of any payment of Debt
made by Parent. Upon payments in full of Debt owing to Lenders,
Parent shall be subrogated to the rights of Lenders to receive any
further payment or distributions in respect of Debt, provided,
however, that nothing in this Section 7(c) will prohibit the Parent
from receiving any payments permitted under Section 7(a)(ii).
8. Notices. Any notice, instruction, request, consent,
demand or other communication required or contemplated by this Agreement shall
be in writing, shall be given or made by United States first class mail, telex,
facsimile transmission or hand delivery, addressed as follows:
<PAGE> 5
5
If to Parent: 2000 Second Avenue
Detroit, Michigan 48226-1279
Attention: Assistant Treasurer-Banking
If to Subsidiary: 2000 Second Avenue
Detroit, Michigan 48226-1279
Attention: Assistant Treasurer
9. Successors. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and is also intended
for the benefit of Lenders, and, notwithstanding that such Lenders are not
parties hereto, each Lender shall be entitled to the full benefits of this
Agreement and to enforce the covenants and agreements contained herein as set
forth in Section 6. This Agreement is not intended for the benefit of any
person other than Lenders and shall not confer or be deemed to confer upon any
such person any benefits, rights or remedies hereunder.
10. Governing Law. This Agreement shall be governed by
the laws of the State of New York.
DTE ENERGY COMPANY
By
------------------------------
Name:
Title:
DTE CAPITAL CORPORATION
By
------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10-4
FOURTH RESTATEMENT OF
THE DETROIT EDISON COMPANY
SAVINGS REPARATION PLAN
The Detroit Edison Company Savings Reparation Plan (the "Plan"), established by
The Detroit Edison Company (the "Company") effective May 22, 1989, as amended
and restated effective June 27, 1994, June 26, 1995, and January 1, 1996 is
hereby amended and restated as of April 29, 1996, by this Fourth Restatement.
SECTION 1 - PURPOSE
The purpose of this Plan is to offer a retirement savings alternative for those
eligible executives whose permissible contributions to The Detroit Edison
Company Savings & Investment Plan (hereinafter the "Savings & Investment Plan"
and "Plan") are subject to the compensation limitation of Section 401(a)(17) of
the Internal Revenue Code. The benefits provided under this Plan to any
individual shall be separate from and in addition to any benefit provided under
the Savings & Investment Plan and any other plan or program maintained by the
Company. The amount of benefit under this Plan is to be determined solely in
accordance with Section 4 hereof and is not dependent or conditioned on
participation in the Savings & Investment Plan. Therefore, this Plan is not
intended to and shall not be construed so as to provide the same
dollar-for-dollar benefit as a participant would have received under the
Savings & Investment Plan if contributions had not been limited by Section
401(a)(17), nor is this Plan intended to compensate an employee for the benefit
loss which results if the employee elects not to participate in the Savings &
Investment Plan to the full extent permitted thereunder.
SECTION 2 - ELIGIBILITY
Employees of an Employer whose benefits under the Savings & Investment Plan are
subject to limitation by the provisions set forth therein to conform to Section
401(a)(17) of the Internal Revenue Code shall be eligible to elect to
participate and receive the benefits provided under this Plan. However, if an
eligible employee hereunder obtains a hardship distribution under the Savings &
Investment Plan, his or her right to elect to participate hereunder shall be
suspended for twelve months after receipt of the hardship distribution. In no
event shall a person who is not eligible to participate in the Savings &
Investment Plan be eligible to elect to participate and receive the benefits
provided under this Plan.
1
<PAGE> 2
SECTION 3 - PARTICIPATION AND AMOUNT OF BENEFITS
(a) Any employee who is eligible to elect to receive the benefits provided
under this Plan may participate in this Plan by irrevocably electing to
defer 1% to 15% of his or her Basic Compensation, as defined in the
Savings & Investment Plan, in excess of the compensation limitations of
Section 401(a)(17) of the Internal Revenue Code. Deferrals must be made in
whole percents. The amount by which an employee's Basic Compensation
exceeds the compensation limitations of Section 401(a)(17) shall
hereinafter be referred to as "excess basic compensation". The amount of
compensation which the employee defers hereunder shall hereinafter be
referred to as "deferred excess basic compensation".
An election to defer a percentage of excess basic compensation will
become effective on January 1 of the calendar year subsequent to the
calendar year during which the election is received by the Administrator.
An election to defer a percentage of excess basic compensation will
remain in effect until an election to change the percentage of excess
basic compensation deferred or a revocation of the election becomes
effective. An election to change the percentage of excess basic
compensation deferred or a revocation of an election to defer a
percentage of excess basic compensation will become effective on January
1 of the calendar year subsequent to the calendar year during which the
election to change the percentage of excess basic compensation deferred
or the revocation of the election is received by the Administrator.
All elections and revocations of elections must be made on forms provided
by the Company and will become effective only after they are received by
the Administrator. In no event shall an employee be permitted to elect to
defer excess basic compensation, to elect to change the percentage of
excess basic compensation deferred, or to revoke an election to defer
excess basic compensation which has already been earned by the employee.
The actual deferral of deferred excess basic compensation will not
commence until the employee compensation to date for the calendar year
exceeds the compensation limitation of Section 401(a)(17) of the Internal
Revenue Code.
Notwithstanding the foregoing, in the first plan year in which a
participant becomes eligible to participate in this Plan, the participant
may make an election to defer a percentage of excess basic compensation
for services to be performed subsequent to the election within 30 days
after the employee becomes eligible to participate in this Plan. Such
election shall be effective with the pay period commencing immediately
after the election is timely received by the Administrator.
2
<PAGE> 3
(b) An employee's deferred excess basic compensation will be deemed to be
invested in an investment option(s) available to employees under the
Savings & Investment Plan. Currently, the Savings & Investment Plan allows
participants to invest in the funds listed below:
(a) Fidelity Retirement Money Market Portfolio
(b) Fidelity Intermediate Bond Fund
(c) Fidelity Asset Manager
(d) Fidelity U.S. Equity Index Portfolio
(e) Fidelity Growth & Income Portfolio
(f) Fidelity Magellan Fund
(g) Fidelity ContraFund
(h) Fidelity OTC Portfolio
(i) Fidelity Overseas Fund
(j) DTE Energy Common Stock Fund
As part of the employee election to defer excess basic compensation, the
employee shall make an investment designation, which shall indicate (1)
the investment option(s) in which the employee deferred excess basic
compensation will be deemed to be invested each month and (2) the
percentage of deferred excess basic compensation to be deemed to be
invested in each of the investment options selected each month. The
distribution may be 100 percent in one fund, or divided among any
combination of the ten funds in multiples of 10 percent, as long as the
combination of deemed fund investments equals 100 percent.
Notwithstanding the foregoing, the Employer matching contribution
credited to an employee's account each month, pursuant to paragraph (c)
of Section 3 of this Plan, will always be deemed to be invested entirely
in the DTE Energy Common Stock Fund.
If a change in investment options available to participants in the
Savings & Investment Plan eliminates an investment option previously
selected by a participating employee hereunder as part of his or her
deemed investment option, the amount of deferred excess basic
compensation which is deemed to be invested (including earnings, if any,
deemed to be applicable) in the discontinued investment option on the
last business day of the month immediately preceding the date that it is
discontinued shall be deemed to be transferred to participating units in
the DTE Energy Common Stock Fund valued as of the last business day of
the month immediately preceding the effective date of the investment
option's discontinuance unless, in the opinion of the Savings &
Investment Plan Committee (as defined in the Savings & Investment Plan)
it is determined that the discontinued investment option has
3
<PAGE> 4
been replaced by an equivalent investment option. In this case, the
amount of the employee's excess basic compensation that is deemed to be
invested in the discontinued investment option shall be transferred to
the equivalent investment option at the time such investment option is
discontinued and all additional deferred excess basic compensation that
the employee elected to be deemed to be invested in the discontinued
investment option shall be deemed to be invested in the investment option
determined to be equivalent by the Savings & Investment Plan Committee.
In the event that the Savings & Investment Plan Committee has not
determined that there is an equivalent investment option with respect to
the discontinued investment option, then all additional deferred excess
basic compensation that the employee elected to be deemed to be invested
in the discontinued investment option shall be deemed to be invested in
the DTE Energy Common Stock Fund and such deemed investment shall
continue until the effective date of a change in investment designation
which is received by the Administrator pursuant to Section 3(d).
The aforementioned deemed investment options available hereunder are
merely intended to serve as tools to measure the value of the amount to
be paid to the employee under Section 4 of this Plan. They are not
intended to and shall not be construed to require the Employer to make
actual investments of the type anticipated by the deemed investment
option selected by the employee. If and to the extent the Employer
chooses to actually invest in the investment option selected by the
employee, any assets acquired by the Employer shall remain the sole
property of the Employer subject to the claims of its general creditors
and shall not be deemed to form part of the employee account.
Notwithstanding anything herein to the contrary, in no event shall
anything be done under this Plan by reference to the Savings & Investment
Plan which would cause any participating employee to be in constructive
receipt of amounts credited to his or her account under this Plan.
(c) An unfunded bookkeeping account will be established and maintained for
each participating employee which shall be credited with the employee's
deferred excess basic compensation paid as of the last business day of
each month. In addition, as of the last business day of the month, the
Company will credit an amount to the employee's account equal to one
dollar for each dollar the employee defers of up to four percent of his or
her excess basic compensation and fifty cents for each dollar the employee
defers of up to the next four percent of his or her excess basic
compensation for that month. The employee's contribution for that month
will be converted into participating units/shares equivalent in value to
the corresponding participating units/shares on the last business day of
that month in the Savings & Investment Plan investment option(s) which
have been designated by the employee as his or her deemed investment
option(s). In the case of the Employer's matching contributions,
4
<PAGE> 5
the amount attributable to that month shall be converted into
participating units equivalent in value to participating units on the
last business day of that month in the Savings & Investment Plan DTE
Energy Common Stock Fund. The number of participating units/shares
(rounded to the nearest hundredth) will be determined by dividing the
total amount credited to the employee's account for the month, which is
deemed to be invested in an investment option, by the actual value of a
participating unit/share in that investment option under the Savings &
Investment Plan. The value of the applicable participating unit/share in
the Savings & Investment Plan investment option shall be determined on
the last business day of the month during which the deferred excess basic
compensation to be converted has been credited to the employee's account.
Unless otherwise specified herein, the valuation of the employee's
unfunded bookkeeping account will follow the procedures utilized by the
Savings & Investment Plan Trustee in determining the valuation of
contributions and investments in the Savings & Investment Plan.
(d) Subject to the procedures identified in Section 3(b) hereof, an
investment designation made by an employee will remain in effect until
changed by the employee. The employee may change his or her investment
designation by giving written notice to the Administrator on a form
provided for such purpose. A change of an investment designation may be
made once each calendar quarter. The participant must designate whether
the change applies (1) to amounts already credited to the participant's
account, (2) to the participant's future contributions to the Plan or (3)
to the amounts already credited to the participant's account and to the
participant's future contributions to the Plan. A change of an investment
designation shall be effective on the last business day of the month
during which written notice of such change is received by the
Administrator.
SECTION 4 - PAYMENT OF BENEFITS
(a) An employee's unfunded bookkeeping account will be valued upon
termination of employment with the Employer and all Affiliates. The
account value will be determined by multiplying the number of
participating units/shares in the employee account relative to each
investment option in which the employee deferred excess basic compensation
and the Employer's matching contribution have been deemed to have been
invested by the value of a participating unit/share in the applicable
investment option of the Savings & Investment Plan in which the deferred
excess basic compensation and the Employer's matching contribution have
been deemed to have been invested. The value of the participating
units/shares in this Plan shall be determined on the business day
preceding the day on which termination of employment occurs. The account
5
<PAGE> 6
will be distributed to the employee in one lump-sum payment as soon as
practicable, but no later than 30 days, after the employee's termination
of employment.
(b) In the event that an employee receives an assessment of income taxes from
the Internal Revenue Service which treats any amount in the employee's
unfunded bookkeeping account as being includible in such employee's gross
income prior to actual payment under Section 4(a) hereof, the Employer
shall pay an amount equal to such income taxes to such employee within
thirty days after the Company receives written notice from such employee
of such assessment, and such employee's unfunded bookkeeping account shall
be reduced by an amount equal to such income taxes.
(c) Each payment under the Plan shall be reduced by any federal, state, or
local income taxes which the Company determines should be withheld from
such payment.
(d) An employee may name any beneficiary or beneficiaries (subject to
restrictions imposed by law, if any) to whom amounts credited to his or
her account under this Plan are to be paid in case of the employee's death
before the employee receives all amounts credited to his or her account.
Each designation will revoke all prior designations by the employee, shall
be on a form prescribed by the Company and will be effective only when
received by the Administrator. In the absence of any such designation, the
unpaid amount in an employee's account at the time of the employee's death
shall be paid to the employee's estate.
(e) An employee will not be permitted to defer excess basic compensation and
will not be credited with the Employer's matching contribution for a month
unless he or she is employed by the Employer on the last business day of
the month. Therefore, if an employee terminates employment with the
Employer prior to the last business day of the month, the employee shall
receive what would have been that month's deferred excess basic
compensation in his or her final paycheck and will not receive any
matching contribution from the Employer for the month of termination of
employment.
(f) The amount of each employee's excess basic compensation which he or she
elects to defer under the plan shall be deemed to be compensation for the
purpose of calculating the amount of an employee's benefits or
contributions under a pension or a retirement plan qualified under Section
401(a) of the Internal Revenue Code, and under any non-qualified deferred
compensation
6
<PAGE> 7
arrangements maintained by the Employer except to the extent specifically
provided to the contrary in any such plan.
(g) Benefits under this Plan shall be payable to or in respect of an
Employer's former employees solely from the general assets of such
Employer; provided, however, that no provisions of the Plan shall preclude
an Employer from segregating assets which are intended to be a source for
payment of benefits under the Plan. The Plan shall remain unfunded during
the entire period of its existence for purposes of the Federal income tax
laws and Title I of ERISA. The Company intends that this Plan be
maintained primarily for a select group of management or highly
compensated employees.
SECTION 5 - RIGHTS OF EMPLOYEES
Except to the extent provided in Section 7 herein below, no employee or an
employee's spouse or beneficiary shall at any time have any vested right to
receive the benefits provided by this Plan. An employee, employee's spouse or
beneficiary shall not have any interest in the deferred excess basic
compensation or monthly award credited to his or her unfunded bookkeeping
account until such account is distributed in accordance with the Plan. All
deferred excess basic compensation and any other amounts otherwise credited to
the unfunded bookkeeping account of an employee under the Plan shall remain the
sole property of the Employer, subject to the claims of its general creditors
and available for its use for whatever purposes are desired. The employee,
employee's spouse or beneficiary is merely a general unsecured creditor of the
Employer and the obligation of the Employer hereunder is purely contractual and
shall not be funded or secured in any way.
The right of an employee, employee's spouse or beneficiary to payment of any
benefit or deferred compensation hereunder shall not be alienated, assigned,
transferred, pledged or encumbered and shall not be subject to execution,
attachment or similar process. No employee may borrow against the unfunded
bookkeeping account established for his or her benefit hereunder. No account
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, whether voluntary or involuntary, including but not limited to any
liability which is for alimony or other payments for the support of a spouse or
former spouse, or for any other relative of any employee. Any attempted
assignment, pledge, levy or similar process shall be null and void and without
effect.
Employees who participate in this Plan assume the risks associated with
fluctuations in the value of all deemed investment options, including the
Fidelity Retirement Money Market Portfolio, Fidelity Intermediate Bond Fund,
Fidelity Asset Manager, Fidelity
7
<PAGE> 8
U.S. Equity Index Portfolio, Fidelity Growth & Income Portfolio, Fidelity
Magellan Fund, Fidelity ContraFund, Fidelity OTC Portfolio, Fidelity Overseas
Fund, and DTE Energy Common Stock Fund.
SECTION 6 - ADMINISTRATION; ARBITRATION
(a) This Plan shall be administered by the Director of Benefit Plan
Administration of the Company (the "Administrator") as an unfunded plan
which is not intended to meet the qualification requirements of Section
401 of the Internal Revenue Code. The Administrator's decisions in all
matters involving the interpretation, application and administration of
this Plan shall be conclusive.
(b) The Plan shall at all times be maintained by the Company and administered
by the Administrator as a plan wholly separate from the Savings &
Investment Plan, and any other plan or program maintained by the Company.
(c) For purposes of the Plan, "Employer" shall mean the Company and any
Affiliate which has adopted the Plan with the approval of the Chairman of
the Board of Directors and Chairman of the board of directors of the
Affiliate (such an Affiliate is referred to hereinafter as a
"Participating Affiliate"). As a condition to participating in the Plan,
such Affiliate shall authorize the Chairman of the Board of Directors and
the Administrator to act for it in all matters arising under the Plan and
shall agree to comply with such other terms and conditions as may be
imposed by the Chairman of the Board of Directors. Where the context
requires in respect of the liability for the payment of any benefit to an
employee or beneficiary thereof, the term "Employer" shall mean the
Employer employing or who employed such employee. Unless otherwise
defined herein, all defined terms shall have the same meaning as provided
under the Savings & Investment Plan. All corporate officers and other
administrative personnel referred to herein refer to officers and
administrative personnel of the Company.
(d) Notwithstanding Section 6(a) hereof, in the event of any dispute, claim,
or controversy (hereinafter referred to as a "Grievance") between an
employee who is eligible to elect to receive the benefits provided under
this Plan and the Employer with respect to the payment of benefits to such
employee under this Plan, the computation of benefits under this Plan, or
any of the terms and conditions of this Plan, such Grievance shall be
resolved by arbitration in accordance with this Section 6(d).
(1) Arbitration shall be the sole and exclusive remedy to redress
any Grievance.
8
<PAGE> 9
(2) The arbitration decision shall be final and binding, and a
judgment on the arbitration award may be entered in any
court of competent jurisdiction and enforcement may be had
according to its terms.
(3) The arbitration shall be conducted by the American
Arbitration Association with the Commercial Arbitration Rules
of the American Arbitration Association and expenses of the
arbitrators and the American Arbitration Association shall
borne by the Company. Neither the Company nor such employee
shall be entitled to attorneys' fees, expert witness fees, or
other expenses expended in the course of such arbitration or
the enforcement of any award rendered thereunder.
(4) The place of the arbitration shall be the offices of the
American Arbitration Association in the Detroit Metropolitan
area, Michigan.
(5) The arbitrator(s) shall not have the jurisdiction or
authority to change any of the provisions of this Plan by
alteration of, addition to, or subtraction from
the terms thereof. The arbitrator(s)' sole authority shall
be to apply any terms and conditions of this Plan. Since
arbitration is the exclusive remedy with respect to any
Grievance, no employee eligible to receive benefits provided
under this Plan has the right to resort to any federal court,
state court, local court, or administrative agency concerning
breaches of any terms and provisions hereunder, and the
decision of the arbitrator(s) shall be a complete defense to
any suit, action, or proceeding instituted in any federal
court, state court, local court, or administrative agency by
such employee or the Company with respect to any Grievance
which is arbitrable as herein set forth.
(6) The arbitration provisions shall, with respect to any
Grievance, survive the termination of this Plan.
SECTION 7 - AMENDMENT AND DISCONTINUANCE
The Company expects to continue this Plan indefinitely, but reserves the right
to amend or discontinue the Plan. The Vice President - Human Resources, or,
should the Vice President - Human Resources become a Participant in this Plan,
the Manager - Human
9
<PAGE> 10
Resources Operations, shall review the Plan from time to time and as part of
such review is hereby directed and authorized to amend such Plan to the
extent necessary for ease of administration and/or to comply with applicable
federal and state laws. If the Plan should be amended or discontinued, the
Employer shall be liable for any benefits that have accrued under this Plan
(determined on the basis of each employee's presumed termination of employment
as of the date of such amendment or discontinuance) as of the date of such
action.
Any Participating Affiliate may as to itself withdraw from the Plan at any time
by action of the Chairman of its board of directors. In the event of the
dissolution, merger, consolidation or reorganization of a Participating
Affiliate, the Plan shall terminate as to such Participating Affiliate unless
the Plan is continued by a successor thereto (subject to the consent of the
Chairman of the Board of Directors).
10
<PAGE> 1
EXHIBIT 11-3
DTE ENERGY COMPANY AND SUBSIDIARY COMPANIES
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
OF COMMON STOCK
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended Ended
March 31, 1996 March 31, 1996
-------------- --------------
(Thousands, except per share amounts)
<S> <C> <C>
PRIMARY:
Net Income ................................. $108,440 $408,271
Weighted average number of common
shares outstanding (a) .................... 145,120 145,613
Earnings per share of Common Stock
based on weighted average number
of shares outstanding ..................... $ 0.75 $ 2.82
FULLY DILUTED:
Net Income ................................. $108,440 $408,271
Convertible Preferred Stock dividends ...... - 125
-------- --------
$108,440 $408,396
======== ========
Weighted average number of common
shares outstanding (a) .................... 145,120 144,613
Conversion of convertible Preferred Stock .. - 173
-------- --------
145,120 144,786
======== ========
Earnings per share of Common Stock
assuming conversion of outstanding
convertible Preferred Stock ............... $ 0.75 $ 2.82
</TABLE>
- ---------------
(a) Based on a daily average.
<PAGE> 1
Exhibit 15-1
May 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 period ended March 31, 1996, as indicated in our report
dated May 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 March 31, 1996,
is incorporated by reference in the following Registration Statements:
<TABLE>
<S> <C>
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
</TABLE>
We also are aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act of 1933, is not considered a part of the
Registration Statements listed above which are prepared or certified by
an accountant or a report prepared or certified by an accountant within
the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
The Schedule contains summary financial information extracted from the DTE
Energy Company and 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
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,490,547
<OTHER-PROPERTY-AND-INVEST> 467,575
<TOTAL-CURRENT-ASSETS> 887,793
<TOTAL-DEFERRED-CHARGES> 1,300,321
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 11,146,236
<COMMON> 1,951,437
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,515,773
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,467,210
0
144,405
<LONG-TERM-DEBT-NET> 3,921,894
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 138,428
0
<CAPITAL-LEASE-OBLIGATIONS> 126,130
<LEASES-CURRENT> 137,830
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,210,339
<TOT-CAPITALIZATION-AND-LIAB> 11,146,236
<GROSS-OPERATING-REVENUE> 909,579
<INCOME-TAX-EXPENSE> 76,104
<OTHER-OPERATING-EXPENSES> 646,931
<TOTAL-OPERATING-EXPENSES> 723,035
<OPERATING-INCOME-LOSS> 186,544
<OTHER-INCOME-NET> 1,376
<INCOME-BEFORE-INTEREST-EXPEN> 187,920
<TOTAL-INTEREST-EXPENSE> 72,187
<NET-INCOME> 108,440
7,293
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 74,737
<TOTAL-INTEREST-ON-BONDS> 68,360
<CASH-FLOW-OPERATIONS> 255,809
<EPS-PRIMARY> .75
<EPS-DILUTED> .75
</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> THE DETROIT EDISON COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 8,490,547
<OTHER-PROPERTY-AND-INVEST> 421,907
<TOTAL-CURRENT-ASSETS> 845,890
<TOTAL-DEFERRED-CHARGES> 1,297,547
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 11,055,891
<COMMON> 1,451,199
<CAPITAL-SURPLUS-PAID-IN> 500,238
<RETAINED-EARNINGS> 1,427,499
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,378,936
0
144,405
<LONG-TERM-DEBT-NET> 3,921,894
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 138,428
0
<CAPITAL-LEASE-OBLIGATIONS> 126,130
<LEASES-CURRENT> 137,830
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,208,268
<TOT-CAPITALIZATION-AND-LIAB> 11,055,891
<GROSS-OPERATING-REVENUE> 908,891
<INCOME-TAX-EXPENSE> 76,672
<OTHER-OPERATING-EXPENSES> 645,013
<TOTAL-OPERATING-EXPENSES> 721,685
<OPERATING-INCOME-LOSS> 187,206
<OTHER-INCOME-NET> 719
<INCOME-BEFORE-INTEREST-EXPEN> 187,925
<TOTAL-INTEREST-EXPENSE> 72,161
<NET-INCOME> 115,764
7,293
<EARNINGS-AVAILABLE-FOR-COMM> 108,471
<COMMON-STOCK-DIVIDENDS> 79,816
<TOTAL-INTEREST-ON-BONDS> 68,360
<CASH-FLOW-OPERATIONS> 248,669
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.9
CREDIT AGREEMENT
Dated as of March 1, 1996
DTE CAPITAL CORPORATION, a Michigan corporation (the "Borrower")
which is wholly owned by DTE Energy Company, a Michigan corporation (the
"Parent"), the banks, financial institutions and other institutional lenders
(the "Initial Lenders") listed on the signature pages hereof, and CITIBANK,
N.A. ("Citibank"), as agent (the "Agent") for the Lenders (as hereinafter
defined), agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Advance" means a Revolving Credit Advance or a Competitive Bid
Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"Agent's Account" means the account of the Agent maintained by the
Agent at Citibank with its office at One Court Square, Long Island City,
NY 11120, Account No. 36852248, Attention: Shawn Bernard.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance and, in the case of a Competitive Bid Advance, the office of such
Lender notified by such Lender to the Agent as its Applicable Lending
Office with respect to such Competitive Bid Advance.
"Applicable Margin" means, as of any date, a percentage per annum
determined by reference to the Public Debt Rating in effect on such date
as set forth below:
<PAGE> 2
2
<TABLE>
<CAPTION>
Public Debt Rating Applicable Margin for Applicable Margin for
S&P/Moody's Base Rate Advances Eurodollar Rate Advances
- --------------------------------------------------------------------------------
<S> <C> <C>
Level 1
A- / A3 or above 0% .225%
Level 2
Lower than Level 1, but at 0% .250%
least BBB+ / Baa1 or above
Level 3
Lower than Level 2, but at 0% .250%
least BBB / Baa2 or above
Level 4
Lower than Level 3, but at 0% .300%
least BBB- / Baa3 or above
Level 5
Lower than Level 4, or 0% .700%
no Public Debt Rating in Effect
</TABLE>
"Applicable Percentage" means, as of any date, a percentage per
annum determined by reference to the Public Debt Rating in effect on such
date as set forth below:
<TABLE>
<CAPTION>
Public Debt Rating Applicable
S&P/Moody's Percentage
- -----------------------------------------------
<S> <C>
Level 1
A- / A3 or above .125%
Level 2
Lower than Level 1, but at .150%
least BBB+ / Baa1 or above
Level 3
Lower than Level 2, but at .200%
least BBB / Baa2 or above
Level 4
Lower than Level 3, but at .250%
least BBB- / Baa3 or above
Level 5
Lower than Level 4, or .300%
no Public Debt Rating in Effect
</TABLE>
"Assigned Rights" means the rights of the Borrower under Sections 1,
2, 3 and 4 of the Support Agreement and all other rights that are
intended to secure the obligations of the Borrower under this Agreement.
<PAGE> 3
3
"Assignment Agreement" has the meaning specified in Section
3.01(h)(vi).
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Agent, in substantially the form of Exhibit C hereto.
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to
the highest of:
(a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/16 of 1% or, if there
is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2
of 1% per annum, plus (ii) the rate obtained by dividing (A) the
latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates of
deposit of major United States money market banks, such three-week
moving average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business
Day, on the next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published
by the Federal Reserve Bank of New York or, if such publication
shall be suspended or terminated, on the basis of quotations for
such rates received by Citibank from three New York certificate of
deposit dealers of recognized standing selected by Citibank, by (B)
a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank with respect to liabilities consisting of
or including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, plus (iii) the
average during such three-week period of the annual assessment
rates estimated by Citibank for determining the then current annual
assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring U.S. dollar deposits of
Citibank in the United States; and
(c) 1/2 of one percent per annum above the Federal Funds Rate.
"Base Rate Advance" means a Revolving Credit Advance that bears
interest as provided in Section 2.07(a)(i).
"Borrower" has the meaning specified in the recital of parties to
this Agreement.
"Borrowing" means a Revolving Credit Borrowing or a Competitive Bid
Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"Capitalization" means the sum of tangible net worth plus
Consolidated Debt.
"Commitment" has the meaning specified in Section 2.01.
<PAGE> 4
4
"Competitive Bid Advance" means an advance by a Lender to the
Borrower as part of a Competitive Bid Borrowing resulting from the
competitive bidding procedure described in Section 2.03 and refers to a
Fixed Rate Advance or a LIBO Rate Advance.
"Competitive Bid Borrowing" means a borrowing consisting of
simultaneous Competitive Bid Advances from each of the Lenders whose
offer to make one or more Competitive Bid Advances as part of such
borrowing has been accepted under the competitive bidding procedure
described in Section 2.03.
"Competitive Bid Note" means a promissory note of the Borrower
payable to the order of any Lender, in substantially the form of Exhibit
A-2 hereto, evidencing the indebtedness of the Borrower to such Lender
resulting from a Competitive Bid Advance made by such Lender.
"Competitive Bid Reduction" has the meaning specified in Section
2.01.
"Confidential Information" means information that a Loan Party
furnishes to the Agent or any Lender in a writing designated as
confidential, but does not include any such information that is or
becomes generally available to the public or that is or becomes available
to the Agent or such Lender from a source other than a Loan Party.
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.
"Convert", "Conversion" and "Converted" each refers to a conversion
of Revolving Credit Advances of one Type into Revolving Credit Advances
of the other Type pursuant to Section 2.08 or 2.09.
"Debt" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services
(other than trade payables not overdue by more than 60 days incurred in
the ordinary course of such Person's business), (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all obligations of such Person created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all obligations of
such Person as lessee under leases that have been or should be, in
accordance with GAAP, recorded as capital leases, (f) all obligations,
contingent or otherwise, of such Person in respect of acceptances,
letters of credit or similar extensions of credit, (g) all obligations of
such Person in respect of Hedge Agreements, (h) all Debt of others
referred to in clauses (a) through (g) above or clause (i) below
guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an
agreement (1) to pay or purchase such Debt or to advance or supply funds
for the payment or purchase of such Debt, (2) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Debt or to assure the holder of such Debt against loss, (3) to supply
funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (4) otherwise to
assure a creditor against loss, and (i) all Debt referred to in clauses
(a) through (h) above secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) any
Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Debt.
<PAGE> 5
5
"DECO" means The Detroit Edison Company, a Michigan corporation
wholly owned by the Parent.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Designated Bidder" means (a) an Eligible Assignee or (b) a special
purpose corporation that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and
that issues (or the parent of which issues) commercial paper rated at
least "Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or
the then equivalent grade) by S&P that, in the case of either clause (a)
or (b), (i) is organized under the laws of the United States or any State
thereof, (ii) shall have become a party hereto pursuant to Section
8.07(d), (e) and (f) and (iii) is not otherwise a Lender.
"Designation Agreement" means a designation agreement entered into
by a Lender (other than a Designated Bidder) and a Designated Bidder, and
accepted by the Agent, in substantially the form of Exhibit D hereto.
"Disclosed Litigation" has the meaning specified in Section 3.01(b).
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other office of such Lender
as such Lender may from time to time specify to the Borrower and the
Agent.
"EBITDA" means, for any period, net income (or net loss) plus the
sum of (a) interest expense, (b) income tax expense, (c) depreciation
expense and (d) amortization expense, in each case determined in
accordance with GAAP for such period.
"Effective Date" has the meaning specified in Section 3.01.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender; (iii) a commercial bank organized under the laws of the United
States, or any State thereof, and having a combined capital and surplus
of at least $250,000,000; (iv) a savings and loan association or savings
bank organized under the laws of the United States, or any State thereof,
and having a combined capital and surplus of at least $250,000,000; (v) a
commercial bank organized under the laws of any other country that is a
member of the Organization for Economic Cooperation and Development or
has concluded special lending arrangements with the International
Monetary Fund associated with its General Arrangements to Borrow, or a
political subdivision of any such country, and having a combined capital
and surplus of at least $250,000,000, so long as such bank is acting
through a branch or agency located in the United States; (vi) the central
bank of any country that is a member of the Organization for Economic
Cooperation and Development; (vii) a finance company, insurance company
or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing
or otherwise investing in commercial loans in the ordinary course of its
business and having a combined capital and surplus of at least
$250,000,000; and (viii) any other Person approved by the Agent and the
Borrower, such approval not to be unreasonably withheld or delayed by
either party; provided, however, that neither the Borrower nor an
Affiliate of the Borrower shall qualify as an Eligible Assignee.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of liability
or potential liability, investigation, proceeding, consent order or
consent agreement relating in any way to any Environmental Law,
Environmental Permit or
<PAGE> 6
6
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment, including, without limitation, (a) by
any governmental or regulatory authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b) by any
governmental or regulatory authority or any third party for damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, judgment, decree
or judicial or agency interpretation, policy or guidance relating to
pollution or protection of the environment, health, safety or natural
resources, including, without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the Borrower's controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC, or (ii) the requirements of subsection (1) of Section
4043(b) of ERISA (without regard to subsection (2) of such Section) are
met with a contributing sponsor, as defined in Section 4001(a)(13) of
ERISA, of a Plan, and an event described in paragraph (9), (10), (11),
(12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur
with respect to such Plan within the following 30 days; (b) the
application for a minimum funding waiver with respect to a Plan; (c) the
provision by the administrator of any Plan of a notice of intent to
terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including
any such notice with respect to a plan amendment referred to in Section
4041(e) of ERISA); (d) the cessation of operations at a facility of the
Borrower or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year for which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(f) the conditions for the imposition of a lien under Section 302(f) of
ERISA shall have been met with respect to any Plan; (g) the adoption of
an amendment to a Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of
proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA
that constitutes grounds for the termination of, or the appointment of a
trustee to administer, a Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender (or, if no such office is
specified, its Domestic Lending Office), or such other office of such
Lender as such Lender may from time to time specify to the Borrower and
the Agent.
<PAGE> 7
7
"Eurodollar Rate" means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same Revolving Credit Borrowing, an
interest rate per annum equal to the rate per annum obtained by dividing
(a) the average (rounded upward to the nearest whole multiple of 1/16 of
1% per annum, if such average is not such a multiple) of the rate per
annum at which deposits in U.S. dollars are offered by the principal
office of each of the Reference Banks in London, England to prime banks
in the London interbank market at 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in an amount
substantially equal to such Reference Bank's Eurodollar Rate Advance
comprising part of such Revolving Credit Borrowing to be outstanding
during such Interest Period and for a period equal to such Interest
Period by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period. The Eurodollar Rate for any
Interest Period for each Eurodollar Rate Advance comprising part of the
same Revolving Credit Borrowing shall be determined by the Agent on the
basis of applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest
Period, subject, however, to the provisions of Section 2.08.
"Eurodollar Rate Advance" means a Revolving Credit Advance that
bears interest as provided in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for all
Eurodollar Rate Advances or LIBO Rate Advances comprising part of the
same Borrowing means the reserve percentage applicable two Business Days
before the first day of such Interest Period under regulations issued
from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting
of or including Eurocurrency Liabilities (or with respect to any other
category of liabilities that includes deposits by reference to which the
interest rate on Eurodollar Rate Advances or LIBO Rate Advances is
determined) having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by
the Agent from three federal funds brokers of recognized standing
selected by it.
"Financial Officer" of any Person means the chief executive officer,
president, chief financial officer, controller, treasurer or any
assistant treasurer of such Person.
"Fixed Rate Advances" has the meaning specified in Section
2.03(a)(i).
"GAAP" has the meaning specified in Section 1.03.
"Hazardous Materials" means (a) petroleum and petroleum products,
by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas
and (b) any other chemicals, materials or substances designated,
classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any Environmental Law.
<PAGE> 8
8
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"Information Memorandum" means the information memorandum dated
January 1996 used by the Agent in connection with the syndication of the
Commitments.
"Insufficiency" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Revolving Credit Borrowing and each LIBO Rate Advance
comprising part of the same Competitive Bid Borrowing, the period
commencing on the date of such Eurodollar Rate Advance or LIBO Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance and ending on the last day of the period selected
by the Borrower pursuant to the provisions below and, thereafter, with
respect to Eurodollar Rate Advances, each subsequent period commencing on
the last day of the immediately preceding Interest Period and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be
one, two, three or six months, as the Borrower may, upon notice received
by the Agent not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the first day of such Interest Period, select;
provided, however, that:
(i) the Borrower may not select any Interest Period that ends
after the Termination Date;
(ii) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Revolving
Credit Borrowing or for LIBO Rate Advances comprising part of the
same Competitive Bid Borrowing shall be of the same duration;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next
succeeding Business Day, provided, however, that, if such extension
would cause the last day of such Interest Period to occur in the
next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day; and
(iv) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of
months in such Interest Period, such Interest Period shall end on
the last Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Junior Subordinated Debentures" means subordinated junior
deferrable interest debentures issued by DECO from time to time.
"Lenders" means the Initial Lenders and each Person that shall
become a party hereto pursuant to Section 8.07(a), (b) and (c) and,
except when used in reference to a Revolving Credit Advance, a
<PAGE> 9
9
Revolving Credit Borrowing, a Revolving Credit Note, a Commitment or a
related term, each Designated Bidder.
"LIBO Rate" means, for any Interest Period for all LIBO Rate
Advances comprising part of the same Competitive Bid Borrowing, an
interest rate per annum equal to the rate per annum obtained by dividing
(a) the average (rounded upward to the nearest whole multiple of 1/16 of
1% per annum, if such average is not such a multiple) of the rate per
annum at which deposits in U.S. dollars are offered by the principal
office of each of the Reference Banks in London, England to prime banks
in the London interbank market at 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period in an amount
substantially equal to the amount that would be the Reference Banks'
respective ratable shares of such Borrowing if such Borrowing were to be
a Revolving Credit Borrowing to be outstanding during such Interest
Period and for a period equal to such Interest Period by (b) a percentage
equal to 100% minus the Eurodollar Rate Reserve Percentage for such
Interest Period. The LIBO Rate for any Interest Period for each LIBO
Rate Advance comprising part of the same Competitive Bid Borrowing shall
be determined by the Agent on the basis of applicable rates furnished to
and received by the Agent from the Reference Banks two Business Days
before the first day of such Interest Period, subject, however, to the
provisions of Section 2.08.
"LIBO Rate Advances" has the meaning specified in Section
2.03(a)(i).
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"Loan Documents" means this Agreement, the Notes, the Support
Agreement and the Assignment Agreement.
"Loan Parties" means the Borrower and the Parent.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of either Loan Party and its Subsidiaries taken
as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of either Loan Party or either Loan Party and its
Subsidiaries taken as a whole, (b) the rights and remedies of the Agent
or any Lender under any Loan Document or (c) the ability of either Loan
Party to perform its obligations under any Loan Document to which it is a
party.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
is making or accruing an obligation to make contributions, or has within
any of the preceding five plan years made or accrued an obligation to
make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and at least one Person other than the
Borrower and the ERISA Affiliates or (b) was so maintained and in respect
of which the Borrower or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to
be terminated.
<PAGE> 10
10
"Note" means a Revolving Credit Note or a Competitive Bid Note.
"Notice of Competitive Bid Borrowing" has the meaning specified in
Section 2.03(a)(i).
"Notice of Revolving Credit Borrowing" has the meaning specified in
Section 2.02(a).
"Parent" has the meaning specified in the recital by the parties to
this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced: (a) Liens for taxes, assessments and governmental
charges or levies to the extent not required to be paid under Section
5.01(b) hereof; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar
Liens arising in the ordinary course of business securing obligations
that are not overdue for a period of more than 30 days; (c) pledges or
deposits to secure obligations under workers' compensation laws or
similar legislation or to secure public or statutory obligations; and (d)
easements, rights of way and other encumbrances on title to real property
that do not render title to the property encumbered thereby unmarketable
or materially adversely affect the use of such property for its present
purposes.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Public Debt Rating" means, as of any date, the lowest rating that
has been most recently announced by either S&P or Moody's, as the case
may be, for any class of non-credit enhanced long-term First Mortgage
Bonds issued by DECO. For purposes of the foregoing, (a) if only one of
S&P and Moody's shall have in effect a Public Debt Rating, the Applicable
Margin and the Applicable Percentage shall be determined by reference to
the available rating; (b) if neither S&P nor Moody's shall have in effect
a Public Debt Rating, the Applicable Margin and the Applicable Percentage
will be set in accordance with Level 5 under the definition of
"Applicable Margin" or "Applicable Percentage", as the case may be; (c)
if the ratings established by S&P and Moody's shall fall within different
levels, the Applicable Margin and the Applicable Percentage shall be
based upon the lower rating; (d) if any rating established by S&P or
Moody's shall be changed, such change shall be effective as of the date
on which such change is first announced publicly by the rating agency
making such change; and (e) if S&P or Moody's shall change the basis on
which ratings are established, each reference to the Public Debt Rating
announced by S&P or Moody's, as the case may be, shall refer to the then
equivalent rating by S&P or Moody's, as the case may be.
"Reference Banks" means Citibank, N.A., Barclays Bank PLC and The
First National Bank of Chicago.
"Register" has the meaning specified in Section 8.07(g).
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"Required Lenders" means at any time Lenders owed at least 66-2/3%
of the then aggregate unpaid principal amount of the Revolving Credit
Advances owing to Lenders, or, if no such principal amount is then
outstanding, Lenders having at least 66-2/3% of the Commitments.
"Revolving Credit Advance" means an advance by a Lender to the
Borrower as part of a Revolving Credit Borrowing and refers to a Base
Rate Advance or a Eurodollar Rate Advance (each of which shall be a
"Type" of Revolving Credit Advance).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by each of
the Lenders pursuant to Section 2.01.
"Revolving Credit Note" means a promissory note of the Borrower
payable to the order of any Lender, in substantially the form of Exhibit
A-1 hereto, evidencing the aggregate indebtedness of the Borrower to such
Lender resulting from the Revolving Credit Advances made by such Lender.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"SEC Reports" means the following reports filed with or sent to the
Securities and Exchange Commission by the Parent or DECO, as the case may
be:
(a) the Form 10K of DECO for the year ended December 31, 1994,
(b) the Forms 10Q of DECO for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995,
(c) the Form 8K of the Parent dated January 22, 1996,
(d) the Forms 8K of DECO dated January 27, 1995, March 1,
1995, January 1, 1996 and January 22, 1996, and
(e) the Audited Consolidated Financial Statements of the
Parent for the year ended December 31, 1995, together with the
notes thereto, as contained in the Parent's 1995 annual report to
Shareholders.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and no Person other than the Borrower and
the ERISA Affiliates or (b) was so maintained and in respect of which the
Borrower or any ERISA Affiliate could have liability under Section 4069
of ERISA in the event such plan has been or were to be terminated.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in
which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency), (b) the
interest in the capital or profits of such limited liability company,
partnership or joint venture or (c) the beneficial interest in such trust
or estate is at the time directly owned or controlled by such Person, by
such Person and one or more of its other Subsidiaries or by one or more
of such Person's other Subsidiaries.
"Support Agreement" has the meaning specified in Section 3.01(h)(v).
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"Termination Date" means the earlier of March 8, 1999 and the date
of termination in whole of the Commitments pursuant to Section 2.05 or
6.01.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening
of such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Credit Advances. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, to make Revolving
Credit Advances to the Borrower from time to time on any Business Day during
the period from the Effective Date until the Termination Date in an aggregate
amount not to exceed at any time outstanding the amount set forth opposite such
Lender's name on the signature pages hereof or, if such Lender has entered into
any Assignment and Acceptance, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 8.07(g), as such amount may be
reduced pursuant to Section 2.05 (such Lender's "Commitment"), provided that
the aggregate amount of the Commitments of the Lenders shall be deemed used
from time to time to the extent of the aggregate amount of the Competitive Bid
Advances then outstanding and such deemed use of the aggregate amount of the
Commitments shall be allocated among the Lenders ratably according to their
respective Commitments (such deemed use of the aggregate amount of the
Commitments being a "Competitive Bid Reduction"). Each Revolving Credit
Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof (or, if less, an aggregate amount equal to the
amount by which the aggregate amount of a proposed Competitive Bid Borrowing
requested by the Borrower exceeds the aggregate amount of Competitive Bid
Advances offered to be made by the Lenders and accepted by the Borrower in
respect of such Competitive Bid Borrowing, if such Competitive Bid Borrowing is
made on the same date as such Revolving Credit Borrowing) and shall consist of
Revolving Credit Advances of the same Type made on the same day by the Lenders
ratably according to their respective Commitments. Within the limits of each
Lender's Commitment, the Borrower may borrow under this Section 2.01, prepay
pursuant to Section 2.10 and reborrow under this Section 2.01.
SECTION 2.02. Making the Revolving Credit Advances. (a) Each
Revolving Credit Borrowing shall be made on notice, given not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the
proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Eurodollar Rate Advances, or the first Business Day prior to the
date of the proposed Revolving Credit Borrowing in the case of a Revolving
Credit Borrowing consisting of Base Rate Advances, by the Borrower to the
Agent, which shall give to each Lender prompt notice thereof by telecopier or
telex. Each such
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notice of a Revolving Credit Borrowing (a "Notice of Revolving Credit
Borrowing") shall be by telephone, confirmed immediately in writing, or
telecopier or telex in substantially the form of Exhibit B-1 hereto, specifying
therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of
Advances comprising such Revolving Credit Borrowing, (iii) aggregate amount of
such Revolving Credit Borrowing, and (iv) in the case of a Revolving Credit
Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for
each such Revolving Credit Advance. Each Lender shall, before 11:00 A.M. (New
York City time) on the date of such Revolving Credit Borrowing, make available
for the account of its Applicable Lending Office to the Agent at the Agent's
Account, in same day funds, such Lender's ratable portion of such Revolving
Credit Borrowing. After the Agent's receipt of such funds and upon fulfillment
of the applicable conditions set forth in Article III, the Agent will make such
funds available to the Borrower at the Agent's address referred to in Section
8.02.
(b) Anything in subsection (a) above to the contrary notwithstanding, (i)
the Borrower may not select Eurodollar Rate Advances for any Revolving Credit
Borrowing if the aggregate amount of such Revolving Credit Borrowing is less
than $5,000,000 or if the obligation of the Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the
Eurodollar Rate Advances may not be outstanding as part of more than five
separate Revolving Credit Borrowings.
(c) Each Notice of Revolving Credit Borrowing shall be irrevocable
and binding on the Borrower. In the case of any Revolving Credit Borrowing
that the related Notice of Revolving Credit Borrowing specifies is to be
comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in such Notice of Revolving
Credit Borrowing for such Revolving Credit Borrowing the applicable conditions
set forth in Article III, including, without limitation, any loss (including
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to fund the Revolving Credit Advance to be made by such Lender as part of such
Revolving Credit Borrowing when such Revolving Credit Advance, as a result of
such failure, is not made on such date.
(d) Unless the Agent shall have received notice from a Lender
prior to the date of any Revolving Credit Borrowing that such Lender will not
make available to the Agent such Lender's ratable portion of such Revolving
Credit Borrowing, the Agent may assume that such Lender has made such portion
available to the Agent on the date of such Revolving Credit Borrowing in
accordance with subsection (a) of this Section 2.02 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Agent, such Lender and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Revolving Credit Advances comprising such Revolving Credit Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Revolving Credit Advance as part of such Revolving
Credit Borrowing for purposes of this Agreement.
(e) The failure of any Lender to make the Revolving Credit Advance to be
made by it as part of any Revolving Credit Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit
Borrowing.
SECTION 2.03. The Competitive Bid Advances. (a) Each Lender
severally agrees that the Borrower may make Competitive Bid Borrowings under
this Section 2.03 from time to time on any Business Day during the period from
the date hereof until the date occurring 30 days prior to the Termination Date
in the
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manner set forth below; provided that, following the making of each Competitive
Bid Borrowing, the aggregate amount of the Advances then outstanding shall not
exceed the aggregate amount of the Commitments of the Lenders (computed without
regard to any Competitive Bid Reduction).
(i) The Borrower may request a Competitive Bid Borrowing under this
Section 2.03 by delivering to the Agent, by telecopier or telex, a notice
of a Competitive Bid Borrowing (a "Notice of Competitive Bid Borrowing"),
in substantially the form of Exhibit B-2 hereto, specifying therein the
requested (v) date of such proposed Competitive Bid Borrowing, (w)
aggregate amount of such proposed Competitive Bid Borrowing, (x) in the
case of a Competitive Bid Borrowing consisting of LIBO Rate Advances,
Interest Period, or in the case of a Competitive Bid Borrowing consisting
of Fixed Rate Advances, maturity date for repayment of each Fixed Rate
Advance to be made as part of such Competitive Bid Borrowing (which
maturity date may not be earlier than the date occurring 7 days after the
date of such Competitive Bid Borrowing or later than the earlier of (I)
180 days after the date of such Competitive Bid Borrowing and (II) the
Termination Date), (y) interest payment date or dates relating thereto,
and (z) other terms (if any) to be applicable to such Competitive Bid
Borrowing, not later than 10:00 A.M. (New York City time) (A) at least
one Business Day prior to the date of the proposed Competitive Bid
Borrowing, if the Borrower shall specify in the Notice of Competitive Bid
Borrowing that the rates of interest to be offered by the Lenders shall
be fixed rates per annum (the Advances comprising any such Competitive
Bid Borrowing being referred to herein as "Fixed Rate Advances") and (B)
at least five Business Days prior to the date of the proposed Competitive
Bid Borrowing, if the Borrower shall instead specify in the Notice of
Competitive Bid Borrowing that the rates of interest be offered by the
Lenders are to be based on the LIBO Rate (the Advances comprising such
Competitive Bid Borrowing being referred to herein as "LIBO Rate
Advances"). Each Notice of Competitive Bid Borrowing shall be
irrevocable and binding on the Borrower. The Agent shall in turn
promptly notify each Lender of each request for a Competitive Bid
Borrowing received by it from the Borrower by sending such Lender a copy
of the related Notice of Competitive Bid Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to do
so, irrevocably offer to make one or more Competitive Bid Advances to the
Borrower as part of such proposed Competitive Bid Borrowing at a rate or
rates of interest specified by such Lender in its sole discretion, by
notifying the Agent (which shall give prompt notice thereof to the
Borrower), before 9:30 A.M. (New York City time) on the date of such
proposed Competitive Bid Borrowing, in the case of a Competitive Bid
Borrowing consisting of Fixed Rate Advances and before 10:00 A.M. (New
York City time) three Business Days before the date of such proposed
Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing
consisting of LIBO Rate Advances, of the minimum amount and maximum
amount of each Competitive Bid Advance which such Lender would be willing
to make as part of such proposed Competitive Bid Borrowing (which amounts
may, subject to the proviso to the first sentence of this Section
2.03(a), exceed such Lender's Commitment, if any), the rate or rates of
interest therefor and such Lender's Applicable Lending Office with
respect to such Competitive Bid Advance; provided that if the Agent in
its capacity as a Lender shall, in its sole discretion, elect to make any
such offer, it shall notify the Borrower of such offer at least 30
minutes before the time and on the date on which notice of such election
is to be given to the Agent by the other Lenders. If any Lender shall
elect not to make such an offer, such Lender shall so notify the Agent,
before 10:00 A.M. (New York City time) on the date on which notice of
such election is to be given to the Agent by the other Lenders, and such
Lender shall not be obligated to, and shall not, make any Competitive Bid
Advance as part of such Competitive Bid Borrowing; provided that the
failure by any Lender to give such notice shall not cause such Lender to
be obligated to make any Competitive Bid Advance as part of such proposed
Competitive Bid Borrowing.
(iii) The Borrower shall, in turn, before 10:30 A.M. (New York City
time) on the date of such proposed Competitive Bid Borrowing, in the case
of a Competitive Bid Borrowing consisting of
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Fixed Rate Advances and before 11:00 A.M. (New York City time) three
Business Days before the date of such proposed Competitive Bid Borrowing,
in the case of a Competitive Bid Borrowing consisting of LIBO Rate
Advances, either:
(x) cancel such Competitive Bid Borrowing by giving the Agent
notice to that effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion,
by giving notice to the Agent of the amount of each Competitive Bid
Advance (which amount shall be equal to or greater than the minimum
amount, and equal to or less than the maximum amount, notified to
the Borrower by the Agent on behalf of such Lender for such
Competitive Bid Advance pursuant to paragraph (ii) above) to be
made by each Lender as part of such Competitive Bid Borrowing, and
reject any remaining offers made by Lenders pursuant to paragraph
(ii) above by giving the Agent notice to that effect. The Borrower
shall accept the offers made by any Lender or Lenders to make
Competitive Bid Advances in order of the lowest to the highest
rates of interest offered by such Lenders. If two or more Lenders
have offered the same interest rate, the amount to be borrowed at
such interest rate will be allocated among such Lenders in
proportion to the amount that each such Lender offered at such
interest rate.
(iv) If the Borrower notifies the Agent that such Competitive Bid
Borrowing is cancelled pursuant to paragraph (iii)(x) above, the Agent
shall give prompt notice thereof to the Lenders and such Competitive Bid
Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall
in turn promptly notify (A) each Lender that has made an offer as
described in paragraph (ii) above, of the date and aggregate amount of
such Competitive Bid Borrowing and whether or not any offer or offers
made by such Lender pursuant to paragraph (ii) above have been accepted
by the Borrower, (B) each Lender that is to make a Competitive Bid
Advance as part of such Competitive Bid Borrowing, of the amount of each
Competitive Bid Advance to be made by such Lender as part of such
Competitive Bid Borrowing, and (C) each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing, upon
receipt, that the Agent has received forms of documents appearing to
fulfill the applicable conditions set forth in Article III. Each Lender
that is to make a Competitive Bid Advance as part of such Competitive Bid
Borrowing shall, before 12:00 noon (New York City time) on the date of
such Competitive Bid Borrowing specified in the notice received from the
Agent pursuant to clause (A) of the preceding sentence or any later time
when such Lender shall have received notice from the Agent pursuant to
clause (C) of the preceding sentence, make available for the account of
its Applicable Lending Office to the Agent at the Agent's Account, in
same day funds, such Lender's portion of such Competitive Bid Borrowing.
Upon fulfillment of the applicable conditions set forth in Article III
and after receipt by the Agent of such funds, the Agent will make such
funds available to the Borrower at the Agent's address referred to in
Section 8.02. Promptly after each Competitive Bid Borrowing the Agent
will notify each Lender of the amount of the Competitive Bid Borrowing,
the consequent Competitive Bid Reduction and the dates upon which such
Competitive Bid Reduction commenced and will terminate.
(vi) If the Borrower notifies the Agent that it accepts one or more
of the offers made by any Lender or Lenders pursuant to paragraph
(iii)(y) above, such notice of acceptance shall be irrevocable and
binding on the Borrower. The Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in the related
Notice of Competitive Bid Borrowing for such Competitive Bid Borrowing
the applicable
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conditions set forth in Article III, including, without limitation, any
loss (including loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Competitive Bid Advance to be made by
such Lender as part of such Competitive Bid Borrowing when such
Competitive Bid Advance, as a result of such failure, is not made on such
date.
(b) Each Competitive Bid Borrowing shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each Competitive Bid Borrowing, the Borrower and each
Lender shall be in compliance with the limitations set forth in the proviso to
the first sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this Section
2.03, the Borrower may from time to time borrow under this Section 2.03, repay
or prepay pursuant to subsection (d) below, and reborrow under this Section
2.03, provided that a Competitive Bid Borrowing shall not be made within three
Business Days of the date of any other Competitive Bid Borrowing.
(d) The Borrower shall repay to the Agent for the account of each Lender
that has made a Competitive Bid Advance, on the maturity date of each
Competitive Bid Advance (such maturity date being that specified by the
Borrower for repayment of such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and
provided in the Competitive Bid Note evidencing such Competitive Bid Advance),
the then unpaid principal amount of such Competitive Bid Advance. The Borrower
shall have no right to prepay any principal amount of any Competitive Bid
Advance unless, and then only on the terms, specified by the Borrower for such
Competitive Bid Advance in the related Notice of Competitive Bid Borrowing
delivered pursuant to subsection (a)(i) above and set forth in the Competitive
Bid Note evidencing such Competitive Bid Advance.
(e) The Borrower shall pay interest on the unpaid principal amount of
each Competitive Bid Advance from the date of such Competitive Bid Advance to
the date the principal amount of such Competitive Bid Advance is repaid in
full, at the rate of interest for such Competitive Bid Advance specified by the
Lender making such Competitive Bid Advance in its notice with respect thereto
delivered pursuant to subsection (a)(ii) above, payable on the interest payment
date or dates specified by the Borrower for such Competitive Bid Advance in the
related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(a)(i) above, as provided in the Competitive Bid Note evidencing such
Competitive Bid Advance. Upon the occurrence and during the continuance of an
Event of Default, the Borrower shall pay interest on the amount of unpaid
principal of and interest on each Competitive Bid Advance owing to a Lender,
payable in arrears on the date or dates interest is payable thereon, at a rate
per annum equal at all times to 2% per annum above the rate per annum required
to be paid on such Competitive Bid Advance under the terms of the Competitive
Bid Note evidencing such Competitive Bid Advance unless otherwise agreed in
such Competitive Bid Note.
(f) The indebtedness of the Borrower resulting from each Competitive Bid
Advance made to the Borrower as part of a Competitive Bid Borrowing shall be
evidenced by a separate Competitive Bid Note of the Borrower payable to the
order of the Lender making such Competitive Bid Advance.
(g) Upon delivery of each Notice of Competitive Bid Borrowing, the
Borrower shall pay a non-refundable fee of $3,000 to the Agent for its own
account.
SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay
to the Agent for the account of each Lender (other than the Designated Bidders)
a facility fee on the aggregate amount of such Lender's Commitment from the
Effective Date in the case of each Initial Lender and from effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the
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Termination Date at a rate per annum equal to the Applicable Percentage in
effect from time to time, payable in arrears quarterly on the last day of each
March, June, September and December, commencing March 1996, and on the
Termination Date.
(b) Agent's Fees. The Borrower shall pay to the Agent for its own
account such fees as may from time to time be agreed between the Borrower and
the Agent.
SECTION 2.05. Termination or Reduction of the Commitments. The
Borrower shall have the right, upon at least three Business Days' notice to the
Agent, to terminate in whole or reduce ratably in part the unused portions of
the respective Commitments of the Lenders, provided that each partial reduction
shall be in the aggregate amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and provided further that the aggregate amount of
the Commitments of the Lenders shall not be reduced to an amount that is less
than the aggregate principal amount of the Competitive Bid Advances then
outstanding.
SECTION 2.06. Repayment of Revolving Credit Advances. The Borrower
shall repay to the Agent for the ratable account of the Lenders on the
Termination Date the aggregate principal amount of the Revolving Credit
Advances then outstanding.
SECTION 2.07. Interest on Revolving Credit Advances. (a) Scheduled
Interest. The Borrower shall pay interest on the unpaid principal amount of
each Revolving Credit Advance owing to each Lender from the date of such
Revolving Credit Advance until such principal amount shall be paid in full, at
the following rates per annum:
(i) Base Rate Advances. During such periods as such Revolving
Credit Advance is a Base Rate Advance, a rate per annum equal at all
times to the sum of (x) the Base Rate in effect from time to time plus
(y) the Applicable Margin in effect from time to time, payable in arrears
quarterly on the last day of each March, June, September and December
during such periods and on the date such Base Rate Advance shall be
Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such
Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum
equal at all times during each Interest Period for such Revolving Credit
Advance to the sum of (x) the Eurodollar Rate for such Interest Period
for such Revolving Credit Advance plus (y) the Applicable Margin in
effect from time to time, payable in arrears on the last day of such
Interest Period and, if such Interest Period has a duration of more than
three months, on each day that occurs during such Interest Period every
three months from the first day of such Interest Period and on the date
such Eurodollar Rate Advance shall be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the continuance of
an Event of Default, the Borrower shall pay interest on (i) the unpaid
principal amount of each Revolving Credit Advance owing to each Lender, payable
in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a
rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Revolving Credit Advance pursuant to clause (a)(i)
or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of
any interest, fee or other amount payable hereunder that is not paid when due,
from the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on Base Rate Advances pursuant to clause (a)(i) above.
SECTION 2.08. Interest Rate Determination. (a) Each Reference Bank
agrees to furnish to the Agent timely information for the purpose of
determining each Eurodollar Rate and each LIBO Rate. If any one or more of the
Reference Banks shall not furnish such timely information to the Agent for the
purpose of
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determining any such interest rate, the Agent shall determine such interest
rate on the basis of timely information furnished by the remaining Reference
Banks. The Agent shall give prompt notice to the Borrower and the Lenders of
the applicable interest rate determined by the Agent for purposes of Section
2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for
the purpose of determining the interest rate under Section 2.07(a)(ii).
(b) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Agent that the Eurodollar Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert
Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent
will forthwith so notify the Borrower and the Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Base Rate Advances.
(d) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.
(e) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance
and (ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.
(f) If fewer than two Reference Banks furnish timely information to the
Agent for determining the Eurodollar Rate or LIBO Rate for any Eurodollar Rate
Advances or LIBO Rate Advances, as the case may be,
(i) the Agent shall forthwith notify the Borrower and the Lenders
that the interest rate cannot be determined for such Eurodollar Rate
Advances or LIBO Rate Advances, as the case may be,
(ii) with respect to Eurodollar Rate Advances, each such Advance
will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance (or if such Advance is then a
Base Rate Advance, will continue as a Base Rate Advance), and
(iii) the obligation of the Lenders to make Eurodollar Rate Advances
or LIBO Rate Advances or to Convert Revolving Credit Advances into
Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 2.09. Optional Conversion of Revolving Credit Advances. The
Borrower may on any Business Day, upon notice given to the Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.08 and
2.12, Convert all Revolving Credit Advances of one Type comprising the same
Borrowing into Revolving Credit Advances of the other Type; provided, however,
that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall
be made only on the last day of an Interest Period for such Eurodollar Rate
Advances, any
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Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an
amount not less than the minimum amount specified in Section 2.02(b) and no
Conversion of any Revolving Credit Advances shall result in more separate
Revolving Credit Borrowings than permitted under Section 2.02(b). Each such
notice of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the Revolving Credit Advances to be
Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for each such Advance. Each notice of
Conversion shall be irrevocable and binding on the Borrower.
SECTION 2.10. Prepayments of Revolving Credit Advances.
(a) Optional Prepayment. The Borrower may on any Business Day, upon
notice given to the Agent not later than 11:00 A.M., (i) on the same day for
Base Rate Advances and (ii) on the second Business Day prior to the prepayment
in the case of Eurodollar Rate Advances stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the Borrower
shall, prepay the outstanding principal amount of the Revolving Credit Advances
comprising part of the same Revolving Credit Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (x) each partial prepayment
shall be in an aggregate principal amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof and (y) in the event of any such prepayment of
a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 8.04(c).
(b) Mandatory Prepayment. The Borrower shall, upon five Business
Days notice from the Agent given at the request or with the consent of the
Required Lenders, prepay the aggregate principal amount outstanding plus all
interest thereon and all other amounts payable hereunder or under the Notes,
in the event that (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934), directly or indirectly, of Voting Stock of the Parent (or other
securities convertible into such Voting Stock) representing 20% or more of the
combined voting power of all Voting Stock of the Parent; or (ii) any Person or
two or more Persons acting in concert shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence over the management or policies
of the Parent.
SECTION 2.11. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force
of law), there shall be any increase in the cost to any Lender of agreeing to
make or making, funding or maintaining Eurodollar Rate Advances or LIBO Rate
Advances (excluding for purposes of this Section 2.11 any such increased costs
resulting from (i) Taxes or Other Taxes (as to which Section 2.14 shall govern)
and (ii) changes in the basis of taxation of overall net income or overall
gross income by the United States or by the foreign jurisdiction or state under
the laws of which such Lender is organized or has its Applicable Lending Office
or any political subdivision thereof), then the Borrower shall from time to
time, upon demand by such Lender (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost. A certificate as to the amount
of such increased cost, submitted to the Borrower and the Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.
(b) If any Lender determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Lender
or any corporation controlling such Lender and that the amount of such capital
is increased by or based upon the existence of such Lender's commitment to lend
hereunder and other commitments of this type, then, upon demand by such Lender
(with a copy of such demand to the Agent), the Borrower shall pay to the Agent
for the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such
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corporation in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend hereunder. A certificate as to such
amounts submitted to the Borrower and the Agent by such Lender shall be
conclusive and binding for all purposes, absent manifest error.
(c) In the event that a Lender demands payment from the Borrower for
amounts owing pursuant to subsection (a) or (b) of this Section 2.11, the
Borrower may, upon payment of such amounts and subject to the requirements of
Sections 8.04 and 8.07, substitute for such Lender another financial
institution, which financial institution shall be an Eligible Assignee and
shall assume the Commitments of such Lender and purchase the Notes held by such
Lender in accordance with Section 8.07, provided, however, that (i) no Default
shall have occurred and be continuing, (ii) the Borrower shall have satisfied
all of its obligations in connection with the Loan Documents with respect to
such Lender, and (iii) if such assignee is not a Lender, (A) such assignee is
acceptable to the Agent and (B) the Borrower shall have paid the Agent a $3,000
administrative fee.
SECTION 2.12. Illegality. Notwithstanding any other provision of
this Agreement, if any Lender shall notify the Agent that the introduction of
or any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that it
is unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or LIBO Rate Advances or
to fund or maintain Eurodollar Rate Advances or LIBO Rate Advances
hereunder, (i) each Eurodollar Rate Advance or LIBO Rate Advance, as the case
may be, will automatically, upon such demand, Convert into a Base Rate Advance
or an Advance that bears interest at the rate set forth in Section 2.07(a)(i),
as the case may be, and (ii) the obligation of the Lenders to make Eurodollar
Rate Advances or LIBO Rate Advances or to Convert Revolving Credit Advances
into Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension no
longer exist.
SECTION 2.13. Payments and Computations. (a) The Borrower shall
make each payment hereunder and under the Notes not later than 11:00 A.M. (New
York City time) on the day when due in U.S. dollars to the Agent at the Agent's
Account in same day funds. The Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or
facility fees ratably (other than amounts payable pursuant to Section 2.03,
2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and recording
of the information contained therein in the Register pursuant to Section
8.07(c), from and after the effective date specified in such Assignment and
Acceptance, the Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Lender assignee thereunder, and
the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note
held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate shall be made by
the Agent on the basis of a year of 365 or 366 days, as the case may be, and
all computations of interest based on the Eurodollar Rate or the Federal Funds
Rate and of facility fees shall be made by the Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
facility fees are payable. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
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(d) Whenever any payment hereunder or under the Notes shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(e) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender
on such due date an amount equal to the amount then due such Lender. If and to
the extent the Borrower shall not have so made such payment in full to the
Agent, each Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from
the date such amount is distributed to such Lender until the date such Lender
repays such amount to the Agent, at the Federal Funds Rate.
SECTION 2.14. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.13,
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender
and the Agent, taxes imposed on its overall net income, and franchise taxes
imposed on it in lieu of net income taxes, by the jurisdiction under the laws
of which such Lender or the Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed on
its overall net income, and franchise taxes imposed on it in lieu of net income
taxes, by the jurisdiction of such Lender's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Lender or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.14) such Lender or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes or from
the execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) The Borrower shall indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any taxes
imposed by any jurisdiction on amounts payable under this Section 2.14) imposed
on or paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 30 days from the date such
Lender or the Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Agent, at its address referred to in Section 8.02, the
original or a certified copy of a receipt evidencing payment thereof. In the
case of any payment hereunder or under the Notes by or on behalf of the
Borrower through an account or branch outside the United States or by or on
behalf of the Borrower by a payor that is not a United States person, if the
Borrower determines that no Taxes are payable in respect thereof, the Borrower
shall furnish, or shall cause
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such payor to furnish, to the Agent, at such address, an opinion of counsel
acceptable to the Agent stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e), the terms "United States"
and "United States person" shall have the meanings specified in Section 7701 of
the Internal Revenue Code.
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender and on the date of the Assignment
and Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter as requested in writing by the
Borrower (but only so long as such Lender remains lawfully able to do so),
shall provide each of the Agent and the Borrower with two original Internal
Revenue Service forms 1001 or 4224, as appropriate, or any successor or other
form prescribed by the Internal Revenue Service, certifying that such Lender is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or the Notes. If the forms provided by a
Lender at the time such Lender first becomes a party to this Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender provides the appropriate forms certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; provided, however, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender
assignee becomes a party to this Agreement, the Lender assignor was entitled to
payments under subsection (a) in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States
withholding tax, if any, applicable with respect to the Lender assignee on such
date. If any form or document referred to in this subsection (e) requires the
disclosure of information, other than information necessary to compute the tax
payable and information required on the date hereof by Internal Revenue Service
form 1001 or 4224, that the Lender reasonably considers to be confidential, the
Lender shall give notice thereof to the Borrower and shall not be obligated to
include in such form or document such confidential information.
(f) For any period with respect to which a Lender has failed to provide
the Borrower with the appropriate form described in Section 2.14(e) (other than
if such failure is due to a change in law occurring subsequent to the date on
which a form originally was required to be provided, or if such form otherwise
is not required under the first sentence of subsection (e) above), such Lender
shall not be entitled to indemnification under Section 2.14(a) or (c) with
respect to Taxes imposed by the United States by reason of such failure;
provided, however, that should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such
steps as the Lender shall reasonably request to assist the Lender to recover
such Taxes.
(g) In the event that a Lender demands payment from the Borrower for
amounts owing pursuant to subsection (a) or (b) of this Section 2.14, the
Borrower may, upon payment of such amounts and subject to the requirements of
Sections 8.04 and 8.07, substitute for such Lender another financial
institution, which financial institution shall be an Eligible Assignee and
shall assume the Commitments of such Lender and purchase the Notes held by such
Lender in accordance with Section 8.07, provided, however, that (i) no Default
shall have occurred and be continuing, (ii) the Borrower shall have satisfied
all of its obligations in connection with the Loan Documents with respect to
such Lender, and (iii) if such assignee is not a Lender, (A) such assignee is
acceptable to the Agreement and the Borrower shall have paid the Agent a $3,000
administrative fee.
SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Revolving Credit Advances owing to
it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its
ratable share of payments on account of the Revolving Credit Advances obtained
by all the Lenders, such Lender shall forthwith purchase from the other Lenders
such participations in the Revolving Credit Advances owing to them as shall be
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necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an
amount equal to such Lender's ratable share (according to the proportion of (i)
the amount of such Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.15 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
SECTION 2.16. Use of Proceeds. The proceeds of the Advances shall
be available (and the Borrower agrees that it shall use such proceeds) solely
for general corporate purposes of the Borrower and its Subsidiaries.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Sections
2.01 and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective
on and as of the first date (the "Effective Date") on which the following
conditions precedent have been satisfied:
(a) There shall have occurred no Material Adverse Change, in the
case of the Parent and its Subsidiaries since December 31, 1995, and in
the case of the Borrower, since the date of its formation.
(b) There shall exist no action, suit, investigation, litigation or
proceeding affecting either Loan Party or any of its Subsidiaries pending
or threatened before any court, governmental agency or arbitrator that
(i) could be reasonably likely to have a Material Adverse Effect other
than the matters described in the SEC Reports (the "Disclosed
Litigation") or (ii) purports to affect the legality, validity or
enforceability of any Loan Document or the consummation of the
transactions contemplated hereby and there shall have been no adverse
change in the status, or financial effect on any Loan Party or any of its
Subsidiaries of the Disclosed Litigation from that described in the SEC
Reports.
(c) Nothing shall have come to the attention of the Lenders during
the course of their due diligence investigation to lead them to believe
that the Information Memorandum was or has become misleading, incorrect
or incomplete in any material respect; without limiting the generality of
the foregoing, the Lenders shall have been given such access, as such
Lenders have reasonably requested, to the management, records, books of
account, contracts and properties of each Loan Party and its Subsidiaries
as they shall have requested.
(d) All governmental and third party consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained (without the imposition of any conditions that are not
acceptable to the Lenders) and shall remain in effect, and no law or
regulation shall be applicable in the reasonable judgment of the Lenders
that restrains, prevents or imposes materially adverse conditions upon
the transactions contemplated by the Loan Documents.
(e) The Borrower shall have notified each Lender and the Agent in
writing as to the proposed Effective Date.
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(f) The Borrower shall have paid all accrued fees and expenses of
the Agent and the Lenders.
(g) On the Effective Date, the following statements shall be true
and the Agent shall have received for the account of each Lender a
certificate signed by a duly authorized officer of the Borrower, dated
the Effective Date, stating that:
(i) The representations and warranties contained in Section
4.01 are correct on and as of the Effective Date, and
(ii) No event has occurred and is continuing that constitutes
a Default.
(iii) The Parent shall have delivered a certificate,
substantially in form of Exhibit E hereto, signed on behalf of the
Parent by a Financial Officer of the Parent.
(h) The Agent shall have received on or before the Effective Date
the following, each dated such day, in form and substance satisfactory to
the Agent and (except for the Revolving Credit Notes) in sufficient
copies for each Lender:
(i) The Revolving Credit Notes to the order of the Lenders,
respectively.
(ii) Certified copies of the resolutions of the Board of
Directors of each Loan Party approving each Loan Document to which
it is a party, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect
to each Loan Document to which it is a party.
(iii) A certificate of the Secretary or an Assistant Secretary
of each Loan Party certifying the names and true signatures of the
officers of each Loan Party authorized to sign each Loan Document
to which it is a party and the other documents to be delivered
hereunder or thereunder.
(iv) An unaudited Consolidated balance sheet of the Borrower
and its Subsidiaries and the related statements of income and cash
flows of the Borrower and its Subsidiaries, as of December 31, 1995
and as filed by the Parent with the Securities and Exchange
Commission on Form U-3A-2.
(v) A support agreement in substantially the form of Exhibit
F (as amended, supplemented or otherwise modified from time to time
in accordance with its terms, the "Support Agreement"), duly
executed by each Loan Party.
(vi) An assignment agreement in substantially the form of
Exhibit G (as amended, supplemented or otherwise modified from time
to time in accordance with its terms, the "Assignment Agreement"),
duly executed by the Borrower, together with:
(A) acknowledgment copies or stamped receipt copies of
proper financing statements, duly filed on or before the
Effective Date under the Uniform Commercial Code of all
jurisdictions that the Agent may deem necessary or desirable
in order to perfect and protect the first priority liens and
security interests created under the
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Support Agreement and the Assignment Agreement, covering the
Assigned Rights described in the Support Agreement and the
Assignment Agreement, and
(B) completed requests for information, dated on or
before the Effective Date, listing the financing statements
referred to in clause (A) above and all other effective
financing statements filed in the jurisdictions referred to
in clause (A) above that name the Borrower as debtor,
together with copies of such other financing statements.
(vii) A favorable opinion of C.C. Nern, General Counsel of the
Parent and the Borrower, substantially in the form of Exhibit H
hereto and as to such other matters as any Lender through the Agent
may reasonably request.
(viii) A favorable opinion of Shearman & Sterling, counsel for
the Agent, in form and substance satisfactory to the Agent.
SECTION 3.02. Conditions Precedent to Each Revolving Credit
Borrowing. The obligation of each Lender to make a Revolving Credit Advance on
the occasion of each Revolving Credit Borrowing shall be subject to the
conditions precedent that the Effective Date shall have occurred and on the
date of such Revolving Credit Borrowing (a) the following statements shall be
true (and each of the giving of the applicable Notice of Revolving Credit
Borrowing and the acceptance by the Borrower of the proceeds of such Revolving
Credit Borrowing shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing such statements are true):
(i) the representations and warranties contained in Section 4.01
are correct on and as of the date of such Revolving Credit Borrowing,
before and after giving effect to such Revolving Credit Borrowing and to
the application of the proceeds therefrom, as though made on and as of
such date, and
(ii) no event has occurred and is continuing, or would result from
such Revolving Credit Borrowing or from the application of the proceeds
therefrom, that constitutes a Default;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
SECTION 3.03. Conditions Precedent to Each Competitive Bid
Borrowing. The obligation of each Lender that is to make a Competitive Bid
Advance on the occasion of a Competitive Bid Borrowing to make such Competitive
Bid Advance as part of such Competitive Bid Borrowing is subject to the
conditions precedent that (i) the Agent shall have received the written
confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on
or before the date of such Competitive Bid Borrowing, but prior to such
Competitive Bid Borrowing, the Agent shall have received a Competitive Bid Note
payable to the order of such Lender for each of the one or more Competitive Bid
Advances to be made by such Lender as part of such Competitive Bid Borrowing,
in a principal amount equal to the principal amount of the Competitive Bid
Advance to be evidenced thereby and otherwise on such terms as were agreed to
for such Competitive Bid Advance in accordance with Section 2.03, and (iii) on
the date of such Competitive Bid Borrowing the following statements shall be
true (and each of the giving of the applicable Notice of Competitive Bid
Borrowing and the acceptance by the Borrower of the proceeds of such
Competitive Bid Borrowing shall constitute a representation and warranty by the
Borrower that on the date of such Competitive Bid Borrowing such statements are
true):
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(a) the representations and warranties contained in Section 4.01
are correct on and as of the date of such Competitive Bid Borrowing,
before and after giving effect to such Competitive Bid Borrowing and to
the application of the proceeds therefrom, as though made on and as of
such date,
(b) no event has occurred and is continuing, or would result from
such Competitive Bid Borrowing or from the application of the proceeds
therefrom, that constitutes a Default, and
(c) no event has occurred and no circumstance exists as a result of
which the information concerning either Loan Party that has been provided
to the Agent and each Lender by either Loan Party in connection herewith
would include an untrue statement of a material fact or omit to state any
material fact or any fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made,
not misleading.
SECTION 3.04. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lenders unless
an officer of the Agent responsible for the transactions contemplated by this
Agreement shall have received notice from such Lender prior to the date that
the Borrower, by notice to the Lenders, designates as the proposed Effective
Date, specifying its objection thereto. The Agent shall promptly notify the
Lenders of the occurrence of the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Michigan.
(b) The execution, delivery and performance by the Borrower of the
Loan Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, are within such Loan
Party's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Borrower's charter or
by-laws or (ii) law or any contractual restriction binding on or
affecting the Borrower.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any
other third party is required for the due execution, delivery and
performance by the Borrower of this Agreement, the Notes or any other
Loan Document to which it is a party.
(d) This Agreement has been, and each of the Notes and each of the
other Loan Documents to which it is a party when delivered hereunder will
have been, duly executed and delivered by the Borrower. This Agreement
is, and each of the Notes and each of the other Loan Documents to which
it is a party when delivered hereunder will be, the legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with their respective terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
law affecting creditors rights generally.
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(e) (i) The Consolidated balance sheet of the Parent and its
Subsidiaries as at December 31, 1995, and the related Consolidated
statements of income and cash flows of the Parent and its Subsidiaries
for the fiscal year then ended, accompanied by an opinion of Deloitte &
Touche LLP, independent public accountants, duly certified by a Financial
Officer of the Parent, copies of which have been furnished to each
Lender, and the unaudited Consolidated balance sheet of the Borrower and
its Subsidiaries as of December 31, 1995 and as filed by the Parent with
the Securities and Exchange Commission on Form U-3A-2 fairly present the
Consolidated financial condition of the Parent and its Subsidiaries as at
such dates all in accordance with generally accepted accounting
principles consistently applied. Since December 31, 1995, in the case of
the Parent and its Subsidiaries, and since the dates of its formation, in
the case of the Borrower, there has been no Material Adverse Change,
except as shall have been disclosed in the SEC Reports.
(f) There is no pending or threatened action, suit, investigation,
litigation or proceeding, including, without limitation, any
Environmental Action, affecting the Borrower or any of its Subsidiaries
before any court, governmental agency or arbitrator that (i) could be
reasonably likely to have a Material Adverse Effect (other than the
Disclosed Litigation) or (ii) purports to affect the legality, validity
or enforceability of this Agreement, any Note or any other Loan Document
or the consummation of the transactions contemplated hereby and there has
been no adverse change in the status of any Disclosed Litigation, or its
financial effect on any Loan Party or any of its Subsidiaries from that
described on Schedule 3.01(b).
(g) The operations and properties of the Borrower and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past non-compliance
with such Environmental Laws and Environmental Permits has been resolved
without ongoing obligations or costs, and no circumstances exist that
could be reasonably likely to (i) form the basis of an Environmental
Action against the Borrower or any of its Subsidiaries or any of their
properties that could have a Material Adverse Effect or (ii) cause any
such property to be subject to any restrictions on ownership, occupancy,
use or transferability under any Environmental Law that could have a
Material Adverse Effect.
(h) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan.
(i) Schedule B (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, copies of which have been filed
with the Internal Revenue Service, is complete and accurate and fairly
presents the funding status of such Plan, and since the date of such
Schedule B there has been no material adverse change in such funding
status.
(j) Neither the Borrower nor any ERISA Affiliate has incurred or is
reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan.
(k) Neither the Borrower nor any ERISA Affiliate has been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(l) Except as set forth in the financial statements referred to in
this Section 4.01, the Borrower and its Subsidiaries have no material
liability with respect to "expected post retirement benefit obligations"
within the meaning of Statement of Financial Accounting Standards No.
106.
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(m) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Advance will be used to purchase
or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.
(n) Neither the Borrower nor any of its Subsidiaries is, or after
the making of any Advance or the application of the proceeds or repayment
thereof, or the consummation of any of the other transactions
contemplated hereby, will be, an "investment company", or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company" (within the meaning of the Investment Company Act of 1940, as
amended).
(o) The Borrower is a "subsidiary company" of a "holding company"
(within the meaning of the Public Utility Holding Company Act of 1935, as
amended) which holding company is exempt from being required to seek
approval to perform its obligations under the Loan Documents pursuant to
Rule 2 of the Rules and Regulations promulgated pursuant to the Public
Utility Holding Company Act of 1935, as amended.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA and Environmental Laws.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that, if
unpaid, might by law become a Lien upon its property; provided, however,
that neither the Borrower nor any of its Subsidiaries shall be required
to pay or discharge any such tax, assessment, charge or claim that is
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable
against its other creditors.
(c) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates.
(d) Preservation of Corporate Existence, Etc. Preserve and
maintain its corporate existence, rights (charter and statutory) and
franchises; provided, however, that the Borrower may consummate
any merger or consolidation permitted under Section 5.02(b) and provided
further that the Borrower shall not be required to preserve any right or
franchise if the Board of Directors of the Borrower or such Subsidiary
shall determine that the preservation thereof is no longer desirable in
the
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conduct of the business of the Borrower and that the loss thereof is not
disadvantageous in any material respect to the Borrower or the Lenders.
(e) Visitation Rights. At any reasonable time and from time to
time, permit the Agent or any of the Lenders or any agents or
representatives thereof, to examine and make copies of and abstracts from
the records and books of account of, and visit the properties of, the
Borrower and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of the Borrower and any of its Subsidiaries with
any of their officers or directors and with their independent certified
public accountants.
(f) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with
generally accepted accounting principles in effect from time to time.
(g) Maintenance of Properties, Etc. Subject to clause (d) above,
maintain and preserve, all of its properties that are used or useful in
the conduct of its business in good working order and condition, ordinary
wear and tear excepted.
(h) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of
the Parent, Consolidated balance sheet of the Parent and its
Consolidated Subsidiaries as of the end of such quarter and
Consolidated statements of income and cash flows of the Parent and
its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter;
(ii) as soon as available and in any event within 90 days
after the end of each fiscal year of the Parent, a copy of the
annual report to Shareholders for such year for the Parent and its
Consolidated Subsidiaries, containing the Consolidated balance
sheet of the Parent and its Consolidated Subsidiaries as of the end
of such fiscal year and Consolidated statements of income and cash
flows of the Parent and its Subsidiaries for such fiscal year, in
each case accompanied by (A) an opinion by Deloitte & Touche LLP or
other independent public accountants acceptable to the Required
Lenders and (B) the report by the Parent filed with the Securities
and Exchange Commission on Form U-3A-2 for such fiscal year,
containing the Consolidating balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and Consolidating
statements of income and Consolidating statements of retained
earnings of the Borrower and its Subsidiaries for such fiscal year,
in each case, having been prepared in accordance with generally
accepted accounting principles consistent with those applied in the
preparation of the financial statements referred to in Section
4.01;
(iii) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal
year of the Borrower, unaudited Consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such quarter and
unaudited Consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such
quarter, duly certified (subject to year-end audit adjustments) by
a Financial Officer of the Borrower as having been prepared in
accordance with generally accepted accounting principles in each
case, having been prepared in accordance with generally accepted
accounting principles consistent with those applied in the
preparation of the financial statements referred to in Section
4.01;
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30
(iv) as soon as possible and in any event within five days
after the occurrence of each Default continuing on the date of such
statement, a statement of a Financial Officer of the Borrower
setting forth details of such Default and the action that the
Borrower has taken and proposes to take with respect thereto;
(v) promptly after the sending or filing thereof copies of all
reports and registration statements that the Borrower or any
Subsidiary files with the Securities and Exchange Commission or any
national securities exchange;
(vi) promptly after the commencement thereof, notice of all
actions and proceedings before any court, governmental agency or
arbitrator affecting the Borrower or any of its Subsidiaries of the
type described in Section 4.01(f); and
(viii) such other information respecting the Borrower or any
of its Subsidiaries as any Lender through the Agent may from time
to time reasonably request.
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will not:
(a) Liens, Etc. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien on or with respect to
any of its properties, whether now owned or hereafter acquired, or
assign, or permit any of its Subsidiaries to assign, any right to receive
income, other than:
(i) Permitted Liens,
(ii) purchase money Liens upon or in any real property or
equipment acquired or held by the Borrower or any Subsidiary in the
ordinary course of business to secure the purchase price of such
property or equipment or to secure Debt incurred solely for the
purpose of financing the acquisition of such property or equipment,
or Liens existing on such property or equipment at the time of its
acquisition (other than any such Liens created in contemplation of
such acquisition that were not incurred to finance the acquisition
of such property) or extensions, renewals or replacements of any of
the foregoing for the same or a lesser amount, provided, however,
that no such Lien shall extend to or cover any properties of any
character other than the real property or equipment being acquired,
and no such extension, renewal or replacement shall extend to or
cover any properties not theretofore subject to the Lien being
extended, renewed or replaced, provided further that the aggregate
principal amount of the indebtedness secured by the Liens referred
to in this clause (ii) shall not exceed $20,000,000 at any time
outstanding,
(iii) the Liens existing on the Effective Date and described
on Schedule 5.02(a) hereto,
(iv) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Borrower or any
Subsidiary of the Borrower or becomes a Subsidiary of the Borrower;
provided that such Liens were not created in contemplation of such
merger, consolidation or acquisition and do not extend to any
assets other than those of the Person so merged into or
consolidated with the Borrower or such Subsidiary or acquired by
the Borrower or such Subsidiary,
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31
(v) other Liens securing Debt in an aggregate principal amount
not to exceed $20,000,000 at any time outstanding, and
(vi) the replacement, extension or renewal of any Lien
permitted by clause (iii) or (iv) above upon or in the same
property theretofore subject thereto or the replacement, extension
or renewal (without increase in the amount or change in any direct
or contingent obligor) of the Debt secured thereby.
(b) Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to, any Person, or permit any of its
Subsidiaries to do so, except that any Subsidiary of the Borrower may
merge or consolidate with or into any other Subsidiary of the Borrower,
and except that any Subsidiary of the Borrower may merge into or dispose
of assets to the Borrower, provided, in each case, that no Default shall
have occurred and be continuing at the time of such proposed transaction
or would result therefrom.
(c) Change in Nature of Business. Make any material change in the
nature of its business as carried on at the date hereof.
(d) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or
reporting practices, except as required or permitted by generally
accepted accounting principles.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Advance
when the same becomes due and payable; or the Borrower shall fail to pay
any interest on any Advance or make any other payment of fees or other
amounts payable under this Agreement or any Note within three Business
Days after the same becomes due and payable; or
(b) Any representation or warranty made by the Borrower herein or
by the Borrower (or any of its officers) in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or
(c) (i) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 2.10(b), 5.01(d), (e) or (h)
or 5.02 or in the Assignment Agreement, (ii) the Parent shall fail to
perform or observe any term, covenant or agreement contained in the
Support Agreement, or (iii) the Borrower shall fail to perform or observe
any other term, covenant or agreement contained in any Loan Document on
its part to be performed or observed if such failure shall remain
unremedied for 10 days after written notice thereof shall have been given
to the Borrower by the Agent or any Lender; or
(d) Either Loan Party or any of its Subsidiaries shall fail to pay
any principal of or premium or interest on any Debt that is outstanding
in a principal or notional amount of at least $20,000,000 in the
aggregate (but excluding Debt outstanding hereunder) of such Loan Party
or such Subsidiary (as the case may be), when the same becomes due and
payable (whether by scheduled
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maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration of, the maturity of such Debt; or any such
Debt shall be declared to be due and payable, or required to be prepaid
or redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case
prior to the stated maturity thereof; or
(e) Either Loan Party or DECO shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against either
Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period
of 30 days, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall occur; or
either Loan Party or any of its Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this subsection
(e); or
(f) Any judgment or order for the payment of money in excess of
$20,000,000 shall be rendered against either Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of 10 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(g) Any non-monetary judgment or order shall be rendered against
either Loan Party or any of its Subsidiaries that could be reasonably
expected to have a Material Adverse Effect, and there shall be any period
of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect; or
(h) The Parent shall at any time cease to hold 100% of the Voting
Stock of the Borrower or DECO; or
(i) The Borrower or any of its ERISA Affiliates shall incur, or, in
the reasonable opinion of the Required Lenders, shall be reasonably
likely to incur liability in excess of $20,000,000 in the aggregate as a
result of one or more of the following: (i) the occurrence of any ERISA
Event; (ii) the partial or complete withdrawal of the Borrower or any of
its ERISA Affiliates from a Multiemployer Plan; or (iii) the
reorganization or termination of a Multiemployer Plan; or
(j) The Parent and its Subsidiaries, on a Consolidated basis, shall
at any time cease to:
(i) Maintain a ratio of Consolidated EBITDA to cash interest
payable on all Debt (excluding, (A) such non-recourse Debt of their
own and of their Subsidiaries and Affiliates as would be listed as
such in the financial statements of the Parent of the kind
delivered pursuant to Section 5.01(h)(ii) and (iii) and (B) the
Junior Subordinated Debentures) of not less than 2:1 for
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each period of four consecutive fiscal quarters ending on the last
day of September, December, March and June of each year, or
(ii) Maintain a ratio of Consolidated Debt (excluding, (A)
such non-recourse Debt of their own and of their Subsidiaries as
would be listed in the financial statements of the Parent and (B)
the Junior Subordinated Debentures) to Capitalization of not
greater than .65:1; or
(k) any provision of any of the Loan Documents after delivery
thereof pursuant to Section 3.01 shall for any reason cease to be valid
and binding on or enforceable against any Loan Party to it, or any such
Loan Party shall so state in writing;
then, and in any such event, the Agent (i) shall at the request, or may with
the consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes,
all interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Borrower; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to the Borrower
under the Federal Bankruptcy Code, (A) the obligation of each Lender to make
Advances shall automatically be terminated and (B) the Notes, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to this Agreement
or applicable law. The Agent agrees to give to each Lender prompt notice of
each notice given to it by the Borrower pursuant to the terms of this
Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may
treat the payee of any Note as the holder thereof until the Agent receives and
accepts an Assignment and Acceptance entered into by the Lender that is the
payee of such Note, as assignor, and an Eligible Assignee, as assignee, as
provided in Section 8.07; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in
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connection with this Agreement; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant hereto; and (vi) shall incur no liability under or
in respect of this Agreement by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopier, telegram or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 7.03. Citibank and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Citibank shall
have the same rights and powers under this Agreement as any other Lender and
may exercise the same as though it were not the Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include
Citibank in its individual capacity. Citibank and its Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from and generally engage in any kind of
business with, the Borrower, any of its Subsidiaries and any Person who may do
business with or own securities of the Borrower or any such Subsidiary, all as
if Citibank were not the Agent and without any duty to account therefor to the
Lenders.
SECTION 7.04. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders (other than the
Designated Bidders) agree to indemnify the Agent (to the extent not reimbursed
by the Borrower), ratably according to the respective principal amounts of the
Revolving Credit Notes then held by each of them (or if no Revolving Credit
Notes are at the time outstanding or if any Revolving Credit Notes are held by
Persons that are not Lenders, ratably according to the respective amounts of
their Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of any
Loan Document or any action taken or omitted by the Agent under any Loan
Document, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender (other than the Designated Bidders) agrees to reimburse the Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, any Loan
Document, to the extent that the Agent is not reimbursed for such expenses by
the Borrower.
SECTION 7.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Required Lenders. Upon any
such resignation or removal, the Required Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Required Lenders, and shall have accepted such appointment, within 30
days after the retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent,
<PAGE> 35
35
which shall be a commercial bank organized under the laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, discretion, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Revolving Credit Notes, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all the Lenders (other than
the Designated Bidders), do any of the following: (a) waive any of the
conditions specified in Section 3.01, (b) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations, (c) reduce the
principal of, or interest on, the Revolving Credit Notes or any fees or other
amounts payable hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, the Revolving Credit Notes or any fees or other
amounts payable hereunder, (e) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Revolving Credit Notes, or the
number of Lenders, that shall be required for the Lenders or any of them to
take any action hereunder or (f) amend this Section 8.01; and provided further
that no amendment, waiver or consent shall, unless in writing and signed by the
Agent in addition to the Lenders required above to take such action, affect the
rights or duties of the Agent under this Agreement or any Note.
SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic
or telex communication) and mailed, telecopied, telegraphed, telexed or
delivered, if to the Borrower, at its address at 200 Second Avenue, Detroit, MI
48226, Attention: Christopher C. Arvani; if to any Initial Lender, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender, at its Domestic Lending Office specified in the Assignment
and Acceptance pursuant to which it became a Lender; and if to the Agent, at
its address at One Court Square, Long Island City, NY 11120, Attention: Shawn
Bernard; or, as to the Borrower or the Agent, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Agent. All such notices and
communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company or confirmed by telex answerback, respectively, except that notices and
communications to the Agent pursuant to Article II, III or VII shall not be
effective until received by the Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or
the Notes or of any Exhibit hereto to be executed and delivered hereunder shall
be effective as delivery of a manually executed counterpart thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
Lender or the Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
<PAGE> 36
36
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay
on demand all reasonable costs and reasonable expenses of the Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Agreement, the Notes, each other Loan
Document and the other documents to be delivered hereunder and thereunder,
including, without limitation, (A) all due diligence, syndication (including
printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, consultant, and audit expenses and (B) the reasonable
fees and reasonable expenses of counsel for the Agent with respect thereto and
with respect to advising the Agent as to its rights and responsibilities under
the Loan Documents. The Borrower further agrees to pay on demand all
reasonable costs and reasonable expenses of the Agent and the Lenders, if any
(including, without limitation, reasonable internal and external counsel fees
and expenses, provided such fees and expenses are not duplicative), in
connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the Notes and the other documents
to be delivered hereunder, including, without limitation, reasonable fees and
expenses of counsel for the Agent and each Lender in connection with the
enforcement of rights under this Section 8.04(a).
(b) The Borrower agrees to indemnify, to the extent legally permissible,
and hold harmless the Agent and each Lender and each of their Affiliates and
their officers, directors, employees, agents and advisors (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) the Notes, this Agreement, the other Loan Documents any of
the transactions contemplated herein or therein or the actual or proposed use
of the proceeds of the Advances or (ii) the actual or alleged presence of
Hazardous Materials on any property of the Borrower or any of its Subsidiaries
or any Environmental Action relating in any way to the Borrower or any of its
Subsidiaries, in each case whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors, shareholders or creditors
or an Indemnified Party or any other Person or any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. The Borrower also agrees not to assert any
claim against the Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to the Notes, this Agreement, the other Loan
Documents any of the transactions contemplated herein or therein or the actual
or proposed use of the proceeds of the Advances.
(c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance or LIBO Rate Advance is made by the Borrower to or for the account of a
Lender other than on the last day of the Interest Period for such Advance, as a
result of a payment or Conversion pursuant to Section 2.08(d) or (e), 2.10 or
2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for
any other reason, the Borrower shall, upon demand by such Lender (with a copy
of such demand to the Agent), pay to the Agent for the account of such Lender
any amounts required to compensate such Lender for any additional losses, costs
or expenses that it may reasonably incur as a result of such payment or
Conversion, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Advance.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of each Loan Party contained
in Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to
<PAGE> 37
37
authorize the Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender or such Affiliate to or for the credit or the account
of either Loan Party against any and all of the obligations of either Loan
Party now or hereafter existing under the Loan Documents Agreement and the Note
held by such Lender, whether or not such Lender shall have made any demand
under this Agreement or such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify such Loan Party after any
such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender and its Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender and its Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
(other than Sections 2.01 and 2.03, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders.
SECTION 8.07. Assignments, Designations and Participations.
(a) Each Lender (other than the Designated Bidders) may assign to one or more
Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the
Revolving Credit Advances owing to it and the Revolving Credit Note or Notes
held by it); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations under
this Agreement (other than any right to make Competitive Bid Advances,
Competitive Bid Advances owing to it and Competitive Bid Notes), (ii) except in
the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $10,000,000 or an integral multiple of $1,000,000 in
excess thereof, (iii) each such assignment shall be to an Eligible Assignee,
and (iv) the parties to each such assignment shall execute and deliver to the
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Revolving Credit Note subject to such assignment
and a processing and recordation fee of $3,000. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, this Agreement
or any other instrument or document furnished pursuant hereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial
<PAGE> 38
38
condition of the Borrower or the performance or observance by the Borrower of
any of its obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Credit Note or Notes subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent in exchange for the surrendered Revolving
Credit Note a new Note to the order of such Eligible Assignee in an amount
equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment hereunder, a
new Revolving Credit Note to the order of the assigning Lender in an amount
equal to the Commitment retained by it hereunder. Such new Revolving Credit
Note or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Revolving Credit Note or Notes, shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of Exhibit A-1 hereto.
(d) Each Lender (other than the Designated Bidders) may designate one or
more banks or other entities to have a right to make Competitive Bid Advances
as a Lender pursuant to Section 2.03; provided, however, that (i) no such
Lender shall be entitled to make more than two such designations, (ii) each
such Lender making one or more of such designations shall retain the right to
make Competitive Bid Advances as a Lender pursuant to Section 2.03, (iii) each
such designation shall be to a Designated Bidder and (iv) the parties to each
such designation shall execute and deliver to the Agent, for its acceptance and
recording in the Register, a Designation Agreement. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Designation Agreement, the designee thereunder shall be a party hereto
with a right to make Competitive Bid Advances as a Lender pursuant to Section
2.03 and the obligations related thereto.
(e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such designee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Designation Agreement; (iv)
such designee will, independently and without reliance upon the Agent, such
designating Lender or any other Lender
<PAGE> 39
39
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such designee confirms that it is a Designated
Bidder; (vi) such designee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such
designee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed
by it as a Lender.
(f) Upon its receipt of a Designation Agreement executed by a designating
Lender and a designee representing that it is a Designated Bidder, the Agent
shall, if such Designation Agreement has been completed and is substantially in
the form of Exhibit D hereto, (i) accept such Designation Agreement, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower.
(g) The Agent shall maintain at its address referred to in Section 8.02 a
copy of each Assignment and Acceptance and each Designation Agreement delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and, with respect to Lenders other than Designated
Bidders, the Commitment of, and principal amount of the Advances owing to, each
Lender from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(h) Each Lender may sell participations to one or more banks or other
entities (other than the Borrower or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and
the Note or Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation, its Commitment
to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(v) no participant under any such participation shall have any right to approve
any amendment or waiver of any provision of this Agreement or any Note, or any
consent to any departure by the Borrower therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest
on, the Notes or any fees or other amounts payable hereunder, in each case to
the extent subject to such participation, or postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation.
(i) Any Lender may, in connection with any assignment, designation or
participation or proposed assignment, designation or participation pursuant to
this Section 8.07, disclose to the assignee, designee or participant or
proposed assignee, designee or participant, any information relating to the
Borrower furnished to such Lender by or on behalf of the Borrower; provided
that, prior to any such disclosure, the assignee, designee or participant or
proposed assignee, designee or participant shall agree to preserve the
confidentiality of any Confidential Information relating to the Borrower
received by it from such Lender.
(j) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
<PAGE> 40
40
SECTION 8.08. Confidentiality. Neither the Agent nor any Lender
shall disclose any Confidential Information to any other Person without the
consent of the Borrower, other than (a) to the Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and,
as contemplated by Section 8.07(i), to actual or prospective assignees and
participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation or judicial process, (c) to any rating agency when
required by it, provided that, prior to any such disclosure, such rating agency
shall undertake to preserve the confidentiality of any Confidential Information
relating to either Loan Party received by it from such Lender and (d) as
requested or required by any state, federal or foreign authority or examiner
regulating banks or banking.
SECTION 8.09. Governing Law. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.10. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of any New York State court or federal court
of the United States of America sitting in New York City, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or the Notes, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the extent permitted by
law, in such federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any
party may otherwise have to bring any action or proceeding relating to this
Agreement or the Notes in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any New
York State or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
<PAGE> 41
SECTION 8.12. Waiver of Jury Trial. Each of the Borrower, the
Agent and the Lenders hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to this Agreement or the Notes or the
actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
DTE CAPITAL CORPORATION
By
----------------------------------
Name:
Title:
CITIBANK, N.A.,
as Agent
By
----------------------------------
Name:
Title:
Initial Lenders
Commitment
$12,000,000 CITIBANK, N.A.
By
----------------------------------
Name:
Title:
$8,000,000 ABN-AMRO BANK N.V.
By
----------------------------------
Name:
Title:
By
----------------------------------
Name:
Title:
<PAGE> 42
$10,000,000 BANK OF AMERICA ILLINOIS
By
----------------------------------
Name:
Title:
$10,000,000 THE BANK OF NEW YORK
By
----------------------------------
Name:
Title:
$8,000,000 BANQUE PARIBAS
By
----------------------------------
Name:
Title:
By
----------------------------------
Name:
Title:
$11,000,000 BARCLAYS BANK PLC
By
----------------------------------
Name:
Title:
$8,000,000 BHF-BANK AKTIENGESELLSCHAFT
By
----------------------------------
Name:
Title:
$10,000,000 CHEMICAL BANK
By
----------------------------------
Name:
Title:
<PAGE> 43
43
$8,000,000 COMERICA BANK
By
----------------------------------
Name:
Title:
$8,000,000 THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By
----------------------------------
Name:
Title:
$11,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By
----------------------------------
Title:
Name:
$8,000,000 THE FUJI BANK LIMITED
By
----------------------------------
Name:
Title:
$8,000,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED
By
----------------------------------
Name:
Title:
$8,000,000 J.P. MORGAN DELAWARE
By
----------------------------------
Name:
Title:
<PAGE> 44
44
$8,000,000 THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By
----------------------------------
Name:
Title:
$8,000,000 MELLON BANK, N.A.
By
----------------------------------
Name:
Title:
$8,000,000 MICHIGAN NATIONAL BANK
By
----------------------------------
Name:
Title:
$8,000,000 THE SANWA BANK
By
----------------------------------
Name:
Title:
$8,000,000 SOCIETE GENERALE
By
----------------------------------
Name:
Title:
$8,000,000 THE SUMITOMO BANK, LTD.,
CHICAGO BRANCH
By
----------------------------------
Name:
Title:
<PAGE> 45
$8,000,000 TORONTO DOMINION (TEXAS), INC.
By
----------------------------------
Name:
Title:
$8,000,000 UNION BANK
By
----------------------------------
Name:
Title:
$8,000,000 WESTDEUTCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By
----------------------------------
Name:
Title:
By
----------------------------------
Name:
Title:
$200,000,000 Total of the Commitments
<PAGE> 1
EXHIBIT 99.10
FOURTH AMENDMENT TO
1988 AMENDED AND RESTATED
NUCLEAR FUEL HEAT PURCHASE CONTRACT
Fourth Amendment, dated as of March 8, 1996 (this "Fourth Amendment"), to
the 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract dated as of
October 4, 1988, as amended by First, Second and Third Amendments thereto dated
as of February 1, 1990, September 1, 1993 and August 31, 1994, respectively (as
so amended, the "Contract"), between RENAISSANCE ENERGY COMPANY, a Delaware
corporation ("Fuel Company") and THE DETROIT EDISON COMPANY, a Michigan
corporation ("Utility").
W I T N E S S E T H:
Whereas, the Fuel Company is a party to (i) a $200,000,000 364 Day Credit
Agreement dated as of September 1, 1993, as amended by a First Amendment
thereto dated as of September 1, 1994 and extension letters from the Banks to
the Fuel Company dated June 30, 1995, among the Fuel Company, the Utility,
Barclays Bank PLC, New York Branch, as agent (the "Agent") and the banks
signatory thereto (the "Banks") (as so amended, the "364 Day Credit
Agreement"); and (ii) a $200,000,000 Three Year Credit Agreement dated as of
September 1, 1993, as amended by a First Amendment thereto dated as of
September 1, 1994 and extension letters from the Banks to the Fuel Company
dated June 30, 1995, among the Fuel Company, the Utility, the Agent and the
Banks (as so amended, the "Three Year Credit Agreement"; the 364 Day Credit
Agreement and the Three Year Credit Agreement, collectively, the "Credit
Agreement");
Whereas, on the date hereof, each of the 364 Day Credit Agreement and the
Three Year Credit Agreement, respectively, are being amended by Third
Amendments thereto (collectively, the "Credit Agreement Amendments");
Whereas, it is a condition precedent to the effectiveness of the Credit
Agreement Amendments that the Utility and Fuel Company enter into this Fourth
Amendment.
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Fuel Company and the Utility agree as follows:
Section 1. Defined Terms. All capitalized terms used herein and not
defined shall have the meanings ascribed to such terms in the Contract.
Section 2. Amendments to Contract. Section 2(b) of the Contract is hereby
amended to read in its entirety as follows:
"(b) The term of this Contract shall, unless sooner terminated
pursuant to the provisions hereof, end at 12:00 midnight, New York
time, on the Expiration Date. The Expiration Date in effect on the date hereof
is August 30, 1996. Subject to the proviso below, the Utility shall have the
right to renew this Contract for subsequent terms by designating in writing to
the Fuel Company, within 90 days prior to the then current Expiration Date, a
new Expiration Date; provided, however, that the Expiration Date for such
renewal term shall be, (i) in the event the Michigan Public Service Commission
(the "MPSC") has authorized this Contract, not later than August 31, 1999 (an
"Outside Expiration Date") or (ii) if the MPSC has not authorized this
Contract, not later than the earlier to occur of the Outside Expiration Date
and twelve months from the then current Expiration Date; and provided, further,
that (i) no material adverse change shall have occurred (except such as may
have occurred in the ordinary course of the Utility's business) in the
financial condition or results of operations of Utility since the most recent
financial statements of the Utility delivered to the Borrower, and (ii) no
Event of Default (as defined herein or as defined in any Credit Agreement) or
other event which with the giving of notice or lapse of time, or both, would
constitute such an Event of Default shall have occurred and be continuing."
Section 3. Miscellaneous.
(a) Each of Utility and Fuel Company hereby represents and warrants
as to itself that this Fourth Amendment has been duly authorized by all
2
<PAGE> 3
necessary corporate action on its part and this Fourth Amendment has been duly
and validly executed and delivered by itself and constitutes its respective
legal, valid and binding obligation, enforceable in accordance with the terms
of this Fourth Amendment.
(b) Except as amended hereby, the terms of the Contract shall
continue in full force and effect and is hereby ratified and confirmed in all
respects as so amended.
(c) This Fourth Amendment shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of conflicts of laws.
3
<PAGE> 4
(d) This Fourth Amendment may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
IN WITNESS WHEREOF, Utility and Fuel Company have caused this Fourth
Amendment to be duly executed by their duly authorized officers, all as of the
day and year first above written.
RENAISSANCE ENERGY COMPANY
By:________________________
Title:
THE DETROIT EDISON COMPANY
By:________________________
Title:
4
<PAGE> 1
EXHIBIT 99.11
EXECUTION COPY
THIRD AMENDMENT
364-DAY CREDIT AGREEMENT
THIRD AMENDMENT (this "AMENDMENT"), dated as of March 8, 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, and the extension letters (the
"EXTENSION LETTERS"), each dated June 30, 1995, 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 in certain particulars;
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 Amendments to the Existing Credit Agreement. THE EXISTING
CREDIT AGREEMENT IS, EFFECTIVE AS OF THE DATE HEREOF, AND SUBJECT TO THE
SATISFACTION OF THE CONDITIONS PRECEDENT SET FORTH IN SECTION 2 HEREOF, HEREBY
AMENDED AS FOLLOWS:
a) Section 1.01. The definition of "APPLICABLE MARGIN" contained in
Section 1.01 is hereby amended in full to read as follows:
<PAGE> 2
"APPLICABLE MARGIN" means for the Interest Period of an Adjusted
CD Rate Advance or a Eurodollar Rate Advance the percentage per annum
set forth in the applicable column below:
<TABLE>
<CAPTION>
RATINGS LEVEL I II III
- -------------------------------------------
<S> <C> <C> <C>
EURODOLLAR
RATE ADVANCE 0.20% 0.25% 0.35%
ADJUSTED CD
RATE ADVANCE 0.325% 0.375% 0.475%
</TABLE>
Section 2.04(a). Section 2.04(a) is hereby amended in full to read as
follows:
b) SECTION 2.04. FACILITY FEE. (a) The Borrower agrees to pay to
the Agent for the account of each Bank a facility fee (the "FACILITY
FEE") on the full amount of such Bank's Commitment (whether used or
unused), from the date hereof in the case of each Bank listed on the
signature pages hereto, and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Bank pursuant
to Section 9.07 hereof in the case of any other Bank, until the
Termination Date or earlier termination of such Bank's Commitment
pursuant to Section 2.05, payable on the basis of the actual number of
days elapsed in a year of 365 or 366 days, on the last Business Day of
March, June, September and December in each year and on the
Termination Date, at the rate per annum set forth below as determined
in accordance with the then applicable Ratings Level:
<TABLE>
RATINGS LEVEL I II III
- ---------------------------------------------------
<S> <C> <C> <C>
FACILITY FEE 0.10% 0.10% 0.25%
</TABLE>
provided, however, that during any period in which the Guarantor's
Senior Secured Indebtedness unsupported by letters of credit or
similar credit enhancement facilities is rated at or below BB+ by S&P
or at or below Ba-1 by Moody's, or shall cease to be rated by either
or both, the Facility Fee shall be 0.375% per annum.
<PAGE> 3
c) Section 2.11(d). Section 2.11(d) is hereby amended by deleting in its
entirety the phrase "such extension of time shall in such case be included
in the computation of payment of interest or commitment fee, as the case may
be" and substituting therefor the new phrase "such extension of time shall
in such case be included in the computation of payment of interest".
d) Section 9.07(f). Section 9.07(f) is hereby amended by deleting in its
entirety the phrase "reducing the Facility Fee or Commitment Fee referred to
in Section 2.04(a) hereof" and substituting therefor the new phrase
"reducing the Facility Fee referred to in Section 2.04(a) hereof".
SECTION 2. 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 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
<PAGE> 4
contemplated hereby as any Bank through the Agent may reasonably
request.
f) Evidence that the "Expiration Date" of the Heat Purchase
Contract has been extended to August 29, 1996 and that the "Outside
Expiration Date" of the Heat Purchase Contract has been extended to
September 1, 1999.
g) Such other instruments, opinions or documents as any Bank
through the Agent may reasonably request.
SECTION 3. 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 ITS CHARTER OR
BY-LAWS, AS THE CASE MAY BE, OR ANY LAW OR LEGAL RESTRICTION 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;
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
<PAGE> 5
d) No event in respect of it has occurred and is continuing, which
constitutes an Event of Default or a Default.
SECTION e) REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. 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. Without
limiting the generality of the foregoing, each of the parties hereto hereby
ratifies and confirms the extension of the Termination Date to August 29,
1996 pursuant to the Extension Letters.
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 4. 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.
<PAGE> 6
SECTION 5. 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 6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 7
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> 8
S-2
BARCLAYS BANK PLC,
NEW YORK BRANCH,
as Agent and as Bank
By
________ Title:
By
________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 9
S-3
BANK OF AMERICA NT & SA
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 10
S-4
THE BANK OF NEW YORK
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 11
S-5
BHF-BANK AKTIENGESELLSCHAFT
By
_____________ Title:
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 12
S-6
THE CHASE MANHATTAN BANK, N.A.
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 13
S-7
CITIBANK, N.A.
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 14
S-8
COMERICA BANK
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 15
S-9
THE FIRST NATIONAL BANK OF CHICAGO
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 16
S-10
THE FUJI BANK, LIMITED
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 17
S-11
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 18
S-12
J.P. MORGAN DELAWARE
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 19
S-13
NBD BANK
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 20
S-14
SOCIETE GENERALE
By
_____________ Title:
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 21
S-15
TORONTO DOMINION (TEXAS), INC.
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 22
S-16
UNION BANK
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 23
S-17
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By
_____________ Title:
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 24
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> 25
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 ITS CHARTER
OR BY-LAWS, AS THE CASE MAY BE, OR ANY LAW OR LEGAL RESTRICTION 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 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;
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 99.12
[EXECUTION COPY]
THIRD AMENDMENT
3-YEAR CREDIT AGREEMENT
THIRD AMENDMENT (this "AMENDMENT"), dated as of March 8, 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, and the extension letters (the
"EXTENSION LETTERS"), each dated June 30, 1995, 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 in certain particulars;
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 1. Amendments to the Existing Credit Agreement. THE EXISTING
CREDIT AGREEMENT IS, EFFECTIVE AS OF THE DATE HEREOF, AND SUBJECT TO THE
SATISFACTION OF THE CONDITIONS PRECEDENT SET FORTH IN SECTION 2 HEREOF, HEREBY
AMENDED AS FOLLOWS:
Section 1.01. The definition of "APPLICABLE MARGIN" contained in
Section 1.01 is hereby amended in full to read as follows:
<PAGE> 2
"APPLICABLE MARGIN" means for the Interest Period of an Adjusted
CD Rate Advance or a Eurodollar Rate Advance the percentage per annum
set forth in the applicable column below:
<TABLE>
<CAPTION>
RATINGS LEVEL I II III
- -------------------------------------------
<S> <C> <C> <C>
EURODOLLAR
RATE ADVANCE 0.25% 0.25% 0.35%
ADJUSTED CD
RATE ADVANCE 0.375% 0.375% 0.475%
</TABLE>
b) Section 2.04(a). Section 2.04(a) is hereby amended in full to
read as follows:
SECTION 2.04. FACILITY FEE. (a) The Borrower agrees to pay to
the Agent for the account of each Bank a facility fee (the "FACILITY
FEE") on the full amount of such Bank's Commitment (whether used or
unused), from the date hereof in the case of each Bank listed on the
signature pages hereto, and from the effective date specified in the
Assignment and Acceptance pursuant to which it became a Bank pursuant
to Section 9.07 hereof in the case of any other Bank, until the
Termination Date or earlier termination of such Bank's Commitment
pursuant to Section 2.05, payable on the basis of the actual number of
days elapsed in a year of 365 or 366 days, on the last Business Day of
March, June, September and December in each year and on the
Termination Date, at the rate per annum set forth below as determined
in accordance with the then applicable Ratings Level:
<TABLE>
<CAPTION>
RATINGS LEVEL I II III
- ---------------------------------------------------
<S> <C> <C> <C>
FACILITY FEE 0.10% 0.125% 0.25%
</TABLE>
provided, however, that during any period in which the Guarantor's
Senior Secured Indebtedness unsupported by letters of credit or
similar credit enhancement facilities is rated at or below BB+ by S&P
or at or below Ba-1 by Moody's, or shall cease to be rated by either
or both, the Facility Fee shall be 0.375% per annum.
<PAGE> 3
c) Section 2.11(d). Section 2.11(d) is hereby amended by deleting in
its entirety the phrase "such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be" and substituting therefor the new phrase "such extension of
time shall in such case be included in the computation of payment of
interest".
d) Section 9.07(f). Section 9.07(f) is hereby amended by deleting in
its entirety the phrase "reducing the Facility Fee or Commitment Fee
referred to in Section 2.04(a) hereof" and substituting therefor the new
phrase "reducing the Facility Fee referred to in Section 2.04(a) hereof".
SECTION 2. 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 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
<PAGE> 4
contemplated hereby as any Bank through the Agent may reasonably
request.
f) Evidence that the "Expiration Date" of the Heat Purchase
Contract has been extended to August 29, 1996 and that the "Outside
Expiration Date" of the Heat Purchase Contract has been extended to
September 1, 1999.
g) Such other instruments, opinions or documents as any Bank
through the Agent may reasonably request.
SECTION 3. 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;
and
<PAGE> 5
d) No event in respect of it has occurred and is continuing, which
constitutes an Event of Default or a Default.
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. Without
limiting the generality of the foregoing, each of the parties hereto hereby
ratifies and confirms the extension of the Termination Date to September 1,
1999 pursuant to the Extension Letters.
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 4. 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.
<PAGE> 6
SECTION 5. 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 6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 7
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> 8
S-2
BARCLAYS BANK PLC,
NEW YORK BRANCH,
as Agent and as Bank
By
Title:
By
Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 9
S-3
BANK OF AMERICA NT & SA
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 10
S-4
THE BANK OF NEW YORK
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 11
S-5
BHF-BANK AKTIENGESELLSCHAFT
By
_____________ Title:
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 12
S-6
THE CHASE MANHATTAN BANK, N.A.
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 13
S-7
CITIBANK, N.A.
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 14
S-8
COMERICA BANK
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 15
S-9
THE FIRST NATIONAL BANK OF CHICAGO
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 16
S-10
THE FUJI BANK, LIMITED
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 17
S-11
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 18
S-12
J.P. MORGAN DELAWARE
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 19
S-13
NBD BANK
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 20
S-14
SOCIETE GENERALE
By
_____________ Title:
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 21
S-15
TORONTO DOMINION (TEXAS), INC.
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 22
S-16
UNION BANK
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 23
S-17
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By
_____________ Title:
By
_____________ Title:
SIGNATURE PAGE TO RENAISSANCE ENERGY CO. THIRD AMENDMENT
<PAGE> 24
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> 25
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;
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.
