10-K405 1 FORM 10-K405 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER DECEMBER 31, 1994 1-2198 THE DETROIT EDISON COMPANY (Exact name of registrant as specified in its charter) MICHIGAN 38-0478650 (State of incorporation) (I.R.S. employer identification no.) 2000 SECOND AVENUE, DETROIT, MICHIGAN 48226 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 237-8000 Securities registered pursuant to Section 12(b) of the Act: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- Common Stock, $10 par value New York and Chicago Stock Exchanges Preferred Stock (5 1/2%, 7.36%, 7.45%, 7.68%, 7.74% and 7.75% series), cumulative, $100 par value New York Stock Exchange General and Refunding Mortgage Bonds (only Series R and S) New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None ______________________________ (TITLE OF CLASS) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] At February 28, 1995, 144,863,966 shares of the Company's Common Stock, substantially all held by non-affiliates, were outstanding, with an aggregate market value of approximately $4,146,731,027 based upon the closing price on the New York Stock Exchange. DOCUMENTS INCORPORATED BY REFERENCE Certain information in the Company's definitive proxy statement dated March 9, 1995 (which is included with the prospectus of DTE Holdings, Inc.), in connection with its Annual Meeting of Shareholders to be held on April 24, 1995, is incorporated herein by reference in Part III, Items 10, 11, 12 and 13 hereof. 2 CROSS REFERENCE TO INFORMATION CONTAINED IN THE REGISTRANT'S DEFINITIVE PROXY STATEMENT DATED MARCH 9, 1995 (INCORPORATED HEREIN BY REFERENCE)
ANNUAL REPORT LOCATION OF INFORMATION ON FORM 10-K IN PROXY STATEMENT ------------- ----------------------- Part III, Item 10 - Directors and "The Election of Directors" - Pages 5-9 Executive Officers of the Registrant "Compliance with Section 16(a) of the Securities Exchange Act of 1934" - Page 35 Part III, Item 11 - Executive "Board Compensation Committee Report on Compensation Executive Compensation" - Pages 10-15 Part III, Item 12 - Security "Security Ownership of Management" - Page 9 Ownership of Certain Beneficial Owners and Management Part III, Item 13 - Certain "Compensation Committee Interlocks and Insider Relationships and Related Transactions Participation" - Page 15
2 3 TABLE OF CONTENTS
Page ---- Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Part I - Items 1 and 2 - Business and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Certain Factors Affecting Public Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Capital Expenditure Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Fuel Costs and Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Nuclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Regulation and Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Michigan Public Service Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Federal Energy Regulatory Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Nuclear Regulatory Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Wastes and Toxic Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Employes and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Employes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Item 3 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Item 4 - Submission of Matters to a Vote of Security-Holders . . . . . . . . . . . . . . . . . . 22 Part II -Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Item 6 - Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 24 Item 8 - Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . 30 Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . 49 Part III -Item 10 - Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . 49 Item 11 - Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Item 12 - Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Item 13 - Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . 50 Part IV -Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3 4 DEFINITIONS AFUDC . . . . . . . . . . . . . Allowance for Funds Used During Construction (both borrowed and other funds) BTU . . . . . . . . . . . . . . British Thermal Unit CERCLA . . . . . . . . . . . . Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 Company . . . . . . . . . . . . The Detroit Edison Company and Subsidiary Companies Consumers . . . . . . . . . . . Consumers Power Company (a wholly-owned subsidiary of CMS Energy Corporation) DOE . . . . . . . . . . . . . . United States Department of Energy DSM . . . . . . . . . . . . . . Demand-Side Management EPA . . . . . . . . . . . . . . Environmental Protection Agency ERA . . . . . . . . . . . . . . Department of Energy's Economic Regulatory Administration FERC . . . . . . . . . . . . . Federal Energy Regulatory Commission kWh . . . . . . . . . . . . . . Kilowatthour Ludington . . . . . . . . . . . Ludington Hydroelectric Pumped Storage Plant (owned jointly with Consumers) MDNR . . . . . . . . . . . . . Michigan Department of Natural Resources Mortgage Bonds . . . . . . . . The Company's General and Refunding Mortgage Bonds MPSC . . . . . . . . . . . . . Michigan Public Service Commission MW . . . . . . . . . . . . . . Megawatt MWh . . . . . . . . . . . . . . Megawatthour MWRC . . . . . . . . . . . . . Michigan Water Resources Commission Note . . . . . . . . . . . . . Notes to Consolidated Financial Statements NPDES . . . . . . . . . . . . . National Pollutant Discharge Elimination System NRC . . . . . . . . . . . . . . Nuclear Regulatory Commission PCB's . . . . . . . . . . . . . Polychlorinated Biphenyls PRP . . . . . . . . . . . . . . Potentially Responsible Party PSCR . . . . . . . . . . . . . Power Supply Cost Recovery RCRA . . . . . . . . . . . . . Resource Conservation and Recovery Act Registrant . . . . . . . . . . The Detroit Edison Company Renaissance . . . . . . . . . . Renaissance Energy Company (an unaffiliated company)
4 5 PART I ITEMS 1 AND 2 - BUSINESS AND PROPERTIES. GENERAL The Company, incorporated in Michigan since 1967, 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. The Company's service area includes about 13% of Michigan's total land area, and about half of its population (approximately five million people), electric energy consumption and industrial capacity. The Company's residential customers reside in urban and rural areas, including an extensive shoreline along the Great Lakes and connecting waters. See operating revenues, sales and customer data by rate class below.
1994(1) 1993(1) 1992 ----------------------- ----------------------- ----------------------- Percent Percent Percent Operating Revenues Amount of Total Amount of Total Amount of Total ------------------ ----------- ---------- ----------- ---------- ----------- ---------- (Thousands, except percentages) Electric Residential . . . . . . . . $1,136,169 32.3% $1,125,624 31.7% $1,098,027 30.8% Commercial . . . . . . . . . 1,473,309 41.9 1,428,321 40.2 1,438,258 40.4 Industrial . . . . . . . . . 736,339 20.9 720,002 20.2 749,240 21.1 Sales for resale and other (2) 102,534 2.9 193,410 5.4 187,058 5.3 ---------- ----- ---------- ----- ---------- ----- Total System . . . . . . . 3,448,351 98.0 3,467,357 97.5 3,472,583 97.6 Interconnection . . . . . . 43,141 1.2 60,363 1.7 58,447 1.6 ---------- ----- ---------- ----- ---------- ----- Total Electric . . . . . . 3,491,492 99.2 3,527,720 99.2 3,531,030 99.2 Steam Heating . . . . . . . . . 27,849 0.8 27,491 0.8 27,113 0.8 ---------- ----- ---------- ----- ---------- ----- Total Operating Revenues . $3,519,341 100.0% $3,555,211 100.0% $3,558,143 100.0% ========== ===== ========== ===== ========== =====
(1) 1994 and 1993 include unbilled sales and operating revenues by rate class while 1992 includes unbilled sales and operating revenues in the other category. (2) Primary pumping operating revenues, sales and customers are included in commercial in 1994 and in the other category in 1993 and 1992.
1994(1) 1993(1) 1992 ----------------------- ----------------------- ----------------------- Increase Increase Increase (Decrease) (Decrease) (Decrease) From Prior From Prior From Prior Sales Amount Year Amount Year Amount Year ----- ----------- ---------- ----------- ---------- ----------- ---------- Electric (thousands of kWh) Residential . . . . . . . . 12,169,417 1.1 % 12,032,342 6.4% 11,309,007 (7.5)% Commercial . . . . . . . . . 17,041,446 6.5 15,996,307 4.0 15,384,055 (1.2) Industrial . . . . . . . . . 13,356,351 5.9 12,618,018 6.7 11,827,605 2.3 Sales for resale and other(2) 1,586,162 (31.6) 2,317,793 6.5 2,176,096 28.6 ---------- ---------- ---------- Total System . . . . . . . 44,153,376 2.8 42,964,460 5.6 40,696,763 (0.9) Interconnection . . . . . . 1,978,135 (45.2) 3,611,455 12.7 3,204,357 (42.1) ---------- ---------- ---------- Total Electric . . . . . 46,131,511 (1.0)% 46,575,915 6.1% 43,901,120 (5.8)% ========== ========== ========== Steam Heating (thousands of lbs.) . . . . 3,109,596 3.5 % 3,004,394 -% 3,005,724 7.5% ========== ========== ==========
See footnote reference above. 5 6
Customers (at Year-End) 1994 1993 1992 ----------------------- ---------- ---------- ---------- Electric Residential . . . . . . . . . . . . . . . . 1,805,141 1,790,197 1,777,914 Commercial . . . . . . . . . . . . . . . . . 172,221 170,453 169,080 Industrial . . . . . . . . . . . . . . . . . 889 850 813 Other (2) . . . . . . . . . . . . . . . . . 1,967 2,034 1,985 --------- --------- --------- Total System . . . . . . . . . . . . . . . 1,980,218 1,963,534 1,949,792 Interconnection . . . . . . . . . . . . . . 7 7 7 --------- --------- --------- Total Electric . . . . . . . . . . . . . . 1,980,225 1,963,541 1,949,799 ========= ========= ========= Steam Heating . . . . . . . . . . . . . . . . . . 367 378 412 ========= ========= =========
See footnote reference on Page 5. During 1994, sales to automotive and automotive-related customers accounted for approximately 11% of total operating revenues. The Company's 30 largest industrial customers accounted for approximately 18% of total operating revenues in 1994 and 1993 (as compared to 19% in 1992) and no one customer accounted for more than 4%. Set forth below are comparisons of total system sales by year and quarter.
1994 1993 1992 ---------- ---------- ---------- (Thousands of kWh) First Quarter . . . . . . . . . . . . . 10,892,135 10,583,641 10,133,257 Second Quarter . . . . . . . . . . . . . 10,696,503 10,170,611 9,938,869 Third Quarter . . . . . . . . . . . . . 11,790,735 11,606,908 10,359,706 Fourth Quarter . . . . . . . . . . . . . 10,774,003 10,603,300 10,264,931 ---------- ---------- ---------- Total System . . . . . . . . . . . . . . 44,153,376 42,964,460 40,696,763 ========== ========== ==========
The Company generally experiences its peak load and highest total system sales during the third quarter of the year as a result of air conditioning and cooling-related loads; however, in 1994 a new all-time peak of 9,684 MW was reached in the second quarter. For information on an interruptible rate, commonly known as R-10, and the special manufacturing contracts which are expected to reduce revenues and peak demand, see "Regulation and Rates" and for information on the Company's future sales growth which may be limited by the economic base in the Company's service territory, see Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. For further information on financial results of the Company's operations, see Item 6 - Selected Financial Data, Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, Item 8 - Financial Statements and Supplementary Data and Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K. 6 7 CERTAIN FACTORS AFFECTING PUBLIC UTILITIES The Company, in common with other public utilities having industrialized service areas, is experiencing increased competition and pressure to reduce rates in order to retain industrial customers. These competitive issues are further compounded by public interest in and existing and proposed regulations dealing with cogeneration, transmission access and retail wheeling. In response to competitive pressures, the Company has developed a DSM program and has, also, entered into special manufacturing contracts with Chrysler Corporation, Ford Motor Company and General Motors Corporation. These competitive responses are expected to reduce revenues. The Company has announced its intention to create a holding company. Subject to the receipt of necessary approvals, the new structure will be in place by year-end 1995. A holding company structure is responsive to competitive issues and will allow the development of new non-utility revenue sources while offering the utility protection from possible losses from non-utility investments. Also, in part, in response to competitive issues, 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. The Company cannot predict what suggestions for legislative changes may result from the review, or whether it may result in regulation of the proposed holding company formation or additional regulation of the relationship between the proposed holding company and the Company. On November 2, 1994, the Securities and Exchange Commission ("SEC") issued a release requesting comments on possible revision of regulation of public utility holding companies under the Public Utility Holding Company Act of 1935. Various parties have suggested significant revisions to, or repeal of, this statute. The Company 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 such statute. In addition, the Company, in common with other public utilities, is subject to extensive environmental regulation. Additional costs may result as the effects of various chemicals on the environment (including nuclear waste) are studied and governmental regulations are developed and implemented. The costs of future nuclear decommissioning activities are the subject of increased regulatory attention. CAPITAL EXPENDITURE PROGRAM The Company has no current plans to construct additional generating plants. However, an Integrated Resource Plan, reviewed by the MPSC biennially, recognizes that the need for additional capacity may be satisfied by the return to service of certain units in economy reserve status and various DSM programs. See "Regulation and Rates - Michigan Public Service Commission - Integrated Resource Plan". 7 8 Capital expenditures in 1994, 1993 and 1992 were $366 million (including $4 million of AFUDC), $396 million (including $3 million of AFUDC) and $416 million (including $3 million of AFUDC), respectively. Also, the purchase of leased equipment totaled $11.5 million in 1994 and $2.4 million in 1993. Projections for the 1995-1999 period contemplate capital expenditures of approximately $1.9 billion (including an estimated $18 million of AFUDC). Also, projections for capitalized leases and non-utility investments for the same period are estimated to be $250 million. The 1995 capital expenditure program is budgeted at $398 million (including $4 million of AFUDC). The 1995 capital expenditure program includes planned expenditures for production plant improvement projects ($68 million), transmission and distribution facilities ($140 million), general plant projects ($87 million) and miscellaneous construction and construction overheads capitalized ($103 million). Planned expenditures for 1995 capitalized rail-car leases and non-utility investments are estimated to be $22 million and $40 million, respectively. FINANCING The Company is required to obtain financing authority from the MPSC as to the issuance of long-term debt and equity securities and from the FERC as to short-term obligations (maturities of two years or less). An MPSC order permits the Company to issue approximately $3.5 billion of securities for the purpose of refinancing debt and preferred and/or preference stock (issued prior to 1993) prior to maturity (when economic) and at maturity, and to replace funds used for those purposes. The Company also has MPSC authority to refinance substantially all non-taxable debt obligations. In 1994, the Company optionally redeemed $218 million of higher-cost Mortgage Bonds and $20 million of tax-exempt debt obligations utilizing, in part, the proceeds of a $200 million collateralized note issue and two new tax-exempt issues totaling $20 million. In addition, the Company financed certain pollution control projects with the proceeds of two new tax-exempt debt issues totaling $30 million. The Company currently has authority from the FERC for short-term borrowings in the amount of up to $1 billion, which authority expires in May 1995; and an application is pending with FERC to extend this authority an additional two years. At February 28, 1995, the Company had short-term credit arrangements of $404 million under which $67.5 million of borrowings were outstanding. See Note 8. At December 31, 1994, the book value of the Company's Common Stock, after deduction of Common and Preferred Stock expenses, was $22.89 per share as compared to $22.34 per share at December 31, 1993. PROPERTIES The summer net rated capability of electric department generating units is as follows: 8 9
Summer Net Location By Rated Capability(2)(3) Michigan ----------------------- Year Plant Name(1) County (MW) % in Service -------------------------------- ----------- ------- -------- ------------------------- Fossil-fueled Steam-Electric Belle River (4) St. Clair 1,026 10.0% 1984 and 1985 Greenwood (5) St. Clair 785 7.7 1979 Harbor Beach Huron 103 1.0 1968 Marysville St. Clair 167 1.6 1930, 1943 and 1947 Monroe Monroe 3,000 29.4 1971, 1973 and 1974 River Rouge Wayne 500 4.9 1957 and 1958 St. Clair St. Clair 1,379 13.5 1953, 1954, 1961 and 1969 Trenton Channel Wayne 725 7.1 1949, 1950 and 1968 ------ ----- 7,685 75.2% Oil or Gas-fueled Peaking Units Various 525 5.2 1966-1971 and 1981 Nuclear-fueled Steam-Electric Fermi 2 (6) Monroe 1,085 10.6 1988 Hydroelectric Pumped Storage Ludington (7) Mason 917 9.0 1973 ------ ----- 10,212 100.0% ====== =====
--------------- (1) See Note 10. (2) Summer net rated capabilities of generating units in service are based on periodic load tests and are changed depending on operating experience, the physical condition of units, environmental control limitations and customer requirements for steam, which otherwise would be used for electric generation. (3) Excludes two oil-fueled units, River Rouge Unit No. 1 (206 MW) and St. Clair Unit No. 5 (250 MW), and one coal-fueled power plant, Conners Creek (236 MW), all in economy reserve status. (4) The Belle River capability represents the Company's entitlement to 81.39% of the capacity and energy of the plant. See Note 4. (5) Pursuant to MPSC orders, Greenwood Unit No. 1 was not in rate base during the period January 1988 through January 21, 1994 with no return on the investment during that period. See Note 3. (6) Fermi 2 was out of service in 1994. See Note 2 and discussion below. (7) Represents the Company's 49% interest in Ludington with a total capability of 1,872 MW. The four Monroe units, two Belle River units, Fermi 2 and one unit at each of the Trenton Channel and St. Clair Power Plants account for 6,061 MW of the Company's summer net rated capability. These units, which commenced commercial operation during the period 1968 through 1988, are the Company's larger, more efficient generating units. The Monroe, St. Clair and Belle River power plants provided approximately 48%, 19% and 18%, respectively, of the Company's total 1994 power plant generation. On December 25, 1993, the Fermi 2 reactor automatically shut down after a turbine-generator failure. Major repairs have been completed and tests are continuing to balance and synchronize the unit. See Note 2. Sources of electric energy were as follows:
1994 1993 1992 ------ ------ ------ (Thousands of MWh) Power plant generation Fossil . . . . . . . . . . . . . . . . . . . . . . . . 42,410 38,882 36,689 Nuclear . . . . . . . . . . . . . . . . . . . . . . . . - 8,274 7,338 Purchased power . . . . . . . . . . . . . . . . . . . . . 6,599 2,211 2,705 ------ ------ ------ Net system output . . . . . . . . . . . . . . . . . . . . 49,009 49,367 46,732 ====== ====== ======
9 10 The Company and Consumers are parties to an Electric Coordination Agreement providing for emergency assistance, coordination of operations and planning for bulk power supply, with energy interchanged at nine interconnections. The Company and Consumers also have interchange agreements to exchange electric energy through 12 interconnections with The Toledo Edison Company, Indiana Michigan Power Company, Northern Indiana Public Service Company and Ontario Hydro. In addition, the Company has interchange agreements for the exchange of electric energy with Michigan South Central Power Agency, Rouge Steel Company and the City of Wyandotte. The Company also purchases energy from cogeneration facilities and other small power producers. Energy purchased from cogeneration facilities and small power producers amounted to $10.9 million, $13.9 million and $16.7 million for 1992, 1993 and 1994, respectively, and is currently estimated at $22.7 million for 1995. An all time peak demand of 9,684 MW was experienced for the Company's system on June 16, 1994, with a reserve margin of 6.2%. The previous peak was 9,362 MW set in August 1993. Based on the current load forecast and planned generating capability, the Company estimates that its summer reserve margin, expressed as a percentage of peak demand, will be approximately 14% for 1995 and 17% for 1996. Included as part of the 1995 and 1996 reserve margin projections are the Company's present and projected capacity purchases and anticipated peak reductions due to the implementation of various DSM programs, including the R-10 interruptible rate. The 1995 and 1996 reserve margins are above the Company's current planning criterion, which specifies a minimum reserve margin of 12%. The Company has an agreement for the sale and assignment, from time to time, of an undivided ownership interest in $200 million of the Company's customer accounts receivable and unbilled revenues. The agreement has been extended to February 1996, although the Company anticipates that all customer accounts receivable and unbilled revenues subject to this agreement will be repurchased in 1995. See Note 5. Gross property additions and retirements from January 1, 1990 through December 31, 1994 were $1.69 billion and $299 million, respectively. The Company's electric generating plants are interconnected by a transmission system operating at 24 to 345 kilovolts through 94 transmission stations. As of December 31, 1994, electric energy was being distributed in the Company's service area through 577 substations over 2,946 distribution circuits. FUEL COSTS AND SUPPLY The Company's 1990 through 1994 generating capability was primarily dependent upon coal. Fuel information for these periods is shown below. 10 11
Percent of Cents Per Million BTU Total Fuel Consumed Average ------------------------------ ----------------------- Cost Per Ton All of Coal Coal Nuclear Oil Gas Fuels Coal Nuclear Oil Gas Consumed ---- ------- --- --- ----- ---- ------- --- --- -------- 1994 153 - 337 285 157 99% -% -% 1% $32.25 1993 154 111 358 259 148 81 18 - 1 31.68 1992 160 97 403 212 150 81 17 - 2 32.88 1991 159 109 409 196 153 84 14 1 1 33.21 1990 163 114 414 166 156 83 16 - 1 34.21
COAL. The Company estimates that it will require approximately 600 million tons of coal over the next 35 years for its coal-fueled generating units. The Company expects to obtain a significant portion of its requirements through long-term contracts and the balance through additional short-term agreements and spot purchases. The Company has contracts with five coal suppliers for a total purchase of up to 82 million tons of low-sulfur western coal to be delivered during the period from 1995 through 2005. It also has several contracts for the purchase of approximately 18 million tons of Appalachian coal with varying contract expiration dates through 1999. These existing long-term coal contracts include provisions for market price reopeners and price escalation as well as deescalation. Under current market conditions, the Company is able to purchase coal at prices lower than some of its existing long-term contracts. As a result, the Company is renegotiating some contracts and buying out others whenever it is prudent and economic. The low-sulfur western coal contracts have a maximum sulfur content of 0.55%. The Appalachian coal contracts range in maximum sulfur content from 0.70% to 3.0%. As required by the Michigan Air Pollution Control Commission, the Company's aggregate consumption of both types of coal averages below 1% sulfur content. For further information on environmental matters, see "Environmental Matters" and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. OIL. The Company purchases No. 2 oil, used principally for peaking units and start-up for other units, and No. 6 oil, used principally by Greenwood Unit No. 1, through spot market purchases. GAS. Natural gas is used principally at one of the Company's steam heating plants and Greenwood Unit No. 1. Natural gas requirements are met through spot market purchases. NUCLEAR. Renaissance holds title to the nuclear fuel utilized at Fermi 2. Under the terms of a heat purchase contract between the Company and Renaissance, the Company makes quarterly payments to Renaissance for the cost of the nuclear fuel consumed and interest expense. For information on nuclear fuel financing, see Notes 8 and 9. Since Fermi 2 is not scheduled for refueling in 1995, the Company is currently maintaining a minimal inventory for nuclear fuel requirements. Also, 11 12 the Company believes that adequate uranium supplies exist to supplement existing contracts to meet plant requirements beyond 1995. The Company has a contract with the DOE for the future storage and disposal of spent nuclear fuel from Fermi 2. Under the terms of the contract, the Company makes quarterly payments to the DOE based upon a fee of 1 mill per kWh applied to the Fermi 2 electricity generated and sold. No fees were levied in 1994 due to Fermi 2 being out of service. The spent nuclear fuel will be stored on site until the DOE accepts it for disposal. The DOE has stated that it will be unable to store spent nuclear fuel at a permanent repository until after 2010. However, the DOE and utilities with nuclear units are pursuing other interim storage options. The Company estimates that existing temporary storage capacity at Fermi 2 will be sufficient until the year 2000, or until 2015 with the expansion of such storage capacity. REGULATION AND RATES MICHIGAN PUBLIC SERVICE COMMISSION. The Company is subject to the general regulatory jurisdiction of the MPSC, which, from time to time, issues its orders pertaining to the Company's conditions of service, rates and recovery of certain costs, the issuance of securities (other than short-term obligations), accounting and various other matters. MPSC orders issued in December 1988 and on January 21, 1994 are currently in effect with respect to the Company's rates and certain other revenue and operating-related matters. On January 21, 1994, the MPSC issued an order reducing the Company's rates in the amount of $78 million annually. The order is the subject of various appeals before the Michigan Court of Appeals. See Note 3 for a discussion of the provisions of the January 21, 1994 order. In 1994, the MPSC issued an order approving a settlement agreement resolving the issues concerning the reconciliation of the Company's 1993 PSCR plan and the Fermi 2 performance standard. The Company refunded approximately $3.4 million, plus interest, to customers through a credit on their electric bills. This refund is due to overcollection from its customers for its power supply costs for calendar 1993. The order defers consideration of unamortized nuclear fuel expense totaling $6.1 million until the Company's 1994 PSCR reconciliation case. In addition, the Company refunded approximately $147,000 for 1993 to its customers due to provisions of the Fermi 2 performance standard. On January 25, 1995, the MPSC approved a settlement agreement that adopts a plan to utilize Fermi 2 insurance proceeds for the $6.1 million of unamortized nuclear fuel and to substantially offset increased power supply costs incurred during 1994 due to the forced outage at the Fermi 2 power plant. The settlement will avoid the need for a potential surcharge to the Company's PSCR customers to recover these increased costs for replacement power. Conservation and Demand-Side Management Programs - As the result of a generic review of Michigan conservation programs, the MPSC in June 1988 ordered each Michigan gas and electric utility to file a biennial energy conservation report, including a three-year plan. In December 1989, the MPSC issued an order approving a settlement agreement under which the Company entered into a number of conservation and DSM pilot programs to be funded by the existing 0.1 mill surcharge approved in a December 1988 MPSC order. On January 28, 1993, the MPSC issued an order approving a settlement agreement of the reconciliation of expenses and revenues for the period 1989-91. The order required that $4 million 12 13 be utilized for program expenses. In May 1992, the MPSC issued an order approving a settlement agreement covering the Company's demand and energy conservation programs for the years 1992 and 1993. Funding was provided by the existing 0.1 mill surcharge. The Company was also required to contribute an additional $4 million, which was not recovered through the surcharge, for use in the Residential Low Income Program, which amount was charged to Other Income and Deductions in 1992 and 1993. On September 8, 1994, the MPSC issued an order approving a settlement agreement of the reconciliation of expenses and revenues for the Company's demand and energy conservation programs for the years 1992 and 1993. The order required that $3.5 million be utilized for program expenses and that $1.3 million plus interest be refunded to customers during the billing month of October 1994. On April 11, 1994, the MPSC issued an order approving a partial settlement agreement covering the Company's energy conservation programs for the period 1994-1996. The order authorizes the Company to collect $21.2 million through a surcharge for the three-year program to install energy conservation measures in low-income customer households. Also, as discussed in Note 3, the January 21, 1994 MPSC order authorized a three-year $41.5 million DSM program. On September 1, 1994, the Company filed for approval of a DSM surcharge for 1995. The Company's 1995 DSM plan includes measures which pass the Ratepayer Impact Measure test and customer value DSM measures totaling $4.9 million. An MPSC order is expected by June 1995. Integrated Resource Plan - The Company's Integrated Resource Plan ("IRP") is designed to provide resource plans which have adequate flexibility to react to major changes and at the same time address the concerns of its customers. It attempts to minimize risks and costs to customers and shareholders alike, while maintaining an appropriate balance between demand-side and supply-side alternatives. The Company's first IRP proposed to meet future load requirements by utilizing existing power plant units that are in economy reserve status rather than building new plants. On September 1, 1994, the Company filed its biennial third Integrated Resource Plan with the MPSC. This IRP, which covers a 15-year (1994-2008) study period, calls for the return to service of existing plant and a DSM program that will continue to provide for interruptible service to large primary customers which is expected to reduce peak demand by 500 MW in 1995. The recommended IRP plan again indicates that the Company will not need to add capacity before the year 2000, at which time the restart of the Conners Creek coal-fired units that are currently in economy reserve is the next supply-side option to be used as the avoided unit for future capacity solicitations. Competitive Bidding - In July 1992, the MPSC issued an order establishing a competitive bidding framework for future electric capacity solicitations for the Company. The MPSC directed the Company to proceed with a capacity solicitation proceeding based on its 1992 IRP, which outlined the Company's long-range plan for meeting its customers' electricity needs, and to submit a Request For Proposal ("RFP") to meet the need for any future electrical capacity. On March 1, 1993, the Company submitted its direct testimony indicating that as a result of the IRP update performed in the first quarter of 1993, there was no need for additional supply-side capacity until the year 2000. It was also stated that the restart of Conners Creek Power Plant continues to be the most economical supply-side selection and at this time would represent the "avoided cost" unit. On July 13 14 8, 1993, the MPSC issued an order dismissing that proceeding, in accordance with the terms of a settlement agreement executed by the parties to the case. The agreement provides that, based on a projected need for additional capacity in the year 2000, the Company is scheduled to submit a new RFP filing on or before May 1, 1995. Retail Wheeling - The MPSC has been considering the propriety of retail wheeling programs. In an interim order dated April 11, 1994, the MPSC approved a framework for a five-year experimental retail wheeling program for the Company to be limited to 90 MW and to be implemented when additional capacity is required by the Company which is expected to be approximately the year 2000. The interim order referred this case to the Administrative Law Judge for further proceedings to determine rates for service to retail wheeling customers. Both the Company's and the Michigan Attorney General's appeals of the April 11, 1994 MPSC order to the Michigan Court of Appeals were dismissed as premature. On August 26, 1994, the Company, in compliance with the MPSC's April 11, 1994 interim order, filed its case for the pricing of retail wheeling service. A final order is expected by the end of April 1995. On August 26, 1994, the Company also initiated a declaratory judgement action in the Federal District Court for the Western District of Michigan asserting that the MPSC lacks authority to compel the Company to undertake retail wheeling involuntarily and the rates and terms and conditions for retail wheeling transmission service are subject to federal rather than state jurisdiction. A motion to dismiss, filed by the defendants, is pending. Special Manufacturing Contracts - As part of a continuing response to the challenge of competition, the Company has executed 10-year special manufacturing contracts with Chrysler Corporation, Ford Motor Company and General Motors Corporation, covering 54 of the Big Three automakers' largest manufacturing locations in Southeastern Michigan. These long-term contracts are expected to reduce annual operating revenues in amounts ranging from about $30 million in 1995 to $50 million in 1999 through 2004. The Company expects to offset these reductions by further reducing operating expenses. On March 23, 1995, the MPSC issued an order approving the special manufacturing contracts. The MPSC also found that the Company should assume full responsibility for negotiating the discounted prices and that its shareholders should expect to absorb much, if not all, of any revenue shortfall caused by the pricing and other contract provisions that the Company negotiates. Therefore, unless the Company can make a compelling showing why a different ratemaking treatment is justified, the MPSC will not permit the Company to reallocate the costs of serving contract customers to other ratepayer classes. In addition, the MPSC agreed that other ratepayers should be protected from any underrecoveries of PSCR costs and the other Company surcharges as a result of the contracts. For further information on regulation and rates, see Note 3 and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. FEDERAL ENERGY REGULATORY COMMISSION. The Company is subject to the general jurisdiction of the FERC with respect to accounting, sales for resale in interstate commerce, levels of short-term obligations, the licensing of Ludington and other matters. The Company's electric transmission facilities, interconnected with those of Ontario Hydro at the United States - Canada border, are subject to safety regulation by various departments of the United States 14 15 government and to a permit administered by the ERA. The transmission of electric energy to Ontario Hydro is subject to regulation by the FERC and the ERA. On February 14, 1995, the Company filed an Application with FERC seeking authority to establish a holding company. The application requests that FERC approve the Company's request by late April 1995. Based upon applicable precedent, the Company anticipates that the requested authority will be granted. NUCLEAR REGULATORY COMMISSION. The NRC has regulatory jurisdiction over all phases of the operation, construction (including plant modifications), licensing and decommissioning of Fermi 2. Reports on plant operation are filed with the NRC on a periodic basis. The scope of regulation is such that from time to time assertions may be made that deviations from prescribed standards and the unit's operating license have occurred. Assertions of such a nature are subject to the NRC's investigative, administrative and appeal procedures and are considered to be pending until such time as review within the NRC is completed. At the conclusion of an investigation, the NRC may assess a fine which should, in accordance with NRC regulations, be calculated in a manner designed to take into account the severity, length and safety significance of the alleged infraction. In February 1994, the Company was assessed a fine of $50,000 for failure to correct significant conditions adverse to quality. On May 18, 1994, the NRC issued the fourteenth Systematic Assessment of Licensee Performance ("SALP") report on Fermi 2 operations. The report rates four functional areas of plant performance during the period July 1, 1992 through April 2, 1994. The report ratings remained unchanged from the SALP report for the prior rating period except one area of performance was reduced from a good rating to an acceptable rating. This is the first rating of Fermi 2 under the NRC's recently revised SALP categories. The next SALP period is expected to end in August 1995. The Company will request that the NRC consent to the transfer of control of its NRC Licenses as part of the formation of the holding company. Based upon controlling precedent, the Company anticipates that the NRC will issue such consent in a timely manner. See Note 2 for further information on matters related to Fermi 2. ENVIRONMENTAL MATTERS The Company, in common with other electric utilities, is subject to applicable permit requirements and to increasingly stringent federal, state and local standards covering, among other things, particulate and gaseous stack emission limitations, the discharge of effluents (including heated cooling water) into lakes and streams and the handling and disposal of waste material. In November 1990, the federal Clean Air Act was amended to further strengthen federal regulations governing air emissions. For further information on matters related to the 1990 Amendments to the federal Clean Air Act, see Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. Through 1994, the Company's capital expenditures for environmental control and protection facilities were approximately $2.9 billion, including expenditures of $24 million in 1994. The Company's 1995 capital expenditure budget for environmental protection is approximately $19 million. 15 16 AIR. The Company's operations are subject to environmental regulations of the EPA, the State of Michigan and Wayne County. Under the federal Clean Air Act of 1970, as amended, the EPA has the authority to adopt and implement additional regulations in support or in substitution of state and local enactments where the EPA deems such enactments to be deficient in relation to its regulations. A May 1992 EPA rule provides an exemption from new source review for major modifications at utility facilities associated with pollution control projects unless the EPA administrator determines the modification renders the unit "less environmentally beneficial." The State of Michigan passed air fee legislation to provide revenues to comply with Title V of the Clean Air Act. Beginning in 1995, it is anticipated that the Company will pay less than $1 million in air fees annually. On September 15, 1993, the Company received a Finding of Violation from the EPA concerning alleged violations of asbestos regulations observed during an EPA inspection of the Monroe Power Plant on February 9, 1993. On February 8, 1994, the Company and its contractor received an administrative order proposing a penalty in the amount of $28,300. In May 1994, the Company and its contractor signed a Consent Order with the EPA neither admitting nor denying the allegations and the contractor paid the recalculated civil penalty of $15,900. Title III of the Clean Air Act Amendments, Hazardous Air Pollutants, requires the EPA to conduct a four-year study of mercury emissions from fossil fuel-fired boilers, to determine whether regulations are required. In May 1993, the Michigan Environmental Science Board recommended that the Governor direct the MPSC to require utilities to compile an accurate emission inventory. The Company has submitted a plan for such an inventory to the MPSC. Until studies are completed and resulting regulations, if any, are promulgated, the impact on the Company cannot be determined. WATER. NPDES permits for the Company's power plants are issued by the MDNR pursuant to delegation by the EPA under the federal Clean Water Act. In 1994, the Company submitted renewal applications for three Company facilities. Two permits were issued in 1994, six permit applications (submitted in 1994 and earlier) remain pending; the expired permits remain effective until new permits are issued or denied. In an effort to streamline the industrial facility permitting process, in 1993 the MDNR created a program to issue general storm water discharge permits for various types of facilities across the state. Instead of applying for individual permits, companies are now required to notify the state of the operating facilities which should be included under the general permits. On August 22, 1994, the Company filed Notices of Intent with the MDNR for coverage for nine facilities under the NPDES general permit for storm water discharges associated with industrial activity. The Company is required to demonstrate that the cooling water intake structures at all of its facilities reflect the "best technology available for minimizing adverse environmental impact." The Company filed such demonstrations in July 1976 and the MDNR Staff accepted all except those relating to the St. Clair and Monroe Power Plants. The MDNR Staff rejected the St. Clair demonstration and requested additional information, which was submitted. The MDNR Staff has not made a formal initial decision about the intake at the 16 17 Company's Monroe Power Plant but has requested additional information which was submitted on alternative intake technologies. In the event of a final adverse decision by the MDNR, the Company may be required to install additional control technologies to further minimize the impact. In January 1993, a number of environmental groups filed suit against the EPA in the United States District Court for the Southern District of New York. The suit sought a declaratory ruling that the EPA had failed to perform a non-discretionary duty to adopt a technology-based requirement under Section 316b of the Federal Clean Water Act. The plaintiffs argue that Section 316b requires the "best technology available" for cooling water intakes to protect fish. The Utility Water Act Group ("UWAG") and the Company intervened in the suit and the judge is currently considering jurisdictional arguments. Should the suit prove successful, an adverse result in the rulemaking could require the installation of cooling towers. The Company was required under its Monroe Power Plant NPDES permit to demonstrate that thermal discharge from the plant does not cause an adverse environmental impact on Lake Erie. Such demonstration was submitted to the MWRC and subsequently approved in 1976. The demonstration has been under review by the EPA which indicated that it was unable to concur in the acceptability of the demonstration until additional information had been provided with respect to the cooling water intake effects of the plant. Additional information was submitted, but it is unknown at this time when this issue will be resolved, or what the impact, if any, upon the Company will be. In November 1985, the National Wildlife Federation ("NWF") filed suit against Consumers contending that Ludington had been illegally discharging pollutants (fish and fish parts) without a NPDES permit. In March 1987, the federal District Court ordered Consumers to apply for a NPDES permit. While appealing the District Court order, Consumers filed a NPDES permit application which was granted in June 1988 by the MWRC. Both the NWF and Consumers took exception to the permit issuance and were granted combined contested case status before the MWRC. In December 1988, the Sixth Circuit Court of Appeals reversed the District Court, finding that no NPDES permit was required by federal law. An Administrative Law Judge hearing the MWRC matter found in favor of the companies and ruled that no state discharge permit was required for the turbine discharge water. The decision was transmitted to the MWRC for final action, but the MWRC remanded the matter back to the Administrative Law Judge for clarification. See Note 12 for further information on Ludington. WASTES AND TOXIC SUBSTANCES. The Michigan Solid Waste and Hazardous Waste Management Acts, the Michigan Environmental Response Act and the Federal Resource Conservation and Recovery Act, Toxic Substances Control Act (TSCA), and Comprehensive Environmental Response, Compensation and Liability Act regulate the Company's handling, storage and disposal of its waste materials. A nationwide environmental problem is the discovery of improperly disposed of, hidden or buried hazardous wastes. The Company has extensive property holdings, including approximately 400 miles of transmission corridors which are accessible to the public. The Company could be responsible for cleanup of wastes found on its property, despite the fact that the dumping may have occurred without the Company's permission. The Company's Lulu-Milan transmission corridor in northwestern Monroe County was used as a dump site for drums of paint sludges, 17 18 solvents and some PCB's and a portion of the corridor and adjoining property is listed on the MDNR's "Priority List of Environmental Contamination Sites." Although not responsible for placing the drums there, the Company has spent approximately $550,000 on cleanup and disposal costs. In June 1993, the Company and the MDNR reached an agreement to hire contractors to perform additional investigative and remedial work at the site. While the costs will be shared between the Company and the state, it is impossible at this time to predict what impact this will have upon the Company. See Note 12 for information on the Carter Industrials site matter. A landfill site abandoned by the South Macomb Disposal Authority and now owned in part by the Company is being surveyed by the MDNR for possible contamination. The Company could be required to contribute toward cleanup costs, if any occur. It is unknown at this time what impact, if any, this situation will have upon the Company. The Company has received letters from the EPA requesting information about its involvement with the following sites of identified contamination in Michigan: Rasmussen Dump site in Green Oak Township, Livingston County; Metamora Landfill site in Lapeer County; and the Pioneer Equipment Company site in Detroit. The Company has examined its records and finds no evidence of any involvement at these sites. This information has been communicated to the EPA, but it remains unknown what impact, if any, the EPA's ongoing investigations will have upon the Company. In February 1992, the Company received formal notice from the MDNR that the Port of Monroe Landfill Site had been identified as a site of environmental contamination. Also in February 1992, after an investigation of its records, the Company sent a letter to the MDNR stating its belief that it has never disposed of hazardous material at the Port of Monroe Landfill Site. On March 14, 1994, the MDNR sent formal notice to the PRPs (but not to the Company) that it is seeking reimbursement for its past costs and interest totaling $750,000. The PRPs sent a letter to Detroit Edison on April 8, 1994 advising that they will seek a contribution from the Company on grounds that they believe it to be a party despite the MDNR's decision not to include it. It is unknown what impact, if any, this situation will have upon the Company. In March 1989, the EPA served the Company with an investigative subpoena requesting extensive information regarding the Company's PCB activities. The Company responded to the investigative subpoena in June 1989. It is unknown at this time what impact, if any, the investigation will have upon the Company. EPA rules for underground storage tanks became effective in December 1988. These rules are now administered by the State of Michigan and contain requirements on new tank system installations, leak detection monitoring, notification and cleanup of leaks, corrosion resistance for new and existing tank systems and spill prevention. Of the original 90, the Company now has 70 remaining regulated underground storage tanks containing petroleum products. Although most of the tanks have been upgraded to "new tank standards", in accordance with further review of the rules, six tanks and 23 piping systems still need upgrading or replacement by December 22, 1998. It is estimated that it will cost the Company approximately $1.25 million to complete the underground storage tanks program. 18 19 On July 1, 1991, the Michigan Environmental Response Act ("Act 307") became effective. The law is patterned after the CERCLA and gives the MDNR authority to list sites of environmental contamination and bring about environmental cleanups within the State of Michigan. Several Company-owned properties are on the Act 307 list as a result of diesel oil releases or dredged disposal operations, including portions of the Superior Station and portions of the St. Clair and Monroe Power Plants. The Company is addressing these issues and it is unknown what impact, if any, they will have upon the Company. In 1993, the Company received a letter from the MDNR requesting information regarding the Satterlee-Sumpter Township landfill site in Wayne County. In April 1994, the Company received a letter formally naming it as a PRP in the case and requesting the Company, along with the other PRPs, to conduct a remedial investigation of the site and to pay past costs incurred by the State. The PRPs have met with the MDNR to clarify the extent of the desired investigation. At this time, it is impossible to predict what the impact upon the Company will be. In July 1994, the Company received a Third Party summons and complaint from Oakland Disposal, Inc., Bestway Recycling, Inc., Aero Disposal, Inc., and Oakland Disposal No. 1 regarding the use of the Waterford Hills Sanitary Landfill for disposal of hazardous waste or hazardous waste constituents. An investigation of Company records revealed no evidence that any hazardous material was sent to the site. It is impossible to predict what impact this issue will have upon the Company. The Company received approval from the MDNR on October 5, 1993 to close its hazardous waste storage facility at its Warren Service Center. The facility's hazardous waste storage area has been closed but the issue of corrective actions at solid waste management units has not yet been addressed by the MDNR or the EPA. The Company has been minimizing radioactive waste production and all Fermi 2 final form radioactive waste is being stored in on-site facilities. During 1994, 72 drums of mixed (radioactive and hazardous) waste were disposed of at an approved facility. Two drums will be shipped in 1995, however, there are no facilities available to receive the remaining six drums of mixed waste. Temporary on-site storage will very likely continue to be the radioactive waste management option available in the near future. The federal Low-Level Radioactive Waste Policy Act makes each state responsible for the disposal of low-level radioactive waste situated within each state's borders. In June 1992, the United States Supreme Court upheld most of the provisions of this statute. The Court upheld the responsibility of each state to develop low-level waste facilities, but declared a provision requiring the state to take title to low-level radioactive waste in 1996 to be unconstitutional. For further information on nuclear waste disposal, see "Fuel Costs and Supply - Nuclear." For further information on environmental matters, see Notes 2 and 12 and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations. 19 20 EMPLOYES AND EXECUTIVE OFFICERS EMPLOYES. The Company has 8,407 employes with an average length of service of approximately 18 years. Of these, 3,264 employes are represented by unions under two collective bargaining agreements. One agreement expires in June 1995 for 2,713 employes and the other agreement expires in August 1996 for 551 employes.
EXECUTIVE OFFICERS. PRESENT POSITION NAME AGE(A) PRESENT POSITION HELD SINCE ---- ------ ---------------- ---------- John E. Lobbia . . . . . . . . . . . 53 Chairman of the Board 5- 1-90 and Chief Executive Officer Anthony F. Earley, Jr. . . . . . . . 45 President and Chief Operating 3- 1-94 Officer Larry G. Garberding . . . . . . . . . 56 Executive Vice President and 8- 1-90 Chief Financial Officer Frank E. Agosti . . . . . . . . . . . . 58 Senior Vice President- 2- 1-90 Power Supply Robert J. Buckler . . . . . . . . . . . 45 Senior Vice President- 12- 1-92 Energy Marketing and Distribution Douglas R. Gipson . . . . . . . . . . . 47 Senior Vice President- 4- 1-93 Nuclear Generation Gerard M. Anderson . . . . . . . . . . 36 Vice President for Non-Utility 12- 1-93 Business Ventures Susan M. Beale . . . . . . . . . . . . . 46 Vice President and Corporate 3-27-95 Secretary Michael E. Champley . . . . . . . . . . 46 Vice President-Marketing and 12- 1-92 Sales Haven E. Cockerham . . . . . . . . . . 47 Vice President-Human Resources 6- 1-94 Ronald W. Gresens . . . . . . . . . . . 61 Vice President and Controller 5- 1-87 Leslie L. Loomans . . . . . . . . . . . 51 Vice President and Treasurer 10 -1-89 Christopher C. Nern . . . . . . . . . . 50 Vice President and General 6- 1-93 Counsel S. Martin Taylor . . . . . . . . . . . 54 Vice President-Corporate and 2- 1-89 Public Affairs
(a) As of March 1, 1995 Under the Company's By-Laws, the officers of the Company are elected annually by the Board of Directors at a meeting held for such purpose, each to serve until the next annual meeting of shareholders or until their respective successors are chosen and qualified. With the exception of Messrs. Anderson, Cockerham, Earley and Garberding, all of the above officers have been employed by the Company in one or more management capacities during the past five years. Gerard M. Anderson was a senior engagement manager at McKinsey & Company, Inc., a management consulting firm, from 1988 to 1993. Effective December 1, 1993, he was elected Vice President of the Company. 20 21 Haven E. Cockerham, from 1991 until 1994, was president of Cockerham, McCain & Associates, Inc., a management, business development and human resources consulting firm in Columbia, South Carolina. From 1989 to 1991, Mr. Cockerham owned Cockerham Chevrolet-Oldsmobile, an automobile dealership in Newberry, South Carolina. Prior to 1989, Mr. Cockerham was employed by General Motors in various executive positions in the human resources area. Effective June 1, 1994, he was elected Vice President-Human Resources. Anthony F. Earley, Jr., from 1989 to 1994, was President and Chief Operating Officer of Long Island Lighting Company ("LILCO"), an electric and gas utility company serving Long Island, New York. He previously served in various executive capacities at LILCO from 1985 to 1989. Effective March 1, 1994, he was elected President and Chief Operating Officer and a member of the Board of Directors of the Company. Larry G. Garberding, from 1987 until 1990, was President of NICOR, Inc., a natural gas utility serving suburban Chicago. Effective August 1, 1990, he was elected Executive Vice President, Chief Financial Officer and a member of the Board of Directors of the Company. On July 1, 1994, Malcolm G. Dade, Jr., Vice President, retired from the Company. On July 2, 1994, Saul J. Waldman, Vice President-Corporate Communications, retired from the Company. Pursuant to Article VI of the Company's Articles of Incorporation, directors of the Company will not be personally liable to the Company or its shareholders in the performance of their duties to the full extent permitted by law. Article VII of the Company's Articles of Incorporation provides that 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 Board of Directors as an employe or agent of the 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 the 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, the Company has entered into indemnification agreements with all of its officers and directors, which agreements set forth procedures for claims for indemnification as well as contractually obligating the Company to provide indemnification to the maximum extent permissible by law. The Company 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. OTHER INFORMATION. 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 April 24, 1995, at thirteen. 21 22 ITEM 3 - LEGAL PROCEEDINGS. The Company in the ordinary course of its business, is involved in a number of suits and controversies including claims for personal injuries and property damage and matters involving zoning ordinances and other regulatory matters. As of December 31, 1994, the Company was named as defendant in 194 lawsuits involving claims for personal injuries and property damage and had been advised of 22 other potential claims not evidenced by lawsuits. From time to time the Company has paid nominal penalties which were administratively assessed by the United States Coast Guard, United States Department of Transportation under the Federal Water Pollution Control Act, as amended, with respect to minor accidental oil spills at the Company's power plants into navigable waters of the United States. Payment of such penalties represents full disposition of these matters. The Company in its 1982 main electric rate case requested the MPSC to recognize the costs associated with the abandoned Greenwood Unit Nos. 2 and 3 for ratemaking purposes. In March 1983, the MPSC, consistent with past precedent, granted the Company authority to defer, amortize and recover these costs (over a period of 10 years) through the ratemaking process. The Michigan Attorney General appealed the MPSC's order. In August 1990, the Ingham County Circuit Court remanded this matter to the MPSC for additional findings of fact. On November 1, 1991, the MPSC issued its final order on remand affirming the earlier decision to allow rate recovery of the costs. The Ingham County Circuit Court has ordered that supplemental briefs be filed. The Company has amortized the costs associated with the abandoned Greenwood Unit Nos. 2 and 3 in accordance with the MPSC's order. The amortization was completed in 1993. The Company has announced its plans to form a holding company. The holding company format is subject to approval by Common Stock Shareholders, FERC and the NRC. The Company expects that the holding company structure will be in place by year-end 1995 and that the new holding company will be exempt from the practices of the federal Public Utility Holding Company Act of 1935. See Note 12. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. Not applicable. 22 23 PART II ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock is listed on the New York Stock Exchange, which is the principal market for such stock, and the Chicago Stock Exchange. The following table indicates the reported high and low sales prices of the Company's Common Stock on the Composite Tape of the New York Stock Exchange and dividends paid per share for each quarterly period during the past two years:
PRICE RANGE DIVIDENDS ------------------------ PAID CALENDAR QUARTER HIGH LOW PER SHARE ---------------------- ------- ------- --------- 1993 First . . . . . . . . . 37-1/8 32 $0.495 Second . . . . . . . . 36-3/4 33-1/8 0.515 Third . . . . . . . . . 36 33-3/4 0.515 Fourth . . . . . . . . 34-3/4 29-7/8 0.515 1994 First . . . . . . . . . 30-1/4 26 0.515 Second . . . . . . . . 27-1/4 24-1/4 0.515 Third . . . . . . . . . 27-1/2 24-1/4 0.515 Fourth . . . . . . . . 27-1/2 24-3/4 0.515
At December 31, 1994, there were 144,863,447 shares of the Company's Common Stock outstanding. These shares were held by a total of 151,077 shareholders. The Company's By-Laws provide that Chapter 7B of the Michigan Business Corporation Act ("Act") does not apply to the Company. The Act regulates shareholder rights when an individual's stock ownership reaches at least 20 percent of a Michigan corporation's outstanding shares. As a result of the amendment, a shareholder seeking control of the Company cannot require the Company's Board of Directors to call a meeting to vote on issues related to corporate control within 10 days, as stipulated by the Act. The level of dividends is dependent on earnings and other business conditions, each of which is periodically reviewed by the Company's Board of Directors. ITEM 6 - SELECTED FINANCIAL DATA.
Year Ended December 31 ------------------------------------------------------------------- 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- (Thousands, except per share amounts) Operating Revenues . . . . $ 3,519,341 $ 3,555,211 $ 3,558,143 $ 3,591,537 $ 3,576,281 Net Income . . . . . . . . $ 419,909 $ 521,903 $ 588,047 $ 568,037 $ 514,459 Earnings for Common Stock . $ 390,269 $ 491,066 $ 557,549 $ 535,205 $ 479,280 Earnings Per Common Share . $ 2.67 $ 3.34 $ 3.79 $ 3.64 $ 3.26 Dividends Declared Per Share of Common Stock . $ 2.06 $ 2.06 $ 1.98 $ 1.88 $ 1.78 At year-end: Total Assets . . . . . . $10,992,978 $11,134,879 $10,309,061 $10,463,624 $10,573,325 Long-Term Debt Obligations (including capital leases) and Redeemable Preferred and Preference Stock Outstanding . . . . . $ 3,979,763 $ 4,007,622 $ 4,525,504 $ 4,900,020 $ 5,300,962
23 24 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion and analysis should be read in conjunction with the Consolidated Financial Statements and accompanying Notes thereto, contained herein. RESULTS OF OPERATIONS In 1994, the Company's earnings for common stock were $390.3 million, or $2.67 per share, a decrease of 20.5% from the $491.1 million, or $3.34 per share earned in 1993. The earnings decrease was due in part to a January 21, 1994 order by the Michigan Public Service Commission ("MPSC"), which reduced rates by $78 million annually and increased depreciation and operation expenses by $84 million annually. In addition, accretion income decreased and amortization of the Fermi 2 nuclear power plant phase-in plan increased significantly in 1994. Also, the Company incurred additional one-time charges at the Fermi 2 nuclear power plant, which was out of service in 1994 due to equipment failure, for maintenance expenses and the establishment of a reserve for estimated Fermi 2 performance in 1995-1997. The earnings decrease was limited by higher system sales and lower interest expense due to the early redemption and refinancing of higher cost debt and the redemption of maturing debt. At December 31, 1994, the book value of the Company's common stock was $22.89 per share, an increase of 2.5% since December 31, 1993. Return on average total common shareholders' equity was 11.6% in 1994, 15.2% in 1993 and 18.6% in 1992. The ratio of earnings to fixed charges for 1994, 1993 and 1992 was 3.13, 3.25 and 3.09, respectively. The ratio of earnings to fixed charges and preferred and preference stock dividend requirements for 1994, 1993 and 1992 was 2.73, 2.88 and 2.79, respectively. OPERATING REVENUES Total operating revenues increased (decreased) due to the following factors:
1994 1993 ----------------------------- (Millions) Rate Changes MPSC rate reduction $(81) $ - Expense stabilization procedure - (63) Power Supply Cost Recovery Clause (5) (106) ----------------------------- (86) (169) System sales volume and mix 103 158 Interconnection sales (17) 2 Fermi 2 capacity factor performance standard reserve (31) - Other - net (5) 6 ----------------------------- Total $(36) $ (3) =============================
Rate Changes The January 21, 1994 MPSC rate order reduced the Company's rates by $78 million annually. In keeping with the MPSC's recognition of the need for industrial customers to be competitive, the January 1994 rate reduction was allocated among the various classes of customers approximately as follows: Industrial-$43 million, Commercial-$24 million, Residential-$10 million and Governmental-$1 million. A December 1988 MPSC rate order provided for a moratorium on base rate changes for the five-year period 1989 - 1993, an expense stabilization procedure ("ESP") surcharge, which provided annual revenues of $63 million in 1992 for the effects of inflation, and a suspension of the Power Supply Cost Recovery ("PSCR") Clause for the four-year period 1989 - 1992. The ESP surcharge expired for service rendered on or after January 1, 1993, and the PSCR Clause was reinstated in 1993. As a result of these two items, 1993 operating revenues were reduced by approximately $169 million. Kilowatthour Sales Kilowatthour sales increased (decreased) as follows:
1994 1993 ------------------------------ Residential 1.1% 6.4% Commercial 3.5 4.0 Industrial 5.9 6.6 Other (includes primarily sales for resale) (14.1) 6.7 Total System 2.8 5.6 Interconnection (45.2) 12.7 Total (1.0) 6.1
1994 Residential sales increased due to substantially warmer weather in the second quarter resulting in increased air conditioning and cooling-related loads, partially offset by lower cooling-related loads in the third quarter. The increased heating-related loads in the first quarter were offset by decreased heating-related loads in the fourth quarter. Commercial sales increased due primarily to improved economic conditions and increased cooling-related loads. Industrial sales increased as a result of higher sales to automotive, steel and other manufacturing customers reflecting the improvement in the economy. The decreased sales to other customers reflect lower sales to wholesale for resale customers. 1993 Residential and commercial sales increased due primarily to substantially warmer summer weather resulting in increased air conditioning and cooling-related loads, partially offset by warmer winter weather reducing heating-related sales. Industrial sales increased due to higher automotive and steel production and improved economic conditions. The increased sales to other customers reflect increased load requirements of wholesale for resale customers. 24 25 Interconnection Sales Interconnection sales represent sales between utilities to meet energy needs as a result of demand and/or generating unit availability. 1994 Interconnection sales decreased due to the reduced availability of energy for sale as a result of the Fermi 2 outage and lower sales to Consumers Power Company. 1993 Interconnection sales increased due primarily to increased sales to Consumers Power Company, partially offset by a decrease in sales to Ontario Hydro. OPERATING EXPENSES Fuel and Purchased Power Fuel and purchased power expenses increased (decreased) due to the following factors:
1994 1993 ------------------------------------- (Millions) Net system output $ (6) $ 43 Average unit cost 59 (37) Fermi 2 business interruption insurance proceeds (65) - Other 6 5 ------------------------------------- Total $ (6) $ 11 =====================================
Net system output and average unit costs were as follows:
1994 1993 1992 ------------------------------------------- (Thousands of Megawatthours) Power plant generation Fossil 42,410 38,882 36,689 Nuclear - 8,274 7,338 Purchased power 6,599 2,211 2,705 ------------------------------------------- Net system output 49,009 49,367 46,732 =========================================== Average unit cost ($/Megawatthour) $16.94 $15.73 $16.49 ===========================================
1994 The increase in average unit cost resulted from replacing lower-cost nuclear generation with higher-cost fossil generation and purchased power due to the Fermi 2 outage in 1994 as a result of a turbine-generator failure on December 25, 1993. This increase was offset by the receipt of Fermi 2 business interruption insurance proceeds. 1993 The decrease in average unit cost was due to declining fuel prices resulting from greater use of lower-cost Western low-sulfur coal, increases in lower-cost nuclear generation and decreases in the buyback of Belle River Power Plant capacity and energy from the Michigan Public Power Agency. Other Operation 1994 Other operation expense increased due primarily to other postretirement health care and life insurance benefits expense, service quality claims expense and higher nuclear plant, transmission and distribution and demand-side management expenses. These increases were partially offset by lower incentive award expenses related to a shareholder value improvement plan, expenses recorded in the year-earlier period for the write-off of obsolete and excess stock material and a reserve for steam purchases under the agreement with the Greater Detroit Resource Recovery Authority, lower uncollectible and employee reorganization expenses and lower injuries and damages expense. 1993 Other operation expense increased due primarily to the write-off of obsolete and excess stock material, higher injuries and damages expenses, a provision for employee reorganization expenses, a reserve for steam purchases under the agreement with the Greater Detroit Resource Recovery Authority, incentive award expenses related to a shareholder value improvement plan and expenses related to the new collective bargaining agreement with employees represented by the Utility Workers Union of America - Local 223. These increases were partially offset by lower uncollectible expenses and a 1992 accrual for low-level nuclear waste disposal. Maintenance 1994 Maintenance expense increased due primarily to higher nuclear plant and storm expenses, partially offset by lower fossil plant and line clearance expenses. Since Fermi 2 was down for repair in 1994, the Company elected to upgrade various plant facilities which resulted in higher nuclear plant maintenance expense. 1993 Maintenance expense decreased due primarily to lower line clearance and storm expenses, partially offset by expenses related to the new collective bargaining agreement with employees represented by the Utility Workers Union of America - Local 223. Depreciation and Amortization 1994 and 1993 Depreciation and amortization expense increased due to increases in plant in service and, for 1994, to increased Fermi 2 decommissioning costs authorized by the January 21, 1994 MPSC rate order. Deferred Fermi 2 Depreciation and Amortization 1994 and 1993 Deferred Fermi 2 depreciation, a non-cash item of income, was recorded beginning with the implementation of the Fermi 2 rate phase-in plan in January 1988. The annual amount deferred decreased each year through 1992. Beginning in 1993 and continuing through 1998, these deferred amounts are amortized to operating expense as the cash recovery is realized 25 26 through revenues. Deferred Fermi 2 amortization, also a non-cash item of income, was recorded beginning with the Company's purchase of the Wolverine Power Supply Cooperative, Inc.'s ownership interest in Fermi 2 in February 1990. The annual amount deferred decreases each year through 1999. Amortization of Deferred Fermi 2 Depreciation and Return 1994 and 1993 Beginning in 1993, the Company began amortizing to operating expense deferred Fermi 2 depreciation and return as discussed herein. Taxes Other Than Income Taxes 1994 Taxes other than income taxes decreased due primarily to lower property taxes, partially offset by higher Michigan Single Business Tax ("MSBT"). 1993 Taxes other than income taxes increased due primarily to higher MSBT expense and higher property taxes. Income Taxes 1994 Income taxes decreased due primarily to lower pretax income, partially offset by higher prior years' federal income tax accrual. In March 1994, the Company and the Internal Revenue Service ("IRS") reached a settlement of the Company's income tax returns for the years 1987 and 1988. 1993 Income taxes decreased due primarily to lower pretax income and prior years' federal income tax accrual, partially offset by an increase in the federal corporate income tax rate from 34% to 35% retroactive to January 1, 1993 and higher taxes due to the reduction of deferred Fermi 2 depreciation, amortization and return. Deferred Fermi 2 Return 1993 Deferred Fermi 2 return, a non-cash item of income, was recorded beginning with the implementation of the Fermi 2 rate phase-in plan in January 1988. The annual amount deferred decreased each year through 1992. Beginning in 1993 and continuing through 1998, these deferred amounts are amortized to operating expense as the cash recovery is realized through revenues. Other Income and Deductions 1994 Other deductions increased slightly due primarily to the write-off of premiums and expenses related to the $50 million portion of 1989 Series A Mortgage Bonds not refinanced and an accrual for a contribution to the Detroit Edison Foundation. 1993 Other deductions increased due primarily to an increase in the accrual for decommissioning expenses for Fermi 1, an experimental nuclear unit that has been shut down since 1972. Accretion Income 1994 and 1993 Accretion income, a non-cash item of income, was recorded beginning in January 1988 to restore to income, over the period 1988-1998, losses recorded due to discounting indirect disallowances of plant costs. The annual amount of accretion income recorded decreases each year through 1998. Also, effective in January 1994, accretion income decreased due to the return to rate base of Greenwood Unit No. 1. Long-Term Debt Interest Charges 1994 and 1993 Long-term debt interest charges decreased due to the early redemption and refinancing of securities when economic and the redemption of maturing securities. Other Interest Charges 1994 Other interest charges increased due to higher levels of short-term borrowings, accruals for prior years' MSBT audits and the settlement of 1987 and 1988 IRS audits. Preferred and Preference Stock Dividend Requirements 1994 Preferred and preference stock dividend requirements decreased slightly due to the optional and mandatory redemption of outstanding shares in 1993. 1993 Preferred and preference stock dividend requirements increased slightly due to issuance of cumulative preferred stock, partially offset by optional and mandatory redemption of outstanding shares. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity has improved since the 1988 commercial operation of Fermi 2, a nuclear generating unit comprising 28% of the Company's total assets and 11% of the Company's summer net rated capability, and lower levels of capital expenditures. Fermi 2 The commercial operation of Fermi 2 completed the Company's power plant construction program. The Company has no current plans for additional generating plants. Ownership of an operating nuclear generating unit such as Fermi 2 subjects the Company to significant additional risks. Nuclear plants are highly regulated by a number of governmental agencies concerned with public health and safety as well as the environment, and consequently, are subject to greater risks and scrutiny than conventional fossil-fueled plants. Fermi 2 was out of service in 1994. On December 25, 1993, the reactor automatically shut down following a turbine-generator failure. Safety systems responded within design and regulatory specifications. The turbine suffered mechanical damage, the exciter and generator incurred mechanical and 26 27 fire damage, and the condenser had some internal damage. The fire was contained in the turbine building, and there was no release of radioactive contaminants during the event. The nuclear part of the plant was not damaged. Major repairs have been completed and tests are continuing to balance and synchronize the unit. The Company expects that most repair costs related to returning the Fermi 2 turbine-generator to service will be covered by insurance. These costs are estimated to be in the $70 million to $80 million range. The Company has received partial insurance payments of $25 million for property damage. In addition, the Company has received insurance payments of $66 million for replacement power costs. As a result of an investigation as to the cause of the December 1993 mechanical failure, the Company will replace major Fermi 2 turbine components. Installation of new low-pressure turbine sections is expected to add about 20 megawatts ("MW") of generating capacity to the plant, which would expand the plant's capability by about 2%. In the interim period the Company will operate Fermi 2 without the large seventh and eighth stage turbine blades until the next refueling, which will reduce the Fermi 2 power output to a range of about 800 MW to 900 MW. During the lower output period, new turbine shafts and blades will be manufactured for the plant's three low-pressure turbines. These major components will be installed during the next refueling outage in 1996. Replacing the major turbine components in 1996 is expected to cost between $30 million and $40 million. These costs will not be covered by insurance. These costs will be capitalized and are expected to be recovered in rates because such costs are less than the cumulative amount available under the cap on Fermi 2 capital expenditures, a provision of the MPSC's December 1988 order. At December 31, 1994, Fermi 2 was insured for property damage in the amount of $2.75 billion and the Company had available approximately $8.5 billion in public liability insurance. To the extent that insurable claims for replacement power, property damage, decontamination, repair and replacement and other costs arising from a nuclear incident at Fermi 2 exceed the policy limits of insurance, or to the extent that such insurance becomes unavailable in the future, the Company will retain the risk of loss. Cash Generation and Cash Requirements Consolidated Statement of Cash Flows The Company generates substantial cash flows from operating activities as shown in the Consolidated Statement of Cash Flows. Net cash from operating activities, which is the Company's primary source of liquidity, was $1,063 million in 1992, $1,141 million in 1993 and $953 million in 1994. Net cash from operating activities decreased in 1994 due to lower net income and changes in current assets and liabilities, partially offset by higher non-cash charges to income for the Fermi 2 phase-in plan and depreciation and amortization. Net cash from operating activities increased in 1993 due to lower non-cash items of income for the Fermi 2 phase-in plan, higher depreciation and amortization, and changes in current assets and liabilities, partially offset by lower net income and deferred income taxes. Net cash used for investing activities increased in 1994 due primarily to increased funding of nuclear decommissioning trust funds, the purchase of leased equipment and non-utility investments, partially offset by lower plant and equipment expenditures. Net cash used for investing activities decreased in 1993 due primarily to lower plant and equipment expenditures. During the period 1992-1994, the Company has engaged in an extensive debt refinancing program. Assuming favorable economic conditions, the Company expects that it will continue to refinance existing higher-cost debt and equity securities. Also, in 1994, as a result of a plan change, the Company entered into the one-time purchase of common stock from the trustee of the Detroit Edison Savings & Investment Plans. Additional Information An MPSC order permits the Company to issue approximately $3.5 billion of securities for the purpose of refinancing debt and preferred and/or preference stock (issued prior to 1993) prior to maturity (when economic) and at maturity, and to replace funds used for those purposes. The Company also has MPSC authority to refinance substantially all non-taxable debt obligations. Cash requirements for scheduled long-term debt redemptions are expected to be $19 million, $119 million, $144 million, $169 million and $219 million for 1995, 1996, 1997, 1998 and 1999, respectively. Cash requirements for capital expenditures were $363 million in 1994 and are expected to be approximately $1.9 billion for the period 1995 through 1999. In 1995, cash requirements for capital expenditures are estimated at $394 million. Environmental expenditures are expected to approximate $79 million for the period 1995 through 1999, including expenditures for Clean Air Act compliance requirements. See "Environmental Matters" herein. The Company's internal cash generation is expected to be sufficient to meet cash requirements for capital expenditures as well as scheduled long-term debt redemption requirements. In May 1993, the Federal Energy Regulatory Commission ("FERC") issued its order authorizing the continuation of the Company's $1 billion of short-term borrowing authority. This authority will be in effect through May 31, 1995. The Company had total short-term credit arrangements of approximately $405 million at December 31, 1994, under which $39.5 million of borrowings were outstanding. 27 28 Capitalization The Company's capital structure ratios (excluding amounts of long-term debt and preferred and preference stock due within one year) were as follows:
December 31 --------------------------------------- 1994 1993 1992 ---- ---- ---- Common Shareholders' Equity 44.2% 43.9% 42.0% Preferred and Preference Stock 5.0 5.1 4.5 Long-Term Debt 50.8 51.0 53.5 ----- ----- ----- 100.0% 100.0% 100.0% ===== ===== =====
Competition An electric public utility must compete with other energy suppliers to meet its customers' energy needs. Serious issues facing the entire electric utility industry include deregulation, municipalization, cogeneration, independent power production, open access to transmission lines and a more competitive bulk power supply market. Utility customers have the option of self-generation or cogeneration and, depending on the extent of future deregulation, may be able to enter into contracts with other power suppliers. In the future, electric utilities may be required to unbundle their products and services to accommodate emerging competitive alternatives brought about by possible industry restructuring due to deregulation. On December 5, 1994, the Company's Board of Directors approved the formation of a holding company. The Company's shareholders will be asked to approve this organizational structure at the Company's April 24, 1995 Annual Meeting of Common Shareholders. This organizational structure will be subject to receipt of a number of regulatory approvals. A holding-company structure will provide greater financial flexibility to develop and operate new non-utility businesses. It also will offer a mechanism for better defining and separating the Company's regulated and unregulated businesses, and for protecting the Company's utility business and customers from any risks that may be involved in non-utility ventures. When all approvals are in place, the Company's common stock will be exchanged share-for-share for the common stock of the holding company. The holding-company structure could be in place before the end of 1995. As a result of the Energy Policy Act of 1992, the Company expects that, over time, non-utility generation resources will be developed which will result in greater competition for power sales. In addition, in April 1994, the MPSC issued an interim order setting forth a framework for a retail wheeling experiment. The 90 MW experiment would last five years commencing with the need for additional capacity, which is expected to be approximately the year 2000, and would be implemented concurrently with the Company's next Request for Proposal case under the MPSC's capacity solicitation process. The Company has appealed the MPSC's interim order with the U.S. District Court for the Western District of Michigan claiming that the MPSC does not have the authority to order the Company to participate in retail wheeling, and that the jurisdiction over transmission rates for wheeling resides with the FERC. The MPSC is expected to issue a final order by the end of April 1995. In response to the changing market for electricity, the Company has developed a number of programs designed to increase its efficiency and competitive status and address customer needs. An aggressive demand-side management program has been developed, an integral part of which is an interruptible rate for large industrial customers. This rate, commonly referred to as R-10 and approved by the MPSC, permits its customers to achieve economic benefits while enabling the Company to reduce its peak demand requirements. The January 21, 1994 MPSC rate order increased the 400 MW available under the R-10 rate to 525 MW in 1994 and 650 MW in 1995, with the Company absorbing revenue losses associated with the additional 250 MW made available under this rate. As part of a continuing response to the challenge of competition, the Company has executed 10-year special manufacturing contracts with Chrysler Corporation, Ford Motor Company and General Motors Corporation, covering 54 of the Big Three automakers' largest manufacturing locations in Southeastern Michigan. On August 3, 1994, the Company filed the executed special manufacturing contracts with the MPSC. The MPSC must approve these contracts before they can become effective. An order approving these long-term contracts is expected to be issued in March 1995. The special manufacturing contracts are available to customers with a total connected load of 100 MW or more for specific locations of 5 MW and over. Service under the special manufacturing contracts will include both firm and interruptible service, which is priced to provide customers with competitively-based electric rates. A major feature of the special manufacturing contracts will be the establishment of a long-term, 10-year relationships with these customers during which the Company will be the customers' sole supplier of electricity through the year 2000. The customers may reduce their purchases by 20% annually during the last four years of the contracts. The special manufacturing contracts provide that the customers' existing self-generation will only be used for emergency back-up. It is anticipated that this will result in additional sales and revenue for the Company. The contracts also provide for a corporate minimum take-or-pay provision for 1995 through 1999 with specified price reductions for 1995 through 2000. Through these agreements, the customers will be assured of both a more competitive and predictable price for electric energy. Detroit Edison will be assured that the customers will purchase their electric requirements from the Company. 28 29 Pursuant to the terms of the special manufacturing contracts, the customers will be able to designate a percentage of their load at each facility as interruptible. The customers will also have the ability to designate interruptions on a corporate basis with the flexibility to shift interruptible load among separate facilities. In total, approximately 160 MW of interruptible capacity is expected. In order to forge an energy partnership with these customers, the Company will provide service delivery quality guarantees and on-site engineering expertise to implement better service, identify energy conservation efficiency improvement opportunities and achieve valuable energy savings for each customer. The goal of these provisions of the special manufacturing contracts is to combine the customers' energy conservation efforts with the knowledge and skills provided by the Company. The Company also may invest in energy saving projects with these customers. The Company will serve the special manufacturing contract customers at rates above its marginal cost. Further, at this time the Company is not requesting a change in electric rates charged to other customers. As a result, annual revenue reductions will range in amounts from about $30 million in 1995 to $50 million for 1999 through 2004. The Company expects to offset these reductions by further reducing operating expenses. In 1994, the Company completed its accelerated reliability improvement program which upgraded its transmission and distribution system. This program has helped reduce interruptions and the duration of outages thus increasing customer satisfaction. The Company is reviewing potential energy services as a method of remaining competitive while diversifying within the scope of its core business. Meeting Energy Demands Since 1980, the compound annual sales growth was 1.8% and peak demand growth was 2.4% (after adjusting for the effects of unusual weather). System sales and demand are expected to grow at a compound annual rate of about 1.5% per year for the next 15 years. Sales to the non-manufacturing segment, which include customers such as agribusiness, grocery stores, restaurants and government, are projected to grow at a strong pace in the next 15 years, a compound annual increase of 1.9% per year. This projected increase indicates the Company's customer base is becoming more diverse and less dependent on the manufacturing segment. The Company expects to meet its near-term demand for energy by the return to service, subject to environmental regulations, of power plant units currently in economy reserve status when energy demand and consumption requirements provide economic justification. The return to service of these units is conditioned upon the outcome of a competitive bidding process which was established by an MPSC order issued in July 1992. The Company will submit a new plan to the MPSC detailing its proposed method of meeting energy demands on or before May 1, 1995. Inflation Inflation is a measure of the purchasing power of the dollar. In 1994, the inflation rate, as defined by the Consumer Price Index, was 2.7%. Although the current inflation rate is relatively low, its compound effect through time can be significant, primarily in its effect on the Company's ability to replace its investment in utility plant. The regulatory process limits the amount of depreciation expense recoverable through revenues to the historical cost of the Company's investment in utility plant. Such amount produces cash flows which are inadequate to replace such property in future years. However, the Company believes that it will be able to recover the increased cost of replacement facilities when, and if, replacement occurs. Regulation and Rates The Company has no plans to seek increased rates for electric service from the MPSC in the near future. Environmental Matters Protecting the environment from damage, as well as correcting past environmental damage, continues to be the focus of state and federal regulators. Committees at both the state and federal level are studying the effects of a wide array of chemicals and electromagnetic fields as well as global warming (as potentially affected by carbon dioxide emissions). Legislation and/or rulemaking resulting from these and any future studies could further impact the electric utility industry including the Company. The Environmental Protection Agency ("EPA") and the Michigan Department of Natural Resources have aggressive programs regarding the cleanup of contaminated property. The Company anticipates that it will be periodically included in these types of environmental proceedings. Further, additional environmental expenditures, although difficult to quantify, will be necessary as the Company prepares to comply with the phase-in of the 1990 Amendments to the federal Clean Air Act. The Company currently meets the first phase of sulfur dioxide emissions and nitrogen oxides emissions requirements. The second phase begins in the year 2000. The Company currently burns low-sulfur coal (less than 1% sulfur) at all its coal-fired units and believes it can meet the second phase sulfur dioxide emission requirements through additional blending of coals. Current projections indicate that annual fuel costs may increase by $13-20 million in the period 2000-2009 in order to comply with new sulfur dioxide emissions requirements. In addition, approximately $59 million in capital expenditures may be necessary for nitrogen oxides emissions requirements. The Company expects that substantially all of the costs of environmental compliance will be recovered through the ratemaking process. 29 30 ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The following consolidated financial statements and schedules are included herein.
Page ---- Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Consolidated Statement of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Consolidated Statement of Common Shareholders' Equity . . . . . . . . . . . . . . . . . 36 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 37 Schedule VIII - Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . 59
Note: All other schedules and portions of included schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto. The Company's individual financial statements have been omitted since the Company is primarily an operating company and all subsidiaries included in the consolidated financial statements being filed, in the aggregate, do not have minority equity interests and/or indebtedness to any person other than the Company or its consolidated subsidiaries in amounts which together exceed 5 percent of the total assets as shown in the December 31, 1994 Consolidated Balance Sheet. 30 31 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of The Detroit Edison Company In our opinion, the consolidated financial statements listed in the index on page 30 present fairly, in all material respects, the financial position of The Detroit Edison Company and its subsidiary companies at December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Detroit, Michigan January 23, 1995 31 32 The Detroit Edison Company and Subsidiary Companies CONSOLIDATED STATEMENT OF INCOME (Dollars in Thousands)
------------------------------------------- Year Ended December 31 --------------------------------------------------------------------------------------------------------------------- 1994 1993 1992 ------------------------------------------- OPERATING REVENUES Electric - System $3,448,351 $3,467,357 $3,472,583 Electric - Interconnection 43,141 60,363 58,447 Steam 27,849 27,491 27,113 --------------------------------------------------------------------------------------------------------------------- Total Operating Revenues $3,519,341 $3,555,211 $3,558,143 --------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Operation Fuel $ 719,215 $ 750,127 $ 704,371 Purchased power 116,947 91,747 126,101 Other operation 621,066 604,882 548,520 Maintenance 262,409 251,149 262,803 Depreciation and amortization 476,415 432,512 423,407 Deferred Fermi 2 depreciation and amortization (7,465) (8,959) (14,984) Amortization of deferred Fermi 2 depreciation and return 84,828 30,888 - Taxes other than income 255,874 261,449 252,011 Income taxes 270,657 297,469 302,758 --------------------------------------------------------------------------------------------------------------------- Total Operating Expenses $2,799,946 $2,711,264 $2,604,987 --------------------------------------------------------------------------------------------------------------------- OPERATING INCOME $ 719,395 $ 843,947 $ 953,156 --------------------------------------------------------------------------------------------------------------------- OTHER INCOME AND DEDUCTIONS Allowance for other funds used during construction $ 1,684 $ 2,055 $ 1,363 Deferred Fermi 2 return - - 13,785 Other income and deductions (24,973) (24,961) (21,179) Income taxes 8,111 8,594 7,108 Accretion income 13,644 44,130 45,695 Income taxes - disallowed plant costs and accretion income (4,252) (14,062) (15,576) --------------------------------------------------------------------------------------------------------------------- Net Other Income and Deductions $ (5,786) $ 15,756 $ 31,196 --------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INTEREST CHARGES $ 713,609 $ 859,703 $ 984,352 --------------------------------------------------------------------------------------------------------------------- INTEREST CHARGES Long-term debt $ 273,763 $ 325,194 $ 388,580 Amortization of debt discount, premium and expense 10,832 9,114 3,952 Other 11,170 4,928 5,169 Allowance for borrowed funds used during construction (credit) (2,065) (1,436) (1,396) --------------------------------------------------------------------------------------------------------------------- Net Interest Charges $ 293,700 $ 337,800 $ 396,305 --------------------------------------------------------------------------------------------------------------------- NET INCOME $ 419,909 $ 521,903 $ 588,047 PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS 29,640 30,837 30,498 --------------------------------------------------------------------------------------------------------------------- EARNINGS FOR COMMON STOCK $ 390,269 $ 491,066 $ 557,549 ===================================================================================================================== COMMON SHARES OUTSTANDING - AVERAGE 146,151,505 147,031,446 146,998,485 --------------------------------------------------------------------------------------------------------------------- EARNINGS PER SHARE $2.67 $3.34 $3.79 =====================================================================================================================
(See accompanying Notes to Consolidated Financial Statements.) 32 33 The Detroit Edison Company and Subsidiary Companies CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Thousands)
------------------------------------------------ Year Ended December 31 ----------------------------------------------------------------------------------------------------------------------- 1994 1993 1992 ------------------------------------------------ OPERATING ACTIVITIES Net Income $ 419,909 $ 521,903 $ 588,047 Adjustments to reconcile net income to net cash from operating activities: Accretion income (13,644) (44,130) (45,695) Depreciation and amortization 476,415 432,512 423,407 Deferred Fermi 2 depreciation, amortization and return - net 77,363 21,929 (28,769) Deferred income taxes and investment tax credit - net 93,287 85,574 132,179 Fermi 2 refueling outage - net (19,507) 17,856 (6,084) Other (31,091) 32,367 6,714 Changes in current assets and liabilities: Customer accounts receivable and unbilled revenues (505) 10,733 9,068 Other accounts receivable (7,593) (2,247) 17,815 Inventories (1,774) 33,839 5,239 Accounts payable (13,858) 21,364 (24,930) Taxes payable (18,031) (6,499) (8,109) Interest payable (6,174) (19,769) (15,199) Other (2,189) 35,350 9,807 ----------------------------------------------------------------------------------------------------------------------- Net cash from operating activities $ 952,608 $ 1,140,782 $ 1,063,490 ----------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Plant and equipment expenditures $ (366,392) $ (396,407) $ (415,937) Purchase of leased equipment (11,500) (2,402) - Nuclear decommissioning trust funds (46,563) (5,346) (4,482) Non-utility investments (12,843) 182 (614) Changes in current assets and liabilities 5,042 10,225 (7,897) Other (11,537) (19,988) 2,047 ----------------------------------------------------------------------------------------------------------------------- Net cash used for investing activities $ (443,793) $ (413,736) $ (426,883) ----------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Sale of cumulative preferred stock $ - $ 200,000 $ - Sale of general and refunding mortgage bonds 200,000 1,510,000 350,000 Funds received from Trustees: Installment sales contracts and loan agreements 50,470 76,510 348,960 Increase (decrease) in short-term borrowings (98,715) 109,210 (9,000) Redemption of long-term debt (258,034) (2,024,289) (957,859) Redemption of preferred and preference stock - (164,158) (22,005) Premiums on reacquired long-term debt and preferred and preference stock (11,563) (81,453) (16,556) Purchase of common stock (59,855) - - Dividends on common, preferred and preference stock (331,445) (330,792) (318,349) Other (2,622) (20,417) (9,225) ----------------------------------------------------------------------------------------------------------------------- Net cash used for financing activities $ (511,764) $ (725,389) $ (634,034) ----------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS $ (2,949) $ 1,657 $ 2,573 CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF THE PERIOD 11,071 9,414 6,841 ----------------------------------------------------------------------------------------------------------------------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF THE PERIOD $ 8,122 $ 11,071 $ 9,414 ======================================================================================================================= SUPPLEMENTARY CASH FLOW INFORMATION Interest paid (excluding interest capitalized) $ 289,375 $ 346,542 $ 406,571 Income taxes paid 183,172 233,542 178,786 New capital lease obligations 9,328 36,606 39,320
For purposes of the consolidated financial statements, the Company considers investments purchased with a maturity of three months or less to be temporary cash investments. (See accompanying Notes to Consolidated Financial Statements.) 33 34 The Detroit Edison Company and Subsidiary Companies CONSOLIDATED BALANCE SHEET (Dollars in Thousands)
----------------------------- December 31 ASSETS 1994 1993 ----------------------------- UTILITY PROPERTIES Plant in service Electric $12,941,414 $12,557,267 Steam 69,813 70,948 ----------------------------------------------------------------------------------------------------------- $13,011,227 $12,628,215 Less: Accumulated depreciation and amortization (4,529,692) (4,137,881) ----------------------------------------------------------------------------------------------------------- $ 8,481,535 $ 8,490,334 Construction work in progress 104,431 160,230 ----------------------------------------------------------------------------------------------------------- Net utility properties $ 8,585,966 $ 8,650,564 ----------------------------------------------------------------------------------------------------------- Property under capital leases (less accumulated amortization of $94,678 and $101,381, respectively) $ 134,542 $ 154,837 Nuclear fuel under capital lease (less accumulated amortization of $374,405) 193,411 184,083 ----------------------------------------------------------------------------------------------------------- Net property under capital leases $ 327,953 $ 338,920 ----------------------------------------------------------------------------------------------------------- Total owned and leased properties $ 8,913,919 $ 8,989,484 ----------------------------------------------------------------------------------------------------------- OTHER PROPERTY AND INVESTMENTS Non-utility property $ 11,281 $ 10,053 Investments and special funds 18,722 15,914 Nuclear decommissioning trust funds 76,492 29,929 ----------------------------------------------------------------------------------------------------------- $ 106,495 $ 55,896 ----------------------------------------------------------------------------------------------------------- CURRENT ASSETS Cash and temporary cash investments $ 8,122 $ 11,071 Customer accounts receivable and unbilled revenues (less allowance for uncollectible accounts of $30,000 and $34,000, respectively) 195,824 195,319 Other accounts receivable 34,212 26,619 Inventories (at average cost) Fuel 136,331 129,024 Materials and supplies 155,921 165,187 Prepayments 10,516 10,914 ----------------------------------------------------------------------------------------------------------- $ 540,926 $ 538,134 ----------------------------------------------------------------------------------------------------------- DEFERRED DEBITS Unamortized debt expense $ 42,876 $ 45,396 Unamortized loss on reacquired debt 123,996 124,567 Recoverable income taxes 663,101 771,277 Other postretirement benefits 36,562 48,568 Fermi 2 phase-in plan 390,764 475,592 Fermi 2 deferred amortization 52,259 44,794 Other 122,080 41,171 ----------------------------------------------------------------------------------------------------------- $ 1,431,638 $ 1,551,365 ----------------------------------------------------------------------------------------------------------- TOTAL $10,992,978 $11,134,879 ===========================================================================================================
(See accompanying Notes to Consolidated Financial Statements.) 34 35 The Detroit Edison Company and Subsidiary Companies CONSOLIDATED BALANCE SHEET (Dollars in Thousands)
----------------------------- December 31 -------------------------------------------------------------------------------------------------------------- LIABILITIES 1994 1993 ----------------------------- CAPITALIZATION Common stock - $10 par value, 400,000,000 shares authorized; 144,863,447 and 147,047,918 shares outstanding, respectively (311,804 and 334,002 shares, respectively, reserved for conversion of preferred stock) $ 1,448,635 $ 1,470,479 Premium on common stock 545,825 553,966 Common stock expense (47,461) (48,175) Retained earnings used in the business 1,379,081 1,319,685 ----------------------------------------------------------------------------------------------------------------- Total common shareholders' equity $ 3,326,080 $ 3,295,955 Cumulative preferred stock - $100 par value, 6,747,484 shares authorized; 3,905,470 and 3,909,419 shares outstanding, respectively (1,539,827 shares unissued) Redeemable solely at the option of the Company 380,283 380,683 Long-term debt 3,825,296 3,830,596 ----------------------------------------------------------------------------------------------------------------- Total Capitalization $ 7,531,659 $ 7,507,234 ----------------------------------------------------------------------------------------------------------------- OTHER NON-CURRENT LIABILITIES Obligations under capital leases $ 126,076 $ 141,043 Other postretirement benefits 37,143 48,567 Other 48,707 15,130 ----------------------------------------------------------------------------------------------------------------- $ 211,926 $ 204,740 ----------------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES Short-term borrowings $ 39,489 $ 138,204 Amounts due within one year Long-term debt 19,214 19,649 Obligations under capital leases 201,877 197,877 Accounts payable 147,020 159,870 Property and general taxes 31,608 38,592 Income taxes 5,304 16,839 Accumulated deferred income taxes 32,625 63,046 Interest 60,214 66,388 Dividends payable 82,012 83,143 Payrolls 71,958 67,778 Fermi 2 refueling outage 1,267 20,774 Other 97,215 103,193 ----------------------------------------------------------------------------------------------------------------- $ 789,803 $ 975,353 ----------------------------------------------------------------------------------------------------------------- DEFERRED CREDITS Accumulated deferred income taxes $ 2,014,821 $ 1,986,463 Accumulated deferred investment tax credits 346,379 359,205 Other 98,390 101,884 ----------------------------------------------------------------------------------------------------------------- $ 2,459,590 $ 2,447,552 ----------------------------------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 4, 9, 12 and 13) ----------------------------------------------------------------------------------------------------------------- TOTAL $10,992,978 $11,134,879 =================================================================================================================
(See accompanying Notes to Consolidated Financial Statements.) 35 36 The Detroit Edison Company and Subsidiary Companies CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (Dollars in Thousands)
----------------------------------------------------------------------------- Common Stock Premium Retained -------------------------- on Common Earnings $10 Par Common Stock Used in the Shares Value Stock Expense Business ----------------------------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1991 146,983,123 $1,469,831 $553,463 $(48,150) $ 872,428 Issuance of common stock on conversion of convertible cumulative preferred stock, 5 1/2% series 33,568 336 261 (13) Expense associated with preferred and preference stock redeemed (847) Net income 588,047 Cash dividends declared Common stock - $1.98 per share (291,066) Cumulative preferred and preference stock* (30,403) ----------------------------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1992 147,016,691 $1,470,167 $553,724 $(48,163) $1,138,159 Issuance of common stock on conversion of convertible cumulative preferred stock, 5 1/2% series 31,227 312 242 (12) Expense associated with preferred and preference stock redeemed (6,634) Net income 521,903 Cash dividends declared Common stock - $2.06 per share (302,894) Cumulative preferred and preference stock* (30,849) ----------------------------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1993 147,047,918 $1,470,479 $553,966 $(48,175) $1,319,685 Issuance of common stock on conversion of convertible cumulative preferred stock, 5 1/2% series 22,164 222 173 (9) Common stock reacquired from Detroit Edison Savings & Investment Plans, August 4, 1994 (2,206,635) (22,066) (8,314) 723 (30,198) Net income 419,909 Cash dividends declared Common stock - $2.06 per share (300,676) Cumulative preferred stock* (29,639) ----------------------------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 1994 144,863,447 $1,448,635 $545,825 $(47,461) $1,379,081 =============================================================================================================================
*At established rate for each series. (See accompanying Notes to Consolidated Financial Statements.) 36 37 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES INDUSTRY SEGMENT - The Detroit Edison Company ("Company") is a regulated public utility engaged in the generation, purchase, transmission, distribution and sale of electric energy. REGULATION - The Company is subject to regulation by the Michigan Public Service Commission ("MPSC") and the Federal Energy Regulatory Commission ("FERC") with respect to accounting matters and maintains its accounts in accordance with Uniform Systems of Accounts prescribed by these agencies. As a regulated entity, taking into account the cost recovery restrictions contained in the December 1988 and January 21, 1994 MPSC rate orders and the provisions of the Energy Policy Act of 1992 ("Energy Act"), the Company meets the criteria of Statement of Financial Accounting Standards ("SFAS") No. 71, "Accounting for the Effects of Certain Types of Regulation." This accounting standard recognizes the ratemaking process which results in differences in the application of generally accepted accounting principles between regulated and non-regulated businesses. Such differences concern mainly the time at which various items enter into the determination of net income in order to follow the principle of matching costs and revenues. PRINCIPLES APPLIED IN CONSOLIDATION - The Consolidated Financial Statements include the accounts of all subsidiary companies, all of which are wholly-owned. REVENUES - The Company records unbilled revenues for electric and steam heating services provided after cycle billings through month-end. PROPERTY, RETIREMENT AND MAINTENANCE, DEPRECIATION AND AMORTIZATION - Utility properties are recorded at original cost less regulatory disallowances. In general, the cost of properties retired in the normal course of business is charged to accumulated depreciation. Expenditures for maintenance and repairs are charged to expense, and the cost of new property installed, which replaces property retired, is charged to property accounts. The annual provision for depreciation is calculated on the straight-line remaining life method by applying annual rates approved by the MPSC to the average of year-beginning and year-ending balances of depreciable property by primary plant accounts. Provision for depreciation of Fermi 2, excluding decommissioning expense, was 3.26% of average depreciable property for 1994 and 2.63% for 1993 and 1992, except for $300 million being amortized over 10 years commencing in 1989 and $513 million being amortized over 19 years commencing in 1990. See Note 3 and Deferred Fermi 2 Amortization below. Provision for depreciation of all other utility plant, as a percent of average depreciable property, was 3.2% for 1994, 3.4% for 1993 and 3.3% for 1992. DEFERRED FERMI 2 DEPRECIATION AND RETURN - An MPSC authorized phase-in plan for Fermi 2, effective in January 1988, provided for gradual rate increases in the early years of plant operation rather than a one-time substantial rate increase which conventional ratemaking would provide. SFAS No. 92, "Regulated Enterprises - Accounting for Phase-in Plans," permits the capitalization of costs deferred for future recovery under a phase-in plan. Accordingly, the Company recorded non-cash income of deferred depreciation and deferred return totaling $506.5 million through 1992. In 1992, deferred depreciation was $4.5 million and deferred return was $13.8 million. Beginning in 1993 and continuing through 1998, these deferred amounts will be amortized to operating expense as the cash recovery is realized through revenues. Amortization of these deferred amounts totaled $84.8 million in 1994 and $30.9 million in 1993. DEFERRED FERMI 2 AMORTIZATION - The December 1988 MPSC rate order provides for the Company's February 1990 purchase of Wolverine Power Supply Cooperative, Inc.'s ("Cooperative") ownership interest in Fermi 2 for $513 million to be treated as a regulatory asset with a 19-year principal amortization and associated interest of 8%, which is the composite average of the Cooperative debt assumed by the Company at the time of the purchase. Since the straight-line amortization of the regulatory asset exceeds the revenues provided for such amortization during the first 10 years of the recovery period, the Company is recording deferred amortization, a non-cash item of income, totaling $67.2 million through 1999. For 1994, 1993 and 1992, the amounts deferred were $7.5 million, $9 million and $10.5 million, respectively. The deferred amounts will be amortized to operating expense as the cash recovery is realized through revenues during the years 2000 through 2008. PROPERTY TAXES - The Company accrues property taxes monthly during the fiscal period of the applicable taxing authority. INCOME TAXES - Deferred income taxes are provided for temporary differences between book and taxable income to the extent authorized by the MPSC. For federal income tax purposes, the Company computes depreciation using accelerated methods and shorter depreciable lives. Investment tax credits utilized which relate to utility property were deferred and are amortized over the estimated composite service life of the related property. See Note 6. ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION ("AFUDC") - AFUDC, a non-operating non-cash item, is defined in the FERC Uniform System of Accounts to include "the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate on other funds when so used." AFUDC involves an accounting procedure whereby the approximate interest expense and the cost of other (common, preferred and preference shareholders' equity) funds applicable to the cost of construction are transferred from the income statement to construction work in progress in the balance sheet. The cash recovery of AFUDC, as well as other costs of construction, occurs as 37 38 completed projects are placed in service and related depreciation is authorized to be recovered through customer rates. The Company capitalized AFUDC at 7.66% in 1994 and 9.65% in 1993 and 1992. ACCRETION INCOME - In 1988, the Company adopted SFAS No. 90, "Regulated Enterprises - Accounting for Abandonments and Disallowances of Plant Costs," and recorded indirect losses for Greenwood Unit No. 1, for the abandoned Greenwood Unit Nos. 2 and 3 and for a portion of Fermi 2 as a discount (reduction) of the Company's investment in these units. These net after-tax losses, due to discounting, originally totaled $198 million, which amounts are being restored to net income over the period 1988-1998 as the Company records a non-cash return (accretion income) on its investment in these units. The Company recorded $8.9 million, $29.5 million and $30.2 million of net after-tax accretion income in 1994, 1993 and 1992, respectively. CAPITALIZATION - DISCOUNT, PREMIUM AND EXPENSE - The discount, premium and expense related to the issuance of long-term debt are amortized over the life of each issue. In accordance with MPSC regulations, the discount, premium and expense, when related to debt redeemed without refunding, are written off to other income and deductions, and when related to debt redeemed with refunding, are amortized over the life of the replacement issue. Capital stock premium and expense related to redeemed preferred and preference stock are written off against retained earnings used in the business. FERMI 2 REFUELING OUTAGES - The Company recognizes the cost of Fermi 2 refueling outages over periods in which related revenues are recognized. Under this procedure, the Company records a provision for incremental costs anticipated to be incurred during the next scheduled Fermi 2 refueling outage. See Note 2. LEASES - See Note 9. EMPLOYEES' RETIREMENT PLAN AND OTHER POSTRETIREMENT BENEFITS - See Note 13. NOTE 2 - FERMI 2 GENERAL - Fermi 2, a nuclear generating unit, began commercial operation in January 1988. Fermi 2 has a design electrical rating (net) of 1,139 megawatts ("MW"). However, due to certain equipment limitations, Fermi 2 is rated at 1,116 MW until modifications can be made to achieve the design rating. This unit represents approximately 28% of total assets, 11% of total operation and maintenance expenses and 11% of summer net rated capability. MPSC rate orders issued in April 1986, January 1987, December 1988 and January 1994 contain provisions with respect to the recovery of Fermi 2 costs. See Note 3 for a discussion of Fermi 2 rate matters and the MPSC's treatment of Fermi 2 project costs of $4.858 billion. LICENSING AND OPERATION - The Nuclear Regulatory Commission ("NRC") maintains jurisdiction over the licensing and operation of Fermi 2. Fermi 2 was out of service in 1994. On December 25, 1993, the reactor automatically shut down following a turbine-generator failure. Safety systems responded within design and regulatory specifications. The turbine suffered mechanical damage, the exciter and generator incurred mechanical and fire damage, and the condenser had some internal damage. The fire was contained in the turbine building, and there was no release of radioactive contaminants during the event. The nuclear part of the plant was not damaged. Major repairs have been completed and tests are continuing to balance and synchronize the unit. The Company expects that most repair costs related to returning the Fermi 2 turbine-generator to service will be covered by insurance. These costs are estimated to be in the $70 million to $80 million range. The Company has received partial insurance payments of $25 million for property damage. In addition, the Company has received insurance payments of $66 million for replacement power costs. As a result of an investigation as to the cause of the December 1993 mechanical failure, the Company will replace major Fermi 2 turbine components. Installation of new low-pressure turbine sections is expected to add about 20 MW of generating capacity to the plant, which would expand the plant's capability by about 2%. In the interim period the Company will operate Fermi 2 without the large seventh and eighth stage turbine blades until the next refueling, which will reduce the Fermi 2 power output to a range of about 800 MW to 900 MW. During the lower output period, new turbine shafts and blades will be manufactured for the plant's three low-pressure turbines. These major components will be installed during the next refueling outage in 1996. Replacing the major turbine components in 1996 is expected to cost between $30 million and $40 million. These costs will not be covered by insurance. These costs will be capitalized and are expected to be recovered in rates because such costs are less than the cumulative amount available under the cap on Fermi 2 capital expenditures, a provision of the MPSC's December 1988 order. See Note 3. INSURANCE - The Company insures Fermi 2 with property damage insurance provided by Nuclear Mutual Limited ("NML") and Nuclear Electric Insurance Limited ("NEIL"). The NML and NEIL insurance policies provide $500 million of composite primary coverage (with a $1 million deductible) and $2.25 billion of excess coverage, respectively, for stabilization, decontamination and debris removal costs and repair and/or replacement of property. Accordingly, the combined limits provide total property damage insurance of $2.75 billion. 38 39 The Company maintains an insurance policy with NEIL providing for extra expenses, including certain replacement power costs necessitated by Fermi 2's unavailability due to an insured event. This policy, which has a 21-week waiting period, provides for three years of coverage. Under the NML and NEIL policies, the Company could be liable for maximum retrospective assessments of up to approximately $28 million per loss if any one loss should exceed the accumulated funds available to NML or NEIL. As required by federal law, the Company maintains $200 million of public liability insurance for a nuclear incident. Further, under the Price-Anderson Amendments Act of 1988, deferred premium charges of $75.5 million could be levied against each licensed nuclear facility, but not more than $10 million per year per facility. On December 31, 1994, there were 110 licensed nuclear facilities in the United States. Thus, deferred premium charges in the aggregate amount of approximately $8.3 billion could be levied against all owners of licensed nuclear facilities in the event of a nuclear incident. Accordingly, public liability for a single nuclear incident is currently limited to approximately $8.5 billion. DECOMMISSIONING - The NRC has jurisdiction over the decommissioning of nuclear power plants. An NRC rule requires decommissioning funding based upon a site-specific estimate or a predetermined NRC formula. Using the NRC's formula, the Company estimates that the cost of decommissioning Fermi 2 when its license expires in the year 2025 is $489 million in current 1994 dollars and $3 billion in future 2025 dollars. The assumed annual inflation rate used to increase the cost to decommission is 6%, compounded annually. The MPSC and FERC regulate the recovery of costs of decommissioning nuclear power plants. A January 1994 MPSC order authorized a $500 million external trust fund in 1994 dollars to finance the decommissioning of Fermi 2. The MPSC's January 21, 1994 rate order includes an increase in rates for the decommissioning of Fermi 2, which the Company believes will be adequate to fund the estimated cost of decommissioning using the NRC formula. See Note 3. The order approves a decommissioning surcharge on customer bills under which the Company is currently collecting approximately $31.4 million annually, including $3.5 million for the recovery of low-level radioactive waste disposal. The FERC has approved the recovery of decommissioning expense in base rates, most recently in its June 1993 order. The Company has established external trust funds to hold decommissioning and low-level radioactive waste disposal funds collected from customers. During 1994, 1993 and 1992, the Company collected $26.9 million, $3.7 million and $3.4 million, respectively, from customers for decommissioning Fermi 2. Also, in 1994, the Company collected $3.3 million from customers for low-level radioactive waste disposal. Such amounts were recorded as components of depreciation and amortization expense in the Consolidated Statement of Income and accumulated depreciation and amortization in the Consolidated Balance Sheet. Earnings on the external decommissioning trust fund assets during 1994, 1993 and 1992 were $1.3 million, $1.2 million and $1.0 million, respectively. Earnings on the external low-level radioactive waste disposal trust fund assets were $0.2 million in 1994. Trust fund earnings are recorded as an investment with a corresponding credit to accumulated depreciation and amortization. Trust fund assets are assumed to earn an after-tax rate of return of 7%, compounded annually. The external trust fund for low-level radioactive waste disposal costs was initially established by charges to other operation expense in the Consolidated Statement of Income of $1.4 million in 1993 and $5.9 million in 1992. At December 31, 1994, the Company had a reserve of $51.5 million for the future decommissioning of Fermi 2 and $10.8 million for low-level radioactive waste disposal costs. These reserves are included in accumulated depreciation and amortization in the Consolidated Balance Sheet with a like amount deposited in external trust funds. The Company also had a reserve of $14.2 million at December 31, 1994 for the future decommissioning of Fermi 1, an experimental nuclear unit on the Fermi 2 site that has been shut down since 1972. This reserve is included in other deferred credits in the Consolidated Balance Sheet with a like amount deposited in an external trust fund. The Company estimates that the cost of decommissioning Fermi 1 in the year 2025 is $19 million in current 1994 dollars and $114 million in future 2025 dollars. The staff of the Securities and Exchange Commission has questioned certain of the current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for nuclear generating units in the financial statements of electric utilities. In response to these questions, the Financial Accounting Standards Board has agreed to review the accounting for removal costs, including decommissioning. If current electric utility industry accounting practices for such decommissioning are changed: (1) annual provisions for decommissioning could increase, (2) the estimated cost for decommissioning could be recorded as a liability rather than as accumulated depreciation, and (3) trust fund income from the external decommissioning trusts could be reported as investment income rather than as a reduction to decommissioning expense. The Energy Act provided for a fund to be established for the decommissioning and decontamination of existing United States Department of Energy ("DOE") uranium enrichment facilities. Utilities with nuclear units are required to pay for a portion of the cost by making annual payments into the fund over a 15 year period. The law directs state regulators to treat these payments as a necessary and reasonable cost of fuel and, accordingly, the Company has recorded a regulatory asset and liability in the Consolidated Balance Sheet to reflect these costs. 39 40 NUCLEAR FUEL DISPOSAL COSTS - The Company has a contract with the DOE for the future storage and disposal of spent nuclear fuel from Fermi 2. Under the terms of the contract, the Company makes quarterly payments to the DOE based upon a fee of 1 mill per kilowatthour applied to the Fermi 2 electricity generated and sold. The spent nuclear fuel disposal cost is included as a component of the Company's nuclear fuel expense. The DOE has stated that it will be unable to store spent nuclear fuel at a permanent repository until after 2010. However, the DOE and utilities with nuclear units are pursuing other interim storage options. The Company estimates that existing temporary storage capacity at Fermi 2 will be sufficient until the year 2000, or until 2015 with the expansion of such storage capacity. NOTE 3 - RATE MATTERS The Company is subject to the primary regulatory jurisdiction of the MPSC, which, from time to time, issues its orders pertaining to the Company's conditions of service, rates and recovery of certain costs including the costs of generating facilities. MPSC orders issued in December 1988 and on January 21, 1994 are currently in effect with respect to the Company's rates and certain other revenue and operating-related matters. On January 21, 1994, the MPSC issued an order reducing the Company's rates in the amount of $78 million annually. The rate reduction was determined by using a 1994 test year and an overall rate of return of 7.66%, incorporating an 11% return on common equity and a capital structure comprised of 40% common equity, 55.01% long-term debt and 4.99% preferred stock. The MPSC order includes the recovery of (1) increased Fermi 2 decommissioning costs of $28.1 million annually, which includes the recovery of low-level radioactive waste disposal costs, (2) full recovery of 1994 other postretirement benefit costs plus recovery and amortization of the 1993 deferred cost (see Note 13), (3) costs associated with the return to rate base of Greenwood Unit No. 1, (4) Fermi 2 phase-in plan revenue requirements of $70.8 million in 1994 and (5) costs associated with a three-year $41.5 million ($7.6 million in 1994, $14.9 million in 1995 and $19 million in 1996) demand-side management program. In keeping with the MPSC's recognition of the need for industrial customers to be competitive, the January 1994 rate reduction was allocated among the various classes of customers approximately as follows: Industrial-$43 million, Commercial-$24 million, Residential-$10 million and Governmental-$1 million. The order was effective for service rendered on and after January 22, 1994 and is the subject of various appeals before the Michigan Court of Appeals. INDUSTRIAL RATES - In August 1994, the Company entered into 10-year special manufacturing contracts which, if approved by the MPSC, will lower costs for the Company's three largest customers (Chrysler Corporation, Ford Motor Company and General Motors Corporation) without impacting the rates or service of other customers. Annual revenue reductions will range in amounts from about $30 million in 1995 to $50 million for 1999 through 2004. The Company expects to offset these reductions by further reducing operating expenses. In August 1994, the Company filed an application with the MPSC seeking approval of the special manufacturing contracts. The Commission scheduled expedited hearings in this case, which were completed in December 1994. An order approving these long-term contracts is expected to be issued in March 1995. FERMI 2 - The December 1988 MPSC order established, for the period January 1989 through December 2003, (1) a cap on Fermi 2 capital additions of $25 million per year, in 1988 dollars adjusted by the Consumers Price Index ("CPI"), cumulative, (2) a cap on Fermi 2 non-fuel operation and maintenance expenses adjusted by the CPI and (3) a capacity factor performance standard based on a three-year rolling average commencing in 1991. For a capital investment of $200 million or more (in 1988 dollars adjusted by the CPI), the Company must obtain prior MPSC approval to be included in rate base. See Note 1 - Regulation. Under the cap on Fermi 2 capital expenditures, the cumulative amount available totals $50 million (in 1994 dollars) at December 31, 1994. Under the cap on non-fuel operation and maintenance expenses, the cumulative amount available totals $31 million (in 1994 dollars) at December 31, 1994. Under the capacity factor performance standard, a disallowance of net incremental replacement power cost will be imposed for the amount by which the Fermi 2 three-year rolling average capacity factor is less than the greater of either the average of the top 50% of U.S. boiling water reactors or 50%. For purposes of the capacity factor performance standard, the capacity for Fermi 2 for the period 1989-1993 shall be 1,093 MW, and 1,139 MW for each year thereafter until December 31, 2003. As discussed in Note 2, Fermi 2 was out of service in 1994 and will operate at a reduced power output until the installation of major turbine components during the next refueling outage in 1996. As a result, the three-year rolling average capacity factor will be unfavorably affected in 1994-1997. The plant's capacity factor was 0%, 86.5% and 76.6% during 1994, 1993 and 1992, respectively, or a three-year rolling average of 54.4% in 1994. The average capacity factor for the top 50% of U.S. boiling water reactors for the 36-month period ending September 1994, was 79.2%. The Company has accrued for the Fermi 2 capacity factor performance standard disallowances that will be imposed during the period 1994-1997. In accordance with April 1986 and December 1988 MPSC rate orders, ratemaking treatment of the Company's Fermi 2 project costs of $4.858 billion is as follows: (1) $3.018 billion 40 41 in rate base with recovery and return, (2) $300 million amortized over 10 years with no return, (3) $513 million amortized over 19 years with associated interest of 8% and (4) $1.027 billion disallowed and written off by the Company in 1988. At December 31, 1994, the Company's net plant investment in Fermi 2 was $3.1 billion ($3.9 billion less accumulated depreciation and amortization of $0.8 billion). Under the December 1988 MPSC order, if nuclear operations at Fermi 2 permanently cease, amortization in rates of the $300 million and $513 million investments in Fermi 2 would continue and the remaining net rate base investment amount shall be removed from rate base and amortized in rates, without return, over 10 years with such amortization not to exceed $290 million per year. In this event, unamortized amounts of deferred depreciation and deferred return, recorded in the Consolidated Balance Sheet under the phase-in plan prior to the removal of Fermi 2 from rate base, will continue to be amortized, with a full return on such unamortized balances, so that all amounts deferred are recovered during the period ending no later than December 31, 1998. The December 1988 and January 21, 1994 rate orders do not address the costs of decommissioning if operations at Fermi 2 prematurely cease. The Company has and believes it will continue to operate under the terms of all applicable MPSC orders with no significant adverse effects as a result of any cost recovery restrictions contained therein. NOTE 4 - JOINTLY-OWNED UTILITY PLANT The Company's portion of jointly-owned utility plant is as follows:
------------------------------------------------------------------------------------ LUDINGTON PUMPED BELLE RIVER STORAGE ------------------------------------------------------------------------------------ In-service date 1984-1985 1973 Undivided ownership interest * 49% Investment (millions) $1,026.6 $174.3 Accumulated depreciation (millions) $ 297.8 $ 67.1
* The Company's undivided ownership interest is 62.78% in Unit No. 1, 81.39% of the portion of the facilities applicable to Belle River used jointly by the Belle River and St. Clair Power Plants, 49.59% in certain transmission lines and, at December 31, 1994, 75% in facilities used in common with Unit No. 2. BELLE RIVER - The Michigan Public Power Agency ("MPPA") has an undivided ownership interest in Belle River Unit No. 1 and certain other related facilities. MPPA is entitled to 18.61% of the capacity and energy of the entire plant and is responsible for the same percentage of the plant's operation and maintenance expenses and capital improvements. The Company is obligated to provide MPPA with backup power when either unit is out of service. The Company was required to purchase MPPA's capacity and energy entitlement through 1994. Such purchases were 80% for 1992, 20% for 1993 and 10% for 1994. The cost for the buyback of power was based on MPPA's plant-related investment, interest costs incurred by MPPA on their original project financing plus 2.5%, and certain other costs such as depreciation and operation and maintenance expenses. Buyback payments to MPPA were $50.9 million, $12.5 million and $6.0 million for 1992, 1993 and 1994, respectively. LUDINGTON PUMPED STORAGE - Operation, maintenance and other expenses of the Ludington Pumped Storage Plant ("Ludington") are shared by the Company and Consumers Power Company ("Consumers") in proportion to their respective interests in the plant. See Note 12 for a discussion of litigation related to Ludington. NOTE 5 - SALE OF ACCOUNTS RECEIVABLE AND UNBILLED REVENUES The Company has an agreement providing for the sale and assignment, from time to time, of an undivided ownership interest in $200 million of the Company's customer accounts receivable and unbilled revenues. At December 31, 1994 and 1993, customer accounts receivable and unbilled revenues in the Consolidated Balance Sheet have been reduced by $200 million reflecting the sale. All expenses associated with the program are being charged to other income and deductions in the Consolidated Statement of Income. NOTE 6 - INCOME TAXES Total income tax expense as a percent of income before tax varies from the statutory federal income tax rate for the following reasons:
---------------------------------------------------------------------------------------------------------- Percent of Income Before Tax ------------------------------------------------------ 1994 1993 1992 ---------------------------------------------------------------------------------------------------------- Statutory income tax rate 35.0% 35.0% 34.0% Deferred Fermi 2 depreciation and return 3.5 1.1 (0.6) Investment tax credit (1.9) (1.7) (1.9) Depreciation 5.5 3.9 3.3 Other-net (3.2) (1.6) (0.2) ------------------------------------------------------ Effective income tax rate 38.9% 36.7% 34.6% ======================================================
41 42 Components of income taxes were applicable to the following:
-------------------------------------------------------------------------------------------------------------- 1994 1993 1992 -------------------------------------------------------------------------------------------------------------- (Thousands) Operating expenses Current $195,848 $243,480 $204,346 Deferred-net --------------------------------------------- Borrowed funds component of AFUDC (1,081) (1,081) (1,081) Depreciation and amortization 52,873 74,567 70,864 Property taxes (23,640) (9,590) 3,952 Alternative minimum tax - 28,174 50,537 Fermi 2 capitalized labor and expenses (1,998) (1,692) (1,692) Nuclear fuel 14,645 (1,543) 6,313 Fermi 2 performance reserve (10,850) - - Reacquired debt losses 43,162 - - Indirect construction costs (1,268) (1,268) (1,268) Uncollectible accounts 1,380 (700) (3,060) Contributions in aid of construction (6,898) (3,756) (4,877) Fermi 2 refueling outage 6,798 (6,136) 2,068 Shareholder value improvement plan 2,244 559 (2,256) Coal contract buyouts (401) (1,411) (1,918) Injuries and damages (1,071) (5,855) - Steam purchase reserve - (3,850) - Employee reorganization expenses 4,200 (4,200) - Pensions and benefits 10,130 4,925 3,708 Other (590) 1,073 (6,110) --------------------------------------------- 87,635 68,216 115,180 --------------------------------------------- Investment tax credit-net Utilized 2,612 250 (417) Amortized (15,438) (14,477) (16,351) --------------------------------------------- (12,826) (14,227) (16,768) --------------------------------------------- Total 270,657 297,469 302,758 --------------------------------------------- Other income and deductions Current (8,083) (7,712) (5,464) Deferred-net (28) (882) (1,644) --------------------------------------------- Total (8,111) (8,594) (7,108) --------------------------------------------- Disallowed plant costs and accretion income Current (18,384) (18,405) (19,835) Deferred-net Disallowed plant costs 17,863 17,863 19,874 Accretion income 4,773 14,604 15,537 --------------------------------------------- Total 4,252 14,062 15,576 --------------------------------------------- Total income taxes $266,798 $302,937 $311,226 =============================================
The Fermi 2 phase-in plan required the Company to record additional deferred income tax expense related to deferred depreciation totaling $33.5 million, with this amount amortized to income over the six-year period ending December 31, 1998. In January 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires an asset and liability approach for financial accounting and reporting for income taxes. At January 1, 1993, the Company recorded an increase in accumulated deferred income tax liabilities of $740 million representing (a) the tax effect of temporary differences not previously recognized and (b) the recomputing of its tax liability at the current tax rate. The liability increase was offset by a regulatory asset of equal value, titled "Recoverable Income Taxes" in the Consolidated Balance Sheet. This regulatory asset represents the future revenue recovery from customers for these taxes as they become payable, with no effect on net income. In August 1993, the Omnibus Budget Reconciliation Act of 1993 increased the federal corporate income tax rate from 34% to 35% retroactive to January 1, 1993. As a result, the Company recorded (1) an increase of $88.1 million in accumulated deferred income tax liabilities, offset by a corresponding increase in "Recoverable Income Taxes," and (2) an increase of $10.4 million in income tax expense. At December 31, 1994, "Recoverable Income Taxes" totaled $663.1 million (deferrals of $828.1 million in 1993 less amortization of $108.2 million in 1994 and $56.8 million in 1993). Deferred income tax assets (liabilities) are comprised of the following at December 31:
------------------------------------------------------------------------------------------------------------ 1994 1993 ------------------------------------------------------------------------------------------------------------ (Thousands) Property $(2,070,943) $(2,023,328) Fermi 2 deferred depreciation and return (170,668) (207,724) Property taxes (52,913) (76,553) Investment tax credit 187,000 195,000 Reacquired debt losses (43,162) - Other 103,240 63,096 ----------- ----------- $(2,047,446) $(2,049,509) =========== =========== Deferred income tax liabilities $(2,566,578) $(2,590,064) Deferred income tax assets 519,132 540,555 ----------- ----------- $(2,047,446) $(2,049,509) =========== ===========
In 1993, the MPSC issued an order, in a generic proceeding, authorizing accounting procedures consistent with SFAS No. 109 and providing assurance that the effects of previously flowed-through tax benefits will continue to be allowed rate recovery. The federal income tax returns of the Company are settled through the year 1988. The Company believes that adequate provisions for federal income taxes have been made through December 31, 1994. 42 43 NOTE 7 - COMMON STOCK AND CUMULATIVE PREFERRED AND PREFERENCE STOCK At December 31, the outstanding Cumulative Preferred Stock redeemable solely at the option of the Company was:
------------------------------------------------------------------------------------------------------------ Date of Issuance 1994 1993 ------------------------------------------------------------------------------------------------------------ (Thousands) CUMULATIVE PREFERRED STOCK 5 1/2% Convertible Series, 55,470 and 59,419 shares, respectively October 1967 $ 5,547 $ 5,942 7.68% Series, 500,000 shares March 1971 50,000 50,000 7.45% Series, 600,000 shares November 1971 60,000 60,000 7.36% Series, 750,000 shares December 1972 75,000 75,000 7.75% Series, 1,500,000 shares February 1993 150,000 150,000 7.74% Series, 500,000 shares April 1993 50,000 50,000 Preferred stock expense (10,264) (10,259) ----------------------- Total Cumulative Preferred Stock $380,283 $380,683 =======================
The Convertible Cumulative Preferred Stock, 5 1/2% Series, is convertible by the holder into Common Stock. The conversion price was $17.79 per share at December 31, 1994. The number of shares converted during 1994, 1993 and 1992 was 3,949, 5,563 and 5,978, respectively. The number of shares of Common Stock reserved for issuance upon conversion and the conversion price are subject to further adjustment in certain events. This Series may be redeemed at any time in whole or in part at the option of the Company at $100 per share, plus accrued dividends. The Company's 7.68% Series, 7.45% Series and 7.36% Series Cumulative Preferred Stock are redeemable solely at the option of the Company at a per share redemption price of $101, plus accrued dividends. The Company's 7.75% Series and 7.74% Series Cumulative Preferred Stock are redeemable solely at the option of the Company at a per share redemption price of $100 (equivalent to $25 per Depositary Share), plus accrued dividends, on and after April 15, 1998 and July 15, 1998, respectively. Apart from MPSC approval and the requirement that common, preferred and preference stock be sold for at least par value, there are no legal restrictions on the issuance of additional authorized shares of such stock. At December 31, 1994, there was no outstanding Cumulative Preferred Stock subject to mandatory redemption. At December 31, 1994, the Company had Cumulative Preference Stock of $1 par value, 30,000,000 shares authorized with 30,000,000 shares unissued. On August 4, 1994, the Company purchased 2,206,635 shares of its $10 par value Common Stock at a price of $27.125 per share, totaling $59.9 million, from the trustee of the Detroit Edison Savings & Investment Plans. These shares were canceled and reverted to the status of authorized but unissued shares. NOTE 8 - SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS As described below, at December 31, 1994, the Company had total short-term credit arrangements of approximately $405 million. At December 31, 1994 and December 31, 1993, $39.5 million and $138.2 million of short-term borrowings were outstanding with weighted average interest rates of 6.2% and 3.4%, respectively. The Company had bank lines of credit of $200 million, all of which had commitment fees in lieu of compensating balances. Commitment fees incurred in 1994 for bank lines of credit were approximately $0.3 million. The Company uses bank lines of credit to support the issuance of commercial paper and bank loans. All borrowings are at prevailing money market rates which are below the banks' prime lending rates. In May 1993, FERC issued its order authorizing the continuation of the Company's $1 billion of short-term borrowing authority. This authority will be in effect through May 31, 1995. The Company has a nuclear fuel financing arrangement (heat purchase contract) with Renaissance Energy Company ("Renaissance"), an unaffiliated company. Renaissance may issue commercial paper or borrow from participating banks on the basis of promissory notes. To the extent the maximum amount of funds available to Renaissance (currently $400 million) is not needed by Renaissance to purchase nuclear fuel, such funds may be loaned to the Company for general corporate purposes pursuant to a separate Loan Agreement. At December 31, 1994, approximately $205 million was available to the Company under such Loan Agreement. See Note 9 for a discussion of the Company's heat purchase contract with Renaissance. Renaissance entered into five-year interest rate swap agreements, guaranteed by the Company, in December 1990, with five banks for a nominal amount of $125 million. These agreements are used to reduce the potential impact of increases in interest rates on the variable rate debt by exchanging the receipt of variable rate amounts for fixed interest payments at rates ranging from 8.12% to 8.145% over the life of the agreements. The differential to be paid or received is recognized as an adjustment to the interest component included as part of nuclear fuel expense. 43 44 NOTE 9 - LEASES Future minimum lease payments under long-term noncancellable leases, consisting of nuclear fuel ($221 million computed on a projected units of production basis), lake vessels ($48 million), locomotives and coal cars ($149 million), office space ($28 million) and computers, vehicles and other equipment ($6 million) at December 31, 1994 are as follows:
---------------------------------------------------------------------------------------------------------- (MILLIONS) (MILLIONS) ---------------------------------------------------------------------------------------------------------- 1995 $103 1998 $ 41 1996 99 1999 23 1997 61 Remaining years 125 ---- Total $452 ==== ----------------------------------------------------------------------------------------------------------
The Company has a heat purchase contract with Renaissance which provides for the purchase by Renaissance for the Company of up to $400 million of nuclear fuel, subject to the continued availability of funds to Renaissance to purchase such fuel. Title to the nuclear fuel is held by Renaissance. The Company makes quarterly payments under the heat purchase contract based on the consumption of nuclear fuel for the generation of electricity. Renaissance's investment in nuclear fuel was $193 million and $184 million at December 31, 1994 and 1993, respectively. The increase in 1994 from 1993 of $9 million includes purchases of $3 million and capitalized interest of $6 million. Under SFAS No. 71, amortization of leased assets is modified so that the total of interest on the obligation and amortization of the leased asset is equal to the rental expense allowed for ratemaking purposes. For ratemaking purposes, the MPSC has treated all leases as operating leases. Net income is not affected by capitalization of leases. Rental expenses for both capital and operating leases were $49 million (including $8 million for nuclear fuel), $126 million (including $89 million for nuclear fuel) and $108 million (including $70 million for nuclear fuel) for 1994, 1993 and 1992, respectively. NOTE 10 - LONG-TERM DEBT The Company's 1924 Mortgage and Deed of Trust ("Mortgage"), the lien of which covers substantially all of the Company's properties, provides for the issuance of additional bonds. At December 31, 1994, approximately $3.1 billion principal amount of Mortgage Bonds could have been issued on the basis of property additions, combined with an earnings test provision, assuming an interest rate of 8.9% on any such additional Mortgage Bonds. An additional $1.2 billion principal amount of Mortgage Bonds could have been issued on the basis of bond retirements. Long-term debt outstanding at December 31 was:
--------------------------------------------------------------------------------------------------------------------- Interest Rate 1994 1993 --------------------------------------------------------------------------------------------------------------------- (Thousands) GENERAL AND REFUNDING MORTGAGE BONDS Series R, due 12/1/96 6 % $ 100,000 $ 100,000 Series S, due 10/1/98 6.4 150,000 150,000 1989 Series A, due 7/1/19 9 7/8 - 168,285 1990 Series A, due 3/31/20 7.904 163,254 169,533 1990 Series B, due 3/31/16 7.904 209,352 218,868 1990 Series C, due 3/31/14 8.357 68,380 71,799 1992 Series D, due 8/1/02 and 8/1/22 7.605 * 290,000 300,000 1992 Series E, due 12/15/99 6.83 50,000 50,000 1993 Series B, due 12/15/99 6.83 50,000 50,000 1993 Series C, due 1/15/03 and 1/13/23 7.939 * 225,000 225,000 1993 Series D, due 4/1/99 6.45 100,000 100,000 1993 Series E, due 3/15/00, 3/17/03 and 3/15/23 6.854 * 390,000 400,000 1993 Series G, due 5/1/97 and 5/1/01 5.921 * 225,000 225,000 1993 Series J, due 6/1/18 7.74 270,000 300,000 Less: Unamortized net discount (182) (1,906) Amount due within one year (19,214) (19,214) ------------------------- $2,271,590 $2,507,365 ------------------------- REMARKETED NOTES Secured by corresponding amounts of General and Refunding Mortgage Bonds 1993 Series H, due 7/15/28 5.839 ** $ 50,000 $ 50,000 1993 Series K, due 8/15/33 4 5/8 ** 160,000 160,000 1994 Series C, due 8/15/34 6.708 ** 200,000 - Less: Unamortized net discount (177) (181) ------------------------- $ 409,823 $ 209,819 -------------------------
Interest Rate 1994 1993 ------------------------------------------------------------------------------------------------------------------------ (Thousands) TAX EXEMPT REVENUE BOND OBLIGATIONS Secured by corresponding amounts of General and Refunding Mortgage Bonds Installment Sales Contracts, due 9/1/05 - 9/1/24 7.32%* $ 302,155 $ 306,440 Less: Unamortized net discount (279) (293) Funds on deposit with Trustee - (160) Amount due within one year - (435) ----------------------------- $ 301,876 $ 305,552 ----------------------------- Loan Agreements, due 7/15/08 - 8/1/24 6.73 * $ 487,495 $ 467,025 Less: Unamortized net discount (73) - ----------------------------- $ 487,422 $ 467,025 ----------------------------- Unsecured Installment Sales Contracts, due 12/15/15 - 12/1/19 8.95 * $ 314,060 $ 290,360 ----------------------------- Loan Agreements, due 4/15/10 - 10/1/24 5.02 * $ 40,525 $ 50,475 ----------------------------- $1,143,883 $1,113,412 ----------------------------- Total Long-Term Debt $3,825,296 $3,830,596 =============================
* Weighted average interest rate at December 31, 1994. ** Variable rate at December 31, 1994. 44 45 In 1995, 1996, 1997, 1998 and 1999, long-term debt maturities consist of $19 million, $119 million, $144 million, $169 million and $219 million, respectively. In June 1992, the Company entered into a three-year interest rate swap agreement matched to a $31 million variable rate tax exempt revenue bond. This agreement is used to reduce the potential impact of increases in interest rates on the variable rate debt by exchanging the receipt of variable rate amounts for fixed interest payments at a rate of 4.32% over the life of the agreement. The differential to be paid or received is recognized as an adjustment to interest expense related to the debt. NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: CASH AND TEMPORARY CASH INVESTMENTS/SHORT-TERM BORROWINGS The carrying amount approximates fair value because of the short maturity of those instruments. OTHER INVESTMENTS The fair value of the Company's other investments was not estimated since they are not material and because some are already recorded at fair value. NUCLEAR DECOMMISSIONING TRUST FUNDS The fair value of the Company's nuclear decommissioning trust funds is estimated based on quoted market prices for securities and carrying amount for the cash equivalents. SALE OF ACCOUNTS RECEIVABLE AND UNBILLED REVENUES The carrying amount approximates fair value because of the short maturity of accounts receivable and unbilled revenues pledged for sale. CUMULATIVE PREFERRED STOCK The fair value of the Company's preferred stock outstanding is estimated based on the quoted market prices for the same or similar issues. LONG-TERM DEBT The fair value of the Company's long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. CUSTOMER SURETY DEPOSITS Surety deposits, including interest as specified by MPSC regulation, are returned to customers. The carrying amount approximates fair value. The estimated fair values of the Company's financial instruments at December 31, all of which are held or issued for purposes other than trading, are as follows:
1994 1993 -------------------------- ------------------------- Carrying Fair Carrying Fair Amount Value Amount Value -------- -------- -------- -------- (Thousands) Cash and temporary cash investments $ 8,122 $ 8,122 $ 11,071 $ 11,071 Other investments 15,168 15,168 2,809 2,809 Nuclear decommissioning trust funds 76,492 76,492 29,929 31,290 Sale of accounts receivable and unbilled revenues 200,000 200,000 200,000 200,000 Cumulative preferred stock 390,547 336,249 390,942 396,154 Long-term debt 3,844,510 3,511,459 3,850,405 4,106,216 Short-term borrowings 39,489 39,489 138,204 138,204 Customer surety deposits 10,870 10,870 10,819 10,819
NOTE 12 - COMMITMENTS AND CONTINGENCIES COMMITMENTS - The Company has entered into purchase commitments of approximately $638 million at December 31, 1994, which includes, among other things, the costs of major turbine components to be replaced at Fermi 2 and line construction and clearance costs. The Company also has entered into substantial long-term fuel supply and transportation commitments. The Company has an Energy Purchase Agreement ("Agreement") for the purchase of steam and electricity from the Detroit Resource Recovery Facility. Under the Agreement, the Company will purchase steam through the year 2008 and electricity through June 30, 2024. Purchases of steam and electricity were $21.3 million, $23.6 million and $24.5 million for 1992, 1993 and 1994, respectively, and annual purchase commitments are approximately $30.0 million, $33.2 million, $35.8 million, $37.0 million and $38.3 million for 1995, 1996, 1997, 1998 and 1999, respectively. CONTINGENCIES - In 1986, the Michigan Attorney General and the Michigan Natural Resources Commission filed a state lawsuit against the Company and Consumers as co-owners of Ludington for claimed aquatic losses. The Company is a 49% co-owner of Ludington. The suit, which alleges violations of the Michigan Environmental Protection Act and the common law for claimed aquatic losses, seeks past damages (including interest) of approximately $148 million and future damages (from the time of the filing of the lawsuit) in the amount of approximately $89,500 per day (of which 49% would be applicable to the Company). In 1986, two environmental organizations requested FERC to withdraw the Ludington license or provide some mitigation for fish mortality. In April 1989, Consumers and the Company were ordered by the FERC to install a temporary barrier net around the plant to protect fish on an interim basis until 45 46 permanent measures could be developed. A net has been in operation for six seasons and the companies have proposed that it be utilized as part of the permanent solution. On October 5, 1994, the Company and all other parties to the state action and the FERC proceeding, except certain Indian tribes, reached a tentative settlement. The settlement agreement is subject to FERC and MPSC approval. (The Michigan Supreme Court is holding this matter in abeyance pending approval of a settlement.) The settlement provides for damages and use of the net as a permanent solution. The net present value of the Company's portion of the damages is estimated to be approximately $30 million which will be paid over a 24-year period, including $10 million to enhance recreational opportunities on Company-owned and donated property. At December 31, 1994, the Company has recorded a regulatory asset and liability of $7 million for past damages, pending approval by the FERC and MPSC. In January 1989, the Environmental Protection Agency ("EPA") issued an administrative order under the Comprehensive Environmental Response, Compensation and Liability Act ordering the Company and 23 other potentially responsible parties ("PRPs") to begin removal activities at the Carter Industrials superfund site. In June 1993, a Consent Decree was entered by the U.S. District Court for the Eastern District of Michigan. It included a provision for the payment of past costs incurred by the EPA of which the Company's share was approximately $1.3 million, paid in June 1993. The Company has recorded a liability of $8.4 million, which amount was charged to other operation expense in the Consolidated Statement of Income in 1989-1992, as its anticipated cost of the clean-up in 1995-1997. On July 7, 1994, the PRPs in this matter petitioned the EPA to consider amending the clean-up plan to permit landfill disposal of certain contaminated soil and on December 12, 1994, the EPA issued a public notice of its intent to amend the Consent Decree to incorporate the proposed change in the clean-up plan. Should the procedure be approved, the Company's portion of the clean-up costs will be reduced by approximately $3 million. There is, however, the possibility that EPA may, through subsequent proceedings, require a clean-up of the sewer and sewer outfall emptying into the Detroit River. In August 1993, the Company, along with approximately 28 other parties, received a "Notice of Demand" from the Michigan Department of Natural Resources ("MDNR"), acting pursuant to a Michigan statute, for all past ($142,000) and future costs incurred by the state in performing response activities related to the Carter Industrials site. In addition, the notice indicated the need to conduct a PCB-sediment sampling program at the sewer outfall emptying into the Detroit River. In response to the "Notice of Demand," the Carter Industrials Site Group (the group, including the Company, of PRPs formed to jointly remediate the Carter Industrials site) paid $126,600 of past costs incurred by the MDNR, of which approximately 45% ($57,000) was paid by the Company. The group declined to commit to pay future costs which the MDNR may incur and declined to conduct the program of Detroit River sediment sampling and analysis requested by the MDNR. At this time, it is impossible to predict what impact, if any, this matter will have upon the Company. The Energy Act became effective in October 1992. While the Company is unable to predict the ultimate impact of this legislation on its operations, the Company expects that, over time, non-utility generation resources will be developed which will result in greater competition for power sales. In addition to the matters reported herein, the Company is involved in litigation and environmental matters dealing with the numerous aspects of its business operations. The Company believes that such litigation and the matters discussed above will not have a material effect on its financial position or results of operations. See Notes 2 and 3 for a discussion of contingencies related to Fermi 2. NOTE 13 - EMPLOYEES' RETIREMENT PLAN AND OTHER POSTRETIREMENT BENEFITS EMPLOYEES' RETIREMENT PLAN - The Company has a trusteed and non-contributory defined benefit retirement plan ("Plan") covering all eligible employees who have completed six months of service. The Plan provides retirement benefits based on the employee's years of benefit service, average final compensation and age at retirement. The Company's policy is to fund pension cost calculated under the projected unit credit actuarial cost method, provided that this amount is at least equal to the minimum funding requirement of the Employee Retirement Income Security Act of 1974, as amended, and is not greater than the maximum amount deductible for federal income tax purposes. Contributions were made to the Plan totaling $23.7 million in 1992, $29.4 million in 1993 and $45.8 million in 1994. Net pension cost included the following components:
----------------------------------------------------------------------------------------------------------- 1994 1993 1992 ----------------------------------------------------------------------------------------------------------- (Thousands) Service cost - benefits earned during the period $ 25,146 $ 22,945 $ 21,644 Interest cost on projected benefit obligation 75,922 74,490 70,511 Actual return on Plan assets (3,272) (119,037) (56,208) Net deferral and amortization: Deferral of net gain (loss) during current period (90,069) 33,435 (23,528) Amortization of unrecognized prior service cost 3,613 3,297 2,776 Amortization of unrecognized net asset resulting from initial application (4,507) (4,507) (4,507) -------------------------------------------- Net pension cost $ 6,833 $ 10,623 $ 10,688 ============================================
46 47 Assumptions used in determining net pension cost are as follows:
------------------------------------------------------------------------------------------------------------ 1994 1993 1992 ------------------------------------------------------------------------------------------------------------ Discount rate 7.5% 8.0% 8.0% Annual increase in future compensation levels 4.5 5.0 5.0 Expected long-term rate of return on Plan assets 9.5 9.5 9.5 ------------------------------------------------------------------------------------------------------------
The following reconciles the funded status of the Plan to the amount recorded in the Company's Consolidated Balance Sheet:
------------------------------------------------------------------------------------------------------------ December 31 ------------------------------- 1994 1993 ------------------------------------------------------------------------------------------------------------ (Thousands) Plan assets at fair value, primarily equity and debt securities $1,054,048 $1,059,775 ------------------------------- Less actuarial present value of benefit obligation: Accumulated benefit obligation, including vested benefits of $852,374 and $872,138, respectively 872,530 892,761 Increase in future compensation levels 138,411 152,279 ------------------------------- Projected benefit obligation 1,010,941 1,045,040 ------------------------------- Plan assets in excess of projected benefit obligation 43,107 14,735 Unrecognized net asset resulting from initial application (33,288) (37,795) Unrecognized net loss (gain) 3,856 (7,315) Unrecognized prior service cost 40,391 45,518 ------------------------------- Asset recorded as Other Deferred Debits in the Consolidated Balance Sheet $ 54,066 $ 15,143 =============================== ------------------------------------------------------------------------------------------------------------
Assumptions used in determining the projected benefit obligation are as follows:
----------------------------------------------------------------------------------------------------------- December 31 -------------------------- 1994 1993 ----------------------------------------------------------------------------------------------------------- Discount rate 8.0% 7.5% Annual increase in future compensation levels 4.5 4.5 -----------------------------------------------------------------------------------------------------------
The unrecognized net asset at date of initial application is being amortized over approximately 15.4 years, which was the average remaining service period of employees at January 1, 1987. In addition to the Plan, the Company has several supplemental non-qualified, non-contributory, unfunded retirement benefit plans for certain management employees. OTHER POSTRETIREMENT BENEFITS - The Company provides certain postretirement health care and life insurance benefits for retired employees. Substantially all of the Company's employees will become eligible for such benefits if they reach retirement age while working for the Company. These benefits are provided principally through insurance companies and other organizations. Effective January 1, 1993, the Company adopted the provisions of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The standard required the Company to change its accounting for postretirement benefits from the pay-as-you-go (cash) basis to the accrual of such benefits during the active service periods of employees to the date they attain full eligibility for benefits. The transition obligation at the time of adoption is being amortized over 20 years. The Company's incremental cost upon adoption of the standard was $49 million for 1993 which is being deferred in accordance with the January 21, 1994 MPSC rate order. See Note 3. This amount is being amortized and recovered in rates over the estimated four-year period 1994-1997. Net other postretirement benefits cost included the following components:
----------------------------------------------------------------------------------------------------------- 1994 1993 ----------------------------------------------------------------------------------------------------------- (Thousands) Service cost - benefits earned during the period $16,267 $15,312 Interest cost on accumulated postretirement benefit obligation 33,459 33,787 Actual return on assets (208) (18) Deferral of net loss during current period (833) - Amortization of unrecognized transition obligation 20,633 21,685 ----------------------------- Net other postretirement benefits cost $69,318 $70,766 ============================= -----------------------------------------------------------------------------------------------------------
Assumptions used in determining net other postretirement benefits cost are as follows:
---------------------------------------------------------------------------------------------------------- 1994 1993 ---------------------------------------------------------------------------------------------------------- Discount rate 7.5% 8.0% Annual increase in future compensation levels 4.5 5.0 Expected long-term rate of return on assets 9.5 9.5 -----------------------------------------------------------------------------------------------------------
47 48 The following reconciles the funded status to the amount recorded in the Company's Consolidated Balance Sheet:
---------------------------------------------------------------------------------------------------------- December 31 ---------------------------- 1994 1993 ---------------------------------------------------------------------------------------------------------- (Thousands) Actuarial present value of benefit obligation: Retirees $(256,370) $(242,787) Fully eligible active participants (67,581) (65,933) Other active participants (140,710) (129,075) ---------------------------- Accumulated postretirement benefit obligation (464,661) (437,795) Less assets at fair value, primarily equity and debt securities 58,080 599 ---------------------------- Benefit obligation in excess of assets (406,581) (437,196) Unrecognized transition obligation 369,459 392,026 Unrecognized net gain (21) (3,397) ---------------------------- Liability recorded as Other Non-Current Liabilities in the Consolidated Balance Sheet $ (37,143) $ (48,567) ============================ ------------------------------------------------------------------------------------------------------------
Assumptions used in determining the accumulated benefit obligation are as follows:
----------------------------------------------------------------------------------------------------------- December 31 ----------------------------- 1994 1993 ----------------------------------------------------------------------------------------------------------- Discount rate 8.0% 7.5% Annual increase in future compensation levels 4.5 4.5 -----------------------------------------------------------------------------------------------------------
Benefit costs were calculated assuming health care cost trend rates beginning at 12.6% for 1994 and decreasing to 6.0% in 2008 and thereafter for persons under age 65 and decreasing from 7.4% to 6.0% for persons age 65 and over. A one-percentage-point increase in health care cost trend rates would increase the aggregate of the service cost and interest cost components of benefit costs by $6 million for 1994 and increase the accumulated benefit obligation by $47 million at December 31, 1994. NOTE 14 - SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
------------------------------------------------------------------------------------------------------------ 1994 Quarter Ended ------------------------------------------------------------ Mar. 31 June 30 Sept. 30 Dec. 31 ------------------------------------------------------------------------------------------------------------ (Thousands, except per share amounts) Operating Revenues $899,589 $872,690 $944,389 $802,673 Operating Income 189,319 161,832 200,298 167,946 Net Income 112,870 87,283 124,381 95,375 Earnings for Common Stock 105,458 79,872 116,972 87,967 Earnings Per Share 0.72 0.54 0.80 0.61 ------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------ 1993 Quarter Ended ----------------------------------------------------------- Mar. 31 June 30 Sept. 30 Dec. 31 ------------------------------------------------------------------------------------------------------------ (Thousands, except per share amounts) Operating Revenues $874,847 $835,171 $976,248 $868,945 Operating Income 221,732 186,498 228,436 207,281 Net Income 135,203 102,664 153,365 130,671 Earnings for Common Stock 127,060 94,799 145,950 123,257 Earnings Per Share 0.86 0.64 0.99 0.84 ------------------------------------------------------------------------------------------------------------
The fourth quarter of 1994 includes a decrease in operating revenues of $59 million, a decrease in operation expense of $65 million and a decrease in maintenance expense of $1 million related to a settlement agreement, with the parties intervening in the 1994 PSCR reconciliation case with the MPSC, for business interruption insurance proceeds associated with the December 25, 1993 outage at Fermi 2. See Note 2. Earnings per share amounts for each quarter are required to be computed independently and, therefore, may not equal the amount computed for the total year. 48 49 ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. The Company's Board of Directors, upon the recommendation of the Board's Audit Committee, has appointed Deloitte & Touche LLP as independent accountants of the Company for the year 1995. The appointment is subject to ratification by the Company's Common Stock Shareholders at the Annual Meeting of Common Stock Shareholders to be held on April 24, 1995 ("Annual Meeting"). (The Company's Board of Directors has also approved the formation of a holding company; and ratification of the appointment of Deloitte & Touche LLP as independent accountants of the Company will be considered ratification of the firm's appointment as independent accountants for the holding company if the holding company is approved at the Annual Meeting.) In prior years, Price Waterhouse LLP served as independent accountants of the Company. 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 their 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. PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information regarding the Company's executive officers is incorporated herein by reference to Items 1 and 2 - Business and Properties, "Employes and Executive Officers" on pages 20-21 hereof; information regarding compliance with section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by reference to the data under the heading "Compliance with Section 16(a) of the Securities Exchange Act of 1934" on page 35 of the Company's definitive proxy statement dated March 9, 1995, in connection with its Annual Meeting of Shareholders to be held on April 24, 1995; and information regarding directors is incorporated herein by reference to the data under the heading "The Election of Directors" on pages 5-9 of the Company's definitive proxy statement dated March 9, 1995, in connection with its Annual Meeting of Shareholders to be held on April 24, 1995. ITEM 11 - EXECUTIVE COMPENSATION. Information regarding "Executive Compensation" is incorporated herein by reference to the data under the heading "Board Compensation Committee Report on Executive Compensation" on pages 10-15 of the Company's definitive proxy statement dated March 9, 1995, in connection with its Annual Meeting of Shareholders to be held on April 24, 1995. 49 50 ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information regarding ownership of equity securities is incorporated herein by reference to the heading "Security Ownership of Management" on page 9 of the Company's definitive proxy statement dated March 9, 1995, in connection with its Annual Meeting of Shareholders to be held on April 24, 1995. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information regarding certain relationships and related transactions is incorporated herein by reference to the heading "Compensation Committee Interlocks and Insider Participation" on page 15 of the Company's definitive proxy statement dated March 9, 1995, in connection with its Annual Meeting of Shareholders to be held on April 24, 1995. 50 51 PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) The following documents are filed as a part of this Annual Report on Form 10-K. (1) Consolidated financial statements. See "Item 8 - Financial Statements and Supplementary Data" on page 30. (2) Financial statement schedules. See "Item 8 - Financial Statements and Supplementary Data" on page 30. (3) Exhibits (* Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 14 (c) of this report). (i) Exhibits filed herewith. Exhibit Number ------- 4-169 - Supplemental Indenture, dated as of December 1, 1994, establishing the Series KKP No. 15 and 1994 Series DP Mortgage Bonds. 4-170 - Supplemental Indenture, dated as of October 15, 1985, establishing the Series KKP No. 9 Mortgage Bonds. 4-171 - Supplemental Indenture, dated as of July 15, 1989, establishing the Series KKP No. 10 Mortgage Bonds. 4-172 - Supplemental Indenture, dated as of December 1, 1989, establishing the Series KKP No. 11 and 1989 Series BP Mortgage Bonds. 4-173 - Supplemental Indenture, dated as of February 15, 1990, establishing the 1990 Series A, 1990 Series B, 1990 Series C, 1990 Series D, 1990 Series E and 1990 Series F Mortgage Bonds. *10-56 - Amended and Restated 1994 Officers' Shareholder Value Improvement Plan (1994 and subsequent years, January 23, 1995). *10-57 - 1995 Officers' Shareholder Value Improvement Plan (January 23, 1995). *10-58 - Plan for Deferring the Payment of Directors' Fees (January 23, 1995). *10-59 - Retirement Plan for Non-Employe Directors (February 27, 1995). 51 52 Exhibit Number ------- 11-21 - Primary and Fully Diluted Earnings Per Share of Common Stock. 12-26 - Computation of Ratio of Earnings to Fixed Charges. 12-27 - Computation of Ratio of Earnings to Fixed Charges and Preferred and Preference Stock Dividend Requirements. 23-7 - Consent of Independent Accountants. (ii) Exhibits incorporated herein by reference. 4(a) - Restated Articles of Incorporation of the Company, as filed December 10, 1991 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-117 to Form 10-Q for quarter ended March 31, 1993). 4(b) - Certificate containing resolution of the Board of Directors establishing the Cumulative Preferred Stock, 7.75% Series as filed February 22, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-134 to Form 10-Q for quarter ended March 31, 1993). 4(c) - Certificate containing resolution of the Board of Directors establishing the Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-140 to Form 10-Q for quarter ended March 31, 1993). 4(d) - By-Laws of the Company as amended November 25, 1991 (Exhibit 4-118 to Form 10-K for year ended December 31, 1991). 4(e) - Mortgage and Deed of Trust, dated as of October 1, 1924, between the Company (File No. 1-2198) and Bankers Trust Company as Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings as set forth below: September 1, 1947 Exhibit B-20 to Registration No. 2-7136 October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096 52 53 Exhibit Number ------- November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160 January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595 June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643 June 30, 1982 Exhibit 4-30 to Registration No. 2-78941 August 15, 1982 Exhibit 4-32 to Registration No. 2-79674 November 30, 1987 Exhibit 4-139 to Form 10-K for year ended December 31, 1992 November 1, 1990 Exhibit 4-110 to Form 10-K for year ended December 31, 1990 April 1, 1991 Exhibit 4-111 to Form 10-Q for quarter ended March 31, 1991 May 1, 1991 Exhibit 4-112 to Form 10-Q for quarter ended June 30, 1991 May 15, 1991 Exhibit 4-113 to Form 10-Q for quarter ended June 30, 1991 September 1, 1991 Exhibit 4-116 to Form 10-Q for quarter ended September 30, 1991 November 1, 1991 Exhibit 4-119 to Form 10-K for year ended December 31, 1991 January 15, 1992 Exhibit 4-120 to Form 10-K for year ended December 31, 1991 February 29, 1992 Exhibit 4-121 to Form 10-Q for quarter ended March 31, 1992 April 15, 1992 Exhibit 4-122 to Form 10-Q for quarter ended June 30, 1992 July 15, 1992 Exhibit 4-123 to Form 10-Q for quarter ended September 30, 1992 July 31, 1992 Exhibit 4-124 to Form 10-Q for quarter ended September 30, 1992 November 30, 1992 Exhibit 4-130 to Registration No. 33-56496 January 1, 1993 Exhibit 4-131 to Registration No. 33-56496 March 1, 1993 Exhibit 4-141 to Form 10-Q for quarter ended March 31, 1993 March 15, 1993 Exhibit 4-142 to Form 10-Q for quarter ended March 31, 1993 April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter ended March 31, 1993 April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter ended March 31, 1993 May 31, 1993 Exhibit 4-148 to Registration No. 33-64296 June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter ended June 30, 1993 (1993 Series AP) 53 54 Exhibit Number ------- June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993 Series H) September 15, 1993 Exhibit 4-158 to Form 10-Q for quarter ended September 30, 1993 March 1, 1994 Exhibit 4-163 to Registration No. 33-53207. June 15, 1994 Exhibit 4-166 to Form 10-Q for quarter ended June 30, 1994. August 15, 1994 Exhibit 4-168 to Form 10-Q for quarter ended September 30, 1994. 4(f) - Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325). 4(g) - First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration No. 33-50325). 4(h) - Second Supplemental Note Indenture, dated as of September 15, 1993 (Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993). 4(i) - Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994). 4(j) - Amended and Restated Standby Note Purchase Credit Facility, dated as of April 26, 1994, among The Detroit Edison Company, The Bank of New York, The Toronto-Dominion Bank, acting through its Houston Agency, Toronto-Dominion (Texas), Inc., as Administrative Agent and Citicorp Securities, Inc., as Remarketing Agent (Exhibit 99-5 to Registration No. 33-50325). 4(k) - Standby Note Purchase Credit Facility, dated as of August 17, 1994, among The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative Agent, Bank of America, The Bank of New York, The Fuji Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents (Exhibit 99-18 to Form 10-Q for quarter ended September 30, 1994). 54 55 Exhibit Number ------- *10(a)- Form of Indemnification Agreement between the Company and (1) Frank E. Agosti, (2) Gerard M. Anderson, (3) Robert J. Buckler, (4) Malcolm G. Dade, Jr., (5) Ronald W. Gresens, (6) Leslie L. Loomans, (7) S. Martin Taylor, (8) Saul J. Waldman, (9) Susan M. Beale, (10) Frederick S. Karwacki, (11) Douglas R. Gipson, (12) Robert J. Horn, (13) Thomas A. Hughes, (14) Christopher C. Nern, (15) Ronald J. Gdowski, (16) Elaine M. Godfrey, (17) Allen W. Anning, (18) Christopher C. Arvani, (19) James R. McGillivary, (20) Thomas J. Howlin, (21) Donald J. Brett, (22) Michael E. Champley, (23) T. Michael Holton, and (24) Haven E. Cockerham (Exhibit 10-41 to Form 10-Q for quarter ended June 30, 1993). *10(b)- 1991 Shareholder Value Improvement Plan - A, as amended effective January 25, 1993 (Exhibit 10-43 to Form 10-Q for quarter ended June 30, 1993). *10(c)- 1990 Shareholder Value Improvement Plan - A, as amended January 25, 1993 (Exhibit 10-44 to Form 10-Q for quarter ended June 30, 1993). *10(d)- 1994 Officers' Shareholder Value Improvement Plan, January, 1994 (Exhibit 10-50 to Form 10-K for year ended December 31, 1993). *10(e)- Certain Arrangements Pertaining to the Employment of S. Martin Taylor (Exhibit 10-38 to Form 10-K for year ended December 31, 1992). *10(f)- Certain arrangements pertaining to the employment of Anthony F. Earley, Jr. (Exhibit 10-53 to Form 10-Q for quarter ended March 31, 1994). *10(g)- Amended and Restated Savings Separation Plan, June 1994 (Exhibit 10-54 to Form 10-Q for quarter ended June 30, 1994.) *10(h)- Certain arrangements pertaining to the employment of Haven E. Cockerham (Exhibit 10-55 to Form 10-Q for quarter ended September 30, 1994). *10(i)- Key Employe Deferred Compensation Plan (January 1990). (Exhibit 10-21 to Form 10-K for year ended December 31, 1989). 55 56 Exhibit Number *10(j)- Retirement Reparation Plan for Certain Employes of The Detroit Edison Company (as amended through May 22, 1989). (Exhibit 10-25 to Form 10-K for year ended December 31, 1989). *10(k)- Benefit Equalization Plan for Certain Employes of The Detroit Edison Company (as amended through May 22, 1989). (Exhibit 10-26 to Form 10-K for year ended December 31, 1989). *10(l)- Certain Arrangements Pertaining to the Employment of Larry G. Garberding (Exhibit 28-52 to Form 10-Q for quarter ended June 30, 1990). *10(m)- Form of Indemnification Agreement, between the Company and (1) John E. Lobbia, (2) Larry G. Garberding and (3) Anthony F. Earley, Jr. (Exhibit 19-7 to Form 10-Q for quarter ended March 31, 1992). *10(n)- Form of Indemnification Agreement, dated March 17, 1992, between the Company and (1) Terence E. Adderley, (2) Wendell W. Anderson, Jr., (3) Walter J. McCarthy, Jr., (4) Lillian Bauder, (5) David Bing, (6) Alan E. Schwartz, (7) William Wegner, (8) Theodore S. Leipprandt, (9) Patricia S. Longe, (10) Eugene A. Miller, (11) Dean E. Richardson, (12) David M. Gates, and (13) Otis M. Smith (Exhibit 19-8 to Form 10-Q for quarter ended March 31, 1992). *10(o)- Supplemental Long Term Disability Plan, dated November 5, 1991 (Exhibit 10-32 to Form 10-K for year ended December 31, 1991). *10(p)- Executive Vehicle Program, dated October 1, 1993 (Exhibit 10-47 to Form 10-Q for quarter ended September 30, 1993). *10(q)- Amendment No. 1 to Executive Vehicle Plan, November 1993 (Exhibit 10-58 to Form 10-K for year ended December 31, 1993). *10(r)- Certain arrangements pertaining to the employment of Gerard M. Anderson (Exhibit 10-40 to Form 10-K for year ended December 31, 1993). *10(s)- Restated Management Supplemental Benefit Plan, January 1994 (Exhibit 10-57 to Form 10-K for year ended December 31, 1993). 99(a)- Belle River Participation Agreement between the Company and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-5 to Registration No. 2-81501). 56 57 Exhibit Number ------- 99(b)- Belle River Transmission Ownership and Operating Agreement between the Company and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501.) 99(c)- 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance Energy Company (an unaffiliated company) ("Renaissance") and the Company (Exhibit 99-6 to Registration No. 33-50325). 99(d)- First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between the Company and Renaissance (Exhibit 99-7 to Registration No. 33-50325). 99(e)- Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between the Company and Renaissance (Exhibit 99-8 to Registration No. 33-50325). 99(f)- Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between The Detroit Edison Company and Renaissance Energy Company (Exhibit 99-21 to Form 10-Q for quarter ended September 30, 1994). 99(g)- $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among the Company, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-12 to Registration No. 33-50325). 99(h)- First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for quarter ended September 30, 1994). 99(i)- $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among the Company, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325). 99(j)- 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between the Company and Renaissance (Exhibit 99-9 to Registration No. 33-50325). 99(k)- First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between the Company and Renaissance (Exhibit 99-10 to Registration No. 33-50325). 57 58 Exhibit Number ------- 99(l)- Second Amendment, dated as of September 1, 1993, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract between the Company and Renaissance (Exhibit 99-11 to Registration No. 33-50325). 99(m)- First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q for quarter ended September 30, 1994). 99(n)- Master Trust Agreement, dated as of June 30, 1994, between the Company and Fidelity Management Trust Company relating to the Employes Savings Plans (Exhibit 4-167 to Form 10-Q for quarter ended June 30, 1994). (b) Registrant did not file any reports on Form 8-K during the fourth quarter of 1994. (c) * Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit to this report. 58 59 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Additions Balance at ------------------------- Balance Beginning Charged to Charged at End of Costs and to Other of Description Period Expenses Accounts(a) Deductions(b) Period ----------- ---------- ---------- ----------- ------------- ------- (Thousands) YEAR 1994 Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet) . . . . . . . $34,000 $11,585 $3,246 $(18,831) $30,000 YEAR 1993 Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet) . . . . . . . $32,000 $21,953 $2,752 $(22,705) $34,000 YEAR 1992 Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet) . . . . . . . $23,000 $31,834 $2,127 $(24,961) $32,000
----------------------- (a) Collection of accounts previously written off. (b) Uncollectible accounts written off. 59 60 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE DETROIT EDISON COMPANY ---------------------------------- (Registrant) By /s/ JOHN E. LOBBIA By /s/ LARRY G. GARBERDING ---------------------------------- ---------------------------------- John E. Lobbia Larry G. Garberding Chairman of the Board, Executive Vice President, Chief Executive Chief Financial Officer and Director Officer and Director By /s/ ANTHONY F. EARLEY, JR. By /s/ RONALD W. GRESENS --------------------------------- ---------------------------------- Anthony F. Earley, Jr. Ronald W. Gresens President and Chief Operating Vice President and Controller Officer and Director By /s/ TERENCE E. ADDERLEY By /s/ WALTER J. McCARTHY, JR. --------------------------------- ---------------------------------- Terence E. Adderley, Director Walter J. McCarthy, Jr., Director By /s/ WENDELL W. ANDERSON, JR. By /s/ EUGENE A. MILLER --------------------------------- ---------------------------------- Wendell W. Anderson, Jr., Director Eugene A. Miller, Director By /s/ LILLIAN BAUDER By --------------------------------- ---------------------------------- Lillian Bauder, Director Dean E. Richardson, Director By /s/ DAVID BING By /s/ ALAN E. SCHWARTZ --------------------------------- ---------------------------------- David Bing, Director Alan E. Schwartz, Director By /s/ THEODORE S. LEIPPRANDT By /s/ WILLIAM WEGNER ---------------------------------- --------------------------------- Theodore S. Leipprandt, Director William Wegner, Director By /s/ PATRICIA S. LONGE ---------------------------------- Patricia S. Longe, Director Date: March 27, 1995 60 61 THE DETROIT EDISON COMPANY ANNUAL REPORT ON FORM 10-K FOR YEAR ENDED DECEMBER 31, 1994 File No. 1-2198 EXHIBIT INDEX Exhibit Page Number Number ------- ------ Exhibits Filed Herewith 4-169 - Supplemental Indenture, dated as of December 1, 1994, establishing the Series KKP No. 15 and 1994 Series DP Mortgage Bonds. 4-170 - Supplemental Indenture, dated as of October 15, 1985, establishing the Series KKP No. 9 Mortgage Bonds. 4-171 - Supplemental Indenture, dated as of July 15, 1989, establishing the Series KKP No. 10 Mortgage Bonds. 4-172 - Supplemental Indenture, dated as of December 1, 1989, establishing the Series KKP No. 11 and 1989 Series BP Mortgage Bonds. 4-173 - Supplemental Indenture, dated as of February 15, 1990, establishing the 1990 Series A, 1990 Series B, 1990 Series C, 1990 Series D, 1990 Series E and 1990 Series F Mortgage Bonds. *10-56 - Amended and Restated 1994 Officers' Shareholder Value Improvement Plan (1994 and subsequent years, January 23, 1995). *10-57 - 1995 Officers' Shareholder Value Improvement Plan (January 23, 1995). *10-58 - Plan for Deferring the Payment of Directors Fees (January 23, 1995). *10-59 - Retirement Plan for Non-Employe Directors (February 27, 1995). 11-21 - Primary and Fully Diluted Earnings Per Share of Common Stock. 12-26 - Computation of Ratio of Earnings to Fixed Charges. 12-27 - Computation of Ratio of Earnings to Fixed Charges and Preferred and Preference Stock Dividend Requirements. 23-7 - Consent of Independent Accountants. 1 62 Exhibit Page Number Number ------- ------ Exhibits incorporated herein by reference. See Page Numbers ______ for location of Exhibits Incorporated By Reference 4(a) - Restated Articles of Incorporation of the Company, as filed December 10, 1991 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau. 4(b) - Certificate containing Resolution of the Board of Directors establishing the Cumulative Preferred Stock, 7.75% Series, as filed February 22, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau. 4(c) - Certificate containing resolution of the Board of Directors establishing the Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau. 4(d) - By-Laws of the Company as amended November 25, 1991. 4(e) - Mortgage and Deed of Trust, dated as of October 1, 1924, between the Company and Bankers Trust Company as Trustee and indentures supplemental thereto, dated as of the dates indicated below: September 1, 1947 October 1, 1968 63 Exhibit Number ------- November 15, 1971 January 15, 1973 June 1, 1978 June 30, 1982 August 15, 1982 November 30, 1987 November 1, 1990 April 1, 1991 May 1, 1991 May 15, 1991 September 1, 1991 November 1, 1991 January 15, 1992 February 29, 1992 April 15, 1992 July 15, 1992 July 31, 1992 November 30, 1992 January 1, 1993 March 1, 1993 March 15, 1993 April 1, 1993 April 26, 1993 May 31, 1993 June 30, 1993 (1993 Series AP) 64 Exhibit Number ------- June 30, 1993 (1993 Series H) September 15, 1993 March 1, 1994 June 15, 1994 August 15, 1994 4(f) Collateral Trust Indenture (notes), dated as of June 30, 1993. 4(g) First Supplemental Note Indenture, dated as of June 30, 1993. 4(h) Second Supplemental Note Indenture, dated as of September 15, 1993. 4(i) Third Supplemental Note Indenture, dated as of August 15, 1994. 4(j) Amended and Restated Standby Note Purchase Credit Facility, dated as of April 26, 1994, among The Detroit Edison Company, The Bank of New York, The Toronto-Dominion Bank, acting through its Houston Agency, Toronto-Dominion (Texas), Inc., as Administrative Agent and Citicorp Securities, Inc., as Remarketing Agent. 4(k) Standby Note Purchase Credit Facility, dated as of August 17, 1994, among The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative Agent, Bank of America, The Bank of New York, The Fuji Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents. 65 Exhibit Number ------- *10(a)- Form of Indemnification Agreement between the Company and (1) Frank E. Agosti, (2) Gerard M. Anderson, (3) Robert J. Buckler, (4) Malcolm G. Dade, Jr., (5) Ronald W. Gresens, (6) Leslie L. Loomans, (7) S. Martin Taylor, (8) Saul J. Waldman, (9) Susan M. Beale, (10) Frederick S. Karwacki, (11) Douglas R. Gipson, (12) Robert J. Horn, (13) Thomas A. Hughes, (14) Christopher C. Nern, (15) Ronald J. Gdowski, (16) Elaine M. Godfrey, (17) Allen W. Anning, (18) Christopher C. Arvani, (19) James R. McGillivary, (20) Thomas J. Howlin, (21) Donald J. Brett, (22) Michael E. Champley, (23) T. Michael Holton, and (24) Haven E. Cockerham. *10(b)- 1991 Shareholder Value Improvement Plan - A, as amended effective January 25, 1993. *10(c)- 1990 Shareholder Value Improvement Plan - A, as amended January 25, 1993. *10(d)- 1994 Officers' Shareholder Value Improvement Plan, January, 1994. *10(e)- Certain Arrangements Pertaining to the Employment of S. Martin Taylor. *10(f)- Certain arrangements pertaining to the employment of Anthony F. Earley, Jr. *10(g)- Amended and Restated Savings Separation Plan, June 1994. *10(h)- Certain arrangements pertaining to the employment of Haven E. Cockerham. *10(i)- Key Employe Deferred Compensation Plan (January 1990). 66 Exhibit Number ------- *10(j)- Retirement Reparation Plan for Certain Employes of The Detroit Edison Company (as amended through May 22, 1989). *10(k)- Benefit Equalization Plan for Certain Employes of The Detroit Edison Company (as amended through May 22, 1989). *10(l)- Certain Arrangements Pertaining to the Employment of Larry G. Garberding. *10(m)- Form of Indemnification Agreement, between the Company and (1) John E. Lobbia, (2) Larry G. Garberding and (3) Anthony F. Earley, Jr. *10(n)- Form of Indemnification Agreement, dated March 17, 1992, between the Company and (1) Terence E. Adderley, (2) Wendell W. Anderson, Jr., (3) Walter J. McCarthy, Jr., (4) Lillian Bauder, (5) David Bing, (6) Alan E. Schwartz, (7) William Wegner, (8) Theodore S. Leipprandt, (9) Patricia S. Longe, (10) Eugene A. Miller, (11) Dean E. Richardson, (12) David M. Gates, and (13) Otis M. Smith. *10(o)- Supplemental Long Term Disability Plan, dated November 5, 1991. *10(p)- Executive Vehicle Program, dated October 1, 1993. *10(q)- Amendment No. 1 to Executive Vehicle Plan, November 1993. *10(r)- Certain arrangements pertaining to the employment of Gerard M. Anderson. *10(s)- Restated Management Supplemental Benefit Plan, January 1994. 99(a)- Belle River Participation Agreement between the Company and Michigan Public Power Agency, dated as of December 1, 1982. 67 Exhibit Number ------- 99(b)- Belle River Transmission Ownership and Operating Agreement between the Company and Michigan Public Power Agency, dated as of December 1, 1982. 99(c)- 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance Energy Company (an unaffiliated company) ("Renaissance") and the Company. 99(d)- First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between the Company and Renaissance. 99(e)- Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between the Company and Renaissance. 99(f)- Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between The Detroit Edison Company. 99(g)- $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among the Company, Renaissance and Barclays Bank PLC, New York Branch, as Agent. 99(h)- First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(i)- $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among the Company, Renaissance and Barclays Bank PLC, New York Branch, as Agent. 99(j)- 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between the Company and Renaissance. 99(k)- First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between the Company and Renaissance. 68 Exhibit Number ------- 99(l)- Second Amendment, dated as of September 1, 1993, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract between the Company and Renaissance. 99(m)- First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as agent. 99(n)- Master Trust Agreement, dated as of June 30, 1994, between the Company and Fidelity Management Trust Company relating to the Employes Savings Plans. * Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit to this report. EX-4.169 2 EXHIBIT 4-169 1 EXHIBIT 4-169 EXECUTED IN COUNTERPARTS OF WHICH THIS IS COUNTERPART NO. . THE DETROIT EDISON COMPANY (2000 Second Avenue, Detroit, Michigan 48226) TO BANKERS TRUST COMPANY (Four Albany Street, New York, New York 10015) AS TRUSTEE ------------------------ INDENTURE Dated as of December 1, 1994 ------------------------ SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST DATED AS OF OCTOBER 1, 1924 PROVIDING FOR (A) GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 15, DUE SEPTEMBER 1, 2004, (B) GENERAL AND REFUNDING MORTGAGE BONDS, 1994 SERIES DP, DUE DECEMBER 1, 2004 AND (C) RECORDING AND FILING DATA 2 i TABLE OF CONTENTS* ------------------------
PAGE --- PARTIES.............................................................. 1 RECITALS Original Indenture and Supplementals............................... 1 Issue of Bonds under Indenture..................................... 1 Bonds heretofore issued............................................ 1 Reason for creation of new series.................................. 5 Bonds to be Series KKP No. 15 and 1994 Series DP................... 5 Further Assurance.................................................. 5 Authorization of Supplemental Indenture............................ 5 Consideration for Supplemental Indenture........................... 6 PART I. CREATION OF THREE HUNDRED SIXTEENTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 15 Sec. 1. Terms of Bonds of Series KKP No. 15.......................... 6 Sec. 2. Redemption of Bonds of Series KKP No. 15..................... 8 Sec. 3. Redemption in Event of Acceleration.......................... 8 Sec. 4. Form of Bonds of Series KKP No. 15........................... 9 Form of Trustee's Certificate................................ 14 PART II. CREATION OF THREE HUNDRED SEVENTEENTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, 1994 SERIES DP Sec. 1. Terms of Bonds of 1994 Series DP............................. 14 Sec. 2. Redemption of Bonds of 1994 Series DP........................ 16 Sec. 3. Redemption and Payment in Event of AMBAC Payment............. 16 Sec. 4. Form of Bonds of 1994 Series DP.............................. 17 Form of Trustee's Certificate................................ 21 PART III. RECORDING AND FILING DATA Recording and filing of Original Indenture........................... 21 Recording and filing of Supplemental Indentures...................... 21 Recording of Certificates of Provision for Payment................... 28 PART IV. THE TRUSTEE Terms and conditions of acceptance of trust by Trustee............... 28 PART V. MISCELLANEOUS Confirmation of Section 318(c) of Trust Indenture Act................ 28 Execution in Counterparts............................................ 28 Testimonium.......................................................... 29 Execution............................................................ 29 Acknowledgements..................................................... 29 Affidavit as to consideration and good faith......................... 31
------------------------ * This Table of Contents shall not have any bearing upon the interpretation of any of the terms or provisions of this Indenture. 3 1 PARTIES SUPPLEMENTAL INDENTURE, dated as of the first day of December, in the year one thousand nine hundred and ninety-four, between THE DETROIT EDISON COMPANY, a corporation organized and existing under the laws of the State of Michigan and a transmitting utility (hereinafter called the "Company"), party of the first part, and BANKERS TRUST COMPANY, a corporation organized and existing under the laws of the State of New York, having its corporate trust office at Four Albany Street, in the Borough of Manhattan, The City and State of New York, as Trustee under the Mortgage and Deed of Trust hereinafter mentioned (hereinafter called the "Trustee"), party of the second part. ORIGINAL WHEREAS, the Company has heretofore executed and delivered its Mortgage INDENTURE AND and Deed of Trust (hereinafter referred to as the "Original Indenture"), SUPPLEMENTALS. dated as of October 1, 1924, to the Trustee, for the security of all bonds of the Company outstanding thereunder, and pursuant to the terms and provisions of the Original Indenture, indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, June 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, November 1, 1936, February 1, 1940, December 1, 1940, September 1, 1947, March 1, 1950, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, June 1, 1959, December 1, 1966, October 1, 1968, December 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, December 15, 1975, February 1, 1976, June 15, 1976, July 15, 1976, February 15, 1977, March 1, 1977, June 15, 1977, July 1, 1977, October 1, 1977, June 1, 1978, October 15, 1978, March 15, 1979, July 1, 1979, September 1, 1979, September 15, 1979, January 1, 1980, April 1, 1980, August 15, 1980, August 1, 1981, November 1, 1981, June 30, 1982, August 15, 1982, June 1, 1983, October 1, 1984, May 1, 1985, May 15, 1985, October 15, 1985, April 1, 1986, August 15, 1986, November 30, 1986, January 31, 1987, April 1, 1987, August 15, 1987, November 30, 1987, June 15, 1989, July 15, 1989, December 1, 1989, February 15, 1990, November 1, 1990, April 1, 1991, May 1, 1991, May 15, 1991, September 1, 1991, November 1, 1991, January 15, 1992, February 29, 1992, April 15, 1992, July 15, 1992, July 31, 1992, November 30, 1992, December 15, 1992, January 1, 1993, March 1, 1993, March 15, 1993, April 1, 1993, April 26, 1993, May 31, 1993, June 30, 1993, June 30, 1993, September 15, 1993, March 1, 1994, June 15, 1994 and August 15, 1994 supplemental to the Original Indenture, have heretofore been entered into between the Company and the Trustee (the Original Indenture and all indentures supplemental thereto together being hereinafter sometimes referred to as the "Indenture"); and ISSUE OF WHEREAS, the Indenture provides that said bonds shall be issuable in one BONDS UNDER or more series, and makes provision that the rates of interest and dates INDENTURE. for the payment thereof, the date of maturity or dates of maturity, if of serial maturity, the terms and rates of optional redemption (if redeemable), the forms of registered bonds without coupons of any series and any other provisions and agreements in respect thereof, in the Indenture provided and permitted, as the Board of Directors may determine, may be expressed in a supplemental indenture to be made by the Company to the Trustee thereunder; and BONDS HERETOFORE WHEREAS, bonds in the principal amount of Eight billion two hundred ISSUED. ninety-eight million five hundred seventy-seven thousand dollars ($8,298,577,000) have heretofore been issued under the indenture as follows, viz: (1) Bonds of Series A -- Principal Amount $26,016,000, (2) Bonds of Series B -- Principal Amount $23,000,000, (3) Bonds of Series C -- Principal Amount $20,000,000, (4) Bonds of Series D -- Principal Amount $50,000,000, (5) Bonds of Series E -- Principal Amount $15,000,000, (6) Bonds of Series F -- Principal Amount $49,000,000, (7) Bonds of Series G -- Principal Amount $35,000,000, (8) Bonds of Series H -- Principal Amount $50,000,000, (9) Bonds of Series I -- Principal Amount $60,000,000, (10) Bonds of Series J -- Principal Amount $35,000,000, (11) Bonds of Series K -- Principal Amount $40,000,000,
4 2 (12) Bonds of Series L -- Principal Amount $24,000,000, (13) Bonds of Series M -- Principal Amount $40,000,000, (14) Bonds of Series N -- Principal Amount $40,000,000, (15) Bonds of Series O -- Principal Amount $60,000,000, (16) Bonds of Series P -- Principal Amount $70,000,000, (17) Bonds of Series Q -- Principal Amount $40,000,000, (18) Bonds of Series W -- Principal Amount $50,000,000, (19) Bonds of Series AA -- Principal Amount $100,000,000, (20) Bonds of Series BB -- Principal Amount $50,000,000, (21) Bonds of Series CC -- Principal Amount $50,000,000, (22) Bonds of Series UU -- Principal Amount $100,000,000, (23-31) Bonds of Series DDP Nos. 1-9 -- Principal Amount $14,305,000, (32-45) Bonds of Series FFR Nos. 1-14 -- Principal Amount $45,600,000, (46-67) Bonds of Series GGP Nos. 1-22 -- Principal Amount $42,300,000, (68) Bonds of Series HH -- Principal Amount $50,000,000, (69-90) Bonds of Series IIP Nos. 1-22 -- Principal Amount $3,750,000, (91-98) Bonds of Series JJP Nos. 1-8 -- Principal Amount $6,850,000, (99-106) Bonds of Series KKP Nos. 1-8 -- Principal Amount $14,890,000, (107-121) Bonds of Series LLP Nos. 1-15 -- Principal Amount $8,850,000, (122-142) Bonds of Series NNP Nos. 1-21 -- Principal Amount $47,950,000, (143-160) Bonds of Series OOP Nos. 1-18 -- Principal Amount $18,880,000, (161-179) Bonds of Series QQP Nos. 1-19 -- Principal Amount $13,650,000, (180-194) Bonds of Series TTP Nos. 1-15 -- Principal Amount $3,800,000, (195) Bonds of 1980 Series A -- Principal Amount $50,000,000, (196-220) Bonds of 1980 Series CP Nos. 1-25 -- Principal Amount $35,000,000, (221-231) Bonds of 1980 Series DP Nos. 1-11 -- Principal Amount $10,750,000, (232-247) Bonds of 1981 Series AP Nos. 1-16 -- Principal Amount $124,000,000, (248) Bonds of 1985 Series A -- Principal Amount $35,000,000, (249) Bonds of 1985 Series B -- Principal Amount $50,000,000, (250) Bonds of Series PP -- Principal Amount $70,000,000, (251) Bonds of Series RR -- Principal Amount $70,000,000, (252) Bonds of Series EE -- Principal Amount $50,000,000, (253-254) Bonds of Series MMP and MMP No. 2 -- Principal Amount $5,430,000, (255) Bonds of Series T -- Principal Amount $75,000,000, (256) Bonds of Series U -- Principal Amount $75,000,000, (257) Bonds of 1986 Series B -- Principal Amount $100,000,000, (258) Bonds of 1987 Series D -- Principal Amount $250,000,000, (259) Bonds of 1987 Series E -- Principal Amount $150,000,000, (260) Bonds of 1987 Series C -- Principal Amount $225,000,000, (261) Bonds of Series V -- Principal Amount $100,000,000, (262) Bonds of Series SS -- Principal Amount $150,000,000, (263) Bonds of 1980 Series B -- Principal Amount $100,000,000, (264) Bonds of 1986 Series C -- Principal Amount $200,000,000, (265) Bonds of 1986 Series A -- Principal Amount $200,000,000, (266) Bonds of 1987 Series B -- Principal Amount $175,000,000, (267) Bonds of Series X -- Principal Amount $100,000,000, (268) Bonds of 1987 Series F -- Principal Amount $200,000,000, (269) Bonds of 1987 Series A -- Principal Amount $300,000,000, (270) Bonds of Series Y -- Principal Amount $60,000,000, (271) Bonds of Series Z -- Principal Amount $100,000,000, (272) Bonds of 1989 Series A -- Principal Amount $300,000,000, (273) Bonds of 1984 Series AP -- Principal Amount $2,400,000 (274) Bonds of 1984 Series BP -- Principal Amount $7,750,000 all of which have either been retired and cancelled, or no longer represent obligations of the Company, having been called for redemption and funds necessary to effect the
5 3 payment, redemption and retirement thereof having been deposited with the Trustee as a special trust fund to be applied for such purpose; (275) Bonds of Series R in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (276) Bonds of Series S in the principal amount of One hundred fifty million dollars ($150,000,000), all of which are outstanding at the date hereof; (277-282) Bonds of Series KKP Nos. 9-14 in the principal amount of One hundred ninety-three million two hundred ninety thousand dollars ($193,290,000), all of which are outstanding at the date hereof; (283) Bonds of 1989 Series BP in the principal amount of Sixty-six million five hundred sixty-five thousand dollars ($66,565,000), all of which are outstanding at the date hereof; (284) Bonds of 1990 Series A in the principal amount of One hundred ninety-four million six hundred forty-nine thousand dollars ($194,649,000) of which Thirty-one million three hundred ninety-five thousand dollars ($31,395,000) principal amount have heretofore been retired and One hundred sixty-three million two hundred fifty-four thousand dollars ($163,254,000) principal amount are outstanding at the date hereof; (285) Bonds of 1990 Series B in the principal amount of Two hundred fifty-six million nine hundred thirty-two thousand dollars ($256,932,000) of which Forty-seven million five hundred eighty thousand dollars ($47,580,000) principal amount have heretofore been retired and Two hundred nine million three hundred fifty-two thousand dollars ($209,352,000) principal amount are outstanding at the date hereof; (286) Bonds of 1990 Series C in the principal amount of Eighty-five million four hundred seventy-five thousand dollars ($85,475,000) of which Seventeen million ninety-five thousand dollars ($17,095,000) principal amount have heretofore been retired and Sixty-eight million three hundred eighty thousand dollars ($68,380,000) principal amount are outstanding at the date hereof; (287) Bonds of 1991 Series AP in the principal amount of Thirty-two million three hundred seventy-five thousand dollars ($32,375,000), all of which are outstanding at the date hereof; (288) Bonds of 1991 Series BP in the principal amount of Twenty-five million nine hundred ten thousand dollars ($25,910,000), all of which are outstanding at the date hereof; (289) Bonds of 1991 Series CP in the principal amount of Thirty-two million eight hundred thousand dollars ($32,800,000), all of which are outstanding at the date hereof; (290) Bonds of 1991 Series DP in the principal amount of Thirty-seven million six hundred thousand dollars ($37,600,000), all of which are outstanding at the date hereof; (291) Bonds of 1991 Series EP in the principal amount of Forty-one million four hundred eighty thousand dollars ($41,480,000), all of which are outstanding at the date hereof; (292) Bonds of 1991 Series FP in the principal amount of Ninety-eight million three hundred seventy-five thousand dollars ($98,375,000), all of which are outstanding at the date hereof; (293) Bonds of 1992 Series BP in the principal amount of Twenty million nine hundred seventy-five thousand dollars ($20,975,000), all of which are outstanding at the date hereof; (294) Bonds of 1992 Series AP in the principal amount of Sixty-six million dollars ($66,000,000), all of which are outstanding at the date hereof; (295) Bonds of 1992 Series D in the principal amount of Three hundred million dollars ($300,000,000), of which Ten million dollars (10,000,000) principal amount have
6 4 heretofore been retired and Two hundred ninety million ($290,000,000) principal amount are outstanding at the date hereof; (296) Bonds of 1992 Series CP in the principal amount of Thirty-five million dollars ($35,000,000), all of which are outstanding at the date hereof; (297) Bonds of 1992 Series E in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (298) Bonds of 1989 Series BP No. 2 in the principal amount of Thirty-six million dollars ($36,000,000), all of which are outstanding at the date hereof; (299) Bonds of 1993 Series C in the principal amount of Two hundred twenty-five million dollars ($225,000,000), all of which are outstanding at the date hereof; (300) Bonds of 1993 Series B in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (301) Bonds of 1993 Series E in the principal amount of Four hundred million dollars ($400,000,000), of which Ten million dollars ($10,000,000) principal amount have heretofore been retired and Three hundred ninety million ($390,000,000) principal amount are outstanding at the date hereof; (302) Bonds of 1993 Series D in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (303) Bonds of 1993 Series FP in the principal amount of Five million six hundred eighty-five thousand dollars ($5,685,000), all of which are outstanding at the date hereof; (304) Bonds of 1993 Series G in the principal amount of Two hundred twenty-five million dollars ($225,000,000), all of which are outstanding at the date hereof; (305) Bonds of 1993 Series J in the principal amount of Three hundred million dollars ($300,000,000), of which Thirty million dollars ($30,000,000) principal amount have heretofore been retired and Two hundred seventy million ($270,000,000) principal amount are outstanding at the date hereof; (306) Bonds of 1993 Series IP in the principal amount of Five million eight hundred twenty-five thousand dollars ($5,825,000), all of which are outstanding at the date hereof; (307) Bonds of 1993 Series AP in the principal amount of Sixty-five million dollars ($65,000,000), all of which are outstanding at the date hereof; (308) Bonds of 1993 Series H in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (309) Bonds of 1993 Series K in the principal amount of One hundred sixty million dollars ($160,000,000), all of which are outstanding at the date hereof; (310) Bonds of 1994 Series AP in the principal amount of Seven million five hundred thirty-five thousand dollars ($7,535,000), all of which are outstanding at the date hereof; (311) Bonds of 1994 Series BP in the principal amount of Twelve million nine hundred thirty-five thousand dollars ($12,935,000), all of which are outstanding at the date hereof; (312) Bonds of 1994 Series C in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; and, accordingly, of the bonds so issued, Three billion four hundred eighty-four million three hundred thirty-six thousand dollars ($3,484,336,000) principal amount are outstanding at the date hereof; and WHEREAS, the County of Monroe, Michigan has agreed to issue and sell $6,300,000 principal amount of its Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1994 so as
7 5 to provide funds the purchase and construction of certain pollution control facilities installed in the Company's Monroe and Fermi 2 Power Plants; and WHEREAS, the Company has entered into an Installment Sales Contract, dated as of March 1, 1977, as previously amended and amended as of December 1, 1994 in order to purchase certain pollution control facilities, and pursuant to such Installment Sales Contract, as amended, the Company has agreed to issue its General and Refunding Mortgage Bonds under the Indenture in order further to secure its obligations under such Installment Sales Contract, as amended; and WHEREAS, the County of Monroe, Michigan has agreed to issue and sell $23,700,000 principal amount of its Pollution Control Revenue Bonds (The Detroit Edison Company Project), Series A-1994 so as to provide funds for the purchase and construction of certain pollution control facilities installed in the Company's Fermi 2 Power Plant; and subject to certain conditions, AMBAC Indemnity Corporation, a Wisconsin-domiciled stock insurance company, has agreed to issue its municipal bond insurance policy guaranteeing the payment of principal and interest on the Series A-1994 Bonds; and WHEREAS, the Company, in order to induce AMBAC to issue its municipal bond insurance policy relating to the Series A-1994 Bonds, has agreed to issue its General and Refunding Mortgage Bonds under the Indenture to AMBAC; and WHEREAS, for such purposes the Company desires to issue new series of bonds to be issued under the Indenture and to be authenticated and delivered pursuant to Section 8 of Article III of the Indenture; and BONDS TO BE WHEREAS, the Company desires by this Supplemental Indenture to create SERIES KKP such new series of bonds, to be designated "General and Refunding Mortgage NO. 15 AND 1994 Bonds, Series KKP No. 15" and "General and Refunding Mortgage Bonds, 1994 SERIES DP. Series DP"; and FURTHER WHEREAS, the Original Indenture, by its terms, includes in the property ASSURANCE. subject to the lien thereof all of the estates and properties, real, personal and mixed, rights, privileges and franchises of every nature and kind and wheresoever situate, then or thereafter owned or possessed by or belonging to the Company or to which it was then or at any time thereafter might be entitled in law or in equity (saving and excepting, however, the property therein specifically excepted or released from the lien thereof), and the Company therein covenanted that it would, upon reasonable request, execute and deliver such further instruments as may be necessary or proper for the better assuring and confirming unto the Trustee all or any part of the trust estate, whether then or thereafter owned or acquired by the Company (saving and excepting, however, property specifically excepted or released from the lien thereof); and AUTHORIZATION WHEREAS, the Company in the exercise of the powers and authority OF SUPPLEMENTAL conferred upon and reserved to it under and by virtue of the provisions of INDENTURE. the Indenture, and pursuant to resolutions of its Board of Directors has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture in the form hereof for the purposes herein provided; and WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized;
8 6 CONSIDERATION NOW, THEREFORE, THIS INDENTURE WITNESSETH: That The Detroit Edison FOR SUPPLEMENTAL Company, in consideration of the premises and of the covenants contained INDENTURE. in the Indenture and of the sum of One Dollar ($1.00) and other good and valuable consideration to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trusts under the Original Indenture and in said indentures supplemental thereto as follows: PART I. CREATION OF THREE HUNDRED SIXTEENTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 15 CERTAIN TERMS SECTION 1. The Company hereby creates the Three hundred sixteenth series OF BONDS OF of bonds to be issued under and secured by the Original Indenture as SERIES KKP NO. 15. amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, Series KKP No. 15" (elsewhere herein referred to as the "bonds of Series KKP No. 15"). The aggregate principal amount of bonds of Series KKP No. 15 shall be limited to six million three hundred thousand dollars ($6,300,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. Each bond of Series KKP No. 15 is to be irrevocably assigned to, and registered in the name of, Comerica Bank, successor to Manufacturers Bank, N.A., formerly known as Manufacturers National Bank of Detroit, as trustee, or a successor trustee (said trustee or any successor trustee being hereinafter referred to as the "Monroe Trust Indenture Trustee"), under the Trust Indenture, dated as of March 1, 1977, as amended September 1, 1979, October 15, 1985, July 1, 1989, December 1, 1989, November 1, 1990, May 1, 1992, December 15, 1992 and December 1, 1994 (hereinafter called the "Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and the Monroe Trust Indenture Trustee, to secure payment of the County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1994 (hereinafter called the "Monroe Revenue Bonds"), issued by Monroe under the Monroe Trust Indenture, the proceeds of which (other than any accrued interest thereon) have been provided for the acquisition and construction of certain pollution control facilities which the Company has agreed to purchase pursuant to the provisions of the Installment Sales Contract, dated as of March 1, 1977, as amended as of September 1, 1979, as of October 15, 1985, as of July 1, 1989, as of December 1, 1989, as of November 1, 1990, as of May 1, 1992 as of December 15, 1992 and as of December 1, 1994 (hereinafter called the "Monroe Contract"), between the Company and Monroe. The bonds of Series KKP No. 15 shall be issued as registered bonds without coupons in denominations of a multiple of $5,000. The bonds of Series KKP No. 15 shall be issued in the aggregate principal amount of $6,300,000, shall mature on September 1, 2004 and shall bear interest, payable semi-annually on March 1 and September 1 of each year (commencing March 1, 1995), at the rate of 6.35%, until the principal thereof shall have become due and payable and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. The bonds of Series KKP No. 15 shall be payable as to principal, premium, if any, and interest as provided in the Indenture, but only to the extent and in the manner herein provided. The bonds of Series KKP No. 15 shall be payable, both as to principal and interest, at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts.
9 7 Except as provided herein, each bond of Series KKP No. 15 shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the March 1 or September 1 next preceding the date thereof to which interest has been paid on bonds of Series KKP No. 15, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication, or unless the date of authentication is prior to March 1, 1995, in which case interest shall be payable from December 1, 1994. The bonds of Series KKP No. 15 in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denominations of bonds of Series KKP No. 15). Until bonds of Series KKP No. 15 in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of Series KKP No. 15 in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of Series KKP No. 15, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of Series KKP No. 15, but with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company. Bonds of Series KKP No. 15 shall not be assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney. Bonds of Series KKP No. 15 shall in the same manner be exchangeable for a like aggregate principal amount of bonds of Series KKP No. 15 upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of Series KKP No. 15, during any period of ten days next preceding any redemption date for such bonds. Bonds of Series KKP No. 15, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or as may be specified in the Monroe Contract. Upon payment of the principal or premium, if any, or interest on the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise, or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of Series KKP No. 15 in a principal amount equal to the principal amount of such Monroe Revenue Bonds, shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds shall be surrendered for cancellation or presented for appropriate notation to the Trustee.
10 8 REDEMPTION SECTION 2. Bonds of Series KKP No. 15 shall be redeemed on the OF BONDS OF respective dates and in the respective principal amounts which correspond SERIES KKP NO. 15. to the redemption dates for, and the principal amounts to be redeemed of, the Monroe Revenue Bonds. In the event the Company elects to redeem any Monroe Revenue Bonds prior to maturity in accordance with the provisions of the Monroe Trust Indenture, the Company shall on the same date redeem bonds of Series KKP No. 15 in principal amounts and at redemption prices corresponding to the Monroe Revenue Bonds so redeemed. The Company agrees to give the Trustee notice of any such redemption of bonds of Series KKP No. 15 on the same date as it gives notice of redemption of Monroe Revenue Bonds to the Monroe Trust Indenture Trustee. REDEMPTION SECTION 3. In the event of an Event of Default under the Monroe Trust OF BONDS OF SERIES Indenture and the acceleration of all Monroe Revenue Bonds, the bonds of KKP NO. 15 IN Series KKP No. 15 shall be redeemable in whole upon receipt by the Trustee EVENT OF of a written demand (hereinafter called a "Redemption Demand") from the ACCELERATION Monroe Trust Indenture Trustee stating that there has occurred under the OF MONROE Monroe Trust Indenture both an Event of Default and a declaration of REVENUE BONDS. acceleration of payment of principal, accrued interest and premium, if any, on the Monroe Revenue Bonds, specifying the last date to which interest on the Monroe Revenue Bonds has been paid (such date being hereinafter referred to as the "Initial Interest Accrual Date") and demanding redemption of the bonds of said series. The Trustee shall, within five days after receiving such Redemption Demand, mail a copy thereof to the Company marked to indicate the date of its receipt by the Trustee. Promptly upon receipt by the Company of such copy of a Redemption Demand, the Company shall fix a date on which it will redeem the bonds of said series so demanded to be redeemed (hereinafter called the "Demand Redemption Date"). Notice of the date fixed as the Demand Redemption Date shall be mailed by the Company to the Trustee at least ten days prior to such Demand Redemption Date. The date to be fixed by the Company as and for the Demand Redemption Date may be any date up to and including the earlier of (x) the 60th day after receipt by the Trustee of the Redemption Demand or (y) the maturity date of such bonds first occurring following the 20th day after the receipt by the Trustee of the Redemption Demand; provided, however, that if the Trustee shall not have received such notice fixing the Demand Redemption Date on or before the 10th day preceding the earlier of such dates, the Demand Redemption Date shall be deemed to be the earlier of such dates. The Trustee shall mail notice of the Demand Redemption Date (such notice being hereinafter called the "Demand Redemption Notice") to the Monroe Trust Indenture Trustee not more than ten nor less than five days prior to the Demand Redemption Date. Each bond of Series KKP No. 15 shall be redeemed by the Company on the Demand Redemption Date therefore upon surrender thereof by the Monroe Trust Indenture Trustee to the Trustee at a redemption price equal to the principal amount thereof plus accrued interest thereon at the rate specified for such bond from the Initial Interest Accrual Date to the Demand Redemption Date plus an amount equal to the aggregate premium, if any, due and payable on such Demand Redemption Date on all Monroe Revenue Bonds; provided, however, that in the event of a receipt by the Trustee of a notice that, pursuant to Section 1010 of the Monroe Trust Indenture, the Monroe Trust Indenture Trustee has terminated proceedings to enforce any right under the Monroe Trust Indenture, then any Redemption Demand shall thereby be rescinded by the Monroe Trust Indenture Trustee, and no Demand Redemption Notice shall be given, or, if already given, shall be automatically annulled; but no such rescission or annulment shall extend to or affect any subsequent default or impair any right consequent thereon. Anything herein contained to the contrary notwithstanding, the Trustee is not authorized to take any action pursuant to a Redemption Demand and such Redemption Demand shall be of no force or effect, unless it is executed in the name of the Monroe Trust Indenture Trustee by its President or one of its Vice Presidents.
11 9 FORM OF BONDS SECTION 4. The bonds of Series KKP No. 15 and the form of Trustee's OF SERIES KKP NO. Certificate to be endorsed on such bonds shall be substantially in the 15. following forms, respectively:
12 10 [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND SERIES KKP NO. 15, 6.35% DUE SEPTEMBER 1, 2004 Notwithstanding any provisions hereof or in the Indenture, this bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Trust Indenture, dated as of March 1, 1977 and amended as of September 1, 1979, October 15, 1985, July 1, 1989, December 1, 1989, November 1, 1990, May 1, 1992, December 15, 1992 and December 1, 1994 between the County of Monroe, Michigan and Comerica Bank, successor to Manufacturers Bank, N.A., formerly known as Manufacturers National Bank of Detroit, as trustee, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under said Trust Indenture. $......... No.......... THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to Comerica Bank, as trustee, or registered assigns, at the Company's office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of dollars ($ ) in lawful money of the United States of America on the date specified in the title hereof and interest thereon at the rate specified in the title hereof, in like lawful money, from December 1, 1994, and after the first payment of interest on bonds of this Series has been made or otherwise provided for, from the most recent date to which interest has been paid or otherwise provided for, semi-annually on March 1 and September 1 of each year (commencing March 1, 1995), until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Under a Trust Indenture, dated as of March 1, 1977 and amended as of September 1, 1979, October 15, 1985, July 1, 1989, December 1, 1989, November 1, 1990, May 1, 1992, December 15, 1992 and December 1, 1994 (hereinafter called the "Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and Comerica Bank, as trustee (hereinafter called the "Monroe Trust Indenture Trustee"), Monroe has issued Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1994 (hereinafter called the "Monroe Revenue Bonds"). This bond was originally issued to Monroe and simultaneously irrevocably assigned to the Monroe Trust Indenture Trustee so as to secure the payment of the Monroe Revenue Bonds. Payments of principal of, or premium, if any, or interest on, the Monroe Revenue Bonds shall constitute like payments on this bond as further provided herein and in the supplemental indenture pursuant to which this bond has been issued. Reference is hereby made to such further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon.
13 11 IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed by its Chairman of the Board and its Vice President and Treasurer, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Corporate Secretary or an Assistant Corporate Secretary with his or her manual or facsimile signature. Dated: THE DETROIT EDISON COMPANY By ---------------------------- Chairman of the Board ---------------------------- Vice President Attest: and Treasurer ---------------------------- Corporate Secretary
14 12 [FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of General and Refunding Mortgage Bonds known as Series KKP No. 15, limited to an aggregate principal amount of $6,300,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of December 1, 1994) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of December 15, 1992, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of or the interest on this bond, which in those respects is unconditional. This bond is redeemable upon the terms and conditions set forth in the Indenture, including provision for redemption upon demand of the Monroe Trust Indenture Trustee following the occurrence of an Event of Default under the Monroe Trust Indenture and the acceleration of the principal of the Monroe Revenue Bonds. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of Series KKP No. 15 (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds (or portions thereof) and interest. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.
15 13 Upon payment of the principal of, or premium, if any, or interest on, the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of Series KKP No. 15 in a principal amount equal to the principal amount of such Monroe Revenue Bonds and having both a corresponding maturity date and interest rate shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds of said series shall be surrendered for cancellation or presented for appropriate notation to the Trustee. This bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee in exchange therefor, and this bond with others in like form may in like manner be exchanged for one or more new bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture. No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture.
16 14 [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated therein, TRUSTEE'S described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By --------------------------- Authorized Officer PART II. CREATION OF THREE HUNDRED SEVENTEENTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, 1994 SERIES DP CERTAIN TERMS SECTION 1. The Company hereby creates the Three hundred seventeenth OF BONDS OF series of bonds to be issued under and secured by the Original Indenture 1994 SERIES DP. as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, 1994 Series DP" (elsewhere herein referred to as the "bonds of 1994 Series DP"). The aggregate principal amount of bonds of 1994 Series DP shall be limited to Twenty-three million seven hundred thousand dollars ($23,700,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. Each bond of 1994 Series DP is to be issued to AMBAC Indemnity Corporation ("AMBAC"), a Wisconsin-domiciled stock insurance company, and simultaneously assigned to, and registered in the name of, United States Trust Company of New York, as trustee ("Insurance Trustee") under the Municipal Bond Insurance Policy ("Series A Insurance Policy") issued by AMBAC relating to the guarantee of payment of principal and interest with respect to the County of Monroe, Michigan Pollution Control Revenue Bonds (The Detroit Edison Company Project), Series A-1994 in the aggregate principal amount of Twenty-three million seven hundred thousand dollars ($23,700,000) ("Series A-1994 Bonds"), which Series A-1994 Bonds were created and issued pursuant to a Resolution adopted by the County of Monroe, Michigan ("Monroe") on May 22, 1973, as previously amended and supplemented and as amended and supplemented by a Resolution adopted December 13, 1994 (the "Series A Resolution"), to induce AMBAC to issue the Series A Insurance Policy. Under an Installment Sales Contract, dated as of June 1, 1973, as previously amended and as amended as of December 1, 1994, between the Company and Monroe (the "Series A Contract"), the Company is obligated to make payments to NBD Bank, N.A. (or its successor), as trustee (the "Series A Trustee") for the Series A-1994-Bonds in amounts and at times equal and corresponding to the amount and time of payments of principal, premium and interest due on the Series A-1994. The bonds of 1994 Series DP shall be issued as registered bonds without coupons in denominations of a multiple of $5,000. The bonds of 1994 Series DP shall be issued in the aggregate principal amount of $23,700,000, shall mature on December 1, 2004 and shall bear interest, payable semi-annually on June 1 and December 1 of each year (commencing June 1, 1995), at the rate of 6.35%, until the principal thereof shall have become due and payable and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture.
17 15 The bonds of 1994 Series DP shall be payable as to principal, premium, if any, and interest as provided in the Indenture, but only to the extent and in the manner herein provided. The bonds of 1994 Series DP shall be payable, both as to principal and interest, at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. Except as provided herein, each bond of 1994 Series DP shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the June 1 or December 1 next preceding the date thereof to which interest has been paid on bonds of 1994 Series DP, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication, or unless the date of authentication is prior to June 1, 1995, in which case interest shall be payable from December 1, 1994. The bonds of 1994 Series DP in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denominations of bonds of 1994 Series DP). Until bonds of 1994 Series DP in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of 1994 Series DP in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 1994 Series DP, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 1994 Series DP, but with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company. Bonds of 1994 Series DP shall not be assignable or transferable except as may be required to effect a transfer to any successor insurance trustee under the Series A Insurance Policy, or, to AMBAC in the event that (1) AMBAC makes a payment to fulfill its obligations under the Series A Resolution to cure an Event of Default by the Company as may have occurred under the Series A Resolution and/or (2) an Event of Default shall have occurred under the Indenture. Any such transfer shall be made upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney. Bonds of 1994 Series DP shall in the same manner be exchangeable for a like aggregate principal amount of bonds of 1994 Series DP upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of 1994 Series DP, during any period of ten days next preceding any redemption date for such bonds. So long as the Series A Insurance Policy shall be in full force and effect, AMBAC shall have the right to direct the Trustee in all matters relating to the bonds of 1994 Series DP. Bonds of 1994 Series DP, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or as may be specified pursuant to the terms and conditions specified herein.
18 16 Upon payment by the Company as part of its obligations under the Series A Contract of the principal or premium, if any, or interest on the Series A-1994 Bonds, whether at maturity or prior to maturity by redemption or otherwise, or upon provision for the payment thereof having been made in accordance with the Series A Resolution, bonds of 1994 Series DP in a principal amount equal to the principal amount of such Series A-1994 Bonds, shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds shall be surrendered for cancellation or presented for appropriate notation to the Trustee. REDEMPTION SECTION 2. Bonds of 1994 Series DP shall be redeemed on the respective OF BONDS dates and in the respective principal amounts which correspond to the OF 1994 redemption dates for, and the principal amounts to be redeemed of, the SERIES DP. Series A-1994 Bonds. In the event the Company elects to redeem any Series A-1994 Bonds prior to maturity in accordance with the provisions of the Monroe Trust Indenture, the Company shall on the same date redeem bonds of 1994 Series DP in principal amounts and at redemption prices corresponding to the Series A-1994 Bonds so redeemed. The Company agrees to give the Trustee notice of any such redemption of bonds of 1994 Series DP on the same date as it gives notice of redemption of Series A-1994 Bonds to the Series A Trustee. REDEMPTION SECTION 3. In the event that (1) AMBAC cures an Event of Default (as OF BONDS OF defined in the Series A Resolution) by the Company under the Series A 1994 SERIES Resolution by the payment of principal or interest, or both, due on the DP IN EVENT Series A-1994 Bonds pursuant to the Series A Resolution, the bonds of 1994 OF AMBAC PAYMENT. Series DP shall be payable or redeemable, or both, in an amount corresponding to the payment of principal or interest or both, by AMBAC or (2) the Series A Trustee has called for redemption the Series A-1994 Bonds as a result of an Event of Default under the Series A Resolution and, in each case, upon receipt by the Trustee of a written demand by the AMBAC, accompanied by a certification from the Series A Trustee as to the amount and type (principal, interest or both) of payment by AMBAC ("Payment Demand"). The Trustee shall, within five days after receiving such Payment Demand, mail a copy thereof to the Company marked to indicate the date of its receipt by the Trustee. Promptly upon receipt by the Company of such copy of a Payment Demand, the Company shall be obligated to pay such amount as may be deemed to be interest and shall fix a date on which it will redeem the bonds of said series so demanded to be redeemed (hereinafter called the "Demand Redemption Date") and. Notice of the date fixed as the Demand Redemption Date shall be mailed by the Company to the Trustee at least ten days prior to such Demand Redemption Date. The date to be fixed by the Company as and for the Demand Redemption Date may be any date up to and including the earlier of (x) the 60th day after receipt by the Trustee of the Payment Demand or (y) the maturity date of such bonds first occurring following the 20th day after the receipt by the Trustee of the Payment Demand; provided, however, that if the Trustee shall not have received such notice fixing the Demand Redemption Date on or before the 10th day preceding the earlier of such dates, the Demand Redemption Date shall be deemed to be the earlier of such dates. The Trustee shall mail notice of the Demand Redemption Date (such notice being hereinafter called the "Demand Redemption Notice") to the Insurance Trustee not more than ten nor less than five days prior to the Demand Redemption Date.
19 17 Each bond of 1994 Series DP shall be redeemed by the Company on the Demand Redemption Date therefore upon surrender thereof by the Insurance Trustee to the Trustee at a redemption price equal to the principal amount thereof plus accrued interest paid by AMBAC pursuant to the Series A Resolution from the date of such payment to the Demand Redemption Date plus an amount equal to the aggregate premium, if any, due and payable on such Demand Redemption Date on a corresponding amount of Series A-1994 Bonds; provided, however, that in the event of a receipt by the Trustee of a notice that, pursuant to the Series A Resolution, AMBAC has terminated proceedings to enforce any right it may have against the Company under the Series A Insurance Policy, then any Payment Demand shall thereby be rescinded by the Insurance Trustee, and no Demand Redemption Notice shall be given, or, if already given, shall be automatically annulled; but no such rescission or annulment shall extend to or affect any subsequent default or impair any right consequent thereon. Anything herein contained to the contrary notwithstanding, the Trustee is not authorized to take any action pursuant to a Payment Demand and such Payment Demand shall be of no force or effect, unless it is executed in the name of the Insurance Trustee by its President or one of its Vice Presidents. FORM OF BONDS SECTION 4. The bonds of 1994 Series DP and the form of Trustee's OF 1994 SERIES DP. Certificate to be endorsed on such bonds shall be substantially in the following forms, respectively: [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 1994 SERIES DP, 6.35% DUE DECEMBER 1, 2004 Notwithstanding any provisions hereof or in the Indenture, this bond is not assignable or transferable except as may be required to effect a transfer to any successor insurance trustee under the Municipal Bond Insurance Policy, dated as of December 21, 1994 issued by AMBAC Indemnity Corporation and relating to the County of Monroe, Michigan Pollution Control Bonds (The Detroit Edison Company Project), Series A-1994, or to AMBAC Indemnity Corporation pursuant to Part II, Section 1 of the Supplemental Indenture dated as of December 1, 1994, or, subject to compliance with applicable law. $......... No.......... THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to United States Trust Company of New York, as Insurance Trustee, or registered assigns, at the Company's office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of Twenty-three million seven hundred thousand dollars ($23,700,000) in lawful money of the United States of America on the date specified in the title hereof and interest thereon at the rate specified in the title hereof, in like lawful money, from December 1, 1994, and after the first payment of interest on bonds of this Series has been made or otherwise provided for, from the most recent date to which interest has been paid or otherwise provided for, semi-annually on June 1 and December 1 of each year (commencing June 1, 1995), until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued.
20 18 Under a Resolution, dated as of May 8, 1973, as previously amended and supplemented and amended and supplemented as of December 13, 1994 (hereinafter called the "Series A Resolution Monroe Trust Indenture"), adopted by the County of Monroe, Michigan (hereinafter called "Monroe"), Monroe has issued Pollution Control Revenue Bonds (The Detroit Edison Company Project), Series A-1994 (hereinafter called the "Series A-1994 Bonds") and AMBAC Indemnity Corporation ("AMBAC") has issued its Municipal Bond Insurance Policy ("Series A Insurance Policy") relating to the guarantee of the payment of principal and interest on the Series A-1994 Bond. This bond is being issued to induce AMBAC to issue the Series A Insurance Policy. Payments of principal of, or premium, if any, or interest on, the Series A-1994 Bonds shall constitute like payments on this bond as further provided herein and in the supplemental indenture pursuant to which this bond has been issued. Reference is hereby made to such further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary with his manual or facsimile signature. Dated: THE DETROIT EDISON COMPANY By ------------------------------- Chairman of the Board ------------------------------- Vice President and Treasurer Attest: ---------------------------- Corporate Secretary
21 19 [FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of General and Refunding Mortgage Bonds known as 1994 Series DP, limited to an aggregate principal amount of $23,700,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of December 1, 1994) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of December 1, 1994, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of or the interest on this bond, which in those respects is unconditional. This bond is redeemable upon the terms and conditions set forth in the Indenture. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of 1994 Series DP (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds (or portions thereof) and interest.
22 20 Upon payment by the Company as part of its obligations under the Series A Resolution of the principal of, or premium, if any, or interest on, the Series A-1994 Bonds, whether at maturity or prior to maturity by redemption or otherwise or upon provision for the payment thereof having been made in accordance with Series A Resolution, bonds of 1994 Series DP in a principal amount equal to the principal amount of such Series A-1994 Bonds and having both a corresponding maturity date and interest rate shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds of said series shall be surrendered for cancellation or presented for appropriate notation to the Trustee. This bond is not assignable or transferable except as may be required to effect a transfer to any successor insurance trustee under the Series A Insurance Policy, or, to AMBAC Indemnity Corporation pursuant to the terms and conditions set forth in Part II, Section I of the Supplemental Indenture, dated as of December 1, 1994 or subject to compliance with applicable law. Any such transfer shall be made by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee in exchange therefor, and this bond with others in like form may in like manner be exchanged for one or more new bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture. So long as the Series A Insurance Policy shall be in full force and effect, AMBAC shall have the right to direct the Trustee in all matters relating to the bonds of 1994 Series DP. No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture.
23 21 [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated therein, TRUSTEE'S described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By --------------------------- Authorized Officer PART III. RECORDING AND FILING DATA RECORDING AND The Original Indenture and indentures supplemental thereto have been FILING OF ORIGINAL recorded and/or filed and Certificates of Provision for Payment have been INDENTURE. recorded as hereinafter set forth. The Original Indenture has been recorded as a real estate mortgage and filed as a chattel mortgage in the offices of the respective Registers of Deeds of certain counties in the State of Michigan as set forth in the Supplemental Indenture dated as of September 1, 1947, has been recorded as a real estate mortgage in the office of the Register of Deeds of Genesee County, Michigan as set forth in the Supplemental Indenture dated as of May 1, 1974, has been filed in the Office of the Secretary of State of Michigan on November 16, 1951 and has been filed and recorded in the office of the Interstate Commerce Commission on December 8, 1969. RECORDING AND Pursuant to the terms and provisions of the Original Indenture, FILING OF indentures supplemental thereto heretofore entered into have been recorded SUPPLEMENTAL as a real estate mortgage and/or filed as a chattel mortgage or as a INDENTURES. financing statement in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, the Office of the Secretary of State of Michigan and the Office of the Interstate Commerce Commission, as set forth in supplemental indentures as follows:
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ June 1, 1925(a)(b)................ Series B Bonds February 1, 1940 August 1, 1927(a)(b).............. Series C Bonds February 1, 1940 February 1, 1931(a)(b)............ Series D Bonds February 1, 1940 June 1, 1931(a)(b)................ Subject Properties February 1, 1940 October 1, 1932(a)(b)............. Series E Bonds February 1, 1940 September 25, 1935(a)(b).......... Series F Bonds February 1, 1940 September 1, 1936(a)(b)........... Series G Bonds February 1, 1940 November 1, 1936(a)(b)............ Subject Properties February 1, 1940 February 1, 1940(a)(b)............ Subject Properties September 1, 1947 December 1, 1940(a)(b)............ Series H Bonds and Addi- September 1, 1947 tional Provisions September 1, 1947(a)(b)(c)........ Series I Bonds, November 15, 1951 Subject Properties and Additional Provisions March 1, 1950(a)(b)(c)............ Series J Bonds November 15, 1951 and Additional Provi- sions November 15, 1951(a)(b)(c)........ Series K Bonds January 15, 1953 Additional Provisions and Subject Properties January 15, 1953(a)(b)............ Series L Bonds May 1, 1953
24 22
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ May 1, 1953(a).................... Series M Bonds March 15, 1954 and Subject Properties March 15, 1954(a)(c).............. Series N Bonds May 15, 1955 and Subject Properties May 15, 1955(a)(c)................ Series O Bonds August 15, 1957 and Subject Properties August 15, 1957(a)(c)............. Series P Bonds June 1, 1959 Additional Provisions and Subject Properties June 1, 1959(a)(c)................ Series Q Bonds December 1, 1966 and Subject Properties December 1, 1966(a)(c)............ Series R Bonds October 1, 1968 Additional Provisions and Subject Properties October 1, 1968(a)(c)............. Series S Bonds December 1, 1969 and Subject Properties December 1, 1969(a)(c)............ Series T Bonds July 1, 1970 and Subject Properties July 1, 1970(c)................... Series U Bonds December 15, 1970 and Subject Properties December 15, 1970(c).............. Series V and June 15, 1971 Series W Bonds June 15, 1971(c).................. Series X Bonds November 15, 1971 and Subject Properties November 15, 1971(c).............. Series Y Bonds January 15, 1973 and Subject Properties January 15, 1973(c)............... Series Z Bonds May 1, 1974 and Subject Properties May 1, 1974....................... Series AA Bonds October 1, 1974 and Subject Properties October 1, 1974................... Series BB Bonds January 15, 1975 and Subject Properties January 15, 1975.................. Series CC Bonds November 1, 1975 and Subject Properties November 1, 1975.................. Series DDP Nos. 1-9 December 15, 1975 Bonds and Subject Properties December 15, 1975................. Series EE Bonds February 1, 1976 and Subject Properties February 1, 1976.................. Series FFR Nos. 1-13 June 15, 1976 Bonds June 15, 1976..................... Series GGP Nos. 1-7 July 15, 1976 Bonds and Subject Properties July 15, 1976..................... Series HH Bonds February 15, 1977 and Subject Properties February 15, 1977................. Series MMP Bonds and March 1, 1977 Subject Properties March 1, 1977..................... Series IIP Nos. 1-7 June 15, 1977 Bonds, Series JJP Nos. 1-7 Bonds, Series KKP Nos. 1-7 Bonds and Series LLP Nos. 1-7 Bonds June 15, 1977..................... Series FFR No. 14 Bonds July 1, 1977 and Subject Properties
25 23
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ July 1, 1977...................... Series NNP Nos. 1-7 October 1, 1977 Bonds and Subject Properties October 1, 1977................... Series GGP Nos. 8-22 June 1, 1978 Bonds and Series OOP Nos. 1-17 Bonds and Subject Properties June 1, 1978...................... Series PP Bonds, October 15, 1978 Series QQP Nos. 1-9 Bonds and Subject Properties October 15, 1978.................. Series RR Bonds March 15, 1979 and Subject Properties March 15, 1979.................... Series SS Bonds July 1, 1979 and Subject Properties July 1, 1979...................... Series IIP Nos. 8-22 September 1, 1979 Bonds, Series NNP Nos. 8-21 Bonds and Series TTP Nos. 1-15 Bonds and Subject Properties September 1, 1979................. Series JJP No. 8 Bonds, September 15, 1979 Series KKP No. 8 Bonds, Series LLP Nos. 8-15 Bonds, Series MMP No. 2 Bonds and Series OOP No. 18 Bonds and Subject Properties September 15, 1979................ Series UU Bonds January 1, 1980 January 1, 1980................... 1980 Series A Bonds and April 1, 1980 Subject Properties April 1, 1980..................... 1980 Series B Bonds August 15, 1980 August 15, 1980................... Series QQP Nos. 10-19 August 1, 1981 Bonds, 1980 Series CP Nos. 1-12 Bonds and 1980 Series DP No. 1-11 Bonds and Subject Properties August 1, 1981.................... 1980 Series CP Nos. November 1, 1981 13-25 Bonds and Subject Properties November 1, 1981.................. 1981 Series AP Nos. 1-12 June 30, 1982 Bonds June 30, 1982..................... Article XIV August 15, 1982 Reconfirmation August 15, 1982................... 1981 Series AP Nos. June 1, 1983 13-14 and Subject Properties June 1, 1983...................... 1981 Series AP Nos. October 1, 1984 15-16 and Subject Properties October 1, 1984................... 1984 Series AP and 1984 May 1, 1985 Series BP Bonds and Subject Properties May 1, 1985....................... 1985 Series A Bonds May 15, 1985 May 15, 1985...................... 1985 Series B Bonds and October 15, 1985 Subject Properties
26 24
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ October 15, 1985.................. Series KKP No. 9 Bonds April 1, 1986 and Subject Properties April 1, 1986..................... 1986 Series A and August 15, 1986 Subject Properties August 15, 1986................... 1986 Series B and November 30, 1986 Subject Properties November 30, 1986................. 1986 Series C January 31, 1987 January 31, 1987.................. 1987 Series A April 1, 1987 April 1, 1987..................... 1987 Series B and 1987 August 15, 1987 Series C August 15, 1987................... 1987 Series D and 1987 November 30, 1987 Series E and Subject Properties November 30, 1987................. 1987 Series F June 15, 1989 June 15, 1989..................... 1989 Series A July 15, 1989 July 15, 1989..................... Series KKP No. 10 December 1, 1989 December 1, 1989.................. Series KKP No. 11 and February 15, 1990 1989 Series BP February 15, 1990................. 1990 Series A, 1990 November 1, 1990 Series B, 1990 Series C, 1990 Series D, 1990 Series E and 1990 Series F November 1, 1990.................. Series KKP No. 12 April 1, 1991 April 1, 1991..................... 1991 Series AP May 1, 1991 May 1, 1991....................... 1991 Series BP and 1991 May 15, 1991 Series CP May 15, 1991...................... 1991 Series DP September 1, 1991 September 1, 1991................. 1991 Series EP November 1, 1991 November 1, 1991.................. 1991 Series FP January 15, 1992 January 15, 1992.................. 1992 Series BP February 29, 1992 and April 15, 1992 February 29, 1992................. 1992 Series AP April 15, 1992 April 15, 1992.................... Series KKP No. 13 July 15, 1992 July 15, 1992..................... 1992 Series CP November 30, 1992 July 31, 1992..................... 1992 Series D November 30, 1992 April 1, 1986..................... 1986 Series A and August 15, 1986 Subject Properties August 15, 1986................... 1986 Series B and November 30, 1986 Subject Properties November 30, 1986................. 1986 Series C January 31, 1987 January 31, 1987.................. 1987 Series A April 1, 1987 April 1, 1987..................... 1987 Series B and 1987 August 15, 1987 Series C August 15, 1987................... 1987 Series D and 1987 November 30, 1987 Series E and Subject Properties November 30, 1987................. 1987 Series F June 15, 1989 June 15, 1989..................... 1989 Series A July 15, 1989 July 15, 1989..................... Series KKP No. 10 December 1, 1989 December 1, 1989.................. Series KKP No. 11 and February 15, 1990 1989 Series BP February 15, 1990................. 1990 Series A, 1990 November 1, 1990 Series B, 1990 Series C, 1990 Series D, 1990 Series E and 1990 Series F November 1, 1990.................. Series KKP No. 12 April 1, 1991
27 25
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ April 1, 1991..................... 1991 Series AP May 1, 1991 May 1, 1991....................... 1991 Series BP and 1991 May 15, 1991 Series CP May 15, 1991...................... 1991 Series DP September 1, 1991 September 1, 1991................. 1991 Series EP November 1, 1991 November 1, 1991.................. 1991 Series FP January 15, 1992 January 15, 1992.................. 1992 Series BP February 29, 1992 and April 15, 1992 February 29, 1992................. 1992 Series AP April 15, 1992 April 15, 1992.................... Series KKP No. 13 July 15, 1992 July 15, 1992..................... 1992 Series CP November 30, 1992 November 30, 1992................. 1992 Series E and 1993 March 15, 1993 Series D December 15, 1992................. Series KKP No. 14 and March 15, 1992 1989 Series BP No. 2 January 1, 1993................... 1993 Series C April 1, 1993 March 1, 1993..................... 1993 Series E June 30, 1993 March 15, 1993.................... 1993 Series D September 15, 1993 April 1, 1993..................... 1993 Series FP and 1993 September 15, 1993 Series IP April 26, 1993.................... 1993 Series G and September 15, 1993 Amendment of Article II, Section 5 May 31, 1993...................... 1993 Series J September 15, 1993 September 15, 1993................ 1993 Series K March 1, 1994 March 1, 1994..................... 1994 Series AP June 15, 1994 June 15, 1994..................... 1994 Series BP December 1, 1994 August 15, 1994................... 1994 Series C December 1, 1994
------------------------------------------ (a) See Supplemental Indenture dated as of July 1, 1970 for Interstate Commerce Commission filing and recordation information. (b) See Supplemental Indenture dated as of May 1, 1953 for Secretary of State of Michigan filing information. (c) See Supplemental Indenture dated as of May 1, 1974 for County of Genesee, Michigan recording and filing information. 28 26 Further, pursuant to the terms and provisions of the Original Indenture, a Supplemental Indenture dated as June 15, 1994 providing for the terms of bonds to be issued thereunder of 1994 Series BP has heretofore been entered into between the Company and the Trustee and has been filed in the Office of the Secretary of State of Michigan as a financing statement on July 1, 1994 (Filing No. 44411B), has been filed and recorded in the Office of the Interstate Commerce Commission (Recordation No. 5485-NNNN) on July 1, 1994, and has been recorded as a real estate mortgage in the offices of the respective Register of Deeds of certain counties in the State of Michigan, as follows:
LIBER OF MORTGAGES OR COUNTY COUNTY RECORDED RECORDS PAGE ------------------------------------------- -------------- --------- --------- Genesee.................................... July 5, 1994 3052 811-834 Huron...................................... July 1, 1994 630 333-356 Ingham..................................... July 1, 1994 2191 854-877 Lapeer..................................... July 1, 1994 0864 0459-0482 Lenawee.................................... July 1, 1994 1319 901-924 Livingston................................. July 1, 1994 1843 0672-0695 Macomb..................................... July 1, 1994 06381 684-707 Mason...................................... July 1, 1994 442 90-113 Monroe..................................... July 1, 1994 1390 0931-0954 Oakland.................................... July 20, 1994 14843 827-850 St. Clair.................................. July 5, 1994 1361 599-622 Sanilac.................................... July 1, 1994 459 74-97 Tuscola.................................... July 6, 1994 661 391-414 Washtenaw.................................. July 1, 1994 2997 527-550 Wayne...................................... July 1, 1994 27471 444-467
29 27 Further, pursuant to the terms and provisions of the Original Indenture, a Supplemental Indenture dated as August 15, 1994 providing for the terms of bonds to be issued thereunder of 1994 Series C has heretofore been entered into between the Company and the Trustee and has been filed in the Office of the Secretary of State of Michigan as a financing statement on August 16, 1994 (Filing No. 46000B), has been filed and recorded in the Office of the Interstate Commerce Commission (Recordation No. 5485-OOOO) on August 16, 1994, and has been recorded as a real estate mortgage in the offices of the respective Register of Deeds of certain counties in the State of Michigan, as follows:
LIBER OF MORTGAGES OR COUNTY COUNTY RECORDED RECORDS PAGES ----------------------------------------- ---------------- --------- --------- Genesee.................................. August 16, 1994 3068 11-33 Huron.................................... August 16, 1994 632 650-672 Ingham................................... August 16, 1994 2202 288-310 Lapeer................................... August 16, 1994 0869 0936-0958 Lenawee.................................. August 16, 1994 1325 559-581 Livingston............................... August 16, 1994 1855 0990-1012 Macomb................................... August 16, 1994 06425 191-213 Mason.................................... August 16, 1994 443 561-583 Monroe................................... August 16, 1994 1398 0968-0990 Oakland.................................. August 16, 1994 14910 248-270 St. Clair................................ August 16, 1994 1370 957-979 Sanilac.................................. August 16, 1994 460 661-683 Tuscola.................................. August 16, 1994 662 1224-1246 Washtenaw................................ August 16, 1994 3016 827-849 Wayne.................................... August 16, 1994 27560 686-708
30 28 RECORDING OF All the bonds of Series A which were issued under the Original CERTIFICATES Indenture dated as of October 1, 1924, and of Series B, C, D, E, F, G, H, OF PROVISION I, J, K, L, M, N, O, P, Q, W, Y, Z, AA, BB, CC, DDP Nos. 1-9, FFR Nos. FOR PAYMENT. 1-14, GGP Nos. 1-22, HH, IIP Nos. 1-22, JJP Nos. 1-8, KKP Nos. 1-8, LLP Nos. 1-15, NNP Nos. 1-21, OOP Nos. 1-18, QQP Nos. 1-17, TTP Nos. 1-15, UU, 1980 Series A, 1980 Series CP Nos. 1-25, 1980 Series DP Nos. 1-11, 1981 Series AP Nos. 1-16, 1984 Series AP, 1984 Series BP, 1985 Series A, 1985 Series B, 1987 Series A, PP, RR, EE, MMP, MMP No. 2 and 1989 Series A which were issued under Supplemental Indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, December 1, 1940, September 1, 1947, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, December 15, 1970, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, February 1, 1976, June 15, 1976, July 15, 1976, October 1, 1977, March 1, 1977, July 1, 1979, March 1, 1977, March 1, 1977, March 1, 1977, September 1, 1979, July 1, 1977, July 1, 1979, September 15, 1979, October 1, 1977, June 1, 1978, October 1, 1977, July 1, 1979, January 1, 1980, August 15, 1980, November 1, 1981, October 1, 1984, May 1, 1985, May 15, 1985, January 31, 1987, June 1, 1978, October 15, 1978, December 15, 1975, February 15, 1977, September 1, 1979 and June 15, 1989 have matured or have been called for redemption and funds sufficient for such payment or redemption have been irrevocably deposited with the Trustee for that purpose; and Certificates of Provision for Payment have been recorded in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, with respect to all bonds of Series A, B, C, D, E, F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1 and GGP No. 8. PART IV. THE TRUSTEE. TERMS AND The Trustee hereby accepts the trust hereby declared and provided, and CONDITIONS OF agrees to perform the same upon the terms and conditions in the Original ACCEPTANCE OF Indenture, as amended to date and as supplemented by this Supplemental TRUST BY TRUSTEE. Indenture, and in this Supplemental Indenture set forth, and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for and in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. PART V. MISCELLANEOUS. CONFIRMATION OF Except to the extent specifically provided therein, no provision of SECTION 318(C) OF this supplemental indenture or any future supplemental indenture is TRUST INDENTURE intended to modify, and the parties do hereby adopt and confirm, the ACT provisions of Section 318(c) of the Trust Indenture Act which amend and supercede provisions of the Indenture in effect prior to November 15, 1990. EXECUTION IN THIS SUPPLEMENTAL INDENTURE MAY BE SIMULTANEOUSLY EXECUTED IN ANY COUNTERPARTS. NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL; BUT SUCH COUNTERPARTS SHALL TOGETHER CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.
31 29 TESTIMONIUM. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY AND BANKERS TRUST COMPANY HAVE CAUSED THESE PRESENTS TO BE SIGNED IN THEIR RESPECTIVE CORPORATE NAMES BY THEIR RESPECTIVE CHAIRMEN OF THE BOARD, PRESIDENTS, VICE PRESIDENTS, ASSISTANT VICE PRESIDENTS, TREASURERS OR ASSISTANT TREASURERS AND IMPRESSED WITH THEIR RESPECTIVE CORPORATE SEALS, ATTESTED BY THEIR RESPECTIVE SECRETARIES OR ASSISTANT SECRETARIES, ALL AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN. THE DETROIT EDISON COMPANY, (Corporate Seal) By ------------------------------ L. L. Loomans Vice President and Treasurer EXECUTION. Attest: ---------------------------------- Ronald J. Gdowski Assistant Corporate Secretary Signed, sealed and delivered by THE DETROIT EDISON COMPANY, in the presence of ----------------------------------- Jack L. Somers ----------------------------------- Cathy M. Lewis STATE OF MICHIGAN SS.: COUNTY OF WAYNE ACKNOWLEDGMENT On this day of December, 1994, before me, the subscriber, a Notary OF EXECUTION Public within and for the County of Wayne, in the State of Michigan, BY COMPANY. personally appeared L. L. Loomans, to me personally known, who, being by me duly sworn, did say that he does business at 2000 Second Avenue, Detroit, Michigan 48226 and is the Vice President and Treasurer of THE DETROIT EDISON COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said L. L. Loomans, acknowledged said instrument to be the free act and deed of said corporation. ------------------------------------ (Notarial Seal) Judith Thun, Notary Public Wayne County, MI My Commission Expires March 4, 1995
32 30 BANKERS TRUST COMPANY, (Corporate Seal) By --------------------- Robert Caporale Vice President Attest: ------------------------------- M. Lisa Morrone Assistant Vice President Signed, sealed and delivered by BANKERS TRUST COMPANY, in the presence of ------------------------------- Scott Thiel ------------------------------- Denise Mitchell STATE OF NEW YORK SS.: COUNTY OF NEW YORK ACKNOWLEDGMENT On this day of December, 1994, before me, the subscriber, a Notary OF EXECUTION Public within and for the County of New York, in the State of New York, BY TRUSTEE. personally appeared Robert Caporale, to me personally known, who, being by me duly sworn, did say that his business office is located at Four Albany Street, New York, New York 10015, and he is Vice President of BANKERS TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said Robert Caporale acknowledged said instrument to be the free act and deed of said corporation. (Notarial Seal) ----------------------------------- Karen J. Morena Notary Public, State of New York No. 41-4991083 Qualified in Queens County Certificate Filed in New York County Commission Expires 1-21-96
33 31 STATE OF MICHIGAN SS.: COUNTY OF WAYNE AFFIDAVIT AS TO L. L. Loomans, being duly sworn, says: that he is the Vice President CONSIDERATION and Treasurer of THE DETROIT EDISON COMPANY, the Mortgagor named in the AND GOOD FAITH. foregoing instrument, and that he has knowledge of the facts in regard to the making of said instrument and of the consideration therefor; that the consideration for said instrument was and is actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth. ----------------- L. L. Loomans Sworn to before me this day of December, 1994 /s/ JUDITH THUN -------------------------- Judith Thun, Notary Public Wayne County, MI My Commission Expires March 4, 1995 (Notarial Seal) This instrument was drafted by Frances B. Rohlman, Esq., 2000 Second Avenue, Detroit, Michigan 48226
EX-4.170 3 EXHIBIT 4-170 1 Exhibit 4-170 EXECUTED IN 50 COUNTER- PARTS OF WHICH THIS IS, COUNTERPART NUMBER 50 THE DETROIT EDISON COMPANY (2000 Second Avenue, Detroit, Michigan 48226) TO BANKERS TRUST COMPANY (16 Wall Street, New York, New York 10015) AS TRUSTEE ---------------------------- INDENTURE Dated as of October 15, 1985 ---------------------------- SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST DATED AS OF OCTOBER 1, 1924 PROVIDING FOR (A) GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 9 (B) LISTING OF ADDITIONAL REAL ESTATE AND (C) RECORDING AND FILING DATA 2 i TABLE OF CONTENTS*
PAGE ---- PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS Original Indenture and Supplementals . . . . . . . . . . . . . . . . . . . . . . . . . 1 Issue of Bonds under Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Bonds heretofore issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Reason for creation of new series . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Bonds to be Series KKP No. 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Further assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Authorization of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . 5 Consideration for Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . 5 PART I. CREATION OF TWO HUNDRED SIXTY-SEVENTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 9 Sec. 1. Certain terms of Bonds of Series KKP No. 9 . . . . . . . . . . . . . . . . . . 6 Sec. 2. Redemption of Bonds of Series KKP No. 9 . . . . . . . . . . . . . . . . . . . . 7 Sec. 3. Redemption of Bonds of Series KKP No. 9 in event of acceleration of Monroe Revenue Bonds . . . . . . . . . . . . . . . . . . . 7 Sec. 4. Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Sec. 5. Form of Bonds of Series KKP No. 9 . . . . . . . . . . . . . . . . . . . . . . . 8 Form of Trustee's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 12 PART II. ADDITIONAL REAL ESTATE After acquired property being specifically subjected to Indenture . . . . . . . . . . . 12 Assignment of income, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Habendum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 In trust nevertheless . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 PART III. RECORDING AND FILING DATA Recording and filing of Original Indenture . . . . . . . . . . . . . . . . . . . . . . . 13 Recording and filing of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 13 Recording of Certificates of Provision for Payment . . . . . . . . . . . . . . . . . . . 17 PART IV. THE TRUSTEE Terms and conditions of acceptance of trust by Trustee . . . . . . . . . . . . . . . . . 17 PART V. MISCELLANEOUS Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Testimonium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Affidavit as to consideration and good faith . . . . . . . . . . . . . . . . . . . . . . 20
--------------- * This Table of Contents shall not (have any bearing upon the interpretation of any of the terms or provisions of this Indenture. 3 1 PARTIES SUPPLEMENTAL INDENTURE, dated as of the fifteenth day of October, in the year one thousand nine hundred and eighty-five, between THE DETROIT EDISON COMPANY, a corporation organized and existing under the laws of the State of Michigan and a transmitting utility (hereinafter called the "Company"), party of the first part, and BANKERS TRUST COMPANY, a corporation organized and existing under the laws of the State of New York, having its corporate trust office at Four Albany Street, in the Borough of Manhattan, The City and State of New York, as Trustee under the Mortgage and Deed of Trust hereinafter mentioned (hereinafter called the "Trustee"), party of the second part. ORIGINAL WHEREAS, the Company has heretofore executed and INDENTURE AND delivered its Mortgage and Deed of Trust (hereinafter SUPPLEMENTALS. referred to as the "Original Indenture"), dated as of October 1, 1924, to the Trustee, for the security of all bonds of the Company outstanding thereunder, and pursuant to the terms and provisions of the Original Indenture, indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, June 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, November 1, 1936, February 1, 1940, December 1, 1940, September 1, 1947, March 1, 1950, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, June 1, 1959, December 1, 1966, October 1, 1968, December 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, December 15, 1975, February 1, 1976, June 15, 1976, July 15, 1976, February 15, 1977, March 1, 1977, June 15, 1977, July 1, 1977, October 1, 1977, June 1, 1978, October 15, 1978, March 15, 1979, July 1, 1979, September 1, 1979, September 15, 1979, January 1, 1980, April 1, 1980, August 15, 1980, August 1, 1981, November 1, 1981, June 30, 1982, August 15, 1982, June 1, 1983, October 1, 1984, May 1, 1985 and May 15, 1985 supplemental to the Original Indenture, have heretofore been entered into between the Company and the Trustee (the Original Indenture and all indentures supplemental thereto together being hereinafter sometimes referred to as the "Indenture"); and ISSUE OF WHEREAS, the Indenture provides that said bonds shall be BONDS UNDER issuable in one or more series, and makes provision that INDENTURE. the rates of interest and dates for the payment thereof, the date of maturity or dates of maturity, if of serial maturity, the terms and rates of optional redemption (if redeemable), the forms of registered bonds without coupons of any series and any other provisions and agreements in respect thereof, in the Indenture provided and permitted, as the Board of Directors may determine, may be expressed in a supplemental indenture to be made by the Company to the Trustee thereunder; and BONDS HERETOFORE WHEREAS, bonds in the principal amount of Two billion ISSUED. eight hundred eighteen million one hundred seventy-one thousand dollars ($2,818,171,000) have heretofore been issued under the Indenture as follows, viz: (1) Bonds of Series A -- Principal Amount $26,016,000, (2) Bonds of Series B -- Principal Amount $23,000,000, (3) Bonds of Series C -- Principal Amount $20,000,000, (4) Bonds of Series D -- Principal Amount $50,000,000, (5) Bonds of Series E -- Principal Amount $15,000,000, (6) Bonds of Series F -- Principal Amount $49,000,000, (7) Bonds of Series G -- Principal Amount $35,000,000, (8) Bonds of Series H -- Principal Amount $50,000,000, (9) Bonds of Series I -- Principal Amount $60,000,000, (10) Bonds of Series J -- Principal Amount $35,000,000, (11) Bonds of Series K -- Principal Amount $40,000,000, (12) Bonds of Series L -- Principal Amount $24,000,000, (13) Bonds of Series M -- Principal Amount $40,000,000, (14) Bonds of Series N -- Principal Amount $40,000,000, (15) Bonds of Series O -- Principal Amount $60,000,000,
4 2 (16) Bonds of Series W -- Principal Amount $50,000,000, (17) Bonds of Series BB -- Principal Amount $50,000,000, (18) Bonds of Series CC -- Principal Amount $50,000,000, (19-23) Bonds of Series DDP Nos. 1-5 -- Principal Amount $4,000,000, (24-29) Bonds of Series FFR Nos. 1-6 -- Principal Amount $3,100,000, (30-38) Bonds of Series GGP Nos. 1-5 and 8-11 -- Principal Amount $5,580,000, (39-44) Bonds of Series IIP Nos. 1-4 and 8-9 -- Principal Amount $260,000, (45-48) Bonds of Series JJP Nos. 1-4 -- Principal Amount $460,000, (49-52) Bonds of Series KKP Nos. 1-4 -- Principal Amount $1,060,000, (53-58) Bonds of Series LLP Nos. 1-4 and 8-9 -- Principal Amount $1,640,000, (59-64) Bonds of Series NNP Nos. 1-4 and 8-9 -- Principal Amount $4,300,000, (65-68) Bonds of Series OOP Nos. 1-4 -- Principal Amount $1,340,000, (69-72) Bonds of Series QQP Nos. 1-3 and 10 -- Principal Amount $1,755,000, (73-74) Bonds of Series TTP Nos. 1-2 -- Principal Amount $110,000, (75) Bonds of 1980 Series A -- Principal Amount $50,000,000, (76) Bonds of 1980 Series CP No. 1 -- Principal Amount $490,000, (77) Bonds of 1980 Series DP No. 1 -- Principal Amount $185,000,
all of which have either been retired and cancelled, or no longer represent obligations of the Company, having been called for redemption and funds necessary to effect the payment, redemption and retirement thereof having been deposited with the Trustee as a special trust fund to be applied for such purpose; (78) Bonds of Series P in the principal amount of Seventy million dollars ($70,000,000), of which Three million six hundred seventy-five thousand dollars ($3,675,000) principal amount have heretofore been retired and cancelled and Sixty-six million three hundred twenty-five thousand dollars ($66,325,000) principal amount are outstanding at the date hereof; (79) Bonds of Series Q in the principal amount of Forty million dollars ($40,000,000), of which Two million three hundred five thousand dollars ($2,305,000) principal amount have heretofore been retired and cancelled and Thirty-seven million six hundred ninety-five thousand dollars ($37,695,000) principal amount are outstanding at the date hereof; (80) Bonds of Series R in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (81) Bonds of Series S in the principal amount of One hundred fifty million dollars ($150,000,000), all of which are outstanding at the date hereof; (82) Bonds of Series T in the principal amount of Seventy-five million dollars ($75,000,000), all of which are outstanding at the date hereof; (83) Bonds of Series U in the principal amount of Seventy-five million dollars ($75,000,000), all of which are outstanding at the date hereof; (84) Bonds of Series V in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (85) Bonds of Series X in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (86) Bonds of Series Y in the principal amount of Sixty million dollars ($60,000,000), all of which are outstanding at the date hereof; (87) Bonds of Series Z in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (88) Bonds of Series AA in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; 5 3 (89-92) Bonds of Series DDP Nos. 6-9 in the principal amount of Ten million three hundred five thousand dollars ($10,305,000), all of which are outstanding at the date hereof; (93) Bonds of Series EE in the principal amount of Fifty million dollars ($50,000,000), of which Twelve million five hundred thousand dollars ($12,500,000) principal amount have heretofore been retired and Thirty-seven million five hundred thousand dollars ($37,500,000) principal amount are outstanding at the date hereof: (94-101) Bonds of Series FFR Nos. 7-14 in the principal amount of Forty-two million five hundred thousand dollars ($42,500,000), all of which are outstanding at the date hereof; (102-114) Bonds of Series GGP Nos. 6-7 and 12-22 in the principal amount of Thirty-six million seven hundred twenty thousand dollars ($36,720,000), all of which are outstanding at the date hereof; (115) Bonds of Series HH in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (116-117) Bonds of Series MMP and MMP No. 2 in the principal amount of Five million four hundred thirty thousand dollars ($5,430,000), of which Five hundred ten thousand dollars ($510,000) principal amount have heretofore been retired and Four million nine hundred twenty thousand dollars ($4,920,000) principal amount are outstanding at the date hereof; (118-133) Bonds of Series IIP Nos. 5-7 and 10-22 in the principal amount of Three million four hundred ninety thousand dollars ($3,490,000), all of which are outstanding at the date hereof: (134-137) Bonds of Series JJP Nos. 5-8 in the principal amount of Six million three hundred ninety thousand dollars ($6,390,000), of which Forty thousand dollars ($40,000) principal amount have heretofore been retired and Six million three hundred fifty thousand dollars ($6,350,000) are outstanding at the date hereof; (138-141) Bonds of Series KKP Nos. 5-8 in the principal amount of Thirteen million eight hundred thirty thousand dollars ($13,830,000), of which Sixty thousand dollars ($60,000) principal amount have heretofore been retired and Thirteen million seven hundred seventy thousand dollars ($13,770,000) are outstanding at the date hereof; (142-150) Bonds of Series LLP Nos. 5-7 and 10-15 in the principal amount of Seven million two hundred ten thousand dollars ($7,210,000), all of which are outstanding at the date hereof; (151-165) Bonds of Series NNP Nos. 5-7 and 10-21 in the principal amount of Forty-three million six hundred fifty thousand dollars ($43,650,000), all of which are outstanding at the date hereof, (166-179) Bonds of Series OOP Nos. 5-18 in the principal amount of Seventeen million five hundred forty thousand dollars ($17,540,000), of which Eighty thousand dollars ($80,000) principal amount have heretofore been retired and Seventeen million four hundred sixty thousand dollars ($17,460,000) are outstanding at the date hereof; (180) Bonds of Series PP in the principal amount of Seventy million dollars ($70,000,000), all of which are outstanding at the date hereof; 6 4 (181-195) Bonds of Series QQP Nos. 4-9 and 11-19 in the principal amount of Eleven million eight hundred ninety-five thousand dollars ($11,895,000), all of which are outstanding at the date hereof; (196) Bonds of Series RR in the principal amount of Seventy million dollars ($70,000,000), all of which are outstanding at the date hereof; (197) Bonds of Series SS in the principal amount of One hundred fifty million dollars ($150,000,000), of which Ten million dollars ($10,000,000) principal amount have heretofore been retired and One hundred forty million dollars ($140,000,000) principal amount are outstanding at the date hereof; (198-210) Bonds of Series TTP Nos. 3-15 in the principal amount of Three million six hundred ninety thousand dollars ($3,690,000), all of which are outstanding at the date hereof; (211) Bonds of Series UU in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (212) Bonds of 1980 Series B in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (213-236) Bonds of 1980 Series CP Nos. 2-25 in the principal amount of Thirty-four million five hundred ten thousand dollars ($34,510,000), all of which are outstanding at the date hereof: (237-246) Bonds of 1980 Series DP Nos. 2-11 in the principal amount of Ten million five hundred sixty-five thousand dollars ($10,565,000), all of which are outstanding at the date hereof; (247-262) Bonds of 1981 Series AP Nos. 1-16 in the principal amount of One hundred twenty-four million dollars ($124,000,000), all of which are outstanding at the date hereof; (263) Bonds of 1984 Series AP in the principal amount of Two million four hundred thousand dollars ($2,400,000), all of which are outstanding at the date hereof; (264) Bonds of 1984 Series BP in the principal amount of Seven million seven hundred fifty thousand dollars ($7,750,000), all of which are outstanding at the date hereof; (265) Bonds of 1985 Series A in the principal amount of Thirty-five million dollars ($35,000,000), all of which are outstanding at the date hereof; and (266) Bonds of 1985 Series B in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; and, accordingly, of the bonds so issued, one billion nine hundred ninety-seven million seven hundred five thousand dollars ($1,997,705,000) principal amount are outstanding at the date hereof; and REASON FOR WHEREAS, the County of Monroe, Michigan has agreed CREATION OF to issue and sell $20,000,000 principal amount of its NEW SERIES. Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1985 so as to provide funds for the purchase and construction of certain pollution control facilities installed in the Company's Fermi 2 Plant; and WHEREAS, the Company has entered into an Installment Sales Contract, dated as of March 1, 1977 and amended as of September 1, 1979 and November 1, 1985 with the County of Monroe, in order to purchase certain pollution control facilities, and pursuant to such Installment Sales Contract the Company has agreed to issue its General and Refunding Mortgage Bonds under the Indenture in order further to secure its obligations under such Installment Sales Contract; and 7 5 WHEREAS, for such purposes the Company desires to issue a new series of bonds to be issued under the Indenture and to be authenticated and delivered pursuant to Section 4 of Article III of the Indenture; and BONDS TO BE WHEREAS, the Company desires by this Supplemental SERIES KKP Indenture to create such new series of bonds, to be NO. 9 designated "General and Refunding Mortgage Bonds, Series KKP No. 9"; and FURTHER WHEREAS, the Original Indenture, by its terms, ASSURANCE. includes in the property subject to the lien thereof all of the estates and properties, real, personal and mixed, rights, privileges and franchises of every nature and kind and wheresoever situate, then or thereafter owned or possessed by or belonging to the Company or to which it was then or at any time thereafter might be entitled in law or in equity (saving and excepting, however, the property therein specifically excepted or released from the lien thereof), and the Company therein covenanted that it would, upon reasonable request, execute and deliver such further instruments as may be necessary or proper for the better assuring and confirming unto the Trustee all or any part of the trust estate, whether then or thereafter owned or acquired by the Company (saving and excepting, however, property specifically excepted or released from the lien thereof); and WHEREAS, the Company has, since the date as of which the Original Indenture was executed, viz, October 1, 1924, acquired and/or perfected its title to certain property hereinafter described. not previously specifically subjected to the lien of the Indenture, which is subject to the lien of the Indenture and, for the better security and protection of the bonds now or hereafter issued under the Indenture, the Company desires by this Supplemental Indenture to evidence the specific conveyance of said property to the Trustee upon the trusts set forth in the Original Indenture and in said indentures supplemental thereto; and AUTHORIZATION WHEREAS, the Company in the exercise of the powers OF SUPPLEMENTAL and authority conferred upon and reserved to it under and INDENTURE. by virtue of the provisions of the Indenture, and pursuant to resolutions of its Board of Directors has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture in the form hereof for the purposes herein provided; and WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized; CONSIDERATION NOW, THEREFORE, THIS INDENTURE WITNESSETH: That The FOR SUPPLE- Detroit Edison Company, in consideration of the premises MENTAL and of the covenants contained in the Indenture and of INDENTURE. the sum of One Dollar ($1.00) and other good and valuable consideration to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trusts under the Original Indenture and in said indentures supplemental thereto as follows: 8 6 PART I. CREATION OF TWO HUNDRED SIXTY-SEVENTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 9 CERTAIN TERMS SECTION 1. The Company hereby creates the Two hundred OF BONDS OF sixty-seventh series of bonds to be issued under and SERIES KKP secured by the Original Indenture as amended to date and NO. 9 as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, Series KKP No. 9" (elsewhere herein referred to as the "bonds of Series KKP No. 9"). The aggregate principal amount of bonds of Series KKP No. 9 shall be limited to twenty million dollars ($20,000,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. Each bond of Series KKP No. 9 is to be irrevocably assigned to, and registered in the name of, Manufacturers National Bank of Detroit, as trustee, or a successor trustee (said trustee or any successor trustee being hereinafter referred to as the Monroe Trust Indenture Trustee"), under the Trust Indenture, dated as of March 1, 1977, as amended September 1, 1979 and October 15, 1985 (hereinafter called the "Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and the Monroe Trust Indenture Trustee, to secure payment of the County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1985 (hereinafter called the "Monroe Revenue Bonds"), issued by Monroe under the Monroe Trust Indenture, the proceeds of which (other than any accrued interest thereon) have been provided for the acquisition and construction of certain pollution control facilities which the Company has agreed to purchase pursuant to the provisions of the Installment Sales Contract, dated as of March 1, 1977, as amended as of September 1, 1979 and as of October 15, 1985 (hereinafter called the "Monroe Contract"), between the Company and Monroe. The bonds of Series KKP No. 9 shall be issued as registered bonds without coupons in denominations of a multiple of $5,000. The bonds of Series KKP No. 9 shall be issued in the aggregate principal amount of $20,000,000, shall mature on September 1, 2005 and shall bear interest, payable semi-annually on March 1 and September 1 of each year, at the rate of 10-1/8 %, until the principal thereof shall have become due and payable and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. The bonds of Series KKP No. 9 shall be payable as to principal, premium, if any, and interest as provided in the Indenture, but only to the extent and in the manner herein provided. The bonds of Series KKP No. 9 shall be payable, both as to principal and interest, at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. Except as provided herein, each bond of Series KKP No. 9 shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the March 1 or September 1 next preceding the date thereof to which interest has been paid on bonds of Series KKP No. 9, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication, or unless the date of authentication is prior to March 1, 1986, in which case interest shall be payable from October 15, 1985. The bonds of Series KKP No. 9 in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denom- inations as aforesaid and numbered 1 and upwards (with such further designation as 9 7 may be appropriate and desirable to indicate by such designation the form, series and denominations of bonds of Series KKP No. 9). Until bonds of Series KKP No. 9 in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of Series KKP No. 9 in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of Series KKP No. 9, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of Series KKP No. 9, but with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company. Bonds of Series KKP No. 9 shall not be assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney. Bonds of Series KKP No. 9 shall in the same manner be exchangeable for a like aggregate principal amount of bonds of Series KKP No. 9 upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of Series KKP No. 9, during any period of ten days next preceding any redemption date for such bonds. Bonds of Series KKP No. 9, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or as may be specified in the Monroe Contract. Upon payment of the principal or premium, if any, or interest on the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise, or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of Series KKP No. 9 in a principal amount equal to the principal amount of such Monroe Revenue Bonds, shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds shall be surrendered for cancellation or presented for appropriate notation to the Trustee. REDEMPTION SECTION 2. Bonds of Series KKP No. 9 shall be redeemed OF BONDS on the respective dates and in the respective OF SERIES KKP principal amounts which correspond to the redemption NO. 9. dates for, and the principal amounts to be redeemed of, the Monroe Revenue Bonds. In the event the Company elects to redeem any Monroe Revenue Bonds prior to maturity in accordance with the provisions of the Monroe Trust Indenture, the Company shall on the same date redeem bonds of Series KKP No. 9 in principal amounts and at redemption prices corresponding to the Monroe Revenue Bonds so redeemed. The Company agrees to give the Trustee notice of any such redemption of bonds of Series KKP No. 9 on the same date as it gives notice of redemption of Monroe Revenue Bonds to the Monroe Trust Indenture Trustee. REDEMPTION SECTION 3. In the event of an Event of Default under the OF BONDS OF Monroe Trust Indenture and the acceleration of all Monroe SERIES KKP Revenue Bonds, the bonds of Series KKP No. 9 shall be NO. 9 IN EVENT redeemable in whole upon receipt by the Trustee of a OF ACCELERATION written demand (hereinafter called a "Redemption Demand") OF MONROE from the Monroe Trust Indenture Trustee stating that REVENUE BONDS. there has occurred under the Monroe Trust Indenture both an Event of Default and a declaration of acceleration of payment of principal, accrued interest and premium, if any, on the Monroe Revenue Bonds, specifying the last date to 10 8 which interest on the Monroe Revenue Bonds has been paid (such date being hereinafter referred to as the "Initial Interest Accrual Date") and demanding redemption of the bonds of said series. The Trustee shall, within five days after receiving such Redemption Demand, mail a copy thereof to the Company marked to indicate the date of its receipt by the Trustee. Promptly upon receipt by the Company of such copy of a Redemption Demand, the Company shall fix a date on which it will redeem the bonds of said series so demanded to be redeemed (hereinafter called the "Demand Redemption Date"). Notice of the date fixed as the Demand Redemption Date shall be mailed by the Company to the Trustee at least ten days prior to such Demand Redemption Date. The date to be fixed by the Company as and for the Demand Redemption Date may be any date up to and including the earlier of (x) the 60th day after receipt by the Trustee of the Redemption Demand or (y) the maturity date of such bonds first occurring following the 20th day after the receipt by the Trustee of the Redemption Demand; provided, however, that if the Trustee shall not have received such notice fixing the Demand Redemption Date on or before the 10th day preceding the earlier of such dates, the Demand Redemption Date shall be deemed to be the earlier of such dates. The Trustee shall mail notice of the Demand Redemption Date (such notice being hereinafter called the "Demand Redemption Notice") to the Monroe Trust Indenture Trustee not more than ten nor less than five days prior to the Demand Redemption Date. Each bond of Series KKP No. 9 shall be redeemed by the Company on the Demand Redemption Date therefore upon surrender thereof by the Monroe Trust Indenture Trustee to the Trustee at a redemption price equal to the principal amount thereof plus accrued interest thereon at the rate specified for such bond from the Initial Interest Accrual Date to the Demand Redemption Date plus an amount equal to the aggregate premium, if any, due and payable on such Demand Redemption Date on all Monroe Revenue Bonds; provided, however, that in the event of a receipt by the Trustee of a notice that, pursuant to Section 1010 of the Monroe Trust Indenture, the Monroe Trust Indenture Trustee has terminated proceedings to enforce any right under the Monroe Trust Indenture, then any Redemption Demand shall thereby be rescinded By the Monroe Trust Indenture Trustee, and no Demand Redemption Notice shall be given, or, if already given, shall be automatically annulled; but no such rescission or annulment shall extend to or affect any subsequent default or impair any right consequent thereon. Anything herein contained to the contrary notwithstanding, the Trustee is not authorized to take any action pursuant to a Redemption Demand and such Redemption Demand shall be of no force or effect, unless it is executed in the name of the Monroe Trust Indenture Trustee by its President or one of its Vice Presidents. CONSENT. SECTION 4. The holders of the bonds of Series KKP No. 9, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in this Section 4, or in writing, or by affirmative vote cast a meeting called pursuant to said Article XV, or by any combination thereof. 11 9 FORM OF BONDS SECTION 5. The bonds of Series KKP No. 9 and the form of OF SERIES KKP Trustee's Certifcate to be endorsed on such bonds shall NO. 9. be substantially in the following forms, respectively: THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND SERIES KKP NO. 9, 10-1/8% DUE SEPTEMBER 1, 2005 Notwithstanding any provisions hereof or in the Indenture, this bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Trust Indenture, dated as of March 1, 1977 and amended as of September 1, 1979 and October 15, 1985 between the County of Monroe, Michigan and Manufacturers National Bank of Detroit, as trustee, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under said Trust Indenture. $....... No........ THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to Manufacturers National Bank of Detroit, as trustee, or registered assigns, at the Company's office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of dollars ($ ) in lawful money of the United States of America on the date specified in the title hereof and interest thereon at the rate specified in the title hereof, in like lawful money, from October 15, 1985, and after the first payment of interest on bonds of this Series has been made or otherwise provided for, from the most recent date to which interest has been paid or otherwise provided for, semiannually on March 1 and September 1 of each year, until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Under a Trust Indenture, dated as of March 1, 1977 and amended as of September 1, 1979 and October 15, 1985 (hereinafter called the "Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and Manufacturers National Bank of Detroit, as trustee (hereinafter called the "Monroe Trust Indenture Trustee"), Monroe has issued Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1985 (hereinafter called the "Monroe Revenue Bonds"). This bond was originally issued to Monroe and simultaneously irrevocably assigned to the Monroe Trust Indenture Trustee so as to secure the payment of the Monroe Revenue Bonds. Payments of principal of, or premium, if any, or interest on, Monroe Revenue Bonds shall constitute like pavements on this bond as further provided herein and in the supplemental indenture pursuant to which this bond has been issued. Reference is hereby made to such further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed by its Chairman of the Board and its President or a 12 10 Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary, or an Assistant Secretary with his manual or facsimile signature. Dated: THE DETROIT EDISON COMPANY By ............................. Chairman of the Board Attest: ............................. President ........................ Secretary [FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of General and Refunding Mortgage Bonds known as Series KKP No. 9, limited to an aggregate principal amount of $20,000,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of October 15, 1985) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of October 15, 1985, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of or the interest on this bond, which in those respects is unconditional. The holders of the bonds of Series KKP No. 9, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024,". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part 13 11 of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five per cent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in Section 4 of Part II of the Supplemental Indenture dated as of October 15, 1985, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof. This bond is redeemable upon the terms and conditions set forth in the Indenture, including provision for redemption upon demand of the Monroe Trust Indenture Trustee following the occurrence of an Event of Default under the Monroe Trust Indenture and the acceleration of the principal of the Monroe Revenue Bonds. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of Series KKP No. 9 (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds (or portions thereof) and interest. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. Upon payment of the principal of, or premium, if any, or interest on, the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of Series KKP No. 9 in a principal amount equal to the principal amount of such Monroe Revenue Bonds and having both a corresponding maturity date and interest rate shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds of said series shall be surrendered for cancellation or presented for appropriate notation to the Trustee. This bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee in exchange therefor, and this bond with others in like form may in like manner be exchanged for one or more new bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture. No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through 14 12 the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture. [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated TRUSTEE'S therein, described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By ............................ Authorized Officer PART II. ADDITIONAL REAL ESTATE AFTER ACQUIRED The Company, in order to secure the payment of the PROPERTY BEING principal of, and interest on, the bonds now or hereafter SPECIFICALLY issued under the Indenture according to their tenor and SUBJECTED TO effect, has granted, bargained, sold, released, conveyed, INDENTURE. assigned, transferred, pledged, set over and confirmed and by these presents does grant, bargain, sell, release, convey, assign, transfer, pledge, set over and confirm unto Bankers Trust Company, as Trustee under the Indenture, and to its successor or successors in said trust, and to its and their assigns forever, all the following described property: All those certain tracts and parcels of land located as noted in the following schedule and acquired by the Company under the deeds therein set forth:
RECORDED IN LIBER OF OFFICE OF MORTGAGES REGISTER OF OR PARCEL DEEDS FOR COUNTY NO. NAME LOCATION COUNTY OF RECORDS PAGE ----- ---- -------- --------- --------- ---- 941 AX Central Huron County Power Verona Township Huron 377 496 Plant Site 941 AY Central Huron County Power Verona Township Huron 376 090 Plant Site 941 AZ Central Huron County Power Verona Township Huron 381 389 Plant Site 934 AE Greenwood Energy Center Greenwood Township St. Clair 982 671 934 AF Greenwood Energy Center Greenwood Township St. Clair 982 671 922 S Enrico Fermi Power Plant Frenchtown Township Monroe 930 635 Addition 923 N Monroe Power Plant Addition Monroe Township Monroe 866 914 943 F Belle River Power Plant China Township St. Clair 1153 403 Addition 1043 Monroe Edison Club House Frenchtown Township Monroe 806 104 1033 AD Yukon-Saratoga Corridor Richmond Township Macomb 3722 465 1033 AE Yukon-Saratoga Corridor Richmond Township Macomb 3760 671 1033 AF Yukon-Saratoga Corridor Armada Township Macomb 3785 548 1033 AG Yukon-Saratoga Corridor Columbus Township St. Clair 1150 206 984 O Greenwood-Saratoga Corridor Kenockee Township St. Clair 992 568 904 I Genoa-North Corridor Genoa Township Livingston 707 447
15 13 ASSIGNMENT OF TOGETHER WITH all the tolls, incomes, revenues, rents, INCOME, ETC. issues and profits of the above described properties and of all properties mortgaged and conveyed by the Original Indenture and by indentures supplemental thereto. HABENDUM. TO HAVE AND TO HOLD, all the above described properties, together with all properties, real, personal and mixed, and securities mortgaged, pledged and conveyed by the Company in and by the terms of the Original Indenture and in the indentures supplemental thereto, or intended so to be, unto the Trustee and its successor or successors in said trust, and to its and their assigns forever. IN TRUST IN TRUST NEVERTHELESS, upon the terms and trusts in the NEVERTHELESS. Original Indenture and in the indentures supplemental thereto, including this Supplemental Indenture, set forth, for the equal and proportionate use, benefit and security of all present and future holders of the bonds and coupons issued and to be issued under the Original Indenture and all indentures supplemental thereto, including this Supplemental Indenture, and for the enforcement of the payment of said bonds and coupons when payable according to their tenor, purport and effect, and to secure the performance of and compliance with the covenants and conditions of said bonds and coupons and of the Original Indenture and all indentures supplemental thereto, including this Supplemental Indenture, without preference, priority or distinction as to lien or otherwise (except as otherwise provided in the Indenture) of any one bond or coupon over any other bond or coupon, or of the bonds or coupons of any series over the bonds or coupons of any other series, by reason of priority in the time of issue, sale or negotiation thereof or by reason of the purpose of issue or otherwise howsoever. PART III. RECORDING AND FILING DATA RECORDING AND The Original Indenture and indentures supplemental FILING OF ORIGINAL thereto have been recorded and/or filed and Certificates INDENTURE. of Provision for Payment have been recorded as hereinafter set forth. The Original Indenture has been recorded as a real estate mortgage and filed as a chattel mortgage in the offices of the respective Registers of Deeds of certain counties in the State of Michigan as set forth in the Supplemental Indenture dated as of September 1, 1947, has been recorded as a real estate mortgage in the office of the Register of Deeds of Genesee County, Michigan as set forth in the Supplemental Indenture dated as of May 1, 1974, has been filed in the Office of the Secretary of State of Michigan on November 16, 1951 and has been filed and recorded in the office of the Interstate Commerce Commission on December 8, 1969. RECORDING AND Pursuant to the terms and provisions of the Original FILING OF Indenture, indentures supplemental thereto heretofore SUPPLEMENTAL entered into have been recorded as a real estate mortgage INDENTURES. and/or filed as a chattel mortgage or as a financing statement in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, the Office of the Secretary of State of Michigan and the Office of the Interstate Commerce Commission, as set forth in supplemental indentures as follows:
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ----------- ------------ --------------------- June 1, 1925(a)(b) . . . . . . . . Series B Bonds February 1, 1940 August 1, 1927(a)(b) . . . . . . . Series C Bonds February 1, 1940 February 1, 1931(a)(b) . . . . . . Series D Bonds February 1, 1940 June 1, 1931(a)(b) . . . . . . . . Subject Properties February 1, 1940 October 1, 1932(a)(b) . . . . . . Series E Bonds February 1, 1940 September 25, 1935(a)(b) . . . . . Series F Bonds February 1, 1940 September 1, 1936(a)(b) . . . . . Series G Bonds February 1, 1940 November 1, 1936(a)(b) . . . . . . Subject Properties February 1, 1940
16 14
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ----------- ------------ ------------------- February 1, 1940(a)(b) . . . . . . Subject Properties September 1, 1947 December 1, 1940(a)(b) . . . . . . Series H Bonds September 1, 1947 and Additional Provisions September 1, 1947(a)(b)(c) . . . . Series I Bonds, November 15, 1951 Subject Properties and Additional Provisions March 1, 1950(a)(b)(c) . . . . . . Series J Bonds November 15, 1951 and Additional Provisions November 15, 1951 (a)(b)(c) . . . . Series K Bonds January 15, 1953 Additional Provisions and Subject Properties January 15, 1953(a)(b) . . . . . . Series L Bonds May 1, 1953 May 1, 1953(a) . . . . . . . . . . Series M Bonds March 15, 1954 and Subject Properties March 15, 1954(a)(c) . . . . . . . Series N Bonds May 15, 1955 and Subject Properties May 15, 1955(a)(c) . . . . . . . . Series O Bonds August 15, 1957 and Subject Properties August 15, 1957(a)(c) . . . . . . . Series P Bonds June 1, 1959 Additional Provisions and Subject Properties June 1, 1959(a)(c) . . . . . . . . Series Q Bonds December 1, 1966 and Subject Properties December 1, 1966(a)(c) . . . . . . Series R Bonds October 1, 1968 Additional Provisions and Subject Properties October 1, 1968(a)(c) . . . . . . Series S Bonds December 1, 1969 and Subject Properties December 1, 1969(a)(c) . . . . . . Series T Bonds July 1, 197O and Subject Properties July 1, 1970(c) . . . . . . . . . Series U Bonds December 15, 1970 and Subject Properties December 15, 1970(c) . . . . . . . Series V and June 15, 1971 Series W Bonds June 15, 1971 (c) . . . . . . . . Series X Bonds November 15, 1971 and Subject Properties November 15, 1971 (c) . . . . . . Series Y Bonds January 15, 1973 and Subject Properties January 15, 1973(c) . . . . . . . Series Z Bonds May 1, 1974 and Subject Properties May 1, 1974 . . . . . . . . . . . Series AA Bonds October 1, 1974 and Subject Properties October 1, 1974 . . . . . . . . . Series BB Bonds January 15, 1975 and Subject Properties
17 15
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ----------- ------------ ------------------- January 15, 1975 . . . . . . . . . Series CC Bonds November 1, 1975 and Subject Properties November 1, 1975 . . . . . . . . . Series DDP Nos. December 15, 1975 1-9 Bonds and Subject Properties December 15, 1975 . . . . . . . . Series EE Bonds February 1, 1976 and Subject Properties February 1, 1976 . . . . . . . . . Series FFR Nos. June 15, 1976 1-13 Bonds June 15, 1976 . . . . . . . . . . Series GGP Nos. July 15, 1976 1-7 Bonds and Subject Properties July 15, 1976 . . . . . . . . . . Series HH Bonds February 15, 1977 and Subject Properties February 15, 1977 . . . . . . . . Series MMP March 1, 1977 Bonds and Subject Properties March 1, 1977 . . . . . . . . . . Series IIP Nos. June 15, 1977 1-7 Bonds, Series JJP Nos. 1-7 Bonds, Series KKP Nos. 1-7 Bonds and Series LLP Nos. 1-7 Bonds June 15, 1977 . . . . . . . . . . Series FFR No. July 1, 1977 14 Bonds and Subject Properties July 1, 1977 . . . . . . . . . . . Series NNP Nos. October 1, 1977 1-7 Bonds and Subject Properties October 1, 1977 . . . . . . . . . Series GGP Nos. June 1, 1978 8-22 Bonds and Series OOP Nos. 1-17 Bonds and Subject Properties June 1, 1978 . . . . . . . . . . . Series PP Bonds, October 15, 1978 Series QQP Nos. 1-9 Bonds and Subject Properties October 15, 1978 . . . . . . . . . Series RR Bonds March 15, 1979 and Subject Properties March 15, 1979 . . . . . . . . . . Series SS Bonds July 1, 1979 and Subject Properties July 1, 1979 . . . . . . . . . . Series IIP Nos. September 1, 1979 8-22 Bonds, Series NNP Nos. 8-21 Bonds and Series TTP Nos. 1-15 Bonds and Subject Properties
18 16
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ----------- ------------ ------------------- September 1, 1979 . . . . . . . . Series JJP No. 8 September 15, 1979 Bonds, Series KKP No. 8 Bonds, Series LLP Nos. 8-15 Bonds, Series MMP No. 2 Bonds and Series OOP No. 18 Bonds and Subject Properties September 15, 1979 . . . . . . . . Series UU Bonds January 1, 1980 January 1, 1980 . . . . . . . . . 1980 Series A April 1, 1980 Bonds and Subject Properties April 1, 1980 . . . . . . . . . . 1980 Series B August 15, 1980 Bonds August 15, 1980 . . . . . . . . . Series QQP Nos. August 1, 1981 10-19 Bonds, 1980 Series CP Nos. 1-12 Bonds and 1980 Series DP No. 1-11 Bonds and Subject Properties August 1, 1981 . . . . . . . . . . 1980 Series CP November 1, 1981 Nos. 13-25 Bonds and Subject Properties November 1, 1981 . . . . . . . . . 1981 Series AP June 30, 1982 Nos. 1-12 Bonds June 30, 1982 . . . . . . . . . . Article XIV August 15, 1982 Reconfirmation August 15, 1982 . . . . . . . . . 1981 Series AP Nos. June 1, 1983 13-14 Bonds and Subject Properties June 1, 1983 . . . . . . . . . . 1981 Series AP October 1, 1984 Nos. 15-16 Bonds and Subject Properties October 1, 1984 . . . . . . . . . 1984 Series AP and May 1, 1985 1984 Series BP Bonds and Subject Properties May 1, 1985 . . . . . . . . . . 1985 Series A Bonds May 15, 1985 -------------------------
(a) See Supplemental Indenture dated as of July 1, 1970 for Interstate Commerce Commission filing and recordation information. (b) See Supplemental Indenture dated as of May 1, 1953 for Secretary of State of Michigan filing information. (c) See Supplemental Indenture dated as of May 1, 1974 for County of Genesee, Michigan recording and filing information. Further, pursuant to the terms and provisions of the Original Indenture, a Supplemental Indenture dated as of May 15, 1985 providing for the terms of bonds to be issued thereunder of 1985 Series B has heretofore been entered into between the Company and the Trustee and has been filed in the Office of the Secretary of State of Michigan as a financing statement on May 30, 1985 (Filing No. 67215A), has been 19 17 filed and recorded in the Office of the Interstate Commerce Commission (Recordation No. 5485-DDD), and has been recorded as a real estate mortgage in the offices of the respective Register of Deeds of certain counties in the State of Michigan, as follows:
LIBER OF MORTGAGES OR COUNTY COUNTY RECORDED RECORDS PAGE ------ -------- --------- ---- Genesee . . . . . . . . . . . . . . May 30, 1985 2266 391-411 Huron . . . . . . . . . . . . . . . May 30, 1985 461 44-64 Ingham . . . . . . . . . . . . . . . May 30, 1985 1511 1217-1237 Lapeer . . . . . . . . . . . . . . . May 30, 1985 567 711-731 Lenawee . . . . . . . . . . . . . . May 30, 1985 990 9-29 Livingston . . . . . . . . . . . . . May 30, 1985 1125 857-877 Macomb . . . . . . . . . . . . . . . May 30, 1985 3770 600-620 Mason . . . . . . . . . . . . . . . May 30, 1985 326 884-904 Monroe . . . . . . . . . . . . . . . May 30, 1985 930 702-722 Oakland . . . . . . . . . . . . . . May 30, 1985 8995 663-683 Sanilac . . . . . . . . . . . . . . May 30, 1985 377 71-91 St. Clair . . . . . . . . . . . . . May 30, 1985 827 177-197 Tuscola . . . . . . . . . . . . . . May 30, 1985 550 697-717 Washtenaw . . . . . . . . . . . . . May 30, 1985 1985 351-371 Wayne . . . . . . . . . . . . . . . May 30, 1985 22385 675-695
RECORDING OF All the bonds of Series A which were issued under the CERTIFICATES Original Indenture dated as of October 1, 1924, and of OF PROVISION Series B, C, D, E, F, G, H, I, J, K, L, M, N, O, W, BB, FOR PAYMENT. CC, DDP Nos. 1-5, FFR Nos. 1-6, GGP Nos. 1-5 and 8-11, IIP Nos. 1-4 and 8-9, JJP Nos. 1-4, KKP Nos. 1-4, LLP Nos. 1-4 and 8-9, NNP Nos. 1-4 and 8-9, OOP Nos. 1-4, QQP Nos. 1-3 and 10 and TTP No. 1-2 1980 Series A, 1980 Series CP No. 1, and 1980 Series DP No. 1 which were issued under Supplemental Indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, December 1, 1940, September 1, 1947, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, December 15, 1970, October 1, 1974, January 15, 1975, November 1, 1975, February 1, 1976, June 15, 1976, October 1, 1977, March 1, 1977, July 1, 1979, March 1, 1977, March 1, 1977, March 1, 1977, September 1, 1979, July 1, 1977, July 1, 1979, October 1, 1977, June 1, 1978, October 1, 1977, July 1, 1979, January 1, 1980 and August 15, 1980 have matured or have been called for redemption and funds sufficient for such payment or redemption have been irrevocably deposited with the Trustee for that purpose; and Certificates of Provision for Payment have been recorded in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, with respect to all bonds of Series A, B, C, D, E, F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1 and GGP No. 8. PART IV. THE TRUSTEE. TERMS AND The Trustee hereby accepts the trust hereby declared and CONDITIONS OF provided, and agrees to perform the same upon the terms ACCEPTANCE OF and conditions in the Original Indenture, as amended to TRUST BY TRUSTEE. date and as supplemented by this Supplemental Indenture, and in this Supplemental Indenture set forth, and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for and in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. 20 18 PART V. MISCELLANEOUS. EXECUTION IN This Supplemental Indenture may be simultaneously COUNTERPARTS. executed in any number of counterparts, each of which when so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument. TESTIMONIUM. IN WITNESS WHEREOF, The Detroit Edison Company and Bankers Trust Company have caused these presents to be signed in their respective corporate names by their respective Chairmen of the Board, Presidents, Vice Presidents, Assistant Vice Presidents or Treasurers and impressed with their respective corporate seals, attested by their respective Secretaries or Assistant Secretaries, all as of the day and year first above written. THE DETROIT EDISON COMPANY, (Corporate Seal) By L.L. Loomans ------------------------- L.L. Loomans Treasurer EXECUTION. Attest: Kathryn L. Westman ---------------------------- Kathryn L. Westman Secretary Signed, sealed and delivered by THE DETROIT EDISON COMPANY, in the presence of Elaine M. Godfrey ---------------------------- Elaine M. Godfrey Janet A. Scullen ---------------------------- Janet A. Scullen BANKERS TRUST COMPANY, (Corporate Seal) Joan M. Morgan --------------------------- Joan M. Morgan Vice President Attest: Michele Stein ---------------------------- Michele Stein Assistant Secretary Signed, sealed and delivered by BANKERS TRUST COMPANY, in the presence of Shirley R. West ---------------------------- Shirley R. West Claudia Dillard ---------------------------- Claudia Dillard 21 19 STATE OF MICHIGAN ss.: COUNTY OF WAYNE ACKNOWLEDGMENT On this 30th day of October, 1985, before me, the OF EXECUTION subscriber, a Notary Public within and for the County of BY COMPANY. Wayne, in the State of Michigan, personally appeared L.L. LOOMANS, to me personally known, who, being by me duly sworn, did say that he resides at 2666 Danburv Lane, Ann Arbor, Michigan 48103 and is the Treasurer of THE DETROIT EDISON COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said L.L. LOOMANS, acknowledged said instrument to be the free act and deed of said corporation. (Notarial Seal) Janet A. Scullen -------------------------------------- Janet A. Scullen Notary Public, Macomb County, Michigan My Commission Expires July 31, 1989 Acting in Wayne County, Michigan STATE OF NEW YORK COUNTY OF NEW YORK ss.: ACKNOWLEDGMENT On this 28th day of October, 1985, before me, the OF EXECUTION subscriber, a Notary Public within and for the County BY TRUSTEE. of New York, in the State of New York, personally appeared JOAN M. MORGAN, to me personally known, who, being by me duly sworn, did say that she resides at 315 Hillcrest Road, Englewood, New Jersey 07631, and is a Vice President of BANKERS TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that she knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that she subscribed her name thereto by like authority; and said JOAN M. MORGAN acknowledged said instrument to be the free act and deed of said corporation. (Notarial Seal) Louise G. Buckley --------------------------------------- Louise G. Buckley Notary Public, State of New York No. 41-4742240 Qualified in Queens County Certificate filed in New York County Commission Expires March 30, 1987 22 20 STATE OF MICHIGAN ss.: COUNTY OF WAYNE AFFIDAVIT AS TO L.L. LOOMANS, being duly sworn, says: that he is CONSIDERATION the Treasurer of THE DETROIT EDISON COMPANY, the AND GOOD FAITH. Mortgagor named in the foregoing instrument, and that he has knowledge of the facts in regard to the making of said instrument and of the consideration therefor; that the consideration for said instrument was and is actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth. L.L. Loomans --------------------------------------- L.L. Loomans Sworn to before me this 30th day of October, 1985 Janet A. Scullen --------------------------- Notary Public, Macomb County, Michigan My Commission Expires July 31, 1989 Acting in Wayne County, Michigan (Notarial Seal) This instrument was drafted by Frances B. Rohlman, Esq., 2000 Second Avenue, Detroit, Michigan 48226 EX-4.171 4 EXHIBIT 4-171 1 EXHIBIT 4-171 CONFORMED COPY THE DETROIT EDISON COMPANY (2000 Second Avenue, Detroit, Michigan 48226) TO BANKERS TRUST COMPANY (Four Albany Street, New York, New York 10015) AS TRUSTEE ------------------------ INDENTURE Dated as of July 15, 1989 ------------------------ SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST DATED AS OF OCTOBER 1, 1924 PROVIDING FOR (A) GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 10, DUE SEPTEMBER 1, 2019 AND (B) RECORDING AND FILING DATA 2 i TABLE OF CONTENTS* ------------------------
PAGE --- PARTIES.............................................................. 1 RECITALS Original Indenture and Supplementals............................... 1 Issue of Bonds under Indenture..................................... 1 Bonds heretofore issued............................................ 1 Reason for creation of new series.................................. 5 Bonds to be Series KKP No. 10...................................... 5 Further assurance.................................................. 5 Authorization of Supplemental Indenture............................ 5 Consideration for Supplemental Indenture........................... 6 PART I. CREATION OF TWO HUNDRED SEVENTY-EIGHTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 10 Sec. 1. Terms of Bonds of Series KKP No. 10.......................... 6 Sec. 2. Redemption of Bonds of Series KKP No. 10..................... 7 Exchange and transfer........................................ 7 Sec. 3. Consent...................................................... 8 Sec. 4. Form of Bonds of Series KKP No. 10........................... 9 Form of Trustee's Certificate................................ 13 PART II. RECORDING AND FILING DATA Recording and filing of Original Indenture........................... 13 Recording and filing of Supplemental Indentures...................... 13 Recording of Certificates of Provision for Payment................... 17 PART III. THE TRUSTEE Terms and conditions of acceptance of trust by Trustee............... 17 PART IV. MISCELLANEOUS Execution in Counterparts............................................ 18 Testimonium.......................................................... 18 Execution............................................................ 18 Acknowledgements..................................................... 19 Affidavit as to consideration and good faith......................... 20
------------------------ * This Table of Contents shall not have any bearing upon the interpretation of any of the terms or provisions of this Indenture. 3 1 PARTIES. SUPPLEMENTAL INDENTURE, dated as of the fifteenth day of July, in the year one thousand nine hundred and eighty-nine, between THE DETROIT EDISON COMPANY, a corporation organized and existing under the laws of the State of Michigan and a transmitting utility (hereinafter called the "Company"), party of the first part, and BANKERS TRUST COMPANY, a corporation organized and existing under the laws of the State of New York, having its corporate trust office at Four Albany Street, in the Borough of Manhattan, The City and State of New York, as Trustee under the Mortgage and Deed of Trust hereinafter mentioned (hereinafter called the "Trustee"), party of the second part. ORIGINAL WHEREAS, the Company has heretofore executed and delivered its Mortgage INDENTURE AND and Deed of Trust (hereinafter referred to as the "Original Indenture"), SUPPLEMENTALS. dated as of October 1, 1924, to the Trustee, for the security of all bonds of the Company outstanding thereunder, and pursuant to the terms and provisions of the Original Indenture, indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, June 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, November 1, 1936, February 1, 1940, December 1, 1940, September 1, 1947, March 1, 1950, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, June 1, 1959, December 1, 1966, October 1, 1968, December 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, December 15, 1975, February 1, 1976, June 15, 1976, July 15, 1976, February 15, 1977, March 1, 1977, June 15, 1977, July 1, 1977, October 1, 1977, June 1, 1978, October 15, 1978, March 15, 1979, July 1, 1979, September 1, 1979, September 15, 1979, January 1, 1980, April 1, 1980, August 15, 1980, August 1, 1981, November 1, 1981, June 30, 1982, August 15, 1982, June 1, 1983, October 1, 1984, May 1, 1985, May 15, 1985, October 15, 1985, April 1, 1986, August 15, 1986, November 30, 1986, January 31, 1987, April 1, 1987, August 15, 1987, November 30, 1987 and June 15, 1989 supplemental to the Original Indenture, have heretofore been entered into between the Company and the Trustee (the Original Indenture and all indentures supplemental thereto together being hereinafter sometimes referred to as the "Indenture"); and ISSUE OF WHEREAS, the Indenture provides that said bonds shall be issuable in one BONDS UNDER or more series, and makes provision that the rates of interest and dates INDENTURE. for the payment thereof, the date of maturity or dates of maturity, if of serial maturity, the terms and rates of optional redemption (if redeemable), the forms of registered bonds without coupons of any series and any other provisions and agreements in respect thereof, in the Indenture provided and permitted, as the Board of Directors may determine, may be expressed in a supplemental indenture to be made by the Company to the Trustee thereunder; and BONDS HERETOFORE WHEREAS, bonds in the principal amount of Four billion nine hundred ISSUED. thirty-eight million one hundred seventy-one thousand dollars ($4,938,171,000) have heretofore been issued under the Indenture as follows, viz: (1) Bonds of Series A -- Principal Amount $26,016,000, (2) Bonds of Series B -- Principal Amount $23,000,000, (3) Bonds of Series C -- Principal Amount $20,000,000, (4) Bonds of Series D -- Principal Amount $50,000,000, (5) Bonds of Series E -- Principal Amount $15,000,000, (6) Bonds of Series F -- Principal Amount $49,000,000, (7) Bonds of Series G -- Principal Amount $35,000,000, (8) Bonds of Series H -- Principal Amount $50,000,000, (9) Bonds of Series I -- Principal Amount $60,000,000, (10) Bonds of Series J -- Principal Amount $35,000,000, (11) Bonds of Series K -- Principal Amount $40,000,000, (12) Bonds of Series L -- Principal Amount $24,000,000, (13) Bonds of Series M -- Principal Amount $40,000,000, (14) Bonds of Series N -- Principal Amount $40,000,000, (15) Bonds of Series O -- Principal Amount $60,000,000, (16) Bonds of Series P -- Principal Amount $70,000,000,
4 2 (17) Bonds of Series Q -- Principal Amount $40,000,000, (18) Bonds of Series W -- Principal Amount $50,000,000, (19) Bonds of Series BB -- Principal Amount $50,000,000, (20) Bonds of Series CC -- Principal Amount $50,000,000, (21-28) Bonds of Series DDP Nos. 1-8 -- Principal Amount $6,400,000, (29-38) Bonds of Series FFR Nos. 1-10 -- Principal Amount $5,800,000, (39-52) Bonds of Series GGP Nos. 1-6 and 8-15 -- Principal Amount $7,960,000, (53-64) Bonds of Series IIP Nos. 1-6 and 8-13 -- Principal Amount $450,000, (65-70) Bonds of Series JJP Nos. 1-6 -- Principal Amount $690,000, (71-76) Bonds of Series KKP Nos. 1-6 -- Principal Amount $1,590,000, (77-88) Bonds of Series LLP Nos. 1-6 and 8-13 -- Principal Amount $4,760,000, (89-100) Bonds of Series NNP Nos. 1-6 and 8-13 -- Principal Amount $7,950,000, (101-107) Bonds of Series OOP Nos. 1-7 -- Principal Amount $2,345,000, (108-119) Bonds of Series QQP Nos. 1-7 and 10-14 -- Principal Amount $7,075,000, (120-125) Bonds of Series TTP Nos. 1-6 -- Principal Amount $330,000, (126) Bonds of 1980 Series A -- Principal Amount $50,000,000, (127-133) Bonds of 1980 Series CP Nos. 1-4 and 13-15 -- Principal Amount $2,560,000, (134-137) Bonds of 1980 Series DP Nos. 1-4 -- Principal Amount $740,000, (138-140) Bonds of 1981 Series AP Nos. 1-3 -- Principal Amount $2,400,000, all of which have either been retired and cancelled, or no longer represent obligations of the Company, having been called for redemption and funds necessary to effect the payment, redemption and retirement thereof having been deposited with the Trustee as a special trust fund to be applied for such purpose; (141) Bonds of Series R in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (142) Bonds of Series S in the principal amount of One hundred fifty million dollars ($150,000,000), all of which are outstanding at the date hereof; (143) Bonds of Series T in the principal amount of Seventy-five million dollars ($75,000,000), all of which are outstanding at the date hereof; (144) Bonds of Series U in the principal amount of Seventy-five million dollars ($75,000,000), all of which are outstanding at the date hereof; (145) Bonds of Series V in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (146) Bonds of Series X in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (147) Bonds of Series Y in the principal amount of Sixty million dollars ($60,000,000), all of which are outstanding at the date hereof; (148) Bonds of Series Z in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (149) Bonds of Series AA in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (150) Bonds of Series DDP No. 9 in the principal amount of Seven million nine hundred five thousand dollars ($7,905,000), of which Eight hundred thousand dollars ($800,000) principal amount have heretofore been retired and Seven million one hundred five thousand dollars ($7,105,000) principal amount are outstanding at the date hereof;
5 3 (151) Bonds of Series EE in the principal amount of Fifty million dollars ($50,000,000), of which Twenty-five million dollars ($25,000,000) principal amount have heretofore been retired and Twenty-five million dollars ($25,000,000) principal amount are outstanding at the date hereof; (152-155) Bonds of Series FFR Nos. 11-14 in the principal amount of Thirty-nine million eight hundred thousand dollars ($39,800,000), all of which are outstanding at the date hereof; (156-163) Bonds of Series GGP Nos. 7 and 16-22 in the principal amount of Thirty-four million three hundred forty thousand dollars ($34,340,000), of which Two million four hundred thousand dollars ($2,400,000) principal amount have heretofore been retired and Thirty-one million nine hundred forty thousand dollars ($31,940,000) principal amount are outstanding at the date hereof; (164) Bonds of Series HH in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (165-166) Bonds of Series MMP and MMP No. 2 in the principal amount of Five million four hundred thirty thousand dollars ($5,430,000), of which One million ninety thousand dollars ($1,090,000) principal amount have heretofore been retired and Four million three hundred forty thousand dollars ($4,340,000) principal amount are outstanding at the date hereof; (167-176) Bonds of Series IIP Nos. 7 and 14-22 in the principal amount of Three million three hundred thousand dollars ($3,300,000), of which One hundred ten thousand dollars principal amount have heretofore been retired and Three million one hundred ninety thousand dollars ($3,190,000) principal amount are outstanding at the date hereof; (177-178) Bonds of Series JJP Nos. 7-8 in the principal amount of Six million one hundred sixty thousand dollars ($6,160,000), of which Three hundred fifty thousand dollars ($350,000) principal amount have heretofore been retired and Five million eight hundred ten thousand dollars ($5,810,000) are outstanding at the date hereof; (179-181) Bonds of Series KKP Nos. 7-9 in the principal amount of Thirty-three million three hundred thousand dollars ($33,300,000), of which Seven hundred ten thousand dollars ($710,000) principal amount have heretofore been retired and Thirty-two million five hundred ninety thousand dollars ($32,590,000) are outstanding at the date hereof; (182-184) Bonds of Series LLP Nos. 7 and 14-15 in the principal amount of Four million ninety thousand dollars ($4,090,000), of which Two million five hundred thirty-five thousand dollars ($2,535,000) principal amount have heretofore been retired and One million five hundred fifty- five thousand dollars ($1,555,000) principal amount are outstanding at the date hereof; (185-193) Bonds of Series NNP Nos. 7 and 14-21 in the principal amount of Forty million ($40,000,000), of which One million six hundred fifty thousand dollars ($1,650,000) principal amount have heretofore been retired and Thirty-eight million three hundred fifty thousand dollars ($38,350,000) principal amount are outstanding at the date hereof; (194-204) Bonds of Series OOP Nos. 8-18 in the principal amount of Sixteen million five hundred thirty-five thousand dollars ($16,535,000), of which Two hundred thousand dollars ($200,000) principal amount have heretofore been retired and Sixteen million three hundred thirty-five thousand dollars ($16,335,000) are outstanding at the date hereof; (205) Bonds of Series PP in the principal amount of Seventy million dollars ($70,000,000), all of which are outstanding at the date hereof;
6 4 (206-212) Bonds of Series QQP Nos. 8-9 and 15-19 in the principal amount of Six million five hundred seventy-five thousand dollars ($6,575,000), all of which are outstanding at the date hereof; (213) Bonds of Series RR in the principal amount of Seventy million dollars ($70,000,000), all of which are outstanding at the date hereof; (214) Bonds of Series SS in the principal amount of One hundred fifty million dollars ($150,000,000), of which Fifty million dollars ($50,000,000) principal amount have heretofore been retired and One hundred million dollars ($100,000,000) principal amount are outstanding at the date hereof; (215-223) Bonds of Series TTP Nos. 7-15 in the principal amount of Three million four hundred seventy thousand dollars ($3,470,000), all of which are outstanding at the date hereof; (224) Bonds of Series UU in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (225) Bonds of 1980 Series B in the principal amount of One hundred million dollars ($100,000,000), of which Fifty-three million two hundred thousand dollars ($53,200,000) principal amount have heretofore been retired and Forty-six million eight hundred thousand dollars ($46,800,000) principal amount are outstanding at the date hereof; (226-243) Bonds of 1980 Series CP Nos. 5-12 and 16-25 in the principal amount of Thirty- two million four hundred forty thousand dollars ($32,440,000), all of which are outstanding at the date hereof; (244-250) Bonds of 1980 Series DP Nos. 5-11 in the principal amount of Ten million ten thousand dollars ($10,010,000), all of which are outstanding at the date hereof; (251-263) Bonds of 1981 Series AP Nos. 4-16 in the principal amount of One hundred twenty- one million six hundred thousand dollars ($121,600,000), all of which are outstanding at the date hereof; (264) Bonds of 1984 Series AP in the principal amount of Two million four hundred thousand dollars ($2,400,000), all of which are outstanding at the date hereof; (265) Bonds of 1984 Series BP in the principal amount of Seven million seven hundred fifty thousand dollars ($7,750,000), all of which are outstanding at the date hereof; (266) Bonds of 1985 Series A in the principal amount of Thirty-five million dollars ($35,000,000), all of which are outstanding at the date hereof; (267) Bonds of 1985 Series B in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (268) Bonds of 1986 Series A in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; (269) Bonds of 1986 Series B in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (270) Bonds of 1986 Series C in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; (271) Bonds of 1987 Series A in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof; (272) Bonds of 1987 Series B in the principal amount of One hundred seventy-five million dollars ($175,000,000), all of which are outstanding at the date hereof; (273) Bonds of 1987 Series C in the principal amount of Two hundred twenty-five million dollars ($225,000,000), all of which are outstanding at the date hereof; (274) Bonds of 1987 Series D in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof; (275) Bonds of 1987 Series E in the principal amount of One hundred fifty million dollars ($150,000,000), all of which are outstanding at the date hereof;
7 5 (276) Bonds of 1987 Series F in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; and (277) Bonds of 1989 Series A in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof; and, accordingly, of the bonds so issued, Three billion eight hundred seventy- two million sixty thousand dollars ($3,872,060,000) principal amount are outstanding at the date hereof; and REASON FOR WHEREAS, the County of Monroe, Michigan has agreed to issue and sell CREATION OF $30,000,000 principal amount of its Pollution Control Revenue Bonds (The NEW SERIES. Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1989 so as to provide funds for the purchase and construction of certain pollution control facilities installed in the Company's Fermi 2 Plant; and WHEREAS, the Company has entered into an Installment Sales Contract, dated as of March 1, 1977 and amended as of September 1, 1979, October 15, 1985 and July 1, 1989 with the County of Monroe, in order to purchase certain pollution control facilities, and pursuant to such Installment Sales Contract the Company has agreed to issue its General and Refunding Mortgage Bonds under the Indenture in order further to secure its obligations under such Installment Sales Contract; and WHEREAS, for such purposes the Company desires to issue a new series of bonds to be issued under the Indenture and to be authenticated and delivered pursuant to Section 8 of Article III of the Indenture; and BONDS TO BE WHEREAS, the Company desires by this Supplemental Indenture to create SERIES KKP such new series of bonds, to be designated "General and Refunding Mortgage NO. 10 Bonds, Series KKP No. 10"; and FURTHER WHEREAS, the Original Indenture, by its terms, includes in the property ASSURANCE. subject to the lien thereof all of the estates and properties, real, personal and mixed, rights, privileges and franchises of every nature and kind and wheresoever situate, then or thereafter owned or possessed by or belonging to the Company or to which it was then or at any time thereafter might be entitled in law or in equity (saving and excepting, however, the property therein specifically excepted or released from the lien thereof), and the Company therein covenanted that it would, upon reasonable request, execute and deliver such further instruments as may be necessary or proper for the better assuring and confirming unto the Trustee all or any part of the trust estate, whether then or thereafter owned or acquired by the Company (saving and excepting, however, property specifically excepted or released from the lien thereof); and AUTHORIZATION WHEREAS, the Company in the exercise of the powers and authority OF SUPPLEMENTAL conferred upon and reserved to it under and by virtue of the provisions of INDENTURE. the Indenture, and pursuant to resolutions of its Board of Directors has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture in the form hereof for the purposes herein provided; and WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized; CONSIDERATION NOW, THEREFORE, THIS INDENTURE WITNESSETH: That The Detroit Edison FOR SUPPLEMENTAL Company, in consideration of the premises and of the covenants contained INDENTURE. in the Indenture and of the sum of One Dollar ($1.00) and other good and valuable consideration to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trusts under the Original Indenture and in said indentures supplemental thereto as follows:
8 6 PART I. CREATION OF TWO HUNDRED SEVENTY-EIGHTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 10 CERTAIN TERMS SECTION 1. The Company hereby creates the Two hundred seventy-eighth OF BONDS OF series of bonds to be issued under and secured by the Original Indenture SERIES KKP as amended to date and as further amended by this Supplemental Indenture, NO. 10 to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, Series KKP No. 10" (elsewhere herein referred to as the "bonds of Series KKP No. 10"). The aggregate principal amount of bonds of Series KKP No. 10 shall be limited to Thirty million dollars ($30,000,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. Each bond of Series KKP No. 10 is to be irrevocably assigned to, and registered in the name of, Manufacturers National Bank of Detroit, as trustee, or a successor trustee (said trustee or any successor trustee being hereinafter referred to as the "Monroe Trust Indenture Trustee"), under the Trust Indenture, dated as of March 1, 1977, as amended September 1, 1979, October 15, 1985 and July 1, 1989 (hereinafter called the " Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and the Monroe Trust Indenture Trustee, to secure payment of the County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1989 (hereinafter called the "Monroe Revenue Bonds"), issued by Monroe under the Monroe Trust Indenture, the proceeds of which (other than any accrued interest thereon) have been provided for the acquisition and construction of certain pollution control facilities which the Company has agreed to purchase pursuant to the provisions of the Installment Sales Contract, dated as of March 1, 1977, as amended as of September 1, 1979, as of October 15, 1985 and as of July 1, 1989 (hereinafter called the "Monroe Contract"), between the Company and Monroe. The bonds of Series KKP No. 10 shall be issued as registered bonds without coupons in denominations of a multiple of $5,000. The bonds of Series KKP No. 10 shall be issued in the aggregate principal amount of $30,000,000, shall mature on September 1, 2019 and shall bear interest, payable semi-annually on March 1 and September 1 of each year (commencing March 1, 1990), at the rate of 7.30%, until the principal thereof shall have become due and payable and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. The bonds of Series KKP No. 10 shall be payable as to principal, premium, if any, and interest as provided in the Indenture, but only to the extent and in the manner herein provided. The bonds of Series KKP No. 10 shall be payable, both as to principal and interest, at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. Except as provided herein, each bond of Series KKP No. 10 shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the March 1 or September 1 next preceding the date thereof to which interest has been paid on bonds of Series KKP No. 10, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication, or unless the date of authentication is prior to September 1, 1989, in which case interest shall be payable from July 1, 1989.
9 7 The bonds of Series KKP No. 10 in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denominations of bonds of Series KKP No. 10). Until bonds of Series KKP No. 10 in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of Series KKP No. 10 in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of Series KKP No. 10, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of Series KKP No. 10, but with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company. Bonds of Series KKP No. 10 shall not be assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney. Bonds of Series KKP No. 10 shall in the same manner be exchangeable for a like aggregate principal amount of bonds of Series KKP No. 10 upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of Series KKP No. 10, during any period of ten days next preceding any redemption date for such bonds. Bonds of Series KKP No. 10, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or as may be specified in the Monroe Contract. Upon payment of the principal or premium, if any, or interest on the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise, or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of Series KKP No. 10 in a principal amount equal to the principal amount of such Monroe Revenue Bonds, shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds shall be surrendered for cancellation or presented for appropriate notation to the Trustee. REDEMPTION SECTION 2. Bonds of Series KKP No. 10 shall be redeemed on the OF BONDS respective dates and in the respective principal amounts which correspond OF SERIES KKP to the redemption dates for, and the principal amounts to be redeemed of, NO. 10 the Monroe Revenue Bonds. In the event the Company elects to redeem any Monroe Revenue Bonds prior to maturity in accordance with the provisions of the Monroe Trust Indenture, the Company shall on the same date redeem bonds of Series KKP No. 10 in principal amounts and at redemption prices corresponding to the Monroe Revenue Bonds so redeemed. The Company agrees to give the Trustee notice of any such redemption of bonds of Series KKP No. 10 on the same date as it gives notice of redemption of Monroe Revenue Bonds to the Monroe Trust Indenture Trustee.
10 8 REDEMPTION SECTION 3. In the event of an Event of Default under the Monroe Trust OF BONDS OF Indenture and the acceleration of all Monroe Revenue Bonds, the bonds of SERIES KKP Series KKP No. 10 shall be redeemable in whole upon receipt by the Trustee NO. 10 IN EVENT of a written demand (hereinafter called a "Redemption Demand") from the OF ACCELERATION Monroe Trust Indenture Trustee stating that there has occurred under the OF MONROE Monroe Trust Indenture both an Event of Default and a declaration of REVENUE BONDS. acceleration of payment of principal, accrued interest and premium, if any, on the Monroe Revenue Bonds, specifying the last date to which interest on the Monroe Revenue Bonds has been paid (such date being hereinafter referred to as the "Initial Interest Accrual Date") and demanding redemption of the bonds of said series. The Trustee shall, within five days after receiving such Redemption Demand, mail a copy thereof to the Company marked to indicate the date of its receipt by the Trustee. Promptly upon receipt by the Company of such copy of a Redemption Demand, the Company shall fix a date on which it will redeem the bonds of said series so demanded to be redeemed (hereinafter called the "Demand Redemption Date"). Notice of the date fixed as the Demand Redemption Date shall be mailed by the Company to the Trustee at least ten days prior to such Demand Redemption Date. The date to be fixed by the Company as and for the Demand Redemption Date may be any date up to and including the earlier of (x) the 60th day after receipt by the Trustee of the Redemption Demand or (y) the maturity date of such bonds first occurring following the 20th day after the receipt by the Trustee of the Redemption Demand; provided, however, that if the Trustee shall not have received such notice fixing the Demand Redemption Date on or before the 10th day preceding the earlier of such dates, the Demand Redemption Date shall be deemed to be the earlier of such dates. The Trustee shall mail notice of the Demand Redemption Date (such notice being hereinafter called the "Demand Redemption Notice") to the Monroe Trust Indenture Trustee not more than ten nor less than five days prior to the Demand Redemption Date. Each bond of Series KKP No. 10 shall be redeemed by the Company on the Demand Redemption Date therefore upon surrender thereof by the Monroe Trust Indenture Trustee to the Trustee at a redemption price equal to the principal amount thereof plus accrued interest thereon at the rate specified for such bond from the Initial Interest Accrual Date to the Demand Redemption Date plus an amount equal to the aggregate premium, if any, due and payable on such Demand Redemption Date on all Monroe Revenue Bonds; provided, however, that in the event of a receipt by the Trustee of a notice that, pursuant to Section 1010 of the Monroe Trust Indenture, the Monroe Trust Indenture Trustee has terminated proceedings to enforce any right under the Monroe Trust Indenture, then any Redemption Demand shall thereby be rescinded by the Monroe Trust Indenture Trustee, and no Demand Redemption Notice shall be given, or, if already given, shall be automatically annulled; but no such rescission or annulment shall extend to or affect any subsequent default or impair any right consequent thereon. Anything herein contained to the contrary notwithstanding, the Trustee is not authorized to take any action pursuant to a Redemption Demand and such Redemption Demand shall be of no force or effect, unless it is executed in the name of the Monroe Trust Indenture Trustee by its President or one of its Vice Presidents. CONSENT. SECTION 4. The holders of the bonds of Series KKP No. 10, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five per cent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in this Section 4, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
11 9 FORM OF BONDS SECTION 5. The bonds of Series KKP No. 10 and the form of Trustee's OF SERIES KKP Certificate to be endorsed on such bonds shall be substantially in the NO. 10. following forms, respectively: THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND SERIES KKP NO. 10, 7.30% DUE SEPTEMBER 1, 2019 Notwithstanding any provisions hereof or in the Indenture, this bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Trust Indenture, dated as of March 1, 1977 and amended as of September 1, 1979, October 15, 1985 and July 1, 1989 between the County of Monroe, Michigan and Manufacturers National Bank of Detroit, as trustee, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under said Trust Indenture. $......... No.......... THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to Manufacturers National Bank of Detroit, as trustee, or registered assigns, at the Company's office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of dollars ($ ) in lawful money of the United States of America on the date specified in the title hereof and interest thereon at the rate specified in the title hereof, in like lawful money, from July 1, 1989, and after the first payment of interest on bonds of this Series has been made or otherwise provided for, from the most recent date to which interest has been paid or otherwise provided for, semi-annually on March 1 and September 1 of each year (commencing March 1, 1990), until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Under a Trust Indenture, dated as of March 1, 1977 and amended as of September 1, 1979, October 15, 1985 and July 1, 1989 (hereinafter called the "Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and Manufacturers National Bank of Detroit, as trustee (hereinafter called the "Monroe Trust Indenture Trustee"), Monroe has issued Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1989 (hereinafter called the "Monroe Revenue Bonds"). This bond was originally issued to Monroe and simultaneously irrevocably assigned to the Monroe Trust Indenture Trustee so as to secure the payment of the Monroe Revenue Bonds. Payments of principal of, or premium, if any, or interest on, Monroe Revenue Bonds shall constitute like payments on this bond as further provided herein and in the supplemental indenture pursuant to which this bond has been issued. Reference is hereby made to such further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary with his manual or facsimile signature.
12 10 Dated: THE DETROIT EDISON COMPANY By ............................ Chairman of the Board ............................ Attest: President ........................ Secretary [FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of General and Refunding Mortgage Bonds known as Series KKP No. 10, limited to an aggregate principal amount of $30,000,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of July 15, 1989) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of July 15, 1989, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of or the interest on this bond, which in those respects is unconditional.
13 11 The holders of the bonds of Series KKP No. 10, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024,". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five per cent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in Section 4 of Part I of the Supplemental Indenture dated as of July 15, 1989, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof. This bond is redeemable upon the terms and conditions set forth in the Indenture, including provision for redemption upon demand of the Monroe Trust Indenture Trustee following the occurrence of an Event of Default under the Monroe Trust Indenture and the acceleration of the principal of the Monroe Revenue Bonds. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of Series KKP No. 10 (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds (or portions thereof) and interest. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. Upon payment of the principal of, or premium, if any, or interest on, the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of Series KKP No. 10 in a principal amount equal to the principal amount of such Monroe Revenue Bonds and having both a corresponding maturity date and interest rate shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds of said series shall be surrendered for cancellation or presented for appropriate notation to the Trustee. This bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee in exchange therefor, and this bond with others in like form may in like manner be exchanged for one or more new bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture.
14 12 No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture.
15 13 [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated therein, TRUSTEE'S described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By ........................... Authorized Officer PART II. RECORDING AND FILING DATA RECORDING AND The Original Indenture and indentures supplemental thereto have been FILING OF ORIGINAL recorded and/or filed and Certificates of Provision for Payment have been INDENTURE. recorded as hereinafter set forth. The Original Indenture has been recorded as a real estate mortgage and filed as a chattel mortgage in the offices of the respective Registers of Deeds of certain counties in the State of Michigan as set forth in the Supplemental Indenture dated as of September 1, 1947, has been recorded as a real estate mortgage in the office of the Register of Deeds of Genesee County, Michigan as set forth in the Supplemental Indenture dated as of May 1, 1974, has been filed in the Office of the Secretary of State of Michigan on November 16, 1951 and has been filed and recorded in the office of the Interstate Commerce Commission on December 8, 1969. RECORDING AND Pursuant to the terms and provisions of the Original Indenture, FILING OF indentures supplemental thereto heretofore entered into have been recorded SUPPLEMENTAL as a real estate mortgage and/or filed as a chattel mortgage or as a INDENTURES. financing statement in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, the Office of the Scretary of State of Michigan and the Office of the Interstate Commerce Commission, as set forth in supplemental indentures as follows:
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ June 1, 1925(a)(b)................ Series B Bonds February 1, 1940 August 1, 1927(a)(b).............. Series C Bonds February 1, 1940 February 1, 1931(a)(b)............ Series D Bonds February 1, 1940 June 1, 1931(a)(b)................ Subject Properties February 1, 1940 October 1, 1932(a)(b)............. Series E Bonds February 1, 1940 September 25, 1935(a)(b).......... Series F Bonds February 1, 1940 September 1, 1936(a)(b)........... Series G Bonds February 1, 1940 November 1, 1936(a)(b)............ Subject Properties February 1, 1940 February 1, 1940(a)(b)............ Subject Properties September 1, 1947 December 1, 1940(a)(b)............ Series H Bonds and Addi- September 1, 1947 tional Provisions September 1, 1947(a)(b)(c)........ Series I Bonds, November 15, 1951 Subject Properties and Additional Provisions March 1, 1950(a)(b)(c)............ Series J Bonds November 15, 1951 and Additional Provi- sions November 15, 1951(a)(b)(c)........ Series K Bonds January 15, 1953 Additional Provisions and Subject Properties January 15, 1953(a)(b)............ Series L Bonds May 1, 1953
16 14
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ May 1, 1953(a).................... Series M Bonds March 15, 1954 and Subject Properties March 15, 1954(a)(c).............. Series N Bonds May 15, 1955 and Subject Properties May 15, 1955(a)(c)................ Series O Bonds August 15, 1957 and Subject Properties August 15, 1957(a)(c)............. Series P Bonds June 1, 1959 Additional Provisions and Subject Properties June 1, 1959(a)(c)................ Series Q Bonds December 1, 1966 and Subject Properties December 1, 1966(a)(c)............ Series R Bonds October 1, 1968 Additional Provisions and Subject Properties October 1, 1968(a)(c)............. Series S Bonds December 1, 1969 and Subject Properties December 1, 1969(a)(c)............ Series T Bonds July 1, 1970 and Subject Properties July 1, 1970(c)................... Series U Bonds December 15, 1970 and Subject Properties December 15, 1970(c).............. Series V and June 15, 1971 Series W Bonds June 15, 1971(c).................. Series X Bonds November 15, 1971 and Subject Properties November 15, 1971(c).............. Series Y Bonds January 15, 1973 and Subject Properties January 15, 1973(c)............... Series Z Bonds May 1, 1974 and Subject Properties May 1, 1974....................... Series AA Bonds October 1, 1974 and Subject Properties October 1, 1974................... Series BB Bonds January 15, 1975 and Subject Properties January 15, 1975.................. Series CC Bonds November 1, 1975 and Subject Properties November 1, 1975.................. Series DDP Nos. 1-9 December 15, 1975 Bonds and Subject Properties December 15, 1975................. Series EE Bonds February 1, 1976 and Subject Properties February 1, 1976.................. Series FFR Nos. 1-13 June 15, 1976 Bonds June 15, 1976..................... Series GGP Nos. 1-7 July 15, 1976 Bonds and Subject Properties July 15, 1976..................... Series HH Bonds February 15, 1977 and Subject Properties February 15, 1977................. Series MMP Bonds and March 1, 1977 Subject Properties March 1, 1977..................... Series IIP Nos. 1-7 June 15, 1977 Bonds, Series JJP Nos. 1-7 Bonds, Series KKP Nos. 1-7 Bonds and Series LLP Nos. 1-7 Bonds June 15, 1977..................... Series FFR No. 14 Bonds July 1, 1977 and Subject Properties
17 15
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ July 1, 1977...................... Series NNP Nos. 1-7 October 1, 1977 Bonds and Subject Properties October 1, 1977................... Series GGP Nos. 8-22 June 1, 1978 Bonds and Series OOP Nos. 1-17 Bonds and Subject Properties June 1, 1978...................... Series PP Bonds, October 15, 1978 Series QQP Nos. 1-9 Bonds and Subject Properties October 15, 1978.................. Series RR Bonds March 15, 1979 and Subject Properties March 15, 1979.................... Series SS Bonds July 1, 1979 and Subject Properties July 1, 1979...................... Series IIP Nos. 8-22 September 1, 1979 Bonds, Series NNP Nos. 8-21 Bonds and Series TTP Nos. 1-15 Bonds and Subject Properties September 1, 1979................. Series JJP No. 8 Bonds, September 15, 1979 Series KKP No. 8 Bonds, Series LLP Nos. 8-15 Bonds, Series MMP No. 2 Bonds and Series OOP No. 18 Bonds and Subject Properties September 15, 1979................ Series UU Bonds January 1, 1980 January 1, 1980................... 1980 Series A Bonds and April 1, 1980 Subject Properties April 1, 1980..................... 1980 Series B Bonds August 15, 1980 August 15, 1980................... Series QQP Nos. 10-19 August 1, 1981 Bonds, 1980 Series CP Nos. 1-12 Bonds and 1980 Series DP No. 1-11 Bonds and Subject Properties August 1, 1981.................... 1980 Series CP Nos. November 1, 1981 13-25 Bonds and Subject Properties November 1, 1981.................. 1981 Series AP Nos. 1-12 June 30, 1982 Bonds June 30, 1982..................... Article XIV August 15, 1982 Reconfirmation August 15, 1982................... 1981 Series AP Nos. June 1, 1983 13-14 and Subject Properties June 1, 1983...................... 1981 Series AP Nos. October 1, 1984 15-16 and Subject Properties October 1, 1984................... 1984 Series AP and 1984 May 1, 1985 Series BP Bonds and Subject Properties May 1, 1985....................... 1985 Series A Bonds May 15, 1985 May 15, 1985...................... 1985 Series B Bonds and October 15, 1985 Subject Properties
18 16
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ October 15, 1985.................. Series KKP No. 9 Bonds April 1, 1986 and Subject Properties April 1, 1986..................... 1986 Series A and August 15, 1986 Subject Properties August 15, 1986................... 1986 Series B and November 30, 1986 Subject Properties November 30, 1986................. 1986 Series C Janaury 31, 1987 January 31, 1987.................. 1987 Series A April 1, 1987 April 1, 1987..................... 1987 Series B and 1987 August 15, 1987 Series C August 15, 1987................... 1987 Series D and 1987 November 30, 1987 Series E and Subject Properties November 30, 1987................. 1987 Series F June 15, 1989
------------------------------------------ (a) See Supplemental Indenture dated as of July 1, 1970 for Interstate Commerce Commission filing and recordation information. (b) See Supplemental Indenture dated as of May 1, 1953 for Secretary of State of Michigan filing information. (c) See Supplemental Indenture dated as of May 1, 1974 for County of Genesee, Michigan recording and filing information. Further, pursuant to the terms and provisions of the Original Indenture, a Supplemental Indenture dated as of June 15, 1989 providing for the terms of bonds to be issued thereunder of 1989 Series A has heretofore been entered into between the Company and the Trustee and has been filed in the Office of the Secretary of State of Michigan as a financing statement on June 26, 1989 (Filing No. 95793A), has been filed and recorded in the Office of the Interstate Commerce Commission (Recordation No. 5485-MMM), and has been recorded as a real estate mortgage in the offices of the respective Register of Deeds of certain counties in the State of Michigan, as follows:
LIBER OF MORTGAGES OR COUNTY COUNTY RECORDED RECORDS PAGE -------------------------------- ------------- ------ ---------- Genesee......................... June 26, 1989 2515 559-581 Huron........................... June 26, 1989 525 420-442 Ingham.......................... June 26, 1989 1762 166-188 Lapeer.......................... June 26, 1989 663 562-584 Lenawee......................... June 26, 1989 1098 723-745 Livingston...................... June 26, 1989 1350 936-958 Macomb.......................... June 26, 1989 04671 742-764 Mason........................... June 26, 1989 381 750-772 Monroe.......................... June 26, 1989 1082 0466-0488 Oakland......................... June 26, 1989 10955 346-368 Sanilac......................... June 26, 1989 403 718-740 St. Clair....................... June 26, 1989 932 735-757 Tuscola......................... June 26, 1989 593 1035-1057 Washtenaw....................... June 26, 1989 2326 425-447 Wayne........................... June 26, 1989 24229 673-695
19 17 RECORDING OF All the bonds of Series A which were issued under the Original CERTIFICATES Indenture dated as of October 1, 1924, and of Series B, C, D, E, F, G, H, OF PROVISION I, J, K, L, M, N, O, P, Q, W, BB, CC, DDP Nos. 1-7, FFR Nos. 1-10, GGP FOR PAYMENT. Nos. 1-6 and 8-15, IIP Nos. 1-6 and 8-13, JJP Nos. 1-6, KKP Nos. 1-6, LLP Nos. 1-6 and 8-13, NNP Nos. 1-6 and 8-13, OOP Nos. 1-7, QQP Nos. 1-7 and 10-14 and TTP Nos. 1-6, 1980 Series A, 1980 Series CP Nos. 1-4 and 13-15, 1980 Series DP Nos. 1-4 and 1981 Series AP No. 1-3 which were issued under Supplemental Indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, December 1, 1940, September 1, 1947, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, December 15, 1970, October 1, 1974, January 15, 1975, November 1, 1975, February 1, 1976, June 15, 1976, October 1, 1977, March 1, 1977, July 1, 1979, March 1, 1977, March 1, 1977, March 1, 1977, September 1, 1979, July 1, 1977, July 1, 1979, October 1, 1977, June 1, 1978, October 1, 1977, July 1, 1979, January 1, 1980, August 15, 1980 and November 1, 1981 have matured or have been called for redemption and funds sufficient for such payment or redemption have been irrevocably deposited with the Trustee for that purpose; and Certificates of Provision for Payment have been recorded in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, with respect to all bonds of Series A, B, C, D, E, F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1 and GGP No. 8. PART III. THE TRUSTEE. TERMS AND The Trustee hereby accepts the trust hereby declared and provided, and CONDITIONS OF agrees to perform the same upon the terms and conditions in the Original ACCEPTANCE OF Indenture, as amended to date and as supplemented by this Supplemental TRUST BY TRUSTEE. Indenture, and in this Supplemental Indenture set forth, and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for and in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely.
20 18 PART IV. MISCELLANEOUS. EXECUTION IN This Supplemental Indenture may be simultaneously executed in any COUNTERPARTS. number of counterparts, each of which when so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument. TESTIMONIUM. IN WITNESS WHEREOF, The Detroit Edison Company and Bankers Trust Company have caused these presents to be signed in their respective corporate names by their respective Chairmen of the Board, Presidents, Vice Presidents, Assistant Vice Presidents or Treasurers and impressed with their respective corporate seals, attested by their respective Secretaries or Assistant Secretaries, all as of the day and year first above written. THE DETROIT EDISON COMPANY, (Corporate Seal) By /s/ L. L. LOOMANS --------------------------- L. L. Loomans Treasurer EXECUTION. Attest: /s/ ELAINE M. GODFREY --------------------------- Elaine M. Godfrey Assistant Secretary Signed, sealed and delivered by THE DETROIT EDISON COMPANY, in the presence of /s/ PEARL KOTTER --------------------------- Pearl Kotter /s/ BETTY M. HANSEN --------------------------- Betty M. Hansen (Corporate Seal) BANKERS TRUST COMPANY, -------------------------- By /s/ BARBARAJOINER Barbara A. Joiner Vice President Attest: /s/ SANDRA SHIRLEY --------------------------- Sandra Shirley Assistant Secretary Signed, sealed and delivered by BANKERS TRUST COMPANY, in the presence of /s/ ERIC M. HAWNER --------------------------- Eric M. Hawner /s/ TODD A. GASPER --------------------------- Todd A. Gasper
21 19 STATE OF MICHIGAN COUNTY OF WAYNE SS.: ACKNOWLEDGMENT On this 19th day of July, 1989, before me, the subscriber, a Notary Public OF EXECUTION within and for the County of Wayne, in the State of Michigan, personally BY COMPANY. appeared L. L. Loomans, to me personally known, who, being by me duly sworn, did say that he does business at 2000 Second Avenue, Detroit, Michigan 48226 and is the Treasurer of THE DETROIT EDISON COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said L. L. Loomans, acknowledged said instrument to be the free act and deed of said corporation. /s/ JANET A. SCULLEN ------------------------------- (Notarial Seal) Janet A. Scullen, Notary Public Macomb County, MI (Acting in Wayne County) My Commission Expires July 31, 1989 STATE OF MICHIGAN COUNTY OF WAYNE SS.: ACKNOWLEDGMENT On this 18th day of July, 1989, before me, the subscriber, a Notary Public OF EXECUTION within and for the County of New York, in the State of New York, BY TRUSTEE. personally appeared Barbara A. Joiner, to me personally known, who, being by me duly sworn, did say that she does business at Four Albany Street, New York, New York 10015, and is Vice President of BANKERS TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that she knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that she subscribed her name thereto by like authority; and said Barbara A. Joiner acknowledged said instrument to be the free act and deed of said corporation. (Notarial Seal) /s/ DESIREE MARSHALL ------------------------------- Desiree Marshall Notary Public, State of New York No. 24-4885294 Qualified in Kings County Certificate filed in New York County Commission Expires February 17, 1991
22 20 STATE OF MICHIGAN COUNTY OF WAYNE SS.: AFFIDAVIT AS TO L. L. Loomans, being duly sworn, says: that he is the Treasurer of THE CONSIDERATION DETROIT EDISON COMPANY, the Mortgagor named in the foregoing instrument, AND GOOD FAITH. and that he has knowledge of the facts in regard to the making of said instrument and of the consideration therefor; that the consideration for said instrument was and is actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth. /s/ L. L. LOOMANS ------------------------ L. L. Loomans Sworn to before me this 19th day of July, 1989 /s/ JANET A. SCULLEN ------------------------------- Janet A. Scullen, Notary Public Macomb County, MI (Acting in Wayne County) My Commission Expires July 31, 1989 (Notarial Seal) This instrument was drafted by Frances B. Rohlman, Esq., 2000 Second Avenue, Detroit, Michigan 48226
EX-4.172 5 EXHIBIT 4-172 1 EXHIBIT 4-172 CONFORMED COPY THE DETROIT EDISON COMPANY (2000 Second Avenue, Detroit, Michigan 48226) TO BANKERS TRUST COMPANY (Four Albany Street, New York, New York 10015) AS TRUSTEE ------------------------ INDENTURE Dated as of December 1, 1989 ------------------------ SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST DATED AS OF OCTOBER 1, 1924 PROVIDING FOR (A) GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 11, DUE SEPTEMBER 1, 2019, (B) GENERAL AND REFUNDING MORTGAGE BONDS, 1989 SERIES BP, DUE DECEMBER 1, 2019 AND (C) RECORDING AND FILING DATA 2 i TABLE OF CONTENTS* ------------------------
PAGE --- PARTIES.............................................................. 1 RECITALS Original Indenture and Supplementals............................... 1 Issue of Bonds under Indenture..................................... 1 Bonds heretofore issued............................................ 1 Reason for creation of new series.................................. 5 Bonds to be Series KKP No. 11 and 1989 Series BP................... 5 Further Assurance.................................................. 5 Authorization of Supplemental Indenture............................ 5 Consideration for Supplemental Indenture........................... 6 PART I. CREATION OF TWO HUNDRED SEVENTY-NINTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 11 Sec. 1. Terms of Bonds of Series KKP No. 11.......................... 6 Sec. 2. Redemption of Bonds of Series KKP No. 11..................... 7 Sec. 3. Redemption in Event of Acceleration.......................... 8 Sec. 4. Consent...................................................... 9 Sec. 5. Form of Bonds of Series KKP No. 11........................... 9 Form of Trustee's Certificate................................ 13 PART II. CREATION OF TWO HUNDRED EIGHTIETH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, 1989 SERIES BP Sec. 1. Terms of Bonds of 1989 Series BP............................. 13 Sec. 2. Redemption of Bonds of 1989 Series BP........................ 14 Sec. 3. Redemption in Event of Acceleration.......................... 15 Sec. 4. Consent...................................................... 16 Sec. 5. Form of Bonds of 1989 Series BP.............................. 16 Form of Trustee's Certificate................................ 20 PART III. RECORDING AND FILING DATA Recording and filing of Original Indenture........................... 20 Recording and filing of Supplemental Indentures...................... 20 Recording of Certificates of Provision for Payment................... 24 PART IV. THE TRUSTEE Terms and conditions of acceptance of trust by Trustee............... 24 PART V. MISCELLANEOUS Execution in Counterparts............................................ 25 Testimonium.......................................................... 25 Execution............................................................ 25 Acknowledgements..................................................... 26 Affidavit as to consideration and good faith......................... 27
------------------------ * This Table of Contents shall not have any bearing upon the interpretation of any of the terms or provisions of this Indenture. 3 1 PARTIES. SUPPLEMENTAL INDENTURE, dated as of the first day of December, in the year one thousand nine hundred and eighty-nine, between THE DETROIT EDISON COMPANY, a corporation organized and existing under the laws of the State of Michigan and a transmitting utility (hereinafter called the "Company"), party of the first part, and BANKERS TRUST COMPANY, a corporation organized and existing under the laws of the State of New York, having its corporate trust office at Four Albany Street, in the Borough of Manhattan, The City and State of New York, as Trustee under the Mortgage and Deed of Trust hereinafter mentioned (hereinafter called the "Trustee"), party of the second part. ORIGINAL WHEREAS, the Company has heretofore executed and delivered its Mortgage INDENTURE AND and Deed of Trust (hereinafter referred to as the "Original Indenture"), SUPPLEMENTALS. dated as of October 1, 1924, to the Trustee, for the security of all bonds of the Company outstanding thereunder, and pursuant to the terms and provisions of the Original Indenture, indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, June 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, November 1, 1936, February 1, 1940, December 1, 1940, September 1, 1947, March 1, 1950, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, June 1, 1959, December 1, 1966, October 1, 1968, December 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, December 15, 1975, February 1, 1976, June 15, 1976, July 15, 1976, February 15, 1977, March 1, 1977, June 15, 1977, July 1, 1977, October 1, 1977, June 1, 1978, October 15, 1978, March 15, 1979, July 1, 1979, September 1, 1979, September 15, 1979, January 1, 1980, April 1, 1980, August 15, 1980, August 1, 1981, November 1, 1981, June 30, 1982, August 15, 1982, June 1, 1983, October 1, 1984, May 1, 1985, May 15, 1985, October 15, 1985, April 1, 1986, August 15, 1986, November 30, 1986, January 31, 1987, April 1, 1987, August 15, 1987, November 30, 1987, June 15, 1989 and July 15, 1989 supplemental to the Original Indenture, have heretofore been entered into between the Company and the Trustee (the Original Indenture and all indentures supplemental thereto together being hereinafter sometimes referred to as the "Indenture"); and ISSUE OF WHEREAS, the Indenture provides that said bonds shall be issuable in one BONDS UNDER or more series, and makes provision that the rates of interest and dates INDENTURE. for the payment thereof, the date of maturity or dates of maturity, if of serial maturity, the terms and rates of optional redemption (if redeemable), the forms of registered bonds without coupons of any series and any other provisions and agreements in respect thereof, in the Indenture provided and permitted, as the Board of Directors may determine, may be expressed in a supplemental indenture to be made by the Company to the Trustee thereunder; and BONDS HERETOFORE WHEREAS, bonds in the principal amount of Four billion nine hundred ISSUED. sixty-eight million one hundred seventy-one thousand dollars ($4,968,171,000) have heretofore been issued under the Indenture as follows, viz:
(1) Bonds of Series A -- Principal Amount $26,016,000, (2) Bonds of Series B -- Principal Amount $23,000,000, (3) Bonds of Series C -- Principal Amount $20,000,000, (4) Bonds of Series D -- Principal Amount $50,000,000, (5) Bonds of Series E -- Principal Amount $15,000,000, (6) Bonds of Series F -- Principal Amount $49,000,000, (7) Bonds of Series G -- Principal Amount $35,000,000, (8) Bonds of Series H -- Principal Amount $50,000,000, (9) Bonds of Series I -- Principal Amount $60,000,000, (10) Bonds of Series J -- Principal Amount $35,000,000, (11) Bonds of Series K -- Principal Amount $40,000,000, (12) Bonds of Series L -- Principal Amount $24,000,000, (13) Bonds of Series M -- Principal Amount $40,000,000, (14) Bonds of Series N -- Principal Amount $40,000,000, (15) Bonds of Series O -- Principal Amount $60,000,000, (16) Bonds of Series P -- Principal Amount $70,000,000,
4 2 (17) Bonds of Series Q -- Principal Amount $40,000,000, (18) Bonds of Series W -- Principal Amount $50,000,000, (19) Bonds of Series BB -- Principal Amount $50,000,000, (20) Bonds of Series CC -- Principal Amount $50,000,000, (21-28) Bonds of Series DDP Nos. 1-8 -- Principal Amount $6,400,000, (29-38) Bonds of Series FFR Nos. 1-10 -- Principal Amount $5,800,000, (39-52) Bonds of Series GGP Nos. 1-6 and 8-15 -- Principal Amount $7,960,000, (53-64) Bonds of Series IIP Nos. 1-6 and 8-13 -- Principal Amount $450,000, (65-70) Bonds of Series JJP Nos. 1-6 -- Principal Amount $690,000, (71-76) Bonds of Series KKP Nos. 1-6 -- Principal Amount $1,590,000, (77-88) Bonds of Series LLP Nos. 1-6 and 8-13 -- Principal Amount $4,760,000, (89-100) Bonds of Series NNP Nos. 1-6 and 8-13 -- Principal Amount $7,950,000, (101-108) Bonds of Series OOP Nos. 1-8 -- Principal Amount $2,680,000, (109-120) Bonds of Series QQP Nos. 1-7 and 10-14 -- Principal Amount $7,075,000, (121-126) Bonds of Series TTP Nos. 1-6 -- Principal Amount $330,000, (127) Bonds of 1980 Series A -- Principal Amount $50,000,000, (128-136) Bonds of 1980 Series CP Nos. 1-5 and 13-16 -- Principal Amount $3,250,000, (137-141) Bonds of 1980 Series DP Nos. 1-5 -- Principal Amount $925,000, (142-145) Bonds of 1981 Series AP Nos. 1-4 -- Principal Amount $3,200,000, all of which have either been retired and cancelled, or no longer represent obligations of the Company, having been called for redemption and funds necessary to effect the payment, redemption and retirement thereof having been deposited with the Trustee as a special trust fund to be applied for such purpose; (146) Bonds of Series R in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (147) Bonds of Series S in the principal amount of One hundred fifty million dollars ($150,000,000), all of which are outstanding at the date hereof; (148) Bonds of Series T in the principal amount of Seventy-five million dollars ($75,000,000), all of which are outstanding at the date hereof; (149) Bonds of Series U in the principal amount of Seventy-five million dollars ($75,000,000), all of which are outstanding at the date hereof; (150) Bonds of Series V in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (151) Bonds of Series X in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (152) Bonds of Series Y in the principal amount of Sixty million dollars ($60,000,000), all of which are outstanding at the date hereof; (153) Bonds of Series Z in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (154) Bonds of Series AA in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (155) Bonds of Series DDP No. 9 in the principal amount of Seven million nine hundred five thousand dollars ($7,905,000), of which One million six hundred thousand dollars ($1,600,000) principal amount have heretofore been retired and Six million three hundred five thousand dollars ($6,305,000) principal amount are outstanding at the date hereof;
5 3 (156) Bonds of Series EE in the principal amount of Fifty million dollars ($50,000,000), of which Twenty-five million dollars ($25,000,000) principal amount have heretofore been retired and Twenty-five million dollars ($25,000,000) principal amount are outstanding at the date hereof; (157-160) Bonds of Series FFR Nos. 11-14 in the principal amount of Thirty-nine million eight hundred thousand dollars ($39,800,000), all of which are outstanding at the date hereof; (161-168) Bonds of Series GGP Nos. 7 and 16-22 in the principal amount of Thirty-four million three hundred forty thousand dollars ($34,340,000), of which Two million four hundred thousand dollars ($2,400,000) principal amount have heretofore been retired and Thirty-one million nine hundred forty thousand dollars ($31,940,000) principal amount are outstanding at the date hereof; (169) Bonds of Series HH in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (170-171) Bonds of Series MMP and MMP No. 2 in the principal amount of Five million four hundred thirty thousand dollars ($5,430,000), of which One million ninety thousand dollars ($1,090,000) principal amount have heretofore been retired and Four million three hundred forty thousand dollars ($4,340,000) principal amount are outstanding at the date hereof; (172-181) Bonds of Series IIP Nos. 7 and 14-22 in the principal amount of Three million three hundred thousand dollars ($3,300,000), of which One hundred ten thousand dollars ($110,000) principal amount have heretofore been retired and Three million one hundred ninety thousand dollars ($3,190,000) principal amount are outstanding at the date hereof; (182-183) Bonds of Series JJP Nos. 7-8 in the principal amount of Six million one hundred sixty thousand dollars ($6,160,000), of which Three hundred fifty thousand dollars ($350,000) principal amount have heretofore been retired and Five million eight hundred ten thousand dollars ($5,810,000) are outstanding at the date hereof; (184-187) Bonds of Series KKP Nos. 7-10 in the principal amount of Sixty-three million three hundred thousand dollars ($63,300,000), of which Seven hundred ten thousand dollars ($710,000) principal amount have heretofore been retired and Sixty-two million five hundred ninety thousand dollars ($62,590,000) are outstanding at the date hereof; (188-190) Bonds of Series LLP Nos. 7 and 14-15 in the principal amount of Four million ninety thousand dollars ($4,090,000), of which Two million five hundred thirty-five thousand dollars ($2,535,000) principal amount have heretofore been retired and One million five hundred fifty-five thousand dollars ($1,555,000) principal amount are outstanding at the date hereof; (191-199) Bonds of Series NNP Nos. 7 and 14-21 in the principal amount of Forty million ($40,000,000), of which One million six hundred fifty thousand dollars ($1,650,000) principal amount have heretofore been retired and Thirty-eight million three hundred fifty thousand dollars ($38,350,000) principal amount are outstanding at the date hereof; (200-209) Bonds of Series OOP Nos. 9-18 in the principal amount of Sixteen million two hundred thousand dollars ($16,200,000), of which Two hundred forty thousand dollars ($240,000) principal amount have heretofore been retired and Fifteen million nine hundred sixty thousand dollars ($15,960,000) are outstanding at the date hereof; (210) Bonds of Series PP in the principal amount of Seventy million dollars ($70,000,000), all of which are outstanding at the date hereof; (211-217) Bonds of Series QQP Nos. 8-9 and 15-19 in the principal amount of Six million five hundred seventy-five thousand dollars ($6,575,000), all of which are outstanding at the date hereof;
6 4 (218) Bonds of Series RR in the principal amount of Seventy million dollars ($70,000,000), all of which are outstanding at the date hereof; (219) Bonds of Series SS in the principal amount of One hundred fifty million dollars ($150,000,000), of which Fifty million dollars ($50,000,000) principal amount have heretofore been retired and One hundred million dollars ($100,000,000) principal amount are outstanding at the date hereof; (220-228) Bonds of Series TTP Nos. 7-15 in the principal amount of Three million four hundred seventy thousand dollars ($3,470,000), all of which are outstanding at the date hereof; (229) Bonds of Series UU in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (230) Bonds of 1980 Series B in the principal amount of One hundred million dollars ($100,000,000), of which Fifty-three million two hundred thousand dollars ($53,200,000) principal amount have heretofore been retired and Forty-six million eight hundred thousand dollars ($46,800,000) principal amount are outstanding at the date hereof; (231-246) Bonds of 1980 Series CP Nos. 6-12 and 17-25 in the principal amount of Thirty-one million seven hundred fifty thousand dollars ($31,750,000), all of which are outstanding at the date hereof; (247-252) Bonds of 1980 Series DP Nos. 6-11 in the principal amount of Nine million eight hundred twenty-five thousand dollars ($9,825,000), all of which are outstanding at the date hereof; (253-264) Bonds of 1981 Series AP Nos. 5-16 in the principal amount of One hundred twenty million eight hundred thousand dollars ($120,800,000), all of which are outstanding at the date hereof; (265) Bonds of 1984 Series AP in the principal amount of Two million four hundred thousand dollars ($2,400,000), all of which are outstanding at the date hereof; (266) Bonds of 1984 Series BP in the principal amount of Seven million seven hundred fifty thousand dollars ($7,750,000), all of which are outstanding at the date hereof; (267) Bonds of 1985 Series A in the principal amount of Thirty-five million dollars ($35,000,000), all of which are outstanding at the date hereof; (268) Bonds of 1985 Series B in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (269) Bonds of 1986 Series A in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; (270) Bonds of 1986 Series B in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (271) Bonds of 1986 Series C in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; (272) Bonds of 1987 Series A in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof; (273) Bonds of 1987 Series B in the principal amount of One hundred seventy-five million dollars ($175,000,000), all of which are outstanding at the date hereof; (274) Bonds of 1987 Series C in the principal amount of Two hundred twenty-five million dollars ($225,000,000), all of which are outstanding at the date hereof; (275) Bonds of 1987 Series D in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof; (276) Bonds of 1987 Series E in the principal amount of One hundred fifty million dollars ($150,000,000), all of which are outstanding at the date hereof; (277) Bonds of 1987 Series F in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; and
7 5 (278) Bonds of 1989 Series A in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof; and, accordingly, of the bonds so issued, Three billion eight hundred ninety-nine million two hundred ten thousand dollars ($3,899,210,000) principal amount are outstanding at the date hereof; and REASON FOR WHEREAS, the County of Monroe, Michigan has agreed to issue and sell CREATION OF $9,745,000 principal amount of its Pollution Control Revenue Bonds (The NEW SERIES. Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1989B and $66,565,000 principal amount of its Pollution Control Revenue Bonds (The Detroit Edison Company Fermi Plant Project), Collateralized Series CC so as to provide funds for the purchase and construction of certain pollution control facilities installed in the Company's Fermi 2 Plant; and WHEREAS, the Company has entered into (1) an Installment Sales Contract, dated as of March 1, 1977 and amended as of September 1, 1979, October 15, 1985, July 1, 1989 and December 1, 1989 and (2) an Installation Subcontract, dated as of December 1, 1989, each with the County of Monroe, in order to purchase certain pollution control facilities, and pursuant to such Installment Sales Contracts the Company has agreed to issue its General and Refunding Mortgage Bonds under the Indenture in order further to secure its obligations under such Installment Sales Contracts; and WHEREAS, for such purposes the Company desires to issue new series of bonds to be issued under the Indenture and to be authenticated and delivered pursuant to Section 8 of Article III of the Indenture; and BONDS TO BE WHEREAS, the Company desires by this Supplemental Indenture to create SERIES KKP such new series of bonds, to be designated "General and Refunding Mortgage NO. 11 AND 1989 Bonds, Series KKP No. 11" and "General and Refunding Mortgage Bonds, 1989 SERIES BP Series BP"; and FURTHER WHEREAS, the Original Indenture, by its terms, includes in the property ASSURANCE. subject to the lien thereof all of the estates and properties, real, personal and mixed, rights, privileges and franchises of every nature and kind and wheresoever situate, then or thereafter owned or possessed by or belonging to the Company or to which it was then or at any time thereafter might be entitled in law or in equity (saving and excepting, however, the property therein specifically excepted or released from the lien thereof), and the Company therein covenanted that it would, upon reasonable request, execute and deliver such further instruments as may be necessary or proper for the better assuring and confirming unto the Trustee all or any part of the trust estate, whether then or thereafter owned or acquired by the Company (saving and excepting, however, property specifically excepted or released from the lien thereof); and AUTHORIZATION WHEREAS, the Company in the exercise of the powers and authority OF SUPPLEMENTAL conferred upon and reserved to it under and by virtue of the provisions of INDENTURE. the Indenture, and pursuant to resolutions of its Board of Directors has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture in the form hereof for the purposes herein provided; and WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized; CONSIDERATION NOW, THEREFORE, THIS INDENTURE WITNESSETH: That The Detroit Edison FOR SUPPLEMENTAL Company, in consideration of the premises and of the covenants contained INDENTURE. in the Indenture and of the sum of One Dollar ($1.00) and other good and valuable consideration to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trusts under the Original Indenture and in said indentures supplemental thereto as follows:
8 6 PART I. CREATION OF TWO HUNDRED SEVENTY-NINTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, SERIES KKP NO. 11 CERTAIN TERMS SECTION 1. The Company hereby creates the Two hundred seventy-ninth OF BONDS OF series of bonds to be issued under and secured by the Original Indenture SERIES KKP as amended to date and as further amended by this Supplemental Indenture, NO. 11 to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, Series KKP No. 11" (elsewhere herein referred to as the "bonds of Series KKP No. 11"). The aggregate principal amount of bonds of Series KKP No. 11 shall be limited to Nine million seven hundred and forty-five thousand dollars ($9,745,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. Each bond of Series KKP No. 11 is to be irrevocably assigned to, and registered in the name of, Manufacturers National Bank of Detroit, as trustee, or a successor trustee (said trustee or any successor trustee being hereinafter referred to as the "Monroe Trust Indenture Trustee"), under the Trust Indenture, dated as of March 1, 1977, as amended September 1, 1979, October 15, 1985, July 1, 1989 and December 1, 1989 (hereinafter called the " Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and the Monroe Trust Indenture Trustee, to secure payment of the County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1989B (hereinafter called the "Monroe Revenue Bonds"), issued by Monroe under the Monroe Trust Indenture, the proceeds of which (other than any accrued interest thereon) have been provided for the acquisition and construction of certain pollution control facilities which the Company has agreed to purchase pursuant to the provisions of the Installment Sales Contract, dated as of March 1, 1977, as amended as of September 1, 1979, as of October 15, 1985, as of July 1, 1989 and December 1, 1989 (hereinafter called the "Monroe Contract"), between the Company and Monroe. The bonds of Series KKP No. 11 shall be issued as registered bonds without coupons in denominations of a multiple of $5,000. The bonds of Series KKP No. 11 shall be issued in the aggregate principal amount of $9,745,000, shall mature on September 1, 2019 and shall bear interest, payable semi-annually on March 1 and September 1 of each year (commencing March 1, 1990), at the rate of 7 1/2%, until the principal thereof shall have become due and payable and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. The bonds of Series KKP No. 11 shall be payable as to principal, premium, if any, and interest as provided in the Indenture, but only to the extent and in the manner herein provided. The bonds of Series KKP No. 11 shall be payable, both as to principal and interest, at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. Except as provided herein, each bond of Series KKP No. 11 shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the March 1 or September 1 next preceding the date thereof to which interest has been paid on bonds of Series KKP No. 11, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication, or unless the date of authentication is prior to March 1, 1990, in which case interest shall be payable from December 1, 1989.
9 7 The bonds of Series KKP No. 11 in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denominations of bonds of Series KKP No. 11). Until bonds of Series KKP No. 11 in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of Series KKP No. 11 in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of Series KKP No. 11, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of Series KKP No. 10, but with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company. Bonds of Series KKP No. 11 shall not be assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney. Bonds of Series KKP No. 11 shall in the same manner be exchangeable for a like aggregate principal amount of bonds of Series KKP No. 11 upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of Series KKP No. 11, during any period of ten days next preceding any redemption date for such bonds. Bonds of Series KKP No. 11, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or as may be specified in the Monroe Contract. Upon payment of the principal or premium, if any, or interest on the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise, or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of Series KKP No. 11 in a principal amount equal to the principal amount of such Monroe Revenue Bonds, shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds shall be surrendered for cancellation or presented for appropriate notation to the Trustee. REDEMPTION SECTION 2. Bonds of Series KKP No. 11 shall be redeemed on the OF BONDS respective dates and in the respective principal amounts which correspond OF SERIES KKP to the redemption dates for, and the principal amounts to be redeemed of, NO. 11 the Monroe Revenue Bonds. In the event the Company elects to redeem any Monroe Revenue Bonds prior to maturity in accordance with the provisions of the Monroe Trust Indenture, the Company shall on the same date redeem bonds of Series KKP No. 11 in principal amounts and at redemption prices corresponding to the Monroe Revenue Bonds so redeemed. The Company agrees to give the Trustee notice of any such redemption of bonds of Series KKP No. 11 on the same date as it gives notice of redemption of Monroe Revenue Bonds to the Monroe Trust Indenture Trustee.
10 8 REDEMPTION SECTION 3. In the event of an Event of Default under the Monroe Trust OF BONDS OF Indenture and the acceleration of all Monroe Revenue Bonds, the bonds of SERIES KKP Series KKP No. 11 shall be redeemable in whole upon receipt by the Trustee NO. 11 IN EVENT of a written demand (hereinafter called a "Redemption Demand") from the OF ACCELERATION Monroe Trust Indenture Trustee stating that there has occurred under the OF MONROE Monroe Trust Indenture both an Event of Default and a declaration of REVENUE BONDS. acceleration of payment of principal, accrued interest and premium, if any, on the Monroe Revenue Bonds, specifying the last date to which interest on the Monroe Revenue Bonds has been paid (such date being hereinafter referred to as the "Initial Interest Accrual Date") and demanding redemption of the bonds of said series. The Trustee shall, within five days after receiving such Redemption Demand, mail a copy thereof to the Company marked to indicate the date of its receipt by the Trustee. Promptly upon receipt by the Company of such copy of a Redemption Demand, the Company shall fix a date on which it will redeem the bonds of said series so demanded to be redeemed (hereinafter called the "Demand Redemption Date"). Notice of the date fixed as the Demand Redemption Date shall be mailed by the Company to the Trustee at least ten days prior to such Demand Redemption Date. The date to be fixed by the Company as and for the Demand Redemption Date may be any date up to and including the earlier of (x) the 60th day after receipt by the Trustee of the Redemption Demand or (y) the maturity date of such bonds first occurring following the 20th day after the receipt by the Trustee of the Redemption Demand; provided, however, that if the Trustee shall not have received such notice fixing the Demand Redemption Date on or before the 10th day preceding the earlier of such dates, the Demand Redemption Date shall be deemed to be the earlier of such dates. The Trustee shall mail notice of the Demand Redemption Date (such notice being hereinafter called the "Demand Redemption Notice") to the Monroe Trust Indenture Trustee not more than ten nor less than five days prior to the Demand Redemption Date. Each bond of Series KKP No. 11 shall be redeemed by the Company on the Demand Redemption Date therefore upon surrender thereof by the Monroe Trust Indenture Trustee to the Trustee at a redemption price equal to the principal amount thereof plus accrued interest thereon at the rate specified for such bond from the Initial Interest Accrual Date to the Demand Redemption Date plus an amount equal to the aggregate premium, if any, due and payable on such Demand Redemption Date on all Monroe Revenue Bonds; provided, however, that in the event of a receipt by the Trustee of a notice that, pursuant to Section 1010 of the Monroe Trust Indenture, the Monroe Trust Indenture Trustee has terminated proceedings to enforce any right under the Monroe Trust Indenture, then any Redemption Demand shall thereby be rescinded by the Monroe Trust Indenture Trustee, and no Demand Redemption Notice shall be given, or, if already given, shall be automatically annulled; but no such rescission or annulment shall extend to or affect any subsequent default or impair any right consequent thereon. Anything herein contained to the contrary notwithstanding, the Trustee is not authorized to take any action pursuant to a Redemption Demand and such Redemption Demand shall be of no force or effect, unless it is executed in the name of the Monroe Trust Indenture Trustee by its President or one of its Vice Presidents. CONSENT. SECTION 4. The holders of the bonds of Series KKP No. 11, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five per cent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in this Section 4, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
11 9 FORM OF BONDS SECTION 5. The bonds of Series KKP No. 11 and the form of Trustee's OF SERIES KKP Certificate to be endorsed on such bonds shall be substantially in the NO. 11. following forms, respectively: [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND SERIES KKP NO. 11, 7 1/2% DUE SEPTEMBER 1, 2019 Notwithstanding any provisions hereof or in the Indenture, this bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Trust Indenture, dated as of March 1, 1977 and amended as of September 1, 1979, October 15, 1985, July 1, 1989 and December 1, 1989 between the County of Monroe, Michigan and Manufacturers National Bank of Detroit, as trustee, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under said Trust Indenture. $......... No.......... THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to Manufacturers National Bank of Detroit, as trustee, or registered assigns, at the Company's office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of dollars ($ ) in lawful money of the United States of America on the date specified in the title hereof and interest thereon at the rate specified in the title hereof, in like lawful money, from December 1, 1989, and after the first payment of interest on bonds of this Series has been made or otherwise provided for, from the most recent date to which interest has been paid or otherwise provided for, semi-annually on March 1 and September 1 of each year (commencing March 1, 1990), until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Under a Trust Indenture, dated as of March 1, 1977 and amended as of September 1, 1979, October 15, 1985, July 1, 1989 and December 1, 1989 (hereinafter called the "Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and Manufacturers National Bank of Detroit, as trustee (hereinafter called the "Monroe Trust Indenture Trustee"), Monroe has issued Pollution Control Revenue Bonds (The Detroit Edison Company Monroe and Fermi Plants Project), Collateralized Series I-1989B (hereinafter called the "Monroe Revenue Bonds"). This bond was originally issued to Monroe and simultaneously irrevocably assigned to the Monroe Trust Indenture Trustee so as to secure the payment of the Monroe Revenue Bonds. Payments of principal of, or premium, if any, or interest on, Monroe Revenue Bonds shall constitute like payments on this bond as further provided herein and in the supplemental indenture pursuant to which this bond has been issued. Reference is hereby made to such further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary with his manual or facsimile signature.
12 10 Dated: THE DETROIT EDISON COMPANY By -------------------------- Chairman of the Board ---------------------------- Attest: President ---------------------------- Secretary
[FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of General and Refunding Mortgage Bonds known as Series KKP No. 11, limited to an aggregate principal amount of $9,745,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of December 1, 1989) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of December 1, 1989, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of or the interest on this bond, which in those respects is unconditional.
13 11 The holders of the bonds of Series KKP No. 11, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024,". Such holders further agree that (A) Such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five per cent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in Section 4 of Part I of the Supplemental Indenture dated as of December 1, 1989, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof. This bond is redeemable upon the terms and conditions set forth in the Indenture, including provision for redemption upon demand of the Monroe Trust Indenture Trustee following the occurrence of an Event of Default under the Monroe Trust Indenture and the acceleration of the principal of the Monroe Revenue Bonds. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of Series KKP No. 11 (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds (or portions thereof) and interest. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. Upon payment of the principal of, or premium, if any, or interest on, the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of Series KKP No. 11 in a principal amount equal to the principal amount of such Monroe Revenue Bonds and having both a corresponding maturity date and interest rate shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds of said series shall be surrendered for cancellation or presented for appropriate notation to the Trustee. This bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee in exchange therefor, and this bond with others in like form may in like manner be exchanged for one or more new bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture.
14 12 No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture.
15 13 [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated therein, TRUSTEE'S described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By ---------------------------- Authorized Officer PART II. CREATION OF TWO HUNDRED EIGHTIETH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, 1989 SERIES BP CERTAIN TERMS SECTION 1. The Company hereby creates the Two hundred eightieth series OF BONDS OF of bonds to be issued under and secured by the Original Indenture as 1989 SERIES BP amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, 1989 Series BP" (elsewhere herein referred to as the "bonds of 1989 Series BP"). The aggregate principal amount of bonds of 1989 Series BP shall be limited to sixty-six million five hundred and sixty-five thousand dollars ($66,565,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. Each bond of 1989 Series BP is to be irrevocably assigned to, and registered in the name of, Manufacturers National Bank of Detroit, as trustee, or a successor trustee (said trustee or any successor trustee being hereinafter referred to as the "Monroe Trust Indenture Trustee"), under the Trust Indenture, dated as of December 1, 1989 (hereinafter called the "Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and the Monroe Trust Indenture Trustee, to secure payment of the County of Monroe, Michigan, Pollution Control Revenue Bonds (The Detroit Edison Company Fermi Plant Project), Collateralized Series CC (hereinafter called the "Monroe Revenue Bonds"), issued by Monroe under the Monroe Trust Indenture, the proceeds of which (other than any accrued interest thereon) have been provided for the acquisition and construction of certain pollution control facilities which the Company has agreed to purchase pursuant to the provisions of the Installment Sales Contract, dated as of December 1, 1989 (hereinafter called the "Monroe Contract"), between the Company and Monroe. The bonds of 1989 Series BP shall be issued as registered bonds without coupons in denominations of a multiple of $5,000. The bonds of 1989 Series BP shall be issued in the aggregate principal amount of $66,565,000, shall mature on December 1, 2019 and shall bear interest, payable semi-annually on June 1 and December 1 of each year (commencing June 1, 1990), at the rate of 7 1/2%, until the principal thereof shall have become due and payable and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. The bonds of 1989 Series BP shall be payable as to principal, premium, if any, and interest as provided in the Indenture, but only to the extent and in the manner herein provided. The bonds of 1989 Series BP shall be payable, both as to principal and interest, at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts.
16 14 Except as provided herein, each bond of 1989 Series BP shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the June 1 or December 1 next preceding the date thereof to which interest has been paid on bonds of 1989 Series BP, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication, or unless the date of authentication is prior to June 1, 1990, in which case interest shall be payable from December 1, 1989. The bonds of 1989 Series BP in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denominations of bonds of 1989 Series BP). Until bonds of 1989 Series BP in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of 1989 Series BP in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 1989 Series BP, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 1989 Series BP, but with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company. Bonds of 1989 Series BP shall not be assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City and State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney. Bonds of 1989 Series BP shall in the same manner be exchangeable for a like aggregate principal amount of bonds of 1989 Series BP upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of 1989 Series BP, during any period of ten days next preceding any redemption date for such bonds. Bonds of 1989 Series BP, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or as may be specified in the Monroe Contract. Upon payment of the principal or premium, if any, or interest on the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise, or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of 1989 Series BP in a principal amount equal to the principal amount of such Monroe Revenue Bonds, shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds shall be surrendered for cancellation or presented for appropriate notation to the Trustee. REDEMPTION SECTION 2. Bonds of 1989 Series BP shall be redeemed on the respective OF BONDS dates and in the respective principal amounts which correspond to the OF 1989 redemption dates for, and the principal amounts to be redeemed of, the SERIES BP Monroe Revenue Bonds.
17 15 E In the event the Company elects to redeem any Monroe Revenue Bonds prior to maturity in accordance with the provisions of the Monroe Trust Indenture, the Company shall on the same date redeem bonds of 1989 Series BP in principal amounts and at redemption prices corresponding to the Monroe Revenue Bonds so redeemed. The Company agrees to give the Trustee notice of any such redemption of bonds of 1989 Series BP on the same date as it gives notice of redemption of Monroe Revenue Bonds to the Monroe Trust Indenture Trustee. REDEMPTION SECTION 3. In the event of an Event of Default under the Monroe Trust OF BONDS OF Indenture and the acceleration of all Monroe Revenue Bonds, the bonds of 1989 SERIES 1989 Series BP shall be redeemable in whole upon receipt by the Trustee of BP IN EVENT a written demand (hereinafter called a "Redemption Demand") from the OF ACCELERATION Monroe Trust Indenture Trustee stating that there has occurred under the OF MONROE Monroe Trust Indenture both an Event of Default and a declaration of REVENUE BONDS. acceleration of payment of principal, accrued interest and premium, if any, on the Monroe Revenue Bonds, specifying the last date to which interest on the Monroe Revenue Bonds has been paid (such date being hereinafter referred to as the "Initial Interest Accrual Date") and demanding redemption of the bonds of said series. The Trustee shall, within five days after receiving such Redemption Demand, mail a copy thereof to the Company marked to indicate the date of its receipt by the Trustee. Promptly upon receipt by the Company of such copy of a Redemption Demand, the Company shall fix a date on which it will redeem the bonds of said series so demanded to be redeemed (hereinafter called the "Demand Redemption Date"). Notice of the date fixed as the Demand Redemption Date shall be mailed by the Company to the Trustee at least ten days prior to such Demand Redemption Date. The date to be fixed by the Company as and for the Demand Redemption Date may be any date up to and including the earlier of (x) the 60th day after receipt by the Trustee of the Redemption Demand or (y) the maturity date of such bonds first occurring following the 20th day after the receipt by the Trustee of the Redemption Demand; provided, however, that if the Trustee shall not have received such notice fixing the Demand Redemption Date on or before the 10th day preceding the earlier of such dates, the Demand Redemption Date shall be deemed to be the earlier of such dates. The Trustee shall mail notice of the Demand Redemption Date (such notice being hereinafter called the "Demand Re- demption Notice") to the Monroe Trust Indenture Trustee not more than ten nor less than five days prior to the Demand Redemption Date. Each bond of 1989 Series BP shall be redeemed by the Company on the Demand Redemption Date therefore upon surrender thereof by the Monroe Trust Indenture Trustee to the Trustee at a redemption price equal to the principal amount thereof plus accrued interest thereon at the rate specified for such bond from the Initial Interest Accrual Date to the Demand Redemption Date plus an amount equal to the aggregate premium, if any, due and payable on such Demand Redemption Date on all Monroe Revenue Bonds; provided, however, that in the event of a receipt by the Trustee of a notice that, pursuant to Section 1010 of the Monroe Trust Indenture, the Monroe Trust Indenture Trustee has terminated proceedings to enforce any right under the Monroe Trust Indenture, then any Redemption Demand shall thereby be rescinded by the Monroe Trust Indenture Trustee, and no Demand Redemption Notice shall be given, or, if already given, shall be automatically annulled; but no such rescission or annulment shall extend to or affect any subsequent default or impair any right consequent thereon. Anything herein contained to the contrary notwithstanding, the Trustee is not authorized to take any action pursuant to a Redemption Demand and such Redemption Demand shall be of no force or effect, unless it is executed in the name of the Monroe Trust Indenture Trustee by its President or one of its Vice Presidents.
18 16 CONSENT. SECTION 4. The holders of the bonds of 1989 Series BP, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five per cent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in this Section 4, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof. FORM OF BONDS SECTION 5. The bonds of 1989 Series BP and the form of Trustee's OF 1989 SERIES BP. Certificate to be endorsed on such bonds shall be substantially in the following forms, respectively: [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 1989 SERIES BP, 7 1/2% DUE DECEMBER 1, 2019 Notwithstanding any provisions hereof or in the Indenture, this bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Trust Indenture, dated as of December 1, 1989 between the County of Monroe, Michigan and Manufacturers National Bank of Detroit, as trustee, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under said Trust Indenture. $......... No.......... THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to Manufacturers National Bank of Detroit, as trustee, or registered assigns, at the Company's office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of dollars ($ ) in lawful money of the United States of America on the date specified in the title hereof and interest thereon at the rate specified in the title hereof, in like lawful money, from December 1, 1989, and after the first payment of interest on bonds of this Series has been made or otherwise provided for, from the most recent date to which interest has been paid or otherwise provided for, semi-annually on June 1 and December 1 of each year (commencing June 1, 1990), until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Under a Trust Indenture, dated as of December 1, 1989 (hereinafter called the "Monroe Trust Indenture"), between the County of Monroe, Michigan (hereinafter called "Monroe"), and Manufacturers National Bank of Detroit, as trustee (hereinafter called the "Monroe Trust Indenture Trustee"), Monroe has issued Pollution Control Revenue Bonds (The Detroit Edison Company Fermi Plant Project), Collateralized Series CC (hereinafter called the "Monroe Revenue Bonds"). This bond was originally issued to Monroe and simultaneously irrevocably assigned to the Monroe Trust Inden- ture Trustee so as to secure the payment of the Monroe Revenue Bonds. Payments of principal of, or premium, if any, or interest on, Monroe Revenue Bonds shall constitute like payments on this bond as further provided herein and in the supplemental indenture pursuant to which this bond has been issued. Reference is hereby made to such further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place.
19 17 This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary with his manual or facsimile signature. Dated: THE DETROIT EDISON COMPANY By ---------------------------- Chairman of the Board ------------------------------- President Attest: ---------------------------- Secretary [FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of General and Refunding Mortgage Bonds known as 1989 Series BP, limited to an aggregate principal amount of $66,565,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of December 1, 1989) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of December 1, 1989, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of or the interest on this bond, which in those respects is unconditional.
20 18 The holders of the bonds of 1989 series BP, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024,". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five per cent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in Section 4 of Part II of the Supplemental Indenture dated as of December 1, 1989, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof. This bond is redeemable upon the terms and conditions set forth in the Indenture, including provision for redemption upon demand of the Monroe Trust Indenture Trustee following the occurrence of an event of default under the Monroe Trust Indenture and the acceleration of the principal of the Monroe Revenue Bonds. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of 1989 Series BP (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds (or portions thereof) and interest. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. Upon payment of the principal of, or premium, if any, or interest on, the Monroe Revenue Bonds, whether at maturity or prior to maturity by redemption or otherwise or upon provision for the payment thereof having been made in accordance with Article IX of the Monroe Trust Indenture, bonds of 1989 Series BP in a principal amount equal to the principal amount of such Monroe Revenue Bonds and having both a corresponding maturity date and interest rate shall, to the extent of such payment of principal, premium or interest, be deemed fully paid and the obligation of the Company thereunder to make such payment shall forthwith cease and be discharged, and, in the case of the payment of principal and premium, if any, such bonds of said series shall be surrendered for cancellation or presented for appropriate notation to the Trustee. This bond is not assignable or transferable except as may be required to effect a transfer to any successor trustee under the Monroe Trust Indenture, or, subject to compliance with applicable law, as may be involved in the course of the exercise of rights and remedies consequent upon an Event of Default under the Monroe Trust Indenture. Any such transfer shall be made by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee in exchange therefor, and this bond with others in like form may in like manner be exchanged for one or more new bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture.
21 19 No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture.
22 20 [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated therein, TRUSTEE'S described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By ........................... Authorized Officer PART III. RECORDING AND FILING DATA RECORDING AND The Original Indenture and indentures supplemental thereto have been FILING OF ORIGINAL recorded and/or filed and Certificates of Provision for Payment have been INDENTURE. recorded as hereinafter set forth. The Original Indenture has been recorded as a real estate mortgage and filed as a chattel mortgage in the offices of the respective Registers of Deeds of certain counties in the State of Michigan as set forth in the Supplemental Indenture dated as of September 1, 1947, has been recorded as a real estate mortgage in the office of the Register of Deeds of Genesee County, Michigan as set forth in the Supplemental Indenture dated as of May 1, 1974, has been filed in the Office of the Secretary of State of Michigan on November 16, 1951 and has been filed and recorded in the office of the Interstate Commerce Commission on December 8, 1969. RECORDING AND Pursuant to the terms and provisions of the Original Indenture, FILING OF indentures supplemental thereto heretofore entered into have been recorded SUPPLEMENTAL as a real estate mortgage and/or filed as a chattel mortgage or as a INDENTURES. financing statement in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, the Office of the Scretary of State of Michigan and the Office of the Interstate Commerce Commission, as set forth in supplemental indentures as follows:
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ June 1, 1925(a)(b)................ Series B Bonds February 1, 1940 August 1, 1927(a)(b).............. Series C Bonds February 1, 1940 February 1, 1931(a)(b)............ Series D Bonds February 1, 1940 June 1, 1931(a)(b)................ Subject Properties February 1, 1940 October 1, 1932(a)(b)............. Series E Bonds February 1, 1940 September 25, 1935(a)(b).......... Series F Bonds February 1, 1940 September 1, 1936(a)(b)........... Series G Bonds February 1, 1940 November 1, 1936(a)(b)............ Subject Properties February 1, 1940 February 1, 1940(a)(b)............ Subject Properties September 1, 1947 December 1, 1940(a)(b)............ Series H Bonds and Addi- September 1, 1947 tional Provisions September 1, 1947(a)(b)(c)........ Series I Bonds, November 15, 1951 Subject Properties and Additional Provisions March 1, 1950(a)(b)(c)............ Series J Bonds November 15, 1951 and Additional Provi- sions November 15, 1951(a)(b)(c)........ Series K Bonds January 15, 1953 Additional Provisions and Subject Properties January 15, 1953(a)(b)............ Series L Bonds May 1, 1953
23 21
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ May 1, 1953(a).................... Series M Bonds March 15, 1954 and Subject Properties March 15, 1954(a)(c).............. Series N Bonds May 15, 1955 and Subject Properties May 15, 1955(a)(c)................ Series O Bonds August 15, 1957 and Subject Properties August 15, 1957(a)(c)............. Series P Bonds June 1, 1959 Additional Provisions and Subject Properties June 1, 1959(a)(c)................ Series Q Bonds December 1, 1966 and Subject Properties December 1, 1966(a)(c)............ Series R Bonds October 1, 1968 Additional Provisions and Subject Properties October 1, 1968(a)(c)............. Series S Bonds December 1, 1969 and Subject Properties December 1, 1969(a)(c)............ Series T Bonds July 1, 1970 and Subject Properties July 1, 1970(c)................... Series U Bonds December 15, 1970 and Subject Properties December 15, 1970(c).............. Series V and June 15, 1971 Series W Bonds June 15, 1971(c).................. Series X Bonds November 15, 1971 and Subject Properties November 15, 1971(c).............. Series Y Bonds January 15, 1973 and Subject Properties January 15, 1973(c)............... Series Z Bonds May 1, 1974 and Subject Properties May 1, 1974....................... Series AA Bonds October 1, 1974 and Subject Properties October 1, 1974................... Series BB Bonds January 15, 1975 and Subject Properties January 15, 1975.................. Series CC Bonds November 1, 1975 and Subject Properties November 1, 1975.................. Series DDP Nos. 1-9 December 15, 1975 Bonds and Subject Properties December 15, 1975................. Series EE Bonds February 1, 1976 and Subject Properties February 1, 1976.................. Series FFR Nos. 1-13 June 15, 1976 Bonds June 15, 1976..................... Series GGP Nos. 1-7 July 15, 1976 Bonds and Subject Properties July 15, 1976..................... Series HH Bonds February 15, 1977 and Subject Properties February 15, 1977................. Series MMP Bonds and March 1, 1977 Subject Properties March 1, 1977..................... Series IIP Nos. 1-7 June 15, 1977 Bonds, Series JJP Nos. 1-7 Bonds, Series KKP Nos. 1-7 Bonds and Series LLP Nos. 1-7 Bonds June 15, 1977..................... Series FFR No. 14 Bonds July 1, 1977 and Subject Properties
24 22
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ July 1, 1977...................... Series NNP Nos. 1-7 October 1, 1977 Bonds and Subject Properties October 1, 1977................... Series GGP Nos. 8-22 June 1, 1978 Bonds and Series OOP Nos. 1-17 Bonds and Subject Properties June 1, 1978...................... Series PP Bonds, October 15, 1978 Series QQP Nos. 1-9 Bonds and Subject Properties October 15, 1978.................. Series RR Bonds March 15, 1979 and Subject Properties March 15, 1979.................... Series SS Bonds July 1, 1979 and Subject Properties July 1, 1979...................... Series IIP Nos. 8-22 September 1, 1979 Bonds, Series NNP Nos. 8-21 Bonds and Series TTP Nos. 1-15 Bonds and Subject Properties September 1, 1979................. Series JJP No. 8 Bonds, September 15, 1979 Series KKP No. 8 Bonds, Series LLP Nos. 8-15 Bonds, Series MMP No. 2 Bonds and Series OOP No. 18 Bonds and Subject Properties September 15, 1979................ Series UU Bonds January 1, 1980 January 1, 1980................... 1980 Series A Bonds and April 1, 1980 Subject Properties April 1, 1980..................... 1980 Series B Bonds August 15, 1980 August 15, 1980................... Series QQP Nos. 10-19 August 1, 1981 Bonds, 1980 Series CP Nos. 1-12 Bonds and 1980 Series DP No. 1-11 Bonds and Subject Properties August 1, 1981.................... 1980 Series CP Nos. November 1, 1981 13-25 Bonds and Subject Properties November 1, 1981.................. 1981 Series AP Nos. 1-12 June 30, 1982 Bonds June 30, 1982..................... Article XIV August 15, 1982 Reconfirmation August 15, 1982................... 1981 Series AP Nos. June 1, 1983 13-14 and Subject Properties June 1, 1983...................... 1981 Series AP Nos. October 1, 1984 15-16 and Subject Properties October 1, 1984................... 1984 Series AP and 1984 May 1, 1985 Series BP Bonds and Subject Properties May 1, 1985....................... 1985 Series A Bonds May 15, 1985 May 15, 1985...................... 1985 Series B Bonds and October 15, 1985 Subject Properties
25 23
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ October 15, 1985.................. Series KKP No. 9 Bonds April 1, 1986 and Subject Properties April 1, 1986..................... 1986 Series A and August 15, 1986 Subject Properties August 15, 1986................... 1986 Series B and November 30, 1986 Subject Properties November 30, 1986................. 1986 Series C Janaury 31, 1987 January 31, 1987.................. 1987 Series A April 1, 1987 April 1, 1987..................... 1987 Series B and 1987 August 15, 1987 Series C August 15, 1987................... 1987 Series D and 1987 November 30, 1987 Series E and Subject Properties November 30, 1987................. 1987 Series F June 15, 1989 June 15, 1989..................... 1989 Series A July 15, 1989
------------------------------------------ (a) See Supplemental Indenture dated as of July 1, 1970 for Interstate Commerce Commission filing and recordation information. (b) See Supplemental Indenture dated as of May 1, 1953 for Secretary of State of Michigan filing information. (c) See Supplemental Indenture dated as of May 1, 1974 for County of Genesee, Michigan recording and filing information. Further, pursuant to the terms and provisions of the Original Indenture, a Supplemental Indenture dated as of July 15, 1989 providing for the terms of bonds to be issued thereunder of Series KKP No. 10 has heretofore been entered into between the Company and the Trustee and has been filed in the Office of the Secretary of State of Michigan as a financing statement on June 25, 1989 (Filing No. 96570A), has been filed and recorded in the Office of the Interstate Commerce Commission (Recordation No. 5485-NNN), and has been recorded as a real estate mortgage in the offices of the respective Register of Deeds of certain counties in the State of Michigan, as follows:
LIBER OF MORTGAGES OR COUNTY COUNTY RECORDED RECORDS PAGE -------------------------------- ------------- ------ ---------- Genesee......................... July 25, 1989 2520 334-355 Huron........................... July 25, 1989 526 646-667 Ingham.......................... July 25, 1989 1766 822-843 Lapeer.......................... July 25, 1989 665 769-790 Lenawee......................... July 25, 1989 1100 937-958 Livingston...................... July 25, 1989 1355 0779-0800 Macomb.......................... July 25, 1989 04689 282-303 Mason........................... July 25, 1989 382 755-776 Monroe.......................... July 25, 1989 1085 0862-0883 Oakland......................... July 25, 1989 10993 471-492 Sanilac......................... July 25, 1989 404 446-467 St. Clair....................... July 25, 1989 935 34-55 Tuscola......................... July 25, 1989 594 728-749 Washtenaw....................... July 25, 1989 2333 501-522 Wayne........................... July 25, 1989 24269 192-213
26 24 RECORDING OF All the bonds of Series A which were issued under the Original CERTIFICATES Indenture dated as of October 1, 1924, and of Series B, C, D, E, F, G, H, OF PROVISION I, J, K, L, M, N, O, P, Q, W, BB, CC, DDP Nos. 1-8, FFR Nos. 1-10, GGP FOR PAYMENT. Nos. 1-6 and 8-15, IIP Nos. 1-6 and 8-13, JJP Nos. 1-6, KKP Nos. 1-6, LLP Nos. 1-6 and 8-13, NNP Nos. 1-6 and 8-13, OOP Nos. 1-8, QQP Nos. 1-7 and 10-14 and TTP Nos. 1-6, 1980 Series A, 1980 Series CP Nos. 1-5 and 13-16, 1980 Series DP Nos. 1-5 and 1981 Series AP No. 1-4 which were issued under Supplemental Indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, December 1, 1940, September 1, 1947, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, December 15, 1970, October 1, 1974, January 15, 1975, November 1, 1975, February 1, 1976, June 15, 1976, October 1, 1977, March 1, 1977, July 1, 1979, March 1, 1977, March 1, 1977, March 1, 1977, September 1, 1979, July 1, 1977, July 1, 1979, October 1, 1977, June 1, 1978, October 1, 1977, July 1, 1979, January 1, 1980, August 15, 1980 and November 1, 1981 have matured or have been called for redemption and funds sufficient for such payment or redemption have been irrevocably deposited with the Trustee for that purpose; and Certificates of Provision for Payment have been recorded in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, with respect to all bonds of Series A, B, C, D, E, F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1 and GGP No. 8. PART IV. THE TRUSTEE. TERMS AND The Trustee hereby accepts the trust hereby declared and provided, and CONDITIONS OF agrees to perform the same upon the terms and conditions in the Original ACCEPTANCE OF Indenture, as amended to date and as supplemented by this Supplemental TRUST BY TRUSTEE. Indenture, and in this Supplemental Indenture set forth, and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for and in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely.
27 25 PART V. MISCELLANEOUS. EXECUTION IN This Supplemental Indenture may be simultaneously executed in any COUNTERPARTS. number of counterparts, each of which when so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument. TESTIMONIUM. IN WITNESS WHEREOF, The Detroit Edison Company and Bankers Trust Company have caused these presents to be signed in their respective corporate names by their respective Chairmen of the Board, Presidents, Vice Presidents, Assistant Vice Presidents or Treasurers and impressed with their respective corporate seals, attested by their respective Secretaries or Assistant Secretaries, all as of the day and year first above written. THE DETROIT EDISON COMPANY, (Corporate Seal) By /s/ L. L. LOOMANS ----------------------------- L. L. Loomans Vice President and Treasurer EXECUTION. Attest: /s/SUSAN M. BEALE ---------------------------- Susan M. Beale Secretary Signed, sealed and delivered by THE DETROIT EDISON COMPANY, in the presence of /s/ PEARL KOTTER ---------------------------- Pearl Kotter /s/ BETTY M. HANSEN ---------------------------- Betty M. Hansen (Corporate Seal) BANKERS TRUST COMPANY, By /s/ BARBARA A. JOINER ------------------------------ Barbara A. Joiner Vice President Attest: /s/ SANDRA SHIRLEY ---------------------------- Sandra Shirley Assistant Secretary Signed, sealed and delivered by BANKERS TRUST COMPANY, in the presence of /s/ ERIC M. HAWNER ---------------------------- Eric M. Hawner /s/ Y. PATRICIA BLUE ---------------------------- Y. Patricia Blue
28 26 STATE OF MICHIGAN COUNTY OF WAYNE SS.: ACKNOWLEDGMENT On this 13th day of December, 1989, before me, the subscriber, a Notary OF EXECUTION Public within and for the County of Wayne, in the State of Michigan, BY COMPANY. personally appeared L. L. Loomans, to me personally known, who, being by me duly sworn, did say that he does business at 2000 Second Avenue, Detroit, Michigan 48226 and is the Vice President and Treasurer of THE DETROIT EDISON COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said L. L. Loomans, acknowledged said instrument to be the free act and deed of said corporation. /s/ JANET A. SCULLEN --------------------------------- (Notarial Seal) Janet A. Scullen, Notary Public Macomb County, MI (Acting in Wayne County) My Commission Expires March 30, 1993 STATE OF NEW YORK COUNTY OF NEW YORK SS.: ACKNOWLEDGMENT On this 13th day of December, 1989, before me, the subscriber, a Notary OF EXECUTION Public within and for the County of New York, in the State of New York, BY TRUSTEE. personally appeared Barbara A. Joiner, to me personally known, who, being by me duly sworn, did say that she does business at Four Albany Street, New York, New York 10015, and is Vice President of BANKERS TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that she knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that she subscribed her name thereto by like authority; and said Barbara A. Joiner acknowledged said instrument to be the free act and deed of said corporation. (Notarial Seal) /s/ DESIREE MARSHALL -------------------------------- Desiree Marshall Notary Public, State of New York No. 24-4885294 Qualified in Kings County Certificate filed in New York County Commission Expires February 17, 1991
29 27 STATE OF MICHIGAN COUNTY OF WAYNE SS.: AFFIDAVIT AS TO L. L. Loomans, being duly sworn, says: that he is the Vice President and CONSIDERATION Treasurer of THE DETROIT EDISON COMPANY, the Mortgagor named in the AND GOOD FAITH. foregoing instrument, and that he has knowledge of the facts in regard to the making of said instrument and of the consideration therefor; that the consideration for said instrument was and is actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth. /s/ L. L. LOOMANS ---------------------------- L. L. Loomans Sworn to before me this 13th day of December, 1989 /s/ JANET A. SCULLEN ------------------------------------ Janet A. Scullen, Notary Public Macomb County, MI (Acting in Wayne County) My Commission Expires March 30, 1993 (Notarial Seal) This instrument was drafted by Frances B. Rohlman, Esq., 2000 Second Avenue, Detroit, Michigan 48226
EX-4.173 6 EXHIBIT 4-173 1 EXHIBIT 4-173 CONFORMED COPY THE DETROIT EDISON COMPANY (2000 Second Avenue, Detroit, Michigan 48226) TO BANKERS TRUST COMPANY (Four Albany Street, New York, New York 10015) AS TRUSTEE ------------------------ INDENTURE Dated as of February 15, 1990 ------------------------ SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST DATED AS OF OCTOBER 1, 1924 PROVIDING FOR (A) GENERAL AND REFUNDING MORTGAGE BONDS, 1990 SERIES A AND 1990 SERIES D, DUE MARCH 31, 2020, (B) GENERAL AND REFUNDING MORTGAGE BONDS, 1990 SERIES B AND 1990 SERIES E, DUE MARCH 31, 2016, (C) 1990 SERIES C AND 1990 SERIES F, DUE MARCH 31, 2014 AND (D) RECORDING AND FILING DATA 2 i TABLE OF CONTENTS* ------------------------
PAGE --- PARTIES.............................................................. 1 RECITALS Original Indenture and Supplementals............................... 1 Issue of Bonds under Indenture..................................... 1 Bonds heretofore issued............................................ 1 Reason for creation of new series.................................. 5 Bonds to be 1990 Series A/1990 Series D, 1990 Series B/1990 Series E, and 1990 Series C/1990 Series F.............................. 5 Further assurance.................................................. 5 Authorization of Supplemental Indenture............................ 5 Consideration for Supplemental Indenture........................... 6 PART I. CREATION OF TWO HUNDRED EIGHTY-FIRST SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BOND, 1990 SERIES A Sec. 1. Terms of Bond of 1990 Series A............................... 7 Sec. 2. Redemption of 1990 Series A Bond............................. 8 Sec. 3. Exchange..................................................... 9 Sec. 4. Consent...................................................... 9 Sec. 5. Form of 1990 Series A Bond................................... 9 Form of Trustee's Certificate................................ 13 PART II. CREATION OF TWO HUNDRED EIGHTY-SECOND SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, 1990 SERIES D Sec. 1. Terms of Bonds of 1990 Series D.............................. 14 Sec. 2. Redemption of Bonds of 1990 Series D......................... 15 Exchange and transfer........................................ 17 Sec. 3. Consent...................................................... 17 Sec. 4. Form of Bonds of 1990 Series D............................... 18 Form of Trustee's Certificate................................ 21 PART III. CREATION OF TWO HUNDRED EIGHTY-THIRD SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BOND, 1990 SERIES B Sec. 1. Terms of Bond of 1990 Series B............................... 22 Sec. 2. Redemption of 1990 Series B Bond............................. 23 Sec. 3. Exchange..................................................... 24 Sec. 4. Consent...................................................... 24 Sec. 5. Form of 1990 Series B Bond................................... 25 Form of Trustee's Certificate................................ 30
3 ii
PAGE --- PART IV. CREATION OF TWO HUNDRED EIGHTY-FOURTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, 1990 SERIES E Sec. 1. Terms of Bonds of 1990 Series E.............................. 31 Sec. 2. Redemption of Bonds of 1990 Series E......................... 32 Exchange and transfer........................................ 34 Sec. 3. Consent...................................................... 34 Sec. 4. Form of Bonds of 1990 Series E............................... 35 Form of Trustee's Certificate................................ 38 PART V. CREATION OF TWO HUNDRED EIGHTY-FIFTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BOND, 1990 SERIES C Sec. 1. Terms of Bond of 1990 Series C............................... 39 Sec. 2. Redemption of 1990 Series C Bond............................. 40 Sec. 3. Exchange..................................................... 41 Sec. 4. Consent...................................................... 41 Sec. 5. Form of 1990 Series C Bond................................... 42 Form of Trustee's Certificate................................ 47 PART VI. CREATION OF TWO HUNDRED EIGHTY-SIXTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, 1990 SERIES F Sec. 1. Terms of Bonds of 1990 Series F.............................. 48 Sec. 2. Redemption of Bonds of 1990 Series F......................... 49 Exchange and transfer........................................ 51 Sec. 3. Consent...................................................... 51 Sec. 4. Form of Bonds of 1990 Series F............................... 52 Form of Trustee's Certificate................................ 55 PART VII. RECORDING AND FILING DATA Recording and filing of Original Indenture........................... 56 Recording and filing of Supplemental Indentures...................... 56 Recording of Certificates of Provision for Payment................... 60 PART VIII. THE TRUSTEE Terms and conditions of acceptance of trust by Trustee............... 60 PART IX. MISCELLANEOUS Execution in Counterparts............................................ 61 Testimonium.......................................................... 61 Execution............................................................ 61 Acknowledgements..................................................... 62 Affidavit as to consideration and good faith......................... 63
------------------------ * This Table of Contents shall not have any bearing upon the interpretation of any of the terms or provisions of this Indenture. 4 1 PARTIES. SUPPLEMENTAL INDENTURE, dated as of the fifteenth day of February, in the year one thousand nine hundred and ninety, between THE DETROIT EDISON COMPANY, a corporation organized and existing under the laws of the State of Michigan and a transmitting utility (hereinafter called the "Company"), party of the first part, and BANKERS TRUST COMPANY, a corporation organized and existing under the laws of the State of New York, having its corporate trust office at Four Albany Street, in the Borough of Manhattan, The City and State of New York, as Trustee under the Mortgage and Deed of Trust hereinafter mentioned (hereinafter called the "Trustee"), party of the second part. ORIGINAL WHEREAS, the Company has heretofore executed and delivered its Mortgage INDENTURE AND and Deed of Trust (hereinafter referred to as the "Original Indenture"), SUPPLEMENTALS. dated as of October 1, 1924, to the Trustee, for the security of all bonds of the Company outstanding thereunder, and pursuant to the terms and provisions of the Original Indenture, indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, June 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, November 1, 1936, February 1, 1940, December 1, 1940, September 1, 1947, March 1, 1950, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, June 1, 1959, December 1, 1966, October 1, 1968, December 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, December 15, 1975, February 1, 1976, June 15, 1976, July 15, 1976, February 15, 1977, March 1, 1977, June 15, 1977, July 1, 1977, October 1, 1977, June 1, 1978, October 15, 1978, March 15, 1979, July 1, 1979, September 1, 1979, September 15, 1979, January 1, 1980, April 1, 1980, August 15, 1980, August 1, 1981, November 1, 1981, June 30, 1982, August 15, 1982, June 1, 1983, October 1, 1984, May 1, 1985, May 15, 1985, October 15, 1985, April 1, 1986, August 15, 1986, November 30, 1986, January 31, 1987, April 1, 1987, August 15, 1987, November 30, 1987, June 15, 1989, July 15, 1989 and December 1, 1989 supplemental to the Original Indenture, have heretofore been entered into between the Company and the Trustee (the Original Indenture and all indentures supplemental thereto together being hereinafter sometimes referred to as the "Indenture"); and ISSUE OF WHEREAS, the Indenture provides that said bonds shall be issuable in one BONDS UNDER or more series, and makes provision that the rates of interest and dates INDENTURE. for the payment thereof, the date of maturity or dates of maturity, if of serial maturity, the terms and rates of optional redemption (if redeemable), the forms of registered bonds without coupons of any series and any other provisions and agreements in respect thereof, in the Indenture provided and permitted, as the Board of Directors may determine, may be expressed in a supplemental indenture to be made by the Company to the Trustee thereunder; and BONDS HERETOFORE WHEREAS, bonds in the principal amount of Five billion forty-four million ISSUED. four hundred eighty-one thousand dollars ($5,044,481,000) have heretofore been issued under the Indenture as follows, viz:
(1) Bonds of Series A -- Principal Amount $26,016,000, (2) Bonds of Series B -- Principal Amount $23,000,000, (3) Bonds of Series C -- Principal Amount $20,000,000, (4) Bonds of Series D -- Principal Amount $50,000,000, (5) Bonds of Series E -- Principal Amount $15,000,000, (6) Bonds of Series F -- Principal Amount $49,000,000, (7) Bonds of Series G -- Principal Amount $35,000,000, (8) Bonds of Series H -- Principal Amount $50,000,000, (9) Bonds of Series I -- Principal Amount $60,000,000, (10) Bonds of Series J -- Principal Amount $35,000,000, (11) Bonds of Series K -- Principal Amount $40,000,000, (12) Bonds of Series L -- Principal Amount $24,000,000, (13) Bonds of Series M -- Principal Amount $40,000,000, (14) Bonds of Series N -- Principal Amount $40,000,000, (15) Bonds of Series O -- Principal Amount $60,000,000, (16) Bonds of Series P -- Principal Amount $70,000,000,
5 2 (17) Bonds of Series Q -- Principal Amount $40,000,000, (18) Bonds of Series W -- Principal Amount $50,000,000, (19) Bonds of Series BB -- Principal Amount $50,000,000, (20) Bonds of Series CC -- Principal Amount $50,000,000, (21-28) Bonds of Series DDP Nos. 1-8 -- Principal Amount $6,400,000, (29-39) Bonds of Series FFR Nos. 1-11 -- Principal Amount $6,500,000, (40-53) Bonds of Series GGP Nos. 1-6 and 8-15 -- Principal Amount $7,960,000, (54-65) Bonds of Series IIP Nos. 1-6 and 8-13 -- Principal Amount $450,000, (66-71) Bonds of Series JJP Nos. 1-6 -- Principal Amount $690,000, (72-77) Bonds of Series KKP Nos. 1-6 -- Principal Amount $1,590,000, (78-89) Bonds of Series LLP Nos. 1-6 and 8-13 -- Principal Amount $4,760,000, (90-101) Bonds of Series NNP Nos. 1-6 and 8-13 -- Principal Amount $7,950,000, (102-109) Bonds of Series OOP Nos. 1-8 -- Principal Amount $2,680,000, (110-121) Bonds of Series QQP Nos. 1-7 and 10-14 -- Principal Amount $7,075,000, (122-127) Bonds of Series TTP Nos. 1-6 -- Principal Amount $330,000, (128) Bonds of 1980 Series A -- Principal Amount $50,000,000, (129-137) Bonds of 1980 Series CP Nos. 1-5 and 13-16 -- Principal Amount $3,250,000, (138-142) Bonds of 1980 Series DP Nos. 1-5 -- Principal Amount $925,000, (143-146) Bonds of 1981 Series AP Nos. 1-4 -- Principal Amount $3,200,000, all of which have either been retired and cancelled, or no longer represent obligations of the Company, having been called for redemption and funds necessary to effect the payment, redemption and retirement thereof having been deposited with the Trustee as a special trust fund to be applied for such purpose; (147) Bonds of Series R in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (148) Bonds of Series S in the principal amount of One hundred fifty million dollars ($150,000,000), all of which are outstanding at the date hereof; (149) Bonds of Series T in the principal amount of Seventy-five million dollars ($75,000,000), all of which are outstanding at the date hereof; (150) Bonds of Series U in the principal amount of Seventy-five million dollars ($75,000,000), all of which are outstanding at the date hereof; (151) Bonds of Series V in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (152) Bonds of Series X in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (153) Bonds of Series Y in the principal amount of Sixty million dollars ($60,000,000), all of which are outstanding at the date hereof; (154) Bonds of Series Z in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (155) Bonds of Series AA in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (156) Bonds of Series DDP No. 9 in the principal amount of Seven million nine hundred five thousand dollars ($7,905,000), of which One million six hundred thousand dollars ($1,600,000) principal amount have heretofore been retired and Six million three hundred five thousand dollars ($6,305,000) principal amount are outstanding at the date hereof;
6 3 (157) Bonds of Series EE in the principal amount of Fifty million dollars ($50,000,000), of which Thirty million dollars ($30,000,000) principal amount have heretofore been retired and Twenty million dollars ($20,000,000) principal amount are outstanding at the date hereof; (158-160) Bonds of Series FFR Nos. 12-14 in the principal amount of Thirty-nine million one hundred thousand dollars ($39,100,000), all of which are outstanding at the date hereof; (161-168) Bonds of Series GGP Nos. 7 and 16-22 in the principal amount of Thirty-four million three hundred forty thousand dollars ($34,340,000), of which Two million four hundred thousand dollars ($2,400,000) principal amount have heretofore been retired and Thirty-one million nine hundred forty thousand dollars ($31,940,000) principal amount are outstanding at the date hereof; (169) Bonds of Series HH in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (170-171) Bonds of Series MMP and MMP No. 2 in the principal amount of Five million four hundred thirty thousand dollars ($5,430,000), of which One million two hundred thirty-five thousand dollars ($1,235,000) principal amount have heretofore been retired and Four million one hundred ninety-five thousand dollars ($4,195,000) principal amount are outstanding at the date hereof; (172-181) Bonds of Series IIP Nos. 7 and 14-22 in the principal amount of Three million three hundred thousand dollars ($3,300,000), of which One hundred ten thousand dollars ($110,000) principal amount have heretofore been retired and Three million one hundred ninety thousand dollars ($3,190,000) principal amount are outstanding at the date hereof; (182-183) Bonds of Series JJP Nos. 7-8 in the principal amount of Six million one hundred sixty thousand dollars ($6,160,000), of which Three hundred fifty thousand dollars ($350,000) principal amount have heretofore been retired and Five million eight hundred ten thousand dollars ($5,810,000) are outstanding at the date hereof; (184-188) Bonds of Series KKP Nos. 7-11 in the principal amount of Seventy-three million forty-five thousand dollars ($73,045,000), of which Seven hundred ten thousand dollars ($710,000) principal amount have heretofore been retired and Seventy-two million three hundred thirty-five thousand dollars ($72,335,000) are outstanding at the date hereof; (189-191) Bonds of Series LLP Nos. 7 and 14-15 in the principal amount of Four million ninety thousand dollars ($4,090,000), of which Two million five hundred thirty-five thousand dollars ($2,535,000) principal amount have heretofore been retired and One million five hundred fifty-five thousand dollars ($1,555,000) principal amount are outstanding at the date hereof; (192-200) Bonds of Series NNP Nos. 7 and 14-21 in the principal amount of Forty million ($40,000,000), of which One million six hundred fifty thousand dollars ($1,650,000) principal amount have heretofore been retired and Thirty-eight million three hundred fifty thousand dollars ($38,350,000) principal amount are outstanding at the date hereof; (201-210) Bonds of Series OOP Nos. 9-18 in the principal amount of Sixteen million two hundred thousand dollars ($16,200,000), of which Two hundred forty thousand dollars ($240,000) principal amount have heretofore been retired and Fifteen million nine hundred sixty thousand dollars ($15,960,000) are outstanding at the date hereof; (211) Bonds of Series PP in the principal amount of Seventy million dollars ($70,000,000), all of which are outstanding at the date hereof; (212-218) Bonds of Series QQP Nos. 8-9 and 15-19 in the principal amount of Six million five hundred seventy-five thousand dollars ($6,575,000), all of which are outstanding at the date hereof;
7 4 (219) Bonds of Series RR in the principal amount of Seventy million dollars ($70,000,000), all of which are outstanding at the date hereof; (220) Bonds of Series SS in the principal amount of One hundred fifty million dollars ($150,000,000), of which Fifty million dollars ($50,000,000) principal amount have heretofore been retired and One hundred million dollars ($100,000,000) principal amount are outstanding at the date hereof; (221-229) Bonds of Series TTP Nos. 7-15 in the principal amount of Three million four hundred seventy thousand dollars ($3,470,000), all of which are outstanding at the date hereof; (230) Bonds of Series UU in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (231) Bonds of 1980 Series B in the principal amount of One hundred million dollars ($100,000,000), of which Fifty-three million two hundred thousand dollars ($53,200,000) principal amount have heretofore been retired and Forty-six million eight hundred thousand dollars ($46,800,000) principal amount are outstanding at the date hereof; (232-247) Bonds of 1980 Series CP Nos. 6-12 and 17-25 in the principal amount of Thirty-one million seven hundred fifty thousand dollars ($31,750,000), all of which are outstanding at the date hereof; (248-253) Bonds of 1980 Series DP Nos. 6-11 in the principal amount of Nine million eight hundred twenty-five thousand dollars ($9,825,000), all of which are outstanding at the date hereof; (254-265) Bonds of 1981 Series AP Nos. 5-16 in the principal amount of One hundred twenty million eight hundred thousand dollars ($120,800,000), all of which are outstanding at the date hereof; (266) Bonds of 1984 Series AP in the principal amount of Two million four hundred thousand dollars ($2,400,000), all of which are outstanding at the date hereof; (267) Bonds of 1984 Series BP in the principal amount of Seven million seven hundred fifty thousand dollars ($7,750,000), all of which are outstanding at the date hereof; (268) Bonds of 1985 Series A in the principal amount of Thirty-five million dollars ($35,000,000), all of which are outstanding at the date hereof; (269) Bonds of 1985 Series B in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (270) Bonds of 1986 Series A in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; (271) Bonds of 1986 Series B in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof; (272) Bonds of 1986 Series C in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; (273) Bonds of 1987 Series A in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof; (274) Bonds of 1987 Series B in the principal amount of One hundred seventy-five million dollars ($175,000,000), all of which are outstanding at the date hereof; (275) Bonds of 1987 Series C in the principal amount of Two hundred twenty-five million dollars ($225,000,000), all of which are outstanding at the date hereof; (276) Bonds of 1987 Series D in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof; (277) Bonds of 1987 Series E in the principal amount of One hundred fifty million dollars ($150,000,000), all of which are outstanding at the date hereof; (278) Bonds of 1987 Series F in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof;
8 5 (279) Bonds of 1989 Series A in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof; and (280) Bonds of 1989 Series BP in the principal amount of Sixty-six million five hundred sixty-five thousand dollars ($66,565,000), all of which are outstanding at the date hereof; and, accordingly, of the bonds so issued, Three billion nine hundred sixty-nine million six hundred seventy-five thousand dollars ($3,969,675,000) principal amount are outstanding at the date hereof; and REASON FOR WHEREAS, the Company is purchasing the undivided ownership interest of Wolverine CREATION OF Power Supply Cooperative, Inc. in Fermi 2 and related nuclear fuel, materials and NEW SERIES. supplies and for this purpose desires to issue new series of bonds as final payment of the purchase price; such bonds to be issued under the Indenture in the aggregate principal amount of Five hundred thirty-seven million and fifty-six thousand dollars ($537,056,000) to be authenticated and delivered pursuant to Section 4 of Article III of the Indenture; and BONDS TO BE WHEREAS, the Company desires by this Supplemental Indenture to create such new series 1990 SERIES A/ of bonds, to be designated "General and Refunding Mortgage Bond, 1990 Series A", 1990 SERIES D, "General and Refunding Mortgage Bond, 1990 Series B", "General and Refunding Mortgage 1990 SERIES B/ Bond, 1990 Series C", "General and Refunding Mortgage Bonds, 1990 Series D", "General 1990 SERIES E AND and Refunding Mortgage Bonds, 1990 Series E" and "General and Refunding Mortgage Bonds, 1990 SERIES C/ 1990 Series F"; and to provide for the exchange of: (1) General and Refunding Mortgage 1990 SERIES F. Bonds, 1990 Series A for General and Refunding Mortgage Bonds, 1990 Series D; (2) General and Refunding Mortgage Bonds, 1990 Series B for General and Refunding Mortgage Bonds, 1990 Series E; and (3) General and Refunding Mortgage Bonds, 1990 Series C for General and Refunding Mortgage Bonds, 1990 Series F; and FURTHER WHEREAS, the Original Indenture, by its terms, includes in the property subject to ASSURANCE. the lien thereof all of the estates and properties, real, personal and mixed, rights, privileges and franchises of every nature and kind and wheresoever situate, then or thereafter owned or possessed by or belonging to the Company or to which it was then or at any time thereafter might be entitled in law or in equity (saving and excepting, however, the property therein specifically excepted or released from the lien thereof), and the Company therein convenanted that it would, upon reasonable request, execute and deliver such further instruments as may be necessary or proper for the better assuring and confirming unto the Trustee all or any part of the trust estate, whether then or thereafter owned or acquired by the Company (saving and excepting, however, property specifically excepted or released from the lien thereof); and AUTHORIZATION WHEREAS, the Company in the exercise of the powers and authority conferred upon and OF SUPPLEMENTAL reserved to it under and by virtue of the provisions of the Indenture, and pursuant to INDENTURE. resolutions of its Board of Directors has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture in the form hereof for the purposes herein provided; and WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized; CONSIDERATION FOR NOW, THEREFORE, THIS INDENTURE WITNESSETH: That The Detroit Edison Company, in SUPPLEMENTAL consideration of the premises and of the covenants contained in the Indenture and INDENTURE. of the sum of One Dollar ($1.00) and other good and valuable consideration to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the reciept whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trusts under the Original Indenture and in said indentures supplemental thereto as follows:
9 6 PART I. CREATION OF TWO HUNDRED EIGHTY-FIRST SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BOND, 1990 SERIES A TERMS OF BOND SECTION 1. The Company hereby creates the Two hundred eighty-first OF 1990 SERIES A. series of bonds to be issued under and secured by the Original Indenture as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bond, 1990 Series A (elsewhere herein referred to as the "1990 Series A Bond"). The aggregate principal amount of the 1990 Series A Bond shall be limited to One hundred ninety-four million six hundred forty-nine thousand dollars ($194,649,000), except as provided in Section 13 of Article II of the Original Indenture with respect to exchanges and replacement of bonds. The 1990 Series A Bond shall be a multiple of $1,000. The 1990 Series A Bond shall be issued as one registered bond without coupons in the amount of $$194,649,000, which shall bear interest, payable semi-annually on March 31 and September 30 of each year (commencing March 31, 1990) at the rate of 7.904%, and principal payments shall be made thereon annually, payable on March 31 of each year (commencing March 31, 1990) as set forth below, until the final payment of principal shall be made:
PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT PAYMENT PAYMENT REMAINING DATE DUE OUTSTANDING ------------------ ---------- ------------ March 31, 1990............................... $6,279,000 $188,370,000 March 31, 1991............................... 6,279,000 182,091,000 March 31, 1992............................... 6,279,000 175,812,000 March 31, 1993............................... 6,279,000 169,533,000 March 31, 1994............................... 6,279,000 163,254,000 March 31, 1995............................... 6,279,000 156,975,000 March 31, 1996............................... 6,279,000 150,696,000 March 31, 1997............................... 6,279,000 144,417,000 March 31, 1998............................... 6,279,000 138,138,000 March 31, 1999............................... 6,279,000 131,859,000 March 31, 2000............................... 6,279,000 125,580,000 March 31, 2001............................... 6,279,000 119,301,000 March 31, 2002............................... 6,279,000 113,022,000 March 31, 2003............................... 6,279,000 106,743,000 March 31, 2004............................... 6,279,000 100,464,000 March 31, 2005............................... 6,279,000 94,185,000 March 31, 2006............................... 6,279,000 87,906,000 March 31, 2007............................... 6,279,000 81,627,000 March 31, 2008............................... 6,279,000 75,348,000 March 31, 2009............................... 6,279,000 69,069,000 March 31, 2010............................... 6,279,000 62,790,000 March 31, 2011............................... 6,279,000 56,511,000 March 31, 2012............................... 6,279,000 50,232,000 March 31, 2013............................... 6,279,000 43,953,000 March 31, 2014............................... 6,279,000 37,674,000 March 31, 2015............................... 6,279,000 31,395,000 March 31, 2016............................... 6,279,000 25,116,000 March 31, 2017............................... 6,279,000 18,837,000 March 31, 2018............................... 6,279,000 12,558,000 March 31, 2019............................... 6,279,000 6,279,000 March 31, 2020............................... 6,279,000 0
10 7 Payments of principal, premium, if any, and interest on the 1990 Series A Bond shall be made by bank wire transfer in immediately available funds in lawful money of the United States of America to the bank account of the registered holder of such bond which such registered holder shall designate in writing to Bankers Trust Company, Trustee, not less than fifteen (15) days prior to the date such payment shall become due and payable. When a semi-annual interest payment date falls on a Saturday, Sunday or a day on which the Federal Reserve Bank of New York or the Trustee is not open for business, all payments shall be payable on the first day thereafter on which the Federal Reserve Bank of New York and the Trustee are open for business. The 1990 Series A Bond shall be dated January 3, 1990 and interest shall be payable from January 3, 1990. The 1990 Series A Bond in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed. The 1990 Series A Bond shall not be subject to or entitled to any sinking fund. REDEMPTION OF SECTION 2. The 1990 Series A Bond shall be redeemable prior to stated 1990 SERIES A BOND. maturity, at the election of the Company on any interest payment date, at redemption prices calculated in accordance with the formula set forth below on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company not more than ninety (90) days nor less than thirty (30) days prior to the date fixed for redemption to the registered holder of the 1990 Series A Bond. Any such redemption payment shall be equal to one hundred percent (100%) of the principal so redeemed, plus a prepayment premium, if any, in an amount equal to one hundred percent (100%) of the amount of interest for one year on the unpaid principal balance proposed to be redeemed, multiplied by the ratio which the number of semi-annual payment dates between the proposed redemption date and the final maturity date of the series bears to the number of semi-annual payment dates between December 31, 1994 and the final maturity date, plus in each case accrued interest to the date fixed for redemption. Any partial redemption shall, as the principal portion of such redemption, be no less than $100,000. No redemption pursuant to this paragraph shall be credited to, or relieve the Company to any extent from its obligation to make the principal payments provided for in Section 1 hereof. On or before the first day of February or August in each year, commencing September 1 1990, the Company will deliver to the Trustee a treasurer's certificate, which shall be irrevocable, specifying the amount of bonds to be optionally redeemed and the corresponding premium, if any, and accrued interest on such bonds on the next ensuing March 31 or September 30, or the first business day thereafter, respectively. The Trustee shall, upon the receipt of the treasurer's certificate, cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner herein provided for. Such notice having been duly given, the redemption of bonds of 1990 Series A shall be made upon the terms and in the manner and with the effect hereinabove provided for with respect to redemptions. A treasurer's certificate shall not be required if no bonds of a series are to be redeemed under this paragraph. EXCHANGE. SECTION 3. At the option of the holder, upon written request to both the Company and the Trustee made at least forty-five (45) days prior to an interest payment date and subject to the terms of the Indenture and compliance with applicable securities laws, the 1990 Series A Bond shall be exchangeable, in whole but not in part, for bonds of 1990 Series D (as hereinafter described) in an aggregate principal amount equal to the aggregate amount of unpaid principal which shall remain outstanding on the 1990 Series A Bond as of the date of such exchange. Such exchange shall occur only on an interest payment date for the 1990 Series A Bond at the office of the Trustee in the Borough of Manhattan, The City of New York, The State of New York.
11 8 THE 1990 SERIES A BOND SHALL BEAR A LEGEND STATING THAT SUCH BOND HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND THAT AS A CONSEQUENCE SUCH BOND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, UNLESS REGISTERED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION APPLICABLE TO SUCH OFFER, SALE OR OTHER TRANSFER, AND MAY BEAR SUCH OTHER LEGENDS AS MAY BE NECESSARY TO COMPLY WITH ANY LAW OR WITH ANY RULES OR REGULATIONS MADE PURSUANT THERETO. CONSENT. SECTION 4. THE HOLDER OF THE 1990 SERIES A BOND, BY ITS ACCEPTANCE OF AND HOLDING THEREOF, CONSENTS AND AGREES THAT BONDS OF ANY SERIES MAY BE ISSUED WHICH MATURE ON A DATE OR DATES LATER THAN OCTOBER 1, 2024 AND ALSO CONSENTS TO THE DELETION FROM THE FIRST PARAGRAPH OF SECTION 5 OF ARTICLE II OF THE INDENTURE OF THE PHRASE "BUT IN NO EVENT LATER THAN OCTOBER 1, 2024." SUCH HOLDER FURTHER AGREES THAT (A) SUCH CONSENT SHALL, FOR ALL PURPOSES OF ARTICLE XV OF THE INDENTURE AND WITHOUT FURTHER ACTION ON THE PART OF SUCH HOLDER, BE DEEMED THE AFFIRMATIVE VOTE OF SUCH HOLDER AT ANY MEETING CALLED PURSUANT TO SAID ARTICLE XV FOR THE PURPOSE OF APPROVING SUCH DELETION, AND (B) SUCH DELETION SHALL BECOME EFFECTIVE AT SUCH TIME AS NOT LESS THAN EIGHTY-FIVE PER CENT (85%) IN PRINCIPAL AMOUNT OF BONDS OUTSTANDING UNDER THE INDENTURE SHALL HAVE CONSENTED THERETO SUBSTANTIALLY IN THE MANNER SET FORTH IN THIS SECTION 4, OR IN WRITING, OR BY AFFIRMATIVE VOTE CAST AT A MEETING CALLED PURSUANT TO SAID ARTICLE XV, OR BY ANY COMBINATION THEREOF. FORM OF SECTION 5. THE 1990 SERIES A BOND AND THE FORM OF TRUSTEE'S CERTIFICATE 1990 SERIES A BOND. TO BE ENDORSED ON SUCH BOND SHALL BE SUBSTANTIALLY IN THE FOLLOWING FORMS, RESPECTIVELY: [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 1990 Series A, 7.904% due March 31, 2020 (Payable in annual installments, commencing March 31, 1990) $194,649,000 No. THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to UNITED STATES OF AMERICA, at its office or agency in the Borough of Manhattan, the City and State of New York, in lawful money of the United States of America, the principal sum of $194,649,000, together with interest at the rate specified in the title hereof on the amount of said principal sum remaining unpaid from time to time from January 3, 1990, and after the first interest payment hereon from the most recent date to which interest has been paid hereon, until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Interest shall be due and payable in 61 consecutive semi-annual payments on March 31 and September 30 in each year, commencing on March 31, 1990, and principal shall be due and payable in 31 consecutive annual payments of $6,279,000 on March 31, in each year, commencing on March 31, 1990, as more fully set forth on the reverse hereof. PAYMENTS OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST ON THIS BOND ARE TO BE MADE BY BANK WIRE TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO THE HOLDER HEREOF ALL AS PROVIDED, TO THE EXTENT AND IN THE MANNER SPECIFIED IN THE INDENTURE HEREINAFTER MENTIONED ON THE REVERSE HEREOF AND IN THE SUPPLEMENTAL INDENTURE PURSUANT TO WHICH THIS BOND HAS BEEN ISSUED. WHEN ANY PAYMENT DATE FALLS ON A SATURDAY, SUNDAY OR A DAY ON WHICH THE FEDERAL RESERVE BANK OF NEW YORK OR THE TRUSTEE IS NOT OPEN FOR BUSINESS, ALL PAYMENTS SHALL BE PAYABLE ON THE FIRST DAY THEREAFTER ON WHICH THE FEDERAL RESERVE BANK OF NEW YORK AND THE TRUSTEE ARE OPEN FOR BUSINESS.
12 9 AT THE WRITTEN REQUEST OF THE REGISTERED HOLDER HEREOF MADE TO THE COMPANY AND THE TRUSTEE AT LEAST FORTY-FIVE (45) DAYS IN ADVANCE OF AN INTEREST PAYMENT DATE, THIS BOND SHALL BE EXCHANGEABLE, IN WHOLE BUT NOT IN PART, ON ANY INTEREST PAYMENT DATE IN AN AGGREGATE PRINCIPAL AMOUNT EQUAL TO THE AMOUNT OF UNPAID PRINCIPAL WHICH SHALL REMAIN OUTSTANDING ON THIS BOND AS OF THE DATE OF SUCH EXCHANGE (AFTER GIVING EFFECT TO THE PAYMENT OF PRINCIPAL HEREON ON THE DATE OF SUCH EXCHANGE), ALL AS PROVIDED, TO THE EXTENT AND IN THE MANNER SPECIFIED IN THE INDENTURE AND THE SUPPLEMENTAL INDENTURE HEREINAFTER MENTIONED ON THE REVERSE HEREOF. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH SET FORTH AT THIS PLACE. THIS BOND SHALL NOT BE VALID OR BECOME OBLIGATORY FOR ANY PURPOSE UNTIL BANKERS TRUST COMPANY, THE TRUSTEE UNDER THE INDENTURE HEREINAFTER MENTIONED ON THE REVERSE HEREOF, OR ITS SUCCESSOR THEREUNDER, SHALL HAVE SIGNED THE FORM OF CERTIFICATE ENDORSED HEREON. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed on its behalf by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary by manual or facsimile signature. THE DETROIT EDISON COMPANY Dated: January 3, 1990 By ------------------------ Chairman of the Board ------------------------ President Attest: ----------------------------------- Secretary
13 10
[FORM OF REVERSE OF BOND] This bond is the only bond of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of said bonds known as General and Refunding Mortgage Bonds, 1990 Series A (elsewhere herein referred to as the "1990 Series A Bond"), limited to an aggregate principal amount of $194,649,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond is issued and to be issued under, and is equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of February 15, 1990) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of February 15, 1990, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in principal amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in principal amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of, or the interest on, this bond, which in those respects is unconditional. The holder of the 1990 Series A Bond, by its acceptance of and holding thereof, consents and agrees that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consents to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024." Such holder further agrees that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holder, be deemed the affirmative vote of such holder at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substan- tially in the manner set forth in Section 3 of Part I of the Supplemental Indenture dated as of February 15, 1990, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof. Principal payments shall be made hereon annually, payable on March 31 of each year (commencing March 31, 1990) as set forth below, until the final payment of principal shall be made:
PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT PAYMENT PAYMENT REMAINING DATE DUE OUTSTANDING ------------------ ---------- ------------ March 31, 1990............................... $6,279,000 $188,370,000
14 11
PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT PAYMENT PAYMENT REMAINING DATE DUE OUTSTANDING ------------------ ---------- ------------ March 31, 1991............................... 6,279,000 182,091,000 March 31, 1992............................... 6,279,000 175,812,000 March 31, 1993............................... 6,279,000 169,533,000 March 31, 1994............................... 6,279,000 163,254,000 March 31, 1995............................... 6,279,000 156,975,000 March 31, 1996............................... 6,279,000 150,696,000 March 31, 1997............................... 6,279,000 144,417,000 March 31, 1998............................... 6,279,000 138,138,000 March 31, 1999............................... 6,279,000 131,859,000 March 31, 2000............................... 6,279,000 125,580,000 March 31, 2001............................... 6,279,000 119,301,000 March 31, 2002............................... 6,279,000 113,022,000 March 31, 2003............................... 6,279,000 106,743,000 March 31, 2004............................... 6,279,000 100,464,000 March 31, 2005............................... 6,279,000 94,185,000 March 31, 2006............................... 6,279,000 87,906,000 March 31, 2007............................... 6,279,000 81,627,000 March 31, 2008............................... 6,279,000 75,348,000 March 31, 2009............................... 6,279,000 69,069,000 March 31, 2010............................... 6,279,000 62,790,000 March 31, 2011............................... 6,279,000 56,511,000 March 31, 2012............................... 6,279,000 50,232,000 March 31, 2013............................... 6,279,000 43,953,000 March 31, 2014............................... 6,279,000 37,674,000 March 31, 2015............................... 6,279,000 31,395,000 March 31, 2016............................... 6,279,000 25,116,000 March 31, 2017............................... 6,279,000 18,837,000 March 31, 2018............................... 6,279,000 12,558,000 March 31, 2019............................... 6,279,000 6,279,000 March 31, 2020............................... 6,279,000 0
This bond shall be redeemable prior to stated maturity, at the election of the Company on any interest payment date, at redemption prices calculated in accordance with the formula set forth below on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company not more than ninety (90) days nor less than thirty (30) days prior to the date fixed for redemption to the registered holder of the 1990 Series A Bond. Any such redemption payment shall be equal to one hundred percent (100%) of the principal so redeemed, plus a prepayment premium, if any, in an amount equal to one hundred percent (100%) of the amount of interest for one year on the unpaid principal balance proposed to be redeemed, multiplied by the ratio which the number of semi-annual payment dates between the proposed redemption date and the final maturity date of the series bears to the number of semi-annual payment dates between December 31, 1994 and the final maturity date, plus in each case accrued interest to the date fixed for redemption. Any partial redemption shall, as the principal portion of such redemption, be no less than $100,000. No redemption pursuant to this paragraph shall be credited to, or relieve the Company to any extent from its obligation to make the principal payments provided for above. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in said Indenture.
15 12 No recourse shall be had for the payment of the principal of, or the interest on, this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture. [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is the only bond of the series designated therein, described TRUSTEE'S in the within- mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By --------------------------------------- Authorized Officer
16 13 PART II. CREATION OF TWO HUNDRED EIGHTY-SECOND SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, 1990 SERIES D TERMS OF BONDS SECTION 1. The Company hereby creates the Two hundred eighty-second OF 1990 SERIES D. series of bonds to be issued under and secured by the Original Indenture as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, 1990 Series D" (elsewhere herein referred to as the "bonds of 1990 Series D"). The aggregate principal amount of bonds of 1990 Series D shall be limited to the principal amount of 1990 Series A Bond being exchanged, except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. The bonds of 1990 Series D shall mature on March 31, 2020 and shall be issued in exchange for, and in an aggregate principal amount equal to the principal amount remaining outstanding on, the 1990 Series A Bond as of the date of such exchange. The Bonds of Series D shall be issued as registered bonds without coupons in denominations of $10,000 and any multiple thereof, and shall bear interest, payable semi-annually on March 31 and September 30 of each year (commencing on the first March 31 or September 30 following the date of such exchange), at the rate of seven and 904/1000 per centum (7.904%) per annum until the principal shall have become due and payable, and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. Except as otherwise specifically provided in this Supplemental Indenture, the principal of and interest on the bonds of 1990 Series D shall be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. The interest on bonds of 1990 Series D, whether in temporary or definitive form, shall be payable without presentation of such bonds and (subject to the provisions of this Section 1) only to or upon the written order of the registered holders thereof. Each bond of 1990 Series D shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the March 31 or September 30 next preceding the date thereof to which interest has been paid on bonds of 1990 Series D, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication. The bonds of 1990 Series D in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denomination of bonds of 1990 Series D). Until bonds of 1990 Series D in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of 1990 Series D in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 1990 Series D, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 1990 Series D, but without a recital of redemption prices and with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company.
17 14 Interest on any bond of 1990 Series D which is payable on any interest payment date and is punctually paid or duly provided for shall be paid to the person in whose name that bond, or any previous bond to the extent evidencing the same debt as that evidenced by that bond, is registered at the close of business on the regular record date for such interest, which regular record date shall be the fifteenth day of March or September as the case may be (whether or not a business day) next preceding such interest payment date. If the Company shall default in the payment of the interest due on any interest payment date on the principal represented by any bond of 1990 Series D, such defaulted interest shall forthwith cease to be payable to the registered holder of that bond on the relevant regular record date by virtue of his having been such holder, and such defaulted interest may be paid to the registered holder of that bond (or any bond or bonds of 1990 Series D issued upon transfer or exchange thereof) on the date of payment of such defaulted interest or, at the election of the Company, to the person in whose name that bond (or any bond or bonds of 1990 Series D issued upon transfer or exchange thereof) is registered on a subsequent record date established by notice given by mail by or on behalf of the Company to the holders of bonds of 1990 Series D not less than ten (10) days preceding such subsequent record date, which subsequent record date shall be at least five (5) days prior to the payment date of such defaulted interest. REDEMPTION OF BONDS SECTION 2. The bonds of 1990 Series D shall be redeemable (i) on March OF 1990 31 in each year, commencing March 31 in the first calendar year SERIES D. subsequent to initial issuance, through the operation of the sinking fund hereinafter described at 100% of the principal amount thereof, (ii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole, or in part, from time to time, at par plus in each case accrued interest to the date fixed for redemption if such redemption does not utilize, directly or indirectly, the proceeds of and is not in anticipation of any refunding operation involving borrowing at an interest cost to the Company, computed in accordance with generally accepted financial practice, of less than 7.904% per annum, and (iii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole, or in part, from time to time, at the following redemption prices (expressed as percentages of the principal amount thereof) plus in each case (whether through operation of the sinking fund or otherwise) accrued interest to the date fixed for redemption:
IF REDEEMED DURING 12 MONTH PERIOD ENDING REDEMPTION MARCH 31, PRICE --------------- ----------- Year 11................................ 102.50% Year 12................................ 102.00 Year 13................................ 101.50 Year 14................................ 101.00 Year 15................................ 100.50 Thereafter............................. 100.00 The bonds of 1990 Series D shall be redeemable as aforesaid as provided herein and as specified in Article IV of the Indenture upon giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) days prior to the date fixed for redemption to the registered holders of bonds of 1990 Series D so called for redemption at their last respective addresses appearing on the register thereof, but failure to mail such notice to the registered holders of any bonds of 1990 Series D designated for redemption shall not affect the validity of any such redemption of any other bonds of such series. Interest shall cease to accrue on any bonds of 1990 Series D (or any portion thereof) so called for redemption from and after the date fixed for redemption if payment sufficient to redeem the bonds of 1990 Series D (or such protion) designated for redemption has been duly provided for. Bonds of 1990 Series D redeemed in part only shall be in amounts of $10,000 or any multiple thereof.
18 15 If the giving of the notice of redemption shall have been completed, or if provision satisfactory to the Trustee for the giving of such notice shall have been made, and if the Company shall have deposited with the Trustee in trust funds (which shall become available for payment to the holders of the bonds of 1990 Series D so to be redeemed) sufficient to redeem bonds of 1990 Series D in whole or in part, on the date fixed for redemption, then all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and interest due or to become due thereon shall cease and be discharged and the holders of such bonds of 1990 Series D (or portions thereof) shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or in respect of such bonds (or portions thereof) and interest. As and for the sinking fund for the retirement of the bonds of 1990 Series D the Company will, until all the bonds of 1990 Series D are paid or payment thereof provided for, deposit with the Trustee prior to March 31 in each year, commencing March 31 of the first calendar year subsequent to initial issuance, an amount in cash sufficient to redeem on such March 31 $6,280,000 principal amount of bonds of 1990 Series D. On or before February 1 in each year, commencing February 1 of the first calendar year subsequent to initial issuance the Company (i) may deliver bonds of 1990 Series D (other than any previously called for redemption for the sinking fund) and (ii) may apply as a credit bonds for 1990 Series D redeemed at the election of the Company otherwise than through the sinking fund, in each case in satisfaction of all or any part of the amount of any sinking fund payment. Each such bond of 1990 Series D shall be received or credited for such purpose by the Trustee at the principal amount thereof and the amount of such sinking fund payment shall be reduced accordingly. On February 1 in each year, commencing February 1 of the first calendar year subsequent to initial issuance, the Company will deliver to the Trustee a treasurer's certificate, which shall be irrevocable, specifying the amount of the next ensuing sinking fund payment and the portions thereof which are to be satisfied by payment of cash, by delivery of bonds of 1990 Series D or by crediting bonds of 1990 Series D previously redeemed. The treasurer's certificate shall also state that bonds of 1990 Series D forming the basis of any such credit do not include any bonds of 1990 Series D which have been called for redemption for the sinking fund or previously credited against any sinking fund payment. The Trustee shall, upon the receipt of the treasurer's certificate, select the bonds of 1990 Series D to be redeemed upon the next ensuing March 31 in the manner hereinabove provided for and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner hereinabove provided for. Such notice having been duly given, the redemption of such bonds of 1990 Series D shall be made upon the terms and in the manner and with the effect hereinabove provided for with respect to redemptions. EXCHANGE AND At the option of the registered holder, any bonds of 1990 Series D, upon TRANSFER. surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney, shall be exchangeable for a like aggregate principal amount of bonds of 1990 Series D of other authorized denominations, upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. Bonds of 1990 Series D shall be transferable at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of 1990 Series D during any period of ten (10) days next preceding any interest payment date for such bonds.
19 16 Bonds of 1990 Series D, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or with the rules or regulations of any stock exchange or to conform to usage with respect thereto. CONSENT. SECTION 3. The holders of the bonds of 1990 Series D, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in this Section 3, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
20 17 FORM OF BONDS OF SECTION 4. The bonds of 1990 Series D and the form of Trustee's 1990 SERIES D. Certificate to be endorsed on such bonds shall be substantially in the following forms, respectively. [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 1990 Series D, 7.904% due March 31, 2020 $_________ No. _________ THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to or registered assigns, at its office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of in lawful money of the United States of America on the thirty-first day of March, 2020, and to pay interest thereon at the rate specified in the title hereof, at such office or agency, in like lawful money, from , and after the first interest payment on bonds of this Series from the most recent date to which such interest has been paid, semi-annually on the thirty-first day of March and the thirtieth day in September each year, to the person in whose name this bond is registered at the close of business on the preceding fifteenth day of March or September (subject to certain exceptions provided in the Indenture hereinafter mentioned), until the Company's obligation with respect to payment of said principal shall have been discharged as provided in such Indenture. Reference is hereby made to the further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the aforesaid Indenture, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instru- ment to be executed on its behalf by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary with his manual or facsimile signature. Dated: THE DETROIT EDISON COMPANY By ------------------------ Chairman of the Board ------------------------ Attest: President ------------------------------------- Secretary
21 18
[FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of said bonds known as General and Refunding Mortgage Bonds, 1990 Series D, (elsewhere herein referred to as the "bonds of 1990 Series D"), limited to [the aggregate principal amount of the 1990 Series A Bond being converted], except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of February 15, 1990) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of February 15, 1990, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in principal amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in principal amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of, or the interest on, this bond, which in those respects is unconditional. The holders of the bonds of 1990 Series D, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024,". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in Section 3 of Part I of the Supplemental Indenture dated as of February 15, 1990, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
22 19 This bond is redeemable on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) but not more than ninety (90) days prior to the date fixed for redemption to the registered holder of this bond at his last address appearing on the register thereof, in the manner and upon the terms provided in the Indenture, (i) on March 31 in each year, commencing [March 31, ], through the operation of the sinking fund for bonds of 1990 Series D at 100% of the principal amount hereof, (ii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole, or in part, from time to time, at par plus in each case accrued interest to the date fixed for redemption if such redemption does not utilize, directly or indirectly, the proceeds of and is not in anticipation of any refunding operation involving borrowing at an interest cost to the Company, computed in accordance with generally accepted financial practice, of less than 7.904% per annum, and (iii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole or in part, from time to time, at the following redemption prices (expressed as percentages of the principal amount hereof) plus in each case (whether through operation of the sinking fund or otherwise) accrued interest to the date fixed for redemption:
IF REDEEMED DURING 12 MONTH PERIOD ENDING REDEMPTION MARCH 31, PRICE --------------- ----------- Year 11................................ 102.50% Year 12................................ 102.00 Year 13................................ 101.50 Year 14................................ 101.00 Year 15................................ 100.50 Thereafter............................. 100.00
The Company will deposit with the Trustee as and for a sinking fund for the bonds of Series D prior to each March 31, commencing [ ], an amount sufficient to redeem $6,280,000 principal amount of bonds of 1990 Series D, less the amount of any credit against any such payment taken by the Company for bonds of 1990 Series D delivered to the Trustee or redeemed by the Company otherwise than through the sinking fund. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of 1990 Series D (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds and interest. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in said Indenture. This bond is transferable by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond or bonds of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee or transferees in exchange herefor, and this bond with others in like form may in like manner be exchanged for one or more new registered bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture.
23 20 No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture. [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated therein, TRUSTEE'S described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By ------------------------------------------- Authorized Officer
24 21 PART III. CREATION OF TWO HUNDRED EIGHTY-THIRD SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BOND, 1990 SERIES B TERMS OF BOND SECTION 1. The Company hereby creates the Two hundred eighty-third OF 1990 SERIES B. series of bonds to be issued under and secured by the Original Indenture as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bond, 1990 Series B (elsewhere herein referred to as the "1990 Series B Bond"). The aggregate principal amount of the 1990 Series B Bond shall be limited to Two hundred fifty-six million nine hundred thirty-two thousand dollars ($256,932,000), except as provided in Section 13 of Article II of the Original Indenture with respect to exchanges and replacement of bonds. The 1990 Series B Bond shall be a multiple of $1,000. The 1990 Series B Bond shall be issued as one registered bond without coupons in the amount of $256,932,000, which shall bear interest, payable semi-annually on March 31 and September 30 of each year (commencing March 31, 1990) at the rate of 7.904%, and principal payments shall be made thereon annually, payable on March 31 of each year (commencing March 31, 1990) as set forth below, until the final payments of interest and principal shall be made:
PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT PAYMENT PAYMENT REMAINING DATE DUE OUTSTANDING ------------------ ---------- ------------ March 31, 1990............................... $9,516,000 $247,416,000 March 31, 1991............................... 9,516,000 237,900,000 March 31, 1992............................... 9,516,000 228,384,000 March 31, 1993............................... 9,516,000 218,868,000 March 31, 1994............................... 9,516,000 209,352,000 March 31, 1995............................... 9,516,000 199,836,000 March 31, 1996............................... 9,516,000 190,320,000 March 31, 1997............................... 9,516,000 180,804,000 March 31, 1998............................... 9,516,000 171,288,000 March 31, 1999............................... 9,516,000 161,772,000 March 31, 2000............................... 9,516,000 152,256,000 March 31, 2001............................... 9,516,000 142,740,000 March 31, 2002............................... 9,516,000 133,224,000 March 31, 2003............................... 9,516,000 123,708,000 March 31, 2004............................... 9,516,000 114,192,000 March 31, 2005............................... 9,516,000 104,676,000 March 31, 2006............................... 9,516,000 95,160,000 March 31, 2007............................... 9,516,000 85,644,000 March 31, 2008............................... 9,516,000 76,128,000 March 31, 2009............................... 9,516,000 66,612,000 March 31, 2010............................... 9,516,000 57,096,000 March 31, 2011............................... 9,516,000 47,580,000 March 31, 2012............................... 9,516,000 38,064,000 March 31, 2013............................... 9,516,000 28,548,000 March 31, 2014............................... 9,516,000 19,032,000 March 31, 2015............................... 9,516,000 9,516,000 March 31, 2016............................... 9,516,000 0
25 22 Payments of principal, premium, if any, and interest on the 1990 Series B Bond shall be made by bank wire transfer in immediately available funds in lawful money of the United States of America to the bank account of the registered holder of such bond which such registered holder shall designate in writing to Bankers Trust Company, Trustee, not less than fifteen (15) days prior to the date such payment shall become due and payable. When a semi-annual interest payment date falls on a Saturday, Sunday or a day on which the Federal Reserve Bank of New York or the Trustee is not open for business, all payments shall be payable on the first day thereafter on which the Federal Reserve Bank of New York and the Trustee are open for business. In the event any semi-annual payment is not made when due, the amount payable shall be such payment, plus interest thereon at the interest rate on such bond, based on a 360-day year, from the due date to the date of payment. The 1990 Series B Bond shall be dated January 3, 1990 and interest shall be payable from January 3, 1990. The 1990 Series B Bond in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed. The 1990 Series B Bond shall not be subject to or entitled to any sinking fund. REDEMPTION OF SECTION 2. The 1990 Series B Bond shall be redeemable prior to stated 1990 SERIES B BOND. maturity, at the election of the Company on any interest payment date, at redemption prices calculated in accordance with the formula set forth below on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company not more than ninety (90) days nor less than thirty (30) days prior to the date fixed for redemption to the registered holder of the 1990 Series B Bond. The optional redemption payment of each bond to be redeemed shall be equal to the present worth, on the date of redemption, of the remaining scheduled semi-annual payments of interest and annual retirement of principal of such bond, calculated as follows. Determine the present value of each scheduled semi-annual payment of interest and annual retirement of principal by dividing each payment by the Present Value Divisor (PVD), where: ________ PVD = ( \/ 1.0 + I) (D) I = That annual interest rate (which has been adjusted for semi-annual compounding) for U.S. Treasury securities, with comparable maturities as set forth in the Federal Reserve statistical release, designated H.15 (519), or its successor, published at least 4 days but not more than 10 days prior to the optional redemption date. The rate shall be the "This Week" rate for Treasury Constant Maturities. Straight line interpolate to 3 decimal places after rounding the prepayment period to the nearest month (1st-15th round down) to match the remaining term of the bond to be redeemed. D = Present value divisor for the preceding 6 month interest period (D equals 1.0 for the period preceding the first period, which is the period from the redemption date to the first scheduled payment date thereafter). Add the present value for all scheduled annual retirements of principal and semi-annual payments of interest to determine the sum to be paid upon redemption of each bond. If the optional redemption payment is greater than the principal outstanding as of the date of optional redemption, the prepayment results in a premium, plus in each case accrued interest to the date fixed for redemption. If the optional redemption payment is less than the principal outstanding as of the date of the optional redemption, the prepayment results in a discount which shall be deducted from the outstanding principal amount which otherwise would have been paid, plus in each case accrued interest to the date fixed for redemption.
26 23 ANY PARTIAL REDEMPTION SHALL, AS THE PRINCIPAL PORTION OF SUCH REDEMPTION, BE NO LESS THAN $100,000. NO REDEMPTION PURSUANT TO THIS PARAGRAPH SHALL BE CREDITED TO, OR RELIEVE THE COMPANY TO ANY EXTENT FROM ITS OBLIGATION TO MAKE THE PRINCIPAL PAYMENTS PROVIDED FOR IN SECTION 1 HEREOF. ON OR BEFORE THE FIRST DAY OF FEBRUARY OR AUGUST IN EACH YEAR, COMMENCING SEPTEMBER 1 1990, THE COMPANY WILL DELIVER TO THE TRUSTEE A TREASURER'S CERTIFICATE, WHICH SHALL BE IRREVOCABLE, SPECIFYING THE PRINCIPAL AMOUNT OF BONDS TO BE OPTIONALLY REDEEMED AND ACCRUED INTEREST ON SUCH BONDS ON THE NEXT ENSUING MARCH 31 OR SEPTEMBER 30, OR THE FIRST BUSINESS DAY THEREAFTER, RESPECTIVELY. THE TRUSTEE SHALL, UPON THE RECEIPT OF THE TREASURER'S CERTIFICATE, CAUSE NOTICE OF THE REDEMPTION THEREOF TO BE GIVEN IN THE NAME OF AND AT THE EXPENSE OF THE COMPANY IN THE MANNER HEREIN PROVIDED FOR. ON OR BEFORE NOON OF THE BUSINESS DAY PRECEDING THE DAY OF PREPAYMENT, THE COMPANY WILL ADVISE THE TRUSTEE OF THE APPLICABLE PREMIUM OR DISCOUNT APPLICABLE TO SUCH PREPAYMENT. SUCH NOTICE HAVING BEEN DULY GIVEN, THE REDEMPTION OF BONDS OF 1990 SERIES B SHALL BE MADE UPON THE TERMS AND IN THE MANNER AND WITH THE EFFECT HEREINABOVE PROVIDED FOR WITH RESPECT TO REDEMPTIONS. A TREASURER'S CERTIFICATE SHALL NOT BE REQUIRED IF NO BONDS OF A SERIES ARE TO BE REDEEMED UNDER THIS PARAGRAPH. EXCHANGE. SECTION 3. AT THE OPTION OF THE HOLDER, UPON WRITTEN REQUEST MADE AT LEAST FORTY-FIVE (45) DAYS PRIOR TO AN INTEREST PAYMENT DATE AND SUBJECT TO THE TERMS OF THE INDENTURE AND COMPLIANCE WITH APPLICABLE SECURITIES LAWS, THE 1990 SERIES B BOND SHALL BE EXCHANGEABLE, IN WHOLE BUT NOT IN PART, FOR BONDS OF 1990 SERIES E (AS HEREINAFTER DESCRIBED) IN AN AGGREGATE PRINCIPAL AMOUNT EQUAL TO THE AGGREGATE AMOUNT OF UNPAID PRINCIPAL WHICH SHALL REMAIN OUTSTANDING ON THE 1990 SERIES B BOND AS OF THE DATE OF SUCH EXCHANGE. SUCH EXCHANGE SHALL OCCUR ONLY ON AN INTEREST PAYMENT DATE FOR THE 1990 SERIES B BOND AT THE OFFICE OF THE TRUSTEE IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, THE STATE OF NEW YORK. THE 1990 SERIES B BOND SHALL BEAR A LEGEND STATING THAT SUCH BOND HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND THAT AS A CONSEQUENCE SUCH BOND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, UNLESS REGISTERED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION APPLICABLE TO SUCH OFFER, SALE OR OTHER TRANSFER, AND MAY BEAR SUCH OTHER LEGENDS AS MAY BE NECESSARY TO COMPLY WITH ANY LAW OR WITH ANY RULES OR REGULATIONS MADE PURSUANT THERETO. CONSENT. SECTION 4. THE HOLDER OF THE 1990 SERIES B BOND, BY ITS ACCEPTANCE OF AND HOLDING THEREOF, CONSENTS AND AGREES THAT BONDS OF ANY SERIES MAY BE ISSUED WHICH MATURE ON A DATE OR DATES LATER THAN OCTOBER 1, 2024 AND ALSO CONSENTS TO THE DELETION FROM THE FIRST PARAGRAPH OF SECTION 5 OF ARTICLE II OF THE INDENTURE OF THE PHRASE "BUT IN NO EVENT LATER THAN OCTOBER 1, 2024." SUCH HOLDER FURTHER AGREES THAT (A) SUCH CONSENT SHALL, FOR ALL PURPOSES OF ARTICLE XV OF THE INDENTURE AND WITHOUT FURTHER ACTION ON THE PART OF SUCH HOLDER, BE DEEMED THE AFFIRMATIVE VOTE OF SUCH HOLDER AT ANY MEETING CALLED PURSUANT TO SAID ARTICLE XV FOR THE PURPOSE OF APPROVING SUCH DELETION, AND (B) SUCH DELETION SHALL BECOME EFFECTIVE AT SUCH TIME AS NOT LESS THAN EIGHTY-FIVE PER CENT (85%) IN PRINCIPAL AMOUNT OF BONDS OUTSTANDING UNDER THE INDENTURE SHALL HAVE CONSENTED THERETO SUBSTANTIALLY IN THE MANNER SET FORTH IN THIS SECTION 4, OR IN WRITING, OR BY AFFIRMATIVE VOTE CAST AT A MEETING CALLED PURSUANT TO SAID ARTICLE XV, OR BY ANY COMBINATION THEREOF. FORM OF SECTION 5. THE 1990 SERIES B BOND AND THE FORM OF TRUSTEE'S CERTIFICATE 1990 SERIES B BOND. TO BE ENDORSED ON SUCH BOND SHALL BE SUBSTANTIALLY IN THE FOLLOWING FORMS, RESPECTIVELY: [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 1990 Series B, 7.904% due March 31, 2016 (Payable in annual installments, commencing March 31, 1990) $256,932,000 No.____
27 24 THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to UNITED STATES OF AMERICA, at its office or agency in the Borough of Manhattan, the City and State of New York, in lawful money of the United States of America, the principal sum of $256,932,000, together with interest at the rate specified in the title hereof on the amount of said principal sum remaining unpaid from time to time from January 3, 1990, and after the first interest payment hereon from the most recent date to which interest has been paid hereon, until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Interest shall be due and payable in 53 consecutive semi-annual payments on March 31 and September 30 in each year, commencing on March 31, 1990, and principal shall be due and payable in 27 consecutive annual payments on March 31, in each year, commencing on March 31, 1990, each as more fully set forth on the reverse hereof. Payments of principal, premium, if any, and interest on this bond are to be made by bank wire transfer in immediately available funds to the holder hereof all as provided, to the extent and in the manner specified in the indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. When any payment date falls on a Saturday, Sunday or a day on which the Federal Reserve Bank of New York or the Trustee is not open for business, all payments shall be payable on the first day thereafter on which the Federal Reserve Bank of New York and the Trustee are open for business. In the event any semi-annual payment is not made when due, the amount payable shall be such payment, plus interest thereon at the interest rate on such bond, based on a 360-day year, from the due date to the date of payment. At the written request of the registered holder hereof made at least forty-five (45) days in advance of an interest payment date, this bond shall be exchangeable, in whole but not in part, on any interest payment date in an aggregate principal amount equal to the amount of unpaid principal which shall remain outstanding on this bond as of the date of such exchange (after giving effect to the payment of principal hereon on the date of such exchange), all as provided, to the extent and in the manner specified in the Indenture and the Supplemental Indenture hereinafter mentioned on the reverse hereof. Reference is hereby made to the further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed on its behalf by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary by manual or facsimile signature. THE DETROIT EDISON COMPANY By ------------------------------------------- Dated: January 3, 1990 Chairman of the Board
28 25 ------------------------------ President Attest: ---------------------------- Secretary 29 26 [FORM OF REVERSE OF BOND] This bond is the only bond of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of said bonds known as General and Refunding Mortgage Bonds, 1990 Series B (elsewhere herein referred to as the "1990 Series B Bond"), limited to an aggregate principal amount of $256,932,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond is issued and to be issued under, and is equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of February 15, 1990) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of February 15, 1990, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in principal amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in principal amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of, or the interest on, this bond, which in those respects is unconditional. The holder of the 1990 Series B Bond, by its acceptance of and holding thereof, consents and agrees that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consents to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024." Such holder further agrees that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holder, be deemed the affirmative vote of such holder at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substan- tially in the manner set forth in Section 3 of Part I of the Supplemental Indenture dated as of February 15, 1990, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
30 27 Principal payments shall be made hereon annually, payable on March 31 of each year (commencing March 31, 1990) as set forth below, until the final payment of principal shall be made:
PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT PAYMENT PAYMENT REMAINING DATE DUE OUTSTANDING ------------------ ---------- ------------ March 31, 1990............................... $9,516,000 $247,416,000 March 31, 1991............................... 9,516,000 237,900,000 March 31, 1992............................... 9,516,000 228,384,000 March 31, 1993............................... 9,516,000 218,868,000 March 31, 1994............................... 9,516,000 209,352,000 March 31, 1995............................... 9,516,000 199,836,000 March 31, 1996............................... 9,516,000 190,320,000 March 31, 1997............................... 9,516,000 180,804,000 March 31, 1998............................... 9,516,000 171,288,000 March 31, 1999............................... 9,516,000 161,772,000 March 31, 2000............................... 9,516,000 152,256,000 March 31, 2001............................... 9,516,000 142,740,000 March 31, 2002............................... 9,516,000 133,224,000 March 31, 2003............................... 9,516,000 123,708,000 March 31, 2004............................... 9,516,000 114,192,000 March 31, 2005............................... 9,516,000 104,676,000 March 31, 2006............................... 9,516,000 95,160,000 March 31, 2007............................... 9,516,000 85,644,000 March 31, 2008............................... 9,516,000 76,128,000 March 31, 2009............................... 9,516,000 66,612,000 March 31, 2010............................... 9,516,000 57,096,000 March 31, 2011............................... 9,516,000 47,580,000 March 31, 2012............................... 9,516,000 38,064,000 March 31, 2013............................... 9,516,000 28,548,000 March 31, 2014............................... 9,516,000 19,032,000 March 31, 2015............................... 9,516,000 9,516,000 March 31, 2016............................... 9,516,000 0
This bond shall be redeemable prior to stated maturity, at the election of the Company on any interest payment date, at the redemption prices calculated in accordance with the formula set forth below on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company not more than ninety (90) days nor less than thirty (30) days prior to the date fixed for redemption to the registered holder of the 1990 Series B Bond.
31 28 The optional redemption payment of each bond to be redeemed shall be equal to the present worth, on the date of redemption, of the remaining scheduled semi- annual payments of interest and annual retirement of principal of such bond, calculated as follows. Determine the present value of each scheduled semi-annual payment of interest and annual retirement of principal by dividing each payment by the Present Value Divisor (PVD), where: ________ PVD = (\/ 1.0 + I) (D) I = That annual interest rate (which has been adjusted for semi-annual compounding) for U.S. Treasury securities, with comparable maturities as set forth in the Federal Reserve statistical release, designated H.15 (519), or its successor, published at least 4 days but not more than 10 days prior to the optional redemption date. The rate shall be the "This Week" rate for Treasury Constant Maturities. Straight line interpolate to 3 decimal places after rounding the prepayment period to the nearest month (1st-15th round down) to match the remaining term of the bond to be redeemed. D = Present value divisor for the preceding 6 month interest period (D equals 1.0 for the period preceding the first period, which is the period from the redemption date to the first scheduled payment date thereafter). Add the present value for all scheduled annual retirements of principal and semi-annual payments of interest to determine the sum to be paid upon redemption of each bond. If the optional redemption payment is greater than the principal outstanding as of the date of optional redemption, the prepayment results in a premium, plus in each case accrued interest to the date fixed for redemption. If the optional redemption payment is less than the principal outstanding as of the date of the optional redemption, the prepayment results in a discount which shall be deducted from the outstanding principal amount which otherwise would have been paid, plus in each case accrued interest to the date fixed for redemption. No redemption pursuant to this paragraph shall be credited to, or relieve the Company to any extent from its obligation to make the principal payment provided for above. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in said Indenture. No recourse shall be had for the payment of the principal of, or the interest on, this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture.
32 29 [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is the only bond of the series designated therein, described TRUSTEE'S in the within- mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By ---------------------------------------------- Authorized Officer
33 30 PART IV. CREATION OF TWO HUNDRED EIGHTY-FOURTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, 1990 SERIES E TERMS OF BONDS SECTION 1. The Company hereby creates the Two hundred eighty-fourth OF 1990 SERIES E. series of bonds to be issued under and secured by the Original Indenture as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, 1990 Series E" (elsewhere herein referred to as the "bonds of 1990 Series E"). The aggregate principal amount of bonds of 1990 Series E shall be limited to the principal amount of 1990 Series B Bond being exchanged, except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. The bonds of 1990 Series E shall mature on March 31, 2016 and shall be issued in exchange for, and in an aggregate principal amount equal to the principal amount remaining outstanding on, the 1990 Series B Bond as of the date of such exchange. The Bonds of Series E shall be issued as registered bonds without coupons in denominations of $10,000 and any multiple thereof, and shall bear interest, payable semi-annually on March 31 and September 30 of each year (commencing on the first March 31 or September 30 following the date of such exchange), at the rate of seven and 904/1000 per centum (7.904%) per annum until the principal shall have become due and payable, and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. Except as otherwise specifically provided in this Supplemental Indenture, the principal of and interest on the bonds of 1990 Series E shall be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. The interest on bonds of 1990 Series E, whether in temporary or definitive form, shall be payable without presentation of such bonds and (subject to the provisions of this Section 1) only to or upon the written order of the registered holders thereof. Each bond of 1990 Series E shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the March 31 or September 30 next preceding the date thereof to which interest has been paid on bonds of 1990 Series E, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication. The bonds of 1990 Series E in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denomination of bonds of 1990 Series E). Until bonds of 1990 Series E in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of 1990 Series E in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 1990 Series E, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 1990 Series E, but without a recital of redemption prices and with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company.
34 31 Interest on any bond of 1990 Series E which is payable on any interest payment date and is punctually paid or duly provided for shall be paid to the person in whose name that bond, or any previous bond to the extent evidencing the same debt as that evidenced by that bond, is registered at the close of business on the regular record date for such interest, which regular record date shall be the fifteenth day of March or September as the case may be (whether or not a business day) next preceding such interest payment date. If the Company shall default in the payment of the interest due on any interest payment date on the principal represented by any bond of 1990 Series E, such defaulted interest shall forthwith cease to be payable to the registered holder of that bond on the relevant regular record date by virtue of his having been such holder, and such defaulted interest may be paid to the registered holder of that bond (or any bond or bonds of 1990 Series E issued upon transfer or exchange thereof) on the date of payment of such defaulted interest or, at the election of the Company, to the person in whose name that bond (or any bond or bonds of 1990 Series E issued upon transfer or exchange thereof) is registered on a subsequent record date established by notice given by mail by or on behalf of the Company to the holders of bonds of 1990 Series E not less than ten (10) days preceding such subsequent record date, which subsequent record date shall be at least five (5) days prior to the payment date of such defaulted interest. REDEMPTION OF BONDS SECTION 2. The bonds of 1990 Series E shall be redeemable (i) on March OF 1990 31 in each year, commencing March 31 in the first calendar year SERIES E. subsequent to initial issuance, through the operation of the sinking fund hereinafter described at 100% of the principal amount thereof, (ii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole, or in part, from time to time, at par plus in each case accrued interest to the date fixed for redemption if such redemption does not utilize, directly or indirectly, the proceeds of and is not in anticipation of any refunding operation involving borrowing at an interest cost to the Company, computed in accordance with generally accepted financial practice, of less than 7.904% per annum, and (iii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole, or in part, from time to time, at the following redemption prices (expressed as percentages of the principal amount thereof) plus in each case (whether through operation of the sinking fund or otherwise) accrued interest to the date fixed for redemption:
IF REDEEMED DURING 12 MONTH PERIOD ENDING REDEMPTION MARCH 31, PRICE --------------- ----------- Year 11................................ 102.50% Year 12................................ 102.00 Year 13................................ 101.50 Year 14................................ 101.00 Year 15................................ 100.50 Thereafter............................. 100.00 The bonds of 1990 Series E shall be redeemable as aforesaid as provided herein and as specified in Article IV of the Indenture upon giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) days prior to the date fixed for redemption to the registered holders of bonds of 1990 Series E so called for redemption at their last respective addresses appearing on the register thereof, but failure to mail such notice to the registered holders of any bonds of 1990 Series E designated for redemption shall not affect the validity of any such redemption of any other bonds of such series. Interest shall cease to accrue on any bonds of 1990 Series E (or any portion thereof) so called for redemption from and after the date fixed for redemption if payment sufficient to redeem the bonds of 1990 Series E (or such portion) designated for redemption has been duly provided for. Bonds of 1990 Series E redeemed in part only shall be in amounts of $10,000 or any multiple thereof.
35 32 If the giving of the notice of redemption shall have been completed, or if provision satisfactory to the Trustee for the giving of such notice shall have been made, and if the Company shall have deposited with the Trustee in trust funds (which shall become available for payment to the holders of the bonds of 1990 Series E so to be redeemed) sufficient to redeem bonds of 1990 Series E in whole or in part, on the date fixed for redemption, then all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and interest due or to become due thereon shall cease and be discharged and the holders of such bonds of 1990 Series E (or portions thereof) shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or in respect of such bonds (or portions thereof) and interest. As and for the sinking fund for the retirement of the bonds of 1990 Series E the Company will, until all the bonds of 1990 Series E are paid or payment thereof provided for, deposit with the Trustee prior to March 31 in each year, commencing March 31 of the first calendar year subsequent to initial issuance, an amount in cash sufficient to redeem on such March 31 $9,520,000 principal amount of bonds of 1990 Series E. On or before February 1 in each year, commencing February 1 of the first calendar year subsequent to initial issuance the Company (i) may deliver bonds of 1990 Series E (other than any previously called for redemption for the sinking fund) and (ii) may apply as a credit bonds for 1990 Series E redeemed at the election of the Company otherwise than through the sinking fund, in each case in satisfaction of all or any part of the amount of any sinking fund payment. Each such bond of 1990 Series E shall be received or credited for such purpose by the Trustee at the principal amount thereof and the amount of such sinking fund payment shall be reduced accordingly. On February 1 in each year, commencing February 1 of the first calendar year subsequent to initial issuance, the Company will deliver to the Trustee a treasurer's certificate, which shall be irrevocable, specifying the amount of the next ensuing sinking fund payment and the portions thereof which are to be satisfied by payment of cash, by delivery of bonds of 1990 Series E or by crediting bonds of 1990 Series E previously redeemed. The treasurer's certificate shall also state that bonds of 1990 Series E forming the basis of any such credit do not include any bonds of 1990 Series E which have been called for redemption for the sinking fund or previously credited against any sinking fund payment. The Trustee shall, upon the receipt of the treasurer's certificate, select the bonds of 1990 Series E to be redeemed upon the next ensuing March 31 in the manner hereinabove provided for and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner hereinabove provided for. Such notice having been duly given, the redemption of such bonds of 1990 Series E shall be made upon the terms and in the manner and with the effect hereinabove provided for with respect to redemptions. EXCHANGE AND At the option of the registered holder, any bonds of 1990 Series E, upon TRANSFER. surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney, shall be exchangeable for a like aggregate principal amount of bonds of 1990 Series E of other authorized denominations, upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. Bonds of 1990 Series E shall be transferable at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of 1990 Series E during any period of ten (10) days next preceding any interest payment date for such bonds.
36 33 Bonds of 1990 Series E, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or with the rules or regulations of any stock exchange or to conform to usage with respect thereto. CONSENT. SECTION 3. The holders of the bonds of 1990 Series E, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in this Section 3, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
37 34 FORM OF BONDS OF SECTION 4. The bonds of 1990 Series E and the form of Trustee's 1990 SERIES E. Certificate to be endorsed on such bonds shall be substantially in the following forms, respectively. [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 1990 Series E, 7.904% due March 31, 2016 $_____________ No.________ THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to or registered assigns, at its office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of in lawful money of the United States of America on the thirty-first day of March, 2016, and to pay interest thereon at the rate specified in the title hereof, at such office or agency, in like lawful money, from , and after the first interest payment on bonds of this Series from the most recent date to which such interest has been paid, semi-annually on the thirty-first day of March and the thirtieth day in September each year, to the person in whose name this bond is registered at the close of business on the preceding fifteenth day of March or September (subject to certain exceptions provided in the Indenture hereinafter mentioned), until the Company's obligation with respect to payment of said principal shall have been discharged as provided in such Indenture. Reference is hereby made to the further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the aforesaid Indenture, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instru- ment to be executed on its behalf by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary with his manual or facsimile signature. Dated: THE DETROIT EDISON COMPANY By -------------------------- Chairman of the Board -------------------------- President Attest: ----------------------------------- Secretary
38 35 [FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of said bonds known as General and Refunding Mortgage Bonds, 1990 Series E, (elsewhere herein referred to as the "bonds of 1990 Series E"), limited to the aggregate principal amount of [the 1990 Series B Bonds being converted], except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of February 15, 1990) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of February 15, 1990, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in principal amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in principal amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of, or the interest on, this bond, which in those respects is unconditional. The holders of the bonds of 1990 Series E, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024,". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in Section 3 of Part I of the Supplemental Indenture dated as of February 15, 1990, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
39 36 This bond is redeemable on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) but not more than ninety (90) days prior to the date fixed for redemption to the registered holder of this bond at his last address appearing on the register thereof, in the manner and upon the terms provided in the Indenture, (i) on March 31 in each year, commencing [March 31, ], through the operation of the sinking fund for bonds of 1990 Series E at 100% of the principal amount hereof, (ii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole, or in part, from time to time, at par plus in each case accrued interest to the date fixed for redemption if such redemption does not utilize, directly or indirectly, the proceeds of and is not in anticipation of any refunding operation involving borrowing at an interest cost to the Company, computed in accordance with generally accepted financial practice, of less than 7.904% per annum, and (iii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole or in part, from time to time, at the following redemption prices (expressed as percentages of the principal amount hereof) plus in each case (whether through operation of the sinking fund or otherwise) accrued interest to the date fixed for redemption:
IF REDEEMED DURING 12 MONTH PERIOD ENDING REDEMPTION MARCH 31, PRICE --------------- ----------- Year 11................................ 102.50% Year 12................................ 102.00 Year 13................................ 101.50 Year 14................................ 101.00 Year 15................................ 100.50 Thereafter............................. 100.00 The Company will deposit with the Trustee as and for a sinking fund for the bonds of Series E prior to each March 31, commencing [ ], an amount sufficient to redeem $9,520,000 principal amount of bonds of 1990 Series E, less the amount of any credit against any such payment taken by the Company for bonds of 1990 Series E delivered to the Trustee or redeemed by the Company otherwise than through the sinking fund. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of 1990 Series E (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds and interest. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in said Indenture. This bond is transferable by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond or bonds of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee or transferees in exchange herefor, and this bond with others in like form may in like manner be exchanged for one or more new registered bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture.
40 37 No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture. [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated therein, TRUSTEE'S described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By -------------------------------------- Authorized Officer
41 38 PART V. CREATION OF TWO HUNDRED EIGHTY-FIFTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BOND, 1990 SERIES C TERMS OF BOND SECTION 1. The Company hereby creates the Two hundred eighty-fifth OF 1990 SERIES C. series of bonds to be issued under and secured by the Original Indenture as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bond, 1990 Series C (elsewhere herein referred to as the "1990 Series C Bond"). The aggregate principal amount of the 1990 Series C Bond shall be limited to Eighty-five million four hundred seventy-five thousand dollars ($85,475,000), except as provided in Section 13 of Article II of the Original Indenture with respect to exchanges and replacement of bonds. The 1990 Series C Bond shall be a multiple of $1,000. The 1990 Series C Bond shall be issued as one registered bond without coupons in the amount of $85,475,000, which shall bear interest, payable semi-annually on March 31 and September 30 of each year (commencing March 31, 1990) at the rate of 8.357%, and principal payments shall be made thereon annually, payable on March 31 of each year (commencing March 31, 1990) as set forth below, until the final payments of interest and principal shall be made:
PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT PAYMENT PAYMENT REMAINING DATE DUE OUTSTANDING ------------------ ---------- ----------- March 31, 1990................................ $3,419,000 $82,056,000 March 31, 1991................................ 3,419,000 78,637,000 March 31, 1992................................ 3,419,000 75,218,000 March 31, 1993................................ 3,419,000 71,799,000 March 31, 1994................................ 3,419,000 68,380,000 March 31, 1995................................ 3,419,000 64,961,000 March 31, 1996................................ 3,419,000 61,542,000 March 31, 1997................................ 3,419,000 58,123,000 March 31, 1998................................ 3,419,000 54,704,000 March 31, 1999................................ 3,419,000 51,285,000 March 31, 2000................................ 3,419,000 47,866,000 March 31, 2001................................ 3,419,000 44,447,000 March 31, 2002................................ 3,419,000 41,028,000 March 31, 2003................................ 3,419,000 37,609,000 March 31, 2004................................ 3,419,000 34,190,000 March 31, 2005................................ 3,419,000 30,771,000 March 31, 2006................................ 3,419,000 27,352,000 March 31, 2007................................ 3,419,000 23,933,000 March 31, 2008................................ 3,419,000 20,514,000 March 31, 2009................................ 3,419,000 17,095,000 March 31, 2010................................ 3,419,000 13,676,000 March 31, 2011................................ 3,419,000 10,257,000 March 31, 2012................................ 3,419,000 6,838,000 March 31, 2013................................ 3,419,000 3,419,000 March 31, 2014................................ 3,419,000 0 Payments of principal, premium, if any, and interest on the 1990 Series C Bond shall be made by bank wire transfer in immediately available funds in lawful money of the United States of America to the bank account of the registered holder of such bond which such registered holder shall designate in writing to Bankers Trust Company, Trustee, not less than fifteen (15) days prior to the date such payment shall become due and payable.
42 39 When a semi-annual interest payment date falls on a Saturday, Sunday or a day on which the Federal Reserve Bank of New York or the Trustee is not open for business, all payments shall be payable on the first day thereafter on which the Federal Reserve Bank of New York and the Trustee are open for business. In the event any semi-annual payment is not made when due, the amount payable shall be such payment, plus interest thereon at the interest rate of one and one-half times the rate to be determined by the Secretary of the Treasury taking into consideration the prevailing market yield on the remaining maturity of the most recently auctioned 13-week U.S. Treasury bills, from the due date to the date of payment. Upon the expiration of each successive 91-day period following the scheduled payment date for any outstanding payment, a new rate shall be established pursuant to this paragraph and such rate shall be applied to the outstanding payment and all late charges accrued thereon. The 1990 Series C Bond shall be dated January 3, 1990 and interest shall be payable from January 3, 1990. The 1990 Series C Bond in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed. The 1990 Series C Bond shall not be subject to or entitled to any sinking fund. REDEMPTION OF SECTION 2. The 1990 Series C Bond shall be redeemable prior to stated 1990 SERIES C BOND. maturity, at the election of the Company on any interest payment date, at redemption prices calculated in accordance with the formula set forth below on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company not more than ninety (90) days nor less than thirty (30) days prior to the date fixed for redemption to the registered holder of the 1990 Series C Bond. The optional redemption payment of each bond to be redeemed shall be equal to the present worth, on the date of redemption, of the remaining scheduled semi- annual payments of interest and annual retirement of principal of such bond, calculated as follows. Determine the present value of each scheduled semi-annual payment of interest and annual retirement of principal by dividing each payment by the Present Value Divisor (PVD), where: __________ PVD = (\/ 1.0 + I) (D) I = That annual interest rate (which has been adjusted for semi-annual compounding) for U.S. Treasury securities, with comparable maturities as set forth in the Federal Reserve statistical release, designated H.15 (519), or its successor, published at least 4 days but not more than 10 days prior to the optional redemption date. The rate shall be the "This Week" Rate for Treasury Constant Maturities. Straight line interpolate to 3 decimal places after rounding the prepayment period to the nearest month (1st-15th round down) to match the remaining term of the bond to be redeemed. D = Present value divisor for the preceding 6 month interest period (D equals 1.0 for the period preceding the first period, which is the period from the redemption date to the first scheduled payment date thereafter). Add the present value for all scheduled annual retirements of principal and semi-annual payments of interest to determine the sum to be paid upon redemption of each bond. If the optional redemption payment is greater than the principal outstanding as of the date of optional redemption, the prepayment results in a premium, plus in each case accrued interest to the date fixed for redemption. If the optional redemption payment is less than the principal outstanding as of the date of the optional redemption, the prepayment results in a discount which shall be deducted from the outstanding principal amount which otherwise would have been paid, plus in each case accrued interest to the date fixed for redemption.
43 40 Any partial redemption shall, as the principal portion of such redemption, be no less than $100,000. No redemption pursuant to this paragraph shall be credited to, or relieve the Company to any extent from its obligation to make the principal payments provided for in Section 1 hereof. On or before the first day of February or August in each year, commencing September 1 1990, the Company will deliver to the Trustee a treasurer's certificate, which shall be irrevocable, specifying the principal amount of bonds to be optionally redeemed and accrued interest on such bonds on the next ensuing March 31 or September 30, or the first business day thereafter, respectively. The Trustee shall, upon the receipt of the treasurer's certificate, cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner herein provided for. On or before noon of the business day preceding the day of prepayment, the Company will advise the Trustee of the applicable premium or discount applicable to such prepayment. Such notice having been duly given, the redemption of bonds of 1990 Series C shall be made upon the terms and in the manner and with the effect hereinabove provided for with respect to redemptions. A treasurer's certificate shall not be required if no bonds of a series are to be redeemed under this paragraph. EXCHANGE. SECTION 3. At the option of the holder, upon written request made at least forty-five (45) days prior to an interest payment date and subject to the terms of the Indenture and compliance with applicable securities laws, the 1990 Series C Bond shall be exchangeable, in whole but not in part, for bonds of 1990 Series F (as hereinafter described) in an aggregate principal amount equal to the aggregate amount of unpaid principal which shall remain outstanding on the 1990 Series C Bond as of the date of such exchange. Such exchange shall occur only on an interest payment date for the 1990 Series C Bond at the office of the Trustee in the Borough of Manhattan, The City of New York, The State of New York. The 1990 Series C Bond shall bear a legend stating that such bond has not been registered under the United States Securities Act of 1933, as amended (the "Act") and that as a consequence such bond may not be offered, sold or otherwise transferred, whether or not for consideration, unless registered under such Act or pursuant to an exemption from such registration applicable to such offer, sale or other transfer, and may bear such other legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto. CONSENT. SECTION 4. The holder of the 1990 Series C Bond, by its acceptance of and holding thereof, consents and agrees that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consents to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024." Such holder further agrees that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holder, be deemed the affirmative vote of such holder at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five per cent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substan- tially in the manner set forth in this Section 4, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof. FORM OF SECTION 5. The 1990 Series C Bond and the form of Trustee's Certificate 1990 SERIES C BOND. to be endorsed on such bond shall be substantially in the following forms, respectively: [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 1990 Series C, 8.357% due March 31, 2014 (Payable in annual installments, commencing March 31, 1990) $85,475,000 No.________
44 41 THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to UNITED STATES OF AMERICA, at its office or agency in the Borough of Manhattan, the City and State of New York, in lawful money of the United States of America, the principal sum of $85,475,000, together with interest at the rate specified in the title hereof on the amount of said principal sum remaining unpaid from time to time from January 3, 1990, and after the first interest payment hereon from the most recent date to which interest has been paid hereon, until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Interest shall be due and payable in 49 consecutive semi-annual payments on March 31 and September 30 in each year, commencing on March 31, 1990, and principal shall be due and payable in 25 consecutive annual payments on March 31, in each year, commencing on March 31, 1990, each as more fully set forth on the reverse hereof. Payments of principal, premium, if any, and interest on this bond are to be made by bank wire transfer in immediately available funds to the holder hereof all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. In the event any semi-annual payment is not made when due, the amount payable shall be such payment, plus interest thereon at the interest rate of one and one-half times the rate to be determined by the Secretary of the Treasury taking into consideration the prevailing market yield on the remaining maturity of the most recently auctioned 13-week U.S. Treasury bills, from the due date to the date of payment. Upon the expiration of each successive 91-day period following the scheduled payment date for any outstanding payment, a new rate shall be established pursuant to this paragraph and such rate shall be applied to the outstanding payment and all late charges accrued thereon. When any payment date falls on a Saturday, Sunday or a day on which the Federal Reserve Bank of New York or the Trustee is not open for business, all payments shall be payable on the first day thereafter on which the Federal Reserve Bank of New York and the Trustee are open for business. At the written request of the registered holder hereof made at least forty-five (45) days in advance of an interest payment date, this bond shall be exchangeable, in whole but not in part, on any interest payment date in an aggregate principal amount equal to the amount of unpaid principal which shall remain outstanding on this bond as of the date of such exchange (after giving effect to the payment of principal hereon on the date of such exchange), all as provided, to the extent and in the manner specified in the Indenture and the Supplemental Indenture hereinafter mentioned on the reverse hereof. Reference is hereby made to the further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon.
45 42 IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed on its behalf by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary by manual or facsimile signature. THE DETROIT EDISON COMPANY Dated January 3, 1990 By ---------------------------------- Chairman of the Board ---------------------------------- President Attest: ---------------------------------- Secretary
46 43 [FORM OF REVERSE OF BOND] This bond is the only bond of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of said bonds known as General and Refunding Mortgage Bonds, 1990 Series C (elsewhere herein referred to as the "1990 Series C Bond"), limited to an aggregate principal amount of $85,475,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond is issued and to be issued under, and is equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of February 15, 1990) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of February 15, 1990, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in principal amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in principal amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of, or the interest on, this bond, which in those respects is unconditional. The holder of the 1990 Series C Bond, by its acceptance of and holding thereof, consents and agrees that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consents to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024." Such holder further agrees that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holder, be deemed the affirmative vote of such holder at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substan- tially in the manner set forth in Section 3 of Part I of the Supplemental Indenture dated as of February 15, 1990, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof. Principal payments shall be made hereon annually, payable on March 31 of each year (commencing March 31, 1990) as set forth below, until the final payment of principal shall be made:
PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT PAYMENT PAYMENT REMAINING DATE DUE OUTSTANDING ------------------ ---------- ----------- March 31, 1990................................ $3,419,000 $82,056,000
47 44
PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT PAYMENT PAYMENT REMAINING DATE DUE OUTSTANDING ------------------ ---------- ----------- March 31, 1991................................ 3,419,000 78,637,000 March 31, 1992................................ 3,419,000 75,218,000 March 31, 1993................................ 3,419,000 71,799,000 March 31, 1994................................ 3,419,000 68,380,000 March 31, 1995................................ 3,419,000 64,961,000 March 31, 1996................................ 3,419,000 61,542,000 March 31, 1997................................ 3,419,000 58,123,000 March 31, 1998................................ 3,419,000 54,704,000 March 31, 1999................................ 3,419,000 51,285,000 March 31, 2000................................ 3,419,000 47,866,000 March 31, 2001................................ 3,419,000 44,447,000 March 31, 2002................................ 3,419,000 41,028,000 March 31, 2003................................ 3,419,000 37,609,000 March 31, 2004................................ 3,419,000 34,190,000 March 31, 2005................................ 3,419,000 30,771,000 March 31, 2006................................ 3,419,000 27,352,000 March 31, 2007................................ 3,419,000 23,933,000 March 31, 2008................................ 3,419,000 20,514,000 March 31, 2009................................ 3,419,000 17,095,000 March 31, 2010................................ 3,419,000 13,676,000 March 31, 2011................................ 3,419,000 10,257,000 March 31, 2012................................ 3,419,000 6,838,000 March 31, 2013................................ 3,419,000 3,419,000 March 31, 2014................................ 3,419,000 0 This bond shall be redeemable prior to stated maturity, at the election of the Company on any interest payment date, at the redemption prices calculated in accordance with the formula set forth below on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company not more than ninety (90) days nor less than thirty (30) days prior to the date fixed for redemption to the registered holder of the 1990 Series C Bond.
48 45 The optional redemption payment of each bond to be redeemed shall be equal to the present worth, on the date of redemption, of the remaining scheduled semi- annual payments of interest and annual retirement of principal of such bond, calculated as follows. Determine the present value of each scheduled semi-annual payment of interest and annual retirement of principal by dividing each payment by the Present Value Divisor (PVD), where: ____________ PVD = (\/1.0 + I) (D) I = That annual interest rate (which has been adjusted for semi-annual compounding) for U.S. Treasury securities, with comparable maturities as set forth in the Federal Reserve statistical release, designated H.15 (519), or its successor, published at least 4 days but not more than 10 days prior to the optional redemption date. The rate shall be the "This Week" rate for Treasury Constant Maturities. Straight line interpolate to 3 decimal places after rounding the prepayment period to the nearest month (1st-15th round down) to match the remaining term of the bond to be redeemed. D = Present value divisor for the preceding 6 month interest period (D equals 1.0 for the period preceding the first period, which is the period from the redemption date to the first scheduled payment date thereafter). Add the present value for all scheduled annual retirements of principal and semi-annual payments of interest to determine the sum to be paid upon redemption of each bond. If the optional redemption payment is greater than the principal outstanding as of the date of optional redemption, the prepayment results in a premium, plus in each case accrued interest to the date fixed for redemption. If the optional redemption payment is less than the principal outstanding as of the date of the optional redemption, the prepayment results in a discount which shall be deducted from the outstanding principal amount which otherwise would have been paid, plus in each case accrued interest to the date fixed for redemption. No redemption pursuant to this paragraph shall be credited to, or relieve the Company to any extent from its obligation to make the principal payment provided for above. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in said Indenture. No recourse shall be had for the payment of the principal of, or the interest on, this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture.
49 46 [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is the only bond of the series designated therein, described TRUSTEE'S in the within- mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By --------------------------------- Authorized Officer
50 47 PART VI. CREATION OF TWO HUNDRED EIGHTY-SIXTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, 1990 SERIES F TERMS OF BONDS SECTION 1. The Company hereby creates the Two hundred eighty-sixth OF 1990 SERIES F. series of bonds to be issued under and secured by the Original Indenture as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, 1990 Series F" (elsewhere herein referred to as the "bonds of 1990 Series F"). The aggregate principal amount of bonds of 1990 Series F shall be limited to the principal amount of 1990 Series C Bond being exchanged, except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. The bonds of 1990 Series F shall mature on March 31, 2014 and shall be issued in exchange for, and in an aggregate principal amount equal to the principal amount remaining outstanding on, the 1990 Series C Bond as of the date of such exchange. The bonds of 1990 Series F shall be issued as registered bonds without coupons in denominations of $10,000 and any multiple thereof, and shall bear interest, payable semi-annually on March 31 and September 30 of each year (commencing on the first March 31 or September 30 following the date of such exchange), at the rate of eight and 357/1000 per centum (8.357%) per annum until the principal shall have become due and payable, and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. Except as otherwise specifically provided in this Supplemental Indenture, the principal of and interest on the bonds of 1990 Series F shall be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. The interest on bonds of 1990 Series F, whether in temporary or definitive form, shall be payable without presentation of such bonds and (subject to the provisions of this Section 1) only to or upon the written order of the registered holders thereof. Each bond of 1990 Series F shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the March 31 or September 30 next preceding the date thereof to which interest has been paid on bonds of 1990 Series F, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication. The bonds of 1990 Series F in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denomination of bonds of 1990 Series F). Until bonds of 1990 Series F in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of 1990 Series F in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 1990 Series F, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 1990 Series F, but without a recital of redemption prices and with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company.
51 48 Interest on any bond of 1990 Series F which is payable on any interest payment date and is punctually paid or duly provided for shall be paid to the person in whose name that bond, or any previous bond to the extent evidencing the same debt as that evidenced by that bond, is registered at the close of business on the regular record date for such interest, which regular record date shall be the fifteenth day of March or September as the case may be (whether or not a business day) next preceding such interest payment date. If the Company shall default in the payment of the interest due on any interest payment date on the principal represented by any bond of 1990 Series F, such defaulted interest shall forthwith cease to be payable to the registered holder of that bond on the relevant regular record date by virtue of his having been such holder, and such defaulted interest may be paid to the registered holder of that bond (or any bond or bonds of 1990 Series F issued upon transfer or exchange thereof) on the date of payment of such defaulted interest or, at the election of the Company, to the person in whose name that bond (or any bond or bonds of 1990 Series F issued upon transfer or exchange thereof) is registered on a subsequent record date established by notice given by mail by or on behalf of the Company to the holders of bonds of 1990 Series F not less than ten (10) days preceding such subsequent record date, which subsequent record date shall be at least five (5) days prior to the payment date of such defaulted interest. REDEMPTION OF BONDS SECTION 2. The bonds of 1990 Series F shall be redeemable (i) on March OF 1990 31 in each year, commencing March 31 in the first calendar year SERIES F. subsequent to initial issuance, through the operation of the sinking fund hereinafter described at 100% of the principal amount thereof, (ii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole, or in part, from time to time, at par plus in each case accrued interest to the date fixed for redemption if such redemption does not utilize, directly or indirectly, the proceeds of and is not in anticipation of any refunding operation involving borrowing at an interest cost to the Company, computed in accordance with generally accepted financial practice, of less than 8.357% per annum, and (iii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance as a whole, or in part, from time to time, at the following redemption prices (expressed as percentages of the principal amount thereof) plus in each case (whether through operation of the sinking fund or otherwise) accrued interest to the date fixed for redemption:
IF REDEEMED DURING 12 MONTH PERIOD ENDING REDEMPTION MARCH 31, PRICE --------------- ----------- Year 11................................ 102.50% Year 12................................ 102.00 Year 13................................ 101.50 Year 14................................ 101.00 Year 15................................ 100.50 Thereafter............................. 100.00 The bonds of 1990 Series F shall be redeemable as aforesaid as provided herein and as specified in Article IV of the Indenture upon giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) days prior to the date fixed for redemption to the registered holders of bonds of 1990 Series F so called for redemption at their last respective addresses appearing on the register thereof, but failure to mail such notice to the registered holders of any bonds of 1990 Series F designated for redemption shall not affect the validity of any such redemption of any other bonds of such series. Interest shall cease to accrue on any bonds of 1990 Series F (or any portion thereof) so called for redemption from and after the date fixed for redemption if payment sufficient to redeem the bonds of 1990 Series F (or such protion) designated for redemption has been duly provided for. Bonds of 1990 Series F redeemed in part only shall be in amounts of $10,000 or any multiple thereof.
52 49 If the giving of the notice of redemption shall have been completed, or if provision satisfactory to the Trustee for the giving of such notice shall have been made, and if the Company shall have deposited with the Trustee in trust funds (which shall become available for payment to the holders of the bonds of 1990 Series F so to be redeemed) sufficient to redeem bonds of 1990 Series F in whole or in part, on the date fixed for redemption, then all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and interest due or to become due thereon shall cease and be discharged and the holders of such bonds of 1990 Series F (or portions thereof) shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or in respect of such bonds (or portions thereof) and interest. As and for the sinking fund for the retirement of the bonds of 1990 Series F the Company will, until all the bonds of 1990 Series F are paid or payment thereof provided for, deposit with the Trustee prior to March 31 in each year, commencing March 31 of the first calendar year subsequent to initial issuance, an amount in cash sufficient to redeem on such March 31 $3,420,000 principal amount of bonds of 1990 Series F. On or before February 1 in each year, commencing February 1 of the first calendar year subsequent to initial issuance the Company (i) may deliver bonds of 1990 Series F (other than any previously called for redemption for the sinking fund) and (ii) may apply as a credit bonds for 1990 Series F redeemed at the election of the Company otherwise than through the sinking fund, in each case in satisfaction of all or any part of the amount of any sinking fund payment. Each such bond of 1990 Series F shall be received or credited for such purpose by the Trustee at the principal amount thereof and the amount of such sinking fund payment shall be reduced accordingly. On February 1 in each year, commencing February 1 of the first calendar year subsequent to initial issuance, the Company will deliver to the Trustee a treasurer's certificate, which shall be irrevocable, specifying the amount of the next ensuing sinking fund payment and the portions thereof which are to be satisfied by payment of cash, by delivery of bonds of 1990 Series F or by crediting bonds of 1990 Series F previously redeemed. The treasurer's certificate shall also state that bonds of 1990 Series F forming the basis of any such credit do not include any bonds of 1990 Series F which have been called for redemption for the sinking fund or previously credited against any sinking fund payment. The Trustee shall, upon the receipt of the treasurer's certificate, select the bonds of 1990 Series F to be redeemed upon the next ensuing March 31 in the manner hereinabove provided for and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner hereinabove provided for. Such notice having been duly given, the redemption of such bonds of 1990 Series F shall be made upon the terms and in the manner and with the effect hereinabove provided for with respect to redemptions. EXCHANGE AND At the option of the registered holder, any bonds of 1990 Series F, upon TRANSFER. surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney, shall be exchangeable for a like aggregate principal amount of bonds of 1990 Series F of other authorized denominations, upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. Bonds of 1990 Series F shall be transferable at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of 1990 Series F during any period of ten (10) days next preceding any interest payment date for such bonds.
53 50 Bonds of 1990 Series F, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or with the rules or regulations of any stock exchange or to conform to usage with respect thereto. CONSENT. SECTION 3. The holders of the bonds of 1990 Series F, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in this Section 3, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
54 51 FORM OF BONDS OF SECTION 4. The bonds of 1990 Series F and the form of Trustee's 1990 SERIES F. Certificate to be endorsed on such bonds shall be substantially in the following forms, respectively. [FORM OF FACE OF BOND] THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 1990 Series F, 8.357% due March 31, 2014 $______________ No. _____________ THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to or registered assigns, at its office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of in lawful money of the United States of America on the thirty-first day of March, 2014, and to pay interest thereon at the rate specified in the title hereof, at such office or agency, in like lawful money, from , and after the first interest payment on bonds of this Series from the most recent date to which such interest has been paid, semi-annually on the thirty-first day of March and the thirtieth day in September each year, to the person in whose name this bond is registered at the close of business on the preceding fifteenth day of March or September (subject to certain exceptions provided in the Indenture hereinafter mentioned), until the Company's obligation with respect to payment of said principal shall have been discharged as provided in such Indenture. Reference is hereby made to the further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the aforesaid Indenture, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instru- ment to be executed on its behalf by its Chairman of the Board and its President or a Vice President, with their manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or an Assistant Secretary with his manual or facsimile signature. Dated: THE DETROIT EDISON COMPANY By ------------------------- Chairman of the Board ------------------------- Attest: President ------------------------- Secretary
55 52 [FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of said bonds known as General and Refunding Mortgage Bonds, 1990 Series F, (elsewhere herein referred to as the "bonds of 1990 Series F"), limited to [the aggregate principal amount of the 1990 Series C Bond being converted], except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of February 15, 1990) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of February 15, 1990, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in principal amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in principal amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of, or the interest on, this bond, which in those respects is unconditional. The holders of the bonds of 1990 Series F, by their acceptance of and holding thereof, consent and agree that bonds of any series may be issued which mature on a date or dates later than October 1, 2024 and also consent to the deletion from the first paragraph of Section 5 of Article II of the Indenture of the phrase "but in no event later than October 1, 2024,". Such holders further agree that (a) such consent shall, for all purposes of Article XV of the Indenture and without further action on the part of such holders, be deemed the affirmative vote of such holders at any meeting called pursuant to said Article XV for the purpose of approving such deletion, and (b) such deletion shall become effective at such time as not less than eighty-five percent (85%) in principal amount of bonds outstanding under the Indenture shall have consented thereto substantially in the manner set forth in Section 3 of Part I of the Supplemental Indenture dated as of February 15, 1990, or in writing, or by affirmative vote cast at a meeting called pursuant to said Article XV, or by any combination thereof.
56 53 This bond is redeemable on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) but not more than ninety (90) days prior to the date fixed for redemption to the registered holder of this bond at his last address appearing on the register thereof, in the manner and upon the terms provided in the Indenture, (i) on March 31 in each year, commencing [March 31, ], through the operation of the sinking fund for bonds of 1990 Series F at 100% of the principal amount hereof, (ii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole, or in part, from time to time, at par plus in each case accrued interest to the date fixed for redemption if such redemption does not utilize, directly or indirectly, the proceeds of and is not in anticipation of any refunding operation involving borrowing at an interest cost to the Company, computed in accordance with generally accepted financial practice, of less than 8.357% per annum, and (iii) at the election of the Company on any date prior to maturity, commencing March 31 of the eleventh (11th) calendar year subsequent to initial issuance, as a whole or in part, from time to time, at the following redemption prices (expressed as percentages of the principal amount hereof) plus in each case (whether through operation of the sinking fund or otherwise) accrued interest to the date fixed for redemption:
IF REDEEMED DURING 12 MONTH PERIOD ENDING REDEMPTION MARCH 31, PRICE --------------- ----------- Year 11................................ 102.50% Year 12................................ 102.00 Year 13................................ 101.50 Year 14................................ 101.00 Year 15................................ 100.50 Thereafter............................. 100.00
The Company will deposit with the Trustee as and for a sinking fund for the bonds of Series F prior to each March 31, commencing [ ], an amount sufficient to redeem $3,420,000 principal amount of bonds of 1990 Series F, less the amount of any credit against any such payment taken by the Company for bonds of 1990 Series F delivered to the Trustee or redeemed by the Company otherwise than through the sinking fund. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of 1990 Series F (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds and interest. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in said Indenture. This bond is transferable by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond or bonds of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee or transferees in exchange herefor, and this bond with others in like form may in like manner be exchanged for one or more new registered bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture.
57 54 No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture. [FORM OF TRUSTEE'S CERTIFICATE] FORM OF This bond is one of the bonds, of the series designated therein, TRUSTEE'S described in the within-mentioned Indenture. CERTIFICATE. BANKERS TRUST COMPANY, as Trustee By ----------------------------------- Authorized Officer
58 55 PART VII. RECORDING AND FILING DATA RECORDING AND The Original Indenture and indentures supplemental thereto have been FILING OF ORIGINAL recorded and/or filed and Certificates of Provision for Payment have been INDENTURE. recorded as hereinafter set forth. The Original Indenture has been recorded as a real estate mortgage and filed as a chattel mortgage in the offices of the respective Registers of Deeds of certain counties in the State of Michigan as set forth in the Supplemental Indenture dated as of September 1, 1947, has been recorded as a real estate mortgage in the office of the Register of Deeds of Genesee County, Michigan as set forth in the Supplemental Indenture dated as of May 1, 1974, has been filed in the Office of the Secretary of State of Michigan on November 16, 1951 and has been filed and recorded in the office of the Interstate Commerce Commission on December 8, 1969. RECORDING AND Pursuant to the terms and provisions of the Original Indenture, FILING OF indentures supplemental thereto heretofore entered into have been recorded SUPPLEMENTAL as a real estate mortgage and/or filed as a chattel mortgage or as a INDENTURES. financing statement in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, the Office of the Scretary of State of Michigan and the Office of the Interstate Commerce Commission, as set forth in supplemental indentures as follows:
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ June 1, 1925(a)(b)................ Series B Bonds February 1, 1940 August 1, 1927(a)(b).............. Series C Bonds February 1, 1940 February 1, 1931(a)(b)............ Series D Bonds February 1, 1940 June 1, 1931(a)(b)................ Subject Properties February 1, 1940 October 1, 1932(a)(b)............. Series E Bonds February 1, 1940 September 25, 1935(a)(b).......... Series F Bonds February 1, 1940 September 1, 1936(a)(b)........... Series G Bonds February 1, 1940 November 1, 1936(a)(b)............ Subject Properties February 1, 1940 February 1, 1940(a)(b)............ Subject Properties September 1, 1947 December 1, 1940(a)(b)............ Series H Bonds and Addi- September 1, 1947 tional Provisions September 1, 1947(a)(b)(c)........ Series I Bonds, November 15, 1951 Subject Properties and Additional Provisions March 1, 1950(a)(b)(c)............ Series J Bonds November 15, 1951 and Additional Provi- sions November 15, 1951(a)(b)(c)........ Series K Bonds January 15, 1953 Additional Provisions and Subject Properties January 15, 1953(a)(b)............ Series L Bonds May 1, 1953 May 1, 1953(a).................... Series M Bonds March 15, 1954 and Subject Properties March 15, 1954(a)(c).............. Series N Bonds May 15, 1955 and Subject Properties May 15, 1955(a)(c)................ Series O Bonds August 15, 1957 and Subject Properties August 15, 1957(a)(c)............. Series P Bonds June 1, 1959 Additional Provisions and Subject Properties June 1, 1959(a)(c)................ Series Q Bonds December 1, 1966 and Subject Properties
59 56
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ December 1, 1966(a)(c)............ Series R Bonds October 1, 1968 Additional Provisions and Subject Properties October 1, 1968(a)(c)............. Series S Bonds December 1, 1969 and Subject Properties December 1, 1969(a)(c)............ Series T Bonds July 1, 1970 and Subject Properties July 1, 1970(c)................... Series U Bonds December 15, 1970 and Subject Properties December 15, 1970(c).............. Series V and June 15, 1971 Series W Bonds June 15, 1971(c).................. Series X Bonds November 15, 1971 and Subject Properties November 15, 1971(c).............. Series Y Bonds January 15, 1973 and Subject Properties January 15, 1973(c)............... Series Z Bonds May 1, 1974 and Subject Properties May 1, 1974....................... Series AA Bonds October 1, 1974 and Subject Properties October 1, 1974................... Series BB Bonds January 15, 1975 and Subject Properties January 15, 1975.................. Series CC Bonds November 1, 1975 and Subject Properties November 1, 1975.................. Series DDP Nos. 1-9 December 15, 1975 Bonds and Subject Properties December 15, 1975................. Series EE Bonds February 1, 1976 and Subject Properties February 1, 1976.................. Series FFR Nos. 1-13 June 15, 1976 Bonds June 15, 1976..................... Series GGP Nos. 1-7 July 15, 1976 Bonds and Subject Properties July 15, 1976..................... Series HH Bonds February 15, 1977 and Subject Properties February 15, 1977................. Series MMP Bonds and March 1, 1977 Subject Properties March 1, 1977..................... Series IIP Nos. 1-7 June 15, 1977 Bonds, Series JJP Nos. 1-7 Bonds, Series KKP Nos. 1-7 Bonds and Series LLP Nos. 1-7 Bonds June 15, 1977..................... Series FFR No. 14 Bonds July 1, 1977 and Subject Properties July 1, 1977...................... Series NNP Nos. 1-7 October 1, 1977 Bonds and Subject Properties October 1, 1977................... Series GGP Nos. 8-22 June 1, 1978 Bonds and Series OOP Nos. 1-17 Bonds and Subject Properties June 1, 1978...................... Series PP Bonds, October 15, 1978 Series QQP Nos. 1-9 Bonds and Subject Properties
60 57
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ October 15, 1978.................. Series RR Bonds March 15, 1979 and Subject Properties March 15, 1979.................... Series SS Bonds July 1, 1979 and Subject Properties July 1, 1979...................... Series IIP Nos. 8-22 September 1, 1979 Bonds, Series NNP Nos. 8-21 Bonds and Series TTP Nos. 1-15 Bonds and Subject Properties September 1, 1979................. Series JJP No. 8 Bonds, September 15, 1979 Series KKP No. 8 Bonds, Series LLP Nos. 8-15 Bonds, Series MMP No. 2 Bonds and Series OOP No. 18 Bonds and Subject Properties September 15, 1979................ Series UU Bonds January 1, 1980 January 1, 1980................... 1980 Series A Bonds and April 1, 1980 Subject Properties April 1, 1980..................... 1980 Series B Bonds August 15, 1980 August 15, 1980................... Series QQP Nos. 10-19 August 1, 1981 Bonds, 1980 Series CP Nos. 1-12 Bonds and 1980 Series DP No. 1-11 Bonds and Subject Properties August 1, 1981.................... 1980 Series CP Nos. November 1, 1981 13-25 Bonds and Subject Properties November 1, 1981.................. 1981 Series AP Nos. 1-12 June 30, 1982 Bonds June 30, 1982..................... Article XIV August 15, 1982 Reconfirmation August 15, 1982................... 1981 Series AP Nos. June 1, 1983 13-14 and Subject Properties June 1, 1983...................... 1981 Series AP Nos. October 1, 1984 15-16 and Subject Properties October 1, 1984................... 1984 Series AP and 1984 May 1, 1985 Series BP Bonds and Subject Properties May 1, 1985....................... 1985 Series A Bonds May 15, 1985 May 15, 1985...................... 1985 Series B Bonds and October 15, 1985 Subject Properties October 15, 1985.................. Series KKP No. 9 Bonds April 1, 1986 and Subject Properties
61 58
RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ---------------------------------- ------------------------ ------------------ April 1, 1986..................... 1986 Series A and August 15, 1986 Subject Properties August 15, 1986................... 1986 Series B and November 30, 1986 Subject Properties November 30, 1986................. 1986 Series C Janaury 31, 1987 January 31, 1987.................. 1987 Series A April 1, 1987 April 1, 1987..................... 1987 Series B and 1987 August 15, 1987 Series C August 15, 1987................... 1987 Series D and 1987 November 30, 1987 Series E and Subject Properties November 30, 1987................. 1987 Series F June 15, 1989 June 15, 1989..................... 1989 Series A July 15, 1989 July 15, 1989..................... Series KKP No. 10 December 1, 1989
----------------- (a) See Supplemental Indenture dated as of July 1, 1970 for Interstate Commerce Commission filing and recordation information. (b) See Supplemental Indenture dated as of May 1, 1953 for Secretary of State of Michigan filing information. (c) See Supplemental Indenture dated as of May 1, 1974 for County of Genesee, Michigan recording and filing information. Further, pursuant to the terms and provisions of the Original Indenture, a Supplemental Indenture dated as of December 1, 1989 providing for the terms of bonds to be issued thereunder of Series KKP No. 11 and 1989 Series BP has heretofore been entered into between the Company and the Trustee and has been filed in the Office of the Secretary of State of Michigan as a financing statement on December 19, 1989 (Filing No. 99782), has been filed and recorded in the Office of the Interstate Commerce Commission (Recordation No. 5485-000), and has been recorded as a real estate mortgage in the offices of the respective Register of Deeds of certain counties in the State of Michigan, as follows:
LIBER OF MORTGAGES OR COUNTY COUNTY RECORDED RECORDS PAGE --------------------------- ----------------- ------ --------- Genesee.................... December 19, 1989 2548 1-29 Huron...................... December 19, 1989 533 702-730 Ingham..................... December 19, 1989 1793 766-794 Lapeer..................... December 19, 1989 676 970-998 Lenawee.................... December 19, 1989 1113 98-126 Livingston................. December 19, 1989 1382 437-465 Macomb..................... December 19, 1989 04784 792-820 Mason...................... December 19, 1989 387 516-544 Monroe..................... December 19, 1989 1103 0100-0128 Oakland.................... December 19, 1989 11194 511-539 Sanilac.................... December 19, 1989 407 685-713 St. Clair.................. December 19, 1989 946 919-947 Tuscola.................... December 19, 1989 598 863-891 Washtenaw.................. December 19, 1989 2371 834-862 Wayne...................... December 19, 1989 24466 89-837
62 59 RECORDING OF All the bonds of Series A which were issued under the Original CERTIFICATES Indenture dated as of October 1, 1924, and of Series B, C, D, E, F, G, H, OF PROVISION I, J, K, L, M, N, O, P, Q, W, BB, CC, DDP Nos. 1-9, FFR Nos. 1-11, GGP FOR PAYMENT. Nos. 1-6 and 8-15, IIP Nos. 1-6 and 8-13, JJP Nos. 1-6, KKP Nos. 1-6, LLP Nos. 1-6 and 8-13, NNP Nos. 1-6 and 8-13, OOP Nos. 1-8, QQP Nos. 1-7 and 10-14 and TTP Nos. 1-6, 1980 Series A, 1980 Series CP Nos. 1-5 and 13-16, 1980 Series DP Nos. 1-5 and 1981 Series AP No. 1-4 which were issued under Supplemental Indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, December 1, 1940, September 1, 1947, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, December 15, 1970, October 1, 1974, January 15, 1975, November 1, 1975, February 1, 1976, June 15, 1976, October 1, 1977, March 1, 1977, July 1, 1979, March 1, 1977, March 1, 1977, March 1, 1977, September 1, 1979, July 1, 1977, July 1, 1979, October 1, 1977, June 1, 1978, October 1, 1977, July 1, 1979, January 1, 1980, August 15, 1980 and November 1, 1981 have matured or have been called for redemption and funds sufficient for such payment or redemption have been irrevocably deposited with the Trustee for that purpose; and Certificates of Provision for Payment have been recorded in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, with respect to all bonds of Series A, B, C, D, E, F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1 and GGP No. 8. PART VIII. THE TRUSTEE. TERMS AND The Trustee hereby accepts the trust hereby declared and provided, and CONDITIONS OF agrees to perform the same upon the terms and conditions in the Original ACCEPTANCE OF Indenture, as amended to date and as supplemented by this Supplemental TRUST BY TRUSTEE. Indenture, and in this Supplemental Indenture set forth, and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for and in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely.
63 60 PART IX. MISCELLANEOUS. EXECUTION IN This Supplemental Indenture may be simultaneously executed in any COUNTERPARTS. number of counterparts, each of which when so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument. TESTIMONIUM. IN WITNESS WHEREOF, The Detroit Edison Company and Bankers Trust Company have caused these presents to be signed in their respective corporate names by their respective Chairmen of the Board, Presidents, Vice Presidents, Assistant Vice Presidents or Treasurers and impressed with their respective corporate seals, attested by their respective Secretaries or Assistant Secretaries, all as of the day and year first above written. THE DETROIT EDISON COMPANY, (Corporate Seal) By /s/ L. L. LOOMANS ------------------------------ L. L. Loomans Vice President and Treasurer EXECUTION. Attest: /s/ SUSAN M. BEALE ------------------------------------ Susan M. Beale Secretary Signed, sealed and delivered by THE DETROIT EDISON COMPANY, in the presence of /s/ ELAINE M. GODFREY ------------------------------------ Elaine M. Godfrey /s/ BETTY M. HANSEN ------------------------------------ Betty M. Hansen (Corporate Seal) BANKERS TRUST COMPANY, By /s/ BARBARA A. JOINER ------------------------------ Barbara A. Joiner Vice President Attest: /s/ SANDRA SHIRLEY ------------------------------------ Sandra Shirley Assistant Secretary Signed, sealed and delivered by BANKERS TRUST COMPANY, in the presence of /s/ ERIC M. HAWNER ------------------------------------ Eric M. Hawner /s/ Y. PATRICIA BLUE ------------------------------------ Y. Patricia Blue
64 61 STATE OF MICHIGAN SS.: COUNTY OF WAYNE ACKNOWLEDGMENT On this 14th day of February, 1990, before me, the subscriber, a Notary OF EXECUTION Public within and for the County of Wayne, in the State of Michigan, BY COMPANY. personally appeared L. L. Loomans , to me personally known, who, being by me duly sworn, did say that his business address is 2000 Second Avenue, Detroit, Michigan 48226 and he is the Vice President and Treasurer of THE DETROIT EDISON COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said L. L. Loomans, acknowledged said instrument to be the free act and deed of said corporation. /s/ JANET A. SCULLEN --------------------------------- (Notarial Seal) Janet A. Scullen, Notary Public Macomb County, MI (Acting in Wayne County) My Commission Expires March 30, 1993 STATE OF NEW YORK SS.: COUNTY OF NEW YORK ACKNOWLEDGMENT On this 12th day of February, 1990, before me, the subscriber, a Notary OF EXECUTION Public within and for the County of New York, in the State of New York, BY TRUSTEE. personally appeared Barbara A. Joiner, to me personally known, who, being by me duly sworn, did say that her business address is Four Albany Street, New York, New York 10015, and she is Vice President of BANKERS TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that she knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that she subscribed her name thereto by like authority; and said Barbara A. Joiner acknowledged said instrument to be the free act and deed of said corporation. (Notarial Seal) /s/ DESIREE MARSHALL --------------------------------- Desiree Marshall Notary Public, State of New York No. 24-4885294 Qualified in Kings County Certificate filed in New York County Commission Expires February 17, 1991
65 62 STATE OF MICHIGAN SS.: COUNTY OF WAYNE AFFIDAVIT AS TO L. L. Loomans, being duly sworn, says: that he is the Vice President and CONSIDERATION Treasurer of THE DETROIT EDISON COMPANY, the Mortgagor named in the AND GOOD FAITH. foregoing instrument, and that he has knowledge of the facts in regard to the making of said instrument and of the consideration therefor; that the consideration for said instrument was and is actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth. /s/ L. L. LOOMANS -------------------------------- L. L. Loomans Sworn to before me this 14th day of February, 1990 /s/ JANET A. SCULLEN ------------------------------------- Janet A. Scullen, Notary Public Macomb County, MI (Acting in Wayne County) My Commission Expires March 30, 1993 (Notarial Seal) This instrument was drafted by Frances B. Rohlman, Esq., 2000 Second Avenue, Detroit, Michigan 48226
EX-10.56 7 EXHIBIT 10-56 1 EXHIBIT 10-56 THE DETROIT EDISON COMPANY ("COMPANY") SHAREHOLDER VALUE IMPROVEMENT PLAN - A OFFICIAL PLAN DOCUMENT (POSITIONS OF VICE PRESIDENT AND ABOVE) - A PART OF THE COMPANY-WIDE PROGRAM TO INCREASE SHAREHOLDER VALUE. AS AMENDED AND RESTATED EFFECTIVE JANUARY 23, 1995 2 SHAREHOLDER VALUE IMPROVEMENT PLAN-A AS AMENDED AND RESTATED EFFECTIVE JANUARY 23, 1995 OVERVIEW The Shareholder Value Improvement Plan - A (Plan) is designed to encourage continued improvement in performance and operating results. The Plan's ultimate objective is to increase shareholder value. It provides a method for senior levels of management to share in the added value that they create by contributing to corporate performance improvement. The Plan provides for possible financial awards to eligible members of senior management if specified annual corporate and organizational unit goals are achieved and is intended to motivate senior levels of management toward taking actions that have long-term performance outcomes which improve shareholder value. For Plan years 1991, 1992 and 1993, a portion of approved awards was deferred for a specified period of time. Commencing with the 1996 Plan Year, recipients of Plan awards will be permitted, under specified conditions, to defer the payment of awards. The Plan measures calendar year performance. The current year's standards and requirements will be communicated annually. ADMINISTRATION The Organization and Compensation Committee (Committee) of the Board of Directors is Plan Administrator with responsibility for the administration of the Plan. The Committee has the authority to interpret the provisions of the Plan and prescribe any regulations relating to its administration. The decisions of the Committee with respect thereto shall be conclusive. The Committee, on an annual basis, will review and if appropriate, recommend to the Board of Directors for approval, the specific criteria for eligibility, the type and timing of awards and the manner of payment of awards (current and/or deferred), the performance measures and related weights to be used in computing award amounts for Plan Years 1991, 1992, 1993 and 1994 and the Performance Fund for Plan year 1995 and thereafter and the performance levels for each performance measure. The Board of Directors reserves the right to amend, suspend or terminate the Plan at any time (See "Awards"). Current awards calculated under the terms of the Plan are not payable until such time as the Board's approval has been granted. The Board of Directors reserves the right to reduce or cancel any awards that might otherwise be made if in its sole discretion it determines that the performance achieved is not indicative of an 3 improvement in shareholder value. If such a determination is made, the Plan may be canceled or substantially modified with the result of terminating or decreasing any awards that might otherwise be made hereunder. The Treasurer will be responsible for making award payments, for establishing and maintaining the equity and deferred accounts for award recipients, and for maintaining all necessary records regarding the valuation and payment of awards. The Vice President-Human Resources will assist the Committee in the development, administration and communication of the Plan. ELIGIBILITY Only those individuals that hold and actively perform (where "hold and actively perform" excludes all temporary assignments, all step-up assignments and lengthy periods of absences) in positions of Vice President or above who receive at least a "satisfactory" or "solid" performance appraisal for the applicable calendar year will be eligible to participate in the Plan. The Board of Directors may at any time specify additional positions that may be eligible to participate in the Plan. Any person who is elected to an eligible position in The Detroit Edison Company will become eligible to participate in the Plan provided, however, that any such participant must hold, and actively perform in, one or more eligible positions for a total of at least seven months during a Plan year to receive any award under the Plan. Employes are not eligible to participate in the Plan if they are eligible to participate in any other Company incentive program (other than the Long Term Incentive Plan to be submitted to Common Shareholders for approval in April 1995). Exceptions to the eligibility criteria may be authorized by the Board of Directors. Participation in the Plan does not guarantee continued employment with the Company. AWARD OPPORTUNITY For Plan years 1991, 1992, 1993 and 1994, awards were calculated as a percent of pay based on the achievement of specific performance measures. Each performance measure was assigned performance levels and weights. The amount of an award was dependent upon the achieved level of performance, the associated weight and the applicable award opportunity percentage. 2 4 For Plan years 1991, 1992, 1993 and 1994, the award opportunity percentage that applied to participants was determined by the eligible position that each applicable participant held and actively performed for at least seven months during the calendar year (Plan year). If during a calendar year participants held and actively performed in different eligible positions for a total of at least seven months, their award was calculated at the award level for the lowest eligible position they held provided that they did not hold and actively perform in a single eligible position for at least seven months, in which event the eligible position held for seven months was used for purposes of the Plan. Effective with the 1995 Plan year, awards, if any, will be payable from a fund ("Performance Fund") established by multiplying the base salary (including applicable amounts deferred under Company-sponsored benefit plans) of otherwise eligible members of senior management by a percent based upon the achievement of specific performance measures. (For purposes of the Performance Fund, base salary is defined as being the sum of the base salary of all otherwise eligible members of senior management who performed in one or more senior management positions for a total of at least seven months during the applicable calendar year which is also a Plan year.) PERFORMANCE MEASURES, LEVELS AND WEIGHTS The measures of performance and weight applicable to each Plan year will be communicated annually to all eligible employes. AWARDS Award amounts for 1991, 1992, 1993 and 1994 were calculated with reference to the base salary paid during the applicable calendar year including certain amounts deferred under Company-sponsored benefit plans. Effective with the 1995 Plan year, award amounts will be payable from the Performance Fund and will be granted, in the sole discretion of the Board of Directors, to otherwise eligible members of senior management, in such amounts, if any, as are determined to be appropriate by the Board of Directors. For Plan years 1991, 1992, 1993 and 1994, if an otherwise eligible participant met the eligibility criteria but terminated employment and the termination was due to disability (where disability is defined as being eligible to receive a benefit under the Company's Long Term Disability Plan) or retirement (where retirement is defined as a resignation at age 55 or older and with at least 10 years of Company service or at age 65 or older) or died, such otherwise eligible participant remained eligible for a prorated award for the applicable Plan year. 3 5 Awards under the Plan are not considered compensation for purposes of the Company's qualified and non-qualified savings plans, the Company's qualified and non-qualified retirement plans, insurance or any other Company-sponsored qualified or non-qualified employe benefit programs. See "Forfeiture" herein. AWARD CALCULATION For Plan years 1991, 1992, 1993 and 1994, award amounts were calculated by multiplying a participant's base salary (as defined previously in "Awards") by the award percentage approved by the Board of Directors. Effective with the 1995 Plan year, awards, if any, will be payable from the Performance Fund in such amounts as deemed appropriate by the Board of Directors. AWARD PAYMENT For Plan years 1991, 1992 and 1993, fifty percent (50%) of annual awards were paid as soon as practicable following approval by the Board of Directors. Effective with the 1994 Plan year, annual awards, if any, will be paid as soon as practicable following approval by the Board of Directors unless deferred as permitted herein. Effective with the 1996 Plan year, members of senior management will be permitted to defer the payment of 50% to 100% of an approved award for a period of from one to five years ("Deferred Awards"). A Deferred Award Account will be established for each award recipient with a timely Deferral Notice on file with the Company. Deferrals must be irrevocably submitted prior to the commencement of the Plan year during which the services giving rise to the award will be performed on a form ("Deferral Notice") to be furnished by the Company. For example, a Deferral Notice for an award to be based on 1996 performance must be filed with the Company by the end of 1995. Once filed with the Company, the Deferral Notice may not be changed or revoked. For Plan years 1991, 1992 and 1993, fifty percent (50%) of the annual awards were converted to equity units and deferred for a three-year period. This deferred portion of the approved award was deemed to be invested in Company Common Stock by converting the award into equity units equal in value to the average of the high and low sales prices of Detroit Edison Common Stock as listed in the Wall Street Journal for the New York Stock Exchange Composite Tape, on the last business day on which such stock was traded in the Plan year to which the award related. Equity units were credited to each participant's unfunded equity account as described in the section entitled "Equity Units". 4 6 See "Forfeiture" herein. EQUITY UNITS For Plan years 1991, 1992 and 1993, unfunded equity accounts were created for each participant and fifty percent (50%) of the approved award was converted into equity units. Subsequently, as dividends were and are paid on the Company's Common Stock, a dividend was and will be deemed to be paid on each equity unit in an amount equal to the dividend which is declared and paid on the Company's Common Stock. Deemed dividends have been and will be converted to equity units equal in value to the average of the high and low sales prices of Detroit Edison Common Stock as listed in the Wall Street Journal for the New York Stock Exchange Composite Tape on the dividend payment date, or if such day was not or is not a business day, on the business day immediately preceding the dividend date. Equity units created as a result of deemed dividends have been and will be credited to each participant's unfunded equity account as of the dividend payment date, or if such day was or is not a business day, on the business day immediately preceding the dividend date. The value of equity units is subject to appreciation and depreciation depending upon the trading price of the Company's Common Stock as listed in the Wall Street Journal for the New York Stock Exchange Composite tape. DEFERRED AWARD ACCOUNTS Effective for Plan Year 1996 and thereafter, Deferred Award Accounts will be established for each recipient with a timely Deferral Notice on file as soon as practicable following Board approval of an award. Amounts in Deferred Award Accounts will be deemed to earn interest at a rate calculated on the last business day of each month with reference to the Five-Year United States Treasury Bond rate, as reported in a nationally-recognized financial service. Deferred Awards, including deemed earnings thereon, will be payable as soon as practicable in the calendar year selected by an award recipient in the Deferral Notice. In the event that a participant with a Deferred Account dies, retires or terminates employment prior to the time established for payment in the Deferral Notice, such participant's Deferred Account, plus earnings thereon, shall be paid to such participant or participant's designated beneficiary as soon as possible thereafter. 5 7 EQUITY ACCOUNT PAYMENTS The value of the equity units established for Plan Years 1991, 1992 and 1993 will be paid to the eligible participant in a lump sum cash payment after the end of the third year following the year to which the award relates provided the participant is actively employed by the Company at the end of the third year (December 31) of the three-year award deferral period. (For example, the value of an equity account that is based on the 1992 Plan year is payable as soon as practicable during 1996.) In the event that the participant terminates employment prior to the end of the third year following the year to which the award relates, and the termination is due to disability (where disability is defined as being eligible to receive a benefit under the Company's Long Term Disability Plan) or retirement (where retirement is defined as a resignation at age 55 or older and with at least 10 years of Company service or at age 65 or older), the total value of any or all unfunded equity accounts will be converted to cash and paid as soon as practicable in a lump sum cash payment to the participant. In the event that the participant dies, the total value of all unfunded equity account balances will be paid as soon as practicable in a lump sum cash payment. The value of the unfunded equity account will be determined by multiplying the number of equity units in the account by the average of the high and low sales prices of Detroit Edison Common Stock, as listed in the Wall Street Journal for the New York Stock Exchange Composite Tape, on (1) the day the three-year period ends; (2) the day the employe terminates employment due to disability (last day of employment); (3) the day the employe dies (official date of death); or (4) the day the employe retires (last day of employment), as applicable. If the day the three-year period ends or the last day of employment or date of death is not a business day, the deferred award will be valued on the preceding business day. If the date of a participant's termination of employment due to disability or retirement as defined herein or death or the day after such three-year period ends falls within the record date and the associated dividend payment date for the Company's Common Stock, then such dividend will be deemed to be paid on the equity units in the participant's unfunded account. The value of such deemed dividend will be paid in cash. FORFEITURE Eligible participants who are discharged or resign (except for terminations due to disability or retirement as defined herein or death) prior to the end of the third year following the year to which an award required to be deferred by the Company relates will forfeit the value of the equity units. 6 8 Unless the termination is the result of disability, death or by normal or early retirement as defined herein, a participant will forfeit an annual award required to be deferred by the Company if the participant is not actively employed by the Company at the end of the Plan year (December 31). Deferred Accounts are not subject to forfeiture. FUNDING STATUS Benefits under the Plan including any equity accounts and Deferred Accounts are payable solely from the general assets of the Company and shall remain unfunded and unsecured (under federal income tax laws and Title I of the Employee Retirement Income Security Act of 1974, as amended) during the entire period of the Plan's existence. The participant, the participant's spouse or beneficiary are merely general creditors of the Company and the obligations of the Company hereunder are purely contractual and shall not be funded or secured in any way. If and to the extent the Company chooses to actually invest in any Detroit Edison Common Stock, assets acquired by the Company shall remain the sole property of the Company, subject to the claims of its general creditors, and shall not be deemed to form part of the participant's unfunded equity account. NON-ALIENABILITY AND NON-TRANSFERABILITY The right of a participant, participant's spouse or beneficiary to payment of any benefit or deferred compensation hereunder shall not be alienated, assigned, transferred, pledged or encumbered and shall not be subject to execution, attachment or similar process. No participant may borrow against the unfunded equity or deferred account established for his or her benefit hereunder. No account shall be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether voluntary or involuntary, including but not limited to any liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of any employe. Any attempted assignment, pledge, levy or similar process shall be null and void and without effect. BENEFICIARY DESIGNATION Each eligible participant may name any beneficiary to whom awards under the Plan are to be paid in case of the eligible participant's death before he/she receives an award hereunder. Each designation will revoke all prior designations by the eligible participant and shall be on a form prescribed by the Plan Administrator and will be effective only when filed by the eligible participant with the Treasurer. In the absence of any such designation, awards due 7 9 shall be paid to the participant's (1) life insurance beneficiary designated by the participant with respect to life insurance maintained by the Company for the benefit of the participant, or, in the absence of a designated life insurance beneficiary, (2) to the participant's estate. 8 EX-10.57 8 EXHIBIT 10-57 1 EXHIBIT 10-57 1995 Shareholder Value Improvement Plan - A
----------------------------------------------------------------------------------------------- TARGET LEVELS MEASURE WEIGHT 1 2 3 ----------------------------------------------------------------------------------------------- Positive & Positive & Top 10% Within To Below TOTAL SHAREHOLDER RETURN (TSR)* 40% of 48 10%-50% Median but DJEU Prorated at least 10% CUSTOMER VALUE MEASURES** CUSTOMER SATISFACTION 20% 91% 90% 89% SAFETY LWDC 5% 7 8 10 RECORDABLES*** 5% 220 240 260 O&M AND CAPITAL 10% -4% -2% 0 PRODUCTION COST 20% $21.24 $21.69 $22.13 ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- PERFORMANCE FUND 20% 15% 10% ----------------------------------------------------------------------------------------------- Conditions for Awards: *There is no award if the total return is negative ***LWDC must be at least Level 3 **TSR must be positive or above the median of DJEU.
Approved: _______________________________________________________________ Wendell W. Anderson, Jr., Chairman Date Organization and Compensation Committee EX-10.58 9 EXHIBIT 10-58 1 EXHIBIT 10.58 THE DETROIT EDISON COMPANY PLAN FOR DEFERRING THE PAYMENT OF DIRECTORS' FEES AMENDED AS OF JANUARY 23, 1995 2 AMENDED 1/23/95 THE DETROIT EDISON COMPANY PLAN FOR DEFERRING THE PAYMENT OF DIRECTORS' FEES SECTION I PURPOSE The purpose of The Detroit Edison Company Plan for Deferring the Payment of Directors' Fees (the "Plan") is to enable each Director to defer all or a portion of his or her fees for future services as a member of the Board of Directors or as a member of any committee thereof. SECTION II ELIGIBILITY Any Director of the Company who is not a Company employe shall be eligible to participate in the Plan. SECTION III ELECTION, MODIFICATION, AND TERMINATION PROCEDURES Any Director wishing to participate in the Plan must file with the Corporate Secretary of the Company at 2000 Second Avenue, Detroit, MI 48226, a written Notice of Election on the form attached as Exhibit "A" to defer payment of all or a portion of his or her Director's fees. Such an election to participate in the Plan must be made prior to the beginning of the month for which fees are payable. An effective election with respect to Directors' fees that have been deferred under the terms of this Plan and fees that have already been earned may not be modified or revoked. An effective election with regard to fees that have not been deferred or earned may be modified by filing a new Notice of Election or may be terminated by filing a Notice of Termination on the form attached as Exhibit "B". A Director who shall have terminated an effective election may thereafter file a new election covering a subsequent period. 3 AMENDED 1/23/95 SECTION IV ESTABLISHMENT AND ADMINISTRATION OF DEFERRED DIRECTORS' FEE ACCOUNT The amount of any Director's fees deferred in accordance with an election shall be credited to a deferred Director's fee account maintained by the Company. Such account shall remain a part of the general funds of the Company, and nothing contained in this Plan shall be deemed to create a trust or fund of any kind or create any fiduciary relationship. As of the last day of each month, the deferred Directors' fee account shall be adjusted as follows: (a) The account shall first be charged with any distributions made during the month. (b) The account balance shall then be credited with interest for that month. Commencing January 1, 1995, such interest shall be computed by multiplying the applicable portion of the account balance after the adjustment provided for in Subsection (a) of this Section by a fraction, the numerator of which is the 5-Year United States Treasury Bond rate, as reported in The Wall Street Journal as of the last business day of each month and the denominator of which is 12. (c) Finally, the account shall be credited with the amount, if any, of Directors' fees deferred during that month. A separate record of deferred Director's fees and applicable interest shall be maintained by the Company for each participant in the Plan. SECTION V PAYMENT OF DEFERRED DIRECTORS' FEES Deferred fees shall be paid to a Director or, in the event of death, to his or her designated beneficiary in accordance with the Notice of Election and Beneficiary Designation forms that have been filed with the Corporate Secretary of the Company. If a Director elects to receive payment of his or her deferred fees in installments rather than in a lump sum, the payment period shall not exceed ten years following the payment commencement date. The amount of any installment payment shall be determined by multiplying the balance of the Director's unpaid deferred fees and applicable interest on the date of such installment by a fraction, the numerator of which is one and the denominator of which is the 2 4 AMENDED 1/23/95 number of remaining unpaid installments. Such balance shall be appropriately reduced to reflect the installment payments made hereunder. SECTION VI WHEN PAYMENT OF DEFERRED DIRECTORS' FEES COMMENCES The payment in a lump sum or installments of amounts deferred pursuant to an election under the Plan shall commence on January 15 of the first year to which payment has been deferred and shall be paid in accordance with the terms of such election. If a Director shall die prior to the first year to which payment has been deferred, such payment shall commence on January 15 of the calendar year immediately following the year of death and shall be paid in the manner specified in such election. SECTION VII DESIGNATION OF BENEFICIARY Each Director, on becoming a participant, shall file with the Corporate Secretary of the Company a beneficiary designation on the form attached as Exhibit "C" form designating one or more beneficiaries to whom payments otherwise due the participant shall be made in the event of his or her death while serving as a Director or after leaving the Board. A beneficiary designation will be effective only if the signed beneficiary designation form is filed with the Corporate Secretary of the Company while the Director is alive, and will cancel all beneficiary designations signed and filed previously. If the primary beneficiary shall survive the Director but dies before receiving all the amounts due hereunder, the deferred amounts remaining unpaid at the time of death shall be paid in one lump sum to the legal representative of the primary beneficiary's estate. If the primary beneficiary shall predecease the Director, amounts remaining unpaid at the time of the Director's death shall be paid in the order specified by the Director to the contingent beneficiary(s) surviving the Director. If the contingent beneficiary(s) dies before receiving all the amounts due hereunder, the unpaid amount shall be paid in one lump sum to the legal representative of such contingent beneficiary(s) estate. If the Director shall fail to designate a beneficiary(s) as provided in this Section, or if all designated beneficiaries shall predecease the Director, the deferred amounts remaining unpaid at the time of such Director's death shall be paid in one lump sum to the legal representative of the Director's estate. 3 5 AMENDED 1/23/95 SECTION VIII NON-ALIENABILITY AND NON-TRANSFERABILITY Neither the Director nor any beneficiary designated by him or her shall have any right to, directly or indirectly, alienate, assign, or encumber any amount that is or may be payable hereunder. SECTION IX ADMINISTRATION OF PLAN Full power and authority to construe, interpret, and administer the Plan shall be vested in the Company's Board of Directors. Decisions of the Board shall be final, conclusive, and binding upon all parties. SECTION X AMENDMENT OR TERMINATION OF PLAN The Board of Directors may amend or terminate this Plan at any time. Any amendment or termination of this Plan shall not affect the rights of participants or beneficiaries to the amounts in the deferred Directors' fee accounts at the time of such amendment or termination. SECTION XI APPLICABLE LAW The provisions of this Plan shall be interpreted and construed in accordance with the laws of the State of Michigan. SECTION XII EFFECTIVE DATE OF PLAN This Plan shall become operative and in effect on such date as shall be fixed by the Board of Directors of the Company. 4 6 AMENDED 1/23/95 EXPLANATION OF THE DETROIT EDISON COMPANY PLAN FOR DEFERRING THE PAYMENT OF DIRECTORS' FEES AND INSTRUCTIONS FOR ELECTING TO PARTICIPATE Explanation of Plan The Plan provides that each Company Director can elect to defer all or a portion of his or her retainer and meeting fees (Directors' Fees). In order to compensate for inflation, the Plan provides that deferred Directors' fees earn interest at the 5-Year United States Treasury Bond rate, as reported in The Wall Street Journal as of the last business day of each month (see Section IV of The Detroit Edison Company Plan for Deferring the Payment of Directors' Fees amended as of 1/23/95). Once an election has been made under the Plan to defer all or a portion of Directors' fees, it cannot be modified or revoked with respect to fees that have already been deferred or earned. Such an election can, however, be modified or revoked at any time with respect to fees that have not been deferred or earned. An election must be made to have Directors' fees that are deferred under the Plan paid in either a lump sum or installments. Deferred Directors' fees will remain a part of general Company funds. Under present Federal income tax law, fees that have been deferred and interest that has been imputed will be taxed as ordinary income in the year of payment. EX-10.59 10 EXHIBIT 10-59 1 EXHIBIT 10.59 THE DETROIT EDISON COMPANY RETIREMENT PLAN FOR NON-EMPLOYE DIRECTORS PURPOSE This Plan is to provide a retirement allowance for service as a director while not an employe. ADMINISTRATION This Plan shall be administered by the Chairman of the Board, who shall have full power and authority to make each determination provided for in the Plan, to interpret the Plan, and to establish rules, regulations, and procedures for carrying out its purpose. The Secretary of the Company shall be responsible for recordkeeping under the Plan and shall also be responsible for making all payments provided for by the Plan. This Plan is a non-contributory, non-qualified and unfunded plan and represents only an unsecured general obligation of the Company. ELIGIBILITY The Plan provides a monthly retirement allowance to each director (participant) who has served (a) on the Board as a director for five or more years and (b) as a non-employe director at any time on or after January 1, 1990. AMOUNT OF DISTRIBUTION The monthly retirement allowance will be equal to one-twelfth (1/12th) of the annual retainer (not including Board meeting, Board committee meeting, or Company-related meeting fees) in effect on the date of the participant's termination of service on the Board. Payments shall be made monthly commencing with the month following such participant's termination of service on the Board. DURATION The monthly retirement allowance payments will continue for a period equal to the number of months served on the Board while not an employe, or until the participant's death, whichever occurs first. In the event of death prior to the conclusion of scheduled payments under this Plan, any and all liability of the Company under the Plan is terminated. The participant's estate shall have no rights hereunder. There is no allowance to a surviving spouse or other beneficiary. 2 SUSPENSION OF PAYMENTS Payment of the retirement allowance to a participant who is again elected to the Board will be suspended. Any future allowance will be recalculated based on the annual retainer in effect at the time of the participant's subsequent termination of service on the Board. The duration of payments will be determined by the cumulative number of whole months served on the Board minus the number of retirement allowance payments received prior to re-election of the Board. NONALIENATION OF BENEFITS The right of a participant to payment of a retirement allowance hereunder shall not be alienated, assigned, transferred, pledged or encumbered and shall not be subject to execution, attachment or similar process. Any attempted assignment, pledge, levy or similar process shall be null and void and without effect. AMENDMENT OR TERMINATION The Company reserves the right to amend, modify, supplement, suspend or terminate the Plan at any time, provided, however, that no such amendment, modification, supplement, or termination shall affect the right of any participant who is immediately eligible to receive an allowance hereunder to receive benefits theretofore accrued. EFFECTIVE DATE This Plan became effective on January 1, 1990 and is amended as of February 27, 1995. EX-11.21 11 EXHIBIT 11-21 1 EXHIBIT 11-21 PRIMARY AND FULLY DILUTED EARNINGS PER SHARE OF COMMON STOCK
Year Ended December 31 --------------------------------------------- 1994 1993 1992 ------ ------ ------ (Thousands, except per share amounts) PRIMARY: Earnings for Common Stock . . . . . . . . . . . . . . . . . $390,269 $491,066 $557,549 Weighted average number of common shares outstanding (a) . . . . . . . . . . . . . . . . . 146,152 147,031 146,998 Earnings per share of Common Stock based on weighted average number of shares outstanding . . . . . . . . . . . . . . . . . . $ 2.67 $ 3.34 $ 3.79 FULLY DILUTED: Earnings for Common Stock . . . . . . . . . . . . . . . . . $390,269 $491,066 $557,549 Convertible Preferred Stock dividends . . . . . . . . . . . 314 340 373 -------- -------- -------- $390,583 $491,406 $557,922 ======== ======== ======== Weighted average number of common shares outstanding (a) . . . . . . . . . . . . . . . . . 146,152 147,031 146,998 Conversion of convertible Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 324 351 384 -------- -------- -------- 146,476 147,382 147,382 ======= ======= ======= Earnings per share of Common Stock assuming conversion of outstanding convertible Preferred Stock . . . . . . . . . . . . . . . $ 2.67 $ 3.33 $ 3.79
--------------- (a) Based on a daily average. 61 EX-12.26 12 EXHIBIT 12-26 1 EXHIBIT 12-26 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31 ------------------------------------------------ 1994 1993 1992 ------ ------ ------ (Thousands, except for ratio) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 419,909 $ 521,903 $ 588,047 ---------- ---------- ---------- Taxes based on income: Current income taxes . . . . . . . . . . . . . . . . . . . . 169,381 217,363 179,047 Deferred taxes - net . . . . . . . . . . . . . . . . . . . . 110,243 99,801 148,947 Investment tax credit adjustments - net . . . . . . . . . . (12,826) (14,227) (16,768) Municipal and state . . . . . . . . . . . . . . . . . . . . 2,566 3,373 3,353 ---------- ---------- ---------- Total taxes based on income . . . . . . . . . . . . . . . 269,364 306,310 314,579 ---------- ---------- ---------- Fixed charges: Interest on long-term debt . . . . . . . . . . . . . . . . . 273,763 325,194 388,580 Amortization of debt discount, premium and expense . . . . . . . . . . . . . . . . . . . . . . . 10,832 9,114 3,952 Other interest . . . . . . . . . . . . . . . . . . . . . . . 11,170 4,928 5,169 Interest factor of rents . . . . . . . . . . . . . . . . . . 28,000 29,200 34,400 ---------- ---------- ---------- Total fixed charges . . . . . . . . . . . . . . . . . . . 323,765 368,436 432,101 ---------- ---------- ---------- Earnings before taxes based on income and fixed charges . . . . . . . . . . . . . . . . . . . . . $1,013,038 $1,196,649 $1,334,727 ========== ========== ========== Ratio of earnings to fixed charges . . . . . . . . . . . . . . 3.13 3.25 3.09
62 EX-12.27 13 EXHIBIT 12-27 1 EXHIBIT 12-27 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED AND PREFERENCE STOCK DIVIDEND REQUIREMENTS
Year Ended December 31 ------------------------------------------------ 1994 1993 1992 ------ ------ ------ (Thousands, except for ratio and percent) Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 419,909 $ 521,903 $ 588,047 ---------- ---------- ---------- Taxes based on income: Current income taxes . . . . . . . . . . . . . . . . . . . . 169,381 217,363 179,047 Deferred taxes - net . . . . . . . . . . . . . . . . . . . . 110,243 99,801 148,947 Investment tax credit adjustments - net . . . . . . . . . . (12,826) (14,227) (16,768) Municipal and state . . . . . . . . . . . . . . . . . . . . 2,566 3,373 3,353 ---------- ---------- ---------- Total taxes based on income . . . . . . . . . . . . . . . 269,364 306,310 314,579 ---------- ---------- ---------- Fixed charges: Interest on long-term debt . . . . . . . . . . . . . . . . . 273,763 325,194 388,580 Amortization of debt discount, premium and expense . . . . . . . . . . . . . . . . . . . . . . . 10,832 9,114 3,952 Other interest . . . . . . . . . . . . . . . . . . . . . . . 11,170 4,928 5,169 Interest factor of rents . . . . . . . . . . . . . . . . . . 28,000 29,200 34,400 ---------- ---------- ---------- Total fixed charges . . . . . . . . . . . . . . . . . . . 323,765 368,436 432,101 ---------- ---------- ---------- Earnings before taxes based on income and fixed charges . . . . . . . . . . . . . . . . . . . . . $1,013,038 $1,196,649 $1,334,727 ========== ========== ========== Preferred and preference stock dividend requirements . . . . . . . . . . . . . . . . . . . $ 29,640 $ 30,837 $ 30,498 Dividends meeting requirement of IRC Section 247 . . . . . . . . . . . . . . . . . . . . . . 3,870 4,383 4,651 Percent deductible for income tax purposes . . . . . . . . . . 40.00% 40.00% 41.18% Amount deductible . . . . . . . . . . . . . . . . . . . . . . . 1,548 1,753 1,915 Amount not deductible . . . . . . . . . . . . . . . . . . . . . 28,092 29,084 28,583 Ratio of pretax income to net income . . . . . . . . . . . . . 1.64 1.58 1.53 Dividend factor for amount not deductible . . . . . . . . . . . 46,071 45,953 43,732 Amount deductible . . . . . . . . . . . . . . . . . . . . . . . 1,548 1,753 1,915 ---------- ---------- ---------- Total preferred and preference stock dividend factor . . . . . . . . . . . . . . . . . . . . . 47,619 47,706 45,647 Total fixed charges . . . . . . . . . . . . . . . . . . . . 323,765 368,436 432,101 ---------- ---------- ---------- Total fixed charges and preferred and preference stock dividends . . . . . . . . . . . . . . . $ 371,384 $ 416,142 $ 477,748 ========== ========== ========== Ratio of earnings to fixed charges and preferred and preference stock dividend requirements . . . . . . . . . . . . . . . . . . . 2.73 2.88 2.79
63 EX-23.7 14 EXHIBIT 23-7 1 EXHIBIT 23-7 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (Registration Nos. 33-30809, 33-50325, 33-53207, 33-57095 and 33-64296) and Form S-8 (Registration No. 33-32449) of The Detroit Edison Company and in the Prospectus and Proxy Statement constituting a part of the Registration Statement on Form S-4 (Registration No. 33-57545) of DTE Holdings, Inc. of our report dated January 23, 1995, appearing on page 31 of this Form 10-K. PRICE WATERHOUSE LLP Detroit, Michigan March 27, 1995