<PAGE> 1
AS FILED WITH SECURITIES AND EXCHANGE COMMISSION ON MARCH 9, 1995
REGISTRATION NO. 33-57545
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
DTE HOLDINGS, INC.
(Exact name of registrant as specified in charter)
MICHIGAN 6719 38-3217752
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.
2000 Second Avenue
Detroit, Michigan 48226-1279
(313) 237-8666
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-------------------------
SUSAN M. BEALE
Corporate Secretary
2000 Second Avenue
Detroit, Michigan 48226-1279
(313) 237-8666
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------------
COPIES TO:
ROBERT A. YOLLES, ESQ.
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, Illinois 60601-1692
(312) 782-3939
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement has become effective and all other
conditions to the share exchange (the "Exchange") of the Common Stock of The
Detroit Edison Company and the Common Stock of DTE Holdings, Inc. pursuant to
the Agreement and Plan of Exchange described in the enclosed Prospectus and
Proxy Statement have been satisfied or waived.
-------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------
- -------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(3) PRICE(3) REGISTRATION FEE(4)
- -------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, without par value(1)......... 145,185,241 $27.8125 $4,037,964,515 $1,392,412
- -------------------------------------------
Common Stock, without par value, for
Dividend Reinvestment Plan(2)............. 10,000,000 $27.8125 $278,125,000 $95,906
- -------------------------------------------
Total...................................... 155,175,241 $27.8125 $4,316,089,515 $1,488,318
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</TABLE>
(1) The number of shares of DTE Holdings, Inc. Common Stock to be issued in the
Exchange described herein cannot be precisely determined at the time this
Registration Statement becomes effective because shares of The Detroit
Edison Company Common Stock may be issued thereafter and prior to the
effective time of the Exchange upon conversion of its Convertible Cumulative
Preferred Stock, 5 1/2% Series, $100 par value. This Registration Statement
covers a number of shares of DTE Holdings, Inc. Common Stock which is
estimated to be at least as large as the number of shares of The Detroit
Edison Company Common Stock which is expected to be outstanding at the
effective time of the Exchange. See the undertaking in Item 22(4) in Part II
of this Registration Statement.
(2) To be issued from time to time pursuant to DTE Holdings, Inc.'s Dividend
Reinvestment Plan which will succeed The Detroit Edison Company Dividend
Reinvestment Plan on the effectiveness of the Exchange. A post-effective
amendment on Form S-3 to this Form S-4 will be filed in connection
therewith.
(3) Estimated pursuant to Rule 457(f)(1) of the Securities Act of 1933, based
upon the per share market value of the shares of The Detroit Edison Company
Common Stock to be exchanged in the Exchange, which is the average of the
high and low sales price of a share of The Detroit Edison Company Common
Stock on the New York Stock Exchange, Inc. Composite Tape on January 26,
1995.
(4) Previously paid.
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
DTE HOLDINGS, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
CAPTION OR LOCATION
IN PROXY STATEMENT
FORM S-4 ITEM NUMBER AND HEADING AND PROSPECTUS
- --------------------------------------------------- -------------------------------------------------
<S> <C>
A. Information About the Transaction
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus...... Facing page of Registration Statement; Cross
Reference Sheet; Cover Page of Prospectus and
Proxy Statement
2. Inside Front and Outside Back Cover Pages of
Prospectus.................................. Available Information; Incorporation of Certain
Information by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............... Cover Page of Prospectus and Proxy Statement;
Summary of Restructuring Proposal; Item 2.
Corporate Restructuring Proposal
4. Terms of Transaction........................ Cover Page of Prospectus and Proxy Statement;
Summary of Restructuring Proposal; Item 2.
Corporate Restructuring Proposal
5. Pro Forma Financial Information............. Not Applicable
6. Material Contacts with the Company Being
Acquired.................................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................. Not Applicable
8. Interests of Named Experts and Counsel...... Item 2. Corporate Restructuring Proposal
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................. Not Applicable
B. Information About the Registrant
10. Information With Respect to S-3
Registrants................................. Not Applicable
11. Incorporation of Certain Information
by Reference................................ Not Applicable
12. Information with Respect to S-2 or
S-3 Registrants............................. Not Applicable
13. Incorporation of Certain Information
by Reference................................ Not Applicable
14. Information With Respect to Registrants
Other Than S-3 or S-2 Registrants........... Cover Page of Prospectus and Proxy Statement;
Summary of Proposed Restructuring; Item 2.
Corporate Restructuring Proposal
C. Information About the Company Being Acquired
15. Information with Respect to S-3 Companies... Available Information; Incorporation of Certain
Documents by Reference
16. Information with Respect to S-2 or
S-3 Companies............................... Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies................... Not Applicable
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations are to be Solicited.......... Notice of Annual Meeting; Incorporation of
Certain Documents by Reference; Summary of
Proposed Restructuring; Introduction; Item 1. The
Election of Directors; Item 2. Corporate
Restructuring Proposal
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in
an Exchange Offer........................... Not Applicable
</TABLE>
<PAGE> 3
[DETROIT EDISON LOGO]
Dear Detroit Edison Shareholder:
On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Common Stock Shareholders of The Detroit Edison
Company on Monday, April 24, 1995, at 10:00 a.m. at Detroit Edison's General
Offices, 2000 Second Avenue, Detroit, Michigan.
The principal items of business will be (1) the election of directors, (2) the
adoption of a plan of share exchange pursuant to which the holders of Common
Stock of The Detroit Edison Company will become holders of the Common Stock of a
newly formed holding company, which will become the sole holder of the Common
Stock of The Detroit Edison Company, (3) the approval of a long-term incentive
plan for officers, other employes, and nonemploye directors, and (4) the
ratification of the appointment of the independent accountants.
Additional details about the meeting are in the accompanying Notice of Annual
Meeting and Prospectus and Proxy Statement. At the meeting, I will also report
on the progress of the Company during the past year and answer shareholder
questions.
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND PERSONALLY, PLEASE COMPLETE AND MAIL THE ENCLOSED PROXY CARD
IN THE RETURN ENVELOPE. IF YOU DO ATTEND AND VOTE AT THE MEETING, THAT VOTE WILL
SUPERSEDE THE EARLIER VOTE BY PROXY.
SINCERELY,
[Facsimile Signature]
JOHN E. LOBBIA
Chairman and Chief Executive Officer
<PAGE> 4
[MAP SHOWING DIRECTIONS TO THE DETROIT EDISON COMPANY COMMON STOCK SHAREHOLDERS
ANNUAL MEETING.]
<PAGE> 5
[DETROIT EDISON LOGO]
NOTICE OF ANNUAL MEETING OF COMMON STOCK SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Common Stock Shareholders
(the "Annual Meeting") of THE DETROIT EDISON COMPANY ("Detroit Edison") will be
held at Detroit Edison's General Offices, 2000 Second Avenue, Detroit, Michigan,
on Monday, April 24, 1995, at 10:00 a.m., Detroit time, to consider and take
action on:
1. The election of four directors;
2. An Agreement and Plan of Exchange, a copy of which is attached as
Exhibit A to the accompanying Prospectus and Proxy Statement, pursuant to
which the holders of Common Stock of Detroit Edison will become holders of
the Common Stock of a newly formed holding company ("Holding Company"), and
Holding Company will become the sole holder of the Common Stock of Detroit
Edison, with the result that Detroit Edison will become a subsidiary of
Holding Company;
3. The Long-Term Incentive Plan, a copy of which is attached as
Exhibit C to the accompanying Prospectus and Proxy Statement;
4. Ratification of the appointment of Deloitte & Touche LLP by the
Board of Directors as the independent accountants of Detroit Edison for the
year 1995; and
5. Such other business as may properly come before the meeting, or any
adjournment or adjournments thereof.
Holders of record of shares of Common Stock at the close of business on February
24, 1995, are entitled to notice of, and to vote at, the meeting.
As described under "Item 2. Corporate Restructuring Proposal -- Statutory
Appraisal Rights Inapplicable" of the accompanying Prospectus and Proxy
Statement, no shareholder of Detroit Edison is entitled to statutory dissenters'
appraisal rights in connection with the approval of the Agreement and Plan of
Exchange referred to in Item 2 above.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
MARCH 9, 1995 BY ORDER OF THE BOARD OF DIRECTORS,
SUSAN M. BEALE
CORPORATE SECRETARY
IMPORTANT
EVEN THOUGH YOU EXPECT TO ATTEND THE ANNUAL MEETING, IT IS URGENTLY REQUESTED
THAT, WHETHER YOUR SHARE HOLDINGS ARE LARGE OR SMALL, YOU PROMPTLY FILL IN,
DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED HEREWITH.
IF YOU WILL DO SO NOW, DETROIT EDISON WILL BE SAVED THE EXPENSE OF FOLLOW-UP
NOTICES.
<PAGE> 6
PROXY STATEMENT
FOR
THE DETROIT EDISON COMPANY
PROSPECTUS
FOR
DTE HOLDINGS, INC.
COMMON STOCK
This Prospectus, including the Proxy Statement forming a part hereof, has
been prepared in connection with the issuance of up to 145,185,241 shares of
Common Stock, without par value, of DTE Holdings, Inc., a Michigan corporation
("Holding Company"), a wholly-owned subsidiary of The Detroit Edison Company, a
Michigan corporation ("Detroit Edison" or "the Company"), upon the consummation
of the proposed share exchange pursuant to which each outstanding share of
Detroit Edison Common Stock, $10 par value ("Detroit Edison Common Stock") will
be exchanged for one share of Holding Company Common Stock, without par value
("Holding Company Common Stock").
At the effective time of the share exchange, each then outstanding share of
Detroit Edison Common Stock will automatically be exchanged for and, without
action on the part of the holder thereof, become one share of Holding Company
Common Stock. It is anticipated that the absence of a par value of the Holding
Company Common Stock will not affect the market value of such stock. Following
the share exchange, Detroit Edison will continue to carry on its present utility
business as a subsidiary of Holding Company. Reference is made to "Item 2.
Corporate Restructuring Proposal -- Holding Company Capital Stock" for further
information concerning the securities offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The executive offices of Detroit Edison are located at 2000 Second Avenue,
Detroit, Michigan 48226-1279, and its telephone number at such address is (313)
237-8000. Holding Company's executive offices are at the same address and its
telephone number is (313) 237-8666.
This Prospectus and Proxy Statement and the proxy card were first mailed to
holders of Detroit Edison Common Stock on or about March 17, 1995.
------------------------------
The date of this Prospectus and Proxy Statement is March 9, 1995.
<PAGE> 7
AVAILABLE INFORMATION
Detroit Edison is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("1934 Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission ("SEC"). Reports, proxy statements and other information filed by
Detroit Edison can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
its Regional Offices located at Citicorp Center, 500 West Madison Street,
Chicago, IL 60661 and Seven World Trade Center, New York, NY 10048. Copies of
such material can be obtained from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
reports, proxy statements and other information concerning Detroit Edison may be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, NY, and the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, IL,
the exchanges on which certain of Detroit Edison's securities are listed.
Holding Company has filed with the SEC a Registration Statement on Form S-4
under the Securities Act of 1933, as amended ("1933 Act"), with respect to the
shares of Holding Company Common Stock offered hereby. This Prospectus and Proxy
Statement does not contain all of the information set forth in such Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. The omitted information can be inspected and copied at
the above-described reference facilities maintained by the SEC. For further
information, reference is made to such Registration Statement.
Holding Company will become subject to the same informational requirements
as Detroit Edison following the share exchange described in this Prospectus and
Proxy Statement, and will file reports, proxy statements and other information
with the SEC in accordance with the 1934 Act. Detroit Edison will continue to be
subject to such requirements.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by Detroit Edison with the SEC (File No.
1-2198) are incorporated in this Prospectus and Proxy Statement by reference and
made a part hereof:
(i) The Annual Report on Form 10-K for the year ended December 31,
1993 (the "1993 Form 10-K");
(ii) The Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994; June 30, 1994 and September 30, 1994; and
(iii) The Current Reports on Form 8-K dated January 24, 1994; April 7,
1994 (Amendment No. 1); June 22, 1994; August 3, 1994; January 27, 1995;
and March 1, 1995.
All documents subsequently filed by Detroit Edison pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act, after the date of this Prospectus and
Proxy Statement and prior to the termination of the offer made by this
Prospectus and Proxy Statement, shall be deemed to be incorporated in this
Prospectus and Proxy Statement by reference and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus and Proxy Statement shall be deemed to be modified or superseded for
purposes of this Prospectus and Proxy Statement to the extent that a statement
contained in this Prospectus and Proxy Statement or in any other subsequently
filed document which also is or is deemed to be incorporated by reference in
this Prospectus and Proxy Statement modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus and Proxy Statement.
THIS PROSPECTUS AND PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DETROIT EDISON WILL
PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS PROSPECTUS AND PROXY STATEMENT IS DELIVERED, UPON WRITTEN OR ORAL REQUEST
OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS THAT HAVE BEEN OR MAY BE
INCORPORATED IN THIS PROSPECTUS AND PROXY STATEMENT BY REFERENCE, OTHER THAN
CERTAIN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE
i
<PAGE> 8
SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THIS PROSPECTUS
AND PROXY STATEMENT INCORPORATES. SUCH REQUESTS SHOULD BE DIRECTED TO SUSAN M.
BEALE, CORPORATE SECRETARY, THE DETROIT EDISON COMPANY, 2000 SECOND AVENUE,
DETROIT, MICHIGAN 48226-1279 (TELEPHONE NUMBER (313) 237-8666). IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY APRIL 17,
1995.
------------------------------
No person has been authorized to give any information or to make any
representation not contained in this Prospectus and Proxy Statement in
connection with the offer contained in this Prospectus and Proxy Statement, and,
if given or made, such information or representation must not be relied upon as
having been authorized. Neither the delivery of this Prospectus and Proxy
Statement nor any distribution of shares of Holding Company Common Stock made
hereunder shall, under any circumstances, create any implication that there has
not been any change in the affairs of Detroit Edison or Holding Company since
the respective dates as of which information is given herein. This Prospectus
and Proxy Statement does not constitute an offer to sell or a solicitation of an
offer to buy shares of Holding Company Common Stock by any person in any
jurisdiction or in any circumstance in which such offer would be unlawful.
ii
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY OF CORPORATE RESTRUCTURING PROPOSAL........................................... 1
INTRODUCTION.......................................................................... 5
ITEM 1. THE ELECTION OF DIRECTORS..................................................... 5
Nominees for Election at this Meeting to Terms Expiring in 1998.................. 6
Directors Whose Present Terms Continue Until 1996................................ 7
Directors Whose Present Terms Continue Until 1997................................ 8
Directors Not Standing for Re-Election........................................... 9
Security Ownership of Management................................................. 9
The Board of Directors and Board Committees...................................... 10
Board Compensation Committee Report on Executive Compensation.................... 10
Summary Compensation Table....................................................... 13
Employment Contracts............................................................. 14
Performance Graph................................................................ 15
Compensation Committee Interlocks and Insider Participation...................... 15
ITEM 2. CORPORATE RESTRUCTURING PROPOSAL.............................................. 16
Introduction..................................................................... 16
Vote Required.................................................................... 16
Reasons for the Corporate Restructuring.......................................... 16
Certain Considerations........................................................... 17
Exchange Agreement............................................................... 18
Required Regulatory Approvals.................................................... 18
Transfer of Detroit Edison Assets to Holding Company............................. 19
Dividend Policy.................................................................. 19
Treatment of Preferred and Preference Stock...................................... 19
Amendment or Termination......................................................... 21
Statutory Appraisal Rights Inapplicable.......................................... 21
Effectiveness of the Corporate Restructuring..................................... 21
Exchange of Stock Certificates................................................... 21
Dividend Reinvestment Plan....................................................... 22
Certain Federal Income Tax Consequences.......................................... 22
Listing of Holding Company Common Stock.......................................... 23
Regulation of Holding Company.................................................... 23
Management....................................................................... 23
Holding Company Capital Stock.................................................... 24
Comparative Shareholders' Rights................................................. 24
Stock Plans...................................................................... 26
Transfer Agent and Registrar..................................................... 26
Detroit Edison Common Stock Market Prices and Dividends.......................... 27
Legal Opinions................................................................... 27
Experts.......................................................................... 27
ITEM 3. LONG-TERM INCENTIVE PLAN...................................................... 28
Introduction..................................................................... 28
Vote Required.................................................................... 28
Summary of Plan Features......................................................... 28
Federal Income Tax Consequences of Incentive Plan................................ 33
Effect of Approval of Exchange Agreement......................................... 34
ITEM 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS........................ 34
TRANSACTION OF OTHER BUSINESS AND OTHER INFORMATION................................... 35
EXHIBIT A............................................................................. A-1
EXHIBIT B............................................................................. B-1
EXHIBIT C............................................................................. C-1
</TABLE>
iii
<PAGE> 10
SUMMARY OF CORPORATE RESTRUCTURING PROPOSAL
The following is a summary of certain information regarding the corporate
restructuring proposal contained or incorporated by reference in this Prospectus
and Proxy Statement and is qualified in its entirety by the more detailed
information contained or incorporated by reference herein. Information
concerning other matters to be acted on at the Annual Meeting is set forth
elsewhere herein.
PROPOSED CORPORATE RESTRUCTURING
Holding Company has been organized to become the holding company for, and
the direct owner of, the Common Stock of Detroit Edison. The new holding company
structure will be achieved through a share exchange (the "Exchange") in which
the holders of Detroit Edison Common Stock immediately prior to the Exchange
will become the holders of Holding Company Common Stock immediately after the
Exchange, and pursuant thereto Holding Company will become the sole holder of
Detroit Edison Common Stock. The Exchange will be accomplished pursuant to an
Agreement and Plan of Exchange (the "Exchange Agreement").
Shares of Detroit Edison Cumulative Preferred Stock, $100 par value (issued
and outstanding in six series) (collectively, "Detroit Edison Preferred Stock"),
and Detroit Edison Preference Stock, $1 par value, none of which is currently
outstanding ("Detroit Edison Preference Stock"), will not be affected by or
exchanged in the Exchange but will continue to be held by the holders thereof.
Except as noted in the next sentence, the Exchange will not change any rights of
holders of such shares. If the Exchange is approved by the Detroit Edison Common
Stock shareholders and all necessary regulatory approvals are obtained, Detroit
Edison intends to optionally redeem, prior to the effective time of the
Exchange, all outstanding shares of Convertible Cumulative Preferred Stock,
5 1/2% Series, $100 par value (the "5 1/2% Preferred Stock"). See "Item 2.
Corporate Restructuring Proposal -- Treatment of Preferred and Preference
Stock."
Detroit Edison is a regulated public utility engaged in the generation,
purchase, transmission, distribution and sale of electric energy in a 7,600
square-mile area in Southeastern Michigan. Detroit Edison's service area
includes about 13% of Michigan's total land area, and about half its population
(approximately five million people), electric energy consumption and industrial
capacity. Detroit Edison's residential customers reside in urban and rural
areas, including an extensive shoreline along the Great Lakes and connecting
waters. After the Exchange, Detroit Edison will continue to carry on its current
utility business as a subsidiary of Holding Company.
Holding Company will have no assets other than those involved in its
ownership of stock of its subsidiaries, which after the effective time of the
Exchange will consist of all of the Detroit Edison Common Stock, and after the
Exchange is expected to consist of all of the common stock of certain existing
Detroit Edison subsidiaries involved in non-utility operations (collectively,
the "non-utility subsidiaries"). See "Item 2. Corporate Restructuring Proposal
- -- Transfer of Detroit Edison Assets to Holding Company." It is not expected
that Holding Company will conduct any business other than the ownership of the
stock of its subsidiaries. The principal executive office of Detroit Edison is
located at 2000 Second Avenue, Detroit, Michigan 48226-1279, and its telephone
number is (313) 237-8000. Holding Company's principal executive office is at the
same address; its telephone number is (313) 237-8666.
1
<PAGE> 11
Figure 1 below illustrates the present corporate structure of Detroit
Edison and its subsidiaries before the Exchange. Figure 2 below illustrates the
proposed corporate structure of Holding Company and its subsidiaries following
the Exchange. After the effective time of the Exchange, Detroit Edison will
transfer certain non-utility subsidiaries to Holding Company. Detroit Edison
will retain its other subsidiaries.
FIGURE 1: PRESENT STRUCTURE
-------------------------
| |
| DETROIT EDISON |
| |
-------------------------
|
|
- ------------------------------------------------------------------------------
| | | |
| Utility Subsidiaries | | Non-Utility Subsidiaries |
| | | |
------------------------ --------------------------
FIGURE 2: PROPOSED STRUCTURE
-------------------------
| |
| HOLDING COMPANY |
| |
-------------------------
|
|
-----------------------------------------------------------------------------
| | | |
| Detroit Edison | | Non-Utility Subsidiaries |
| | | |
------------------------ --------------------------
|
|
------------------------
| |
| Utility Subsidiaries |
| |
------------------------
EXCHANGE OF CERTIFICATES
It will not be necessary for shareholders to turn in their certificates for
Detroit Edison Common Stock in exchange for certificates for Holding Company
Common Stock. The certificates which represent shares of Detroit Edison Common
Stock outstanding immediately prior to the effective time of the Exchange will
automatically represent shares of Holding Company Common Stock immediately
following the effective time of the Exchange. New certificates bearing the name
of Holding Company will be issued after the Exchange if and as certificates for
shares of Detroit Edison Common Stock outstanding immediately prior to the
Exchange are presented for exchange or transfer.
DIVIDEND REINVESTMENT PLAN
Detroit Edison Common Stock held under the Detroit Edison Dividend
Reinvestment Plan ("DRIP"), including uncertificated whole and fractional
shares, will be exchanged automatically for shares of Holding Company Common
Stock as of the effective time of the Exchange. Holding Company will establish a
dividend reinvestment plan providing for participation and other features at
least as favorable as the Detroit Edison DRIP.
2
<PAGE> 12
STOCK EXCHANGE LISTINGS
Holding Company will apply to list its Common Stock on the New York and
Chicago stock exchanges. It is expected that such listings will become effective
at the effective time of the Exchange, subject to the rules of such stock
exchanges. See "Item 2. Corporate Restructuring Proposal -- Listing of Holding
Company Common Stock." Holding Company reserves the right to terminate its
listing on any exchange in the future, upon notice to shareholders, in
compliance with its listing agreements.
DIVIDEND POLICY
Dividends on Holding Company Common Stock will depend primarily on the
earnings, financial condition and capital requirements of Detroit Edison, and
its ability to pay dividends on the Detroit Edison Common Stock owned by Holding
Company. It is currently contemplated that Holding Company will initially pay
quarterly dividends on Holding Company Common Stock at least equal to the rate,
and on approximately the same schedule, as the dividends most recently declared
on Detroit Edison Common Stock. See "Item 2. Corporate Restructuring Proposal --
Dividend Policy."
REASONS FOR THE CORPORATE RESTRUCTURING
The management and the Board of Directors of Detroit Edison unanimously
believe that the proposed corporate restructuring is beneficial because it will
provide greater financial flexibility to develop and operate new businesses in
an increasingly competitive business environment. It will also offer a mechanism
for better defining and separating the utility and non-utility businesses and
for protecting the utility business and utility customers from the risk involved
in non-utility ventures. See "Item 2. Corporate Restructuring Proposal --
Reasons for the Restructuring." THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
CORPORATE RESTRUCTURING PROPOSAL.
CERTAIN CONSIDERATIONS
Certain factors which should be considered in determining whether or not to
vote to approve the Exchange Agreement are discussed under "Item 2. Corporate
Restructuring Proposal -- Certain Considerations."
VOTE REQUIRED
Only holders of Detroit Edison Common Stock and Detroit Edison Preferred
Stock at 5:00 p.m. Detroit time on February 24, 1995 (the "Record Date") are
entitled to receive notice of the Annual Meeting. Only holders of shares of
Detroit Edison Common Stock on the Record Date are entitled to vote at the
Annual Meeting to consider approval of the Exchange Agreement pursuant to which
the restructuring proposal will be consummated. As of February 24, 1995, there
were 144,863,961 shares of Detroit Edison Common Stock outstanding. The
affirmative votes of the holders of a majority of the outstanding shares of
Detroit Edison Common Stock are required to approve the Exchange Agreement. See
"Item 2. Corporate Restructuring Proposal -- Vote Required."
REGULATORY APPROVALS
An application for approval of the corporate restructuring has been filed
with the Federal Energy Regulatory Commission ("FERC") under the Federal Power
Act ("FPA"). An application for approval will be filed with the Nuclear
Regulatory Commission ("NRC") under the Atomic Energy Act. No approvals are
required from the SEC under the Public Utility Holding Company Act of 1935 (the
"Holding Company Act") or from the Michigan Public Service Commission ("MPSC")
under applicable Michigan law. Following the Exchange, Holding Company will
qualify for an exemption from registration under the Holding Company Act. See
"Item 2. Corporate Restructuring Proposal -- Required Regulatory Approvals" and
"-- Regulation of Holding Company."
3
<PAGE> 13
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that the exchange of solely Detroit Edison Common Stock for
solely Holding Company Common Stock will not be a taxable event under Federal
income tax laws, and it is a condition for the Exchange to become effective that
Detroit Edison receive either an opinion of counsel or a ruling from the
Internal Revenue Service satisfactory to the Detroit Edison Board of Directors
with respect to the Federal income tax consequences of the Exchange. Detroit
Edison does not expect to apply for such a ruling because it has received an
opinion of Jones, Day, Reavis & Pogue, counsel to Detroit Edison, with respect
to certain Federal income tax consequences of the Exchange. See "Item 2.
Corporate Restructuring Proposal -- Certain Federal Income Tax Consequences."
STATUTORY APPRAISAL RIGHTS INAPPLICABLE
Holders of Detroit Edison Common Stock, Detroit Edison Preferred Stock and
Detroit Edison Preference Stock have no right to dissent from consummation of
the Exchange and have no dissenters' appraisal rights in connection with the
Exchange. See "Item 2. Corporate Restructuring Proposal -- Statutory Appraisal
Rights Inapplicable."
4
<PAGE> 14
INTRODUCTION
The Prospectus and Proxy Statement forming a part hereof is furnished in
connection with the solicitation by the Board of Directors of Detroit Edison of
proxies for use at the Detroit Edison Annual Meeting of Common Stock
Shareholders to be held on April 24, 1995 (the "Annual Meeting"). If the
enclosed proxy card is executed and returned, it will be voted as specified on
such proxy card. If the proxy card is executed and returned but no specification
is made on the proxy card as to any proposal, the shares represented by the
proxy will be voted FOR the election of directors and FOR Proposals 2, 3 and 4.
It is the policy of Detroit Edison that any proxy, ballot or other voting
material that identifies the particular vote of a shareholder will be kept
confidential except in the event of a contested proxy solicitation or as may be
required by law. Detroit Edison may be informed whether or not a particular
shareholder has voted and will have access to any comment written on a proxy
card, ballot or other material. Under the policy, the inspectors of election at
any meeting will be outside parties.
You may revoke your proxy by a written request or by a subsequently dated
proxy card, which, in either case, must be received by the Corporate Secretary
of Detroit Edison before the Annual Meeting, or by voting in person at the
Annual Meeting.
The holders of Detroit Edison Common Stock, the only security of the
Company entitled to vote at the meeting, are entitled to one vote for each share
of such stock held, whether of record or in any account under the Detroit
Edison's DRIP or the Savings & Investment Plans, on the Record Date. Record
shares and DRIP shares are combined in a single proxy card. A majority of the
shares of outstanding Detroit Edison Common Stock present in person or
represented by proxy will constitute a quorum.
An Annual Report of Detroit Edison for the calendar year 1994 was mailed on
or about March 7, 1995, to all Detroit Edison shareholders of record on the
Record Date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL DIRECTOR NOMINEES NAMED
IN ITEM 1, "FOR" APPROVAL OF THE EXCHANGE AGREEMENT AS DISCUSSED IN ITEM 2,
"FOR" APPROVAL OF THE LONG-TERM INCENTIVE PLAN AS DISCUSSED IN ITEM 3, AND "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
ACCOUNTANTS AS DISCUSSED IN ITEM 4.
ITEM 1. THE ELECTION OF DIRECTORS
The Board of Directors of Detroit Edison is divided into three classes,
with one class of directors elected each year for a three-year term. The terms
of directors in one class expire in 1995. Two directors in the class have been
nominated for re-election for terms expiring in 1998 and one person has been
nominated to fill a vacancy. One director from the class whose term expires in
1997 has been nominated for re-election to a term expiring in 1998 so that the
three classes will be of more equal size. In the event such director is not
re-elected for this term, his term will continue until 1997. All of the nominees
have consented to serve if elected, and, except for the nominee to fill the
vacancy, are presently members of the Board of Directors. Pursuant to the
provisions of the Company's By-Laws, the Board of Directors has by resolution
set the number of directors comprising the full Board, effective as of the date
of the Annual Meeting, at 13.
Proxies cannot be voted for more than four persons. It is the intention of
the persons named in the enclosed proxy card, unless otherwise instructed by the
shareholders, to vote for the nominees named below. If, for any reason, any of
the nominees becomes unable or is unwilling to serve at the time of the meeting,
the persons named in the enclosed proxy card will have discretionary authority
to vote for a substitute nominee or nominees. It is not anticipated that any
nominee will be unavailable for election.
Each holder of Detroit Edison Common Stock has the right, without prior
notice to Detroit Edison, to cumulate votes for the election of directors by
multiplying the number of votes to which such holder is entitled by the number
of directors to be elected and casting all such votes for one candidate or
distributing them among any two or more candidates. Any shareholder who may wish
to withhold votes from one or more director or directors may do so by writing
the name or names of such directors in the space provided on the
5
<PAGE> 15
proxy card for such purpose. Shareholders cannot vote for more than four
directors. The election of each director requires the affirmative vote of the
holders of a plurality of the shares of Detroit Edison Common Stock voted.
Broker non-votes will not be included in determining the number of votes cast in
the election. A "withhold" from voting for a director is the equivalent of a
"no" vote and will be included in determining the number of votes cast in the
election of directors. Under Michigan law, only votes cast are counted and, with
respect to the election of directors, abstentions have no effect.
The following sets forth information as to each nominee for election at this
meeting and each director continuing in office.
NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING IN 1998
TERENCE E. ADDERLEY, 61, President and Chief Executive Officer,
Kelly Services, Inc., Troy, Michigan--provider of temporary
help, business services and assisted living (home care)
[PHOTO] services. Mr. Adderley has served in his present position since
1967. He has been a director of Detroit Edison since 1987. Mr.
Adderley is also a director of Kelly Services, Inc.; NBD Bank
and NBD Bancorp, Inc. He received B.B.A. and M.B.A. degrees from
the University of Michigan. Committees: Executive, Finance, and
Organization and Compensation.
ANTHONY F. EARLEY, JR., 45, President and Chief Operating
Officer, Detroit Edison. Mr. Earley has served in his present
position since March 1, 1994. He previously served as President
and Chief Operating Officer of the Long Island Lighting Company
[PHOTO] (LILCO), an electric and gas utility company serving Long
Island, New York, from 1989 to 1994; and in various executive
capacities at LILCO from 1985 to 1989. Before that, Mr. Earley
was a partner in the law firm of Hunton & Williams and served as
an officer in the United States Navy nuclear submarine program.
He has been a director of Detroit Edison since March 1994.
Mr. Earley is also a director of Mutual of America
Capital Management Corporation. He received a B.S. degree in
physics, an M.S. degree in engineering and a J.D. degree, all
from the University of Notre Dame. Committee: Executive.
ALLAN D. GILMOUR, 60, retired Vice Chairman of the Board, Ford
Motor Company. Mr. Gilmour was employed in various capacities at
the Ford Motor Company since 1960 and was President of the Ford
Automotive Group from March 1990 until his appointment in 1993
[PHOTO] as Vice Chairman, the position from which he retired in January
1995. He is a nominee for the first time as director of Detroit
Edison. Mr. Gilmour is a director of the Henry Ford Health
System; US West, Inc.; Whirlpool Corporation; and is a nominee
for director of The Prudential Insurance Company of America. He
is also a director or trustee of a number of community
organizations. Mr. Gilmour holds a B.A. degree from Harvard
University and an M.B.A. from the University of Michigan.
An application will be filed with the FERC seeking a required
approval under the FPA for Mr. Gilmour to serve as a director of
Detroit Edison and The Prudential Insurance Company of America.
Detroit Edison expects such approval will be granted.
6
<PAGE> 16
THEODORE S. LEIPPRANDT, 61, Marketing Specialist, Cooperative
Elevator Company, Pigeon, Michigan--handling export and domestic
marketing of dry beans in the Thumb area for the farming
[PHOTO] industry. Mr. Leipprandt has served the Cooperative in various
positions since 1958. He is a past president of the Michigan
Grain and Agri-Dealers Association and has been a member of the
Michigan 4-H Foundation Board of Trustees since 1984, serving
two years as its president. Mr. Leipprandt is a past District
Governor of Rotary International, having served in that
capacity in 1990 and 1991. In addition, he is a director of
the East Central Michigan Farm Credit Services and serves
on the boards of a variety of civic organizations and his
church. Mr. Leipprandt has been a director of Detroit Edison
since 1990. He received a B.S. degree in animal science from
Michigan State University. Committees: Audit, Energy Resources
Planning and Nuclear Review.
In the event Mr. Leipprandt is not re-elected for a term
expiring in 1998, he will continue to serve his current term,
which expires in 1997.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1996
LILLIAN BAUDER, 55, President and Chief Executive Officer,
Cranbrook Educational Community, Bloomfield Hills, Michigan. Dr.
Bauder has served in her present position since 1984. She has
[PHOTO] been a director of Detroit Edison since 1986 and is also a
director of Comerica Bank and Masco Corporation. Dr. Bauder
received a B.A. degree from Douglass College and M.A. and Ph.D.
degrees in sociology from the University of Michigan.
Committees: Audit, Executive and Nuclear Review.
DAVID BING, 51, Chairman of the Board, Bing Steel, Inc.,
Detroit, Michigan--a steel service center serving automobile
manufacturers, steel fabricators, construction subcontractors
and the farm implement and appliance industries. Mr. Bing has
[PHOTO] served in his present position since 1986 and previously served
as President. He is also Chief Executive Officer of Superb
Manufacturing, Inc., a metal stamping company. Mr. Bing played
professional basketball for 12 years and continues to serve the
community as advisor to many youth groups. He also serves as a
director of a number of civic organizations. Mr. Bing has been
a director of Detroit Edison since 1985. He received a B.A.
degree from Syracuse University. Committees: Audit, Energy
Resources Planning, and Organization and Compensation.
LARRY G. GARBERDING, 56, Executive Vice President and Chief
Financial Officer, Detroit Edison. Mr. Garberding has served in
his present position since 1990. He previously served as
President of NICOR, Inc., a natural gas utility serving suburban
[PHOTO] Chicago, Illinois, from 1988 to 1990 and in various executive
capacities at Tenneco Gas, Houston, Texas, from 1981 to 1987.
Mr. Garberding has been a director of Detroit Edison since 1990.
He received a B.S. degree in industrial administration from Iowa
State University. Committees: Executive and Finance.
7
<PAGE> 17
ALAN E. SCHWARTZ, 69, a Partner of the law firm of Honigman
Miller Schwartz and Cohn, Detroit, Michigan. Mr. Schwartz has
been a director of Detroit Edison since 1969. He is also a
director of Comerica Incorporated; Core Industries, Inc.;
[PHOTO] Handleman Company; Howell Industries, Inc.; Pulte Corporation
and Unisys Corporation. Mr. Schwartz received a B.A. degree from
the University of Michigan and a law degree from Harvard Law
School. Committees: Executive, Finance, Nominating, and
Organization and Compensation.
WILLIAM WEGNER, 68, Consultant; owner of W-Squared, Inc.--a
consulting firm engaged in providing services to nuclear utility
companies. Mr. Wegner has been a nuclear consultant since 1979.
From 1964 to 1979 he served as Admiral Rickover's Deputy
[PHOTO] Director. In addition to his work in the nuclear field, Mr.
Wegner operates a fine arts bronze foundry in Fredericksburg,
Virginia. Mr. Wegner has been a director of Detroit Edison since
1990. He graduated from the U.S. Naval Academy, received
master's degrees in naval architecture and marine engineering
from the Webb Institute of Naval Architecture and in nuclear
engineering from the Massachusetts Institute of Technology.
Committees: Energy Resources Planning and Nuclear Review.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1997
JOHN E. LOBBIA, 53, Chairman of the Board and Chief Executive
Officer, Detroit Edison. Mr. Lobbia has served in his present
position since 1990. He previously served as President and Chief
Operating Officer from 1988 to 1994. Mr. Lobbia has been a
[PHOTO] director of Detroit Edison since 1988. He is also a director of
Flint Ink Corporation; NBD Bank; NBD Bancorp, Inc. and the Rouge
Steel Company, as well as a director and trustee of a number of
community and professional organizations. Mr. Lobbia received a
B.S. degree in electrical engineering from the University of
Detroit. Committee: Executive.
PATRICIA S. LONGE, 61, Economist; Senior Partner, The Longe
Company, Naples, Florida--an economic consulting and investment
firm. Dr. Longe has served in her present position since 1981.
She was a professor of Business Administration at the University
[PHOTO] of Michigan from 1973 to 1986. Dr. Longe has been a director of
Detroit Edison since 1973. She is also a director of Jacobson
Stores, Inc.; The Kroger Company; Comerica Incorporated;
Comerica Bank & Trust, F.S.B. and The Warner-Lambert Company.
Dr. Longe received B.S. and M.B.A. degrees from the University
of Detroit and a Ph.D. degree in economics from Wayne State
University. Committees: Audit, Finance, Nominating and Nuclear
Review.
EUGENE A. MILLER, 57, Chairman of the Board and Chief Executive
Officer, Comerica Incorporated and Comerica Bank, Detroit,
Michigan. Mr. Miller served as Chairman of the Board, President
and Chief Executive Officer of Comerica Incorporated and
[PHOTO] Comerica Bank prior to the merger of Comerica Incorporated and
Manufacturers National Corporation in 1992. He has been a
director of Detroit Edison since 1989. Mr. Miller also serves as
a director or trustee of a number of community and professional
organizations. He received a B.B.A. degree from the Detroit
Institute of Technology. Committees: Finance, Nominating, and
Organization and Compensation.
8
<PAGE> 18
- ------------------------------------------------------------------------
DEAN E. RICHARDSON, 67, retired Chairman of the Board,
Manufacturers National Corporation, Detroit, Michigan. Prior to
his retirement in 1990, Mr. Richardson served in the above
position since 1973. He has been a director of Detroit Edison
[PHOTO] since 1977. Mr. Richardson is also a director of the Automobile
Club of Michigan, Ford Holdings, Inc., and Tecumseh Products
Company. He received a B.A. degree from Michigan State
University and an LL.B. degree from the University of Michigan.
Committees: Audit, Executive, Finance, and Organization and
Compensation.
- ------------------------------------------------------------------------
DIRECTORS NOT STANDING FOR RE-ELECTION
MESSRS. WENDELL W. ANDERSON, JR. and WALTER J. MCCARTHY, JR. have reached
mandatory retirement age and are not standing for re-election. Detroit Edison
expresses its appreciation to Messrs. Anderson and McCarthy for their
contributions during their years of dedicated service as directors of Detroit
Edison.
[PHOTO] [PHOTO]
Wendell W. Anderson, Jr. Walter J. McCarthy, Jr.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
SHARES OF STOCK
OWNED BENEFICIALLY
DIRECTOR/EXECUTIVE OFFICER CLASS OF STOCK MARCH 1, 1995(1)(2)
------------------------------------------- -------------- -------------------
<S> <C> <C>
Terence E. Adderley........................ Common 1,000
Frank E. Agosti............................ Common 6,633(3)
Preferred 3
Lillian Bauder............................. Common 867
David Bing................................. Common 400
Anthony F. Earley, Jr. .................... Common 1,743
Larry G. Garberding........................ Common 4,161(3)
Allan D. Gilmour........................... Common 1,000
Douglas R. Gipson.......................... Common 1,328(3)
Theodore S. Leipprandt..................... Common 642
John E. Lobbia............................. Common 12,070(3)
Patricia S. Longe.......................... Common 1,300
Eugene A. Miller........................... Common 1,000
Dean E. Richardson......................... Common 2,000
Preferred 500
Alan E. Schwartz........................... Common 330
William Wegner............................. Common 500
Directors and executive officers as a group
(23 persons)............................. Common 51,054(3)
Preferred 503
</TABLE>
- -------------------------
(1) Directors and officers owned not more than 1 percent individually and
in the aggregate of any class of the Company's outstanding stock.
Voting power and investment power in many instances are shared with a
joint tenant, generally a spouse.
(2) Does not include 1,361 shares held by spouse or other family member in
which the director or officer disclaims any beneficial ownership
interest.
(3) Includes shares held in the Savings & Investment Plan as of December
31, 1994.
9
<PAGE> 19
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
Directors of Detroit Edison are paid an annual retainer of $18,000 and $750
for attending a meeting of the Board or Board committees or other
Company-related meetings. Directors who serve as chairs of Board committees are
paid an additional annual retainer of $2,000. Directors who are also officers of
the Company receive no payment for service as a director. Reimbursement is made
for out-of-pocket expenses incurred by any director to attend meetings.
Directors may elect to defer the receipt of all or any part of their annual
retainer and meeting fees for payment in the future, with interest accrued
monthly at the 5-year U.S. Treasury Bond rate.
Nonemploye directors with a minimum of five years of Board service are
eligible to participate in a retirement plan. The plan provides for a monthly
retirement payment for the number of months that an eligible director served on
the Board while not an employe in the amount of one-twelfth of the annual
retainer in effect at the time of retirement.
During 1994 there were 11 meetings of the Board of Directors and 36
meetings of the various committees of the Board. All directors attended at least
90 percent of the meetings held during 1994.
The Board of Directors of Detroit Edison has established seven standing
committees (Audit, Energy Resources Planning, Executive, Finance, Nominating,
Nuclear Review, and Organization and Compensation), the members of which are
identified on the preceding pages. With the exception of the Executive
Committee, which has authority to act on most matters when the Board of
Directors is not in session, these committees act in an advisory capacity to the
full Board of Directors. All committees report to the full Board of Directors
with respect to matters considered at each committee meeting held.
The principal functions of the Audit Committee are to review the scope of
the annual audit and the annual audit report of the independent accountants,
recommend the firm of independent accountants to perform such audits, consider
non-audit functions proposed to be performed by the independent accountants,
review the functions performed by the internal audit staff, ascertain whether
the recommendations of auditors are satisfactorily implemented and recommend
such special studies or actions which the Committee deems desirable. During
1994, three meetings of the Audit Committee were held.
The principal functions of the Nominating Committee are to consider the
organizational structure of the Board of Directors and to assist the full Board
in the selection of the nominees for the Board of Directors. In the selection of
nominees for the Board of Directors, the Committee will consider any nominee
recommended by a shareholder if the recommendation is made in writing and
includes (i) the qualifications of the proposed nominee to serve on the Board of
Directors, (ii) the principal occupations and employment of the proposed nominee
during the past five years, (iii) each directorship currently held by the
proposed nominee and (iv) a statement from the proposed nominee that he or she
has consented to the submission of the recommendation. Recommendations should be
addressed to the Corporate Secretary of the Company at its principal business
address. Two meetings of the Nominating Committee were held during 1994.
The Organization and Compensation Committee is comprised of six outside
directors. The Committee reviews recommendations and approves, subject to full
Board agreement, the compensation of those executives who are at the level of
vice president or higher. The Committee also assists in the selection of
officers to assure that successors for each office are provided for and
selected. Seven meetings of the Organization and Compensation Committee were
held during 1994.
The Nuclear Review Committee provides non-management oversight and review
of Fermi 2, focusing on matters such as staffing, personnel selection, training
and retention, adequacy of funding, internal performance review and internal
safety review. During 1994, nineteen meetings of the Nuclear Review Committee
were held.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Policy. The Company's executive compensation program is designed to
align compensation with the achievement of corporate goals. To this end, the
Company has developed an overall compensation plan
10
<PAGE> 20
that rewards executives for the enhancement of shareholder and customer value
and supports performance-oriented behavior. The overall objectives of this
compensation strategy are to motivate key executives to achieve the corporate
goals, to link executive and shareholder interests, to attract and retain key
executives and to provide a compensation package that recognizes individual
contributions to corporate performance.
Organization and Compensation Committee. The Organization and Compensation
Committee ("Committee") of the Board of Directors is comprised of six outside
directors. The Committee reviews recommendations and approves, subject to Board
agreement, the compensation of those executives who are at the level of vice
president or higher, including the individuals whose compensation is detailed in
this Prospectus and Proxy Statement. The Committee has retained an independent
consultant to review the Company's executive compensation program.
The Committee reviews the Company's executive compensation program
annually. This review includes comparing the Company's executive compensation,
business performance and total shareholder return to several groups of electric
utilities. For purposes of comparing shareholder return, the Committee believes
that the appropriate group is the 48 Dow Jones Electric Utilities Companies
("DJEU") since shareholder return information is available for all of these
companies. However, the Committee believes the appropriate group for the purpose
of total compensation comparisons is not the utilities included in the Dow Jones
Electric Utility Index, but rather a group of utilities selected on the basis of
revenues generated, availability of compensation information, financial
performance and geographic area (the "Comparative Market"). The companies in
this group may change from year to year, based on the above factors. It is the
Committee's intent that total compensation be competitive with the Comparative
Market taking into account the Company's relative performance.
The key elements of the Company's executive compensation program for the
years 1992 and 1993 were base salary and the Shareholder Value Improvement Plan.
As discussed below, in 1994 a lump sum payment in lieu of a base salary
adjustment was made. The Committee's policies with respect to each of these
elements, including the basis for the compensation awarded to Mr. Lobbia, the
Company's chief executive officer, are discussed below.
Base Salaries and Lump Sum Awards. Base salaries for executive officers are
determined by evaluating the responsibilities of the position held and the
experience and performance of the individual. Reference is also made to the
competition for executive talent, including a comparison to comparable positions
at other utility companies in the Comparative Market.
Annual increases in each officer's base salary, if any, are determined by
considering the market position of the salary and by evaluating the performance
of the Company and of each executive officer. In reviewing Company performance,
no specific performance target is used, but rather, a subjective judgment is
used. In reviewing the individual performance of the officers at the level of
vice president or higher, the Committee takes into account Mr. Lobbia's
evaluation of such officers' performance. This evaluation is based in part on
the attainment of the officers' individual objectives established for the year.
Three of the executive officers' salaries were below and two were approximately
at the Competitive Market median.
In 1994, the Company awarded lump sum awards in lieu of base salary
adjustments for all employes, including the named executive officers, except for
Mr. Earley who joined the Company on March 1, 1994. The amounts shown in Column
(c) "Salary," include both the base salary and the lump sum award, if any.
With respect to the lump sum award granted to Mr. Lobbia in 1994, the
Committee took into account the factors discussed above. Mr. Lobbia's base
salary for 1993 was below the median of the Comparative Market. Mr. Lobbia's
base salary remained at $515,000 for 1994 and he received a lump sum award of
$25,000 for a total of $540,000 which was below the median of the Comparative
Market.
Shareholder Value Improvement Plan ("SVIP"). All non-union-represented
employes of the Company, including executive officers, are eligible for the
Company's SVIP. The measures for the SVIP are common for all participants. Each
measure is assigned a weight to indicate its relative importance. Each measure
has three levels, the attainment of which results in different levels of awards,
and a fourth level, which results in no payout for that measure. The maximum
award levels available to employes increase with increasing levels of
11
<PAGE> 21
responsibility to put a greater percentage of compensation at risk for those
more senior-level employes. In the case of Mr. Lobbia, the award which could be
earned ranged from 0 percent to 40 percent of base salary. The other executive
officers could earn awards ranging from 0 percent to 30 percent of base salary.
For 1994, the SVIP measures were changed to more directly measure improvement in
shareholder value. There are two categories of SVIP measures, the current-year
shareholder value measure and the customer value measure. The current-year
shareholder value measure is the total shareholder return (measured by stock
price and dividends) compared to the 48 DJEU companies. For an award to be made
under this measure, the total shareholder return must be positive and above the
median of the DJEU companies. If the total shareholder return is below the
median but at least 10 percent, an award is made at Level 3. This measure is
weighted at 50 percent.
The customer satisfaction measures in the aggregate are also weighted at 50
percent. These measures, which support long-term shareholder value, include
residential customer satisfaction (based on a survey by an outside entity);
industrial safety; operation, maintenance and capital expenditures; and the cost
of producing fossil generation and purchasing power for sale to our customers.
In aggregate, the performance in each of the five measures resulted in a 1994
SVIP award to Mr. Lobbia of $33,475, or 6.5 percent of his 1994 base salary, and
to Messrs. Earley, Garberding, Agosti and Gipson 1994 SVIP awards of $17,231,
$16,250, $10,750 and $10,500, respectively, or 5 percent of their 1994 base
salaries.
The awards earned in 1994 were paid in cash. For 1992 and 1993, one-half of
the total award for executive officers and other members of management was paid
in cash. Payment of the remaining one-half of the total was deferred. A record
of this amount is maintained in an unfunded, unsecured account on behalf of the
participant for three years. The amount appreciates or depreciates based on the
market value of the Company's Common Stock plus imputed dividends. The value of
the deferred award will be distributed as a cash payment after the end of three
years.
The amounts awarded under the 1992, 1993 and 1994 SVIP programs for the
five named officers are shown on the Summary Compensation Table in Column (d)
"Bonus."
ORGANIZATION AND COMPENSATION COMMITTEE:
Wendell W. Anderson, Jr., Chairman
Terence E. Adderley, Vice Chairman
David Bing
Eugene A. Miller
Dean E. Richardson
Alan E. Schwartz
12
<PAGE> 22
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION IN 1994 YEAR ANNUAL ($)
- ----------------------------------------------------- ---- COMPENSATION($) ALL OTHER
------------------- COMPENSATION(3)
(A) (B) SALARY BONUS(1) ---------------
------- -------- (I)
(C) (D)
<S> <C> <C> <C> <C>
John E. Lobbia....................................... 1994 540,000 33,475 15,452
Chairman of the Board and 1993 501,250 124,060 20,570
Chief Executive Officer 1992 451,250 75,584 18,491
Anthony F. Earley, Jr................................ 1994 397,989 17,231 4,523
President and Chief Operating Officer(2)
Larry G. Garberding.................................. 1994 333,000 16,250 12,062
Executive Vice President and 1993 322,500 74,174 15,129
Chief Financial Officer 1992 311,250 39,218 12,699
Frank E. Agosti...................................... 1994 225,501 10,750 40,329
Senior Vice President -- Power Supply 1993 212,250 50,940 41,687
1992 200,500 33,082 39,349
Douglas R. Gipson.................................... 1994 215,501 10,500 7,911
Senior Vice President -- Nuclear Generation 1993 202,513 34,800 6,991
1992 166,388 15,300 5,510
</TABLE>
- -------------------------
(1) Includes cash and deferred awards under SVIP for the years shown.
(2) Mr. Earley joined the Company on March 1, 1994.
(3) Includes matching contributions by the Company to the Savings & Investment
Plan. Under the plan, which is a qualified defined-contribution plan, the
Company makes matching contributions periodically on behalf of the
participants in the amount of 50 percent of each such participant's
contributions. These matching contributions are limited to 4 percent of a
participant's salary, up to $150,000 for 1994. Prior to April 1994, the
matching contributions were limited to 3 percent of a participant's salary.
For 1994, Messrs. Lobbia, Earley, Garberding, Agosti, and Gipson were
credited with Company-matching contributions of $4,502, $4,523, $5,187,
$5,478, and $5,511, respectively.
Also includes amounts matched by the Company pursuant to the Savings
Reparation Plan ("SRP") which provides that up to 10 percent of
compensation in excess of $150,000 may be deferred. Matching contributions
are limited to 4 percent of the salary in excess of this amount and the
value of the account will appreciate or depreciate based on the market
value of the Company's Common Stock plus imputed dividends. Prior to July
1994, the matching contributions were limited to 3 percent of a
participant's salary. Assets in the SRP are paid to participants upon
termination of employment. For 1994, Messrs. Lobbia, Garberding, Agosti and
Gipson were credited with matching SRP contributions of $10,950, $6,875,
$2,601 and $2,400, respectively. Mr. Earley did not qualify for this plan
in 1994.
Also includes deferred awards of $30,075, $31,845 and $32,250 for the years
1992, 1993 and 1994, respectively, for Mr. Agosti under the Key Employe
Deferred Compensation Plan ("KEDCP"), a defined-contribution plan, which is
one of two supplemental retirement plans, for specified employes. Under the
terms of the KEDCP, Mr. Agosti is eligible to receive an annual deferred
compensation award that is not in excess of 1 percent of regular
compensation (including employe contributions to the Savings & Investment
Plan and the SRP, but not including incentive awards). KEDCP awards are
payable for 15 years after retirement and reflect the 1992, 1993 and 1994
awards of 1 percent for each of the 15 years subsequent to a participant's
retirement.
13
<PAGE> 23
PENSION PLANS TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF BENEFIT SERVICE
FINAL -------------------------------------------------------------------------------------------------------
COMPENSATION 5 10 15 20 25 30 35 40 45
- ----------- ------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$200,000.. $14,000 $ 80,000 $ 90,000 $100,000 $110,000 $120,000 $125,000 $130,000 $135,000
275,000.. 19,250 123,750 137,500 151,250 165,000 171,875 178,750 185,625 192,500
325,000.. 22,750 146,250 162,500 178,750 195,000 203,125 211,250 219,375 227,500
350,000.. 24,500 157,500 175,000 192,500 210,000 218,750 227,500 236,250 245,000
425,000.. 29,750 191,250 212,500 233,750 255,000 265,625 276,250 286,875 297,500
500,000.. 35,000 225,000 250,000 275,000 300,000 312,500 325,000 337,500 350,000
550,000.. 38,500 247,500 275,000 302,500 330,000 343,750 357,500 371,250 385,000
600,000.. 42,000 270,000 300,000 330,000 360,000 375,000 390,000 405,000 420,000
650,000.. 45,500 292,500 325,000 357,500 390,000 406,250 422,500 438,750 455,000
</TABLE>
- -------------------------
Note: The above includes benefits payable directly by the Company when total
annual benefits exceed the benefits payable under the Retirement Plan and
covered compensation exceeds $150,000. The amounts displayed above for
five years of benefit service do not include a benefit from the Management
Supplemental Benefit Plan since the plan has a 10-year service
requirement.
Compensation used to calculate the benefits in the Pension Plans Table
utilized only base salaries included in the "Salary" column of the Summary
Compensation Table. The base salaries for Messrs. Lobbia, Earley, Garberding,
Agosti and Gipson were $515,000, $344,615, $325,000, $215,001 and $210,001,
respectively. The plans require certain years of service before benefits under
the plans vest with the individual. Under all plans, Messrs. Lobbia, Earley,
Garberding, Agosti, and Gipson have 31, 1, 5, 37 and 7 actual years of service,
respectively. Messrs. Earley, Garberding and Gipson have 15, 25 and 14 years,
respectively, of additional awarded service for the purpose of calculating
benefits under the Management Supplemental Benefit Plan (MSBP). Mr. Earley's
eligibility for the additional awarded service is subject to his meeting the
eligibility requirements of the MSBP. Mr. Garberding's eligibility for the
additional awarded service is subject to his remaining with the Company a
specified number of years. The benefits are calculated based upon age, years of
service (actual and awarded), final average compensation, management position at
retirement and payment option selected. Such benefits are not subject to any
deductions for Social Security benefits or other offset amounts.
In 1995 Detroit Edison intends to establish irrevocable trusts to provide a
source of funds to assist the Company in meeting its liabilities under certain
of the directors' and executives' compensation plans described above. Detroit
Edison will make contributions to the trusts from time to time in amounts
determined in accordance with the provisions of the trusts to be sufficient to
pay when due benefits to participants under such plans. Notwithstanding the
trusts, these plans will not be qualified or "funded" and amounts on deposit in
the trusts will be subject to the claims of Detroit Edison's general creditors
under the applicable law.
EMPLOYMENT CONTRACTS
The Company has employment contracts with Messrs. Earley and Garberding.
Mr. Earley received a lump sum upon joining the Company, which is included in
Column (c) "Salary" in the Compensation Table. Under certain circumstances, if
Mr. Earley leaves the Company, he would be allowed a six-month paid leave of
absence and would receive a lump sum equal to his annual salary. The contract
also provides retirement benefits calculated based upon the Retirement Plan as
if he had become vested under the Retirement Plan. Mr. Garberding's contract
provides certain benefits for retiree health and life insurance and dependent
life insurance available to all employes who satisfy certain length of service
requirements, which length of service requirements Mr. Garberding cannot achieve
due to mandatory retirement.
14
<PAGE> 24
PERFORMANCE GRAPH*
<TABLE>
<CAPTION>
DOW JONES 48
MEASUREMENT PERIOD DETROIT ELECTRIC
(FISCAL YEAR COVERED) EDISON UTILITIES S&P 500
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 116.93 102.01 98.90
1991 153.01 132.22 126.42
1992 153.07 141.28 136.05
1993 148.66 157.77 149.76
1994 142.48 138.34 151.74
</TABLE>
* Assumes $100 invested on December 29, 1989, in Detroit Edison Common Stock,
the S&P 500 Index, and the Dow Jones Electric Utilities Index; also assumes
the reinvestment of dividends.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994 the Company engaged in banking business with Comerica Bank, of
which Eugene A. Miller is Chairman and Chief Executive Officer.
The law firm of Honigman Miller Schwartz and Cohn, of which Alan E.
Schwartz is a Partner, was retained by the Company during 1994 for professional
services.
Kelly Services, Inc., of Troy, Michigan, of which Terence E. Adderly is
President and Chief Executive Officer, provided services to the Company in the
amount of $1.1 million in 1994.
15
<PAGE> 25
ITEM 2. CORPORATE RESTRUCTURING PROPOSAL
INTRODUCTION
The management and the Board of Directors of Detroit Edison unanimously
believe it is in the best interest of Detroit Edison and its shareholders to
change the corporate structure of Detroit Edison so that it will become a
separate subsidiary of a new parent holding company, with the present holders of
Detroit Edison Common Stock becoming the holders of the Common Stock of the new
parent.
To carry out such restructuring, Detroit Edison has caused to be
incorporated a new Michigan corporation, Holding Company, which has a nominal
amount of stock outstanding and no present business or properties of its own.
All of the currently outstanding shares of Holding Company Common Stock are
owned by Detroit Edison.
Detroit Edison and Holding Company have approved the Exchange Agreement
under which, subject to shareholder and regulatory approvals and the
satisfaction or waiver of certain conditions, Detroit Edison will become a
subsidiary of Holding Company through the exchange of the outstanding shares of
Detroit Edison Common Stock on a share-for-share basis for Holding Company
Common Stock. A copy of the Exchange Agreement, in substantially the form in
which it will be executed upon receipt of all necessary approvals, is attached
to this Prospectus and Proxy Statement as Exhibit A and is incorporated herein
by reference.
It is intended that the corporate restructuring will not have any adverse
Federal income tax consequences to the holders of Detroit Edison Common Stock or
Detroit Edison Preferred Stock. See "Certain Federal Income Tax Consequences."
VOTE REQUIRED
Under Michigan law, the affirmative votes of the holders of a majority of
the outstanding shares of Detroit Edison Common Stock are required to approve
the Exchange Agreement. Because the requirement for this proposal is a majority
of outstanding shares, broker non-votes and abstentions will have the effect of
a "no" vote. Holders of Detroit Edison Preferred Stock are entitled to receive
notice of the proposed Exchange Agreement, but are not entitled to vote on the
matter. No Detroit Edison Preference Stock is outstanding.
REASONS FOR THE CORPORATE RESTRUCTURING
General. The primary purpose of Detroit Edison's proposed restructuring
into a holding company system is to provide greater financial flexibility to
develop and operate new businesses in an increasingly competitive business
environment. It will also offer a mechanism for better defining and separating
the utility and non-utility businesses and for protecting the utility business
and utility customers from the risk involved in non-utility ventures.
Flexibility. As described under "Transfer of Detroit Edison Assets to
Holding Company," the current non-utility subsidiaries of Detroit Edison will be
transferred to and become subsidiaries of Holding Company after the
restructuring is completed. In addition, Holding Company may establish
additional subsidiaries to engage in new non-utility businesses. Management
expects that non-utility activities will continue to be energy-related in
markets in which management is familiar and in which it has expertise.
Initially, it is expected that the landfill gas recovery and energy-services
businesses conducted through existing Detroit Edison subsidiaries will be
expanded. Under the holding company structure, the non-utility subsidiaries of
Holding Company would have the flexibility to use various financing techniques
suitable for non-utility businesses, without any impact on the capital structure
or credit of Detroit Edison. Such non-utility businesses could pursue business
opportunities which potentially could enhance the financial strength and
operating results of Holding Company.
Financing of Detroit Edison's activities is subject to approval of the MPSC
and, in certain circumstances, the FERC. Financing of the activities of Holding
Company and its non-utility subsidiaries will not require MPSC or FERC approval,
which will increase financing flexibility. In addition, the capital structure of
each non-utility subsidiary may be appropriately tailored to suit its individual
business.
16
<PAGE> 26
Separation. The Detroit Edison holding company system will clearly separate
its electric utility business from the non-utility businesses of other Holding
Company subsidiaries. Operating management of Detroit Edison will continue to
maintain its focus on meeting its public utility responsibilities and meeting
its mission "to increase shareholder value by providing superior customer
value." The separation of utility and non-utility activities will (i) facilitate
the allocation of expenses, (ii) protect Detroit Edison from any adverse effects
of non-utility operations, (iii) facilitate the regulation of the Detroit Edison
utility operations by the MPSC, FERC and NRC and (iv) permit the capital
structure to be managed efficiently.
Competition. The demand for electricity provided by Detroit Edison and
other utility companies is becoming increasingly affected adversely by
competition from non-utility entities which seek to provide energy services to
users of large quantities of electricity, such as educational, health care and
governmental institutions, as well as industrial, commercial and wholesale
customers. Consequently, Detroit Edison proposes to create a holding company
which could create subsidiaries to compete with non-utility businesses,
including unregulated subsidiaries of other public utility holding companies,
and to provide unregulated energy and other services and products to Detroit
Edison customers and others. Some of these activities could reduce energy costs
for large users of electricity and thereby make it less attractive for them to
obtain electricity from other sources, or to switch from using electricity to
natural gas or another form of energy.
Existing Utility Business. The Detroit Edison electric utility business is
expected to constitute the predominant part of Holding Company's earning power
for the foreseeable future. Detroit Edison operations will continue to be
subject to the jurisdiction of the MPSC, FERC and NRC; operations will be
conducted with the same assets and the same management. The management and Board
of Directors of Detroit Edison believe that the restructuring will have no
adverse effect on Detroit Edison, its customers or the holders of Detroit Edison
Preferred Stock, Detroit Edison first mortgage bonds and other debt securities,
or Detroit Edison Common Stock, which will be exchanged for Holding Company
Common Stock in the Exchange.
CERTAIN CONSIDERATIONS
Detroit Edison currently has a number of direct or indirect non-utility
subsidiaries engaged in real estate development, engineering services, energy
services and production, landfill gas production and other energy-related
services. It is anticipated that Detroit Edison will transfer these
subsidiaries, which are not regulated by state or Federal agencies that regulate
public utilities, to Holding Company sometime after the Exchange. Detroit Edison
currently intends to retain certain other subsidiaries, including a subsidiary
which operates a coal transshipment facility.
It is the current intention of Holding Company for the non-utility
subsidiaries to engage only in energy-related businesses which will not be
regulated by state or federal agencies which regulate public utilities. Such
businesses may encounter competitive and other factors not previously
experienced by Detroit Edison, and may have different, and perhaps greater,
investment risks than those involved in the regulated electric utility business
of Detroit Edison. There can be no assurance that such businesses will be
successful or, if unsuccessful, that they will not have a direct or indirect
adverse effect on Holding Company. Any losses incurred by such businesses will
not be recoverable in utility rates of Detroit Edison.
The unregulated businesses of the non-utility subsidiaries are expected for
the foreseeable future to comprise an immaterial amount of the consolidated
assets, and to provide an immaterial amount of the consolidated revenues of
Holding Company. Detroit Edison currently has approximately $11 billion of
assets and more than $3.5 billion of annual revenues.
Holding Company will obtain funds to invest in non-utility subsidiaries
from dividends Holding Company receives on its Detroit Edison Common Stock,
borrowings by Holding Company or the non-utility subsidiaries and any dividends
Holding Company may in the future receive from any earnings of non-utility
subsidiaries, although there can be no assurance that non-utility subsidiaries
will have any earnings or pay any dividends to Holding Company in the
foreseeable future.
17
<PAGE> 27
EXCHANGE AGREEMENT
The Exchange Agreement has been unanimously approved by the Boards of
Directors of Detroit Edison and Holding Company subject to its approval by the
holders of the outstanding shares of Detroit Edison Common Stock as described
under "Vote Required." In the Exchange,
(1) each share of Detroit Edison Common Stock outstanding immediately
prior to the effective time of the Exchange will be exchanged for one new
share of Holding Company Common Stock;
(2) each outstanding share of Detroit Edison Preferred Stock will
remain outstanding and unchanged (see "Treatment of Preferred and
Preference Stock");
(3) Holding Company will become the owner and holder of each share of
Detroit Edison Common Stock outstanding immediately prior to the effective
time of the Exchange; and
(4) the shares of Holding Company Common Stock presently held by
Detroit Edison will be cancelled.
As a result, Detroit Edison will become a subsidiary of Holding Company, and all
of the Holding Company Common Stock outstanding immediately after the Exchange
will be owned by the holders of Detroit Edison Common Stock outstanding
immediately prior to the Exchange.
The Detroit Edison Preferred Stock, general and refunding mortgage bonds,
and other debt of Detroit Edison will be unchanged and will continue to be
outstanding securities and obligations of Detroit Edison after the Exchange. The
Detroit Edison general and refunding mortgage bonds will continue to be secured
by a mortgage lien on all properties of Detroit Edison which are currently
subject to such lien. The Detroit Edison Restated Articles of Incorporation (the
"Detroit Edison Articles") as then in effect will not be changed as a result of
the Exchange.
REQUIRED REGULATORY APPROVALS
Federal Power Act. The FERC has held that the transfer of common stock of a
public utility company, such as Detroit Edison, from its existing shareholders
to a holding company in a transaction such as the Exchange constitutes a
transfer of the "ownership and control" of the facilities of such utility which
is subject to FERC jurisdiction under the FPA, and is thus a "disposition of
facilities" subject to FERC review and approval under Section 203 of the FPA.
Detroit Edison has applied for such approval.
Atomic Energy Act. A provision in the Atomic Energy Act requires NRC
consent for the transfer of control of NRC licenses. The NRC staff has in the
past asserted that this provision applies to the creation of a holding company
by an NRC-licensed utility company in a transaction such as the Exchange.
Detroit Edison holds NRC licenses, including an operating license for its
nuclear generating station, and will apply for NRC approval under the Atomic
Energy Act for the transfer of control of such licenses in the Exchange.
Public Utility Holding Company Act of 1935. Detroit Edison is currently not
subject to the Holding Company Act because it is not a "public utility holding
company" as defined in that Act. As a result of the Exchange, Holding Company
will become such a public utility holding company under the Holding Company Act.
Holding Company, however, expects to be exempt from all provisions of the
Holding Company Act (except with respect to any future acquisitions of voting
securities of other electric or gas utility companies), pursuant to the
exemption provided by Section 3(a)(1) thereof. The basis for such exemption is
that Holding Company and Detroit Edison are each organized and carry on their
business substantially in Michigan, and that neither Detroit Edison nor Holding
Company will derive any material part of its income from a utility company
organized outside of Michigan. Holding Company will effect such Section 3(a)(1)
exemption pursuant to annual filings made pursuant to SEC Regulation 250.2 under
the Holding Company Act. See "Regulation of Holding Company."
Michigan Public Utilities Acts. No prior MPSC approval of the Exchange is
required under the Michigan Electric Transmission Act or the Michigan Public
Utilities Securities Act. The MPSC will continue to have jurisdiction over
Detroit Edison's rates, charges and conditions of service.
18
<PAGE> 28
In February 1995, the MPSC announced its initiation of a thorough review of
its powers and jurisdiction, and current and future industry structure, to be
able to recommend statutory changes to the Michigan legislature, including
consideration of an overall recodification of the statutes governing energy
provision and utility regulation. This review would be in light of change in the
electric power and natural gas industries. The MPSC indicated it had no specific
time frame for completion of the review. Detroit Edison cannot predict what
suggestions for legislative changes may result from the review, or whether it
may result in regulation of the proposed corporate restructuring or the Exchange
or additional regulation of the relationship between Holding Company and Detroit
Edison.
Conditions. The Exchange is conditioned on the receipt of orders
satisfactory to Detroit Edison and Holding Company from the FERC and the NRC in
response to the applications described above and receipt of any other necessary
regulatory approvals.
TRANSFER OF DETROIT EDISON ASSETS TO HOLDING COMPANY
Detroit Edison intends to transfer to Holding Company, after the Exchange,
the stock of the non-utility subsidiaries as a dividend on the Detroit Edison
Common Stock held by Holding Company.
Except for dividends or other distributions with respect to Detroit Edison
Common Stock held by Holding Company, it is expected that Detroit Edison will
not transfer at less than fair consideration any of its assets to Holding
Company or any Holding Company subsidiaries. In general, under current law,
transactions between Detroit Edison and any of its affiliates, including Holding
Company, do not require the prior approval of the MPSC. Detroit Edison will
develop accounting and other procedures to the extent determined to be necessary
or appropriate to insure separation of utility and non-utility businesses.
DIVIDEND POLICY
Holding Company does not now, nor will it after the Exchange, conduct
directly any business operations from which it will derive any revenues. Holding
Company plans to obtain funds for its own operations from dividends paid to
Holding Company on the stock of its subsidiaries, and from sales of securities
or debt incurred by Holding Company. Dividends on Holding Company Common Stock
will initially depend upon the earnings, financial condition and capital
requirements of Detroit Edison and its ability to pay dividends on the Detroit
Edison Common Stock owned by Holding Company. In addition, payment of dividends
on the Detroit Edison Common Stock will continue to be subject to the rights of
holders of Detroit Edison Preferred Stock and Detroit Edison Preference Stock
with respect to dividends. The Detroit Edison Articles and mortgage indenture
contain covenants which could, in the future, affect Detroit Edison's ability to
pay cash dividends on, or acquire, Detroit Edison Common Stock. Such covenants
will not be altered by the restructuring. As of December 31, 1994, none of the
covenants operated to restrict Detroit Edison's Common Stock equity for payment
of dividends, distributions, purchases or other acquisitions in respect of
Detroit Edison Common Stock.
It is currently contemplated that, subject to the rights, if any, of
holders, if any, of the authorized Preferred Stock of Holding Company, Holding
Company will pay quarterly dividends on Holding Company Common Stock at least
equal to the rate, and on approximately the same schedule as, dividends have
most recently been declared on Detroit Edison Common Stock. The quarterly
dividend most recently declared by the Detroit Edison Board of Directors on
Detroit Edison Common Stock was $0.515 per share payable April 15, 1995, to
holders of record of such stock on March 22, 1995. The amount of dividends on
Detroit Edison Common Stock following the Exchange is expected to be greater
than the amount of dividends on Holding Company Common Stock to the extent
Holding Company needs funds to pay its expenses and to invest in its
subsidiaries.
TREATMENT OF PREFERRED AND PREFERENCE STOCK
Except as described under this caption, the Exchange and restructuring will
not result in any change in the outstanding shares of Detroit Edison Preferred
Stock or Detroit Edison Preference Stock. No Preference Stock is outstanding.
The decision to have Detroit Edison Preferred Stock continue as securities of
Detroit
19
<PAGE> 29
Edison is based upon, among other factors, a desire not to alter or potentially
alter the nature of the investment represented by such stock, as well as the
need of Detroit Edison not to foreclose future issuances of Preferred Stock and
Preference Stock to help meet its capital requirements. The electric utility
operations of Detroit Edison will initially constitute and are expected to
continue to constitute, the predominant part of the consolidated assets and
earning power of Holding Company. Accordingly, it is believed that the
investment ratings of the Detroit Edison Preferred Stock will not be affected by
the Exchange, and that such shares will retain their qualification for legal
investment for certain investors by remaining as capital stock of Detroit
Edison. Detroit Edison Preferred Stock will continue to rank senior to Detroit
Edison Common Stock as to dividends and as to the distribution of Detroit Edison
assets upon any liquidation.
The restructuring is not expected to affect adversely the holders of
Detroit Edison Preferred Stock. However, the assets or earnings of the Holding
Company subsidiaries (other than Detroit Edison) will not be of any potential
benefit to the holders of such stock if the restructuring is consummated. See
"Transfer of Detroit Edison Assets to Holding Company."
After the Exchange, Detroit Edison will continue to be subject to the
informational requirements of the 1934 Act. However, holders of Detroit Edison
Preferred Stock and Detroit Edison Preference Stock, subject to requirements of
any securities exchange on which such stock is listed, will not be entitled to
receive annual reports, proxy statements or information statements except in
those limited circumstances in which such shares are entitled to vote on matters
presented to shareholders under the Detroit Edison Articles and the Michigan
Business Corporation Act. Holding Company will hold sufficient voting power to
approve actions required to be taken by the combined vote of Detroit Edison
Common Stock, Preferred Stock and Preference Stock.
As of February 24, 1995, there were outstanding 55,378 shares of 5 1/2%
Preferred Stock which, as of such date, were convertible at the option of their
holders into an aggregate of 311,287 shares of Detroit Edison Common Stock.
Under the Detroit Edison Articles, the Exchange would not result in the 5 1/2%
Preferred Stock being convertible into Holding Company Common Stock and Detroit
Edison has determined, for the reasons stated in the first paragraph under this
caption, that it would not be appropriate to provide for conversion into Holding
Company Common Stock.
The 5 1/2% Preferred Stock may be called for optional redemption at any
time upon 30-day notice as provided in the Detroit Edison Articles at a price of
$100 per share plus an amount equal to dividends accrued, if any, to the date of
redemption. The last reported trading price per share of the 5 1/2% Preferred
Stock, as reported on the New York Stock Exchange on February 24, 1995, was
$147.
Detroit Edison currently intends to, but will not be required to, redeem
all outstanding 5 1/2% Preferred Stock prior to the effective time of the
Exchange. If the restructuring plan is abandoned or cannot be consummated for
any reason, Detroit Edison intends not to redeem the 5 1/2% Preferred Stock.
Under the Detroit Edison Articles, Detroit Edison is required to give holders of
the 5 1/2% Preferred Stock notice of the Exchange at least 20 days prior to the
effective time of the Exchange.
In the event the 5 1/2% Preferred Stock is not redeemed prior to the
effective time of the Exchange it will, as described above, continue to be
convertible into shares of Detroit Edison Common Stock after the Exchange.
Immediately after the Exchange, Holding Company will own all the then
outstanding shares of Detroit Edison Common Stock. Following the Exchange the
Detroit Edison Common Stock will no longer be listed or traded on any stock
exchange and there will be no other public market for any shares of Detroit
Edison Common Stock into which the 5 1/2% Preferred Stock would be converted
after the Exchange.
The minority interest in Detroit Edison Common Stock which would be created
by the conversion of shares of the 5 1/2% Preferred Stock into shares of Detroit
Edison Common Stock after the effective time of the Exchange, would require
Detroit Edison to pay to the holders of such shares of Detroit Edison Common
Stock dividends at the same times and in the same amounts as Detroit Edison pays
dividends to Holding Company on its shares of Detroit Edison Common Stock. The
amount of dividends on Detroit Edison Common Stock following the Exchange is
expected to be greater than the amount of dividends on Holding Company Common
Stock to the extent Holding Company needs funds to pay its expenses and to
invest in its subsidiaries.
20
<PAGE> 30
Shares of Detroit Edison Common Stock issued upon conversion of shares of
the 5 1/2% Preferred Stock prior to the effective time of the Exchange will be
exchanged in the Exchange for shares of Holding Company Common Stock, which will
be listed and traded on the New York and Chicago stock exchanges.
AMENDMENT OR TERMINATION
By mutual consent of their respective Boards of Directors, Detroit Edison
and Holding Company may amend any of the terms of the Exchange Agreement at any
time before or after its approval by their respective shareholders, but not
after the effective time of the Exchange specified in the Certificate of Share
Exchange (the "Certificate") to be filed with the Corporation and Securities
Bureau of the Michigan Department of Commerce (the "Bureau"), but no such
amendment may, in the sole judgment of the Board of Directors of Detroit Edison,
materially and adversely affect the rights of Detroit Edison shareholders.
The Exchange Agreement may be terminated and the Exchange abandoned at any
time before or after the shareholders of Detroit Edison and Holding Company have
approved the Exchange Agreement, but not after the effective time, if the Board
of Directors of Detroit Edison determines in its sole judgment that consummation
of the Exchange would, for any reason, be inadvisable or not in the best
interests of Detroit Edison or its shareholders.
STATUTORY APPRAISAL RIGHTS INAPPLICABLE
Pursuant to Sections 703a and 762 of the Michigan Business Corporation Act
("Michigan Business Corporation Act"), a shareholder is generally granted the
right to dissent from a share exchange and receive dissenters' rights of
appraisal if shareholder approval is required by statute for the share exchange,
and such shareholder is entitled to vote on the share exchange. Section 762 of
the Michigan Business Corporation Act, however, provides that dissenters'
appraisal rights do not apply to holders of shares which, as of the applicable
record date, are listed on a national securities exchange or held of record by
at least 2,000 persons. Because the Detroit Edison Common Stock is listed on the
New York and Chicago stock exchanges, holders of Detroit Edison Common Stock are
not entitled to dissent from approval of the Exchange Agreement or to receive
dissenters' appraisal rights in connection with the Exchange.
EFFECTIVENESS OF THE CORPORATE RESTRUCTURING
After the Detroit Edison shareholders have approved the Exchange Agreement,
satisfactory orders of the FERC and the NRC have been received, and all other
conditions to the Exchange (including receipt of any other necessary regulatory
approval) have been satisfied or waived, Detroit Edison and Holding Company will
execute the Exchange Agreement and thereafter file the Certificate with the
Bureau. The Exchange will thereafter become effective on the date that the
Certificate is filed or on a later date which may be specified therein. Detroit
Edison cannot predict when all regulatory approvals will be in place, but
expects that the Exchange will become effective in 1995.
Immediately prior to the effective time, Detroit Edison as sole shareholder
of Holding Company will (i) adopt a by-law similar to that of Detroit Edison
providing for a classified board of directors serving staggered terms, (ii)
elect as directors of Holding Company all then incumbent directors of Detroit
Edison not already serving as directors of Holding Company and (iii) restate the
Articles of Incorporation of Holding Company (the "Holding Company Articles")
including providing for a change in the corporate name of Holding Company. The
permanent name of Holding Company has not been selected.
EXCHANGE OF STOCK CERTIFICATES
If the Exchange is effected, it will not be necessary for holders of
Detroit Edison Common Stock to physically exchange their existing stock
certificates for certificates for Holding Company Common Stock. The certificates
which represent shares of Detroit Edison Common Stock outstanding immediately
prior to the effective time of the Exchange will automatically represent shares
of Holding Company Common Stock immediately after the effective time of the
Exchange. New certificates bearing the name of Holding Company
21
<PAGE> 31
will be issued after the Exchange, if and as, certificates representing shares
of Detroit Edison Common Stock outstanding immediately prior to the Exchange are
presented for exchange or transfer.
DIVIDEND REINVESTMENT PLAN
Detroit Edison Common Stock held in Detroit Edison's DRIP (including
uncertificated whole and fractional shares) will be exchanged automatically for
shares of Holding Company Common Stock at the effective time of the Exchange.
Holding Company will establish a dividend reinvestment plan providing for
participation and other features at least as favorable as the Detroit Edison
DRIP. All participants in the Detroit Edison DRIP at the effective time of the
Exchange will automatically become participants in the Holding Company dividend
reinvestment plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Exchange Agreement provides that the proposed restructuring may not
become effective unless Detroit Edison receives either a ruling from the
Internal Revenue Service or an opinion of counsel, satisfactory to the Board of
Directors, with respect to the Federal income tax consequences of the Exchange.
Detroit Edison does not expect to apply for such a ruling because it has
received an opinion from its counsel, Jones, Day, Reavis & Pogue, regarding
certain Federal income tax consequences of the Exchange, to the effect that,
based on certain assumptions and factual representations:
(1) no gain or loss will be recognized by a holder of Detroit Edison
Common Stock upon the exchange solely of such holder's Detroit Edison
Common Stock solely for Holding Company Common Stock;
(2) no income, gain or loss will be recognized on account of the
Exchange by holders of Detroit Edison Preferred Stock with respect to their
Detroit Edison Preferred Stock so long as such holders do not sell or
exchange (including as a result of a redemption) their Detroit Edison
Preferred Stock in a transaction to which Detroit Edison or an affiliate of
Detroit Edison is a party and which is treated as part of the Exchange;
(3) the basis of Holding Company Common Stock received by a former
holder of Detroit Edison Common Stock in an exchange described in (1) above
in the aggregate will equal the basis of such former holder's Detroit
Edison Common Stock exchanged therefor, and the holding period for such
Holding Company Common Stock will include the holding period for the
Detroit Edison Common Stock exchanged therefor to the extent that such
Detroit Edison Common Stock was held as a capital asset at the effective
time of the Exchange;
(4) no gain or loss will be recognized by Holding Company or Detroit
Edison on account of the Exchange or the issuance of Holding Company Common
Stock to the former holders of Detroit Edison Common Stock in the Exchange;
and
(5) the consummation of the Exchange will not result in the
termination of the existence of the affiliated group of corporations of
which Detroit Edison has been the common parent, and Detroit Edison will be
included in such affiliated group of corporations of which Holding Company
will become the new common parent.
The Federal income tax consequences of the Exchange described above may not
apply to a holder of Detroit Edison Common Stock who also owns Detroit Edison
Preferred Stock and who sells or exchanges (including as a result of a
redemption) any of such holder's Detroit Edison Preferred Stock in a transaction
to which Detroit Edison or an affiliate is a party and which is treated as part
of the Exchange. For example, if a holder of both Detroit Edison Common Stock
and Detroit Edison Preferred Stock realized a loss on such a sale or exchange of
Detroit Edison Preferred Stock, and the sale or exchange of Detroit Edison
Preferred Stock and the Exchange were regarded as related steps in an integrated
transaction, the holder might not be able to recognize the loss currently for
Federal income tax purposes. Persons who are holders of both Detroit Edison
Common Stock and Detroit Edison Preferred Stock should, therefore, consult with
their own tax advisors as to the Federal income tax consequences to them of the
Exchange and any sale or exchange of their
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Detroit Edison Preferred Stock. See "Treatment of Preferred and Preference
Stock" regarding the possible redemption by Detroit Edison of the 5 1/2%
Preferred Stock.
The foregoing discussion does not cover the tax consequences of the
Exchange under state, local or foreign income or other tax laws. Shareholders of
Detroit Edison are urged to consult with their own tax advisors with respect to
the effects of such laws.
LISTING OF HOLDING COMPANY COMMON STOCK
Holding Company will apply to have its Common Stock listed on the New York
and Chicago stock exchanges. It is expected that such listings will become
effective at the effective time of the Exchange, subject to the rules of the New
York and Chicago stock exchanges. Information concerning the stock exchange
ticker symbol and quotation listings in newspapers will be announced to
shareholders when available. Holding Company reserves the right to terminate its
listing on any exchange in the future, upon notice to shareholders, in
compliance with its listing agreements.
REGULATION OF HOLDING COMPANY
Following the Exchange, Holding Company, as the owner of the Detroit Edison
Common Stock, will be a holding company under the Holding Company Act. However,
Holding Company will be exempt from all provisions of the Holding Company Act
except Section 9(a)(2) thereof, pursuant to annual filings of the statement
prescribed for such exemption by SEC Regulation 250.2 of the Holding Company
Act, as described under "Required Regulatory Approvals-Public Utility Holding
Company Act of 1935." Section 9(a)(2) of the Holding Company Act requires prior
SEC approval of the direct or indirect acquisition by Holding Company of 5
percent or more of the voting securities of any other electric or gas utility
company. There are also limits on the extent to which Holding Company and its
non-utility subsidiaries can enter into businesses which are not "functionally
related" to the electric utility business without raising questions about
Holding Company's exempt status. SEC policies regarding the scope of permissible
non-utility activities of a public utility holding company are subject to
change, but guidelines established in prior decisions of the SEC would require
Holding Company to remain engaged primarily and predominantly in the electric
utility business and to limit the size of its activities outside of such
business relative to Holding Company as a whole.
On November 2, 1994, the SEC issued a release requesting comments on
possible revision of regulation of public utility holding companies under the
Holding Company Act. Various parties have suggested significant revisions to, or
repeal of, the Holding Company Act. Detroit Edison cannot predict whether
Congress will take any action to significantly modify or repeal the Holding
Company Act or whether the SEC will take any action to significantly revise its
rules promulgated under the Holding Company Act.
Holding Company has no present intention of becoming a registered holding
company subject to regulation by the SEC under the Holding Company Act.
See "Required Regulatory Approvals -- Michigan Public Utilities Act."
MANAGEMENT
The directors of Detroit Edison will also become the directors of Holding
Company prior to the effective time of the Exchange, and they will serve as the
directors of both companies for the foreseeable future, subject to re-nomination
and re-election by shareholders. The division of directors into classes, with
varying numbers of directors being elected for three-year terms, will also apply
to Holding Company, and the directors of each company will be in the same class
and for corresponding terms of office. The approval by Detroit Edison Common
Stock shareholders of the Exchange will be considered also to constitute
ratification of the election of such persons as the directors of Holding
Company. Until the Exchange becomes effective, Mr. Lobbia, Mr. Earley and Mr.
Garberding will be the only directors of Holding Company.
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The current executive officers of Holding Company listed below are also
executive officers of Detroit Edison.
<TABLE>
<S> <C> <C>
Chairman of the Board and Chief Executive
John E. Lobbia -- Officer
Anthony F. Earley, Jr. -- President and Chief Operating Officer
Executive Vice President and Chief Financial
Larry G. Garberding -- Officer
Leslie L. Loomans -- Vice President and Treasurer
Christopher C. Nern -- Vice President and General Counsel
</TABLE>
See "Item 1. Election of Directors" for information regarding Messrs.
Lobbia and Earley. The 1993 10-K contains information regarding the business
experience of the other executive officers.
HOLDING COMPANY CAPITAL STOCK
Authorized Stock. The authorized capital stock of Holding Company consists
of 400,000,000 shares of Common Stock, without par value, and 5,000,000 shares
of Preferred Stock, without par value ("Holding Company Preferred Stock"), the
provisions of which are included in the form of Holding Company Articles
attached to this Prospectus and Proxy Statement as Exhibit B. Reference is made
to Exhibit B for the complete terms of the Holding Company Articles. See
"Comparative Shareholders' Rights" below.
Common Stock. Holders of Holding Company Common Stock are entitled to
receive (a) dividends when, as and if declared by its Board of Directors, and
(b) all of the assets of Holding Company available for distribution on a
pro-rata basis upon its liquidation, dissolution or winding up, after the
payment of all debts and other obligations and subject in each case to the
preferential rights, if any, of the holders of Holding Company Preferred Stock.
No holder of Holding Company Common Stock has any preemptive or preferential
right to subscribe for any additional issue of Holding Company stock of any
class. The Holding Company Common Stock issued in the Exchange will be validly
issued, fully paid and nonassessable.
Preferred Stock. The authorized Holding Company Preferred Stock may be
issued in one or more series, from time to time as the Board of Directors of
Holding Company may determine. Each series of Holding Company Preferred Stock
will bear a distinctive designation, will be issued in such number of shares and
will have such relative rights, preferences and limitations and such conversion
and redemption terms as are prescribed by a resolution of the Board of
Directors. Such resolutions, when filed, will constitute amendments to the
Holding Company Articles to the extent provided by law. No holder of Holding
Company Preferred Stock will have any preemptive or preferential right to
subscribe for any additional issue of Holding Company stock of any class.
COMPARATIVE SHAREHOLDERS' RIGHTS
Detroit Edison and Holding Company are both Michigan corporations. When the
Exchange becomes effective, holders of Detroit Edison Common Stock will become
holders of Holding Company Common Stock, and their rights will be governed by
the Holding Company Articles and By-Laws instead of the Detroit Edison Articles
and By-Laws. The Holding Company Articles have been prepared in accordance with
the Michigan Business Corporation Act and give the Holding Company broad
corporate powers to engage in any lawful activity for which a corporation may be
formed under the laws of the State of Michigan. The Holding Company Articles and
By-Laws and Detroit Edison Articles and By-Laws are substantially similar except
as described below. A copy of Holding Company Articles, substantially in the
form to be in effect immediately prior to the effective time of the Exchange, is
attached as Exhibit B to this Prospectus and Proxy Statement, and the Holding
Company By-Laws have been filed as an exhibit to the Registration Statement and
are incorporated herein by reference. The Detroit Edison Articles and By-Laws
have been filed as an exhibit to the 1993 Form 10-K and are incorporated herein
by reference.
Certain differences between the rights of holders of Holding Company Common
Stock and those of holders of Detroit Edison Common Stock are summarized below.
Such summary is qualified in its entirety by reference to the information
included in the exhibits hereto or in such materials incorporated by reference.
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<PAGE> 34
Authorized Shares. The Holding Company Articles and the Detroit Edison
Articles each authorize the issuance of 400,000,000 shares of common stock. As
of February 24, 1995 there were 144,863,961 shares of Detroit Edison Common
Stock issued and outstanding, and 311,287 shares of Detroit Edison Common Stock
reserved for issuance upon conversion of the 5 1/2% Preferred Stock. The
additional authorized but unissued shares of Holding Company Common Stock could
be used for stock splits or for acquisitions.
In addition to the currently outstanding shares of Detroit Edison Preferred
Stock, as of February 24, 1995, there were 1,539,827 and 30,000,000 authorized
but unissued shares of Detroit Edison Preferred Stock and Detroit Edison
Preference Stock, respectively, which may be issued in series having such rights
and preferences as may be designated by the Detroit Edison Board of Directors in
accordance with the provisions of the Detroit Edison Articles. There are no
restrictions upon the issuance of any of such authorized shares except for any
actions required by Michigan law to be taken by the Detroit Edison Board of
Directors.
The number of authorized shares of Holding Company Preferred Stock is less
than the combined authorized shares of Detroit Edison Preferred Stock and
Detroit Edison Preference Stock. It is not anticipated that any of the Holding
Company Preferred Stock will be issued in the foreseeable future. Management
believes that the ability to issue Holding Company Preferred Stock will provide
important flexibility to Holding Company. It is anticipated that Holding Company
Preferred Stock will be issued only in connection with Holding Company's normal,
traditional financing requirements.
Under the Holding Company Articles and the Detroit Edison Articles, the
respective boards are authorized to issue Preferred Stock in series and to
determine the rights and preferences of the series, to the extent not set forth
in the respective Articles. The voting rights and certain preferences of Detroit
Edison Preferred Stock are determined in the Detroit Edison Articles. The
Holding Company Articles do not establish voting rights or preferences of
Holding Company Preferred Stock. The Holding Company Board may determine whether
or not any series will have voting rights and, if so, the extent thereof,
provided that no share of Holding Company Preferred Stock of any series may be
entitled to more than one vote per share. The Board is also given full authority
to determine the relative preferences of the Holding Company Preferred Stock.
It is not the intention of the Board of Directors to discourage legitimate
offers to enhance shareholder value. It must be recognized, however, that an
effect of the existence of unissued Holding Company Common Stock or Preferred
Stock may be to enable the Holding Company Board of Directors to render more
difficult or discourage a transaction to obtain control of the Holding Company.
Such shares might be issued by the Board of Directors without shareholder
approval in transactions that might prevent or render more difficult or costly
the completion of the takeover transaction, as by diluting voting or other
rights of the proposed acquirer. In this regard, the Holding Company Articles
(as well as the Detroit Edison Articles) grant the Board of Directors broad
power to establish the rights and preferences of the authorized and unissued
Preferred Stock, one or more series of which could be issued entitling holders
to vote separately as a class on any proposed merger or consolidation, to
convert Preferred Stock into a large number of shares of Common Stock or other
securities, to demand redemption at a specified price under prescribed
circumstances related to a change of control, or to exercise other rights
designed to impede a takeover. The Holding Company Preferred Stock, to the
extent any series has voting rights, may not have more than one vote per share.
Voting Rights. Holders of Holding Company Common Stock will be entitled to
one vote per share, and will have the right to cumulative voting in the election
of directors. Voting rights, if any, of Holding Company Preferred Stock (which
may include cumulative voting rights for the election of directors) will be
established by the Holding Company Board of Directors with respect to each
series. All shares of Detroit Edison Common Stock and Preferred Stock are
entitled to one vote per share, with cumulative voting rights for the election
of directors. Detroit Edison Preferred Stock is generally not entitled to vote
but only has limited voting rights as required by law and as set out in the
Detroit Edison Articles, which rights generally arise only in the event of
certain defaults in payment of Preferred Stock dividends and the requisite
approval of certain matters affecting the Detroit Edison Preferred Stock.
Classified Board and Other Provisions. The By-Laws of Holding Company and
Detroit Edison will be substantially the same immediately prior to the Exchange
except as described herein. The Detroit Edison
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<PAGE> 35
By-Laws provide, and the Holding Company By-Laws will, immediately prior to the
Exchange, provide (i) for the Board to determine the number of directors; (ii)
for the division of the Board into three classes with directors in each class
being elected for a three-year term; and (iii) that the classified Board
provision can only be amended or repealed by a vote of the holders of a majority
of the Common Stock of the respective company. See "Item 1. Election of
Directors" and "Management" above. Other provisions may be amended, repealed or
adopted by a vote of the holders of a majority of shares at the time entitled to
vote in the election of directors or by a vote of a majority of directors then
in office. The By-Laws of Holding Company and Detroit Edison each provide that
the Stacey, Bennett, and Randall Shareholder Equity Act (Chapter 7B of the
Michigan Business Corporation Act) (the "Control Share Act") shall not apply to
any control share acquisitions (as defined in the Control Share Act). That
provision of the respective By-Laws may not be amended, altered or repealed with
respect to any control share acquisition of shares of the respective company
effected pursuant to a tender offer or other transaction commenced prior to the
date of such amendment, alteration or repeal.
Indemnification. The Holding Company Articles and the Detroit Edison
Articles each provide that officers and directors of the respective company and
certain other persons shall be indemnified by the respective company to the full
extent permitted by applicable law. Holding Company and Detroit Edison may enter
into agreements with such persons to provide greater or different
indemnification. Any repeal or modification of the indemnification provisions
may not adversely affect any right or protection existing under the respective
Articles immediately prior to such repeal or modification.
Limitation of Liability. The Holding Company Articles and the Detroit
Edison Articles each provide that to the full extent permitted by applicable
law, no director shall be personally liable to the respective company or its
shareholders for or in respect to any acts or omissions in the performance of
his or her duties as a director. Any repeal or modification of the liability
limitation provisions may not adversely affect any right or protection of a
director existing under the respective Articles immediately prior to such repeal
or modification.
Purpose Clause. The corporate purposes for which Detroit Edison may engage
in business are those related to electric, steam and certain other utility
businesses and related activities. Holding Company is authorized by its
Articles, as permitted by the Michigan Business Corporation Act, to engage in
any and all lawful businesses.
Par Value. The shares of Detroit Edison Common Stock and Preferred Stock
have designated par values, whereas Holding Company Common Stock and Preferred
Stock are without par value. A designated par value is not required under the
Michigan Business Corporation Act and in modern corporate practice par value
does not serve any useful purpose. It is anticipated that the absence of par
value in the Holding Company stock will not affect the market value of such
stock.
STOCK PLANS
If the Exchange is consummated, the Savings & Investment Plans will be
amended to provide, and the Long-Term Incentive Plan (assuming approval thereof
by holders of Detroit Edison Common Stock) provides, that Holding Company Common
Stock will be delivered instead of Detroit Edison Common Stock pursuant to such
plans. Shares of Detroit Edison Common Stock then held under those plans will be
exchanged for Holding Company Common Stock. By approving the Exchange Agreement,
the Detroit Edison shareholders will be considered also to have ratified the
amendments to the Savings & Investment Plans to provide for the delivery of
Holding Company Common Stock thereunder.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for Detroit Edison Common Stock is Detroit
Edison. The transfer agent and registrar for Holding Company Common Stock will
be Detroit Edison.
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<PAGE> 36
DETROIT EDISON COMMON STOCK MARKET PRICES AND DIVIDENDS
Detroit Edison Common Stock is listed and principally traded on the New
York and Chicago stock exchanges. The table below sets forth the dividends paid
and the high and low sales prices of Detroit Edison Common Stock for the periods
indicated as reported in The Wall Street Journal as New York Stock Exchange
Composite Transactions.
<TABLE>
<CAPTION>
PRICE RANGE
DIVIDENDS -------------
PAID HIGH LOW
--------- ---- ----
($) ($) ($)
<S> <C> <C> <C>
1993
First Quarter..................................... 0.495 37 1/8 32
Second Quarter.................................... 0.515 36 3/4 33 1/8
Third Quarter..................................... 0.515 36 33 3/4
Fourth Quarter.................................... 0.515 34 3/4 29 7/8
1994
First Quarter..................................... 0.515 30 1/4 26
Second Quarter.................................... 0.515 27 1/4 24 1/4
Third Quarter..................................... 0.515 27 1/2 24 1/4
Fourth Quarter.................................... 0.515 27 1/2 24 3/4
1995
First Quarter (through February 24, 1995)......... 0.515 29 5/8 25 3/4
</TABLE>
The last closing price of Detroit Edison Common Stock on February 24, 1995
was $28 5/8. The closing price of Detroit Edison Common Stock on December 2,
1994 (the trading day next preceding the public announcement by Detroit Edison
of its intention to proceed with the restructuring) was $26 7/8.
LEGAL OPINIONS
Certain legal matters relating to the issuance of Holding Company Common
Stock in the Exchange will be passed upon by Christopher C. Nern, Esq., Vice
President and General Counsel of Detroit Edison and Holding Company. Certain
other matters relating to the Exchange will be passed upon by Jones, Day, Reavis
& Pogue, Chicago, Illinois, who will rely on Mr. Nern's opinion with respect to
matters governed by Michigan law. Mr. Nern owned 3,001 shares of Detroit Edison
Common Stock as of December 31, 1994.
EXPERTS
The consolidated financial statements incorporated in this Prospectus and
Proxy Statement by reference to Detroit Edison's Annual Report on Form 10-K for
the year ended December 31, 1993, and Detroit Edison's Current Report on Form
8-K dated March 1, 1995, have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
With respect to the unaudited consolidated financial information of Detroit
Edison for the three- and 12-month periods ended March 31, 1994, the three-,
six- and 12-month periods ended June 30, 1994, and the three-, nine-, and
12-month periods ended September 30, 1994, incorporated by reference in this
Prospectus and Proxy Statement, Price Waterhouse LLP reported that they have
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports dated May 10, 1994,
August 8, 1994, and November 7, 1994, incorporated by reference herein, state
that they did not audit and does not express an opinion on that unaudited
consolidated financial information. Price Waterhouse LLP has not carried out any
significant or additional audit tests beyond those which would have been
necessary if their reports had not been included. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Price Waterhouse LLP is not
subject to the liability provisions of Section 11 of the Securities Act of 1933
for their report on the unaudited consolidated financial information because
that report is not a "report" or a "part" of
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<PAGE> 37
the Registration Statement prepared or certified by Price Waterhouse LLP within
the meaning of Sections 7 and 11 of the Act.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
EXCHANGE AGREEMENT.
ITEM 3. LONG-TERM INCENTIVE PLAN
INTRODUCTION
On January 23, 1995, the Board of Directors of Detroit Edison adopted a new
employe incentive plan, The Detroit Edison Company Long-Term Incentive Plan (the
"Incentive Plan"), subject to approval by Detroit Edison's shareholders. If
approved, the Incentive Plan will expand Detroit Edison's flexibility to
structure compensation incentives for Detroit Edison officers and other key
employes by rewarding long-term growth and profitability in the emerging
competitive environment. Accordingly, certain key employes may be granted Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance Shares and
Performance Units as described below. Nonemploye directors will also receive
awards of Detroit Edison Common Stock. While it puts more pay at risk, ownership
of stock assists in the attraction and retention of qualified employes and
directors and provides them with additional incentives to devote their best
efforts to pursue and sustain Detroit Edison's financial success through the
achievement of corporate goals.
As described below under "Effect of Approval of Exchange," if the Exchange
is approved and becomes effective, the Incentive Plan will provide for certain
changes in the operation of the Incentive Plan.
VOTE REQUIRED
As a matter of Michigan corporation law, plans and proposals relating to
compensation generally may be adopted by the Board of Directors and given effect
without a vote of shareholders. However, because employe-directors of Detroit
Edison and Detroit Edison officers would be eligible to receive awards under the
Incentive Plan, and because its operation contemplates the issuance of Detroit
Edison stock, the rules of the New York Stock Exchange require such approval. In
addition, shareholder approval of the Incentive Plan is one of the requirements
of Rule 16b-3 of the SEC ("Rule 16b-3") (compliance with which exempts certain
transactions involving directors and officers from provisions of Section 16(b)
of the Exchange Act which otherwise would operate to penalize such transactions
in some cases and thereby partially frustrate the purposes of the Incentive
Plan) and is required by the Internal Revenue Code of 1986, as amended (the
"Code") with respect to Incentive Stock Options, as described below.
Assuming the presence of a quorum, approval of the Incentive Plan will
require the affirmative vote of the holders of a majority of the shares of
Detroit Edison Common Stock present in person or by proxy and entitled to vote
on the Incentive Plan at the Annual Meeting. Any abstention from voting on the
proposal of the shares so present and entitled to vote will have the same effect
as shares voted against the proposal. However, any shares subject to so-called
"broker non-votes" will not be considered present for purposes of voting on the
proposal and, accordingly, broker non-votes will not factor into the
determination of whether or not the proposal is carried.
The Board of Directors believes that the approval of the Incentive Plan is
in the best interests of Detroit Edison and the shareholders because the
Incentive Plan will enable Detroit Edison to provide competitive equity
incentives to officers and other key salaried employes to enhance the
profitability of Detroit Edison and increase shareholder value.
SUMMARY OF PLAN FEATURES
General. The Incentive Plan contemplates the grant from time to time to
selected eligible employes of stock-related awards of four general types: (1)
options to purchase shares of Detroit Edison Common Stock ("Options"); (2)
rights to receive, upon exercise, the appreciation in fair market value of
shares of Detroit Edison Common Stock ("Stock Appreciation Rights" or "SARs");
(3) outright grants of shares of Detroit
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<PAGE> 38
Edison Common Stock, subject to transfer restrictions and risk of forfeiture for
a specified restriction period ("Restricted Stock"); and (4) rights to receive
(a) shares of Detroit Edison Common Stock, or in lieu of all or any portion of
such shares, their fair market value ("Performance Shares") or (b) a specified
dollar amount or, in lieu of all or any portion of such amount, shares of
Detroit Edison Common Stock having the same fair market value ("Performance
Units"), both conditional upon the attainment during a specified performance
period of specified Performance Measures (as described below). Options meeting
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), and intended to be afforded the Federal income tax treatment of
Section 422 options ("Incentive Stock Options" or "ISOs"), as well as other
Options ("Nonqualified Stock Options" or "NQSOs"), may be awarded under the
Incentive Plan. SARs granted under the Incentive Plan may be awarded either in
tandem with Options ("Tandem SARs") or standing alone ("Freestanding SARs"). In
addition, the Incentive Plan provides for annual non-discretionary grants of
Detroit Edison Common Stock to nonemploye directors.
The full text of the Incentive Plan is annexed to this Prospectus and Proxy
Statement as Exhibit C. The discussion which follows provides additional
information concerning the Incentive Plan features highlighted above, as well as
certain other noteworthy features. Since such discussion necessarily is in the
nature of a summary and does not cover all aspects of the Incentive Plan,
shareholders may wish to review Exhibit C in its entirety as they deliberate
upon the proposal to approve the Incentive Plan.
Shares Available for Award and Limits on SARs. Shares used for awards under
the Incentive Plan may be authorized but unissued shares or may be authorized,
issued, and outstanding shares acquired by Detroit Edison in the name of an
award recipient (or a permissible successor thereof) for purposes of granting or
settling such award or may be a combination of the foregoing. Subject to
adjustment as provided in the Incentive Plan, the number of shares of Detroit
Edison Common Stock that may be (i) issued or transferred upon the exercise of
Options or Stock Appreciation Rights, (ii) awarded as Restricted Stock and
released from substantial risk of forfeiture thereof, or (iii) issued or
transferred in payment of Performance Shares or Performance Units which have
been earned, shall not in the aggregate exceed 7,200,000 shares.
Upon the payment of any portion of any exercise price by the transfer to
Detroit Edison of Detroit Edison Common Stock or upon related satisfaction of
tax withholding obligations or any other payment made or benefit realized under
the Incentive Plan by the transfer or relinquishment of Detroit Edison Common
Stock, there shall be deemed to have been issued or transferred only the net
number of shares actually issued or transferred by Detroit Edison less the
number of shares so transferred or relinquished. However, the number of shares
actually issued or transferred by Detroit Edison upon the exercise of Incentive
Stock Options shall not exceed 7,200,000, subject to adjustment as provided for
in the Incentive Plan.
Upon the payment in cash of a benefit provided by any award under the
Incentive Plan, any shares of Detroit Edison Common Stock that were covered by
such award shall again be available for issuance or transfer under the Incentive
Plan.
The number of Performance Units (which each have a face amount of $1)
granted under the Incentive Plan shall not in the aggregate exceed 25,000,000.
Performance Units that are granted under the Incentive Plan and are paid in
shares of Detroit Edison Common Stock or are not earned by an employe at the end
of a performance period are available for future grants of Performance Units.
No employe shall be granted Options for more than 300,000 shares of Detroit
Edison Common Stock or Stock Appreciation Rights for more than 300,000 shares of
Detroit Edison Common Stock during any five consecutive calendar years, subject
to adjustment pursuant to the Incentive Plan. No employe shall receive awards of
Restricted Stock, Performance Shares and Performance Units having an aggregate
value as of their respective dates of grant in excess of $750,000 in any
calendar year or in excess of $3,500,000 during any five consecutive calendar
years.
Administration and Eligibility. The Incentive Plan will be administered by
the Organization and Compensation Committee of the Board, or such other Board
Committee as may be designated from time to time by the Board (the "Committee").
All the members of the Committee must be nonemploye directors and
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<PAGE> 39
otherwise "disinterested persons," as that term is used in Rule 16b-3 or any
successor provision in effect at a relevant time.
All key employes of Detroit Edison or any of its subsidiaries (other than
employes covered by a collective bargaining agreement which does not provide for
Incentive Plan coverage) and directors of its subsidiaries who are not also
nonemploye directors of Detroit Edison would be eligible to receive an award
under the Incentive Plan, but the Committee would have exclusive authority to
determine, in its sole discretion, those eligible employes to whom awards would
be granted at any time, as well as the type, size, and other terms and
conditions of each granted award, subject only to the parameters set forth in
the Incentive Plan. The Committee may make grants to employes under any or a
combination of all of the various categories of awards that are authorized under
the Incentive Plan.
Nonemploye directors of Detroit Edison are eligible only for
non-discretionary grants of Detroit Edison Common Stock. The Committee has no
discretion with respect to the award of Detroit Edison Common Stock to
nonemploye directors.
Performance Measures. Performance Measures are criteria and objectives
determined by the Committee which (1) in the case of Performance Shares or
Units, the attainment of which during the applicable performance period would be
a pre-condition to settlement of such award and (2) in the case of Restricted
Stock, the failure to attain which would cause forfeiture of such award and/or
which if met during the otherwise applicable restriction period would cause an
early termination of the restriction period. Performance Measures applicable to
any award to an employe who is, or is determined by the Committee likely to
become, a "covered employe" within the meaning of 162(m)(3) of the Code shall be
limited to criteria and objectives related to (1) shareholder value growth based
on stock price and dividends, (2) customer price, (3) customer satisfaction, and
(4) growth based on increasing sales or profitability of one or more business
units; provided, however, that the Committee may impose any other subjective or
objective criteria it may approve from time to time for the purpose of reducing
the amount otherwise payable upon settlement of Performance Shares or
Performance Units or for the purpose of increasing the number of shares of
Restricted Stock that would otherwise be forfeited during the applicable
Restriction Period. Except in the case of such a covered employe, if the
Committee determines that a change in the business, operations, corporate
structure or capital structure of Detroit Edison or any of its subsidiaries, or
the manner in which it conducts its business, or other events or circumstances
render the Performance Measures to be unsuitable, the Committee may modify such
Performance Measures, in whole or in part, as the Committee deems appropriate
and equitable.
Options. The Committee may grant Options that entitle the optionee to
purchase shares of Detroit Edison Common Stock at a price equal to or greater
than the fair market value on the date of grant. Any Options granted must be
evidenced by a written agreement. The market value of a share of Detroit Edison
Common Stock was $28 5/8 on February 24, 1995, which was the closing price on
the New York Stock Exchange on that date. The option price is payable at the
time of exercise (i) in cash or cash equivalent, (ii) by the transfer to Detroit
Edison of nonforfeitable, unrestricted shares of Detroit Edison Common Stock
that are already owned by the optionee, (iii) with any other legal consideration
the Committee may deem appropriate or (iv) by any combination of the foregoing
methods of payment.
Any grant of an Option may provide for deferred payment of the exercise
price from the proceeds of sale through a broker of some or all of the shares of
Detroit Edison Common Stock to which the exercise relates. Payment of the
exercise price of any Nonqualified Stock Option may also be made in whole or in
part in the form of shares of Restricted Stock or other shares of Detroit Edison
Common Stock that are subject to risk of forfeiture or restriction on transfer.
When paid for with such consideration, unless otherwise determined by the
Committee on or after the date of the grant, shares of Detroit Edison Common
Stock received by the optionee upon the exercise of the NQSO are subject to the
same risks of forfeiture or restrictions on transfer as applied to the
consideration surrendered by the optionee. However, such risks of forfeiture and
restriction on transfer shall apply only to the same number of shares Detroit
Edison Common Stock received by the optionee as applied to the forfeitable or
restricted Detroit Edison Common Stock surrendered by the optionee. The
Committee has the authority to specify at the time Options are granted that the
shares of Detroit Edison Common Stock will not be accepted in payment of the
option price until they have been owned by the
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optionee for a specified period; however, the Incentive Plan does not require
any such holding period and would permit immediate sequential exchanges of
Common Shares at the time of exercise of Option Rights.
No Option may be exercised more than ten years from the date of grant. A
grant may provide for the early exercise or termination of the Options in the
event of a change in control of Detroit Edison or other similar transaction or
event. Successive grants may be made to the same optionee regardless of whether
Options previously granted to him or her remain unexercised.
When an Option to which a Tandem SAR has been granted is exercised, the
number of shares of Detroit Edison Common Stock with respect to which the SAR
shall be exercisable shall be reduced by the number of shares with respect to
which the Option has been exercised.
Stock Appreciation Rights. Any SARs granted under the Incentive Plan must
be evidenced by a written agreement: in the case of Freestanding SARs,
specifying the number of SARs granted, the term of the SARs (which may not
exceed ten years from the date of grant), and the time or times at which the
SARs will first become exercisable; in the case of Tandem SARs, specifying the
Option and the number of shares subject thereto to which the SAR relates and the
term of the SAR (which may not exceed that of the related Option). Freestanding
SARs may (but need not) be made immediately exercisable. A Tandem SAR generally
will be exercisable during its term only when and to the extent the related
Option is exercisable. During the lifetime of the grantee of either type of SAR,
the SAR would be exercisable only by the grantee or the grantee's legal
representative.
For each Freestanding SAR subsequently exercised, the holder would become
entitled to receive the excess of fair market value of a share of Detroit Edison
Common Stock on the date of exercise over its fair market value on the date the
SAR was granted. Exercise of a Tandem SAR would entitle the holder to receive
the excess of the aggregate fair market value on the exercise date of the number
of optioned shares of Detroit Edison Common Stock with respect to which the SAR
is being exercised over their aggregate fair market value on the date the
related Option was granted. Exercise of a Tandem SAR would have the effect of
reducing the number of shares covered by the related Option by the number with
respect to which the SAR is exercised, and exercise of the related Option would
have the equivalent effect upon a Tandem SAR. Exercised SARs may be settled in
cash, whole shares of Detroit Edison Common Stock (valued at date of exercise),
or a combination of cash and such shares, unless the applicable SAR agreement
further limits the form of settlement. If the form of settlement is not
specified in the SAR agreement, the holder, at the time of exercise, may request
the form he or she wishes to receive, but the Committee will have the ultimate
authority, in its discretion, to approve or disapprove any such request. In the
absence of such a request, the Committee also would determine the form of
settlement.
Restricted Stock. A grant of Restricted Stock involves the immediate
transfer by Detroit Edison to an employe of ownership of a specific number of
shares of Detroit Edison Common Stock that are subject to a risk of forfeiture
in consideration of the performance of services. During the applicable
restriction period, the employe-recipient of Restricted Stock would have all the
voting, dividend, and other rights of a record holder of Detroit Edison Common
Stock, except that the shares would be nontransferable, and that any non-cash
dividends or other distributions paid upon the shares would be held by Detroit
Edison and would be subject to transfer restrictions and risk of forfeiture to
the same extent as the shares themselves. The transfer may be made without
additional consideration or in consideration of a payment by the employe equal
to or less than its fair market value. The general terms and conditions of any
award of Restricted Stock must be set forth in a written agreement, specifying
the number of shares subject to the award and the restriction period(s)
established by the Committee with respect to such shares, which must be at least
three years from the date of grant, except in the case of awards that are
subject to Performance Measures (in which case the restriction period shall be
at least one year). At the time of the grant, the Committee may provide for
forfeiture of shares covered thereby if specified Performance Measures are not
attained during a restriction period and/or for early termination of a
restriction period.
Restricted Stock must be subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code for a period to be determined by
the Committee. An example would be a provision that the Restricted Stock would
be forfeited if the participant ceased to serve Detroit Edison as an officer or
other key
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<PAGE> 41
salaried employe during a specified period of years. In order to enforce these
forfeiture provisions, the transferability of Restricted Stock will be
prohibited or restricted in a manner and to the extent prescribed by the
Committee for the period during which the forfeiture provisions are to continue.
The Committee may provide for a shorter period during which the forfeiture
provisions are to apply in the event of a change in control of Detroit Edison or
other similar transaction or event.
Performance Share and Performance Unit Awards. A Performance Share is the
equivalent of one share of Detroit Edison Common Stock and a Performance Unit is
the equivalent of $1. Any such grant shall be evidenced by a written agreement.
An employe will be given one or more Performance Measures to meet within a
specified performance period. The performance period may be subject to earlier
termination in the event of a change in control of Detroit Edison or other
similar transaction or event. If by the end of the performance period the
employe has achieved the specified Performance Measures, the employe will be
deemed to have fully earned the Performance Shares or Performance Units. To the
extent earned, the Performance Shares or Performance Units will be paid to the
employe at the time and in the manner determined by the Committee in cash,
shares of Detroit Edison Common Stock or any combination thereof.
Non-discretionary Awards to Nonemploye Directors. On the date of the Annual
Meeting and on the date of each annual meeting of Detroit Edison Common Stock
shareholders thereafter, each nonemploye director of Detroit Edison shall
receive automatically an award of 300 shares of Detroit Edison Common Stock if
he or she is elected at such meeting or continues to serve immediately after
such meeting as a nonemploye director. The shares of Detroit Edison Common Stock
so awarded shall not be subject to any restriction under the Incentive Plan
(other than any that may be required by securities laws and stock exchange
requirements).
Tax Withholding. Unless otherwise provided in the applicable agreement
concerning an award, the Incentive Plan would permit award recipients to satisfy
tax withholding requirements in connection with the exercise, vesting or
settlement of an award (1) entirely in cash; (2) subject to Committee approval,
by delivery to Detroit Edison of a number of shares of Detroit Edison Common
Stock which have an aggregate fair market value as of the tax withholding date
sufficient to satisfy all withholding requirements; or (3) subject to Committee
approval, authorizing Detroit Edison to withhold shares otherwise issuable
pursuant to the award sufficient to satisfy all such requirements; or (4) by a
combination of the foregoing methods. Detroit Edison and the employe may also
make similar arrangements with respect to the payment of taxes with respect to
which withholding is not required.
Right of First Refusal. Detroit Edison is authorized under the Incentive
Plan to reserve a right of first refusal to purchase any shares issued under the
Incentive Plan at their fair market value, determined as of the day immediately
preceding the date on which Detroit Edison notifies the holder of its intention
to exercise such right.
Transferability. No option, or other "derivative security" within the
meaning of Rule 16b-3 is transferable by an employe except by will or the laws
of descent and distribution. Options may not be exercised during an employe's
lifetime except by the employe, or in the event of an employe's incapacity by
the employe's guardian or legal representative acting in a fiduciary capacity on
behalf of the employe under state law and court supervision; however, the
Committee, in its sole discretion, may provide for the transferability of
specific awards so long as such provision will not disqualify the exemption for
other awards under Rule 16b-3.
Duration, Amendment, and Termination. The Incentive Plan is intended to be
of indefinite duration. However, the provisions of the Code currently applicable
to ISOs would not permit the grant of ISOs under the Incentive Plan after the
tenth anniversary of its effective date. By the terms of the Incentive Plan,
except as noted below, the Committee may terminate, modify, or amend it in any
manner.
Shareholder approval is not required for any amendment, either by the
Incentive Plan itself, or by applicable Michigan corporation law, except that
the Incentive Plan provides that under no circumstances, without shareholder
approval, may the Incentive Plan be amended or modified to permit the exercise
of an option at a per share exercise price less than the fair market value of a
share of Detroit Edison Common Stock on the date the option was granted, to
increase (except through adjustments as provided in the Incentive Plan) the
number of shares subject to the Incentive Plan under Section 3 of the Incentive
Plan, or otherwise cause
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<PAGE> 42
any award under the Incentive Plan to cease to qualify under Rule 16b-3 or for
the performance based exception to Section 162(m) of the Code.
New Plan Benefits. To date, no awards of any kind have been granted under
the Incentive Plan, and no executive officer, other officer or other employe has
been selected to receive any such award in the future.
The rules of the Securities and Exchange Commission require disclosure of
the awards individuals will receive pursuant to such a plan if such awards are
determinable. Since awards of Options, SARs, Restricted Stock, Performance
Shares and Performance Units will be made by the Committee in its discretion
under the Incentive Plan, it is not possible to determine the amounts of such
awards that will be made. However, the Incentive Plan also provides for
automatic annual awards of Detroit Edison Common Stock to nonemploye directors.
Accordingly, assuming the election of the four director nominees at the Annual
Meeting, 3,000 shares of Detroit Edison Common Stock will be received on the
date of the Annual Meeting by the 10 nonemploye directors. Corresponding awards
will be made to nonemploye directors in future years.
MPSC Approval. Although the Incentive Plan would become effective upon its
approval by the shareholders, Detroit Edison may not lawfully issue any shares
of Detroit Edison Common Stock under the Incentive Plan without the prior
approval of the MPSC, nor may it contract to issue any such shares pursuant to
the exercise of Options, except subject to MPSC approval. Upon the effective
time of the Exchange, the issuance of Holding Company Common Stock pursuant to
the Incentive Plan will not be subject to MPSC approval. Accordingly, Detroit
Edison does not expect to seek approval from the MPSC for the issuance of the
Detroit Edison Common Stock. In the event the Exchange is not consummated, or
prior to the Exchange pending MPSC approval of share issuances by Detroit Edison
under the Incentive Plan, awards under the Incentive Plan (assuming it is
approved by the shareholders) would be confined to Performance Share and
Performance Unit Awards and SARs, which may be settled in cash, or awards which
are settled through open market purchases of Detroit Edison Common Stock
directly on behalf of or in the name of participants.
FEDERAL INCOME TAX CONSEQUENCES OF INCENTIVE PLAN
The following is a brief summary of certain of the Federal income tax
consequences of certain transactions under the Plan based on Federal income tax
laws in effect on January 1, 1995. This summary is not intended to be exhaustive
and does not describe state or local tax consequences.
Nonqualified Stock Options. In general: (i) no income will be recognized by
an optionee at the time an NQSO is granted; (ii) at the time of exercise of an
NQSO, ordinary income will be recognized by the optionee in an amount equal to
the difference between the option price paid for the shares and the fair market
value of the shares if they are nonrestricted on the date of exercise; and (iii)
at the time of sale of shares acquired pursuant to the exercise of an NQSO, any
appreciation (or depreciation) in the value of the shares after the date of
exercise will be treated as either short-term or long-term capital gain (or
loss) depending on how long the shares have been held.
Incentive Stock Options. No income generally will be recognized by an
optionee upon the grant or exercise of an Incentive Stock Option. If Common
Shares are issued to an optionee pursuant to the exercise of an Incentive Stock
Option and no disqualifying disposition of the shares is made by the optionee
within two years after the date of grant or within one year after the transfer
of the shares to the optionee, then upon the sale of the shares any amount
realized in excess of the option price will be taxed to the optionee as
long-term capital gain and any loss sustained will be a long-term capital loss.
If shares acquired upon the exercise of an Incentive Stock Option are
disposed of prior to the expiration of either holding period described above,
the optionee generally will recognize ordinary income in the year of disposition
in an amount equal to any excess of the fair market value of the shares at the
time of exercise (or, if less, the amount realized on the disposition of the
shares if a sale or exchange) over the option price paid for the shares. Any
further gain (or loss) realized by the optionee generally will be taxed as
short-term or long-term capital gain (or loss) depending on the holding period.
Stock Appreciation Rights. No income will be recognized by a holder in
connection with the grant of a Tandem SAR or a Freestanding SAR. When the SAR is
exercised, the recipient normally will be required to
33
<PAGE> 43
include as taxable ordinary income in the year of exercise an amount equal to
the amount of cash received and the fair market value of any nonrestricted
shares of Detroit Edison Common Stock received on the exercise.
Restricted Stock. A recipient of Restricted Stock generally will be subject
to tax at ordinary income rates on the fair market value of the shares of
Restricted Stock (reduced by any amount paid by the recipient for such shares)
at such time as the shares are no longer subject to a risk of forfeiture or
restrictions on transfer for purposes of Section 83 of the Code. However, a
recipient who so elects under Section 83(b) of the Code within 30 days of the
date of transfer of the shares will have taxable ordinary income on the date of
transfer of the shares equal to the excess of the fair market value of the
shares (determined without regard to the risk of forfeiture or restrictions on
transfer) over any purchase price paid for the shares. If a Section 83(b)
election has not been made, any dividends received with respect to shares of
Restricted Stock that are subject at that time to a risk of forfeiture or
restrictions on transfer generally will be treated as compensation that is
taxable as ordinary income to the recipient.
Performance Shares and Performance Units. No income generally will be
recognized upon the grant of Performance Shares or Performance Units. Upon
payment in respect of the earn-out of Performance Shares or Performance Units,
the recipient generally will be required to include as taxable ordinary income
in the year of receipt an amount equal to the amount of cash received and the
fair market value of any nonrestricted shares of Detroit Edison Common Stock
received.
Special Rules Applicable to Officers and Directors. In limited
circumstances where the sale of stock that is received as the result of a grant
of an award could subject an officer to suit under Section 16(b) of the Exchange
Act, the tax consequences to the officer or director may differ from the tax
consequences described above. In these circumstances, unless a special election
has been made, the principal difference usually will be to postpone valuation
and taxation of the stock received so long as the sale of the stock received
could subject the officer or director to suit under Section 16(b) of the
Exchange Act, but not longer than six months.
A nonemploye director who receives shares of Detroit Edison Common Stock
that are not subject to any risk of forfeiture will recognize ordinary income
upon the receipt of such shares equal to the fair market value of the shares of
Detroit Edison Common Stock received.
Tax Consequences to Detroit Edison or Subsidiary. To the extent that an
employe recognizes ordinary income in the circumstances described above, Detroit
Edison or the subsidiary for which the employe performs services will be
entitled to a corresponding deduction provided that, among other things, the
income meets the test of reasonableness, is an ordinary and necessary business
expense, is not an "excess parachute payment" within the meaning of Section 280G
of the Code and is not disallowed by the $1 million limitation on certain
executive compensation.
EFFECT OF APPROVAL OF EXCHANGE AGREEMENT
The Incentive Plan provides that if the Exchange is consummated, the shares
issuable pursuant to the Incentive Plan will be shares of Holding Company Common
Stock and all references to Detroit Edison in the Incentive Plan (and,
accordingly, in the foregoing summary) will be deemed to be references to
Holding Company. Notwithstanding the foregoing, references to Detroit Edison
under the caption "MPSC Approval" will not apply to Holding Company. Approval of
the Exchange Agreement will be deemed an approval of these provisions of the
Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
LONG-TERM INCENTIVE PLAN.
ITEM 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the holders of Detroit Edison Common Stock, the
Detroit Edison Board of Directors, upon recommendation of its Audit Committee,
has appointed Deloitte & Touche LLP as independent accountants of Detroit Edison
for the year 1995. Assuming the presence of a quorum, approval of this proposal
will require the affirmative vote of the holders of a majority of the shares of
Detroit Edison
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<PAGE> 44
Common Stock present in person or by proxy. Any abstention from voting on the
proposal will have the same effect as shares voted against the proposal.
However, any shares subject to so-called "broker non-votes" will not be
considered present for purposes of voting on the proposal and, accordingly,
broker non-votes will not factor into the determination of whether or not the
proposal is carried. Approval of this proposal will be considered ratification
of the appointment of Deloitte & Touche LLP as independent accountants of
Holding Company as of the effective time of the Exchange.
In prior years, Price Waterhouse LLP served as independent accountants of
Detroit Edison. After a review of proposals from several accounting firms and an
evaluation of Detroit Edison's needs and the capabilities of the candidates, the
Audit Committee of Detroit Edison's Board of Directors determined that Deloitte
& Touche LLP should be appointed as independent accountants.
During the Company's two fiscal years ending December 31, 1994, and the
subsequent interim period from January 1, 1995, through the date hereof, there
have been no disagreements with Price Waterhouse LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to its satisfaction, would have caused Price
Waterhouse LLP to make reference thereto in its report on the financial
statements for such years. None of Price Waterhouse LLP's reports on the
financial statements for the past two years contained an adverse opinion or a
disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or accounting principles.
Representatives of Deloitte & Touche LLP and Price Waterhouse LLP will be
present at the Annual Meeting and will be afforded an opportunity to make a
statement, if they desire, and to respond to appropriate questions from holders
of Detroit Edison Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
APPOINTMENT OF INDEPENDENT ACCOUNTANTS.
TRANSACTION OF OTHER BUSINESS AND OTHER INFORMATION
AS TO OTHER BUSINESS WHICH MAY COME BEFORE THE MEETING
Management of Detroit Edison does not intend to bring any other business
before the meeting for action. However, if any other business should be
presented for action, it is the intention of the persons named on the enclosed
proxy card to vote in accordance with their judgment on such business.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the Proxy Statement
for the 1996 Annual Meeting must be received by the Corporate Secretary of
Detroit Edison (or Holding Company if the Exchange is consummated prior thereto)
at its principal business address no later than 5:00 p.m. on November 17, 1995.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, Detroit Edison's directors
and its executive officers are required to report ownership of Detroit Edison
Common Stock and any changes in that ownership to the SEC. Specific due dates
for these reports have been established and Detroit Edison is required to
disclose in this Prospectus and Proxy Statement any failure to file by these
dates during 1994. During 1994, all of the filing requirements were satisfied.
In making these disclosures, Detroit Edison has relied on written
representations of its directors and executive officers and copies of the
reports that they have filed with the SEC.
OTHER INFORMATION
Detroit Edison will bear the cost of solicitation of proxies, which will be
principally by mail. Proxies may also be solicited by directors, officers and
employes of Detroit Edison personally, by telephone or by electronic or
facsimile transmission. In addition, Morrow & Co., Inc. of New York, New York,
has been retained to assist in the solicitation of proxies for the Annual
Meeting by the means described above at an estimated cost (excluding expenses)
to Detroit Edison of approximately $20,000.
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<PAGE> 45
EXHIBIT A
AGREEMENT AND PLAN OF EXCHANGE1
THIS AGREEMENT AND PLAN OF EXCHANGE (this "Agreement"), dated as of
, , is between THE DETROIT EDISON COMPANY, a Michigan
corporation (the "Company"), the company whose shares will be acquired pursuant
to the Exchange described herein, and DTE HOLDINGS, INC., a Michigan corporation
("Holding Company"), the acquiring company. The Company and Holding Company are
hereinafter referred to, collectively, as the "Companies."
WITNESSETH:
WHEREAS, the authorized capital of the Company is $4,740,748,400,
consisting of (a) 400,000,000 shares of Common Stock, $10 par value per share
("Company Common Stock"), of which shares are issued and outstanding, (b)
shares of Preferred Stock, $100 par value ("Company Preferred Stock"), of
which shares are issued and outstanding in six series and (c) 30,000,000
shares of Preference Stock, $1 par value ("Company Preference Stock"), of which
no shares are issued and outstanding;
WHEREAS, Holding Company is a wholly-owned subsidiary of the Company with
authorized capital stock consisting of (a) 400,000,000 shares of Common Stock,
without par value ("Holding Company Common Stock"), of which shares are
issued and outstanding and owned of record by the Company and (b) 5,000,000
shares of Preferred Stock, without par value ("Holding Company Preferred
Stock"), of which no shares are issued and outstanding;
WHEREAS, the Boards of Directors of the respective Companies deem it
desirable and in the best interests of the Companies and their shareholders that
Holding Company acquire each share of Company Common Stock issued and
outstanding at the Effective Time (as hereinafter defined) and that each such
share of Company Common Stock be exchanged for a share of Holding Company Common
Stock with the result that Holding Company becomes the owner of all outstanding
Company Common Stock and that each holder of Company Common Stock becomes the
owner of an equal number of shares of Holding Company Common Stock, all on the
terms and conditions hereinafter set forth;
WHEREAS, the execution and delivery of this Agreement by the Company and
Holding Company and the Exchange and the related transactions have been
approved, to the extent required, by orders, authorizations or approvals of the
Federal Energy Regulatory Commission under the Federal Power Act and the Nuclear
Regulatory Commission under the Atomic Energy Act;
WHEREAS, the Board of Directors of the Company and Holding Company have
recommended that their respective shareholders approve the Exchange and this
Agreement and this Agreement has been adopted by the requisite vote of the
holders of Company Common Stock and by the requisite vote of the shareholder of
Holding Company pursuant to the Michigan Business Corporation Act (the "Act").
NOW, THEREFORE, in consideration of the premises, and of the agreements,
covenants and conditions hereinafter contained, and subject to satisfaction of
the conditions herein contained, the parties hereto agree with respect to the
acquisition and exchange provided for herein (the "Exchange") that at the
Effective Time each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time will
- ---------------
1This document will be executed after, and assumes that, all necessary
regulatory and shareholder approvals have been obtained.
A-1
<PAGE> 46
be exchanged for one share of Holding Company Common Stock, and that the terms
and conditions of the Exchange and the method of carrying the same into effect
are as follows:
ARTICLE I
Subject to the satisfaction of the conditions and obligations of the
parties hereto, the Exchange will be effective upon the filing with the
Corporation and Securities Bureau of the Michigan Department of Commerce (the
"Michigan Bureau") of a Certificate of Share Exchange ("Certificate") with
respect to the Exchange or at such later time as may be stated in the
Certificate (the time at which the Exchange becomes effective being referred to
herein as the "Effective Time").
ARTICLE II
At the Effective Time:
(1) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be acquired by Holding
Company and shall be exchanged for one share of Holding Company Common
Stock, which shall thereupon be fully paid and non-assessable;
(2) Holding Company shall become the owner and holder of each issued
and outstanding share of Company Common Stock so exchanged;
(3) each share of Holding Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be cancelled and shall
thereupon constitute an authorized and unissued share of Holding Company
Common Stock; and
(4) the former owners of Company Common Stock shall be entitled only
to receive shares of Holding Company Common Stock as provided herein.
Shares of Company Preferred Stock and shares of Company Preference Stock
shall not be exchanged or otherwise affected in connection with the Exchange.
Each share of Company Preferred Stock issued and outstanding immediately prior
to the Effective Time shall continue to be issued and outstanding following the
Exchange and shall continue to be a share of Company Preferred Stock of the
applicable series designation. Pursuant to the Company's Restated Articles of
Incorporation it may elect to redeem its Convertible Cumulative Preferred Stock,
5 1/2% Series, on or prior to the Effective Time. Any shares of any series of
Company Preferred Stock which pursuant to their terms are convertible into
shares of Company Common Stock, including such Convertible Cumulative Preferred
Stock, 5 1/2% Series, if not redeemed, will continue to be convertible into
shares of Company Common Stock pursuant to their current terms.
ARTICLE III
The consummation of the Exchange is subject to the following conditions
precedent:
(1) the satisfaction of the respective obligations of the parties
hereto in accordance with the terms and conditions herein contained;
(2) the execution and filing of an appropriate Certificate with the
Michigan Bureau pursuant to the Act;
(3) the approval for listing upon official notice of issuance, by the
New York Stock Exchange and the Chicago Stock Exchange, of Holding Company
Common Stock to be issued in accordance with this Agreement;
(4) the receipt and continued effectiveness of such orders,
authorizations, approvals or waivers from all jurisdictive regulatory
bodies, boards or agencies, in addition to the orders or approvals referred
to in the fourth Whereas clause hereof, which are required in connection
with the Exchange and related transactions; and
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<PAGE> 47
(5) receipt of either an opinion of counsel or a ruling from the
Internal Revenue Service, in either case acceptable to the Board of
Directors of the Company, as to the Federal income tax consequences of the
Exchange.
ARTICLE IV
This Agreement may be amended, modified or supplemented, or compliance with
any provision or condition hereof may be waived, at any time, by the mutual
consent of the Boards of Directors of the Company and of Holding Company at any
time prior to the Effective Time; provided, however, that no such amendment,
modification, supplement or waiver shall be made or effected if such amendment,
modification, supplement or waiver would, in the sole judgment of the Board of
Directors of the Company, materially and adversely affect the shareholders of
the Company.
This Agreement may be terminated and the Exchange and related transactions
abandoned at any time prior to the Effective Time, if the Board of Directors of
the Company determines, in its sole judgment, that consummation of the Exchange
would for any reason be inadvisable or not in the best interests of the Company
or its shareholders.
ARTICLE V
This Agreement has been submitted to the holders of Company Common Stock
and to the sole holder of Holding Company Common Stock for approval as provided
by the Act. The affirmative vote of the holders of a majority of the outstanding
Company Common Stock was received constituting the adoption of this Agreement.
The affirmative vote of the holder of all of the outstanding shares of Holding
Company Common Stock was received constituting the adoption of this Agreement.
ARTICLE VI
Following the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of Company Common Stock may, but
shall not be required to, surrender the same to Holding Company for cancellation
and reissuance of a new certificate or certificates in such holder's name or for
cancellation and transfer, and each such holder or transferee will be entitled
to receive a certificate or certificates representing the same number of shares
of Holding Company Common Stock as the shares of Company Common Stock previously
represented by the certificate or certificates surrendered. Until so surrendered
or presented for transfer, each outstanding certificate which, immediately prior
to the Effective Time, represents Company Common Stock shall be deemed and
treated for all corporate purposes to represent the ownership of the same number
of shares of Holding Company Common Stock as though such surrender or transfer
and exchange had taken place. The holders of Company Common Stock at the
Effective Time shall have no right to have their shares of Company Common Stock
transferred on the stock transfer books of the Company, and such stock transfer
books shall be deemed to be closed for this purpose at the Effective Time.
ARTICLE VII
Prior to or as of the Effective Time, the Company shall cause each director
of the Company who is not then also a director of Holding Company to be elected
a director of Holding Company. Each director of the Company as of the Effective
Time shall also remain a director of the Company.
ARTICLE VIII
At the Effective Time, Holding Company shall adopt a dividend reinvestment
plan ("Holding Company DRIP") substantially similar to the Company's Dividend
Reinvestment Plan ("Company DRIP") in effect immediately prior to the Effective
Time and the Company DRIP shall be discontinued. At the Effective Time, all
shares of Company Common Stock held under the Company DRIP (including fractional
and uncertifi-
A-3
<PAGE> 48
cated shares) shall be exchanged for shares (including fractional and
uncertificated shares) of Holding Company Common Stock and shall be held
pursuant to the Holding Company DRIP. At the Effective Time, Holding Company
shall adopt, become subject to and/or agree to issue Holding Company Common
Stock in connection with, each Savings & Investment Plan of the Company and the
Company's Long-Term Incentive Plan.
IN WITNESS WHEREOF, each of the Company and Holding Company, pursuant to
authorization and approval given by its Board of Directors, has caused this
Agreement to be executed by its Chairman and Chief Executive Officer and its
corporate seal to be affixed hereto and attested by its Secretary as of the date
first above written.
THE DETROIT EDISON COMPANY
By:
------------------------------------
Chairman and Chief Executive
Officer
ATTEST:
- ------------------------------------------------------
Corporate Secretary
DTE HOLDINGS, INC.
By:
------------------------------------
Chairman and Chief Executive
Officer
ATTEST:
- ------------------------------------------------------
Corporate Secretary
A-4
<PAGE> 49
EXHIBIT B
FORM OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
DTE HOLDINGS, INC.
ARTICLE I
The name of the corporation is DTE HOLDINGS, INC.
ARTICLE II
The purposes for which the corporation (the "Company") is formed are to
engage in any activity within the purposes for which corporations may be formed
under the Michigan Business Corporation Act (the "Act").
ARTICLE III
The location and post office address of the principal office of the Company
at the time of filing these Articles is 2000 Second Avenue, Detroit, Wayne
County, Michigan 48226 and it is hereby designated as the location and post
office address of the registered office of the Company in Michigan under these
Articles.
ARTICLE IV
The name of the Company's resident agent in Michigan at the time of filing
these Articles is Susan M. Beale and she is hereby designated as the resident
agent of the Company in Michigan under these Articles.
ARTICLE V
A. The aggregate number of shares which the Company is authorized to issue
is Four Hundred Five Million (405,000,000) shares, divided into and consisting
of (a) Four Hundred Million (400,000,000) shares of Common Stock, without par
value, and (b) Five Million (5,000,000) shares of Preferred Stock, without par
value, issuable in one or more series as hereinafter provided.
B. The authorized Preferred Stock may be issued, in one or more series,
from time to time as the Board of Directors may determine. Each series of
Preferred Stock shall bear a distinctive designation, shall be issued in such
number of shares and shall have such relative voting, distribution, dividend,
liquidation and other rights, preferences and limitations and redemption and/or
conversion provisions (including provisions for the redemption or conversion of
shares at the option of the shareholder or the Company or upon the happening of
a specified event) as shall be prescribed, and the Board of Directors is
expressly authorized to fix such terms, by a resolution of the Board of
Directors. Such resolutions, when filed, shall constitute amendments to these
Articles of Incorporation to the extent provided by the Act.
C. Each holder of Common Stock of the Company shall be entitled to one vote
for each share of such stock standing in such shareholder's name on the books of
the Company and each holder of Preferred Stock of the Company shall be entitled
to such voting rights as shall be established by the Board of Directors pursuant
to paragraph B of this Article V; provided that no share of Preferred Stock may
be entitled to more than one vote per share.
D. In all elections of directors every holder of Common Stock, and every
holder of Preferred Stock entitled to vote for the election of directors whose
Preferred Stock has been granted the right to cumulate votes in the election of
directors shall have the right to vote the number of shares of stock owned by
such shareholder for as many persons as there are directors to be elected and
for whose election such shareholder has the right to vote, or to cumulate all
the votes such shareholder could cast for election of directors and cast them
all for one candidate or distribute them among candidates for whom such
shareholder is entitled to vote, as such shareholder shall think fit.
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E. No shareholder shall have any preemptive or preferential right to
subscribe for or purchase any part of any new or additional issue of stock of
any class whatsoever, or of securities convertible into or exchangeable for any
stock of any class whatsoever, or of securities carrying options, warrants or
other rights to purchase or otherwise acquire stock of any class whatsoever,
whether now or hereafter authorized and whether issued for cash or other
consideration or by way of dividend or otherwise, or to have any other
preemptive or preferential right as now or hereafter defined by the laws of the
State of Michigan.
ARTICLE VI
To the full extent permitted by the Act or any other applicable laws
presently or hereafter in effect, no director of the Company shall be personally
liable to the Company or its shareholders for or with respect to any acts or
omissions in the performance of his or her duties as a director of the Company.
Any repeal or modification of this Article VI shall not adversely affect any
right or protection of a director of the Company existing hereunder immediately
prior to such repeal or modification.
ARTICLE VII
Each person who is or was or had agreed to become a director or officer of
the Company, or each such person who is or was serving or who had agreed to
serve at the request of the Company as an employee or agent of the Company or as
a director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, whether for profit or not
(including any employee benefit plan), shall be indemnified by the Company to
the full extent permitted by the Act or any other applicable laws as presently
or hereafter in effect. The foregoing provision shall extend to the heirs,
executors, administrators or estate of any such person. Without limiting the
generality or the effect of the foregoing, the Company may enter into one or
more agreements with any person which provides for indemnification greater or
different than that provided in this Article. Any repeal or modification of this
Article VII shall not adversely affect any right or protection existing
hereunder immediately prior to such repeal or modification.
ARTICLE VIII
The term of the corporate existence of the Company is perpetual.
ARTICLE IX
The name and address of the sole incorporator is as follows:
Susan M. Beale
2000 Second Avenue
Detroit, Michigan 48226
ARTICLE X
These Amended and Restated Articles of Incorporation were adopted in
accordance with Section 611(2) of the Act.
IN WITNESS WHEREOF, these Amended and Restated Articles of Incorporation
were executed by the undersigned on behalf of the Company on the day of
, 1995.
DTE HOLDINGS, INC.
--------------------------------------
By: John E. Lobbia
Its: Chairman of the Board
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EXHIBIT C
THE DETROIT EDISON COMPANY
LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of this Long-Term Incentive Plan is to more closely align the
interests of key employes of The Detroit Edison Company, its Subsidiaries and
any successor corporation with those of shareholders by rewarding long term
growth and profitability. In the emerging competitive environment, placing more
pay at risk will foster the desired results by providing key employes additional
incentives to devote their best efforts to pursue and sustain the Company's
financial success through the achievement of corporate goals. In addition,
ownership of stock assists in the attraction and retention of qualified employes
and Directors. Accordingly, certain key employes may be granted Stock Options,
Stock Appreciation Rights, Restricted Stock, Performance Shares and Performance
Units. Nonemploye Directors will also receive Awards of Common Stock.
SECTION 2. DEFINITIONS.
A. "Agreement" shall mean a written Agreement, in a form approved by the
Committee, which sets forth the terms and conditions of an Award. Agreements
shall be subject to the express terms and conditions set forth herein, and to
such other terms and conditions not inconsistent with the Plan as the Committee
shall deem appropriate.
B. "Award" shall mean an Option (which may be designated as a Nonqualified
Stock Option or an Incentive Stock Option), a Stock Appreciation Right (which
may be designated as a Freestanding SAR or a Tandem SAR), Restricted Stock,
Performance Shares or Performance Units, in each case granted under this Plan.
Each such Award shall be evidenced by an Agreement. The term shall also include
non-discretionary awards of Common Stock to Nonemploye Directors pursuant to
Section 10 of the Plan.
C. "Board" shall mean the Board of Directors of the Company.
D. "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
E. "Committee" shall mean the Organization and Compensation Committee of
the Board, or such other Board Committee as may be designated from time to time
by the Board. All Directors serving on the Committee at any given time shall be
"disinterested persons" as that term is used in Rule 16b-3, and the number of
Directors serving on the Committee at any given time shall be no less than the
number then required by Rule 16b-3.
F. "Common Stock" shall mean shares of common stock of the Company, subject
to adjustment as provided in Section 13.
G. "Company" shall mean The Detroit Edison Company, a Michigan corporation,
and any successor corporation.
H. "Date of Grant" means the date specified by the Committee pursuant to
Section 4 hereof on which a grant of Options, SAR's, Restricted Stock,
Performance Shares or Performance Units shall become effective, which shall not
be earlier than the date on which the Committee takes action with respect
thereto.
I. "Employe" shall mean (i) an employe of the Company or a Subsidiary,
whether or not an officer thereof, and shall include any such employe who is
also a Director of the Company or a Subsidiary, and (ii) a director of a
Subsidiary who is not a Nonemploye Director.
J. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
K. "Exercise Price" shall mean, with respect to each share of Common Stock
subject to an Option, the price fixed by the Committee at which such share may
be purchased pursuant to the exercise of such Option.
L. "Fair Market Value" shall mean the fair market value of the Common Stock
determined by the Committee by whatever method or means the members, in the good
faith exercise of their discretion, at that time shall deem appropriate.
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M. "Freestanding SAR" shall mean a right, granted pursuant to this Plan
without reference or relationship to any Option, of an Employe to receive cash,
shares of Common Stock, or a combination thereof, as the case may be, having an
aggregate value equal to the excess of the Fair Market Value of one share of
Common Stock on the date of exercise of such SAR over the Fair Market Value of
one such share on the Date of Grant of such SAR.
N. "Incentive Stock Option" or "ISO" shall mean an Option that meets the
requirements of Section 422 of the Code, or any successor provision, and that is
intended by the Committee to constitute an ISO. Any ISO granted hereunder must
be granted within ten years from the date of adoption of the Plan by the Board.
If for any reason an Option (or any portion thereof) intended by the Committee
to be an ISO nevertheless does not so qualify as an ISO under the Code, either
at the time of grant or subsequently, such failure to qualify shall not
invalidate the Option (or any portion thereof) and instead the nonqualified
portion (or, if necessary, the entire Option) shall be deemed to have been
granted as a Nonqualified Stock Option irrespective of the manner in which it is
designated in the Option Agreement.
O. "Nonemploye Director" shall mean a Director of the Company who is not an
employe of the Company or any Subsidiary.
P. "Nonqualified Stock Option" or "NQSO" shall mean an Option that is not
an ISO.
Q. "Option" shall mean the right, granted pursuant to this Plan, of a
holder to purchase shares of Common Stock at an Exercise Price and upon terms to
be specified by the Committee. The term shall include a Nonqualified Stock
Option or an Incentive Stock Option.
R. "Optionee" means the person so designated in an Agreement evidencing an
outstanding Option.
S. "Performance Measures" shall mean (1) in the case of Performance Shares
or Performance Units, those criteria and objectives determined by the Committee
the attainment of which during the applicable Performance Period would be a
pre-condition to settlement of such Award, and (2) in the case of Restricted
Stock, those Committee-determined criteria and objectives (if any) which, if not
met during the applicable Restriction Period, would cause a forfeiture of such
Award and/or which, if met during the otherwise applicable Restriction Period,
would cause an early termination of the Restriction Period. The Performance
Measures applicable to any Award to an Employe who is, or is determined by the
Committee to be likely to become, a "covered employe" within the meaning of
Section 162(m) of the Code (or any successor provision) shall be limited to
criteria and objectives related to: (i) shareholder value growth based on stock
price and dividends, (ii) customer price, (iii) customer satisfaction and (iv)
growth based on increasing sales or profitability of one or more business units;
provided, however, that the Committee may impose any other subjective or
objective criteria it may approve from time to time for the purpose of reducing
the amount otherwise payable upon settlement of Performance Shares or
Performance Units or for the purpose of increasing the number of shares of
Restricted Stock that would otherwise be forfeited during the applicable
Restriction Period. Except in the case of such a covered employe, if the
Committee determines that a change in the business, operations, corporate
structure or capital structure of the Company or a Subsidiary, or the manner in
which it conducts its business, or other events or circumstances render the
Performance Measures to be unsuitable, the Committee may modify such Performance
Measures, in whole or in part, as the Committee deems appropriate and equitable.
T. "Performance Period" shall mean the period designated by the Committee
during which the Performance Measures applicable to Performance Shares or
Performance Units shall be measured. The Performance Period shall be established
on the Date of Grant of such Performance Shares or Performance Units, and shall
not be less than one year in duration. The duration of Performance Periods may
vary.
U. "Performance Shares" shall mean the right, contingent upon attainment of
Performance Measures within a Performance Period, to receive a specified number
of shares of Common Stock, which may be Restricted Stock, or, in lieu of all or
any portion of such shares, their Fair Market Value in cash.
V. "Performance Units" shall mean the right, contingent upon attainment of
Performance Measures within a Performance Period, to receive a specified dollar
amount or, in lieu of all or any portion of such amount, shares of Common Stock
having the same Fair Market Value or the same number of shares of Restricted
Stock. Each Performance Unit shall have a face amount of $1.00.
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W. "Plan" shall mean the Long-Term Incentive Plan set forth in this
instrument, as amended from time to time.
X. "Reorganization" shall mean the corporate reorganization of The Detroit
Edison Company pursuant to resolutions adopted by the Board of Directors of The
Detroit Edison Company on December 5, 1994 and January 23, 1995 (as such
resolutions may be amended or supplemented from time to time) whereby it is
proposed that a corporation ("Holding Company") will become the parent holding
company of The Detroit Edison Company.
Y. "Restriction Period" shall mean the period designated by the Committee
during which Restricted Stock shall be subject to a substantial risk of
forfeiture and may not be sold, exchanged, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of, except as otherwise
provided in the Plan.
Z. "Restricted Stock" shall mean any shares of Common Stock issued pursuant
to the Plan subject to a substantial risk of forfeiture pursuant to Section 83
of the Code and to the restriction that they may not be sold, exchanged,
assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed
of, except as otherwise provided in the Plan, prior to termination of a
Restriction Period. Restricted Stock shall constitute issued and outstanding
shares of Common Stock for all corporate purposes.
AA. "Rule 16b-3" means Rule 16b-3 as promulgated and amended from time to
time by the Securities and Exchange Commission under the Exchange Act (or any
successor rule) as in effect with respect to the Company at a given time.
BB. "Stock Appreciation Right" or "SAR" shall mean any Freestanding SAR or
Tandem SAR.
CC. "Subsidiary" means a corporation, partnership, joint venture,
unincorporated association or other entity in which the Company has a direct or
indirect ownership or other equity interest; provided, however, for purposes of
determining whether any person may receive a grant of ISO's, "Subsidiary" means
any corporation in which the Company owns or controls directly or indirectly
more than 50 percent of the total combined voting power represented by all
classes of stock issued by such corporation at the time of the grant.
DD. "Tandem SAR" shall mean a right, granted under this Plan, pursuant to
which a holder may elect to surrender an Option, or any portion thereof, which
is then exercisable, and receive in exchange therefor shares of Common Stock,
cash, or a combination thereof, as the case may be, with an aggregate value
equal to the excess of the Fair Market Value of one share of Common Stock at the
time of exercise over the per share Exercise Price specified in such Option,
multiplied by the number of shares of Common Stock covered by such Option, or
portion thereof, which is so surrendered.
EE. "Tax Withholding Date" shall mean the date the withholding tax
obligation first arises with respect to an Award.
SECTION 3. LIMITS ON AVAILABLE SHARES AND FREESTANDING SAR'S
A. Shares of Common Stock used for an Award under the Plan may be either
authorized but unissued shares or authorized, issued and outstanding shares
acquired by or on behalf of the Company in the name of an Award recipient (or
permissible successor thereof) for purposes of granting or settling such Award,
or may be a combination of the foregoing. Subject to adjustment as provided in
Section 13 of the Plan, the aggregate maximum number of shares which may be (i)
issued or transferred upon the exercise of Options or SAR's, (ii) awarded as
Restricted Stock and released from substantial risk of forfeiture thereof or
(iii) issued or transferred in payment of Performance Shares or Performance
Units which have been earned is 7,200,000.
B. Upon the full or partial payment of any Exercise Price by the transfer
to the Company of Common Stock or upon satisfaction of tax withholding
obligations in connection with any such exercise or any other payment made or
benefit realized under the Plan by the transfer or relinquishment of Common
Stock, there shall be deemed to have been issued or transferred under the Plan
only the net number of shares of Common Stock actually issued or transferred by
the Company less the number of shares of Common Stock so transferred or
relinquished; provided, however, that the number of shares of Common Stock
actually issued or transferred by the Company upon the exercise of Incentive
Stock Options shall not exceed the number of shares of Common Stock first
specified above in Section 3(A), subject to adjustment as therein provided.
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C. Upon payment in cash of the benefit provided by any Award granted under
the Plan, any shares of Common Stock that were covered by that Award shall again
be available for issuance or transfer hereunder.
D. The number of Performance Units (which each have a face amount of $1.00)
that may be granted under this Plan shall not in the aggregate exceed
25,000,000. Performance Units that are granted under this Plan and are paid in
shares of Common Stock or are not earned by the Employe at the end of the
Performance Period shall be available for future grants of Performance Units
hereunder.
E. Notwithstanding any other provision of the Plan to the contrary, no
Employe shall be granted Options for more than 300,000 shares of Common Stock or
Stock Appreciation Rights for more than 300,000 shares of Common Stock during
any period of five consecutive calendar years, subject to adjustment as provided
in Section 13 of this Plan.
F. Notwithstanding any other provision of the Plan to the contrary, in no
event shall any Employe receive awards of Restricted Stock, Performance Shares
and Performance Units having an aggregate value as of their respective Dates of
Grant in excess of $750,000 in any calendar year or in excess of $3,500,000 in
any period of five consecutive calendar years.
SECTION 4. ADMINISTRATION.
The Plan shall be administered by the Committee. In addition to any implied
powers and duties that may be needed to carry out the provisions of the Plan,
the Committee shall have all the powers vested in it by the terms of the Plan,
including exclusive authority to grant Awards to Employes under the Plan, to
select the Employes to receive such Awards, to determine the type, size and
terms of the Awards to be made to each Employe selected (which Awards need not
be uniform), to determine the time when Awards to Employes will be granted, and
to prescribe the form of the Agreements embodying Awards made under the Plan.
Any Award made to an Employe may provide for acceleration of the period of
exercisability, lapse or alteration of the Restriction Period, or modification
of any Performance Measure in the event of a change in control of the Company or
any Subsidiary or other similar transaction or event. The Committee shall be
authorized to interpret the Plan and the Awards granted under the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, to
make any other determinations which it believes necessary or advisable for the
administration of the Plan, and to correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Award in the manner and to the
extent the Committee deems desirable to carry it into effect.
All Committee determinations shall be final, conclusive and binding on the
Company, any Subsidiary, any Employe, any Nonemploye Director, beneficiary,
legal representative, and any other interested parties. The Committee may
authorize any one or more of their number, or any officer of the Company, to
execute and deliver documents on behalf of the Committee. No member of the
Committee shall be liable for any such action taken or determination made in
good faith.
SECTION 5. ELIGIBILITY.
All key Employes are eligible for selection by the Committee to receive an
Award, except Employes covered by a collective bargaining Agreement with the
Company or a Subsidiary which does not provide for coverage under this Plan.
Nonemploye Directors shall be eligible only for non-discretionary Awards under
Section 10 of the Plan.
SECTION 6. STOCK OPTIONS.
A. Terms and Conditions.
1. Type of Option. The Committee may make Awards of ISO's and NQSO's.
Each Option Award shall specify whether the pertinent Option is intended as
a Nonqualified Stock Option or an Incentive Stock Option.
2. Number of Shares Covered. Each Option Award shall specify the
number of shares of Common Stock subject to the pertinent Option.
3. Exercise Period. Each Option Award shall specify the period (or
periods) not in excess of 10 years during which the pertinent Option (or
portions thereof) may be exercised, and the Option
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Agreement shall provide that the Option (or such portion) shall expire at
the end of such period (or periods), and may be subject to earlier
termination in the event of a change in control of the Company or any
Subsidiary or other similar transaction or event, as provided in the Option
Agreement.
4. Exercise Price. The Exercise Price shall be determined by the
Committee at the time any Option is granted, and shall be set forth in the
Option Agreement. In no event shall the Exercise Price per share of any
Option be less than 100% of the Fair Market Value per share on the Date of
Grant.
5. Manner of Exercise. The specified number of shares with respect to
which an Option is exercised shall, subject to applicable tax withholding,
be issued following receipt by the Company of (i) written notice of such
exercise from the Optionee (in such form as the Committee shall have
specified in the Option Agreement or otherwise) of an Option delivered to
the Corporate Secretary or the Vice President and Treasurer of the Company,
and (ii) payment, as provided herein, of the Exercise Price.
6. Payment for Shares. (a) The Exercise Price shall be payable, in
whole or in part, in (i) cash in the form of currency or check or other
cash equivalent acceptable to the Company, (ii) nonforfeitable,
unrestricted shares of Common Stock which are already owned by the Optionee
and have a value at the time of exercise that is equal to the Option Price,
(iii) any other legal consideration that the Committee may deem
appropriate, including without limitation any form of consideration
authorized under Section 6(A)(6)(b) below, on such basis as the Committee
may determine in accordance with the Plan and (iv) any combination of the
foregoing.
(b) Any grant of a Nonqualified Stock Option may provide that payment
of the Exercise Price may also be made in whole or in part in the form of
shares of Restricted Stock or other Common Stock that are subject to risk
of forfeiture or restrictions on transfer. Unless otherwise determined by
the Committee on or after the Date of Grant, whenever any Exercise Price is
paid in whole or in part by means of any of the forms of consideration
specified in this paragraph, the Common Stock received by the Optionee upon
the exercise of the Nonqualified Option shall be subject to the same risks
of forfeiture or restrictions on transfer as those that applied to the
consideration surrendered by the Optionee; provided, however, that such
risks of forfeiture and restrictions on transfer shall apply only to the
same number of shares of Common Stock received by the Optionee as applied
to the forfeitable or restricted Common Stock surrendered by the Optionee.
(c) Any grant may provide for deferred payment of the Exercise Price
from the proceeds of sale through a broker of some or all of the shares of
Common Stock to which the exercise relates.
B. Effect of Exercise of Option on Tandem SAR.
Upon the exercise of an Option with respect to which a Tandem SAR has been
granted, the number of shares of Common Stock with respect to which the SAR
shall be exercisable shall be reduced by the number of shares with respect to
which the Option has been exercised.
SECTION 7. STOCK APPRECIATION RIGHTS.
A. Terms and Conditions.
1. Type of SAR. Each SAR Award shall specify whether it relates to a
Tandem SAR or to Freestanding SAR's.
2. Number of Optioned Shares or Freestanding SAR's. In the case of
any Tandem SAR, the SAR Award shall specify the Option and the number of
shares of Common Stock subject thereto to which the SAR relates. Any SAR
Award relating to Freestanding SAR's shall specify the number of such SAR's
to which it relates.
3. Exercise Period. Each SAR Award shall specify the period during
which the pertinent SAR(s) may be exercised and the SAR Agreement shall
provide that the SAR(s) shall expire at the end of each period (or periods)
and may be subject to earlier termination in the event of a change in
control of the Company or any Subsidiary or other similar transaction or
event, as provided in the SAR Agreement. For a Freestanding SAR, such
expiration date shall be no later than ten years from the Date of Grant
thereof.
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For Tandem SAR's, such expiration date(s) shall be no later than the
date(s) of expiration of the related Option, and a Tandem SAR shall be
exercisable during its term only when and to the extent the related Option
is exercisable. A Freestanding SAR shall be exercisable only during the
period of the grantee's employment with the Company or a Subsidiary and for
such post-termination exercise period as would apply under the Option
Agreement had the Freestanding SAR Award to the grantee instead been an
Award of NQSO's.
4. Manner of Exercise. A SAR granted under the Plan shall be
exercised by the holder by delivery to the Corporate Secretary or the Vice
President and Treasurer of the Company of written notice of exercise in
such form as shall have been specified in the SAR Agreement or otherwise.
5. Payment to Holder. If the form of consideration to be received
upon exercise of the SAR is not specified in the SAR Agreement, upon the
exercise thereof, the holder may request the form of consideration he or
she wishes to receive in satisfaction of such SAR, which may be in shares
of Common Stock (valued at Fair Market Value on the date of exercise of the
SAR), or in cash, or partly in cash and partly in shares of Common Stock,
as the holder shall request; provided, however, that the Committee, in its
sole discretion, may consent to or disapprove any request of the Employe to
receive cash in full or partial settlement of such SAR. Payment shall be
subject to applicable tax withholding.
B. Effect of Exercise of Tandem SAR on Related Option.
Upon the exercise of a Tandem SAR, the number of shares covered by the
related Option shall be reduced by the number of shares of Common Stock with
respect to which such SAR is exercised.
SECTION 8. RESTRICTED STOCK.
A. Terms and Conditions.
The Committee may make Awards of Restricted Stock to Employes without
additional consideration or may offer to sell Restricted Stock to Employes at a
price that is equal to or less than its Fair Market Value. The terms and
conditions of any such Restricted Stock Award shall be as determined by the
Committee and shall be set forth in the Restricted Stock Agreement. The
Restricted Stock Agreement shall specify the number of shares of Common Stock
subject to the Award and the applicable Restriction Period or Periods. Any such
Agreement may provide for forfeiture of shares covered thereby if specified
Performance Measures are not attained during a Restriction Period and/or for
termination of any Restriction Period upon attainment of Performance Measures,
but in no event may any such Agreement permit termination of any Restriction
Period earlier than three years after the Date of Grant of the pertinent Award
except in the case of Awards that are subject to Performance Measures (in which
case the Restriction Period shall be at least one year) or in the case of death,
disability, retirement or in the event of a change in control of the Company or
any Subsidiary or other similar circumstance in accordance with the provisions
of the Restricted Stock Agreement.
B. Certificates Evidencing Ownership of Restricted Stock.
During the Restriction Period, a certificate representing the Restricted
Stock shall be registered in the recipient's name and bear a restrictive legend
to the effect that ownership of such Restricted Stock, and the enjoyment of all
rights appurtenant thereto, are subject to the restrictions, terms, and
conditions provided in the Plan and the applicable Agreement.
Certificates representing Restricted Stock together with stock powers or
other instruments of assignment, each endorsed in blank, which will permit
transfer to the Company of all or any portion of the Restricted Stock evidenced
by such certificate in the event it is forfeited, shall be deposited by the
recipient with the Company. Upon the termination of an applicable Restriction
Period, and subject to remittance of applicable withholding tax, a certificate
or certificates evidencing ownership of the number of shares of Common Stock
theretofore evidenced by the certificate representing Restricted Stock, free of
restrictive legend (other than any relating to a right of first refusal of the
Company or required by any applicable securities laws), shall be issued to the
Employe, his or her beneficiary(ies), or legal representative, promptly after
the expiration of the Restriction Period.
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C. Rights With Respect to Shares During Restriction Period.
Subject to the terms and conditions of the Restricted Stock Agreement, the
Employe, as the owner of the Common Stock issued as Restricted Stock, shall have
all rights of a shareholder including, but not limited to, voting rights, the
right to receive cash or stock dividends thereon, and the right to participate
in any capital adjustment of the Company. Any distributions with respect to
shares of Restricted Stock other than in the form of cash shall be held by the
Company, and shall be subject to the same restrictions as the shares with
respect to which such distributions were made. Any grant or sale may require
that any or all dividends or other distributions paid on the shares of
Restricted Stock during the Restriction Period shall be automatically
sequestered and may be reinvested on an immediate or deferred basis in
additional shares of Common Stock, which may be subject to the same restrictions
as the underlying Award or such other restrictions as the Committee may
determine.
SECTION 9. PERFORMANCE SHARES AND PERFORMANCE UNITS.
A. Terms and Conditions.
The Committee may make Awards of Performance Shares and Performance Units.
The terms and conditions of any Performance Share Award or a Performance Unit
Award shall be set forth in the applicable Agreement. Such Agreement shall
specify the number of Performance Shares or Performance Units subject to the
Award, the Performance Period(s), which may be subject to earlier termination in
the event of a change in control of the Company or any Subsidiary or other
similar transaction or event, and the Performance Measures applicable to the
Award.
B. Payment.
Following the end of a Performance Period applicable to a granted Award,
the Committee shall determine the extent (if any) to which Performance Measures
established for the Award were attained and, accordingly, the number, if any, of
shares of Common Stock or the amount of cash that shall then become payable to
the holder of the Award. If the Performance Shares or Performance Units are to
be paid to the Employe in the form of shares of Restricted Stock, the recipient
must execute a Restricted Stock Agreement as a condition of the issuance of such
shares in his or her name.
SECTION 10. NON-DISCRETIONARY AWARDS TO NONEMPLOYE DIRECTORS.
On the date of the 1995 annual meeting of Common Stock shareholders of the
Company and on the date of each annual meeting of Common Stock shareholders of
the Company thereafter, each Nonemploye Director shall receive automatically an
Award of 300 shares of Common Stock if he or she is elected at such meeting or
continuing to serve immediately after such meeting as a Nonemploye Director. The
shares of Common Stock awarded pursuant to this Section 10 shall not be subject
to any restriction under the Plan (other than any that may be required pursuant
to Section 16(N)).
SECTION 11. WITHHOLDING TAXES.
The Company shall, if required by applicable law, withhold or cause to be
withheld, Federal, state and/or local taxes in connection with the exercise,
vesting or settlement of an Award. Unless otherwise provided in the applicable
Agreement, each Employe may satisfy any such tax withholding obligation by any
of the following means, or by a combination of such means: (i) a cash payment,
(ii) subject to Committee approval, by delivery to the Company of a number of
shares of Common Stock having a Fair Market Value, as of the Tax Withholding
Date, sufficient to satisfy the amount of the withholding tax obligation arising
from an exercise, vesting or settlement of an Award, (iii) subject to Committee
approval, by authorizing the Company to withhold from the shares of Common Stock
otherwise issuable to the Employe pursuant to the exercise or vesting of an
Award, a number of shares having a Fair Market Value, as of the Tax Withholding
Date, which will satisfy the amount of the withholding tax obligation, or (iv)
by a combination of such methods of payment. If the amount requested is not
paid, the Company may refuse to satisfy the Award. The Company and the Employe
may also make similar arrangements with respect to the payment of any taxes with
respect to which withholding is not required.
C-7
<PAGE> 58
SECTION 12. TRANSFERABILITY.
A. No Option or other derivative security (as that term is defined in Rule
16b-3) granted under the Plan may be transferred by an Employe except by will or
the laws of descent and distribution. Options and Stock Appreciation Rights
granted under the Plan may not be exercised during an Employe's lifetime except
by the Employe or, in the event of the Employe's legal incapacity, by the
employe's guardian or legal representative acting in a fiduciary capacity on
behalf of the Employe under state law and court supervision. Notwithstanding the
foregoing, the Committee, in its sole discretion, may provide for the
transferability of particular Awards under the Plan so long as such provisions
will not disqualify the exemption for other Awards under Rule 16b-3.
B. Any grant made under the Plan may provide that all or any part of the
shares of Common Stock that are to be issued or transferred by the Company upon
the exercise of Options or Stock Appreciation Rights or in payment of
Performance Shares or Performance Units, or that are no longer subject to the
substantial risk of forfeiture and restrictions on transfer referred to in
Section 8 of this Plan, shall be subject to further restrictions upon transfer.
SECTION 13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event of any change in the outstanding Common Stock by reason of any
stock split, stock dividend, recapitalization, merger, consolidation,
reorganization, combination, or exchange of shares, split-up, split-off,
spin-off, spin-away, liquidation or other similar change in capitalization, or
any distribution to common stock shareholders of the Company other than normal
cash dividends, the number or kind of shares that may be issued, transferred or
awarded under the Plan pursuant to Section 3, and the number or kind of shares
subject to any outstanding Award, shall be automatically adjusted, and the
Committee shall be authorized to make such other equitable adjustment of any
Award or shares issuable pursuant thereto, or in any Performance Measures
related to any Award, so that the proportionate interest of the Employe shall be
maintained as before the occurrence of such event. In the event of any such
transaction or event, the Committee may provide in substitution for any or all
outstanding Awards under the Plan such alternative consideration as it may in
good faith determine to be equitable under the circumstances and may require in
connection therewith the surrender of all Awards so replaced. The Committee
shall also make or provide for such adjustments in the maximum numbers of shares
of Common Stock which may be issued or transferred upon the exercise of Options
or SARs or awarded as Restricted Stock or issued or transferred in payment of
Performance shares or Performance Units, as specified in Section 3(A) of the
Plan, the maximum numbers of shares of Common Stock specified in Section 3(E) of
the Plan and the number of shares to be awarded automatically pursuant to
Section 10 of the Plan as the Committee may in good faith determine to be
appropriate in order to reflect any transaction or event described in this
Section 13. Any such adjustment shall be conclusive and binding for all purposes
of the Plan. If the Reorganization is consummated, (i) the "Common Stock" shall
mean thereafter the common stock of Holding Company for which The Detroit Edison
Company common stock is exchanged in the Reorganization, subject to adjustment
pursuant to this Section 13; (ii) "Company" shall thereafter refer to Holding
Company and any successor corporation, and (iii) "Board" and "Committee" shall
thereafter refer to the board of directors and applicable committee of Holding
Company.
SECTION 14. AMENDMENT AND TERMINATION.
The Committee may at any time terminate, modify or amend the Plan in such
respects as it shall deem advisable. However, under no circumstances, without
approval of the Common Stock shareholders, may the Plan be amended or modified
to permit the exercise of an Option at an Exercise Price of less than the Fair
Market Value of a share of Common Stock on the Date of Grant, to increase the
number of shares of stock which may be the subject of Awards under the Plan
under Section 3 (except pursuant to adjustments under
Section 13), or otherwise cause any Award under the Plan to cease to qualify
under Rule 16b-3 or for the performance based exception to Section 162(m) of the
Code. The termination or any modification or amendment of the Plan shall not,
without the consent of the Employe, adversely affect his or her rights under an
Award granted prior thereto.
SECTION 15. CERTAIN TERMINATIONS OF EMPLOYMENT, HARDSHIP AND APPROVED LEAVES OF
ABSENCE.
Notwithstanding any other provision of the Plan to the contrary, in the
event of termination of employment by reason of death, disability, normal
retirement, early retirement with the consent of the
C-8
<PAGE> 59
Company, termination of employment to enter public service with the consent of
the Company or leave of absence approved by the Company, or in the event of
hardship or other special circumstances, of an Employe who holds an Option or
Stock Appreciation Right that is not immediately and fully exercisable, any
shares of Restricted Stock as to which the substantial risk of forfeiture or the
prohibition or restriction on transfer has not lapsed, any Performance Shares or
Performance Units that have not been fully earned, or any Common Shares that are
subject to any transfer restriction pursuant to Section 8 of this Plan, the
Committee may take any action that it deems to be equitable under the
circumstances or in the best interests of the Company or any Subsidiary,
including without limitation waiving or modifying any limitation or requirement
with respect to any Award under this Plan.
SECTION 16. MISCELLANEOUS PROVISIONS.
A. Except as provided in Section 10, no Employe or other person shall have
any claim or right to be granted an Award under the Plan.
B. Grant of any Option, SAR or Performance Shares or Performance Units
shall not confer upon the grantee any rights of a shareholder with respect to
any shares subject to such Award.
C. The Plan, the grant, exercise, vesting and/or settlement of Awards
thereunder, and the obligations of the Company to satisfy Awards shall be
subject to all applicable Federal and state laws, rules and regulations and to
such approvals by any government or regulatory agency as may be required, and
the Committee may impose any additional restrictions with respect to Awards in
order to comply with any legal requirements applicable to Awards or to qualify
for any exemption it may deem appropriate.
D. Any expenses of the Plan shall be borne by the Company.
E. By accepting an Award under the Plan, each Employe and his or her legal
representative or beneficiary shall be conclusively deemed to have indicated his
or her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board or the Committee.
F. Nothing in the Plan, or in any Agreement entered into pursuant to the
Plan, shall confer on an Employe any right to continue in the employ of the
Company or any Subsidiary, or in any way affect the right of the Company or any
Subsidiary to terminate the Employe's employment without prior notice at any
time for any reason or for no reason.
G. Participation in the Plan shall not affect an Employe's eligibility to
participate in any other benefit or incentive plan of the Company or any
Subsidiary. Awards under the Plan shall not be considered earnings for purposes
of the Employe Savings Plan, any Company-sponsored or Subsidiary-sponsored
Retirement Plan, insurance or other employee benefit programs.
H. With respect to shares acquired upon the exercise of Options or Stock
Appreciation Rights and with respect to shares acquired by an individual under a
Restricted Stock Award, Performance Share or Performance Unit Award, or
otherwise under the Plan, the Company may reserve a "right of first refusal" to
purchase from the holder thereof any such shares at Fair Market Value. If such
right is reserved, the holder, prior to any disposition of such shares of Common
Stock, shall be required to first notify the Corporate Secretary or Vice
President and Treasurer of the Company or such other officer as may be
designated by the Committee, in writing in such form as the Committee may
prescribe, of his or her intention to dispose of any such shares, and the
Company will advise the holder within five days whether it intends to purchase
or cause to be purchased such shares, for this purpose. Fair Market Value shall
be determined as of the date next preceding the date that the Company notifies
the holder of its intention to purchase or cause to be purchased such shares.
The Committee will designate an officer to decide whether to accept or reject
such right of first refusal. If the Company does not exercise its right to
purchase or cause to be purchased the shares within such period, the holder may
freely dispose of the shares following expiration of such period.
I. A breach by the Employe, his or her beneficiary(ies), or legal
representative, of any restrictions, terms or conditions provided in the Plan,
the Agreement, or otherwise established by the Committee with respect to any
Award will, unless waived in whole or in part by the Committee, cause a
forfeiture of such Award.
J. The Committee shall not, without the further approval of the Common
Stock shareholders of the Company, authorize the amendment of any outstanding
Option to reduce the Exercise Price or authorize the
C-9
<PAGE> 60
amendment of any outstanding Stock Appreciation Right to reduce the base price.
Furthermore, no Option or Stock Appreciation Right shall be cancelled and
replaced with Awards having a lower Exercise Price or base price without the
further approval of the Common Stock shareholders of the Company.
K. The Plan shall be submitted to the Common Stock shareholders of the
Company for their approval on April 24, 1995, or on such other date as may be
fixed for the next annual meeting of Common Stock shareholders, and shall become
effective only upon such approval and thereafter continue until its termination
by the Compensation Committee. No Restricted Stock Awards or Awards to
Nonemploye Directors shall be granted prior to the date the Plan becomes
effective, and any other Awards that may be granted before the Plan becomes
effective shall be granted subject to and shall become effective only upon the
effectiveness of the Plan.
L. The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the State of Michigan.
M. It is the intention that the Plan at all times fully satisfy the
provisions and conditions of Rule 16b-3 applicable to a Plan of this type.
Accordingly, anything herein to the contrary notwithstanding, to the extent that
Rule 16b-3 at any given time would require that decisions concerning the
selection of Employes who are or become subject to reporting requirements of
Section 16 of the Exchange Act ("Section 16 Reporting Persons") to be granted
Awards hereunder, the timing, amounts, and other terms of such Awards, and the
form of settlement of any such Awards be made only by the Committee, all such
decisions by the Committee shall be final and conclusive and not subject to
reversal or modification by the Board. Moreover, irrespective of any rights or
discretionary power which a Section 16 Reporting Person holding a pertinent
Award otherwise would possess hereunder or under the Agreement evidencing such
Award concerning the timing of exercise of a SAR, the manner of paying the
Exercise Price for an exercised Option, a request or election concerning the
form of settlement of a SAR, or the manner of satisfying tax withholding
obligations arising with respect to any Award, the Section 16 Reporting Person
shall be entitled to exercise such rights and discretion only at such times and
manner and under such other conditions as at the time are contemplated by the
applicable provisions of Rule 16b-3 and any attempt otherwise to exercise such
rights or discretion shall be void and of no effect. The Plan is intended to
comply with and be subject to Rule 16b-3 as in effect prior to May 1, 1991. The
Committee may at any time elect that this Plan shall be subject to Rule 16b-3 as
in effect on and after May 1, 1991.
N. Restrictions on Common Stock. The Company may impose restrictions on
any shares of Common Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, restrictions intended to achieve compliance with
the Securities Act of 1933, as amended, with the requirements of any stock
exchange upon which such shares or shares of the same class are then listed, and
with any blue sky or securities laws applicable to such shares.
O. The Committee may require or permit Employes to elect to defer the
issuance of Common Stock or the settlement of Awards in cash under such rules
and procedures as it may establish under the Plan. It also may provide that
deferred settlements include the payment or crediting of interest on the
deferral amounts, or the payment or crediting of dividend equivalents where the
deferral amounts are denominated in shares.
P. The Committee may condition the grant of any Award or combination of
Awards authorized under this Plan (other than non-discretionary Awards pursuant
to Section 10) on the surrender or deferral by an Employe of his or her right to
receive a cash bonus or other compensation otherwise payable by the Company or a
Subsidiary to the Employe.
Q. If another corporation is merged into the Company or the Company
otherwise acquires another corporation, the Committee may elect to assume under
this Plan any or all outstanding stock options or other awards granted by such
corporation under any stock option or other plan adopted by it prior to such
acquisition. Such assumptions shall be on such terms and conditions as the
Committee may determine; provided, however, that the awards as so assumed do not
contain any terms, conditions or rights that are inconsistent with the terms of
this Plan. Unless otherwise determined by the Committee, such awards shall not
be taken into account for purposes of determining the limitations contained in
Section 3 of this Plan.
C-10
<PAGE> 61
- --------------------------------------------------------------------------------
IMPORTANT
THE INTEREST AND COOPERATION OF ALL SHAREHOLDERS IN THE AFFAIRS OF THE
DETROIT EDISON COMPANY ARE CONSIDERED TO BE OF THE GREATEST IMPORTANCE BY
YOUR MANAGEMENT. EVEN THOUGH YOU EXPECT TO ATTEND THE ANNUAL MEETING, IT
IS URGENTLY REQUESTED THAT, WHETHER YOUR SHAREHOLDINGS ARE LARGE OR SMALL,
YOU PROMPTLY FILL IN, DATE, SIGN AND RETURN THE ENCLOSED FORM OF PROXY IN
THE ENVELOPE PROVIDED HEREWITH. IF YOU WILL DO SO NOW, THE COMPANY WILL BE
SAVED THE EXPENSE OF FOLLOW-UP NOTICES.
- --------------------------------------------------------------------------------
<PAGE> 62
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Indemnification. Pursuant to Article VI of Holding Company's Articles
of Incorporation, directors of Holding Company will not be personally liable to
Holding Company or its shareholders in the performance of their duties to the
full extent permitted by law.
Article VII of Holding Company's Articles of Incorporation provides that
each person who is or was or had agreed to become a director or officer of
Holding Company, or each such person who is or was serving or who had agreed to
serve at the request of the Board of Directors as an employe or agent of Holding
Company or as a director, officer, employe or agent of another corporation,
partnership, joint venture, trust or other enterprise (including the heirs,
executors, administrators or estate of such person), shall be indemnified by
Holding Company to the full extent permitted by the Michigan Business
Corporation Act or any other applicable laws as presently or hereafter in
effect. In addition, pursuant to the authority granted by Article VII of the
Articles of Incorporation, Holding Company intends to enter into indemnification
agreements with its officers and directors which provide for indemnification to
the maximum extent permitted by law. These agreements will set forth certain
procedures for the advancement by Holding Company of certain expenses to
indemnities.
(b) Insurance. Holding Company (with respect to indemnification liability)
and its directors and officers (in their capacities as such) are insured against
liability for wrongful acts (to the extent defined) under three insurance
policies providing aggregate coverage in the amount of $85 million.
ITEM 21. EXHIBITS.
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------------------------------------------------------------------
<S> <C>
2(a) Agreement and Plan of Exchange (attached to Prospectus and Proxy Statement as
Exhibit A).
*3(a) Articles of Incorporation of DTE Holdings, Inc. (attached as Exhibit B to
Prospectus and Proxy Statement previously filed).
3(b) Form of Amended and Restated Articles of Incorporation of DTE Holdings, Inc.
(attached to Prospectus and Proxy Statement as Exhibit B).
3(c) By-Laws of DTE Holdings, Inc.
3(d) Form of By-Laws of DTE Holdings, Inc. to be in effect immediately prior to the
effective time of the Exchange.
5 Opinion of Christopher C. Nern, Esq., Vice President and General Counsel.
8 Opinion of Jones, Day, Reavis & Pogue.
*15 Letter re unaudited interim financial information.
23(a) Consent of Christopher C. Nern, Esq. (included in Exhibit 5).
23(b) Consent of Jones, Day, Reavis & Pogue (included in Exhibit 8).
23(c) Consent of Price Waterhouse LLP.
*24 Powers of Attorney.
99(a) Form of Proxy Card, Confidential Voting Instructions Form, and letter to
participants in Savings & Investment Plan(s).
99(b) Consents of persons to be elected directors of DTE Holdings, Inc. immediately prior
to the Effective Time of the Exchange.
</TABLE>
- ---------------
* Previously filed.
II-1
<PAGE> 63
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(2) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(3) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when
it became effective.
(4) To remove from registration by means of a post-effective amendment
any shares of Holding Company Common Stock which are not issued in the
Exchange.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE> 64
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
DETROIT, STATE OF MICHIGAN ON MARCH 9, 1995.
DTE HOLDINGS, INC.
By: /s/ JOHN E. LOBBIA
------------------------------------
John E. Lobbia
Chairman of the Board and Chief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED, ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ JOHN E. LOBBIA Chairman of the Board, Chief March 9, 1995
- --------------------------------------------- Executive Officer and Director
(John E. Lobbia)
PRINCIPAL OPERATING OFFICER:
/s/ ANTHONY F. EARLEY, JR. President, Chief Operating March 9, 1995
- --------------------------------------------- Officer and Director
(Anthony F. Earley, Jr.)
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ LARRY G. GARBERDING Executive Vice President, March 9, 1995
- --------------------------------------------- Chief Financial Officer and
(Larry G. Garberding) Director
</TABLE>
II-3
<PAGE> 65
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------- -------------------------------------------------------------------------- ------
<C> <S> <C>
2(a) Agreement and Plan of Exchange (attached to Prospectus and Proxy Statement
as Exhibit A).
*3(a) Articles of Incorporation of DTE Holdings, Inc. (attached as Exhibit B to
Prospectus and Proxy Statement previously filed).
3(b) Form of Amended and Restated Articles of Incorporation of DTE Holdings,
Inc. (attached to Prospectus and Proxy Statement as Exhibit B).
3(c) By-Laws of DTE Holdings, Inc.
3(d) Form of By-Laws of DTE Holdings, Inc. to be in effect immediately prior to
the effective time of the Exchange.
5 Opinion of Christopher C. Nern, Esq., Vice President and General Counsel.
8 Opinion of Jones, Day, Reavis & Pogue.
*15 Letter re unaudited interim financial information.
23(a) Consent of Christopher C. Nern, Esq. (included in Exhibit 5).
23(b) Consent of Jones, Day, Reavis & Pogue (included in Exhibit 8).
23(c) Consent of Price Waterhouse LLP.
*24 Powers of Attorney.
99(a) Form of Proxy Card, Confidential Voting Instructions Form, and letter to
participants in Savings & Investment Plan(s).
99(b) Consents of persons to be elected directors of DTE Holdings, Inc.
immediately prior to the Effective Time of the Exchange.
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 3(c)
BY-LAWS
OF
DTE HOLDINGS, INC.
_____________________
AS ADOPTED ON JANUARY 26, 1995
_____________________
<PAGE> 2
BY-LAWS
of
DTE HOLDINGS, INC.
_____________________
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 4. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 5. Voting and Inspectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 6. Record of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 7. List of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
BOARD OF DIRECTORS AND COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1. Number, Time of Holding Office and Limitation on Age. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. Meetings of the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Annual Meeting of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Executive Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 7. Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 8. Participation in Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 9. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1. Officers and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2. Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5. Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 6. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 7. Voting of Shares and Securities
of Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV
CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1. Certificates of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3. Lost or Destroyed Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
CHECKS, NOTES, BONDS, DEBENTURES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI
CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VII
CONTROL SHARE ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII
AMENDMENT OF BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
ii
<PAGE> 4
BY-LAWS
OF
DTE HOLDINGS, INC.
AS ADOPTED ON JANUARY 26, 1995
ARTICLE I
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the
shareholders of the Company shall be held on the fourth Monday of April in each
year (or if said day be a legal holiday, then on the next succeeding day not a
legal holiday), at such time and at such place as may be fixed by the Board of
Directors and stated in the notice of meeting, for the purpose of electing
directors and transacting such other business as may properly be brought before
the meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
shareholders may be held upon call of the Board of Directors or the Chairman of
the Board or the President or the holders of record of a majority of the
outstanding shares of stock of the Company entitled to vote at such meeting, at
such time as may be fixed by the Board of Directors or the Chairman of the
Board or the President or such shareholders and stated in the notice of
meeting. All such meetings shall be held at the office of the Company in the
City of Detroit unless some other place is specified in the notice.
SECTION 3. NOTICE OF MEETINGS. Written notice of the date,
time, place and purpose or purposes of every meeting of the shareholders,
signed by the Secretary or an Assistant Secretary, shall be given either
personally or by mail, within the time prescribed by law, to each shareholder
of record entitled to vote at such meeting and to any shareholder who, by
reason of any action proposed at such meeting, might be entitled to receive
payment for such stock if such action were taken. If mailed, such notice is
given when deposited in the United States mail, with postage thereon prepaid,
directed to the shareholder at the address as it appears on the record of
shareholders, or, if the shareholders shall have filed with the Secretary of
the Company a written request that notices intended for such shareholder be
mailed to some other address, then directed to the address designated in such
request. Further notice shall be given by mail, publication or otherwise, if
and as required by law.
Notice of meeting need not be given to any shareholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of any shareholder at the meeting, in person or by
proxy, without protesting
1
<PAGE> 5
at the beginning of the meeting the lack of notice of such meeting, shall
constitute a waiver of notice by such shareholder.
Notice of a special meeting shall also indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
SECTION 4. QUORUM. At every meeting of the shareholders, the
holders of record of a majority of the outstanding shares of stock of the
Company, entitled to vote at such meeting, whether present in person or
represented by proxy, shall constitute a quorum. If at any meeting there shall
be no quorum, the holders of a majority of the outstanding shares of stock so
present or represented may adjourn the meeting from time to time, without
notice (unless otherwise required by statute) other than announcement at the
meeting, until a quorum shall have been obtained, when any business may be
transacted which might have been transacted at the meeting as first convened
had there been a quorum. When a quorum is once present to organize a meeting,
it is not broken by the subsequent withdrawal of any shareholder.
SECTION 5. VOTING AND INSPECTORS. Each holder of record of
outstanding shares of stock of the Company entitled to vote at a meeting of
shareholders shall be entitled to one vote for each share of stock standing in
the shareholder's name on the record of shareholders, and may so vote either in
person or by proxy appointed by instrument in writing executed by such holder
or by the shareholder's duly authorized attorney-in-fact. No proxy shall be
valid after the expiration of three years from the date of its execution unless
the shareholder executing it shall have specified therein the length of time it
is to continue in force which shall be for some limited period. The authority
of the holder of a proxy to act shall not be revoked by the incompetence or
death of the shareholder who executed the proxy unless, before the authority is
exercised, written notice of an adjudication of such incompetence or of such
death is received by the Secretary or an Assistant Secretary.
In advance of any meeting of shareholders, the Board of Directors may
appoint one or more inspectors for the meeting. If inspectors are not so
appointed, the chairman of the meeting shall appoint such inspectors. Before
entering upon the discharge of their duties, the inspectors shall take and
subscribe an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of their ability, and shall
take charge of the polls and after balloting shall make a certificate of the
result of the vote taken. No officer or director of the Company or candidate
for office of director shall be appointed as an inspector. At all elections of
directors the voting shall be by ballot and a plurality of the votes cast
thereat shall elect.
SECTION 6. RECORD OF SHAREHOLDERS. For the purpose of
determining the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to or dissent
from any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividend or the allotment of
any rights, or for the purpose of any other action, the Board of Directors may
fix, in advance, a date as the record date for any such
2
<PAGE> 6
determination of shareholders, which record date shall not be less than ten
days nor more than the maximum number of days permitted by law before the date
of the meeting, or taking of any other action.
SECTION 7. LIST OF SHAREHOLDERS. A list of shareholders of
record, arranged alphabetically within each class and series of stock, as of
the record date, certified by the Secretary or any Assistant Secretary or by a
transfer agent, shall be produced at any meeting of shareholders and may be
inspected by any shareholder at any time during the meeting. If the right to
vote at any meeting is challenged, the inspectors, or the person presiding at
the meeting, shall require such list of shareholders to be produced as evidence
of the right of the persons challenged to vote at such meeting, and all persons
who appear on such list to be shareholders entitled to vote thereat may vote at
such meeting.
ARTICLE II
BOARD OF DIRECTORS AND COMMITTEES
SECTION 1. NUMBER, TIME OF HOLDING OFFICE AND LIMITATION ON AGE.
The business and affairs of the Company shall be managed by or under the
direction of a Board of Directors. The number of directors constituting the
entire Board shall be three or such other number as may be determined from time
to time by resolution of the Board so long as the total number of directors is
not less than two nor more than eight; provided, however, that the minimum and
maximum number of directors may be increased or decreased from time to time by
vote of a majority of the entire Board; and, further provided that no change in
the number of directors shall serve to shorten the term of office of any
incumbent director. Each director elected shall hold office for the term for
which he or she is elected and until his or her successor is elected and
qualified or until his or her resignation or removal.
Except as hereinafter provided, each director shall be a holder of
common stock of the Company at the time of initial election to the Board or
shall become a holder within thirty days after such election (to the extent of
at least one share, owned beneficially) and any director who thereafter ceases
to be such a holder, shall thereupon cease to be a director. The Board shall
have the authority to waive the requirement to hold shares in individual
situations upon presentation of evidence that a nominee or director is unable
to hold shares for legal or religious reasons.
No person who shall have served as an employe of the Company shall be
elected a director after retiring from employment with the Company; provided,
however, that if such person was the chief executive officer of the Company at
the time of such retirement, such person shall be eligible for election as a
director until attaining age seventy. No other person shall be elected a
director after attaining age seventy.
3
<PAGE> 7
SECTION 2. VACANCIES. Whenever any vacancy shall occur in the
Board of Directors by death, resignation, or any other cause, it shall be
filled without undue delay by a majority vote of the remaining members of the
Board of Directors (even if constituting less than a quorum), and the person
who is to fill any such vacancy shall hold office for the unexpired term of the
director to whom such person succeeds, or for the term fixed by the Board of
Directors acting in compliance with Section l of this Article II in case of a
vacancy created by an increase in the number of directors, and until a
successor shall be elected and shall have qualified; provided, however, that no
vacancy need be filled if, after such vacancy shall occur, the number of
directors remaining on the Board shall be not less than a majority of the
entire Board including any vacancies. During the existence of any vacancy or
vacancies, the surviving or remaining directors shall possess and may exercise
all the powers of the full Board of Directors, when action by a larger number
is not required by law.
SECTION 3. MEETINGS OF THE BOARD. Regular meetings of the Board
of Directors shall be held at such times and at such places as may from time to
time be fixed by the Board of Directors
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President or, in the event of the incapacity of
the Chairman of the Board and the President, the Executive Committee by giving
reasonable notice of the time and place of such meetings or by obtaining
written waivers of notice, before or after the meeting, from each absent
director. All such meetings shall be held at the office of the Company in the
City of Detroit unless some other place is specified in the notice.
A notice, or waiver of notice, need not specify the purpose of the
meeting,
SECTION 4. QUORUM. A majority of the directors in office at the
time of a meeting of the Board shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time without notice other than announcement at the
meeting, until a quorum shall have been obtained, when any business may be
transacted which might have been transacted a the meeting as first convened had
there been a quorum. The acts of a majority of the directors present at any
meeting at which there is a quorum shall be the acts of the Board, unless
otherwise provided by law, by the Articles of Incorporation or by the By-Laws.
SECTION 5. ANNUAL MEETING OF DIRECTORS. A meeting of the Board
of Directors, to be known as the directors' annual meeting, shall be held
without notice each year after the adjournment of the annual shareholders'
meeting and on the same day, and at such meeting the officers of the Company
for the ensuing year shall be elected. If a quorum of the directors is not
present on the day appointed for the directors' annual meeting, the meeting
shall be adjourned to some convenient day.
4
<PAGE> 8
SECTION 6. EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution or resolutions passed by a majority of the entire Board, designate
an Executive Committee to consist of the Chief Executive Officer and two or
more of the other directors, and alternates, and shall designate the Chairman
thereof. The Executive Committee shall have and may exercise, when the Board
is not in session, all of the powers of the Board in the management of the
business and affairs of the Company, and shall have power to authorize the seal
of the Company to be affixed to all papers which may require it; but the
Executive Committee shall not have power to declare dividends, to change the
number of directors constituting the entire Board, to fill vacancies in the
Board, or to change the membership of, or to fill vacancies in, any committee,
or to fix the compensation of the directors or committee members, or to make or
amend By-Laws of the Company, or to submit matters for action by shareholders,
or to amend or repeal a resolution of the Board which by its terms may not be
changed by the Executive Committee. The Board shall have the power at any time
to fill vacancies in, to change the membership of, or to dissolve, the
Executive Committee. The Executive Committee may make rules for the conduct of
its business and may appoint such subcommittees and assistants as it shall from
time to time deem necessary. A majority of the members of the Executive
Committee shall constitute a quorum. All action taken by the Executive
Committee shall be reported to the Board at its meeting next succeeding such
action. The Secretary or an Assistant Secretary shall attend and act as
secretary of all meetings of the Committee and keep the minutes thereof.
Meetings of the Executive Committee may be called by the Chairman of
the Board or the President or, in the event of the incapacity of the Chairman
of the Board and the President, by two or more members of the Executive
Committee by giving reasonable notice of the time and place of such meetings.
All such meetings shall be held at the office of the Company in the City of
Detroit unless some other place is specified in the notice.
SECTION 7. COMMITTEES. The Board of Directors may, by
resolution, create a committee or committees of one or more directors, and
alternates, to consider and report upon or to carry out such matters (not
excepted by the foregoing section) as may be entrusted to them by the Board of
Directors, and shall designate the Chairman of each such committee.
SECTION 8. PARTICIPATION IN MEETINGS. One or more members of
the Board of Directors or any committee thereof may participate in any meeting
of such Board or such committee by means of a conference telephone or similar
communications equipment which enables all persons participating in such a
meeting to hear each other at the same time and participation in the manner so
described shall constitute presence in person at such meetings.
SECTION 9. COMPENSATION. Each director of the Company who is
not a salaried officer or employe of the Company may receive reasonable
compensation for services as a director, including a reasonable fee for
attendance at meetings of the Board and
5
<PAGE> 9
committees thereof, and attendance at the Company's request at other meetings
or similar activities related to the Company.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS AND AGENTS. The officers of the Company to
be elected by the Board of Directors, as soon as practicable after the election
of directors each year, shall be Chairman of the Board, the President, a
Secretary and a Treasurer. The Board of Directors may also from time to time
elect one or more Vice Presidents, a Controller, a General Auditor, a General
Counsel, and such other officers and agents as it may deem proper. The
Chairman of the Board and the President shall be chosen from among the
directors. The persons holding the offices of Chairman of the Board or
President may not also hold the office of General Auditor. The Board of
Directors may, in its discretion, leave vacant any office other than that of
Chairman of the Board, President, Secretary or Treasurer.
SECTION 2. TERM OF OFFICE. The term of office of all officers
shall be until the next directors' annual meeting or until their respective
successors are chosen and qualified; but any officer or agent elected by the
Board of Directors may be removed by the Board at any time, with or without
cause.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board
shall be the chief executive officer of the Company, shall preside at all
meetings of the Board of Directors and shareholders, at which the Chairman is
present, and shall make the annual report to the shareholders. The Chairman
shall have general charge of the business and affairs of the Company subject to
the control of the Board of Directors, may create in the name of the Company
any authorized corporate obligation or other instrument and shall perform such
other functions as may be prescribed by the Board from time to time.
The Chairman of the Board shall manage or supervise the conduct of the
corporate finances and relations of the Company with its shareholders, with the
public and with regulatory authorities and in addition to the President, may
exercise all powers elsewhere in the By-Laws conferred upon the President.
The Chairman may delegate from time to time to the President or to other
officers, employes or positions of the Company, such powers as the Chairman may
specify in writing, with such terms and conditions, if any, as the Chairman may
set forth. A copy of each such delegation and of any revocation or change
shall be filed with the Secretary.
SECTION 4. PRESIDENT. The President shall be the chief
operating officer of the Company, subject to the control of the Board of
Directors and the Chairman of the Board, shall have power to authorize the
employment of such subordinate employes as may, in the President's judgment, be
advisable for the operations of the Company, may execute in the name of the
Company any authorized corporate obligation or other instrument and shall
perform all other acts incident to the President's office or
6
<PAGE> 10
prescribed by the Board of Directors or the Chairman of the Board, or
authorized or required by law. During the absence or disability of the
Chairman of the Board, the President shall assume the duties and authority of
the Chairman of the Board and shall be the chief executive officer of the
Company.
SECTION 5. OTHER OFFICERS. The other officers, agents and
employes of the Company shall each have such powers and perform such duties in
the management of the property and affairs of the Company, subject to the
control of the Board of Directors, as generally pertain to their respective
offices, as well as such powers and duties as from time to time may be
prescribed by the Board of Directors, by the Chairman of the Board or by the
President.
SECTION 6. COMPENSATION. The Board of Directors shall determine
the compensation to be paid to the Chairman of the Board, the President and
each Vice President above the level of Assistant Vice President.
SECTION 7. VOTING OF SHARES AND SECURITIES OF OTHER
CORPORATIONS. Unless the Board of Directors otherwise directs, the Company's
Chairman of the Board and President shall each be entitled to vote or designate
a proxy to vote all shares and other securities which the Company owns in any
other corporation or entity.
ARTICLE IV
CAPITAL STOCK
SECTION 1. CERTIFICATES OF SHARES. The interest of each
shareholder shall be evidenced by a certificate or certificates for shares of
stock of the Company in such form as the Board of Directors may from time to
time prescribe. The certificates of stock shall be signed by the Chairman of
the Board, the President or a Vice President and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, shall be
sealed with the seal of the Company or a facsimile thereof, and shall be
countersigned by a transfer agent for the stock and registered by a registrar
for such stock. The signatures of the officers and the transfer agent or the
registrar upon such certificates may be facsimiles, engraved or printed,
subject to the provisions of applicable law. In case any officer, transfer
agent or registrar shall cease to serve in that capacity after their facsimile
signature has been placed on a certificate, the certificates may be issued with
the same effect as if the officer, transfer agent or registrar were still in
office.
SECTION 2. TRANSFER OF SHARES. Shares in the capital stock of
the Company shall be transferred on the books of the Company upon surrender and
cancellation of certificates for a like number of shares, with duly executed
power to transfer endorsed thereon or attached thereto.
SECTION 3. LOST OR DESTROYED STOCK CERTIFICATES. No certificate
for shares of stock of the Company shall be issued in place of any certificate
alleged to have been lost,
7
<PAGE> 11
stolen or destroyed, except upon production of such evidence of the loss, theft
or destruction, and upon indemnification of the Company and its agents to such
extent and in such manner as the Board of Directors may from time to time
prescribe.
ARTICLE V
CHECKS, NOTES, BONDS, DEBENTURES, ETC.
All checks and drafts on the Company's bank accounts and all bills of
exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such officer or
officers or agent or agents, either manually or by facsimile signature or
signatures, as shall be thereunto authorized from time to time by the Board of
Directors either generally or in specific instances; provided that bonds,
debentures and other evidences of indebtedness of the Company bearing facsimile
signatures of officers of the Company shall be issued only when authenticated
by a manual signature on behalf of a trustee or an authenticating agent
appointed by the Board of Directors and in case any such officer of the
Company shall cease to be such after such officer's facsimile signature has
been placed thereon, such bonds, debentures or other evidences of indebtedness
may be issued with the same effect as if such person were still in office.
ARTICLE VI
CORPORATE SEAL
The Board of Directors shall provide a suitable seal, containing the
name of the Company.
ARTICLE VII
CONTROL SHARE ACQUISITIONS
The Stacey, Bennett, and Randall Shareholder Equity Act (Chapter 7B of
the Michigan Business Corporation Act) shall not apply to any control share
acquisitions (as defined in such Act) of shares of the Company.
This Article VII of the By-Laws may not be amended, altered or
repealed with respect to any control share acquisition of shares of the Company
effected pursuant to a tender offer or other transaction commenced prior to the
date of such amendment, alteration or repeal.
8
<PAGE> 12
ARTICLE VIII
AMENDMENT OF BY-LAWS
By-Laws of the Company may be amended, repealed or adopted by vote of
the holders of a majority of shares at the time entitled to vote in the
election of any directors or by vote of a majority of the directors in office.
9
<PAGE> 1
EXHIBIT 3(d)
[Form of By-laws to be effective
immediately prior to Exchange]
BY-LAWS
OF
DTE HOLDINGS, INC.
_____________________
AS AMENDED THROUGH ______________, 19__
_____________________
<PAGE> 2
BY-LAWS
of
DTE HOLDINGS, INC.
_____________________
INDEX
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C>
SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 4. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 5. Voting and Inspectors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 6. Record of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 7. List of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
BOARD OF DIRECTORS AND COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1. Number, Time of Holding Office and Limitation on Age. . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. Meetings of the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Annual Meeting of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Executive Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 7. Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 8. Participation in Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 9. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1. Officers and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2. Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 4. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 5. Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 6. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 7. Voting of Shares and Securities
of Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
i
<PAGE> 3
<TABLE>
ARTICLE IV
<S> <C>
CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1. Certificates of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3. Lost or Destroyed Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
CHECKS, NOTES, BONDS, DEBENTURES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VI
CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VII
CONTROL SHARE ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII
AMENDMENT OF BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
ii
<PAGE> 4
BY-LAWS
OF
DTE HOLDINGS, INC.
AS AMENDED THROUGH ___________, 199__
ARTICLE I
SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the
shareholders of the Company shall be held on the fourth Monday of April in each
year (or if said day be a legal holiday, then on the next succeeding day not a
legal holiday), at such time and at such place as may be fixed by the Board of
Directors and stated in the notice of meeting, for the purpose of electing
directors and transacting such other business as may properly be brought before
the meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
shareholders may be held upon call of the Board of Directors or the Chairman of
the Board or the President or the holders of record of a majority of the
outstanding shares of stock of the Company entitled to vote at such meeting, at
such time as may be fixed by the Board of Directors or the Chairman of the
Board or the President or such shareholders and stated in the notice of
meeting. All such meetings shall be held at the office of the Company in the
City of Detroit unless some other place is specified in the notice.
SECTION 3. NOTICE OF MEETINGS. Written notice of the date,
time, place and purpose or purposes of every meeting of the shareholders,
signed by the Secretary or an Assistant Secretary, shall be given either
personally or by mail, within the time prescribed by law, to each shareholder
of record entitled to vote at such meeting and to any shareholder who, by
reason of any action proposed to be taken at such meeting, might be entitled to
receive payment for such stock if such action were taken. If mailed, such
notice is given when deposited in the United States mail, with postage thereon
prepaid, directed to the shareholder at the address as it appears on the record
of shareholders, or, if the shareholders shall have filed with the Secretary of
the Company a written request that notices intended for such shareholder be
mailed to some other address, then directed to the address designated in such
request. Further notice shall be given by mail, publication or otherwise, if
and as required by law.
Notice of meeting need not be given to any shareholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of any shareholder at the meeting, in person or by
proxy, without protesting
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<PAGE> 5
at the beginning of the meeting the lack of notice of such meeting, shall
constitute a waiver of notice by such shareholder.
Notice of a special meeting shall also indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
SECTION 4. QUORUM. At every meeting of the shareholders, the
holders of record of a majority of the outstanding shares of stock of the
Company entitled to vote at such meeting, whether present in person or
represented by proxy, shall constitute a quorum. If at any meeting there shall
be no quorum, the holders of a majority of the outstanding shares of stock so
present or represented may adjourn the meeting from time to time, without
notice (unless otherwise required by statute) other than announcement at the
meeting, until a quorum shall have been obtained, when any business may be
transacted which might have been transacted at the meeting as first convened
had there been a quorum. When a quorum is once present to organize a meeting,
it is not broken by the subsequent withdrawal of any shareholder.
SECTION 5. VOTING AND INSPECTORS. Except as provided in the
Articles of Incorporation, each holder of record of outstanding shares of stock
of the Company entitled to vote at a meeting of shareholders shall be entitled
to one vote for each share of stock standing in the shareholder's name on the
record of shareholders, and may so vote either in person or by proxy appointed
by instrument in writing executed by such holder or by the shareholder's duly
authorized attorney-in-fact. No proxy shall be valid after the expiration of
three years from the date of its execution unless the shareholder executing it
shall have specified therein the length of time it is to continue in force
which shall be for some limited period. The authority of the holder of a proxy
to act shall not be revoked by the incompetence or death of the shareholder who
executed the proxy unless, before the authority is exercised, written notice of
an adjudication of such incompetence or of such death is received by the
Secretary or an Assistant Secretary.
In advance of any meeting of shareholders, the Board of Directors may
appoint one or more inspectors for the meeting. If inspectors are not so
appointed, the chairman of the meeting shall appoint such inspectors. Before
entering upon the discharge of their duties, the inspectors shall take and
subscribe an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of their ability, and shall
take charge of the polls and after balloting shall make a certificate of the
result of the vote taken. No officer or director of the Company or candidate
for office of director shall be appointed as an inspector. At all elections of
directors the voting shall be by ballot and a plurality of the votes cast
thereat shall elect.
SECTION 6. RECORD OF SHAREHOLDERS. For the purpose of
determining the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to or dissent
from any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividend or the allotment of
any rights, or for the purpose of any other action, the Board of Directors may
fix, in advance, a date as the record date for any such
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<PAGE> 6
determination of shareholders, which record date shall not precede the date
upon which is it fixed and shall not be less than ten days nor more than the
maximum number of days permitted by law before the date of the meeting, or
taking of any other action.
SECTION 7. LIST OF SHAREHOLDERS. A list of shareholders of
record, arranged alphabetically within each class and series of stock, as of
the record date, certified by the Secretary or any Assistant Secretary or by a
transfer agent, shall be produced at any meeting of shareholders and may be
inspected by any shareholder at any time during the meeting. If the right to
vote at any meeting is challenged, the inspectors, or the person presiding at
the meeting, shall require such list of shareholders to be produced as evidence
of the right of the persons challenged to vote at such meeting, and all persons
who appear on such list to be shareholders entitled to vote thereat may vote at
such meeting.
ARTICLE II
BOARD OF DIRECTORS AND COMMITTEES
SECTION 1. NUMBER, TIME OF HOLDING OFFICE AND LIMITATION ON AGE.
The business and affairs of the Company shall be managed by or under the
direction of a Board of Directors. The number of directors constituting the
entire Board shall be determined from time to time by resolution of the Board
so long as the total number of directors is not less than twelve nor more than
eighteen; provided, however, that the minimum and maximum number of directors
may be increased or decreased from time to time by vote of a majority of the
entire Board; and, further provided that no change in the number of directors
shall serve to shorten the term of office of any incumbent director. The
directors shall be divided into three classes, as nearly equal in number as
possible, and the term of the office of the first class shall expire at the
1996(1) annual meeting of shareholders, the term of office of the second class
shall expire at the 1997 annual meeting of shareholders and the term of office
of the third class shall expire at the 1998 annual meeting of shareholders, or,
in each case, until their successors shall be duly elected and qualified. At
each annual meeting commencing in 1996, a number of directors equal to the
number of the class whose term expires at the time of the meeting shall be
elected to hold office until the third succeeding annual meeting of
shareholders. If at any time the holders of any series of the Company's
Preferred Stock are entitled to elect directors pursuant to the Articles of
Incorporation of the Company, then the provisions of such series of Preferred
Stock with respect to their rights shall apply and such directors shall be
elected in a manner and for terms expiring consistent with the Articles of
Incorporation.
- ----------------
(1) Dates in this Section 1 assume the Exchange Agreement
becomes effective during 1995.
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<PAGE> 7
Except as hereinafter provided, each director shall be a holder of
common stock of the Company at the time of initial election to the Board or
shall become a holder within thirty days after such election (to the extent of
at least one share, owned beneficially) and any director who thereafter ceases
to be such a holder, shall thereupon cease to be a director. The Board shall
have the authority to waive the requirement to hold shares in individual
situations upon presentation of evidence that a nominee or director is unable
to hold shares for legal or religious reasons.
No person who shall have served as an employe of the Company shall be
elected a director after retiring from employment with the Company; provided,
however, that if such person was the chief executive officer of the Company at
the time of such retirement, such person shall be eligible for election as a
director until attaining age seventy. No other person shall be elected a
director after attaining age seventy.
SECTION 2. VACANCIES. Whenever any vacancy shall occur in the
Board of Directors by death, resignation, or any other cause, it shall be
filled without undue delay by a majority vote of the remaining members of the
Board of Directors (even if constituting less than a quorum), and the person
who is to fill any such vacancy shall hold office for the unexpired term of the
director to whom such person succeeds, or for the term fixed by the Board of
Directors acting in compliance with Section l of this Article II in case of a
vacancy created by an increase in the number of directors, and until a
successor shall be elected and shall have qualified; provided, however, that no
vacancy need be filled if, after such vacancy shall occur, the number of
directors remaining on the Board shall be not less than a majority of the
entire Board including any vacancies. During the existence of any vacancy or
vacancies, the surviving or remaining directors shall possess and may exercise
all the powers of the full Board of Directors, when action by a larger number
is not required by law.
SECTION 3. MEETINGS OF THE BOARD. Regular meetings of the Board
of Directors shall be held at such times and at such places as may from time to
time be fixed by the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President or, in the event of the incapacity of
the Chairman of the Board and the President, the Executive Committee by giving
reasonable notice of the time and place of such meetings or by obtaining
written waivers of notice, before or after the meeting, from each absent
director. All such meetings shall be held at the office of the Company in the
City of Detroit unless some other place is specified in the notice.
A notice, or waiver of notice, need not specify the purpose of the
meeting.
SECTION 4. QUORUM. A majority of the directors in office at the
time of a meeting of the Board, but not less than one-third of the Board
including any vacancies, shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time without notice other than
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<PAGE> 8
announcement at the meeting, until a quorum shall have been obtained, when any
business may be transacted which might have been transacted a the meeting as
first convened had there been a quorum. The acts of a majority of the
directors present at any meeting at which there is a quorum shall be the acts
of the Board, unless otherwise provided by law, by the Articles of
Incorporation or by the By-Laws.
SECTION 5. ANNUAL MEETING OF DIRECTORS. A meeting of the Board
of Directors, to be known as the directors' annual meeting, shall be held
without notice each year after the adjournment of the annual shareholders'
meeting and on the same day, and at such meeting the officers of the Company
for the ensuing year shall be elected. If a quorum of the directors is not
present on the day appointed for the directors' annual meeting, the meeting
shall be adjourned to some convenient day.
SECTION 6. EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution or resolutions passed by a majority of the entire Board, designate
an Executive Committee to consist of the Chief Executive Officer and two or
more of the other directors, and alternates, and shall designate the Chairman
thereof. The Executive Committee shall have and may exercise, when the Board
is not in session, all of the powers of the Board in the management of the
business and affairs of the Company, and shall have power to authorize the seal
of the Company to be affixed to all papers which may require it; but the
Executive Committee shall not have power to (a) amend the Articles of
Incorporation, (b) adopt an agreement of merger or share exchange, (c)
recommend to shareholders the sale, lease, or exchange of all or substantially
all of the Company's property and assets, (d) recommend to shareholders a
dissolution of the Company or a revocation of a dissolution, (e) amend these
Bylaws, (f) change the number of directors constituting the entire Board or
fill vacancies in the Board, (g) declare dividends, (h) establish, change the
membership of, or fill vacancies in, any committee, (i) fix the compensation of
the directors or committee members, (j) submit matters for action by
shareholders, or (k) amend or repeal a resolution of the Board which by its
terms may not be changed by the Executive Committee. The Board shall have the
power at any time to fill vacancies in, to change the membership of, or to
dissolve, the Executive Committee. The Executive Committee may make rules for
the conduct of its business and may appoint such subcommittees and assistants
as it shall from time to time deem necessary. A majority of the members of the
Executive Committee shall constitute a quorum. All action taken by the
Executive Committee shall be reported to the Board at its meeting next
succeeding such action. The Secretary or an Assistant Secretary shall attend
and act as secretary of all meetings of the Committee and keep the minutes
thereof.
Meetings of the Executive Committee may be called by the Chairman of
the Board or the President or, in the event of the incapacity of the Chairman
of the Board and the President, by two or more members of the Executive
Committee by giving reasonable notice of the time and place of such meetings.
All such meetings shall be held at the office of the Company in the City of
Detroit unless some other place is specified in the notice.
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<PAGE> 9
SECTION 7. COMMITTEES. The Board of Directors may, by
resolution, create a committee or committees of one or more directors, and
alternates, to consider and report upon or to carry out such matters (not
excepted by the foregoing section) as may be entrusted to them by the Board of
Directors, and shall designate the Chairman of each such committee.
SECTION 8. PARTICIPATION IN MEETINGS. One or more members of
the Board of Directors or any committee thereof may participate in any meeting
of such Board or such committee by means of a conference telephone or similar
communications equipment which enables all persons participating in such a
meeting to hear each other at the same time and participation in the manner so
described shall constitute presence in person at such meetings.
SECTION 9. COMPENSATION. Each director of the Company who is
not a salaried officer or employe of the Company may receive reasonable
compensation for services as a director, including a reasonable fee for
attendance at meetings of the Board and committees thereof, and attendance at
the Company's request at other meetings or similar activities related to the
Company.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS AND AGENTS. The officers of the Company to
be elected by the Board of Directors, as soon as practicable after the election
of directors each year, shall be Chairman of the Board, the President, a
Secretary and a Treasurer. The Board of Directors may also from time to time
elect one or more Vice Presidents, a Controller, a General Auditor, a General
Counsel, and such other officers and agents as it may deem proper. The
Chairman of the Board and the President shall be chosen from among the
directors. The persons holding the offices of Chairman of the Board or
President may not also hold the office of General Auditor. The Board of
Directors may, in its discretion, leave vacant any office other than that of
Chairman of the Board, President, Secretary or Treasurer.
SECTION 2. TERM OF OFFICE. The term of office of all officers
shall be until the next directors' annual meeting or until their respective
successors are chosen and qualified; but any officer or agent elected by the
Board of Directors may be removed by the Board at any time, with or without
cause.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board
shall be the chief executive officer of the Company, shall preside at all
meetings of the Board of Directors and shareholders, at which the Chairman is
present, and shall make the annual report to the shareholders. The Chairman
shall have general charge of the business and affairs of the Company subject to
the control of the Board of Directors, may create in the name of the Company
any authorized corporate obligation or other instrument and shall perform such
other functions as may be prescribed by the Board from time to time.
6
<PAGE> 10
The Chairman of the Board shall manage or supervise the conduct of the
corporate finances and relations of the Company with its shareholders, with the
public and with regulatory authorities and in addition to the President, may
exercise all powers elsewhere in the By-Laws conferred upon the President.
The Chairman may delegate from time to time to the President or to other
officers, employes or positions of the Company, such powers as the Chairman may
specify in writing, with such terms and conditions, if any, as the Chairman may
set forth. A copy of each such delegation and of any revocation or change
shall be filed with the Secretary.
SECTION 4. PRESIDENT. The President shall be the chief
operating officer of the Company, subject to the control of the Board of
Directors and the Chairman of the Board, shall have power to authorize the
employment of such subordinate employes as may, in the President's judgment, be
advisable for the operations of the Company, may execute in the name of the
Company any authorized corporate obligation or other instrument and shall
perform all other acts incident to the President's office or prescribed by the
Board of Directors or the Chairman of the Board, or authorized or required by
law. During the absence or disability of the Chairman of the Board, the
President shall assume the duties and authority of the Chairman of the Board
and shall be the chief executive officer of the Company.
SECTION 5. OTHER OFFICERS. The other officers, agents and
employes of the Company shall each have such powers and perform such duties in
the management of the property and affairs of the Company, subject to the
control of the Board of Directors, as generally pertain to their respective
offices, as well as such powers and duties as from time to time may be
prescribed by the Board of Directors, by the Chairman of the Board or by the
President.
SECTION 6. COMPENSATION. The Board of Directors shall determine
the compensation to be paid to the Chairman of the Board, the President and
each Vice President above the level of Assistant Vice President.
SECTION 7. VOTING OF SHARES AND SECURITIES OF OTHER
CORPORATIONS. Unless the Board of Directors otherwise directs, the Company's
Chairman of the Board and President shall each be entitled to vote or designate
a proxy to vote all shares and other securities which the Company owns in any
other corporation or entity.
ARTICLE IV
CAPITAL STOCK
SECTION 1. CERTIFICATES OF SHARES. The interest of each
shareholder shall be evidenced by a certificate or certificates for shares of
stock of the Company in such form as the Board of Directors may from time to
time prescribe. The certificates of stock shall be signed by the Chairman of
the Board, the President or a Vice President and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the
7
<PAGE> 11
Company, shall be sealed with the seal of the Company or a facsimile thereof,
and shall be countersigned by a transfer agent for the stock and registered by
a registrar for such stock. The signatures of the officers and the transfer
agent or the registrar upon such certificates may be facsimiles, engraved or
printed, subject to the provisions of applicable law. In case any officer,
transfer agent or registrar shall cease to serve in that capacity after their
facsimile signature has been placed on a certificate, the certificates may be
issued with the same effect as if the officer, transfer agent or registrar were
still in office.
SECTION 2. TRANSFER OF SHARES. Shares in the capital stock of
the Company shall be transferred on the books of the Company upon surrender and
cancellation of certificates for a like number of shares, with duly executed
power to transfer endorsed thereon or attached thereto.
SECTION 3. LOST OR DESTROYED STOCK CERTIFICATES. No certificate
for shares of stock of the Company shall be issued in place of any certificate
alleged to have been lost, stolen or destroyed, except upon production of such
evidence of the loss, theft or destruction, and upon indemnification of the
Company and its agents to such extent and in such manner as the Board of
Directors may from time to time prescribe.
ARTICLE V
CHECKS, NOTES, BONDS, DEBENTURES, ETC.
All checks and drafts on the Company's bank accounts and all bills of
exchange and promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such officer or
officers or agent or agents, either manually or by facsimile signature or
signatures, as shall be thereunto authorized from time to time by the Board of
Directors either generally or in specific instances; provided that bonds,
debentures and other evidences of indebtedness of the Company bearing facsimile
signatures of officers of the Company shall be issued only when authenticated
by a manual signature on behalf of a trustee or an authenticating agent
appointed by the Board of Directors and in case any such officer of the
Company shall cease to be such after such officer's facsimile signature has
been placed thereon, such bonds, debentures or other evidences of indebtedness
may be issued with the same effect as if such person were still in office.
ARTICLE VI
CORPORATE SEAL
The Board of Directors shall provide a suitable seal, containing the
name of the Company.
8
<PAGE> 12
ARTICLE VII
CONTROL SHARE ACQUISITIONS
The Stacey, Bennett, and Randall Shareholder Equity Act (Chapter 7B of
the Michigan Business Corporation Act) shall not apply to any control share
acquisitions (as defined in such Act) of shares of the Company.
This Article VII of the By-Laws may not be amended, altered or
repealed with respect to any control share acquisition of shares of the Company
effected pursuant to a tender offer or other transaction commenced prior to the
date of such amendment, alteration or repeal.
ARTICLE VIII
AMENDMENT OF BY-LAWS
Those provisions of these By-Laws providing for a classified Board of
Directors (currently the third, fourth and fifth sentences of the first
paragraph of Section 1 of Article II) and the provisions of this sentence may
be amended or repealed only by the affirmative vote of the holders of a
majority of shares of Common Stock of the Company. Except as provided in the
immediately preceding sentence, By-Laws of the Company may be amended, repealed
or adopted by vote of the holders of a majority of shares at the time entitled
to vote in the election of any directors or by vote of a majority of the
directors in office.
9
<PAGE> 1
Exhibits 5 and 23(a)
Christopher C. Nern, Esq.
Vice President and General Counsel
The Detroit Edison Company
200 Second Avenue
Detroit, Michigan 48226
March 9, 1995
DTE Holdings, Inc.
2000 Second Avenue
Detroit, Michigan 48226
Ladies and Gentlemen:
I have examined the Form S-4 Registration Statement (Reg. No. 33-57545)
of DTE Holdings, Inc. (the "Company") originally filed on February 1, 1995 and
as amended through the date hereof (the "Registration Statement"), to which
this opinion is an exhibit, for the registration under the Securities Act of
1933, as amended, of 145,185,241 shares of the Company's common stock, without
par value (the "Shares") and 10,000,000 shares of the Company's common stock
(the "DRIP Shares") to be issued or offered in connection with a dividend
reinvestment plan (the "Plan") to be adopted by the Company. The Shares are to
be issued in connection with the Agreement and Plan of Exchange (the "Exchange
Agreement"), included as Exhibit A to the Prospectus and Proxy Statement
comprising a part of the Registration Statement and the DRP Shares are to be
issued or offered in connection with the Plan to be adopted by the Company.
Pursuant to the Exchange Agreement, the Company will become the parent
corporation of and own all the outstanding common stock of The Detroit Edison
Company ("Detroit Edison"). The Exchange Agreement has been approved by the
Boards of Directors of the Company and Detroit Edison and the sole shareholder
of the Company. The offering of the DRIP Shares will be made pursuant to a
Post-Effective Amendment on Form S-3 (the "Form S-3") to the Registration
Statement.
I, as Vice President and General Counsel of the Company and Detroit
Edison, in conjunction with the members of the Legal Department of Detroit
Edison, have examined such corporate records, certificates and other documents
and such matters of law as I have considered necessary or appropriate for
purposes of this opinion.
Based on the foregoing and subject to the qualifications set forth
herein, I am of the opinion that:
1. The Company is a corporation duly organized and existing under the
laws of the State of Michigan.
<PAGE> 2
DTE Holdings, Inc.
March 9, 1995
Page 2
2. Under Michigan law, the Shares are duly authorized and will be validly
issued, fully paid and nonassessable shares of common stock, without par value,
of the Company upon (a) the due approval of the Exchange Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of
common stock of Detroit Edison, (b) the execution and delivery of the Exchange
Agreement by the Company and Detroit Edison, (c) the filing of an appropriate
Certificate of Share Exchange (the "Certificate") as required under Michigan
law and (d) the occurrence of the Effective Time of the Exchange Agreement as
set forth in the Certificate. The effectiveness of the Exchange Agreement is
conditioned upon receipt of the necessary approval of the shareholders of
Detroit Edison and other conditions referred to or set forth in the Exchange
Agreement.
3. Under Michigan law, to the extent the DRP Shares are original issue
shares, the DRIP Shares will be duly authorized, validly issued, fully paid and
nonassessable shares of common stock, without par value, of the Company upon
(a) the due adoption of the Plan by the Board of Directors of the Company, (b)
the due adoption by the Board of Directors of the Company of resolutions
authorizing the issuance and sale of the DRIP Shares pursuant to the Plan and
(c) the issuance and delivery of the DRIP Shares in the manner and for the
consideration established by (or pursuant to) the Plan.
I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to me under the caption "Item 2.
Corporate Restructuring Proposal - Legal Opinions" in the Prospectus and Proxy
Statement constituting a part of the Registration Statement.
This opinion may be relied upon by the Company, Detroit Edison and, as
to matters of Michigan law, by Jones, Day, Reavis & Pogue.
I am qualified to practice law in the State of Michigan, and in
rendering this opinion, my examination of matters of law has been limited to,
and I express no opinion as to the laws of any jurisdictions other than, the
laws of the State of Michigan and the Federal laws of the United States.
Very truly yours,
Christopher C. Nern
<PAGE> 1
EXHIBITS 8 and 23(b)
JONES, DAY, REAVIS & POGUE
77 West Wacker
Chicago, Illinois 60601-1692
March 9, 1995
The Detroit Edison Company
2000 Second Avenue
Detroit, Michigan 48226
Dear Sirs:
We have acted as counsel to The Detroit Edison Company, a Michigan
corporation (the "Company"), in connection with a planned corporate
restructuring (the "Exchange") in which the Company will become a subsidiary of
a new holding company named DTE Holdings, Inc., a Michigan corporation
("Holding Company"), and the current holders of the outstanding shares of
Company Common Stock will become holders of all the outstanding shares of
Holding Company Common Stock.
The planned restructuring is more fully described in the Form S-4
Registration Statement of Holding Company originally filed with the Securities
and Exchange Commission on February 1, 1995 and as amended through the date
hereof (the "Registration Statement"), to which this opinion is an exhibit, and
the Prospectus and Proxy Statement (the "Prospectus") comprising a part of the
Registration Statement.
The restructuring will be effected pursuant to an Agreement and Plan of
Exchange (the "Exchange Agreement"), the form of which is included as Exhibit A
to the Prospectus, between the Company and Holding Company. Capitalized terms
used herein and not otherwise defined shall have the meanings specified in the
Exchange Agreement.
In connection with this opinion, we have assumed, with your consent,
that (1) the Exchange will be effected in accordance with the Exchange
Agreement and the laws of the State of Michigan and in the manner described in
the Registration Statement, (2) all the provisions of the Exchange Agreement
will be complied with, (3) the Exchange Agreement and the Prospectus
<PAGE> 2
The Detroit Edison Company
March 9, 1995
Page 2
describe the entire transaction and all related transactions, (4) the facts and
representations made to us in a letter from the Company dated March 9, 1995,
executed by a duly appointed officer of the Company, are true and correct, and
(5) there will be no change in any of the facts or representations material to
this opinion between the date of this opinion and the Effective Time.
Based upon and subject to the foregoing, it is our opinion, under
presently applicable federal income tax law, that:
(1) No gain or loss will be recognized by a holder of Company Common
Stock upon the exchange solely of such holder's Company Common Stock
solely for Holding Company Common Stock.
(2) No income, gain or loss will be recognized on account of the Exchange
by holders of Company Preferred Stock with respect to their Company
Preferred Stock so long as such holders do not sell or exchange
(including as a result of a redemption) their Company Preferred Stock in
a transaction to which the Company or an affiliate of the Company is a
party and which is treated as part of the Exchange.
(3) The basis of Holding Company Common Stock received by a former holder
of Company Common Stock in an exchange described in (1) above in the
aggregate will equal the basis of such former holder's Company Common
Stock exchanged therefor, and the holding period for such Holding
Company Common Stock will include the holding period for the Company
Common Stock exchanged therefor to the extent that such Company Common
Stock was held as a capital asset at the Effective Time.
(4) No gain or loss will be recognized by the Company or Holding Company
on account of the Exchange or the issuance of Holding Company Common
Stock to the former holders of Company Common Stock pursuant to the
Exchange Agreement.
(5) The consummation of the Exchange will not result in the termination
of the existence of the affiliated group of corporations of which the
Company has been the common parent, and the Company will be included in
such affiliated group of which Holding Company will become the new
common parent.
<PAGE> 3
The Detroit Edison Company
March 9, 1995
Page 3
(6) Any gain realized by the Company upon any distribution of the stock
of the Company's existing subsidiaries involved in non-utility
operations to Holding Company following the Exchange as a dividend with
respect to the Company Common Stock held by Holding Company will not be
currently taxable to the Company, but will be deferred.
We have prepared the statements as to matters of law or legal conclusions
with respect to certain federal income tax consequences of the Exchange under
the caption "Item 2. Corporate Restructuring Proposal - Certain Federal Income
Tax Consequences" in the Prospectus constituting a part of the Registration
Statement. We are of the opinion that all such statements as to such matters
are correct and we hereby consent to the use of such statements in the
Registration Statement and to the use of our name in connection therewith.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Item 2.
Corporate Restructuring Proposal - Certain Federal Income Tax Consequences" and
"- Legal Opinions" in the Prospectus constituting a part of the Registration
Statement.
Very truly yours,
JONES, DAY, REAVIS & POGUE
<PAGE> 1
EXHIBIT 23(C)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Proxy Statement constituting part of this Registration Statement on Form S-4 of
our report dated January 24, 1994 appearing on page 29 of The Detroit Edison
Company's Annual Report on Form 10-K for the year ended December 31, 1993 and of
our report dated January 23, 1995, appearing on page 3 of The Detroit Edison
Company's Current Report on Form 8-K dated March 1, 1995. We also consent to the
reference to us under the heading "Item 2. Corporate Restructuring
Proposal -- Experts" in such Prospectus and Proxy Statement.
PRICE WATERHOUSE LLP
Detroit, Michigan
March 9, 1995
<PAGE> 1
Exhibit 99(A)
<TABLE>
<S> <C>
PROXY PLEASE USE AN X TO INDICATE YOUR VOTE IN BOXES BELOW.
Election of Directors: Nominees are Terence E. Adderley, Your Board of Directors Recommends a Vote
Anthony F. Earley, Jr., Allan D. Gilmour and Theodore S. Leipprandt. For Proposals 1, 2, 3, & 4.
-----------------------------------------------------------
- -------------------------------------------------------------- 1. Election of Directors * For Withheld
*To withhold vote from any Nominee(s), write the name(s) here: [] []
-----------------------------------------------------------
2. Exchange Agreement For Against Abstain
[] [] []
-----------------------------------------------------------
3. Long-Term Incentive Plan For Against Abstain
[] [] []
-----------------------------------------------------------
4. Independent Accountants For Against Abstain
[] [] []
-----------------------------------------------------------
The signature(s) below should correspond exactly with the
name(s) as shown on the left. Where stock is registered
jointly in the names of two or more persons, ALL should
sign. When signing as Attorney, Executor, Administrator,
Trustee, Guardian or as Corporate Officer on behalf of a
Corporation, please give full title as such.
-----------------------------------------------------------
-----------------------------------------------------------
Signature(s) Date
- ------------------------------------------------------------------------------------------------------------------------------------
Detach Here
</TABLE>
[Detroit Edison logo] 2000 2nd Avenue
Detroit, Michigan 48226
ANNUAL MEETING OF SHAREHOLDERS - APRIL 24, 1995
The Annual Meeting of Shareholders of The Detroit Edison Company will be held
on Monday, April 24, 1995, at the Detroit Edison General Office Building, 2000
2nd Avenue, Detroit, Michigan, at 10:00 a.m., Detroit time.
PROXY CARD - The top portion of this form is your Proxy Card. Please
record your vote, sign and date the Proxy Card and then detach and return the
completed Proxy Card promptly in the enclosed reply envelope. You should do so
even if you plan to attend the Annual Meeting.
<PAGE> 2
THE DETROIT EDISON COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PROXY By signing on the other side, I (we) appoint Theodore S. Leipprandt,
Patricia S. Longe, Dean E. Richardson, and any of them, as proxies to vote my
(our) shares of Common Stock at the Annual Meeting of Shareholders to be held
on Monday, April 24, 1995, and at all adjournments thereof, upon the matters
set forth on the reverse side hereof and upon such other matters as may come
before the meeting.
If you sign and return this proxy, the shares will be voted as directed. IF NO
DIRECTION IS INDICATED, THE SHARES WILL BE VOTED FOR PROPOSALS 1, 2, 3, AND 4.
If the proxy is not signed and returned, the shares cannot be voted for you.
RECORD VOTE AND SIGN ON REVERSE SIDE
-------------------------------------------------------------------------
<PAGE> 3
[DETROIT EDISON LETTERHEAD]
March 17, 1995
Dear Savings & Investment Plan Participant:
As a participant in the Detroit Edison Savings & Investment Plan, you are
entitled to direct Fidelity Management Trust Company to vote on your behalf at
the April 24 Annual Meeting of Detroit Edison Common Stock Shareholders. Use
the enclosed form to show how you would like Fidelity to vote.
Shareholders will be voting on four issues at the April meeting. They
will be asked to elect four members to the Company's Board of Directors, approve
the Exchange Agreement resulting in the formation of a holding company, approve
a Long-Term Incentive Plan and ratify the appointment of Deloitte & Touche LLP
as independent accountants.
To complete the form, simply follow the instructions on the Confidential
Voting Instructions Form.
By completing the voting form enclosed, you will be participating in an
important Company decision-making process. Please take the time to review the
instructions provided, complete the form and return it in the enclosed envelope.
Sincerely,
/s/ John E. Lobbia
Enclosure
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS
TO FIDELITY MANAGEMENT TRUST COMPANY AS TRUSTEE
UNDER THE DETROIT EDISON SAVINGS & INVESTMENT PLANS
This voting instructions form is sent on behalf of the Board of Directors of The
Detroit Edison Company. Please complete this form on the reverse side, sign
your name exactly as it appears above, and return it in the enclosed envelope
to Fidelity Management Trust Company.
IF YOU SIGN AND RETURN THIS FORM BY APRIL 20, 1995, THE SHARES WILL BE VOTED AS
DIRECTED. IF NO DIRECTION IS INDICATED, THE SHARES WILL BE VOTED FOR PROPOSALS
1, 2, 3, and 4. IF THIS FORM IS NOT SIGNED AND RETURNED, THE SHARES CANNOT BE
VOTED FOR YOU.
Only the Trustee can vote your shares, and the Trustee only votes shares for
which the Trustee has received signed voting instructions. Your shares
cannot be voted in person at the Annual Meeting. How you vote these shares is
confidential. The Trustee will not disclose to the Company how you have
instructed the Trustee to vote.
I, as participant in the Detroit Edison Savings & Investment Plan, hereby
direct Fidelity Management Trust Company as Trustee for the Plan to vote all of
the shares of Common Stock of The Detroit Edison Company represented by my
proportionate interest in the Trust at the Annual Meeting of Common Stock
Shareholders of the Company to be held on Monday, April 24, 1995, and at all
adjournments thereof, upon the matters set forth on the reverse side hereof and
upon such other matters as may come before the meeting.
<PAGE> 4
<TABLE>
<CAPTION>
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ELECTION OF DIRECTORS PLEASE USE AN X TO INDICATE YOUR VOTE IN BOXES BELOW.
Terence E. Adderley Anthony F. Earley, Jr. YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS
Allan D. Gilmour Theodore S. Liepprandt 1, 2, 3 and 4.
- ----------------------------------------------------------- 1. ELECTION OF DIRECTORS
*To withhold vote from any Nominee(s), write the name(s) above: [] FOR [] WITHHELD
-----------------------------------------------------------
2. EXCHANGE AGREEMENT
[] FOR [] AGAINST [] ABSTAIN
-----------------------------------------------------------
3. LONG-TERM INCENTIVE PLAN
[] FOR [] AGAINST [] ABSTAIN
-----------------------------------------------------------
4. INDEPENDENT ACCOUNTANTS
[] FOR [] AGAINST [] ABSTAIN
-----------------------------------------------------------
DATE: _____________, 1995
SIGNATURE SHOULD CORRESPOND EXACTLY WITH YOUR
NAME AS PRINTED ON THE LEFT SIDE OF THIS FORM.
-----------------------------------------------------------
Signature(s) Date
</TABLE>
<PAGE> 1
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Terence E. Adderley
---------------------------
Terence E. Adderley
<PAGE> 2
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Lillian Bauder
------------------
Lillian Bauder
<PAGE> 3
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ David Bing
--------------
David Bing
<PAGE> 4
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Anthony F. Earley, Jr.
---------------------------
Anthony F. Earley, Jr.
<PAGE> 5
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Larry G. Garberding
---------------------------
Larry G. Garberding
<PAGE> 6
EXHIBIT 99(b)
CONSENT
The undersigned, a nominee for director of The Detroit Edison
Company ("Detroit Edison"), hereby consents to his election as a
director of Detroit Edison and DTE Holdings, Inc. ("Holding
Company") immediately prior to the effectiveness of that certain
Agreement and Plan of Exchange (the "Exchange Agreement") to be
executed between Detroit Edison and Holding Company. The under-
signed understands that (i) he will be elected a director of Holding
Company if and only if he is, at the time of such election, serving
as a director of Detroit Edison, (ii) he will serve as a director of
Holding Company (subject to removal, resignation, death, or dis-
ability) until the expiration of his existing term as a director of
Detroit Edison, and (iii) after election as a director of Holding
Company, he will continue to serve as a director of Detroit Edison
(subject to the same exceptions).
/s/ Allan D. Gilmour
--------------------
Allan D. Gilmour
<PAGE> 7
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Theodore S. Leipprandt
---------------------------
Theodore S. Leipprandt
<PAGE> 8
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ John E. Lobbia
-------------------
John E. Lobbia
<PAGE> 9
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Patricia S. Longe
-----------------------
Patricia S. Longe
<PAGE> 10
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Eugene A. Miller
----------------------
Eugene A. Miller
<PAGE> 11
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Dean E. Richardson
---------------------------
Dean E. Richardson
<PAGE> 12
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ Alan E. Schwartz
-----------------------
Alan E. Schwartz
<PAGE> 13
EXHIBIT 99(b)
CONSENT
The undersigned, a director or nominee for director of The
Detroit Edison Company ("Detroit Edison"), hereby consents to his or
her election as a director of DTE Holdings, Inc. ("Holding Company")
immediately prior to the effectiveness of that certain Agreement and
Plan of Exchange (the "Exchange Agreement") to be executed between
Detroit Edison and Holding Company. The undersigned understands
that (i) he or she will be elected a director of Holding Company if
and only if he or she is, at the time of such election, serving as
a director of Detroit Edison, (ii) he or she will serve as a
director of Holding Company (subject to removal, resignation, death,
or disability) until the expiration of his or her existing term as
a director of Detroit Edison, and (iii) after election as a director
of Holding Company, he or she will continue to serve as a director
of Detroit Edison (subject to the same exceptions).
/s/ William Wegner
-----------------------
William Wegner
