0000950124-95-002375.txt : 19950809 0000950124-95-002375.hdr.sgml : 19950809 ACCESSION NUMBER: 0000950124-95-002375 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950808 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DETROIT EDISON CO CENTRAL INDEX KEY: 0000028385 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 380478650 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02198 FILM NUMBER: 95559718 BUSINESS ADDRESS: STREET 1: 2000 SECOND AVE - 2112 WCB CITY: DETROIT STATE: MI ZIP: 48226 BUSINESS PHONE: 3132378000 10-Q 1 FORM 10-Q 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED COMMISSION FILE NUMBER JUNE 30, 1995 1-2198 ------------------ THE DETROIT EDISON COMPANY (Exact name of registrant as specified in its charter) MICHIGAN 38-0478650 (State of incorporation) (I.R.S. Employer Identification No.) 2000 SECOND AVENUE, DETROIT, MICHIGAN 48226 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 237-8000 INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO ----- ------ AT JULY 31, 1995, 144,883,349 SHARES OF THE COMPANY'S $10 PAR VALUE COMMON STOCK WERE OUTSTANDING. ================================================================================ 2 TABLE OF CONTENTS
Page ---- Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Item 1 - Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . 3 Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . . . . . 8 Independent Accountants' Report . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Part II - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Item 4 - Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 20 Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . 23 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
DEFINITIONS ABATE . . . . . . . . . . . . Association of Businesses Advocating Tariff Equity Annual Report . . . . . . . . The Company's 1994 Annual Report to the Securities and Exchange Commission on Form 10-K Annual Report Notes . . . . . Notes to Consolidated Financial Statements appearing on pages 37 through 48 of the Company's 1994 Annual Report to the Securities and Exchange Commission on Form 10-K Company . . . . . . . . . . . The Detroit Edison Company and subsidiary companies Consumers . . . . . . . . . . Consumers Power Company FERC . . . . . . . . . . . . Federal Energy Regulatory Commission kWh . . . . . . . . . . . . . Kilowatthour MPSC . . . . . . . . . . . . Michigan Public Service Commission MW . . . . . . . . . . . . . Megawatts Note(s) . . . . . . . . . . . Note(s) to Consolidated Financial Statements (Unaudited) appearing herein NRC . . . . . . . . . . . . . Nuclear Regulatory Commission PSCR . . . . . . . . . . . . Power Supply Cost Recovery Quarterly Report . . . . . . The Company's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for quarter ended March 31, 1995 Quarterly Report Notes . . . Notes to Consolidated Financial Statements (Unaudited) appearing in the Company's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for quarter ended March 31, 1995 Registrant . . . . . . . . . The Detroit Edison Company
2 3 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED). THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (Dollars in Thousands)
Three Months Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 1995 1994 1995 1994 1995 1994 -------------------------------------------------------------------------------- OPERATING REVENUES Electric - System $ 838,913 $ 853,906 $ 1,701,961 $ 1,724,412 $ 3,425,899 $ 3,522,913 Electric - Interconnection 12,300 13,682 19,639 30,321 32,459 65,440 Steam 4,742 5,102 14,629 17,546 24,933 29,120 ----------------------------------------------------------------------------------------------------------------------- Total Operating Revenues $ 855,955 $ 872,690 $ 1,736,229 $ 1,772,279 $ 3,483,291 $ 3,617,473 ----------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Operation Fuel $ 175,532 $ 175,630 $ 345,192 $ 370,660 $ 693,747 $ 763,539 Purchased power 32,747 47,068 67,859 90,874 93,931 135,510 Other operation 148,998 147,506 286,371 287,847 619,590 626,423 Maintenance 59,903 66,634 112,374 122,805 251,979 240,915 Depreciation and amortization 124,630 120,064 249,674 236,047 490,042 449,663 Deferred Fermi 2 amortization (1,493) (1,867) (2,986) (3,733) (6,718) (8,212) Amortization of deferred Fermi 2 depreciation and return 23,247 21,207 46,494 42,414 88,908 57,857 Taxes other than income 61,459 71,240 124,104 140,554 239,424 269,106 Income taxes 65,218 63,376 147,269 133,660 284,266 295,804 ----------------------------------------------------------------------------------------------------------------------- Total Operating Expenses $ 690,241 $ 710,858 $ 1,376,351 $ 1,421,128 $ 2,755,169 $ 2,830,605 ----------------------------------------------------------------------------------------------------------------------- OPERATING INCOME $ 165,714 $ 161,832 $ 359,878 $ 351,151 $ 728,122 $ 786,868 ----------------------------------------------------------------------------------------------------------------------- OTHER INCOME AND DEDUCTIONS Allowance for other funds used during construction $ 268 $ 550 $ 583 $ 993 $ 1,274 $ 2,280 Other income and (deductions) - net (4,941) (2,538) (18,276) (5,611) (37,695) (24,282) Income taxes 1,172 1,000 6,170 1,925 12,413 8,440 Accretion income 2,845 3,491 5,859 7,136 12,367 29,044 Income taxes - disallowed plant costs and accretion income (868) (1,091) (1,797) (2,235) (3,814) (8,737) ----------------------------------------------------------------------------------------------------------------------- Net Other Income and Deductions $ (1,524) $ 1,412 $ (7,461) $ 2,208 $ (15,455) $ 6,745 ----------------------------------------------------------------------------------------------------------------------- INTEREST CHARGES Long-term debt $ 68,096 $ 69,659 $ 136,520 $ 139,604 $ 270,679 $ 287,667 Amortization of debt discount, premium and expense 2,779 2,620 5,578 5,237 11,174 10,463 Other 2,313 4,230 6,214 9,223 8,161 12,801 Allowance for borrowed funds used during construction (credit) (554) (548) (941) (858) (2,148) (1,507) ----------------------------------------------------------------------------------------------------------------------- Net Interest Charges $ 72,634 $ 75,961 $ 147,371 $ 153,206 $ 287,866 $ 309,424 ----------------------------------------------------------------------------------------------------------------------- NET INCOME $ 91,556 $ 87,283 $ 205,046 $ 200,153 $ 424,801 $ 484,189 PREFERRED STOCK DIVIDEND REQUIREMENTS 7,404 7,411 14,811 14,823 29,627 29,651 ----------------------------------------------------------------------------------------------------------------------- EARNINGS FOR COMMON STOCK $ 84,152 $ 79,872 $ 190,235 $ 185,330 $ 395,174 $ 454,538 ======================================================================================================================= COMMON SHARES OUTSTANDING - AVERAGE 144,875,672 147,054,370 144,869,919 147,052,410 145,069,229 147,045,359 EARNINGS PER SHARE $ 0.58 $ 0.54 $ 1.31 $ 1.26 $ 2.72 $ 3.09 DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $ 0.515 $0.515 $ 1.03 $ 1.03 $ 2.06 $ 2.06
See accompanying Notes to Consolidated Financial Statements (Unaudited). 3 4 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (UNAUDITED) ASSETS (Dollars in Thousands)
June 30 December 31 1995 1994 ------- ----------- UTILITY PROPERTIES Plant in service Electric $ 13,079,251 $ 12,941,414 Steam 70,654 69,813 ------------- ------------ $ 13,149,905 $ 13,011,227 Less: Accumulated depreciation and amortization (4,756,464) (4,529,692) ------------- ------------ $ 8,393,441 $ 8,481,535 Construction work in progress 129,271 104,431 ------------- ------------ Net utility properties $ 8,522,712 $ 8,585,966 ------------- ------------ Property under capital leases (less accumulated amortization of $97,037 and $94,678, respectively) $ 129,581 $ 134,542 Nuclear fuel under capital lease (less accumulated amortization of $390,685 and $374,405, respectively) 175,022 193,411 ------------- ------------ Net property under capital leases $ 304,603 $ 327,953 ------------- ------------ Total owned and leased properties $ 8,827,315 $ 8,913,919 ------------- ------------ OTHER PROPERTY AND INVESTMENTS Non-utility property $ 11,181 $ 11,281 Investments and special funds 23,225 18,722 Nuclear decommissioning trust funds 99,784 76,492 ------------- ------------ $ 134,190 $ 106,495 ------------- ------------ CURRENT ASSETS Cash and temporary cash investments $ 12,685 $ 8,122 Customer accounts receivable and unbilled revenues (less allowance for uncollectible accounts of $28,000 and $30,000, respectively) 388,303 195,824 Other accounts receivable 37,686 34,212 Inventories (at average cost) Fuel 161,309 136,331 Materials and supplies 159,390 155,921 Prepayments 35,720 10,516 ------------- ------------ $ 795,093 $ 540,926 ------------- ------------ DEFERRED DEBITS Unamortized debt expense $ 42,167 $ 42,876 Unamortized loss on reacquired debt 119,621 123,996 Recoverable income taxes 638,731 663,101 Other postretirement benefits 29,029 36,562 Fermi 2 phase-in plan 344,270 390,764 Fermi 2 deferred amortization 55,245 52,259 Other 138,758 122,080 ------------- ------------ $ 1,367,821 $ 1,431,638 ------------- ------------ TOTAL $ 11,124,419 $ 10,992,978 ============= ============
See accompanying Notes to Consolidated Financial Statements (Unaudited). 4 5 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (UNAUDITED) LIABILITIES (Dollars in Thousands)
June 30 December 31 1995 1994 --------------- ---------------- CAPITALIZATION Common stock - $10 par value, 400,000,000 shares authorized; 144,882,760 and 144,863,447 shares outstanding, respectively (292,423 and 311,804 shares, respectively, reserved for conversion of preferred stock) $ 1,448,828 $ 1,448,635 Premium on common stock 545,975 545,825 Common stock expense (47,468) (47,461) Retained earnings used in the business 1,420,095 1,379,081 --------------- -------------- Total common shareholders' equity $ 3,367,430 $ 3,326,080 Cumulative preferred stock - $100 par value, 6,747,484 shares authorized; 3,902,022 and 3,905,470 shares outstanding, respectively (1,539,827 shares unissued) Redeemable solely at the option of the Company 379,946 380,283 Long-term debt 3,806,112 3,825,296 --------------- -------------- Total Capitalization $ 7,553,488 $ 7,531,659 --------------- -------------- OTHER NON-CURRENT LIABILITIES Obligations under capital leases $ 120,838 $ 126,076 Other postretirement benefits 33,536 37,143 Other 54,252 48,707 --------------- -------------- $ 208,626 $ 211,926 --------------- -------------- CURRENT LIABILITIES Short-term borrowings $ 141,877 $ 39,489 Amounts due within one year Long-term debt 19,214 19,214 Obligations under capital leases 183,765 201,877 Accounts payable 139,562 147,020 Property and general taxes 15,772 31,608 Income taxes 33,712 5,304 Accumulated deferred income taxes 30,742 32,625 Interest 59,100 60,214 Dividends payable 82,017 82,012 Payrolls 72,969 71,958 Fermi 2 refueling outage 8,022 1,267 Other 97,671 97,215 --------------- -------------- $ 884,423 $ 789,803 --------------- -------------- DEFERRED CREDITS Accumulated deferred income taxes $ 2,039,935 $ 2,014,821 Accumulated deferred investment tax credits 338,860 346,379 Other 99,087 98,390 --------------- -------------- $ 2,477,882 $ 2,459,590 --------------- -------------- COMMITMENTS AND CONTINGENCIES (Note 5) TOTAL $ 11,124,419 $ 10,992,978 =============== ==============
See accompanying Notes to Consolidated Financial Statements (Unaudited). 5 6 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (Dollars in Thousands)
Three Months Ended Six Months Ended Twelve Months Ended June 30 June 30 June 30 ----------------------------------------------------------------------------- 1995 1994 1995 1994 1995 1994 --------- -------- ---------- --------- ---------- ------------ OPERATING ACTIVITIES Net Income $ 91,556 $ 87,283 $ 205,046 $ 200,153 $ 424,801 $ 484,189 Adjustments to reconcile net income to net cash from operating activities: Accretion income (2,845) (3,491) (5,859) (7,136) (12,367) (29,044) Depreciation and amortization 124,630 120,064 249,674 236,047 490,042 449,663 Deferred Fermi 2 amortization, depreciation and return - net 21,754 19,340 43,508 38,681 82,190 49,645 Deferred income taxes and investment tax credit - net 13,807 38,230 40,083 50,075 83,295 83,147 Fermi 2 refueling outage - net 2,955 (15,937) 6,755 (13,140) 388 (4,992) Premiums on reacquired long-term debt and preferred stock - (213) - (213) (11,350) (33,962) Other 21,111 (12,009) (778) (29,387) (2,481) 11,148 Changes in current assets and liabilities: Customer accounts receivable and unbilled revenues (68,086) (29,035) (192,479) 3,806 (196,790) (16,354) Other accounts receivable (8,756) 4,431 (3,474) (2,351) (8,716) 1,933 Inventories (22,788) (17,998) (27,664) 6,549 (35,987) 27,699 Accounts payable 2,059 9,016 (5,143) (8,926) (10,075) 22,238 Taxes payable (32,882) (37,247) 13,254 (6,017) 1,240 12,728 Interest payable (204) 5,476 (1,114) 1,839 (9,127) (13,887) Other 48,191 53,000 (23,929) (29,363) 3,245 (6,702) --------- --------- ---------- ---------- ---------- ----------- Net cash from operating activities 190,502 220,910 297,880 440,617 798,308 1,037,449 --------- --------- ---------- ---------- ---------- ----------- INVESTING ACTIVITIES Plant and equipment expenditures (94,744) (94,792) (179,978) (171,175) (375,195) (394,479) Purchase of leased equipment - - - (11,500) - (13,902) Nuclear decommissioning trust funds (11,321) (8,122) (23,292) (28,636) (41,219) (31,270) Non-utility investments (2,013) (842) (552) (1,198) (13,384) (157) Changes in current assets and liabilities (4,441) 2,312 (3,588) (2,490) 3,944 17,324 Other (3,511) 8,207 (4,592) 9,795 (24,737) (1,363) --------- --------- ---------- ---------- ---------- ----------- Net cash used for investing activities (116,030) (93,237) (212,002) (205,204) (450,591) (423,847) --------- --------- ---------- ---------- ---------- ----------- FINANCING ACTIVITIES Sale of general and refunding mortgage bonds - - - - 200,000 210,000 Funds received from Trustees: Installment sales contracts and loan agreements - 7,535 - 7,535 42,935 78,360 Increase (decrease) in short-term borrowings 3,941 (40,485) 102,388 (46,268) 49,941 91,936 Redemption of long-term debt - (7,535) (19,214) (26,749) (250,499) (689,289) Purchase of common stock - - - - (59,855) - Dividends on common and preferred stock (82,013) (83,145) (164,026) (166,288) (329,183) (332,438) 0ther (304) (427) (463) (533) (2,552) (4,767) --------- --------- ---------- ---------- ---------- ----------- Net cash used for financing activities (78,376) (124,057) (81,315) (232,303) (349,213) (646,198) --------- --------- ---------- ---------- ---------- ----------- NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS (3,904) 3,616 4,563 3,110 (1,496) (32,596) CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF THE PERIOD 16,589 10,565 8,122 11,071 14,181 46,777 --------- --------- ---------- ---------- ---------- ----------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF THE PERIOD $ 12,685 $ 14,181 $ 12,685 $ 14,181 $ 12,685 $ 14,181 ========= ========= ========== ========== ========== =========== SUPPLEMENTARY CASH FLOW INFORMATION Interest paid (excluding interest capitalized) $ 69,907 $ 67,301 $ 139,699 $ 144,784 $ 284,290 $ 309,715 Income taxes paid 76,240 66,948 76,480 69,205 190,447 203,470 New capital lease obligations 100 1,525 427 5,902 1,316 39,877 ========= ========= ========== ========== ========== ===========
See accompanying Notes to Consolidated Financial Statements (Unaudited). 6 7 THE DETROIT EDISON COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY (UNAUDITED) (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, 1994 144,863,447 $1,448,635 $545,825 $(47,461) $1,379,081 Issuance of common stock on conversion of convertible cumulative preferred stock, 5 1/2% series 19,313 193 150 (7) Net income 205,046 Cash dividends declared Common stock - $1.03 per share (149,221) Cumulative preferred stock* (14,811) ----------- ---------- -------- -------- ---------- BALANCE AT JUNE 30, 1995 144,882,760 $1,448,828 $545,975 $(47,468) $1,420,095 =========== ========== ======== ======== ==========
*At established rate for each series. See accompanying Notes to Consolidated Financial Statements (Unaudited). 7 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - ANNUAL REPORT NOTES These consolidated financial statements (unaudited) should be read in conjunction with the Quarterly Report Notes and the Annual Report Notes. The Notes contained herein update and supplement matters discussed in the Quarterly Report Notes and the Annual Report Notes. The preceding consolidated financial statements are unaudited, but, in the opinion of the Company, include all adjustments necessary for a fair statement of the results for the interim periods. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year. NOTE 2 - FERMI 2 As discussed in Note 2 of the Annual Report Notes and Note 2 of the Quarterly Report Notes, Fermi 2 was out of service in 1994. On December 25, 1993, the reactor automatically shut down following a turbine-generator failure. Major repairs were completed in 1994 and early 1995. The unit was operating at 866 MW at the end of June 1995 and the unit's capacity factor was 27.6% for the six-month period ended June 30, 1995. The Company expects that most repair costs related to returning the Fermi 2 turbine-generator to service will be covered by insurance. These costs are estimated to be approximately $80 million. The Company has received partial insurance payments of $45 million for property damage through June 30, 1995. In addition, the Company has received insurance payments of $71.5 million for replacement power costs through June 30, 1995. NOTE 3 - RATE MATTERS As discussed in Note 3 of the Annual Report Notes and Note 3 of the Quarterly Report Notes, Fermi 2 was out of service in 1994 and will operate at a reduced power output until the installation of major turbine components during the next refueling outage in 1996. Therefore, the three-year rolling average capacity factor utilized in the Fermi 2 performance standard calculation will be unfavorably affected in 1995-1998, which will result in an estimated capacity factor disallowance in the range of $40 million to $55 million. The plant's three-year rolling average capacity factor was 53.7% for 1994 utilizing a capacity of 1,093 MW for 1992 and 1993 and 1,139 MW for 1994. The three-year rolling average capacity factor for the top 50% of U.S. boiling water reactors was 78.6% for 1994. At June 30, 1995, the Company had accrued $45.7 million for the Fermi 2 capacity factor performance standard disallowances that are expected to be imposed by the MPSC during the period 1995-1998, based on the following assumptions: 8 9 a. Fermi 2 estimated three-year rolling average capacity factor of 44.4% in 1995, 34.6% in 1996, 64.1% in 1997 and 72.7% in 1998; b. Estimated three-year rolling average capacity factor for the top 50% of U.S. boiling water reactors of 79% in 1995, 79.5% in 1996, 79.5% in 1997 and 80% in 1998; c. Estimated incremental cost of replacement power of $8 per megawatthour in 1995 and increasing to $11 per megawatthour in 1998. NOTE 4 - SALE OF ACCOUNTS RECEIVABLE AND UNBILLED REVENUES As discussed in Note 5 of the Annual Report Notes and Note 4 of the Quarterly Report Notes, the Company has an agreement providing for the sale, assignment and repurchase, from time to time, of an undivided ownership interest in up to $200 million of the Company's customer accounts receivable and unbilled revenues. At December 31, 1994, customer accounts receivable and unbilled revenues in the Consolidated Balance Sheet were reduced by $200 million reflecting such sales. During the six-month period ended June 30, 1995, customer accounts receivable and unbilled revenues increased as the Company repurchased the $200 million. Therefore, at June 30, 1995, there were no sales under this agreement. NOTE 5 - COMMITMENTS AND CONTINGENCIES As discussed in Note 12 of the Annual Report Notes and in Note 5 of the Quarterly Report Notes, on October 5, 1994, the Company (a 49% co-owner of the Ludington Pumped Storage Plant) and all other parties to a 1986 state lawsuit and a related FERC proceeding reached a tentative settlement. The settlement remains contingent upon FERC and MPSC approval. FERC's decision, originally expected by the end of the summer, is not anticipated before the end of the year. As discussed in Note 12 of the Annual Report Notes, the Company and 23 other potentially responsible parties ("PRPs") have been involved since January 1989 with the Carter Industrial superfund site in Detroit, Michigan. On May 22, 1995, the U.S. District Court for the Eastern District of Michigan approved an Environmental Protection Agency ("EPA") amendment to the Record of Decision regarding the method of remediation of the site to allow removal and landfilling of the contaminated soil, which will reduce the Company's portion of the cleanup costs by $3-4 million. On July 14, 1995, the PRP group awarded a contract to complete the remediation. There continues to be the possibility that EPA may, through subsequent proceedings, require a cleanup of the sewer and sewer outfall emptying into the Detroit River. At this time, it is impossible to predict what further impact, if any, this matter will have upon the Company. 9 10 NOTE 6 - NEW ACCOUNTING STANDARD In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. This statement, which is effective for 1996 financial statements, requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The statement also requires that a loss be recognized whenever a regulator excludes all or part of an asset's cost from a company's rate base. The Company is continuing to review SFAS 121, but does not expect that the application of this statement will have a material impact on its financial position or results of operations based on the current regulatory structure in which the Company operates. ----------------------------------- This Quarterly Report on Form 10-Q, including the report of Deloitte & Touche LLP (on page 11) will automatically be incorporated by reference in the Prospectuses constituting part of the Company's Registration Statements on Form S-3 (Registration Nos. 33-30809, 33-50325, 33-53207, 33-57095 and 33-64296), Form S-4 (Registration No. 33-60333), Form S-8 (Registration No. 33-32449) and Form S-4 (Registration No. 33-57545) of DTE Holdings, Inc., filed under the Securities Act of 1933. Such report of Deloitte & Touche LLP, however, is not a "report" or "part of the Registration Statement" within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11(a) of such Act do not apply. 10 11 INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Shareholders of The Detroit Edison Company We have reviewed the accompanying consolidated balance sheet of The Detroit Edison Company and subsidiary companies as of June 30, 1995, and the related consolidated statements of income and of cash flows for the three-month, six-month and twelve-month periods then ended, and the consolidated statement of common shareholders' equity for the six-month period then ended. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with generally accepted accounting principles. The interim financial statements as of June 30, 1994, and for the three-month, six-month and twelve-month periods then ended were reviewed by other accountants whose report dated August 8, 1994 stated that they were not aware of any material modifications that should be made to those statements in order for them to be in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP Detroit, Michigan August 7, 1995 11 12 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This analysis for the three, six and twelve months ended June 30, 1995, as compared to the same periods in 1994, should be read in conjunction with the consolidated financial statements (unaudited), the accompanying Notes, the Quarterly Report Notes and the Annual Report Notes. RESULTS OF OPERATIONS Total and per share earnings for common stock increased in the three- and six-month periods due to higher electricity sales and lower operating expenses, including reduced fuel and purchased power expenses. However, operating revenues decreased due to lower PSCR clause revenues resulting from lower fuel and purchased power expenses, a reduction in revenues from interconnection sales, an additional reserve for estimated future Fermi 2 nuclear power plant performance and lower rates. The operating revenue decreases were partially offset by higher system sales. For the twelve-month period, total and per share earnings for common stock decreased due in part to a January 1994 order by the MPSC which reduced rates by $78 million annually and increased depreciation and operation expenses. In addition, accretion income decreased and amortization of the Fermi 2 nuclear power plant phase-in plan increased significantly. Also, since Fermi 2 was down for repair during 1994, the Company elected to upgrade various plant facilities, which increased maintenance expense, and also established a reserve for estimated performance disallowances in 1994-1998. The earnings drop was limited by higher system sales, lower property and Michigan Single Business tax expenses and lower interest expense on long-term debt. At June 30, 1995, the book value of the Company's common stock was $23.17 per share, an increase of $0.28 per share or 1.2% since December 31, 1994. Return on average total common shareholders' equity was 11.7% and 13.8% for the twelve months ended June 30, 1995 and 1994, respectively. The ratio of earnings to fixed charges was 3.20 and 3.31 for the twelve months ended June 30, 1995 and 1994, respectively. The ratio of earnings to fixed charges and preferred stock dividend requirements for the 1995 and 1994 twelve-month periods was 2.79 and 2.91, respectively. 12 13 OPERATING REVENUES Total operating revenues increased (decreased) due to the following factors:
Three Six Twelve Months Months Months ------ ------ ------ (Millions) Rate changes MPSC rate reduction $ -- $ (5) $ (49) Special manufacturing contracts (8) (9) (9) PSCR Clause (14) (29) (60) ------ ----- ----- (22) (43) (118) System sales volume and mix 15 32 66 Interconnection sales (1) (11) (33) Fermi 2 capacity factor performance standard reserve (see Note 3) (11) (16) (47) Other - net 2 2 (2) ------ ----- ----- Total $ (17) $ (36) $(134) ====== ===== =====
RATE CHANGES The January 1994 MPSC rate order reduced the Company's rates by $78 million annually. In keeping with the MPSC's recognition of the need for industrial customers to be competitive, the January 1994 rate reduction was allocated among the various classes of customers approximately as follows: Industrial - $43 million, Commercial - $24 million, Residential - $10 million and Governmental - $1 million. On March 23, 1995, the MPSC issued an order approving the Company's 10-year special manufacturing contracts with Chrysler Corporation, Ford Motor Company and General Motors Corporation. The revenue reductions from these contracts initially will amount to $30 million annually and increase to $50 million annually in 1999-2004, which the Company expects to offset by further reducing its operating expenses. The decreases in PSCR Clause revenues resulted from lower fuel and purchased power expenses. 13 14 kWh SALES kWh sales increased (decreased) as follows:
Three Six Twelve Months Months Months ------ ------ ------ Residential 0.4 % (0.4) % (1.4) % Commercial 2.6 1.8 2.3 Industrial 5.1 4.6 5.5 Other (includes primarily sales for resale) 4.1 2.9 (7.3) Total System 2.9 2.1 1.8 Interconnection 21.9 (12.2) (46.1) Total 4.0 1.3 (1.6)
The decreases in residential sales for the six-month and twelve-month periods were due to warmer weather in the first quarter of 1995 decreasing heating related sales while cooler weather in the third quarter of 1994 reduced cooling related sales for the twelve-month period. The increases in commercial sales reflect an improvement in economic conditions. The increases in industrial sales reflect higher sales to automotive customers and increased sales to steel and other industrial customers due to strong demand from the automotive and construction sectors and growth in exports. The increased sales to other customers for the three-month and six-month periods reflect increased load requirements of wholesale for resale customers while sales to these customers decreased for the twelve-month period. Interconnection sales decreased for the six-month and twelve-month periods due to reduced availability of energy for sale as a result of the Fermi 2 outage and warmer winter weather, and increased for the second quarter due to increased availability of energy for sale. OPERATING EXPENSES FUEL AND PURCHASED POWER Fuel and purchased power expenses increased (decreased) due to the following factors:
Three Six Twelve Months Months Months ------ ------ ------ (Millions) Net system output $ 8 $ 5 $ (15) Average unit cost (20) (45) (25) Fermi 2 business interruption insurance proceeds -- (5) (71) Other (2) (3) -- ------ ----- ------ Total $ (14) $ (48) $ (111) ====== ===== ======
14 15 Net system output and average unit costs were as follows:
Three Months Six Months Twelve Months ------------ ---------- ------------- 1995 1994 1995 1994 1995 1994 ---- ---- ---- ---- ---- ---- (Thousands of Megawatthours, "MWh") Power plant generation Fossil 10,355 10,473 20,687 21,262 41,836 41,833 Nuclear 1,078 - 1,323 - 1,323 4,122 Purchased power 1,143 1,669 2,706 3,161 6,143 4,228 ------- ------ ------ ------ ------ ------ Net system output 12,576 12,142 24,716 24,423 49,302 50,183 ======= ====== ====== ====== ====== ====== Average unit cost ($/MWh) $ 15.31 $16.87 $15.54 $17.39 $16.02 $16.52 ======= ====== ====== ====== ====== ======
Fuel and purchased power expenses decreased due to lower average fuel and purchased power unit costs primarily resulting from the use of lower-cost low sulfur western coal. For the twelve-month period, fuel and purchased power expenses also decreased due to lower net system output and the receipt of Fermi 2 business interruption insurance proceeds. Fermi 2 was out of service in 1994 as a result of a turbine-generator failure in December 1993. OTHER OPERATION Three Months Other operation expense increased due to higher postretirement health care and life insurance benefits expenses ($3.2 million), higher demand-side management expenses ($2.2 million) and higher incentive award expenses related to a shareholder value improvement plan ($1.8 million), partially offset by expenses recorded in the year-earlier period for employee reorganization expenses ($4.6 million) and lower employee retirement plan expenses ($1.3 million). Six Months Other operation expense decreased due to expenses recorded in the year-earlier period for lump sum payments to non-represented employees ($7.2 million) and for employee reorganization expenses ($4.6 million) and to lower labor ($3.0 million), retirement plan ($2.7 million) and injuries and damages ($2.3 million) expenses. These decreases were partially offset by higher postretirement health care and life insurance benefits expenses ($6.5 million), higher incentive award expenses related to a shareholder value improvement plan ($5.2 million) and higher demand-side management ($3.7 million) and sales ($3.0 million) expenses. Twelve Months Other operation expense decreased due to expenses recorded in the year-earlier period for employee reorganizations ($17.7 million), the write-off of obsolete and excess 15 16 stock material ($12.4 million), a reserve for steam purchases under the agreement with the Greater Detroit Resource Recovery Authority ($11.0 million) and lump sum payments to non-represented employees ($7.2 million), and to lower incentive awards related to a shareholder value improvement plan ($7.5 million) and lower uncollectibles ($7.1 million), injuries and damages ($6.1 million), and employee retirement plan ($4.6 million) expenses. These decreases were partially offset by higher postretirement health care and life insurance benefits ($37.0 million), nuclear plant ($9.2 million), service quality claims ($8.7 million), and demand-side management ($6.9 million) expenses. MAINTENANCE Three Months and Six Months Maintenance expense decreased due to lower storm and line clearance expenses. Twelve Months Maintenance expense increased due to higher nuclear plant expenses ($22.4 million), partially offset by lower line clearance and storm expenses ($11.6 million). DEPRECIATION AND AMORTIZATION Depreciation and amortization expense increased due to increases in plant in service and increased Fermi 2 decommissioning costs authorized by a January 1994 MPSC rate order. DEFERRED FERMI 2 AMORTIZATION Deferred Fermi 2 amortization, a non-cash item of income, was recorded beginning with the Company's purchase of the Wolverine Power Supply Cooperative, Inc.'s ownership interest in Fermi 2 in February 1990. The annual amount deferred decreases each year through 1999. AMORTIZATION OF DEFERRED FERMI 2 DEPRECIATION AND RETURN Deferred Fermi 2 depreciation and return, non-cash items of income, were recorded beginning with the implementation of the Fermi 2 rate phase-in plan in January 1988. The annual amounts deferred decreased each year through 1992. Beginning in 1993 and continuing through 1998, these deferred amounts will be amortized to operating expense as the cash recovery is realized through revenues. TAXES OTHER THAN INCOME TAXES Taxes other than income taxes decreased due to lower property, payroll and Michigan Single Business taxes. 16 17 INCOME TAXES Three Months Income taxes increased due to higher pretax income. Six Months Income taxes increased due to higher pretax income and a tax reduction recorded in the prior period related to the 1987-1988 Internal Revenue Service audit. Twelve Months Income taxes decreased due to lower pretax income, partially offset by higher prior years' federal income tax accrual, higher taxes due to the increase in amortization of deferred Fermi 2 depreciation and return and a tax reduction recorded in the prior period related to the 1987-1988 Internal Revenue Service audit. OTHER INCOME AND DEDUCTIONS OTHER INCOME AND (DEDUCTIONS) - NET Three Months and Six Months Other deductions increased in both periods due to expenses incurred in the formation of a holding company ($2.1 million) and in the six- month period due to promotional practices expenses ($7.2 million). Twelve Months Other deductions increased due to promotional practices expenses ($7.2 million), a contribution to the Detroit Edison Foundation ($5.0 million), the write-off of premiums and expenses related to the $50 million portion of 1989 Series A General and Refunding Mortgage Bonds not refinanced ($5.2 million) and expenses incurred in the formation of a holding company ($2.1 million), partially offset by the accrual for decommissioning expenses for Fermi 1 in the prior period ($7.6 million). ACCRETION INCOME Accretion income, a non-cash item of income, was recorded beginning in January 1988 to restore to income, over the period 1988-1998, losses recorded due to discounting indirect disallowances of plant costs. The annual amount of accretion income recorded decreases each year through 1998. Also, effective in January 1994, accretion income decreased due to the return to rate base of Greenwood Unit No. 1. 17 18 INTEREST CHARGES LONG-TERM DEBT Interest expense on long-term debt decreased due to the early redemption and refinancing of securities when economic and the redemption of maturing securities. OTHER Other interest expense decreased due to expense recorded in the year-earlier period for prior years' Michigan Single Business Tax audits and the settlement of 1987 and 1988 federal income tax audits. LIQUIDITY AND CAPITAL RESOURCES CASH GENERATION AND CASH REQUIREMENTS CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Net cash from operating activities decreased due to changes in current assets and liabilities, primarily as a result of the repurchase of $200 million of customer accounts receivable and unbilled revenues under the agreement for the sale, assignment and repurchase from time to time of the Company's customer accounts receivable and unbilled revenues, and for the twelve-month period, lower net income. Net cash used for investing activities was higher in the three-month period due primarily to increased funding of utility investments and the nuclear decommissioning trust funds. Net cash used for investing activities was higher in the six-month period due to increased funding of utility investments and higher plant and equipment expenditures, partially offset by purchases of leased equipment in the prior period. Net cash used for investing activities was higher in the twelve-month period due to increased funding of utility and non-utility investments and nuclear decommissioning trust funds, partially offset by lower plant and equipment expenditures and purchases of leased equipment in the prior period. Net cash used for financing activities decreased due to reduced activity in the Company's extensive debt refinancing program, partially offset in the twelve-month period by the one-time purchase of common stock from the trustee of the Detroit Edison Savings & Investment Plans as a result of a plan change. ADDITIONAL INFORMATION The Company's 1995 cash requirements for its capital expenditure program are estimated at $422 million, of which $177 million had been expended as of June 30, 1995. 18 19 The Company's internal cash generation in 1995 is expected to be sufficient to meet cash requirements for capital expenditures as well as scheduled redemptions not subject to refinancing. The Company had short-term credit arrangements of approximately $409 million at June 30, 1995, under which $142 million of borrowings were outstanding. CAPITALIZATION The Company's capital structure as of June 30, 1995 was 44.6% common shareholders' equity, 5.0% preferred stock and 50.4% long-term debt as compared to 44.2%, 5.0% and 50.8%, respectively, at December 31, 1994. COMPETITION On March 29, 1995, the FERC issued a Notice of Proposed Rulemaking on Promoting Wholesale Competition Through Open Access Non-discriminatory Transmission Services by Public Utilities. According to the FERC, the goals of the new rules are to facilitate the development of a competitive market by insuring that wholesale buyers and sellers can reach each other and to eliminate anticompetitive and discriminatory practices in transmission services which, in turn, should lead to lower electric rates. During June 1995, the Staff of the MPSC issued a discussion draft entitled, PROPOSAL "M" A MICHIGAN PLAN FOR FLEXIBLE AND COMPETITIVE ENERGY UTILITY SERVICES. Discussions are proceeding as to the development of a new Michigan energy regulatory framework. JULY 13-16, 1995 STORMS On July 13, 15 and 16, severe weather conditions damaged property within the Company's service area and caused numerous customer outages. It is estimated that the total cost associated with this severe weather will be approximately $25-30 million. The Company has storm insurance which provides for coverage after incurring costs of $10 million for a storm. The Company will be filing a claim for costs incurred as a result of the severe weather. At this time, the Company is unable to predict how much will ultimately be recovered from insurance. Since the Company will not recover all of the storm costs, earnings for the third quarter of 1995 will be negatively impacted by the storms. 19 20 PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS. SEE NOTE 5. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. (a) The annual meeting of the holders of Common Stock of the Company was held on April 24, 1995. Proxies for the meeting were solicited pursuant to Regulation 14(a). (b) There was no solicitation in opposition to the Board of Directors' nominees, as listed in the proxy statement, for directors to be elected at the meeting and all such nominees were elected. The terms of the previously elected nine directors listed below continue until the annual meeting dates shown after each name: Lillian Bauder April 22, 1996 David Bing April 22, 1996 Larry G. Garberding April 22, 1996 Alan E. Schwartz April 22, 1996 William Wegner April 22, 1996 John E. Lobbia April 28, 1997 Patricia S. Longe April 28, 1997 Eugene A. Miller April 28, 1997 Dean E. Richardson April 28, 1997 (c) At the annual meeting of the holders of Common Stock of the Company held on April 24, 1995, the following four directors were elected to serve until the 1998 annual meeting with the votes shown:
Total Vote Total Vote Withheld for Each From Each Director Director ---------- --------- Terence E. Adderley 113,508,494 2,872,751 Anthony F. Earley, Jr. 113,494,737 2,886,766 Allan D. Gilmour 113,516,707 2,866,583 Theodore S. Leipprandt 113,433,908 2,947,382
Shareholders ratified the appointment of Deloitte & Touche LLP as the Company's independent accountants for the year 1995 with the votes shown:
For Against Abstain ----------- --------- --------- 113,090,661 1,371,522 1,919,649
20 21 Shareholders also voted on the two items below: (1) An agreement and plan of exchange which will result in Detroit Edison becoming a subsidiary of a newly formed holding company, and in the shareholders of Detroit Edison becoming shareholders of the holding company.
For Against Abstain ----------- --------- --------- 106,204,308 5,705,957 4,471,567
(2) A Long-Term Incentive Plan
For Against Abstain ---------- ---------- ---------- 92,572,687 19,929,759 3,879,386
(d) Not applicable. ITEM 5 - OTHER INFORMATION. As discussed in Part I, Items 1 and 2 - Business Properties, "Environmental Matters - Wastes and Toxic Substances" of the Annual Report, a nationwide environmental problem is the discovery of improperly disposed of hidden or buried hazardous wastes. The Company has been found responsible for cleanup of wastes found on its property, even in cases where the dumping occurred without the Company's knowledge or permission. On June 5, 1995, Governor John Engler signed P.A. 71 of 1995, which amended the Michigan Environmental Response Act, now part of the Natural Resources and Environmental Protection Act. Among other changes, P.A. 71 amended the liability standards to hold a person liable for remediation only if they are responsible for an activity causing a release of a substance to the environment. Since the previous standard of liability was simply ownership of the property, the Company believes the amendment will remove deterrences to development in its service territory and more fairly allocate cleanup costs to those responsible. However, companies are still liable under federal law. As discussed in Part I, Items 1 and 2 - Business and Properties, "Regulation and Rates - Michigan Public Service Commission - Competitive Bidding" of the Annual Report, on May 1, 1995, the Company filed its preliminary Request for Proposal ("RFP") to solicit bids for the acquisition of new capacity starting in the year 2004. The filing describes Detroit Edison's future requirements for additional generating capacity and addresses the role competitive bidding will play in meeting that capacity need. To better serve its customers in an increasingly competitive marketplace, the Company is proposing customer load management options which have the potential to provide an additional 500 MW of peak reduction by the year 2003. The Company also filed, as required by Commission order, a proposed retail wheeling tariff and proposal for implementing the retail wheeling program. 21 22 As discussed in Part I, Items 1 and 2 - Business and Properties, "Regulation and Rates - Michigan Public Service Commission - Retail Wheeling" of the Annual Report, the MPSC has been considering the propriety of an experimental retail wheeling program. On May 8, 1995, the U.S. District Court, Western District of Michigan, Southern Division, issued an order granting the MPSC's Motion to Dismiss the Company's declaratory judgment action in connection with the MPSC's April 11, 1994 interim order. On June 19, 1995, the MPSC issued a final order finding that an experimental retail wheeling program is in the public interest and establishing rates and charges for the five-year experimental program. Under the program, retail wheeling customers would make their own arrangements to procure power. Implementation of the experimental program would be limited to 90 MW for Detroit Edison and will be coordinated with the Company's next solicitation of new capacity. On July 14, 1995, the Company filed testimony supporting its proposal for implementing the MPSC's experimental retail wheeling program including requirements for collecting data and evaluating the experiment. The Company's identified need date for new capacity is 2004. On July 19, 1995, the Company filed a claim of appeal with the Michigan Court of Appeals. Also, on July 19, 1995, Consumers, ABATE and Dow Chemical Company filed petitions for rehearing and/or clarification of the June 19, 1995 order with the MPSC. On July 21, 1995, ABATE filed a letter with the Michigan Court of Appeals seeking to dismiss the Company's appeal until such time as the MPSC acts on the petitions. As discussed in Part I, Items 1 and 2 - Business and Properties, "Regulation and Rates - Nuclear Regulatory Commission" of the Annual Report and in Item 5 - Other Information of the Quarterly Report, on May 18, 1994, the NRC issued the fourteenth Systematic Assessment of Licensee Performance ("SALP") report on Fermi 2 operations. The next SALP period is expected to end in March 1996. An all time high peak demand of 9,878 MW was experienced for the Company's system on June 19, 1995, with a reserve margin of 4.2%. The previous peak was 9,684 MW set in June 1994. Based on the current load forecast and planned generating capability, the Company estimates that its summer reserve margin, expressed as a percentage of peak demand, will be approximately 17% for 1996 and 15% for 1997. Included as part of the 1996 and 1997 reserve margin projections are the Company's present and projected capacity purchases and anticipated peak reductions due to the implementation of various demand-side management programs, including the R-10 interruptible rate. The 1996 and 1997 reserve margins are above the Company's current planning criterion, which specifies a minimum reserve margin of 12%. 22 23 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (i) Exhibits filed herewith. Exhibit Number ------- 10-61 - Plan for Deferring the Payment of Directors' Fees (June 1995). 10-62 - Retirement Plan for Non-Employe Directors (June 1995). 10-63 - Savings Reparation Plan (June 1995). 10-64 - Retirement Reparation Plan (June 1995). 10-65 - Benefit Equalization Plan (June 1995). 10-66 - Management Supplemental Benefit Plan (June 1995). 11-23 - Primary and Fully Diluted Earnings Per Share of Common Stock. 15-59 - Awareness Letter of Deloitte & Touche LLP regarding their report dated August 7, 1995. 27-4 - Financial Data Schedule for the period ended June 30, 1995. 99-29 - Irrevocable Grantor Trust with respect to Savings Reparation Plan (July 1995). 99-30 - Irrevocable Grantor Trust with respect to Retirement Reparation Plan (July 1995). 99-31 - Irrevocable Grantor Trust with respect to Benefit Equalization Plan (July 1995). 99-32 - Irrevocable Grantor Trust with respect to the Management Supplemental Benefit Plan (July 1995). (ii) Exhibits incorporated herein by reference. 4(a) - Restated Articles of Incorporation of the Company, as filed December 10, 1991 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-117 to Form 10-Q for quarter ended March 31, 1993). 23 24 Exhibit Number ------ 4(b) - Certificate containing resolution of the Board of Directors establishing the Cumulative Preferred Stock, 7.75% Series as filed February 22, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-134 to Form 10-Q for quarter ended March 31, 1993). 4(c) - Certificate containing resolution of the Board of Directors establishing the Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-140 to Form 10-Q for quarter ended March 31, 1993). 4(d) - By-Laws of the Company as amended November 25, 1991 (Exhibit 4-118 to Form 10-K for year ended December 31, 1991). 4(e) - Mortgage and Deed of Trust, dated as of October 1, 1924, between the Company (File No. 1-2198) and Bankers Trust Company as Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings as set forth below: September 1, 1947 Exhibit B-20 to Registration No. 2-7136 October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096 November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160 January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595 June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643 June 30, 1982 Exhibit 4-30 to Registration No. 2-78941 August 15, 1982 Exhibit 4-32 to Registration No. 2-79674 October 15, 1985 Exhibit 4-170 to Form 10-K for year ended December 31, 1994 November 30, 1987 Exhibit 4-139 to Form 10-K for year ended December 31, 1992 July 15, 1989 Exhibit 4-171 to Form 10-K for year ended December 31, 1994 December 1, 1989 Exhibit 4-172 to Form 10-K for year ended December 31, 1994 February 15, 1990 Exhibit 4-173 to Form 10-K for year ended December 31, 1994 November 1, 1990 Exhibit 4-110 to Form 10-K for year ended December 31, 1990 April 1, 1991 Exhibit 4-111 to Form 10-Q for quarter ended March 31, 1991
24 25
Exhibit Number ------ May 1, 1991 Exhibit 4-112 to Form 10-Q for quarter ended June 30, 1991 May 15, 1991 Exhibit 4-113 to Form 10-Q for quarter ended June 30, 1991 September 1, 1991 Exhibit 4-116 to Form 10-Q for quarter ended September 30, 1991 November 1, 1991 Exhibit 4-119 to Form 10-K for year ended December 31, 1991 January 15, 1992 Exhibit 4-120 to Form 10-K for year ended December 31, 1991 February 29, 1992 Exhibit 4-121 to Form 10-Q for quarter ended March 31, 1992 April 15, 1992 Exhibit 4-122 to Form 10-Q for quarter ended June 30, 1992 July 15, 1992 Exhibit 4-123 to Form 10-Q for quarter ended September 30, 1992 July 31, 1992 Exhibit 4-124 to Form 10-Q for quarter ended September 30, 1992 November 30, 1992 Exhibit 4-130 to Registration No. 33-56496 January 1, 1993 Exhibit 4-131 to Registration No. 33-56496 March 1, 1993 Exhibit 4-141 to Form 10-Q for quarter ended March 31, 1993 March 15, 1993 Exhibit 4-142 to Form 10-Q for quarter ended March 31, 1993 April 1, 1993 Exhibit 4-143 to Form 10-Q for quarter ended March 31, 1993 April 26, 1993 Exhibit 4-144 to Form 10-Q for quarter ended March 31, 1993 May 31, 1993 Exhibit 4-148 to Registration No. 33-64296 June 30, 1993 Exhibit 4-149 to Form 10-Q for quarter ended June 30, 1993 (1993 Series AP) June 30, 1993 Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993 Series H) September 15, 1993 Exhibit 4-158 to Form 10-Q for quarter ended September 30, 1993 March 1, 1994 Exhibit 4-163 to Registration No. 33-53207 June 15, 1994 Exhibit 4-166 to Form 10-Q for quarter ended June 30, 1994 August 15, 1994 Exhibit 4-168 to Form 10-Q for quarter ended September 30, 1994 December 1, 1994 Exhibit 4-169 to Form 10-K for year ended December 31, 1994
25 26
Exhibit Number ------ 4(f) - Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325). 4(g) - First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration No. 33-50325). 4(h) - Second Supplemental Note Indenture, dated as of September 15, 1993 (Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993). 4(i) - Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994). 4(j) - Standby Note Purchase Credit Facility, dated as of August 17, 1994, among The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative Agent, Bank of America, The Bank of New York, The Fuji Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents (Exhibit 99-18 to Form 10-Q for quarter ended September 30, 1994). 99(a) - Belle River Participation Agreement between the Company and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-5 to Registration No. 2-81501). 99(b) - Belle River Transmission Ownership and Operating Agreement between the Company and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501.) 99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance Energy Company (an unaffiliated company) ("Renaissance") and the Company (Exhibit 99-6 to Registration No. 33-50325). 99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between the Company and Renaissance (Exhibit 99-7 to Registration No. 33-50325). 99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between the Company and Renaissance (Exhibit 99-8 to Registration No. 33-50325).
26 27
Exhibit Number ------- 99(f) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between The Detroit Edison Company and Renaissance Energy Company (Exhibit 99-21 to Form 10-Q for quarter ended September 30, 1994). 99(g) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among the Company, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-12 to Registration No. 33-50325). 99(h) - First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for quarter ended September 30, 1994). 99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among the Company, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325). 99(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between the Company and Renaissance (Exhibit 99-9 to Registration No. 33-50325). 99(k) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between the Company and Renaissance (Exhibit 99-10 to Registration No. 33-50325). 99(l) - Second Amendment, dated as of September 1, 1993, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract between the Company and Renaissance (Exhibit 99-11 to Registration No. 33-50325). 99(m) - First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q for quarter ended September 30, 1994).
27 28 (b) Reports on Form 8-K The Company did not file any Reports on Form 8-K during the second quarter of 1995. 28 29 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE DETROIT EDISON COMPANY -------------------------------------- (Registrant) Date August 7, 1995 /s/ SUSAN M. BEALE -------------------------------------- Susan M. Beale Vice President and Corporate Secretary Date August 7, 1995 /s/ RONALD W. GRESENS -------------------------------------- Ronald W. Gresens Vice President and Controller 29 30 THE DETROIT EDISON COMPANY QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995 EXHIBIT INDEX FILE NO. 1-2198 Page No. (i) Exhibits filed herewith. Exhibit Number ------ 10 - 61 Plan for Deferring the Payment of Directors' Fees (June 1995). 10 - 62 Retirement Plan for Non-Employe Directors (June 1995). 10 - 63 Savings Reparation Plan (June 1995). 10 - 64 Retirement Reparation Plan (June 1995). 10 - 65 Benefit Equalization Plan (June 1995). 10 - 66 Management Supplemental Benefit Plan (June 1995). 11 - 23 Primary and Fully Diluted Earnings Per Share of Common Stock. 15 - 59 Awareness Letter of Deloitte & Touche LLP regarding their report dated August 7, 1995. 27 - 4 Financial Data Schedule for the period ended June 30, 1995. 99 - 29 Irrevocable Grantor Trust with respect to Savings Reparation Plan (July 1995). 99 - 30 Irrevocable Grantor Trust with respect to Retirement Reparation Plan (July 1995). 99 - 31 Irrevocable Grantor Trust with respect to Benefit Equalization Plan (July 1995). 99 - 32 Irrevocable Grantor Trust with respect to Management Supplemental Benefit Plan (July 1995). 31 See Page Nos. _____ through _____ for location of Exhibits Incorporated by Reference ------------- (ii) Exhibits incorporated hereby by reference. 4 (a) - Restated Articles of Incorporation of the Company, as filed December 10, 1991 with the State of Michigan. 4 (b) - Certificate containing resolution of the Board of Directors establishing the Cumulative Preferred Stock, 7.75% Series, as filed February 22, 1993 with the State of Michigan. 4 (c) - Certificate containing resolution of the Board of Directors establishing the Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the State of Michigan. 4 (d) - By-Laws of the Company as amended November 25, 1991. 4 (e) - Mortgage and Deed of Trust, dated as of October 1, 1924, between the Company and Bankers Trust Company as Trustee and indentures supplemental thereto, dated as of dates indicated below: September 1, 1947 October 1, 1968 November 15, 1971 January 15, 1973 June 1, 1978 June 30, 1982 August 15, 1982 October 15, 1985 November 30, 1987 July 15, 1989 December 1, 1989 February 15, 1990 November 1, 1990 April 1, 1991 May 1, 1991 May 15, 1991 September 1, 1991 2 32 November 1, 1991 January 15, 1992 February 29, 1992 April 15, 1992 July 15, 1992 July 31, 1992 November 30, 1992 January 1, 1993 March 1, 1993 March 15, 1993 April 1, 1993 April 26, 1993 May 31, 1993 June 30, 1993 (1993 Series AP) June 30, 1993 (1993 Series H) September 15, 1993 March 1, 1994 June 15, 1994 August 15, 1994 December 1, 1994 4 (f) - Collateral Trust Indenture (Notes), dated as of June 30, 1993. 4 (g) - First Supplemental Note Indenture, dated as of June 30, 1993. 4 (h) - Second Supplemental Note Indenture, dated as of September 15, 1993. 4 (i) - Third Supplemental Note Indenture, dated as of August 15, 1994. 4 (j) - Standby Note Purchase Credit Facility, dated as of August 17, 1994, among The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative Agent, Bank of America, The Bank of New York, The Fuji Bank Limited, The Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents. 99(a) - Belle River Participation Agreement between the Company and Michigan Public Power Agency, dated as of December 1, 1982. 99(b) - Belle River Transmission Ownership and Operating Agreement between the Company and Michigan Public Power Agency, dated as of December 1, 1982. 3 33 99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance Energy Company (an unaffiliated company) ("Renaissance") and the Company. 99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between the Company and Renaissance. 99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between the Company and Renaissance. 99(f) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between The Detroit Edison Company and Renaissance Energy Company. 99(g) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among the Company, Renaissance and Barclays Bank PLC, New York Branch, as Agent. 99(h) - First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(i) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among the Company, Renaissance and Barclays Bank PLC, New York Branch, as Agent. 99(j) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between the Company and Renaissance. 99(k) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between the Company and Renaissance. 4 34 99(l) - Second Amendment, dated as of September 1, 1993, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract between the Company and Renaissance. 99(m) - First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 5 EX-10.61 2 EX-10.61 1 EXHIBIT 10.61 SECOND RESTATEMENT OF THE DETROIT EDISON COMPANY PLAN FOR DEFERRING THE PAYMENT OF DIRECTORS' FEES The Detroit Edison Company Plan for Deferring the Payment of Directors' Fees (the "Plan") established by The Detroit Edison Company (the "Company) as amended and restated effective January 23, 1995, is hereby amended and restated as of June 26, 1995, by this Second Restatement. SECTION I - PURPOSE The purpose of The Detroit Edison Company Plan for Deferring the Payment of Directors' Fees (the "Plan") is to enable each Director to defer all or a portion of his or her fees for future services as a member of the Board of Directors or as a member of any committee thereof. SECTION II - ELIGIBILITY Any Director of the Company who is not a Company employe shall be eligible to participate in the Plan. SECTION III - ELECTION, MODIFICATION, AND TERMINATION PROCEDURES Any Director wishing to participate in the Plan must file with the Corporate Secretary of the Company at 2000 Second Avenue, Detroit, MI 48226, a written Notice of Election on the form attached as Exhibit "A" to defer payment of all or a portion of his or her Director's fees. Such an election to participate in the Plan must be made prior to the beginning of the month for which fees are payable. An effective election with respect to Directors' fees that have been deferred under the terms of this Plan and fees that have already been earned may not be modified or revoked. An effective election with regard to fees that have not been deferred or earned may be modified by filing a new Notice of Election or may be terminated by filing a Notice of Termination on the form attached as Exhibit "B". A Director who shall have terminated an effective election may thereafter file a new election covering a subsequent period. 2 SECTION IV - ESTABLISHMENT AND ADMINISTRATION OF DEFERRED DIRECTORS' FEE ACCOUNT The amount of any Director's fees deferred in accordance with an election shall be credited to a deferred Director's fee account maintained by the Company. Such account shall remain a part of the general funds of the Company, and nothing contained in this Plan shall be deemed to create a trust or fund of any kind or create any fiduciary relationship. As of the last day of each month for each Director participating in this Plan, the deferred Director's fee account for such Director shall be adjusted as follows: (a) The account shall first be charged with any distributions made during the month. (b) The account balance shall then be credited with interest for that month. Commencing January 1, 1995, such interest shall be computed by multiplying the applicable portion of the account balance after the adjustment provided for in Subsection (a) of this Section by a fraction, the numerator of which is the 5-Year United States Treasury Bond rate, as reported in The Wall Street Journal as of the last business day of each month, and the denominator of which is 12. (c) Finally, the account shall be credited with the amount, if any, of Director's fees deferred during that month. A separate record of deferred Director's fees and applicable interest shall be maintained by the Company for each participant in this Plan. SECTION V - PAYMENT OF DEFERRED DIRECTORS' FEES Deferred fees shall be paid to a Director or, in the event of death, to his or her designated beneficiary in accordance with the Notice of Election and Beneficiary Designation forms that have been filed with the Corporate Secretary of the Company. If a Director elects to receive payment of his or her deferred fees in installments rather than in a lump sum, the payment period shall not exceed ten years following the payment commencement date. The amount of any installment payment shall be determined by multiplying the balance of the Director's unpaid deferred fees and applicable interest on the date of such installment by a fraction, the numerator of which is one and the denominator of which is the number of remaining unpaid installments. Such balance shall be appropriately reduced to reflect the installment payments made hereunder. 2 3 SECTION VI - WHEN PAYMENT OF DEFERRED DIRECTORS' FEES COMMENCES The payment in a lump sum or installments of amounts deferred pursuant to an election under this Plan shall commence on January 15 of the first year to which payment has been deferred and shall be paid in accordance with the terms of such election. If a Director shall die prior to the first year to which payment has been deferred, such payment shall commence on January 15 of the calendar year immediately following the year of death and shall be paid in the manner specified in such election. In the event a participating Director receives an assessment of income taxes from the Internal Revenue Service which treats any amount payable under this Plan as being includible in such Director's gross income prior to the actual payment of such amount to such Director, the Company shall pay an amount equal to such income taxes to such Director within 30 days after written notice from such Director of such assessment, and such Director's fee account shall be reduced by an amount equal to such income taxes. Each payment under this Plan shall be reduced by any federal, state, or local taxes which the Company determines should be withheld from such payment. Benefits under this Plan shall be payable solely from the general assets of the Company. Each participant in this Plan shall have the status of a general unsecured creditor of the Company. This Plan constitutes a promise by the Company to make benefit payments in the future. It is intended that this Plan be unfunded for tax purposes and that this Plan shall remain unfunded for the entire period of its existence. SECTION VII - DESIGNATION OF BENEFICIARY Each Director, on becoming a participant, shall file with the Corporate Secretary of the Company a beneficiary designation on the form attached as Exhibit "C" form designating one or more beneficiaries to whom payments otherwise due the participant shall be made in the event of his or her death while serving as a Director or after leaving the Board. A beneficiary designation will be effective only if the signed beneficiary designation form is filed with the Corporate Secretary of the Company while the Director is alive, and will cancel all beneficiary designations signed and filed previously. If the primary beneficiary shall survive the Director but dies before receiving all the amounts due hereunder, the deferred amounts remaining unpaid at the time of death shall be paid in one lump sum to the legal representative of the primary beneficiary's estate. If the primary beneficiary shall predecease the Director, amounts remaining unpaid at the time of the Director's death shall be paid in the order specified by the Director to the contingent beneficiary(s) surviving the Director. If the contingent beneficiary(s) dies before receiving all the amounts due hereunder, the unpaid amount shall be paid in one lump sum to the legal representative of such contingent beneficiary(s) estate. If the Director shall fail to designate a beneficiary(s) as provided in this Section, or if all designated beneficiaries shall predecease the Director, the deferred amounts remaining 3 4 unpaid at the time of such Director's death shall be paid in one lump sum to the legal representative of the Director's estate. SECTION VIII - NON-ALIENABILITY AND NON-TRANSFERABILITY No Director, beneficiary designated by the Director, or creditors of the Director shall have any right to, directly or indirectly, anticipate, alienate, sell, transfer, assign, pledge, encumber, attach, or garnish any amount that is or may be payable hereunder. SECTION IX - ADMINISTRATION OF PLAN; ARBITRATION (a) Full power and authority to construe, interpret, and administer the Plan shall be vested in the Nominating Committee. Decisions of the Nominating Committee shall be final, conclusive, and binding upon all parties. (b) Notwithstanding Section IX(a) hereof, in the event of any dispute, claim, or controversy (hereinafter referred to as a "Grievance") between a Director who is eligible to elect to receive the benefits provided under this Plan and the Company with respect to the payment of benefits to such Director under this Plan, the computation of benefits under this Plan, or any of the terms and conditions of this Plan, such Grievance shall be resolved by arbitration in accordance with this Section IX(b). (1) Arbitration shall be the sole and exclusive remedy to redress any Grievance. (2) The arbitration decision shall be final and binding, and a judgment on the arbitration award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms. (3) The arbitration shall be conducted by the American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association and expenses of the arbitrators and the American Arbitration Association shall be borne by the Company. Neither the Company nor such Director shall be entitled to attorneys' fees, expert witness fees, or other expenses expended in the course of such arbitration or the enforcement of any award rendered thereunder. (4) The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit Metropolitan area, Michigan. (5) The arbitrator(s) shall not have the jurisdiction or authority to change any of the provisions of this Plan by alteration of, addition 4 5 to, or subtraction from the terms thereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Since arbitration is the exclusive remedy with respect to any Grievance, no Director eligible to receive benefits provided under this Plan has the right to resort to any federal court, state court, local court, or administrative agency concerning breaches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court or administrative agency by such Director or the Company with respect to any Grievance which is arbitrable as herein set forth. (6) The arbitration provisions shall, with respect to any Grievance, survive the termination of this Plan. SECTION X - AMENDMENT OR TERMINATION OF PLAN The Board of Directors may amend or terminate this Plan at any time. Any amendment or termination of this Plan shall not affect the rights of participants or beneficiaries to the amounts in the deferred Directors' fee accounts at the time of such amendment or termination. SECTION XI - APPLICABLE LAW The provisions of this Plan shall be interpreted and construed in accordance with the laws of the State of Michigan. 5 EX-10.62 3 EX-10.62 1 EXHIBIT 10.62 SECOND RESTATEMENT OF THE DETROIT EDISON COMPANY RETIREMENT PLAN FOR NON-EMPLOYE DIRECTORS The Detroit Edison Company Retirement Plan For Non-Employe Directors (the "Plan"), established by The Detroit Edison Company (the "Company") effective January 1, 1990, as amended and restated on February 27, 1995, is hereby amended and restated as of June 26, 1995, by this Second Restatement. 1. PURPOSE This Plan is to provide a retirement allowance for service as a director while not an employe. 2. ELIGIBILITY This Plan provides a monthly retirement allowance to each director ("participant") who has served (a) on the Board as a director for five or more years and (b) as a non-employe director at any time on or after January 1, 1990. 3. AMOUNT AND PAYMENTS OF DISTRIBUTIONS (a) The monthly retirement allowance will be equal to one-twelfth (1/12th) of the annual retainer (not including Board meeting, Board committee meeting, or Company-related meeting fees) in effect on the date of the participant's termination of service on the Board. (b) Payments shall be made monthly commencing with the month following such participant's termination of service on the Board. (c) In the event a participant receives an assessment of income taxes from the Internal Revenue Service which treats any amounts payable under this Plan as being includible in such participant's gross income prior to the actual payment of such amount to such participant, the Company shall pay an amount equal to such income taxes to such participant within 30 days after written notice from such participant of such assessment. The amount of the monthly retirement allowance which would otherwise be paid following such participant's termination of service on the Board shall be reduced, dollar for dollar, starting with the first such payment, by the 2 amount of income taxes previously advanced to the participant hereunder, until such amount has been fully recovered by the Company. (d) Each payment under this Plan shall be reduced by any federal, state, or local taxes which the Company determines should be withheld from such payment. (e) Benefits under this Plan should be payable solely from the general assets of the Company. Each participant in this Plan shall have a status of a general unsecured creditor of the Company. This Plan constitutes a promise by the Company to make benefit payments in the future. It is intended that this Plan be unfunded for tax purposes and that this Plan shall remain unfunded during the entire period of its existence. 4. DURATION The monthly retirement allowance payments will continue for a period equal to the number of months served on the Board while not an employe, or until the participant's death, whichever occurs first. In the event of death prior to the conclusion of scheduled payments under this Plan, any and all liability of the Company under this Plan is terminated. The participant's estate shall have no rights hereunder. There is no allowance to a surviving spouse or other beneficiary. 5. SUSPENSION OF PAYMENTS Payment of the retirement allowance to a participant who is again elected to the Board will be suspended. Any future allowance will be recalculated based on the annual retainer in effect at the time of the participant's subsequent termination of service on the Board. The duration of payments will be determined by the cumulative number of whole months served on the Board minus the number of retirement allowance payments received prior to re-election of the Board. 6. NON-ALIENATION OF BENEFITS The right of a participant to payment of a retirement allowance hereunder shall not be anticipated, alienated, sold, assigned, transferred, pledged, encumbered, attached, or garnished by a participant or a participant's creditors and shall not be subject to garnishment, execution, attachment, or similar process. Any attempted anticipation, sale, assignment, transfer, pledge, levy, encumbrance, attachment, garnishment, or similar process shall be null and void and without effect. 2 3 7. ADMINISTRATION; ARBITRATION (a) This Plan shall be administered by the Nominating Committee of the Board of Directors (the "Nominating Committee"), who shall have full power and authority to make each determination provided for in this Plan, to interpret this Plan, and to establish rules, regulations, and procedures for carrying out its purpose. (b) The Secretary of the Company shall be responsible for recordkeeping under this Plan and shall also be responsible for making all payments provided for by this Plan. (c) Notwithstanding Section 7(a) hereof, in the event of any dispute, claim, or controversy (hereinafter referred to as a "Grievance") between a director who is eligible to elect to receive the benefits provided under this Plan and the Company with respect to the payment of benefits to such director under this Plan, the computation of benefits under this Plan, or any of the terms and conditions of this Plan, such Grievance shall be resolved by arbitration in accordance with this Section 7(c). (1) Arbitration shall be the sole and exclusive remedy to redress any Grievance. (2) The arbitration decision shall be final and binding, and a judgment on the arbitration award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms. (3) The arbitration shall be conducted by the American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association and expenses of the arbitrators and the American Arbitration Association shall be borne by the Company. Neither the Company nor such director shall be entitled to attorneys' fees, expert witness fees, or other expenses expended in the course of such arbitration or the enforcement of any award rendered thereunder. (4) The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit Metropolitan area, Michigan. (5) The arbitrator(s) shall not have the jurisdiction or authority to change any of the provisions of this Plan by alteration of, addition to, or subtraction from the terms thereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Since arbitration is the exclusive remedy with respect to any Grievance, no director eligible to receive benefits provided under this Plan has the 3 4 right to resort to any federal court, state court, local court, or any administrative agency concerning breaches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court or administrative agency by such director or the Company with respect to any Grievance which is arbitrable as herein set forth. (6) The arbitration provisions shall, with respect to any Grievance, survive the termination of this Plan. (d) This Plan is a non-contributory, non-qualified and unfunded plan and represents only an unsecured general obligation of the Company. 8. AMENDMENT OR TERMINATION The Company reserves the right to amend, modify, supplement, suspend or terminate the Plan at any time, provided, however, that no such amendment, modification, supplement, or termination shall affect the right of any participant who is immediately eligible to receive an allowance hereunder to receive benefits theretofore accrued. 4 EX-10.63 4 EX-10.63 1 EXHIBIT 10.63 SECOND RESTATEMENT OF THE DETROIT EDISON COMPANY SAVINGS REPARATION PLAN The Detroit Edison Company Savings Reparation Plan (the "Plan"), established by The Detroit Edison Company (the "Company") effective May 22, 1989, as amended and restated effective June 27, 1994, is hereby amended and restated as of June 26, 1995, by this Second Restatement. SECTION 1 - PURPOSE The purpose of this Plan is to offer a retirement savings alternative for those executives whose permissible contributions to The Detroit Edison Company Savings & Investment Plan (hereinafter the "Savings & Investment Plan" and "Plan") are subject to the compensation limitation of Section 401(a)(17) of the Internal Revenue Code. The benefits provided under this Plan to any individual shall be separate from and in addition to any benefit provided under the Savings & Investment Plan and any other plan or program maintained by the Company. The amount of benefit under this Plan is to be determined solely in accordance with Section 4 hereof and is not dependent or conditioned on participation in the Savings & Investment Plan. Therefore, this Plan is not intended to and shall not be construed so as to provide the same dollar-for-dollar benefit as a participant would have received under the Savings & Investment Plan if contributions had not been limited by Section 401(a)(17), nor is this Plan intended to compensate an employe for the benefit loss which results if the employe elects not to participate in the Savings & Investment Plan to the full extent permitted thereunder. SECTION 2 - ELIGIBILITY Persons whose benefits under the Savings & Investment Plan are subject to limitation by the provisions set forth therein to conform to Section 401(a)(17) of the Internal Revenue Code shall be eligible to elect to participate and receive the benefits provided under this Plan. However, if an eligible employe hereunder obtains a hardship distribution under the Savings & Investment Plan, his or her right to elect to participate hereunder shall be suspended for twelve months after receipt of the hardship distribution. In no event shall a person who is not eligible to participate in the Savings & Investment Plan be eligible to elect to participate and receive the benefits provided under this Plan. 1 2 SECTION 3 - PARTICIPATION AND AMOUNT OF BENEFITS (a) Any employe who is eligible to elect to receive the benefits provided under this Plan may participate in this Plan by irrevocably electing to defer 1% to 10% of his or her Basic Compensation, as defined in the Savings & Investment Plan, in excess of the compensation limitations of Section 401(a)(17) of the Internal Revenue Code. Deferrals must be made in whole percents. The amount by which an employe's Basic Compensation exceeds the compensation limitations of Section 401(a)(17) shall hereinafter be referred to as "excess basic compensation". The amount of compensation which the employe defers hereunder shall hereinafter be referred to as "deferred excess basic compensation". An election to defer a percentage of excess basic compensation will become effective on January 1 of the calendar year subsequent to the calendar year during which the election is received by the Administrator. An election to defer a percentage of excess basic compensation will remain in effect until an election to change the percentage of excess basic compensation deferred or a revocation of the election becomes effective. An election to change the percentage of excess basic compensation deferred or a revocation of an election to defer a percentage of excess basic compensation will become effective on January 1 of the calendar year subsequent to the calendar year during which the election to change the percentage of excess basic compensation deferred or the revocation of the election is received by the Administrator. All elections and revocations of elections must be made on forms provided by the Company and will become effective only after they are received by the Administrator. In no event shall an employe be permitted to elect to defer excess basic compensation, to elect to change the percentage of excess basic compensation deferred, or to revoke an election to defer excess basic compensation which has already been earned by the employe. The actual deferral of deferred excess basic compensation will not commence until the employe compensation to date for the calendar year exceeds the compensation limitation of Section 401(a)(17) of the Internal Revenue Code. Notwithstanding the foregoing, in the first plan year in which a participant becomes eligible to participate in this Plan, the participant may make an election to defer a percentage of excess basic compensation for services to be performed subsequent to the election within 30 days after the employe becomes eligible to participate in this Plan. Such election shall be effective with the pay period commencing immediately after the election is timely received by the Administrator. 2 3 (b) An employe's deferred excess basic compensation will be deemed to be invested in an investment option(s) available to employes under the Savings & Investment Plan. Currently, the Savings & Investment Plan allows participants to invest in the funds listed below: (a) Fidelity Retirement Money Market Portfolio (b) Fidelity Intermediate Bond Fund (c) Fidelity Asset Manager (d) Fidelity U.S. Equity Index Portfolio (e) Fidelity Growth & Income Portfolio (f) Fidelity Magellan Fund (g) Fidelity ContraFund (h) Fidelity OTC Portfolio (i) Fidelity Overseas Fund (j) Detroit Edison Common Stock Fund As part of the employe election to defer excess basic compensation, the employe shall make an investment designation, which shall indicate (1) the investment option(s) in which the employe deferred excess basic compensation will be deemed to be invested each month and (2) the percentage of deferred excess basic compensation to be deemed to be invested in each of the investment options selected each month. The distribution may be 100 percent in one fund, or divided among any combination of the ten funds in multiples of 10 percent, as long as the combination of deemed fund investments equals 100 percent. Notwithstanding the foregoing, the Company matching contribution credited to an employe's account each month, pursuant to paragraph (c) of Section 3 of this Plan, will always be deemed to be invested entirely in the Detroit Edison Common Stock Fund. If a change in investment options available to participants in the Savings & Investment Plan eliminates an investment option previously selected by a participating employe hereunder as part of his or her deemed investment option, the amount of deferred excess basic compensation which is deemed to be invested (including earnings, if any, deemed to be applicable) in the discontinued investment option on the last business day of the month immediately preceding the date that it is discontinued shall be deemed to be transferred to participating units in the Detroit Edison Common Stock Fund valued as of the last business day of the month immediately preceding the effective date of the investment option's discontinuance unless, in the opinion of the Savings Plan Committee (as defined in the Savings & Investment Plan) it is determined that the discontinued investment option has been replaced by an equivalent investment option. In this case, the amount of the employe's excess 3 4 basic compensation that is deemed to be invested in the discontinued investment option shall be transferred to the equivalent investment option at the time such investment option is discontinued and all additional deferred excess basic compensation that the employe elected to be deemed to be invested in the discontinued investment option shall be deemed to be invested in the investment option determined to be equivalent by the Savings Plan Committee. In the event that the Savings Plan Committee has not determined that there is an equivalent investment option with respect to the discontinued investment option, then all additional deferred excess basic compensation that the employe elected to be deemed to be invested in the discontinued investment option shall be deemed to be invested in the Detroit Edison Common Stock Fund and such deemed investment shall continue until the effective date of a change in investment designation which is received by the Administrator pursuant to Section 3(d). The aforementioned deemed investment options available hereunder are merely intended to serve as tools to measure the value of the amount to be paid to the employe under Section 4 of this Plan. They are not intended to and shall not be construed to require the Company to make actual investments of the type anticipated by the deemed investment option selected by the employe. If and to the extent the Company chooses to actually invest in the investment option selected by the employe, any assets acquired by the Company shall remain the sole property of the Company, subject to the claims of its general creditors and shall not be deemed to form part of the employe account. Notwithstanding anything herein to the contrary, in no event shall anything be done under this Plan by reference to the Savings & Investment Plan which would cause any participating employe to be in constructive receipt of amounts credited to his or her account under this Plan. (c) An unfunded bookkeeping account will be established and maintained for each participating employe which shall be credited with the employe's deferred excess basic compensation paid as of the last business day of each month. In addition, as of the last business day of the month, the Company will credit an amount to the employe's account equal to fifty cents for each dollar the employe defers of up to eight percent of his or her excess basic compensation for that month. The employe's contribution for that month will be converted into participating units/shares equivalent in value to the corresponding participating units/shares on the last business day of that month in the Savings & Investment Plan investment option(s) which have been designated by the employe as his or her deemed investment option(s). In the case of the Company's matching contributions, the amount attributable to that month shall be converted into participating units equivalent in value to participating units on the last business day of that month in the Savings & Investment Plan Detroit Edison Common Stock Fund. The number of participating units/shares (rounded to the nearest 4 5 hundredth) will be determined by dividing the total amount credited to the employe's account for the month, which is deemed to be invested in an investment option, by the actual value of a participating unit/share in that investment option under the Savings & Investment Plan. The value of the applicable participating unit/share in the Savings & Investment Plan investment option shall be determined on the last business day of the month during which the deferred excess basic compensation to be converted has been credited to the employe's account. Unless otherwise specified herein, the valuation of the employe's unfunded bookkeeping account will follow the procedures utilized by the Savings & Investment Plan Trustee in determining the valuation of contributions and investments in the Savings & Investment Plan. (d) Subject to the procedures identified in Section 3(b) hereof, an investment designation made by an employe will remain in effect until changed by the employe. The employe may change his or her investment designation by giving written notice to the Administrator on a form provided for such purpose. A change of an investment designation may be made once each calendar quarter. The participant must designate whether the change applies (1) to amounts already credited to the participant's account, (2) to the participant's future contributions to the Plan or (3) to the amounts already credited to the participant's account and to the participant's future contributions to the Plan. A change of an investment designation shall be effective on the last business day of the month during which written notice of such change is received by the Administrator. SECTION 4 - PAYMENT OF BENEFITS (a) An employe's unfunded bookkeeping account will be valued upon termination of employment. The account value will be determined by multiplying the number of participating units/shares in the employe account relative to each investment option in which the employe deferred excess basic compensation and the Company's matching contribution have been deemed to have been invested by the value of a participating unit/share in the applicable investment option of the Savings & Investment Plan in which the deferred excess basic compensation and the Company's matching contribution have been deemed to have been invested. The value of the participating units/shares in this Plan shall be determined on the business day preceding the day on which termination of employment occurs. The account will be distributed to the employe in one lump-sum payment as soon as practicable, but no later than 30 days, after the employe's termination of employment. 5 6 (b) In the event that an employe receives an assessment of income taxes from the Internal Revenue Service which treats any amount in the employe's unfunded bookkeeping account as being includible in such employe's gross income prior to actual payment under Section 4(a) hereof, the Company shall pay an amount equal to such income taxes to such employe within thirty days after the Company receives written notice from such employe of such assessment, and such employe's unfunded bookkeeping account shall be reduced by an amount equal to such income taxes. (c) Each payment under the Plan shall be reduced by any federal, state, or local income taxes which the Company determines should be withheld from such payment. (d) An employe may name any beneficiary or beneficiaries (subject to restrictions imposed by law, if any) to whom amounts credited to his or her account under this Plan are to be paid in case of the employe's death before the employe receives all amounts credited to his or her account. Each designation will revoke all prior designations by the employe, shall be on a form prescribed by the Company and will be effective only when received by the Administrator. In the absence of any such designation, the unpaid amount in an employe's account at the time of the employe's death shall be paid to the employe's estate. (e) An employe will not be permitted to defer excess basic compensation and will not be credited with the Company's matching contribution for a month unless he or she is employed by the Company on the last business day of the month. Therefore, if an employe terminates employment with the Company prior to the last business day of the month, the employe shall receive what would have been that month's deferred excess basic compensation in his or her final paycheck and will not receive any matching contribution from the Company for the month of termination of employment. (f) The amount of each employe's excess basic compensation which he or she elects to defer under the plan shall be deemed to be compensation for the purpose of calculating the amount of an employe's benefits or contributions under a pension or a retirement plan qualified under Section 401(a) of the Internal Revenue Code, and under any non-qualified deferred compensation arrangements maintained by the Company, except to the extent specifically provided to the contrary in any such plan. (g) Benefits under this Plan shall be payable solely from the general assets of the Company. The Plan shall remain unfunded during the entire period of its existence for purposes of the Federal income tax laws and Title I of ERISA. 6 7 The Company intends that this Plan be maintained primarily for a select group of management or highly compensated employes. SECTION 5 - RIGHTS OF EMPLOYES Except to the extent provided in Section 7 herein below, no employe or an employe's spouse or beneficiary shall at any time have any vested right to receive the benefits provided by this Plan. An employe, employe's spouse or beneficiary shall not have any interest in the deferred excess basic compensation or the Company's monthly award credited to his or her unfunded bookkeeping account until such account is distributed in accordance with the Plan. All deferred excess basic compensation and any other amounts otherwise credited to the unfunded bookkeeping account of an employe under the Plan shall remain the sole property of the Company, subject to the claims of its general creditors and available for its use for whatever purposes are desired. The employe, employe's spouse or beneficiary is merely a general unsecured creditor of the Company and the obligation of the Company hereunder is purely contractual and shall not be funded or secured in any way. The right of an employe, employe's spouse or beneficiary to payment of any benefit or deferred compensation hereunder shall not be alienated, assigned, transferred, pledged or encumbered and shall not be subject to execution, attachment or similar process. No employe may borrow against the unfunded bookkeeping account established for his or her benefit hereunder. No account shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether voluntary or involuntary, including but not limited to any liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of any employe. Any attempted assignment, pledge, levy or similar process shall be null and void and without effect. Employes who participate in this Plan assume the risks associated with fluctuations in the value of all deemed investment options, including the Fidelity Retirement Money Market Portfolio, Fidelity Intermediate Bond Fund, Fidelity Asset Manager, Fidelity U.S. Equity Index Portfolio, Fidelity Growth & Income Portfolio, Fidelity Magellan Fund, Fidelity ContraFund, Fidelity OTC Portfolio, Fidelity Overseas Fund, and Detroit Edison Common Stock Fund. SECTION 6 - ADMINISTRATION; ARBITRATION (a) This Plan shall be administered by the Director of Benefit Plan Administration of the Company (the "Administrator") as an unfunded plan which is not intended to meet the qualification requirements of Section 401 of the Internal 7 8 Revenue Code. The Administrator's decisions in all matters involving the interpretation, application and administration of this Plan shall be conclusive. (b) The Plan shall at all times be maintained by the Company and administered by the Administrator as a plan wholly separate from the Savings & Investment Plan, and any other plan or program maintained by the Company. (c) Notwithstanding Section 6(a) hereof, in the event of any dispute, claim, or controversy (hereinafter referred to as a "Grievance") between an employe who is eligible to elect to receive the benefits provided under this Plan and the Company with respect to the payment of benefits to such employe under this Plan, the computation of benefits under this Plan, or any of the terms and conditions of this Plan, such Grievance shall be resolved by arbitration in accordance with this Section 6(c). (1) Arbitration shall be the sole and exclusive remedy to redress any Grievance. (2) The arbitration decision shall be final and binding, and a judgment on the arbitration award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms. (3) The arbitration shall be conducted by the American Arbitration Association with the Commercial Arbitration Rules of the American Arbitration Association and expenses of the arbitrators and the American Arbitration Association shall borne by the Company. Neither the Company nor such employe shall be entitled to attorneys' fees, expert witness fees, or other expenses expended in the course of such arbitration or the enforcement of any award rendered thereunder. (4) The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit Metropolitan area, Michigan. (5) The arbitrator(s) shall not have the jurisdiction or authority to change any of the provisions of this Plan by alteration of, addition to, or subtraction from the terms thereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Since arbitration is the exclusive remedy with respect to any Grievance, no employe eligible to receive benefits provided under this Plan has the right to resort to any 8 9 federal court, state court, local court, or administrative agency concerning breaches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court, or administrative agency by such employe or the Company with respect to any Grievance which is arbitrable as herein set forth. (6) The arbitration provisions shall, with respect to any Grievance, survive the termination of this Plan. SECTION 7 - AMENDMENT AND DISCONTINUANCE The Company expects to continue this Plan indefinitely, but reserves the right to amend or discontinue the Plan. The Vice President - Human Resources, or, should the Vice President - Human Resources become a Participant in this Plan, the Manager - Human Resources Operations, shall review the Plan from time to time and as part of such review is hereby directed and authorized to amend such Plan to the extent necessary for ease of administration and/or to comply with applicable federal and state laws. If the Plan should be amended or discontinued, the Company shall be liable for any benefits that have accrued under this Plan (determined on the basis of each employe's presumed termination of employment as of the date of such amendment or discontinuance) as of the date of such action. 9 EX-10.64 5 EX-10.64 1 EXHIBIT 10.64 SECOND RESTATEMENT OF THE RETIREMENT REPARATION PLAN FOR CERTAIN EMPLOYES OF THE DETROIT EDISON COMPANY The Retirement Reparation Plan for Certain Employes of The Detroit Edison Company (the "Plan"), established by The Detroit Edison Company (the "Company") effective January 1, 1989, as amended and restated effective May 22, 1989, is hereby amended and restated as of June 26, 1995 by this Second Restatement. SECTION 1 - PURPOSE The sole purpose of this Plan is to assure that all persons who become eligible to and do receive benefits under the Employes' Retirement Plan of The Detroit Edison Company (the "Retirement Plan") will receive the same aggregate dollar amount of benefits (after taking into account any benefits such persons are eligible to receive under the Benefit Equalization Plan for Certain Employes of The Detroit Edison Company (the "BEP")) as they would have received under the Retirement Plan, but for the limitations on contributions and benefits imposed from time to time by the compensation limitation of Section 401(a)(17) of the Internal Revenue Code, whether such limitations result solely from the application of Section 401(a)(17) of the Internal Revenue Code or result from the combination of the application of Section 401(a)(17) of the Internal Revenue Code and the application of the limitations on contributions and benefits imposed from time to time by Section 415 of the Internal Revenue Code. This Plan is not intended to and shall not be construed so as to provide any person receiving benefits under the Retirement Plan, the BEP, if applicable, and this Plan, if applicable, with benefits in the aggregate which are either larger or smaller than the benefit which would result from the calculation made under the applicable provisions of the Retirement Plan, and the BEP, if applicable, without giving effect to or recognition of the contribution and benefit limitation provisions of Section 401(a) (17) of the Internal Revenue Code, whether such limitations result solely from the application of Section 401(a)(17) of the Internal Revenue Code or result from the combination of the application of Section 401(a)(17) of the Internal Revenue Code and the application of the limitations on contributions and benefits under Section 415 of the Internal Revenue Code. The benefit provided under this Plan to any person shall be separate from and in addition to any benefit provided under the Retirement Plan, the BEP, if applicable, and any other plan or program maintained by the Company. SECTION 2 - ELIGIBILITY Persons whose benefits under the Retirement Plan are limited by the provisions set forth therein to conform to Section 401(a)(17) of the Internal Revenue Code shall be 2 eligible for the benefits provided under this Plan. In no event shall a person who is not entitled to benefits under the Retirement Plan be eligible for any benefits under this Plan. SECTION 3 - AMOUNT OF BENEFITS The benefits payable under this Plan shall equal the excess, if any, of: (a) the aggregate benefits which would have been paid to such retired employe, an employe's spouse or beneficiary under the Retirement Plan and the BEP, if applicable, if the provisions of such plans were administered and benefits paid without regard to either the limitations on contributions and benefits imposed by the compensation limitation of Section 401(a)(17) of the Internal Revenue Code, or the special benefit limitations added to the Retirement Plan to conform it to Section 415 of the Internal Revenue Code, over (b) the aggregate benefits which are payable to such retired employe, an employe's spouse or beneficiary under the Retirement Plan and the BEP, if applicable. SECTION 4 - PAYMENT OF BENEFITS (a) Payment of benefits under this Plan shall be made coincident with the payment of benefits under the Retirement Plan or as soon as practicable thereafter. (b) In the event an employe receives an assessment of income taxes from the Internal Revenue Service which treats any amount payable under this Plan as being includible in such employe's gross income prior to the actual payment of such amount to such employe, the Company shall pay an amount equal to such income taxes to the employe within 30 days after written notice from such employe of such assessment. The amount of income taxes paid to the employe hereunder shall be considered an advance of and shall reduce the benefits ultimately paid to the employe under this Plan. (c) Each payment under this Plan shall be reduced by any federal, state, or local taxes which the Company determines should be withheld from such payment. (d) Benefits under this Plan shall be payable solely from the general assets of the Company. Each participant in this Plan shall have the status of an unsecured creditor of the Company. This Plan constitutes a promise by the Company to make benefit payments in the future. It is intended that this Plan be unfunded for tax purposes and for purposes of Title I of ERISA and that this Plan shall remain unfunded during the entire period of its existence. The Company intends that this Plan be maintained primarily for a select group of management or highly compensated employes. 2 3 SECTION 5 - RIGHTS OF EMPLOYES Except to the extent provided in Section 7 herein below, no employe or an employe's spouse or beneficiary shall at any time have any vested right to receive the benefits provided by this Plan. The employe, employe's spouse or beneficiary is merely a general creditor of the Company and the obligation of the Company hereunder is purely contractual and shall not be funded or secured in any way. The right of an employe, employe's spouse or beneficiary to payment of any benefit hereunder shall not be anticipated, alienated, sold, assigned, transferred, pledged, encumbered, attached, or garnished by an employe, an employe's spouse or beneficiary, or creditors of an employe and shall not be subject to garnishment, execution, attachment, or similar process. Any attempted anticipation, sale, assignment, transfer, pledge, levy, encumbrance, attachment, garnishment or similar process shall be null and void and without effect. SECTION 6 - ADMINISTRATION; ARBITRATION (a) This Plan shall be administered by the Organization and Compensation Committee of the Board of Directors (the "Administrator") as an unfunded plan which is not intended to meet the qualification requirements of Section 401 of the Internal Revenue Code. The Administrator's decisions in all matters involving the interpretation and application of this Plan shall be conclusive. (b) The Plan shall at all times be maintained by the Company and administered by the Administrator as a plan wholly separate from the Retirement Plan, the BEP and any other plan or program maintained by the Company. (c) Notwithstanding Section 6(a) hereof, in the event of any dispute, claim, or controversy (hereinafter referred to as a "Grievance") between an employe who is eligible to elect to receive the benefits provided under this Plan and the Company with respect to the payment of benefits to such employe under this Plan, the computation of benefits under this Plan, or any of the terms and conditions of this Plan, such Grievance shall be resolved by arbitration in accordance with this Section 6(c). (1) Arbitration shall be the sole and exclusive remedy to redress any Grievance. (2) The arbitration decision shall be final and binding, and a judgment on the arbitration award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms. (3) The arbitration shall be conducted by the American Arbitration 3 4 Association with the Commercial Arbitration Rules of the American Arbitration Association and expenses of the arbitrators and the American Arbitration Association shall be borne by the Company. Neither the Company nor such employe shall be entitled to attorneys' fees, expert witness fees, or any other expenses expended in the course of such arbitration or the enforcement of any award rendered thereunder. (4) The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit Metropolitan area, Michigan. (5) The arbitrator(s) shall not have the jurisdiction or authority to change any of the provisions of this Plan by alteration of, addition to, or subtraction from the terms thereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Since arbitration is the exclusive remedy with respect to any Grievance, no employe eligible to receive benefits provided under this Plan has the right to resort to any federal court, state court, local court, or administrative agency concerning breaches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court, or administrative agency by such employe or the Company with respect to any Grievance which is arbitrable as herein set forth. (6) The arbitration provisions shall, with respect to any Grievance, survive the termination of this Plan. SECTION 7 - AMENDMENT AND DISCONTINUANCE The Company expects to continue this Plan indefinitely, but reserves the right to amend or discontinue it. The Vice President, Human Resources, or, should the Vice President, Human Resources, become a Participant in this Plan, the Manager, Human Resources Operations, shall review the Plan from time to time and as part of such review is hereby directed and authorized to amend such Plan to the extent necessary for ease of administration and/or to comply with applicable federal and state laws. If the Plan should be amended or discontinued, the Company shall be liable for any benefits that have accrued under this Plan (determined on the basis of each employe 's presumed termination of employment as of the date of such amendment or discontinuance) as of the date of such action. 4 EX-10.65 6 EX-10.65 1 EXHIBIT 10.65 SECOND RESTATEMENT OF THE BENEFIT EQUALIZATION PLAN FOR CERTAIN EMPLOYES OF THE DETROIT EDISON COMPANY The Benefit Equalization Plan for Certain Employes of The Detroit Edison Company (the "Plan"), established by The Detroit Edison Company (the "Company") effective March 1, 1978, as amended and restated effective May 22, 1989, is hereby amended and restated as of June 26, 1995, by this Second Restatement. SECTION 1 - PURPOSE The sole purpose of this Plan is to assure that all persons who become eligible to and do receive benefits under the Employes' Retirement Plan of The Detroit Edison Company (the "Retirement Plan") will receive the same dollar amount of benefits as they would have received but for the limitations on contributions and benefits imposed from time to time solely by Section 415 of the Internal Revenue Code. This Plan is not intended to and shall not be construed so as to provide any person receiving benefits under the Retirement Plan and, where applicable, this Plan with benefits in the aggregate which are either larger or smaller than the benefit which would result from the calculation made under the applicable provisions of the Retirement Plan without giving effect to or recognition of solely the benefit limitation provisions of Section 415 of the Internal Revenue Code. The benefit under this Plan provided to any person shall be separate from and in addition to any benefit provided under the Retirement Plan or any other plan or program maintained by the Company. SECTION 2 - ELIGIBILITY Persons whose benefits under the Retirement Plan are limited by the provisions set forth therein to conform to Section 415 of the Internal Revenue Code shall be eligible for the benefits provided by this Plan. In no event shall a person who is not entitled to benefits under the Retirement Plan be eligible for any benefits under this Plan. SECTION 3 - AMOUNT OF BENEFITS The benefits payable hereunder shall equal the excess, if any, of: (a) the benefits which would have been paid to a retired employe, such employe's spouse or beneficiary under the Retirement Plan if the provisions of such plan 1 2 were administered and benefits paid without regard solely to the special benefit limitations added to such plan to conform it to Section 415 of the Internal Revenue Code, over (b) the benefits which would be otherwise payable to such retired employe, such employe's spouse or beneficiary under the Retirement Plan taking into account solely the special benefit limitations added to such plan to conform it to Section 415 of the Internal Revenue Code. SECTION 4 - PAYMENT OF BENEFITS; AMENDMENTS (a) Payment of benefits under this Plan shall be made coincident with the payment of benefits under the Retirement Plan or as soon as practicable thereafter. (b) In the event an employe receives an assessment of income taxes from the Internal Revenue Service which treats any amount payable under this Plan as being includible in such employe's gross income prior to the actual payment of such amount to such employe, the Company shall pay an amount equal to such income taxes to such employe within thirty days after written notice from such employe of such assessment. The amount of income taxes paid to the employe hereunder shall be considered an advance of and shall reduce the benefits ultimately paid to the employe under this Plan. (c) Each payment under this Plan shall be reduced by any federal, state, or local taxes which the Company determines should be withheld from such payment. (d) Benefits under this Plan shall be payable solely from the general assets of the Company. Each participant in this Plan shall have the status of a general unsecured creditor of the Company. This Plan constitutes a promise by the Company to make benefit payments in the future. It is intended that this Plan be unfunded for tax purposes and that this Plan shall remain unfunded during the entire period of its existence. The Company intends to maintain this Plan similarly for a select group of management or highly compensated employes. Payments under the Plan as they become due shall be paid by the Company from its general assets. The Company reserves the right to amend, modify, or discontinue this Plan at any time; provided, however, that no such amendment, modification, or termination shall affect the rights of participants or beneficiaries who are receiving or are immediately eligible to receive benefits from the Plan at the time of such amendment, modification, or termination. 2 3 SECTION 5 - RIGHTS OF EMPLOYES Except as to the extent provided in Section 7 herein, no employe or an employe's spouse or beneficiary shall at any time have any vested right to receive the benefits provided by this Plan. The rights of any participant to receive benefits under this Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by such participant, the creditors of such participant, such participant's spouse or such participant's beneficiary. SECTION 6 - ADMINISTRATION; ARBITRATION (a) This Plan shall be administered by the Organization and Compensation Committee of the Board of Directors (the "Administrator") as an unfunded plan which is not intended to meet the qualification requirements of Section 401 of the Internal Revenue Code. The Administrator's decisions in all matters involving the interpretation and application of this Plan shall be conclusive. (b) The Plan shall at all times be maintained by the Company and administered by the Administrator as a plan wholly separate from the Retirement Plan and any other plan or program maintained by the Company. (c) Notwithstanding Section 6(a) hereof, in the event of any dispute, claim, or controversy (the "Grievance") between an employe whose eligible to elect to receive the benefits provided under this Plan and the Company with respect to the payment of benefits to such employe under this Plan, the computation of benefits under this Plan, or any of the terms and conditions of this Plan, such Grievance shall be resolved by arbitration and in accordance with this Section 6(c). (1) Arbitration shall be the sole and exclusive remedy to redress any Grievance. (2) The arbitration decision shall be final and binding, and a judgment on the arbitration award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms. (3) The arbitration shall be conducted by the American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association and expenses of the arbitrators and the American Arbitration Association shall be borne by the Company. Neither the Company nor such employe shall be entitled to attorneys' fees, expert witness fees, or other expenses expended in the course of such arbitration or the enforcement of any award rendered thereunder. 3 4 (4) The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit Metropolitan area, Michigan. (5) The arbitrator(s) shall not have the jurisdiction or authority to change any provisions of this Plan by alteration of, addition to, or subtraction from the terms thereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Since arbitration is the exclusive remedy with respect to any Grievance, no employe eligible to receive benefits provided under this Plan has the right to resort to any federal court, state court, local court, or administrative agency concerning breeches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court, or administrative agency by such employe or the Company with respect to any Grievance which is arbitrable as herein set forth. (6) The arbitration provision shall, with respect to any Grievance, survive the termination of this Plan. SECTION 7 - AMENDMENT AND DISCONTINUANCE The Company expects to continue this Plan indefinitely, but reserves the right to amend or discontinue it. The Vice President, Human Resources, or, should the Vice President, Human Resources, become a Participant in this Plan, the Manager, Human Resources Operations, shall review the Plan from time to time and as part of such review is hereby directed and authorized to amend such Plan to the extent necessary for ease of administration and/or to comply with applicable federal and state laws. If the Plan should be amended or discontinued, the Company shall be liable for any benefits that have accrued under this Plan (determined on the basis of each employe's presumed termination of employment as of the date of such amendment or discontinuance) as of the date of such action. 4 EX-10.66 7 EX-10.66 1 EXHIBIT 10.66 MANAGEMENT SUPPLEMENTAL BENEFIT PLAN --------------------------------------------------------------- 2 SECOND RESTATEMENT OF THE DETROIT EDISON COMPANY MANAGEMENT SUPPLEMENTAL BENEFIT PLAN The Detroit Edison Company Management Supplemental Benefit Plan (the "Plan"), established by The Detroit Edison Company (the "Company") effective July 24, 1989, as amended and restated effective January 22, 1990, is hereby amended and restated as of June 26, 1995, by this Second Restatement. PURPOSE The Management Supplemental Benefit Plan ("Plan") is designed to supplement pension benefits for eligible management employes. The Plan has the objective of making the Company's retirement program more competitive within the electric utility industry and general industry, which will facilitate the attraction and retention of management employes. DEFINITION AVERAGE FINAL COMPENSATION. Equals one-fifth of normal pay during the 260 weeks of Company service that results in the highest average, calculated without regard to any limitation imposed by Section 401(a)(17) of the Internal Revenue Code. AWARDED SERVICE. Years of service that may be imputed to an otherwise eligible Plan participant by the Organization and Compensation Committee ("Committee") of the Board of Directors, having taken into account the value to the Company of such participant's prior experience. COMPANY SERVICE. All years of service with the Company calculated to the nearest month. EXECUTIVE POST-EMPLOYMENT INCOME ARRANGEMENT. Individual arrangements that were entered into with certain executives upon initial employment with the Company. The arrangements may provide for additional benefits upon retirement. KEY EMPLOYE DEFERRED COMPENSATION PLAN. The Key Employe Deferred Compensation Plan initiated in 1964 which provides a supplemental pension benefit to certain management employes. NORMAL PAY. The employe's salary for a standard forty-hour work week calculated without regard to any limitation imposed by Section 401(a)(17) of the Internal Revenue Code 1 3 including amounts deferred by the employe under the Company's qualified and non-qualified savings plans. It does not include any bonuses, special pay, or premium for overtime work. RETIREMENT PLAN. The Employes' Retirement Plan of The Detroit Edison Company ("Detroit Edison"). The Retirement Plan is a defined benefit pension plan sponsored by Detroit Edison for eligible employes. RETIREMENT ALLOWANCE FACTOR. The multiplier used in the basic formula of the Retirement Plan. ELIGIBILITY Eligibility to participate in this Plan is determined no later than the latest to occur of: (1) 90 days from the date hereof; or (2) 90 days subsequent to an otherwise eligible participant's 55th birthday; or (3) In the case of an otherwise eligible participant who does not have at least 10 years of Company service at age 55, 90 days subsequent to the otherwise eligible participant's having 10 years of Company service. Participation in the Plan is limited to those management employes who (1) Are members of Management Council (pursuant to OR3, Management Groups, as may be amended from time to time) at the time of termination from the Company (or death while actively employed by the Company); and (2) Are not personally eligible to receive a benefit from the Key Employe Deferred Compensation (KEDC) Plan although a court of competent jurisdiction may have recognized spousal rights; (3) Do not have an effective Executive Post-Employment Income Arrangement; and (4) At the time of termination from the Company (or death while actively employed), are at least 55 years of age and have at least 10 years of Company service. Employes who are eligible to receive a benefit from KEDC or who have entered into Post-Employment Income Arrangements with the Company may elect to participate in this Plan in accordance with the first paragraph of this section by filing an election to waive any rights to 2 4 a benefit from KEDC and/or any rights under a Post-Employment Income Arrangement with the Vice President-Human Resources, who will provide an election form upon request. TARGET PERCENTAGE OF AVERAGE FINAL COMPENSATION Payments from the Plan are based upon the calculated target percentage of average final compensation. The target percentage of average final compensation is determined by years of Company service and awarded service, if any, and by the management group in which the participant is a member at the time of termination from the Company (or death while actively employed by the Company) as specified in Exhibit A. Participants awarded service under the Plan must certify any retirement income expected or being received from a previous employer. Payments from the Plan to participants with awarded service will be reduced by the non-contributory portion of any retirement income expected or being received from a previous employer. Payments from the Plan will be reduced by any KEDC spousal payments required by a court of competent jurisdiction. Payments from the Plan may also be affected by the employe's age at termination (see Early Retirement) and the payment option selected by the employe (see Payment Options). EARLY RETIREMENT The Plan provides for an unreduced target percentage for those terminating employment at age 60 or older. A reduced or adjusted target percentage is provided for those terminating employment (including death) who are at least age 55 but prior to age 60. The early retirement adjustment schedule is as follows:
AGE AT EARLY RETIREMENT TERMINATION ADJUSTMENT PERCENTAGE 55 50% 56 60% 57 70% 58 80% 59 90% 60 or older 100%
Age at termination is calculated to the nearest whole month and the early retirement adjustment percentage is determined accordingly. 3 5 PAYMENT OPTIONS At the time of employment termination, an eligible employe must elect one of the following payment options: (a) Guaranteed Term Plus Life, (b) Actuarial-Adjusted Life with a 100% Joint and Survivor Benefit and (c) Actuarial-Adjusted Life with a 50% Joint and Survivor Benefit. In the event that an employe dies during active employment, and at the time of death was eligible for a benefit as provided herein, the payment option is deemed to be Guaranteed Term Plus Life. GUARANTEED TERM PLUS LIFE If the employe elects the Guaranteed Term Plus Life payment option, the employe, at the time of employment termination, must also elect a survivor benefit of either monthly payments or an adjusted lump sum payment. In the event that such an election is not made by the employe, or in the event that the employe dies during active employment and at the time of death was eligible for a Plan benefit as provided herein, the survivor benefit is assumed to be the adjusted lump sum payment. The Guaranteed Term Plus Life payment option provides for a minimum of 15 years of payments to the employe or, if the employe lives beyond the 15-year period, the payments continue to be made to the employe for the life of the employe. If the employe elects the monthly payment survivor benefit and dies prior to the end of the 15-year period, payments will continue to be made to the employe's beneficiary or estate for the balance of the 15-year period. At the end of this 15-year period, all payments cease and liability of the Company under the Plan is terminated. If the employe elects the lump sum payment survivor benefit and dies prior to the end of the 15-year period, an adjusted lump sum payment is made to the employe's designated beneficiary or estate. The adjusted lump sum payment is determined by a standard annuity calculation where the adjusted lump sum is the present worth of the remaining monthly benefits in the 15-year period. The methodology and other relevant factors for determining the amount of the adjusted lump sum payment are provided in Exhibit B. Upon payment of the lump sum payment, all payments cease and liability of the Company under the Plan is terminated. ACTUARIAL-ADJUSTED LIFE WITH A 100% JOINT AND SURVIVOR BENEFIT This option provides for the actuarial equivalent to the benefit payment under the Guaranteed Term Plus Life option. Upon the death of the employe and the designated beneficiary, all 4 6 payments cease and the liability of the Company under the Plan is terminated. The actuarial equivalent benefit is provided for the life of the employe and upon the death of the employe, 100% of the benefit is provided to the employe's designated beneficiary for the duration of the beneficiary's life. If the employe's designated beneficiary should die prior to the employe, payments continue from the life of the employe and upon the death of the employe all payments cease and liability of the Company under the Plan is terminated. If the employe and designated beneficiary are the same age, the actuarial equivalent benefit equals 97.94% of the Guaranteed Term Plus Life benefit. If the beneficiary is younger than the employe, this percentage is reduced by 1.2% for each 12 full months of difference in age. If the beneficiary is older than the employe, this percentage is increased 1.2% for each 12 full months in difference in age up to a maximum of 100%. ACTUARIAL-ADJUSTED LIFE WITH A 50% JOINT AND SURVIVOR BENEFIT This option provides for the actuarial equivalent to the benefit payable under the Guaranteed Term Plus Life option. Upon the death of the employe and the designated beneficiary, all payments cease and the liability of the Company under the Plan is terminated. The actuarial equivalent benefit is provided for the life of the employe and upon the death of the employe, 50% of the benefit is provided to the employe's designated beneficiary for the duration of the beneficiary's life. If the employe's designated beneficiary should die prior to the employe, payments continue for the life of the employe and upon the death of the employe all payments cease and liability of the Company under the Plan is terminated. If the employe and designated beneficiary are the same age, the actuarial equivalent benefit equals 107.72% of the Guaranteed Term Plus Life benefit. If the beneficiary is younger than the employe, this percentage is reduced by 1% for each 12 full months of difference in age. If the beneficiary is older than the employe, there is no adjustment to the percentage. If the employe does not designate a beneficiary, the actuarial equivalent benefit equals 107.72% of the Guaranteed Term Plus Life benefit, and upon the death of the employe all payments cease and the liability of the Company under the Plan is terminated. PAYMENT CALCULATION Monthly payments from the Plan are determined as follows: STEP 1. DETERMINE GROSS TARGET AMOUNT The gross target amount results from multiplying the target percentage by average final compensation (see Exhibit A to determine the target percentage). 5 7 STEP 2. DETERMINE RETIREMENT PLAN BENEFIT The Retirement Plan benefit results from multiplying the retirement allowance factor by average final compensation and by Company service, calculated for purposes hereof, without regard to any limitations imposed by Section 401(a)(17) or Section 415 of the Internal Revenue Code. STEP 3. DETERMINE BASE ANNUAL TARGET BENEFIT AMOUNT The base annual target benefit amount results from subtracting the Retirement Plan benefit from the gross target amount. STEP 4. DETERMINE ADJUSTED ANNUAL TARGET BENEFIT AMOUNT The adjusted annual target benefit amount results from multiplying the base annual target benefit amount by the early retirement adjustment percentage (see page 4 to determine the early retirement adjustment percentage). STEP 5. DETERMINE MONTHLY TARGET BENEFIT AMOUNT UNDER THE GUARANTEED TERM PLUS LIFE PAYMENT OPTION The monthly target benefit amount under the Guaranteed Term Plus Life payment option is determined by dividing the adjusted annual target benefit amount by 12. STEP 6. ACTUARIAL-ADJUSTED PAYMENT OPTION If an actuarial-adjusted payment option is selected, the actuarial adjustment is applied to the monthly target benefit amount under the Guaranteed Term Plus Life payment option. Exhibit C displays examples of the Plan payment calculation procedure. In the event an employe receives an assessment of income taxes from the Internal Revenue Service which treats any amount under this Plan as includible in such employe's gross income prior to payment of such amount to such employe, the Company shall pay an amount equal to such income taxes to such employe within 30 days after receipt of written notice from such employe about such assessment. The base annual target benefit amount (Step 3) shall be reduced by an amount equal to such income taxes and Steps 4, 5 and 6 shall be reduced accordingly. Each payment under this Plan shall be reduced by any federal, state or local taxes which the Company determines should be withheld from such payment. 6 8 SCHEDULE OF PAYMENTS Plan payments, if any, are made to the employe or to the designated beneficiary on a monthly basis. The schedule will follow the provisions for payment under the Retirement Plan. The accompanying examples show the effect of Retirement Plan benefits at different times. BENEFICIARY DESIGNATION Each eligible participant may name any beneficiary to whom payments under the Plan are to be paid in case of the employe's death. Each designation will revoke all prior designations by the employe and shall be on a form prescribed by the Company and will be effective only when filed by the employe with the Treasurer. In the absence of any such designation, payments due shall be paid to the employe's estate. TAXATION The Company makes no representation as to the tax consequences of individual payment options. Plan participants are urged to consult tax advisors of their choice for information and advice. NON-SECURED PROMISE; AMENDMENTS Eligible participants have the status of general unsecured creditors of the Company. This Plan constitutes a promise by the Company to make benefit payments in the future. The Company intends that this Plan be unfunded for tax purposes and for purposes of Title I of ERISA. The Company intends that this Plan be maintained primarily for a select group of management or highly compensated employes. Payments under this Plan as they become due shall be paid by the Company from its general assets. The Company reserves the right to amend, modify, or discontinue this Plan at any time; provided, however, that no such amendment, modification, or termination shall affect the rights of participants or beneficiaries who are receiving or are immediately eligible to receive benefits from this Plan at the time of such amendment, modification, or termination. 7 9 ADMINISTRATION; ARBITRATION The Vice President-Human Resources is responsible for the administration of the Plan. The Vice President-Human Resources has the authority to interpret the provisions of the Plan and prescribe any regulations relating to its administration. The decisions of the Vice President-Human Resources with respect thereto shall be conclusive. The Vice President-Human Resources shall review the Plan from time to time and as part of such review is hereby directed and authorized to amend such Plan to the extent necessary for ease of administration and/or to comply with applicable federal and state laws. The Treasurer of the Company shall be responsible for the administration of benefits under the Plan. Notwithstanding any provision in this Plan to the contrary, in the event of any dispute, claim or controversy (hereinafter referred to as a "Grievance") between an employe who is eligible to receive benefits under this Plan and the Company with respect to the payment of benefits to such employe under this Plan, the computation of benefits under this Plan, or any of the terms or conditions of this Plan, such Grievance shall be resolved by arbitration. Arbitration shall be the sole exclusive remedy to redress any Grievance. The arbitration decision shall be final and binding, and a judgment on the arbitration award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms. The arbitration shall be conducted by American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association and expenses of the arbitrator(s) and the American Arbitration Association shall be borne by the Company. Neither the Company nor such employe shall be entitled to attorneys' fees, expert witness fees, or other expenses expended in the course of such arbitration or the enforcement of any award rendered thereunder. The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit Metropolitan area, Michigan. The arbitrator(s) shall not have the jurisdiction or authority to change any of the provisions of this Plan by alteration of, addition to, or subtraction from the terms thereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Since arbitration is the exclusive remedy with respect to any Grievance, no employe eligible to receive benefits under this Plan has the right to resort to any federal court, state court, local court, or administrative agency concerning breaches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court, or administrative agency by such employe or the Company with respect to any Grievance which is arbitrable as herein set forth. The arbitration provisions shall, with respect to any Grievance, survive the termination of this Plan. 8 10 NON-ALIENABILITY AND NON-TRANSFERABILITY The right of a participant, participant's spouse or beneficiary to payment of any benefit hereunder shall not be alienated, assigned, transferred, pledged or encumbered and shall not be subject to execution, attachment or similar process. No account shall be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, whether voluntary or involuntary, including but not limited to any liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of any employe. Any attempted assignment, pledge, levy or similar process shall be null and void and without effect. 9 11 EXHIBIT A TARGET PERCENTAGE
TARGET PERCENTAGE MANAGEMENT OF AVERAGE FINAL INDEX GROUP COMPENSATION SERVICE ----- ----- ------------ ------- 1. Chairman of the Board 60% 25 President Executive Vice President 2. Senior Vice President 60% 30 Vice President 3. Management Council members 55% 35 other than those included in Groups 1 and 2 above
If the sum of Company service and awarded service is greater than the corresponding service index, the target percentage is increased by 0.5% for each year of service above the index. If the sum of Company service and awarded service is less than the corresponding service index, the target percentage is reduced by 1% for each year of service below the index for employes in Groups 1 and 2 and by 1.5% for each year of service below the index for employes in Group 3. Company service is calculated to the nearest whole month. Awarded service is determined by the sole discretion of the Committee. The target percentage is adjusted accordingly if the service index results in fractional years. 10 12 EXHIBIT B Table for Determining the Adjusted Lump Sum Payment Under the Guaranteed Term Plus Life Payment Option (Per $1,000 of Adjusted Annual Target Benefit Amount)
Remaining Years Of Guaranteed Term Payment Interest Rate 6% 7% 8% 9% 10% 11% 12% -------------------------------------------------------------------------------------------------------------- 15 $9,875 $9,271 $8,720 $8,216 $7,755 $7,332 $6,943 14 9,456 8,909 8,406 7,945 7,520 7,128 6,767 13 9,012 8,520 8,067 7,648 7,260 6,901 6,569 12 8,540 8,103 7,699 7,323 6,973 6,648 6,345 11 8,038 7,656 7,300 6,967 6,656 6,365 6,093 10 7,506 7,177 6,868 6,578 6,306 6,050 5,808 9 6,941 6,663 6,401 6,153 5,919 5,698 5,488 8 6,341 6,112 5,895 5,688 5,492 5,305 5,127 7 5,704 5,521 5,347 5,179 5,020 4,867 4,721 6 5,028 4,888 4,753 4,623 4,498 4,378 4,263 5 4,310 4,208 4,110 4,014 3,922 3,833 3,746 4 3,548 3,480 3,413 3,349 3,286 3,224 3,164 3 2,739 2,699 2,659 2,621 2,583 2,545 2,509 2 1,880 1,861 1,843 1,824 1,806 1,788 1,770 1 968 963 958 953 948 943 938 0 0 0 0 0 0 0 0
NOTES: (1) Interest rate is determined by the current prime interest rate of the NBD Bank less 2%. (2) Apply linear interpolation for partial years remaining in guaranteed term period and adjustments for fractional interest rates. (3) Exhibit B shows the information to perform a standard annuity due calculation. It is the present worth of a stream of monthly payments of $1,000/12 per month made at the end of the month and continuing for the number of months remaining. 11 13 EXHIBIT B (CONTINUED) The formula is: Adjusted Lump Sum = Pmt x (1 -(1 + i) -n)/i Where i is the NBD Bank Prime rate less 2% divided by 12 and n is the number of months remaining. Pmt is $1,000/12 or $83.33. 12 14 EXHIBIT C EXAMPLE 1 Assumptions: Date of Termination: January 31,1994 Age at Termination: 65 Years, 0 Months Position: Vice President Average Final Compensation: $180,000 Company Service & Awarded Service: 25 Years, 0 Months Retirement Allowance Factor: .014 Payment Option: Guaranteed Term Plus Life (Survivor benefit - monthly payments)
(Given the above, the target percentage is 55%) Step 1: 55% x $180,000 = $99,000 Step 2: .014% x $180,000 x 25 = $63,000 Step 3: $99,000 - $63,000 = $36,000 Step 4: $36,000 x 100% = $36,000 Step 5: $36,000/12 = $3,000 Monthly payments of $3,000 will be made for 15 years, or for the life of the employe if greater than 15 years. EXAMPLE 1A Assumptions listed for Example 1 apply with the exception of the following: Payment Option: Guaranteed Term Plus Life (Survivor benefit - lump sum payment) NBD Bank 9% Prime Interest Rate: Date of Employe's Death January 31,1999 13 15 EXHIBIT C (CONTINUED) Monthly payments of $3,000 are made for the life of the employe (see Example 1). Upon the death of the employe (January 31,1999), a lump sum payment of $258,277.20 is made to the beneficiary (see Exhibit B). EXAMPLE 2 Assumptions: Date of Termination: January 31,1994 Age at Termination: 58 Years, 6 Months Position: Vice President Average Final Compensation: $180,000 Company Service & Awarded Service: 25 Years, 6 Months Retirement Allowance Factor: .014 Payment Option: Guaranteed Term Plus Life (Survivor benefit-monthly payments)
(Given the above, the target percentage is 55.5%) Step 1: 55.5% x $180,000 = $99,900 Step 2: .014 x $180,000 x 25.5 x 88% = $56,549 Step 3: $99,900 - $56,549 = $43,351 Step 4: $43,351 x 85% = $36,848.35 Step 5: $36,848.35/12 = $3,070.70 Monthly payments of $3,070.70 will be made for 15 years, or for the life of the employe if greater than 15 years. 14 16 EXHIBIT C (CONTINUED) EXAMPLE 2A Assumptions listed for Example 2 apply with the exception of the following: Payment Option: Actuarial-Adjusted Life with a 100% Joint and Survivor Benefit Employe/Beneficiary Beneficiary is two years younger Age Difference: than the employe Step 1 - Step 5: Same as Example 2. The monthly benefit under the Guaranteed Term Plus Life option is $3,070.70 Step 6: $3,070.70 x .9554 = $2,933.75 Monthly payments of $2,933.75 are made for the life of the employe. Upon the death of the employe, monthly payments of $2,933.75 are made for the life of the designated beneficiary. Upon the death of the designated beneficiary, all payments cease. EXAMPLE 2B Assumptions listed for Example 2A apply with the exception of the following: Payment Option: Actuarial-Adjusted Life with a 50% Joint and Survivor Benefit Step 1 - Step 5: Same as Example 2. The monthly benefit under the Guaranteed Term Plus Life option is $3,070.70 Step 6: $3.070.70 x 1.0572 = $3,246.34 Monthly payments of $3,246.34 are made for the life of the employe. Upon the death of the employe, monthly payments of $1,623.17 ($3,246.34 x 50%) are made for the life of the designated beneficiary. Upon the death of the designated beneficiary, all payments cease. 15 17 EXAMPLE 3 Assumptions: Date of Termination: January 31,1994 Age at Termination: 58 Years, 6 Months Position: Vice President Average Final Compensation: $180,000 Company Service & Awarded Service: 14 Years, 0 Months Retirement Allowance Factor: .014 Payment Option: Guaranteed Term Plus Life (Survivor benefit - monthly payments) (Given the above, the target percentage is 44%) Step 1: 44% x $180,000 = $79,200 Step 2: $0 (Employe is ineligible for an immediate benefit under the Retirement Plan) Step 3: $79,200 - $0 = $79,200 Step 4: $79,200 x 85% = $67,320 Step 5: $67,320/12 = $5,610.00 Monthly payments of $5,610.00 will be made until a benefit is payable under the Retirement Plan. At that time the benefit payable under the MSBP will be offset by an amount equivalent to the benefit paid under the Retirement Plan (Step 6 - Option III assumed). Step 6: .014 x $180,000 x 14 = $35,280 Step 7: $67,320 - $35,280 = $32,040 Step 8: $32,040/12 = $2,670.00 Monthly payments of $2,670.00 will be made for the years remaining of the 15 years guaranteed (i.e., 8.5 years) or for the life of the employe if greater. 16 18 EXAMPLE 3A Assumptions listed for Example 3 apply with the exception of the following: Age at Termination: 60 Employe/Beneficiary Beneficiary is two years younger Age Difference: than the employee Step 1 - Step 3: Same as Example 3. Step 4: $79,200 x 100% = $79,200 Step 5: $79,200/12 = $6,600.00
Monthly payments of $6,600.00 will be made to the employe until a benefit is payable under the Retirement Plan. At that time the benefit payable under the MSBP will be offset by an amount equivalent to the benefit paid under the Retirement Plan (Step 6 - Option II assumed). Step 6: .014 x $180,000 x 14 x 88% = $31,046.40 Step 7: $79,200 - $31,046.40 = $48,153.60 Step 8: $48,153.60/12 = $4,012.80
Monthly payments of $4,012.80 will be made for the years remaining of the 15 years guaranteed (i.e., 10 years) or for the life of the employe if greater. 17 EX-11.23 8 EX-11.23 1 EXHIBIT 11-23 PRIMARY AND FULLY DILUTED EARNINGS PER SHARE OF COMMON STOCK
Three Months Six Months Twelve Months Ended Ended Ended June 30, 1995 June 30, 1995 June 30, 1995 ------------- ------------- ------------- (Thousands, except per share amounts) PRIMARY: Earnings for Common Stock ............... $ 84,152 $ 190,235 $ 395,174 Weighted average number of common shares outstanding (a) ............... 144,876 144,870 145,069 Earnings per share of Common Stock based on weighted average number....... $0.58 $1.31 $2.72 FULLY DILUTED: Earnings for Common Stock ............... $ 84,152 $ 190,235 $ 395,174 Convertible Preferred Stock dividends.... 72 148 302 ---------- --------- --------- $ 84,224 $ 190,383 $ 395,476 ========== ========= ========= Weighted average number of common shares outstanding (a) ............... 144,876 144,870 145,069 Conversion of convertible Preferred Stock................................. 299 305 311 ---------- --------- --------- 145,175 145,175 145,380 ========== ========= ========= Earnings per share of Common Stock assuming conversion of outstanding convertible Preferred Stock .......... $0.58 $1.31 $2.72
--------------- (a) Based on a daily average. EX-15.59 9 EX-15.59 1 Exhibit 15-59 August 7, 1995 The Detroit Edison Company Detroit, Michigan We have conducted a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of The Detroit Edison Company and subsidiary companies for the three-month, six-month and twelve-month periods ended June 30, 1995, as indicated in our report dated August 7, 1995. Because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, is incorporated by reference in Registration Statement No. 33-57545 on Form S-4 of DTE Holdings, Inc., and is also incorporated by reference in the following Registration Statements of The Detroit Edison Company: FORM REGISTRATION NUMBER Form S-3 33-30809 Form S-3 33-50325 Form S-3 33-53207 Form S-3 33-57095 Form S-3 33-64296 Form S-4 33-60333 Form S-8 33-32449 We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statements listed above which are prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP EX-27.4 10 EX-27.4
UT THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME, BALANCE SHEET, STATEMENT OF CASH FLOWS, STATEMENT OF COMMON SHAREHOLDERS' EQUITY AND PRIMARY AND FULLY DILUTED EARNINGS PER SHARE OF COMMON STOCK AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 PER-BOOK 8,522,712 438,793 795,093 1,367,821 0 11,124,419 1,448,828 498,507 1,420,095 3,367,430 0 379,946 3,806,112 20,000 0 121,877 19,214 0 120,838 183,765 3,105,237 11,124,419 1,736,229 147,269 1,229,082 1,376,351 359,878 (7,461) 352,417 147,371 205,046 14,811 190,235 149,221 136,520 297,880 1.31 1.31
EX-99.29 11 EX-99.29 1 EXHIBIT 99.29 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST EFFECTIVE JULY 24, 1995 2 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST TABLE OF CONTENTS I. DEFINITIONS........................................... 2 1.1 Beneficiary........................................................ 2 1.2 Board of Directors................................................. 2 1.3 Change of Control.................................................. 2 1.4 Company............................................................ 4 1.5 Effective Date..................................................... 4 1.6 Reserved........................................................... 4 1.7 Excess Assets..................................................... 4 1.8 Funding Amount..................................................... 4 1.9 General Creditors.................................................. 4 1.10 Reserved........................................................... 4 1.11 Insolvent.......................................................... 4 1.12 Investment Manager................................................. 4 1.13 IRC................................................................ 4 1.14 Participant........................................................ 5 1.15 Reserved........................................................... 5 1.16 Plan Administrator................................................. 5 1.17 Potential Change of Control........................................ 5 1.18 Potential Change of Control Period................................. 6 1.19 Reserved........................................................... 6 1.20 Trust.............................................................. 6 1.21 Trust Fund......................................................... 6 1.22 Trustee............................................................ 7 1.23 Valuation Date..................................................... 7
3 II. ESTABLISHMENT OF THE TRUST............................ 7 2.1 Trust.............................................................. 7 2.2 Description of Trust............................................... 7 2.3 Irrevocability..................................................... 9 2.4 Acceptance by the Trustee.......................................... 9 III. CONTRIBUTIONS......................................... 9 3.1 Calculations of Funding Amount..................................... 9 3.2 Contributions as of Each Valuation Date............................ 9 3.3 Reserved........................................................... 9 3.4 No Dilution of Trust............................................... 10 3.5 Collection......................................................... 10 IV. ACCOUNTING AND ADMINISTRATION......................... 11 4.1 Trustee Recordkeeping.............................................. 11 4.2 Company Recordkeeping.............................................. 11 4.3 Periodic Accounting................................................ 11 4.4 Administrative Powers of Trustee................................... 12 V. INVESTMENTS........................................... 15 5.1 Generally.......................................................... 15 5.2 Investment Powers of Trustee....................................... 15 5.3 Investment Managers................................................ 19 5.4 Reserved........................................................... 20 5.5 Single Fund........................................................ 20 VI. PAYMENTS FROM THE TRUST............................... 20 6.1 Obligation of Trustee to Make Payments to Participants............. 20 6.2 Obligation of the Company to Make Payments to Participants......... 20 6.3 Distributions to Participants...................................... 21
4 6.4 Reserved........................................................... 21 6.5 Insufficient Trust Fund Assets..................................... 21 6.6 Payment of Excess Assets to Company................................ 21 6.7 Company to Pay Withholding and Employment Taxes.................... 22 6.8 Payment in Reversion to Company.................................... 22 6.9 Reserved........................................................... 23 VII. PAYMENTS ON INSOLVENCY OF THE COMPANY................... 23 7.1 No Security Interest............................................... 23 7.2 Determination of Insolvency........................................ 23 7.3 Payments When Company Is Insolvent................................. 24 7.4 Resumption of Duties after Insolvency.............................. 25 7.5 Reserved........................................................... 25 VIII. RESIGNATION OR REMOVAL OF TRUSTEE....................... 25 8.1 Resignation or Removal of Trustee.................................. 25 8.2 Successor Trustee.................................................. 25 8.3 Duties of Retiring and Successor Trustees.......................... 26 8.4 Reserved........................................................... 26 IX. AMENDMENT AND TERMINATION OF TRUST...................... 27 9.1 Amendment.......................................................... 27 9.2 Termination........................................................ 28 9.3 Reserved........................................................... 28 X. GENERAL PROVISIONS...................................... 28 10.1 Coordination with Plan............................................. 28 10.2 Litigation......................................................... 28 10.3 Trustee's Action Conclusive........................................ 28 10.4 No Guarantee or Responsibility..................................... 29 10.5 Liabilities Mutually Exclusive..................................... 29 10.6 Indemnification.................................................... 29 10.7 Expenses and Compensation.......................................... 29
5 10.8 Reserved......................................................... 30 10.9 Notice........................................................... 30 10.10 Antiassignment Clause............................................ 30 10.11 True and Correct Document........................................ 30 10.12 Waiver of Notice................................................. 30 10.13 Counterparts..................................................... 30 10.14 Gender and Number................................................ 31 10.15 Successors....................................................... 31 10.16 Severability..................................................... 31 10.17 Applicable Law................................................... 31
EXHIBIT A The Detroit Edison Company IRREVOCABLE GRANTOR TRUST FOR THE SAVINGS REPARATION PLAN EXHIBIT B The Detroit Edison Company IRREVOCABLE GRANTOR TRUST PARTICIPANTS (as defined in the Trust) 6 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST THIS TRUST AGREEMENT is made this 24th day of July, 1995 by and between The Detroit Edison Company, a Michigan corporation, and The Northern Trust Company, an Illinois corporation, of Chicago, Illinois ("Trustee"), and any successor provided for in the Trust hereby evidenced, as Trustee. WITNESSETH THAT: WHEREAS, the Company has established and maintains the Savings Reparation Plan ("Plan"), an unfunded benefit plan, a copy of which is attached hereto as Exhibit A, for the benefit of certain Company Executives listed on Exhibit B hereto, which Exhibits may be amended from time to time by the Company prior to a potential Change of Control and/or Change of Control, and without the Trustee's consent; and WHEREAS, the Company has incurred and expects to continue to incur liabilities pursuant to the terms of the Plan, and wishes to establish an irrevocable trust by placing assets in trust, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, to pay benefits under the Plan or to be applied as otherwise provided for herein; and WHEREAS, it is the intention of the Company that amounts transferred to the Trust and the earnings thereon shall be used by the Trustee, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, to satisfy the liabilities of the Company in accordance with the provisions hereof; and, upon satisfaction of all liabilities of the Company with respect to all Participants (and their Beneficiaries, if applicable), the assets, if any, remaining in the Trust shall revert to the Company; and WHEREAS, the Company intends that the existence of the Trust shall not alter the characteristics of the Plan as an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management and/or highly-compensated employes, and shall not be construed to provide income - 1 - 7 for federal income tax purposes to a Participant (or his or her Beneficiary) prior to the actual payment of benefits under the Plans; and WHEREAS, the Trustee has agreed to serve as trustee of such trust; NOW, THEREFORE, in consideration of the mutual undertakings of the Company and the Trustee, the parties do hereby establish the Trust, and agree that the Trust shall be comprised, held, and disposed of as follows: I. DEFINITIONS Unless the context requires otherwise, definitions as used herein shall have the same meaning as in the Plan when applied to said Plan. 1.1 "Beneficiary" means the beneficiary designated as provided in the Plan as set forth in Exhibit A. 1.2 "Board of Directors" means the Company's Board of Directors, as constituted from time to time. 1.3 "Change of Control" means the occurrence of any of the following events: (a) a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the Securities Act of 1934, as amended (the "Exchange Act"), or any successor provisions, whether or not the Company is then subject to such reporting requirement; or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an employe benefit plan maintained by the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of the Board of Directors (the "Base Capital Stock"); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's - 2 - 8 ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company; or (c) a change in the composition of the Company's Board of Directors, as a result of which fewer than two-thirds of the incumbent directors are directors who either (1) had been directors of the Company 24 months prior to such change, or (2) were elected, or nominated for election, to the Company's Board of Directors with the affirmative votes of at least a majority of the directors who had been directors of the Company 24 months prior to such change and who were still in office at the time of the election or nomination; or (d) there shall be consummated (1) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted into cash, securities, or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (2) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (3) the stockholders of the Company approve a plan or proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing provisions of this Section 1.3 a "Change of Control" shall not be deemed to have occurred by reason of the corporate reorganization (the "Reorganization") of the Company implemented pursuant to the resolution adopted - 3 - 9 by the Board of Directors of the Company on December 5, 1994 (as such resolution may be amended or supplemented from time to time), whereby it is proposed that a corporation will become the parent holding company of the Company. The Company shall promptly notify the Trustee of a Change of Control and the Trustee may conclusively rely upon such notice and shall have no duty to independently determine whether a Change of Control has occurred. 1.4 "Company" means The Detroit Edison Company, a Michigan corporation, its successors and assigns. 1.5 "Effective Date" means July 24, 1995. 1.6 Reserved. 1.7 "Excess Assets" means assets of the Trust in excess of one hundred and twenty-five per cent (125%) of the Funding Amount. 1.8 "Funding Amount" means the actual benefit obligation on the books of the Company as of the most recent Valuation Date, certified by the Company to the Trustee. Upon any Potential Change of Control and during any Potential Change of Control Period, "Funding Amount" means one hundred and twenty per cent (120%) of the actual benefit obligation on the books of the Company as of the most recent Valuation Date, as certified by the Company to the Trustee. 1.9 "General Creditors" means the unsecured general creditors of the Company, including the Participants. 1.10 Reserved. 1.11 "Insolvent" and "Insolvency" mean that the Company (a) is unable to pay its debts as they become due; or (b) is subject to a pending proceeding as a debtor under the Bankruptcy Code. - 4 - 10 1.12 "Investment Manager" means the investment manager(s) appointed by the Company in the manner provided in Section 5.3 to direct the investment of any part or all of the assets of the Trust Fund in accordance with Article V. 1.13 "IRC" means the Internal Revenue Code of 1986, as amended. 1.14 "Participant" means a Participant in the Plan and includes an individual who is otherwise eligible to participate in the Plan but cannot due to age, years of service or active employment. The Company agrees to list all Participants on Exhibit B attached hereto. Except after a Change of Control as provided in Section 3.4, the Company may add or delete Participants by delivering a new Exhibit B to the Trustee. 1.15 Reserved. 1.16 "Plan Administrator" means the party designated under the Plan as responsible for the management, operation, and administration of the Plan. 1.17 "Potential Change of Control" means the date of the earliest occurrence of any of the following events: (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control of the Company; or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an employee benefit plan maintained by the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 9.5% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of the Board of Directors (the "Base Capital Stock"); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's ownership of securities, shall be disregarded until such person increases in - 5 - 11 any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company; or (c) the public announcement by any individual or entity, other than the Company, that such individual or entity intends to take or to consider taking actions which, if consummated, would constitute a Change of Control of the Company; or (d) the public announcement of any merger, acquisition, consolidation, or reorganization of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company's common stock would be converted into cash, securities, or other property, other than a transaction in which the holders of the Company's common stock immediately prior to the merger, acquisition, consolidation, or reorganization have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, acquisition, consolidation, or reorganization, including, but not limited to, the creation of a parent entity to oversee the Company; or (e) the public announcement of the sale or other transfer of substantially all of the assets of the Company to any third party; or (f) the Board of Directors of the Company adopts a resolution to the effect that a Potential Change of Control of the Company has occurred for purposes of this Trust. Notwithstanding the foregoing provisions of this Section 1.17, a "Potential Change of Control" shall not be deemed to have occurred by reason of the Reorganization (as defined in Section 1.3). 1.18 "Potential Change of Control Period" means the one (1) year period immediately following the date of a Potential Change of Control. If a subsequent Potential Change of Control occurs during any Potential Change of Control Period, the Potential Change of Control Period shall end one (1) year following the date of the most recent Potential Change of Control. The Company shall promptly notify the Trustee of a Potential Change of Control and the Trustee may conclusively rely upon such notice and shall have - 6 - 12 no duty to independently determine whether a Potential Change of Control has occurred. 1.19 Reserved. 1.20 "Trust" means the irrevocable trust established pursuant to this Trust Agreement and all of the terms and conditions of this Trust Agreement, which is intended to constitute a grantor trust under IRC Sections 671 et seq. 1.21 "Trust Fund" means all moneys, securities, and other property held by the Trustee, any custodian, or any insurance company under this Trust. 1.22 "Trustee" shall mean the trustee named herein, and any successor trustee appointed pursuant to Article VIII. 1.23 "Valuation Date" means the day in each calendar year which is the last day of the Company's fiscal year in each year, and such other times as the Company may determine. Each of (a) any date of a Potential Change of Control, (b) the date of a Change of Control, (c) the effective date of a Trustee's resignation or removal, and (d) the date of termination of the Trust shall also be a Valuation Date if any such date occurs other than on the last business day of the Company's fiscal Year. The first Valuation Date shall be December 31, 1994. II. ESTABLISHMENT OF THE TRUST 2.1 Trust. The Company hereby establishes the Trust with the Trustee, which Trust shall consist of such sums of money and other property acceptable to the Trustee as from time to time have been and shall be paid or delivered by the Company to the Trustee as provided herein. All such money and other property, all investments and reinvestments made therewith, or the proceeds thereof, and all investment earnings and profits thereon, less all payments and charges as authorized herein, shall constitute the Trust Fund. The Trust Fund shall be held in trust by the Trustee, and shall be dealt with in accordance with the provisions of this Trust. 2.2 Description of Trust. The Company represents and agrees that: (a) the Trust is intended to be a grantor trust under IRC Sections 671-678, and shall be construed accordingly. The Company intends and agrees that it is - 7 - 13 the "owner" or grantor of the Trust in its entirety, as that term is defined in subpart E, part I, subchapter J, chapter 1, subtitle A of the IRC and that, for income tax purposes, all income, deductions, and credits of the Trust Fund belong to it as owner, and will be included on its income tax or other required tax returns, and any income tax determined to be payable as a result thereof will be the sole obligation of, and will be paid by, the Company; (b) a true and correct copy of the Plan, as in effect on the Effective Date hereof, is attached hereto as Exhibit A. The Company shall file with the Trustee, promptly upon its adoption, a true and correct copy of each amendment to the Plan; (c) the Trust Fund is to be used to satisfy the legal obligations of the Company to Participants under the Plan as provided herein, subject to the claims of General Creditors in the event of Insolvency, and the balance of the Trust Fund, if any, remaining after payment of the Company's obligation to Participants under the Plan will revert to the Company in accordance with the Trust; (d) contributions by the Company to the Trust which are made coincident with and subsequent to the Effective Date shall be in amounts determined under Article III hereof. The Company agrees to fund the Trust as provided therein; (e) the principal of the Trust, and any earnings thereon shall be held by the Trustee separate and apart from other funds of Company, and shall be used exclusively for the uses and purposes as herein set forth; (f) the Trust established under this agreement does not fund and is not intended to fund the Plan, or any other employe benefit plan or program of the Company. Neither the establishment of the Trust, nor the payment or delivery of assets to the Trustee shall vest any Participant in any right, title, or interest in or to any assets of the Trust Fund; (g) participants shall have no preferred claim on, or any beneficial ownership interest in, assets of the Trust. To the extent that any Participant acquires the right to receive payment(s) under the Plan, any such right shall be mere unsecured contractual rights of Participants against the Company, - 8 - 14 and such Participants (or their Beneficiary(ies)) shall have only the unsecured promise of the Company that such payment(s) will be made. Any assets held by the Trust will be subject to the claims of General Creditors under federal and state law in the event of Insolvency, as defined herein, with no preference whatsoever given to claims of employes over claims of other unsecured creditors of the Company; and (h) to the extent the Plan is covered by ERISA, the Plan is a plan for a select group of management or highly compensated employes, and as such are exempt from the application of ERISA except for the disclosure requirements applicable to such plan, for which the Company bears full responsibility as to compliance. The Company further represents that the Plan is not qualified under IRC Section 401 and therefore, is not subject to any IRC requirements applicable to tax-qualified plans. 2.3 Irrevocability. Except as provided in Article 9 and this Section 2.3, the Trust shall be irrevocable from the effective date, and the assets of the Trust Fund shall be held in accordance with the provisions hereof for the exclusive purpose of providing for the payment of the Company's obligations to pay benefits to Participants under the Plan and to satisfy the claims of General Creditors in the event of Insolvency, and defraying the expenses of the Trust. Except as provided in Section 6.6 and Section 6.8 and in the event of Insolvency, no part of the income or corpus of the Trust Fund shall be recoverable by or for the benefit of the Company. 2.4 Acceptance by the Trustee. The Trustee accepts the Trust established under this Trust Agreement on the terms and subject to the provisions set forth herein, and agrees to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under this Trust. III. CONTRIBUTIONS 3.1 Calculations of Funding Amount. By September 30, 1995, the Company shall contribute to the Trust the Funding Amount as determined on the first Valuation Date. As of each Valuation Date, and until the entire Trust Fund has been distributed, the Company (or, after a Change of Control, the Company's independent public accountants) shall recalculate the Funding Amounts. - 9 - 15 3.2 Contributions as of Each Valuation Date. During the life of the Trust but no later than September 30 of each year, commencing no later than September 30, 1996, the Company shall contribute to the Trust such amount as is necessary to make trust assets equal the Funding Amount as of the previous Valuation Date. The Plan Administrator or its delegate (or, after a Change of Control, the Company's independent public accountants) shall provide the Trustee with written notice of the amount of the necessary contribution on or before the date such contribution is due to the Trust. Any such payments to the Trustee do not discharge or release the Company of its obligation under the Plan or Section 6.2 to pay benefits to Participants under the Plan, and shall at all times be subject to the provisions of Article VII. 3.3 Reserved. 3.4 No Dilution of Trust. After a Change of Control, the Exhibit B in effect on the date of a Change of Control shall not be amended to include a Participant not named in the Exhibit B in effect on the date of a Change of Control, unless pursuant to the requirements of this Section 3.4, at the time of delivery to the Trustee of a proposed amended Exhibit B (the "Delivery Date"), the Company shall deliver to the Trustee a determination by the Company's independent public accountants as of the Delivery Date of the proposed amended Exhibit B of the Funding Amount calculated based on the Participants named in the Exhibit B in effect on the Date of the Change of Control and any new or additional Participants named in the proposed amended Exhibit B (the "New Funding Amount") and (b), assets in an amount necessary to make the trust assets equal the New Funding Amount. If the Trustee determines that assets of the Trust Fund, including such assets as are delivered by the Company on the Delivery Date, equal or exceed the New Funding Amount, the Trustee shall accept the amended Exhibit B. Any amended Exhibit B so accepted shall be deemed incorporated with the same effect as if otherwise included herein. Unless an Exhibit B amended after a Change of Control is accepted by the Trustee as provided in this Section, the Trustee shall have no liability, responsibility, or obligation with respect to a Participant named in any amended Exhibit B unless such Participant is named in the Exhibit B then in effect on the date of a Change of Control. 3.5 Collection. In the event the Company fails to pay over to the Trustee within one hundred and twenty (120) days of notice and demand from the Trustee (or, upon the occurrence of a Potential Change of Control or a Change of Control, - 10 - 16 within seven (7) days of notice and demand from the Trustee), any amount determined to be payable by the Company to the Trustee under Sections 3.2, 6.5 or 7.4(a) of the Trust, the Trustee may commence legal action, (which is expressly deemed to include without limitation an alternate dispute resolution proceeding), to compel the Company to pay to the Trustee any amount determined to be payable to it under the Trust. The Trustee may bring such action against the Company in any court of competent jurisdiction, and shall be entitled to recover for the benefit of the Trust from the Company such amount, plus interest for each day at the rate of interest per annum of five (5) percentage points in excess of the prime lending rate as announced by NBD Bank, from the due date specified in the Trustee's notice and demand (or the date(s) from which pro rata payments were made, if such action is brought by the Trustee pursuant to Section 6.5 hereof) to the date of payment, plus all costs of collection, including reasonable attorneys fees and costs of litigation. The Trustee is authorized to bring action to compel payment by the Company, and, in connection with reasonable claims for delinquent contributions by the Company, to retain, at the expense of the Company, counsel and other appropriate experts, including actuaries and accountants, to aid it in pursuing litigation for collection against the Company. The Trustee's anticipated reasonable costs and expenses incurred pursuant to this Section 3.5 are payable by the Company in advance; and should the Company not make timely payment, the Trustee may charge the Trust Fund for such reasonably anticipated costs and expenses. The Trustee shall in no event be required to advance or expend its own funds in order to comply with the provisions of this Section 3.5. IV. ACCOUNTING AND ADMINISTRATION 4.1 Trustee Recordkeeping. The Trustee shall keep or cause to be kept accurate and detailed records of any investments, receipts, disbursements, and all other transactions required to be made by the Trustee hereunder, in accordance with such rules as may be established by the Company, including such specific records as shall be agreed upon in writing between the Company and the Trustee. All accounts, books, and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company. All such accounts, books, and records shall be preserved (in original form, or on microfilm, magnetic tape, or any other similar process) for such period as the Company may determine, and the Trustee may only destroy such accounts, books, and records after first notifying the Company in writing of its intention to so, and transferring to the Company any of such accounts, books, and records requested by the Company. - 11 - 17 4.2 Company Recordkeeping. The Company shall keep full, accurate, and detailed books and records with respect to the Participants and benefits paid and payable under the Plan, which records shall be made available to the Trustee at its request. 4.3 Periodic Accounting. Within sixty (60) days following a Valuation Date, the Trustee shall deliver to Company a written accounting, dated as of the Valuation Date, of its administration of the Trust Fund during such year or during the period from the most recent Valuation Date to the date of such current Valuation Date, which accounting shall be in accordance with the following provisions: (a) Such accounting shall set forth all investments, receipts, disbursements, and other transactions effected the by Trust Fund during the preceding year, or during the period from the most recent Valuation Date to the date of such current Valuation Date, including a description of all securities and investments purchased and sold, with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities or other property held in the Trust Fund, less liabilities known to the Trustee (other than liabilities to Participants entitled to benefits under the Plans) at the end of such year or other period, as the case may be. In making a valuation, all cash, securities or other property held in the Trust Fund shall be valued at their then fair market value, and shall be in a format as may be established by the Company. A copy of each accounting so delivered to the Company shall be open to inspection at the office of the Trustee during normal business hours. (b) If within ninety (90) days after the filing of such written accounting, the Company has not delivered to the Trustee notice of any objection to any act or transaction of the Trustee, the initial accounting shall become an account stated as between the Trustee and the Company. If any objection has been delivered to the Trustee by the Company, and if the Company is satisfied that it should be withdrawn, the Company shall signify its approval of the accounting in writing filed with the Trustee, and the accounting shall become an account stated as between the Trustee and the Company. If the accounting is adjusted following an objection thereto, the Trustee shall file and deliver the adjusted accounting to the Company. If within fifteen (15) days after such filing of an adjusted accounting, the - 12 - 18 Company has not delivered to the Trustee notice of any objection to the transactions as so adjusted, the adjusted accounting shall become an account stated as between the Trustee and the Company. (c) Unless an accounting is fraudulent, when it becomes an account stated, it shall be finally settled, and the Trustee shall, to the extent permitted by applicable law, be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions shown in such accounting. 4.4 Administrative Powers of Trustee. Except to the extent that authority with respect to the administration of the Trust has been allocated to others in accordance with this Trust, and subject to Article V, the Trustee shall have exclusive authority and discretion to manage and administer the Trust. The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Company which is contemplated by, and in conformity with, the terms of the Trustee's responsibilities under this Trust, and is given in writing by Company. The responsibility for maintenance of individual benefit records shall be retained by the Company, and may be delegated to such person or entity as the Company may employ from time to time. Except as otherwise provided herein, the Trustee shall have, without exclusion, all powers conferred on trustees by law and, without limiting the foregoing, shall have the following administrative powers, rights, and duties in addition to those provided elsewhere in this Trust: (a) to manage, sell, insure, and otherwise deal with all assets held by the Trustee on such terms and conditions as the Trustee shall decide; provided however, that if the Company delivers written instructions to the Trustee, the Trustee shall follow such instructions; (b) when directed by the Company or requested by a Participant pursuant to Article VI, to make payments from the Trust Fund to Participants and, when required by Article VII, to make payments from the Trust Fund to General Creditors entitled to payments thereunder; - 13 - 19 (c) except as provided in Article VI and Article VII, to waive, modify, reduce, compromise, release, contest, submit to arbitration, or settle or extend the time of payment of any claims, debts, damages, or demands of any nature in favor of or against the Trustee or all or any part of the Trust Fund; (d) to retain any disputed property until an appropriate final adjudication or release is obtained, and to represent the Trust in, or commence or defend, any litigation the Trustee considers in its discretion necessary in connection with the Trust Fund; (e) to withhold, if the Company so directs, all or any part of any payment required to be made hereunder as may be necessary and proper to protect the Trustee or the Trust Fund against any liability or claim on account of any estate, inheritance, income or other tax or assessment attributable to any amount payable hereunder, and to discharge any such liability with any part or all of such payment so withheld in accordance with Section 6.7; (f) to maintain records reflecting all receipts and payments under this Trust and such other records as the Company may specify and to which the Trustee agrees, which records may be audited from time to time by the Company or anyone named by the Company; and to furnish a written accounting to the Company as of each Valuation Date, as provided in Section 4.3; (g) if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy from a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. Notwithstanding the preceding sentence, the Trustee may loan to the Company the proceeds of any borrowing against an insurance policy held as an asset of the Trust; (h) to furnish the Company with such information for tax or other purposes which the Company may reasonably request and which the Trustee may not unreasonably withhold; - 14 - 20 (i) to employ accountants, advisors, agents, legal counsel (who, except following a Change of Control, may be legal counsel to the Company and who are not in the Company's reasonable judgment deemed to have a conflict of interest), consultants, custodians, depositories, experts and other providers of services, to consult with them with respect to the implementation and construction of this Trust, the duties of the Trustee hereunder, the transactions contemplated by this Trust, or any act which the Trustee proposes to take or omit, and to rely upon the advice of and services performed by such persons; to delegate discretionary powers to such persons and to reasonably rely upon information and advice furnished by such persons; provided that each such delegation and the acceptance thereof by each such person shall be in writing; and provided further that the Trustee may not delegate its responsibilities as to the management or control of the assets of the Trust Fund; (j) to determine whether the Company is Insolvent, and to hold assets of the Trust Fund for the benefit of General Creditors in the event of Insolvency, as provided in Article VII hereof; (k) to make payments to Participants, including after a Change of Control, as provided in Article VI hereof; (l) to perform all other acts which in the Trustee's judgment are appropriate for the proper protection, management, investment, and distribution of the Trust Fund, and to carry out the purposes of the Trust. - 15 - 21 V. INVESTMENTS 5.1 Generally. With respect to assets for which the Trustee has investment responsibility, the Trustee shall invest and reinvest the principal and income of the Trust Fund and keep the Trust Fund invested, without distinction between principal and income, in accordance with the written investment guidelines established by the Company and provided to the Trustee by the Company. If no such written investment guidelines are received by the Trustee, the assets of the Trust Fund shall be invested in such investments as determined by the Trustee in accordance with the powers contained herein. 5.2 Investment Powers of Trustee. Except to the extent that authority with respect to the management of all or a portion of the Trust Fund has been allocated to others in accordance with this Trust, the Trustee shall have exclusive authority and discretion to manage and control the Trust Fund, subject only to broad investment guidelines the Company may establish from time to time. The authority to assume responsibility for investment of assets of the Trust Fund has been retained by the Company, and the authority to hold assets of the Trust Fund may be allocated to one or more custodians or insurance companies. Except as otherwise provided herein, the Trustee shall have, without exclusion, all powers conferred on trustees by applicable law and, without limiting the foregoing, shall have the following powers, rights, and duties in addition to those provided elsewhere in this Trust: (a) to invest and reinvest in any property wherever situated, whether real, personal, mixed, foreign or domestic, including common and preferred stocks, bonds, notes, and debentures (including convertible stocks and securities, but not including any stock, securities, or debt instruments of the Company [unless held in a collective or commingled fund and such Company securities comprise 5% or less of the assets of such fund]), leaseholds, mortgages (including, without limitation, any collective or part interest in any bond and mortgage or note and mortgage), certificates of deposit, life insurance contracts, guaranteed investment contracts, and guaranteed annuity contract, all regardless of diversification and without being limited to investments authorized by law for the investment of trust funds; (b) to invest and reinvest, without distinction between principal and income, in contracts for future delivery of United States Treasury Bills, other financial instruments, or indices based on any group of securities, and in - 16 - 22 options to buy or sell indices based on any group of securities or any kind of evidences of ownership or indebtedness, including financial instruments or futures contracts relating thereto; (c) to invest and reinvest part or all of the Trust Fund in any deposit accounts, deposit administration fund maintained by a legal reserve life insurance company in accordance with an agreement between the Trustee and such insurance company, a group annuity contract or life insurance policies issued by such insurance company to the Trustee as contract holder, any interest bearing deposits held by any financial institution having total capital and surplus of at least Fifty Million Dollars ($50,000,000), investments in any stocks, bonds, debentures, mutual fund shares, notes, commercial paper, treasury bills, and any mutual, common, commingled or collective trust funds or pooled investment funds, and to diversify such investments so as to minimize the risk of losses; (d) to commingle assets of the Trust Fund, for investment purposes only, with assets of any common, collective, or commingled trust fund which has been or may hereafter be established and maintained by the Trustee, or by any other financial institution; provided that to the extent that any part or all of the assets of the Trust Fund for which the Trustee has investment responsibility are invested in any such common, collective or commingled trust fund or pooled investment fund which is maintained by a bank or trust company (including a bank or trust company acting as Trustee), the provisions of the documents under which such common, collective or commingled trust fund or pooled investment fund are maintained shall govern any investment therein and provided further that prior to investing any portion of the Trust Fund for the first time in any such common, collective, or commingled trust fund, the Trustee shall advise the Company of its intent to make such an investment, and furnish to the Company any information it may reasonably request with respect to such common, collective, or commingled trust fund (other than a trust fund established by the Company), and provided further that the Trustee shall maintain separate records with respect to each other trust of the Trust Fund; (e) to vote stock and other voting securities personally or by proxy (and to delegate the Trustee's powers and discretion with respect to such stock or other voting securities to such proxy), to exercise subscription, - 17 - 23 conversion and other rights and options (and make payments from the Trust Fund in connection therewith), to take any action and to abstain from taking any action with respect to any reorganization, consolidation, merger, dissolution, recapitalization, refinancing and any other plan or change affecting any property constituting a part of the Trust Fund (and in connection therewith to delegate the Trustee's discretionary powers and pay assessments, subscriptions and other charges from the Trust Fund), to hold or register any property from time to time in the Trustee's name or in the name of a nominee or to hold it unregistered or in such form that title shall pass by delivery; and to borrow from anyone, including itself (to the extent permitted by law), such amounts from time to time as the Trustee considers desirable to carry out this Trust (and to mortgage or pledge all or part of the Trust Fund as security); to participate in any plan or reorganization, consolidation, merger, combination, liquidation, or other similar plan relating to any such property, and to consent to or oppose any such plan or any action thereunder, or any contract, lease, mortgage, purchase, sale, or other action by any corporation or other entity any of the securities of which may at any time be held in the Trust Fund, and to do any act with reference thereto; (f) to retain in cash such amounts as the Trustee considers advisable and as are permitted by applicable law, and to deposit any cash so retained in any depository (including any bank acting as Trustee) which the Trustee may select, provided such depository must have total capital and surplus of at least Fifty Million Dollars ($50,000,000); (g) when directed by the Company, and subject to Section 4.4(g), to apply for, pay premiums on, and maintain in force individual, ordinary or universal life insurance policies on the lives of Participants, which policies may contain provisions which the Company may approve or direct; to receive or acquire such policy or policies from the Company, but the Trustee may purchase a life insurance policy from a person other than the insurer which issues a policy only if the Trustee pays, transfers, or otherwise exchanges an amount no more than the cash surrender value of the policy or policies, and the policy or policies is (are) not subject to a mortgage or similar lien which the Trustee would be required to assume; to have with respect to such policy or policies any rights, powers, options, privileges, and benefits usually comprised in the term "incidents of ownership", and normally vested in an - 18 - 24 owner of such policy or policies to be exercised only pursuant to Company direction; (h) to retain any property at any time received by it; (i) to sell, to exchange, to convey, to transfer, or to dispose of, and to grant options for the purchase or exchange with respect to it, any property at any time held by it, by public or private sale, for cash or on credit, or partly for cash and partly for credit; (j) to deposit any such property with any protective, reorganization, or similar committee; to delegate discretionary power to any such committee; and to pay part of the expenses and compensation of any such committee and any assessments levied with respect to any property so deposited; (k) to exercise any conversion privilege or subscription right available in connection with any such property, and to do any act with reference thereto, including the exercise of options, the making of agreements or subscription, and the payment of expenses, assessment or subscription, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities or other property which it may so acquire; (l) to extend the time of payment of any obligation held in the Trust Fund; (m) to enter into standby agreements for future investment, either with or without a standby fee; (n) to acquire, renew, or extend, or participate in the renewal or extension of any mortgage, and to agree to a reduction in the rate of interest on any indebtedness or mortgage or to any other modification or change in the terms of any indebtedness or mortgage, or of any guarantee pertaining thereto, in any manner and to any extent that may be deemed advisable for the protection of the Trust Fund or the preservation of any covenant or condition of any indebtedness or mortgage or in the performance of any guarantee, or to enforce any default in such manner and to such extent as may be deemed advisable; and to exercise and enforce any and all rights of foreclosure, to bid on any property in foreclosure, to take a deed in lieu of foreclosure with or - 19 - 25 without paying a consideration therefor, and in connection therewith to release the obligation on the bond secured by such mortgage; and to exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect of any such indebtedness or mortgage or guarantee; (o) to make, execute, and deliver, as Trustee, any and all deeds, leases, notes, bonds, guarantees, mortgage, conveyance, contracts, waivers, releases, or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers; (p) to organize under the laws of any state one or more corporations, partnerships, or trusts for the purpose of acquiring and holding title to any property that it is authorized to acquire under this Trust, and to exercise with respect thereto any or all of the powers set forth in this Trust; (q) notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated under the IRC; and (r) generally to do all acts, whether or not expressly authorized, that the Trustee deems necessary or desirable for the protection of the Trust Fund, and to carry out the purposes of the Trust. 5.3 Investment Managers. The Company may appoint one or more Investment Managers to direct the investment of any part or all of the assets of the Trust Fund by the Trustee. Appointment of an Investment Manager shall be made by written notice to the Investment Manager(s) and to the Trustee, which notice shall specify those powers, rights, and duties of the Trustee under this Trust that are allocated to the Investment Manager(s) and the portion of the assets of the Trust Fund subject to the Investment Manager(s). After it receives written notice of such appointment, the Trustee shall have no obligation or responsibility for those investment duties which are allocated to an Investment Manager. An Investment Manager so appointed pursuant to this paragraph shall be either a registered investment adviser under the Investment Advisers Act of 1940, a bank, as defined in said Act, or an insurance company qualified to manage, acquire and dispose of the - 20 - 26 assets of the Plans under the laws of more than one state of the United States. Any such Investment Manager shall acknowledge to the Company in writing that is accepts such appointment. The Trustee shall not be liable for any loss or diminution of any assets managed by an Investment Manager, including without limitation, any loss or diminution caused by any action or inaction taken or omitted by it at the direction of an Investment Manager. In addition, the Trustee shall not be liable for the diversification of any assets managed by Investment Managers of the Company, each of which shall be solely the responsibility of the Company. An Investment Manager may resign at any time upon written notice to the Trustee and the Company. The Company may remove an Investment Manager at any time by written notice to the Investment Manager and the Trustee. The Company may by written notice to the Trustee assume investment responsibility for any portion or all of the Trust assets. The Trustee shall have no responsibility for any investments or review of such investments and shall act with respect to such assets only as directed by the Company. 5.4 Reserved. 5.5 Single Fund. All assets of the Trust Fund and of each investment fund, and the income thereon, shall be held and invested as a single fund, and the Trustee shall not make any separate investment of the Trust Fund, or make any separate investment fund, for the account of any Participant or other General Creditors prior to receipt of directions to make payments to such Participant or other General Creditors in accordance with Article VI or Article VII. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Participants. VI. PAYMENTS FROM THE TRUST 6.1 Obligation of Trustee to Make Payments to Participants. The Trustee's obligation to distribute to any Participant out of the assets of the Trust Fund shall be limited to payment at such times and in such amounts as are properly in conformance with the provisions of Section 6.3. Payments to Participants pursuant to this Article VI shall be made by the Trustee to the extent that funds in the Trust Fund are sufficient for such purpose, and shall at all times be subject to the provisions of Article VII. In the event the Company determines that it will pay benefits directly to Participants as they become due under the terms of the Plan, the - 21 - 27 the Company shall notify Trustee of its decision prior to the time amounts are payable to Participants. 6.2 Obligation of the Company to Make Payments to Participants. Notwithstanding anything in the Trust to the contrary, the Company shall remain primarily liable to pay benefits under the Plan. Distributions to Participants from the Trust Fund shall discharge, reduce, and offset the Company's obligation to pay benefits to or on behalf of the Participant, to the extent of the distributions, with respect to the Plan. If the Company's obligation to pay a benefit under the Plan is not fully discharged, reduced, and offset by a distribution from the Trust, then the Company shall make the balance of each such benefit payment as it becomes due. 6.3 Distributions to Participants. Distributions which shall be made from the Trust Fund to pay benefits in accordance with the Plan shall be initiated by: (a) written direction to the Trustee from the Plan Administrator, which direction shall certify that such distribution(s) is(are) in accordance with the Plan, and specify the timing, form, payee, and amount of such benefit payments, including any federal, state, or local income taxes to be withheld, and the Trustee shall make or commence the directed distributions after receipt of such written direction; or (b) by the submission to the Trustee by a Participant of certified copy of the non-appealable order of an appropriate forum with jurisdiction to settle a claim for payment(s) under the Plan. 6.4 Reserved. 6.5 Insufficient Trust Fund Assets. If at any time the Trustee determines or is advised that the Trust Fund does not have sufficient assets to permit the Trustee to make a payment property directed pursuant to this Trust, including a payment provided for under Section 10.7 of this Trust, the Trustee shall pay any benefits due (if otherwise payable hereunder) to Participants on a pro rata basis as directed by the Plan Administrator, and the Company shall make the balance of such payments as they become due. If the Plan Administrator determines that the Trust Fund does not have sufficient funds to provide for the payment of all amounts otherwise payable to Participants (or their Beneficiary(ies)) from the Trust under the Plans, it shall notify the Company and the Trustee of the amount of the deficiency, and, within forty-five - 22 - 28 (45) days of such notice, the Company deposit in trust with the Trustee the additional amounts needed to make such payments. Upon receipt of such amount by the Trustee from the Company, proceeds shall first be used by the Trustee to pay any benefits previously due remaining unpaid, in the order in which they were due, pursuant to Plan Administrator instructions. 6.6 Payment of Excess Assets to Company. Subject to Article VII, and except as otherwise provided in this Section and Section 6.8 hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust Fund before payment of all benefits due or to become due have been made to Participants (or their Beneficiary(ies)) pursuant to the terms of the Plan. If, as of a Valuation Date, and based on the fair market value of the Trust Fund as determined by the Trustee in accordance with Section 4.3 hereof, the Trust Fund holds Excess Assets, then in the event the Trustee has received within ninety (90) days after the most recent Valuation Date a written request executed by the Company, the Trustee shall transfer to the Company, within thirty (30) days after the receipt of the request, and provided that a Potential Change of Control Period does not exist on the date of the transfer, such assets of the Trust Fund selected by the Company which have a fair market value equal to the amount of such Excess Assets, after converting such assets to cash if requested by the Company. Any payment of Excess Assets to the Company under this Section shall not discharge or release the Company of its obligation to make any contribution required under Article III (including the requirement of a Company contribution to the Trust upon the occurrence of a Potential Change of Control or a Change of Control), and its obligation to pay benefits to Participants under the Plan. Any payment of Excess Assets in accordance with this Section shall be subject to the provisions of Article VII. 6.7 Company to Pay Withholding and Employment Taxes. Any amount paid to a Participant by the Trustee in accordance with this Article VI shall be reduced by the amount of taxes required to be withheld pursuant to Plan Administrator instructions, and the Trustee shall inform the Company of all amounts so withheld. The Company shall direct that the Trustee shall either (a) pay to the Company a sum equal to the amount of such taxes as are required to be withheld, whereupon the Company shall have full responsibility for the payment of all withholding taxes to the appropriate taxing authorities, or - 23 - 29 (b) pay such taxes directly to the appropriate taxing authorities for the benefit of the Company. The Company shall be solely responsible for the payment of any employment taxes for which it is directly liable as a result of payments by the Trustee. The Company shall furnish each Participant with the appropriate tax information form evidencing payments under the Trust and the amount(s) thereof. 6.8 Payment in Reversion to Company. Subject to Article VII, upon receipt of written certification from the Company that all obligations of the Company to Participants with respect to the Plan have been satisfied, and if the Trust Fund shall have any assets remaining, the Trustee shall distribute such remaining assets of the Trust Fund to the Company, after converting such assets to cash if requested by the Company, subject to the Trustee's right to retain such reasonable amount for compensation and expenses as provided in Section 10.7. The Trust shall thereafter terminate as provided in Section 9.2. 6.9 Reserved. VII. PAYMENTS ON INSOLVENCY OF THE COMPANY 7.1 No Security Interest. No Participant shall have any claim on or beneficial ownership interest in the Trust Fund before such assets are paid to the Participant, except as an unsecured creditor of the Company. The Company shall not create a security interest in the Trust Fund in favor of any Participant or any other General Creditor. At all times during the continuance of this Trust, as provided in this Article VII hereof, the principal and income of the Trust Fund shall be subject to the claims of General Creditors under federal and state law. If at any time the Trustee has received notice as provided below that Company is Insolvent, Trustee shall discontinue payments to Participants, and shall hold assets of the Trust Fund for the benefit of the Company's General Creditors, pursuant to the provisions of Section 7.3, with no preference whatsoever given claims of employes over claims of other unsecured creditors of the Company. 7.2 Determination of Insolvency. Notwithstanding any other provisions of this Trust, the following provisions shall apply: - 24 - 30 (a) The Board of Directors and the Chief Executive Officer of the Company shall have the fiduciary duty and responsibility on behalf of General Creditors to notify the Trustee promptly in writing in the event the Company is Insolvent, and the Trustee shall have the right to rely thereon to the exclusion of all directions or claims for payment made thereafter by Participants. (b) If the Trustee has actual knowledge that the Company is Insolvent, the Trustee shall act in accordance with Section 7.3 hereof. (c) Unless the Trustee receives written notice from the Board of Directors or the Chief Executive Officer of the Company that the Company is Insolvent, or from a person claiming to be a General Creditor and claiming that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. If the Trustee receives a written allegation from a person claiming to be a General Creditor that the Company is Insolvent, the Trustee's only duty of inquiry shall be to request that the Company's independent public accountants determine whether the Company is Insolvent, and shall suspend benefit payments pending such determination. If the Company's independent public accountants advise the Trustee that the Company is not Insolvent, it shall resume payments in accordance with this Trust. If the Trustee receives notice of the Company's Insolvency pursuant to this Section 7.2(c), it shall act in accordance with [this Section and] Section 7.3 hereof. 7.3 Payments When Company Is Insolvent. Notwithstanding any other provision of this Trust to the contrary, if the Trustee has actual knowledge as described in 7.2(b), has been advised pursuant to 7.2(c) or receives actual notice described in Section 7.2(a) that the Company is Insolvent (a) by reason of Section 1.11(b), the Trustee shall suspend payments to Participants and shall notify Participants of the suspension, and shall hold the Trust Fund for the benefit of the General Creditors, and shall pay and deliver the entire amount of the Trust Fund only as a court competent jurisdiction, or duly appointed receiver or other person authorized to act by such court, may order or direct to make the Trust Fund available to satisfy the claims of the General Creditors (payments to Participants in accordance with the terms of the Plan may be resumed only pursuant to Section 7.4 hereof); or - 25 - 31 (b) by reason of Section 1.11(a), the Trustee shall suspend payments to Participants and shall notify Participants of the suspension, and shall (i) hold the Trust Fund for the benefit of General Creditors or (ii) pay over all or a portion of the Trust Fund to General Creditors if directed by the Company or an appropriate judicial forum. Nothing in this Trust Agreement shall in any way diminish any rights of Participants to pursue their rights as unsecured creditors of Company with respect to benefits under the Plan, or otherwise. 7.4 Resumption of Duties after Insolvency. In the absence of notice of a Court order to the contrary, the Trustee shall resume all of its duties and responsibilities under the Trust, including payments to Participants if otherwise provided for herein, within thirty (30) days of the Trustee's receipt of a determination from the Company's independent public accounting firm that the Company is no longer Insolvent. (a) Trust Recovery of Payments to Creditors. In the event that amounts are paid from the Trust Fund to General Creditors of the Company, then as soon as practicable after the Company is no longer Insolvent, the Company shall deposit into the Trust Fund a sum to equal to the Funding Amount, determined as of the date the Company is no longer Insolvent, which date shall be a Valuation Date. The Company (or, after a Change of Control, the Company's independent public accountants) shall provide the Trustee with written certification of such Funding Amount. If the Funding Amount is not paid by the Company within ninety (90) days of the Trustee's receipt of such notice, the Trustee shall demand payment and the provisions of Section 3.5 shall apply. (b) Determination of Payment Amount; Resumption of Payments. Provided that there are sufficient assets of the Trust Fund, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 7.3 and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plan for the period of such discontinuance, as determined by the Plan Administrator, less the aggregate amount of any payments made to Participants by the Company in lieu of the payments - 26 - 32 provided for hereunder during any such period of discontinuance. If the Trustee suspends a payment to a Participant under this Section, and subsequently makes such payment, the payment shall include interest at the rate of interest per annum equal to the prime rate as published by NBD Bank for each day from the date of suspension to the date of payment, as calculated by the Plan Administrator. 7.5 Reserved. VIII. RESIGNATION OR REMOVAL OF TRUSTEE 8.1 Resignation or Removal of Trustee. The Trustee may resign for any reason or for no reason and at any time by giving thirty (30) days prior written notice to the Company (or such shorter notice as may be agreed to by the Company and the Trustee). Subject to Section 8.2(b) hereof, the Company may remove the Trustee, for any reason and with or without cause, by giving thirty (30) days prior written notice to the Trustee (or such shorter notice as may be agreed to by the Company and the Trustee). 8.2 Successor Trustee. In the event of the resignation or removal of a Trustee, a successor Trustee shall be appointed. Any successor Trustee appointed pursuant to this Section must be a corporation which is not an affiliate of the Company and which is authorized under the laws of the United States or of any state to administer trusts and has at the time of its appointment total capital and surplus of at least Fifty Million Dollars ($50,000,000). The Company shall give notice of any such appointment to the retiring Trustee and the successor Trustee. A successor Trustee shall be appointed in accordance with the following provisions: (a) At any time prior to a Change of Control, a successor Trustee shall be appointed by the Company. If a Trustee should resign or be removed, and the Company does not notify the Trustee of the appointment of a successor Trustee within forty-five (45) days of its notice of its resignation or removal, then the Company shall be deemed to have failed to have appointed a successor Trustee, and the Trustee shall apply to a court of competent jurisdiction for appointment of a successor Trustee. (b) After the occurrence of a Change of Control, the Trustee who is the Trustee on the date of the Change of Control may be removed by the - 27 - 33 Company for three (3) years from the date of the Change of Control. If a Trustee resigns or is removed at any time after the date of a Change of Control, the Trustee shall apply to a court of competent jurisdiction for appointment of a successor Trustee. Notwithstanding Section 8.1, no resignation by or removal of the Trustee shall be effective prior to the effective date of the appointment of a successor Trustee by the Company or a court of competent jurisdiction. 8.3 Duties of Retiring and Successor Trustees. In the event of the resignation or removal of a Trustee, the retiring Trustee shall within thirty (30) days after the effective date of resignation or removal furnish to the successor Trustee and the Company a final accounting of its administration of the Trust. A successor Trustee shall succeed to the right and title of the predecessor Trustee in the assets of the Trust Fund and the retiring Trustee shall deliver the property comprising the assets of the Trust Fund (less any unpaid fees and expenses of the retiring trustee) to the successor Trustee, together with any instruments of transfer, conveyance, assignment, and further assurance as the successor Trustee may reasonably require. All of the provisions of the Trust set forth herein with respect to the Trustee shall relate to each successor Trustee with the same force and effect as if such successor Trustee had been originally named as the Trustee hereunder. To the extent permitted by law, neither the Trustee nor the successor Trustee shall be liable for any act or failure to act, and shall not be required to examine the accounts, records, or acts of the other. 8.4 Reserved. IX. AMENDMENT AND TERMINATION OF TRUST 9.1 Amendment. Except as otherwise provided in Section 2.3 of this Trust, the Trust may be amended (but may not be not revoked unless all of the Company's obligations with respect to the Plan have been satisfied) in writing from time to time by delivery to the Trustee of such amendment executed by the Company, which amendment shall include the effective date of such amendment. Any amendment of the Trust may be made: (a) prior to a Change of Control, without limitation and in any manner and effective as of any date, including a retroactive effective date, if - 28 - 34 accompanied by the written certification that no Change of Control has occurred; (b) after a Change of Control, only if a period of three (3) years has elapsed since the Change of Control, and either: (1) such amendment is accompanied by the specific written consent to the amendment by Participants whose actuarial interests under the Plan, computed by the Company's independent public accountants as of the effective date of such amendment, represent at least 51% of the total of all actuarial interests under the Plan; or (2) such amendment is accompanied by the opinion of legal counsel satisfactory to the Trustee that the amendment is necessary for the purpose of conforming the Trust to any present or future federal or state law (including revenue laws) relating to trusts of this or similar nature, as such laws may be amended from time to time, and a certification that a copy of such notice and opinion of counsel has been delivered to each Participant. No amendment shall conflict with the terms of the Plan subject to amendment, and no amendment may reduce the "Funding Amount" or the contribution requirements of Article III to less than 50% of the actual benefit obligation on the books of the Company; provided such amendment shall be effective prior to a Potential Change of Control or a Change of Control. No amendment shall operate to change the duties and liabilities of the Trustee without its consent, or make the Trust revocable after it has become irrevocable in accordance with Section 2.3 hereof unless the Company has satisfied all obligations it may have with respect to the Plan as of the date of such amendment. The Company and the Trustee shall execute such amendments of the Trust as shall be necessary to give effect to any amendment made in accordance with this Section. 9.2 Termination. After all assets of the Trust Fund have been distributed by the Trustee to the Participants or their Beneficiaries in accordance with Article VI, the Trustee shall render an accounting, which shall be the final accounting, in the manner provided for in Section 4.3. Upon acceptance of the accounting by the Company, any assets remaining in the Trust Fund, after deduction of such reasonable amount for compensation and expenses as provided for in Section 10.7, - 29 - 35 shall be returned to the Company in the manner provided in Section 6.8, and the Trust shall terminate thereupon. The Trust and all the rights, titles, powers, duties, discretions and immunities imposed on or reserved to the Trustee and the Company, shall continue in effect until all assets of the Trust Fund have been distributed as provided herein. 9.3 Reserved. X. GENERAL PROVISIONS 10.1 Coordination with Plan. The responsibilities of the Trustee shall be governed solely by the terms of this Trust Agreement. 10.2 Litigation. In any action or proceeding regarding the Trust, the Company, any assets of the Trust Fund, or the administration of the Trust, any creditors who are not parties to such action or proceedings and any other persons having or claiming to have a beneficial interest in the Trust shall not be necessary parties and shall not be entitled to any notice of process. Any final judgment which is not appealed or appealable and which may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto and all persons having or claiming to have a beneficial interest in the Trust. Acceptance by a creditor of assets of the Trust Fund shall constitute a release of an equal amount of any obligations of the Company to such creditor. 10.3 Trustee's Action Conclusive. The Trustee's exercise or non-exercise of its powers and discretion in good faith shall be conclusive on all persons. No one other than the Company shall be obliged to see to the application of any money paid or property delivered to the Trustee. The certificate of the Trustee that it is acting according to this Trust will fully protect all persons dealing with the Trustee. 10.4 No Guarantee or Responsibility. Notwithstanding any other provision of this Trust to the contrary, the Trustee does not guarantee payment of any amount which may become due and payable to a Participant. The Trustee shall have no responsibility for the disclosure to Participants regarding the terms of the Plan or of this Trust, or for the validity thereof. The Trustee shall not be responsible for administrative functions under the Plan and shall have only such responsibilities under this Trust Agreement as specifically set forth herein. The Trustee will be under no liability or obligation to anyone with respect to any failure on the part of - 30 - 36 the Company, the Plan Administrator, the Company's independent public accounting firm, an Investment Manager, or a Participant to perform any of their respective obligations under the Plan or this Trust. The Trustee shall be fully protected in relying upon any notice or direction provided to it from any party in connection with the Trustee's duties hereunder which the Trustee in good faith believes to be genuine, and executed and delivered in accordance with this Trust. Nothing in this Trust shall be construed as requiring the Trustee to make any payment in excess of the amounts held in the Trust Fund at the time of such payment or otherwise to risk or expend its own funds. 10.5 Liabilities Mutually Exclusive. Each of the Trustee and the Company shall be responsible only for its own acts or omissions. 10.6 Indemnification. The Company agrees to indemnify to the extent permitted by law the Trustee and hold it harmless against Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) arising out of or in connection with the performance of the Trustee's duties arising hereunder (but excluding costs arising as a result of the Trustee's bad faith or gross negligence in the performance of its responsibilities hereunder), and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. This Section shall survive the termination of the Trust. 10.7 Expenses and Compensation. The Trustee shall be paid compensation by the Company in an amount agreed to by the Company and the Trustee. The Trustee shall be reimbursed by the Company for reasonable expenses incurred by it in the management and administration of this Trust Agreement, including the reasonable compensation of the Trustee's counsel and other agents; and if the Trustee is not timely reimbursed with respect to amounts due pursuant to this Section 10.7 (or in the case of expenses to be incurred pursuant to Section 3.5 hereof), the Trustee may charge such amounts against the Trust Fund. Any compensation or expenses so agreed upon or otherwise payable not paid by the Company on a timely basis may be charged to the Trust Fund no more frequently than quarter-annually upon notice to the Company. 10.8 Reserved. - 31 - 37 10.9 Notice. Any notice to the Trustee or to the Company required or permitted under this Trust shall be duly and properly given and delivered if sent by certified United States mail, return receipt requested, to the Trustee at: The Northern Trust Company Attn: Trust Department Fifty South LaSalle Street Chicago, Illinois 60675 and to the Company at: The Detroit Edison Company Attn: Vice President and Treasurer 2000 Second Street Detroit, Michigan 48226 or to such other address as the Trustee or the Company may specify by written notice to the other. 10.10 Antiassignment Clause. Benefits payable to Participants and their Beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. 10.11 True and Correct Document. Any persons dealing with the Trustee may rely upon a copy of this Trust and any amendments thereto certified to be true and correct by the Trustee. 10.12 Waiver of Notice. Any notice required under this Trust may be waived by the person entitled to such notice. 10.13 Counterparts. This Trust may be executed in two or more counterparts, any one of which will be an original without reference to the others. 10.14 Gender and Number. Words denoting the masculine gender shall include the feminine and neuter genders and the singular shall include the plural and the plural shall include the singular wherever required by the context. - 32 - 38 10.15 Successors. This Trust shall be binding on all persons entitled to payments hereunder and their respective heirs and legal representatives, and on the Company, the Trustee, and their respective successors. 10.16 Severability. If any provision of this Trust is held to be illegal or invalid, such illegality or invalidity shall not affect the remaining provisions of this Trust, which shall be construed and enforced as if such illegal or invalid provisions had never been inserted herein. 10.17 Applicable Law. The Trust shall be governed by and construed in accordance with the laws of the State of Michigan with respect to the Company's obligations and in accordance with the laws of the State of Illinois with respect to the Trustee's obligations and Trust Administration. IN WITNESS WHEREOF, the Company and the Trustee have caused this trust agreement to be signed by their duly authorized representatives, and have caused their respective seals to be hereunto affixed, as of the Effective Date. THE DETROIT EDISON COMPANY By ------------------------- Its ------------------------ THE NORTHERN TRUST COMPANY as Trustee By ------------------------- Its ------------------------ - 33 - EX-99.30 12 EX-99.30 1 EXHIBIT 99.30 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST EFFECTIVE JULY 24, 1995 2 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST TABLE OF CONTENTS I. DEFINITIONS........................................... 2 1.1 Beneficiary........................................................ 2 1.2 Board of Directors................................................. 2 1.3 Change of Control.................................................. 2 1.4 Company............................................................ 4 1.5 Effective Date..................................................... 4 1.6 Reserved........................................................... 4 1.7 Excess Assets...................................................... 4 1.8 Funding Amount..................................................... 4 1.9 General Creditors.................................................. 4 1.10 Reserved........................................................... 4 1.11 Insolvent.......................................................... 4 1.12 Investment Manager................................................. 4 1.13 IRC................................................................ 4 1.14 Participant........................................................ 5 1.15 Reserved........................................................... 5 1.16 Plan Administrator................................................. 5 1.17 Potential Change of Control........................................ 5 1.18 Potential Change of Control Period................................. 6 1.19 Reserved........................................................... 6 1.20 Trust.............................................................. 6 1.21 Trust Fund......................................................... 6 1.22 Trustee............................................................ 7 1.23 Valuation Date..................................................... 7
3 II. ESTABLISHMENT OF THE TRUST............................ 7 2.1 Trust.............................................................. 7 2.2 Description of Trust............................................... 7 2.3 Irrevocability..................................................... 9 2.4 Acceptance by the Trustee.......................................... 9 III. CONTRIBUTIONS......................................... 9 3.1 Calculations of Funding Amount..................................... 9 3.2 Contributions as of Each Valuation Date............................ 9 3.3 Reserved........................................................... 9 3.4 No Dilution of Trust............................................... 10 3.5 Collection......................................................... 10 IV. ACCOUNTING AND ADMINISTRATION......................... 11 4.1 Trustee Recordkeeping.............................................. 11 4.2 Company Recordkeeping.............................................. 11 4.3 Periodic Accounting................................................ 11 4.4 Administrative Powers of Trustee................................... 12 V. INVESTMENTS........................................... 15 5.1 Generally.......................................................... 15 5.2 Investment Powers of Trustee....................................... 15 5.3 Investment Managers................................................ 19 5.4 Reserved........................................................... 20 5.5 Single Fund........................................................ 20 VI. PAYMENTS FROM THE TRUST............................... 20 6.1 Obligation of Trustee to Make Payments to Participants............. 20 6.2 Obligation of the Company to Make Payments to Participants......... 20 6.3 Distributions to Participants...................................... 21
4 6.4 Reserved........................................................... 21 6.5 Insufficient Trust Fund Assets..................................... 21 6.6 Payment of Excess Assets to Company................................ 21 6.7 Company to Pay Withholding and Employment Taxes.................... 22 6.8 Payment in Reversion to Company.................................... 22 6.9 Reserved........................................................... 23 VII. PAYMENTS ON INSOLVENCY OF THE COMPANY................. 23 7.1 No Security Interest............................................... 23 7.2 Determination of Insolvency........................................ 23 7.3 Payments When Company Is Insolvent................................. 24 7.4 Resumption of Duties after Insolvency.............................. 25 7.5 Reserved........................................................... 25 VIII. RESIGNATION OR REMOVAL OF TRUSTEE..................... 25 8.1 Resignation or Removal of Trustee.................................. 25 8.2 Successor Trustee.................................................. 25 8.3 Duties of Retiring and Successor Trustees.......................... 26 8.4 Reserved........................................................... 26 IX. AMENDMENT AND TERMINATION OF TRUST.................... 27 9.1 Amendment.......................................................... 27 9.2 Termination........................................................ 28 9.3 Reserved........................................................... 28 X. GENERAL PROVISIONS.................................... 28 10.1 Coordination with Plan............................................. 28 10.2 Litigation......................................................... 28 10.3 Trustee's Action Conclusive........................................ 28 10.4 No Guarantee or Responsibility..................................... 29 10.5 Liabilities Mutually Exclusive..................................... 29 10.6 Indemnification.................................................... 29 10.7 Expenses and Compensation.......................................... 29
5 10.8 Reserved........................................................... 30 10.9 Notice............................................................. 30 10.10 Antiassignment Clause.............................................. 30 10.11 True and Correct Document.......................................... 30 10.12 Waiver of Notice................................................... 30 10.13 Counterparts....................................................... 30 10.14 Gender and Number.................................................. 31 10.15 Successors......................................................... 31 10.16 Severability....................................................... 31 10.17 Applicable Law..................................................... 31
EXHIBIT A The Detroit Edison Company IRREVOCABLE GRANTOR TRUST FOR THE RETIREMENT REPARATION PLAN EXHIBIT B The Detroit Edison Company IRREVOCABLE GRANTOR TRUST PARTICIPANTS (as defined in the Trust) 6 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST THIS TRUST AGREEMENT is made this 24th day of July, 1995 by and between The Detroit Edison Company, a Michigan corporation, and The Northern Trust Company, an Illinois corporation, of Chicago, Illinois ("Trustee"), and any successor provided for in the Trust hereby evidenced, as Trustee. WITNESSETH THAT: WHEREAS, the Company has established and maintains the Retirement Reparation Plan ("Plan"), an unfunded benefit plan, a copy of which is attached hereto as Exhibit A, for the benefit of certain Company Executives listed on Exhibit B hereto, which Exhibits may be amended from time to time by the Company prior to a potential Change of Control and/or Change of Control, and without the Trustee's consent; and WHEREAS, the Company has incurred and expects to continue to incur liabilities pursuant to the terms of the Plan, and wishes to establish an irrevocable trust by placing assets in trust, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, to pay benefits under the Plan or to be applied as otherwise provided for herein; and WHEREAS, it is the intention of the Company that amounts transferred to the Trust and the earnings thereon shall be used by the Trustee, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, to satisfy the liabilities of the Company in accordance with the provisions hereof; and, upon satisfaction of all liabilities of the Company with respect to all Participants (and their Beneficiaries, if applicable), the assets, if any, remaining in the Trust shall revert to the Company; and WHEREAS, the Company intends that the existence of the Trust shall not alter the characteristics of the Plan as an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management and/or highly-compensated employes, and shall not be construed to provide income - 1 - 7 for federal income tax purposes to a Participant (or his or her Beneficiary) prior to the actual payment of benefits under the Plans; and WHEREAS, the Trustee has agreed to serve as trustee of such trust; NOW, THEREFORE, in consideration of the mutual undertakings of the Company and the Trustee, the parties do hereby establish the Trust, and agree that the Trust shall be comprised, held, and disposed of as follows: I. DEFINITIONS Unless the context requires otherwise, definitions as used herein shall have the same meaning as in the Plan when applied to said Plan. 1.1 "Beneficiary" means the beneficiary designated as provided in the Plan as set forth in Exhibit A. 1.2 "Board of Directors" means the Company's Board of Directors, as constituted from time to time. 1.3 "Change of Control" means the occurrence of any of the following events: (a) a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the Securities Act of 1934, as amended (the "Exchange Act"), or any successor provisions, whether or not the Company is then subject to such reporting requirement; or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an employe benefit plan maintained by the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of the Board of Directors (the "Base Capital Stock"); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's - 2 - 8 ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company; or (c) a change in the composition of the Company's Board of Directors, as a result of which fewer than two-thirds of the incumbent directors are directors who either (1) had been directors of the Company 24 months prior to such change, or (2) were elected, or nominated for election, to the Company's Board of Directors with the affirmative votes of at least a majority of the directors who had been directors of the Company 24 months prior to such change and who were still in office at the time of the election or nomination; or (d) there shall be consummated (1) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted into cash, securities, or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (2) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (3) the stockholders of the Company approve a plan or proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing provisions of this Section 1.3 a "Change of Control" shall not be deemed to have occurred by reason of the corporate reorganization (the "Reorganization") of the Company implemented pursuant to the resolution adopted - 3 - 9 by the Board of Directors of the Company on December 5, 1994 (as such resolution may be amended or supplemented from time to time), whereby it is proposed that a corporation will become the parent holding company of the Company. The Company shall promptly notify the Trustee of a Change of Control and the Trustee may conclusively rely upon such notice and shall have no duty to independently determine whether a Change of Control has occurred. 1.4 "Company" means The Detroit Edison Company, a Michigan corporation, its successors and assigns. 1.5 "Effective Date" means July 24, 1995. 1.6 Reserved. 1.7 "Excess Assets" means assets of the Trust in excess of one hundred and twenty-five per cent (125%) of the Funding Amount. 1.8 "Funding Amount" means the actual benefit obligation on the books of the Company as of the most recent Valuation Date, certified by the Company to the Trustee. Upon any Potential Change of Control and during any Potential Change of Control Period, "Funding Amount" means one hundred and twenty per cent (120%) of the actual benefit obligation on the books of the Company as of the most recent Valuation Date, as certified by the Company to the Trustee. 1.9 "General Creditors" means the unsecured general creditors of the Company, including the Participants. 1.10 Reserved. 1.11 "Insolvent" and "Insolvency" mean that the Company (a) is unable to pay its debts as they become due; or (b) is subject to a pending proceeding as a debtor under the Bankruptcy Code. - 4 - 10 1.12 "Investment Manager" means the investment manager(s) appointed by the Company in the manner provided in Section 5.3 to direct the investment of any part or all of the assets of the Trust Fund in accordance with Article V. 1.13 "IRC" means the Internal Revenue Code of 1986, as amended. 1.14 "Participant" means a Participant in the Plan and includes an individual who is otherwise eligible to participate in the Plan but cannot due to age, years of service or active employment. The Company agrees to list all Participants on Exhibit B attached hereto. Except after a Change of Control as provided in Section 3.4, the Company may add or delete Participants by delivering a new Exhibit B to the Trustee. 1.15 Reserved. 1.16 "Plan Administrator" means the party designated under the Plan as responsible for the management, operation, and administration of the Plan. 1.17 "Potential Change of Control" means the date of the earliest occurrence of any of the following events: (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control of the Company; or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an employee benefit plan maintained by the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 9.5% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of the Board of Directors (the "Base Capital Stock"); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's ownership of securities, shall be disregarded until such person increases in - 5 - 11 any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company; or (c) the public announcement by any individual or entity, other than the Company, that such individual or entity intends to take or to consider taking actions which, if consummated, would constitute a Change of Control of the Company; or (d) the public announcement of any merger, acquisition, consolidation, or reorganization of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company's common stock would be converted into cash, securities, or other property, other than a transaction in which the holders of the Company's common stock immediately prior to the merger, acquisition, consolidation, or reorganization have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, acquisition, consolidation, or reorganization, including, but not limited to, the creation of a parent entity to oversee the Company; or (e) the public announcement of the sale or other transfer of substantially all of the assets of the Company to any third party; or (f) the Board of Directors of the Company adopts a resolution to the effect that a Potential Change of Control of the Company has occurred for purposes of this Trust. Notwithstanding the foregoing provisions of this Section 1.17, a "Potential Change of Control" shall not be deemed to have occurred by reason of the Reorganization (as defined in Section 1.3). 1.18 "Potential Change of Control Period" means the one (1) year period immediately following the date of a Potential Change of Control. If a subsequent Potential Change of Control occurs during any Potential Change of Control Period, the Potential Change of Control Period shall end one (1) year following the date of the most recent Potential Change of Control. The Company shall promptly notify the Trustee of a Potential Change of Control and the Trustee may conclusively rely upon such notice and shall have - 6 - 12 no duty to independently determine whether a Potential Change of Control has occurred. 1.19 Reserved. 1.20 "Trust" means the irrevocable trust established pursuant to this Trust Agreement and all of the terms and conditions of this Trust Agreement, which is intended to constitute a grantor trust under IRC Sections 671 et seq. 1.21 "Trust Fund" means all moneys, securities, and other property held by the Trustee, any custodian, or any insurance company under this Trust. 1.22 "Trustee" shall mean the trustee named herein, and any successor trustee appointed pursuant to Article VIII. 1.23 "Valuation Date" means the day in each calendar year which is the last day of the Company's fiscal year in each year, and such other times as the Company may determine. Each of (a) any date of a Potential Change of Control, (b) the date of a Change of Control, (c) the effective date of a Trustee's resignation or removal, and (d) the date of termination of the Trust shall also be a Valuation Date if any such date occurs other than on the last business day of the Company's fiscal Year. The first Valuation Date shall be December 31, 1994. II. ESTABLISHMENT OF THE TRUST 2.1 Trust. The Company hereby establishes the Trust with the Trustee, which Trust shall consist of such sums of money and other property acceptable to the Trustee as from time to time have been and shall be paid or delivered by the Company to the Trustee as provided herein. All such money and other property, all investments and reinvestments made therewith, or the proceeds thereof, and all investment earnings and profits thereon, less all payments and charges as authorized herein, shall constitute the Trust Fund. The Trust Fund shall be held in trust by the Trustee, and shall be dealt with in accordance with the provisions of this Trust. 2.2 Description of Trust. The Company represents and agrees that: (a) the Trust is intended to be a grantor trust under IRC Sections 671-678, and shall be construed accordingly. The Company intends and agrees that it is - 7 - 13 the "owner" or grantor of the Trust in its entirety, as that term is defined in subpart E, part I, subchapter J, chapter 1, subtitle A of the IRC and that, for income tax purposes, all income, deductions, and credits of the Trust Fund belong to it as owner, and will be included on its income tax or other required tax returns, and any income tax determined to be payable as a result thereof will be the sole obligation of, and will be paid by, the Company; (b) a true and correct copy of the Plan, as in effect on the Effective Date hereof, is attached hereto as Exhibit A. The Company shall file with the Trustee, promptly upon its adoption, a true and correct copy of each amendment to the Plan; (c) the Trust Fund is to be used to satisfy the legal obligations of the Company to Participants under the Plan as provided herein, subject to the claims of General Creditors in the event of Insolvency, and the balance of the Trust Fund, if any, remaining after payment of the Company's obligation to Participants under the Plan will revert to the Company in accordance with the Trust; (d) contributions by the Company to the Trust which are made coincident with and subsequent to the Effective Date shall be in amounts determined under Article III hereof. The Company agrees to fund the Trust as provided therein; (e) the principal of the Trust, and any earnings thereon shall be held by the Trustee separate and apart from other funds of Company, and shall be used exclusively for the uses and purposes as herein set forth; (f) the Trust established under this agreement does not fund and is not intended to fund the Plan, or any other employe benefit plan or program of the Company. Neither the establishment of the Trust, nor the payment or delivery of assets to the Trustee shall vest any Participant in any right, title, or interest in or to any assets of the Trust Fund; (g) participants shall have no preferred claim on, or any beneficial ownership interest in, assets of the Trust. To the extent that any Participant acquires the right to receive payment(s) under the Plan, any such right shall be mere unsecured contractual rights of Participants against the Company, - 8 - 14 and such Participants (or their Beneficiary(ies)) shall have only the unsecured promise of the Company that such payment(s) will be made. Any assets held by the Trust will be subject to the claims of General Creditors under federal and state law in the event of Insolvency, as defined herein, with no preference whatsoever given to claims of employes over claims of other unsecured creditors of the Company; and (h) to the extent the Plan is covered by ERISA, the Plan is a plan for a select group of management or highly compensated employes, and as such are exempt from the application of ERISA except for the disclosure requirements applicable to such plan, for which the Company bears full responsibility as to compliance. The Company further represents that the Plan is not qualified under IRC Section 401 and therefore, is not subject to any IRC requirements applicable to tax-qualified plans. 2.3 Irrevocability. Except as provided in Article 9 and this Section 2.3, the Trust shall be irrevocable from the effective date, and the assets of the Trust Fund shall be held in accordance with the provisions hereof for the exclusive purpose of providing for the payment of the Company's obligations to pay benefits to Participants under the Plan and to satisfy the claims of General Creditors in the event of Insolvency, and defraying the expenses of the Trust. Except as provided in Section 6.6 and Section 6.8 and in the event of Insolvency, no part of the income or corpus of the Trust Fund shall be recoverable by or for the benefit of the Company. 2.4 Acceptance by the Trustee. The Trustee accepts the Trust established under this Trust Agreement on the terms and subject to the provisions set forth herein, and agrees to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under this Trust. III. CONTRIBUTIONS 3.1 Calculations of Funding Amount. By September 30, 1995, the Company shall contribute to the Trust the Funding Amount as determined on the first Valuation Date. As of each Valuation Date, and until the entire Trust Fund has been distributed, the Company (or, after a Change of Control, the Company's independent public accountants) shall recalculate the Funding Amounts. - 9 - 15 3.2 Contributions as of Each Valuation Date. During the life of the Trust but no later than September 30 of each year, commencing no later than September 30, 1996, the Company shall contribute to the Trust such amount as is necessary to make trust assets equal the Funding Amount as of the previous Valuation Date. The Plan Administrator or its delegate (or, after a Change of Control, the Company's independent public accountants) shall provide the Trustee with written notice of the amount of the necessary contribution on or before the date such contribution is due to the Trust. Any such payments to the Trustee do not discharge or release the Company of its obligation under the Plan or Section 6.2 to pay benefits to Participants under the Plan, and shall at all times be subject to the provisions of Article VII. 3.3 Reserved. 3.4 No Dilution of Trust. After a Change of Control, the Exhibit B in effect on the date of a Change of Control shall not be amended to include a Participant not named in the Exhibit B in effect on the date of a Change of Control, unless pursuant to the requirements of this Section 3.4, at the time of delivery to the Trustee of a proposed amended Exhibit B (the "Delivery Date"), the Company shall deliver to the Trustee a determination by the Company's independent public accountants as of the Delivery Date of the proposed amended Exhibit B of the Funding Amount calculated based on the Participants named in the Exhibit B in effect on the Date of the Change of Control and any new or additional Participants named in the proposed amended Exhibit B (the "New Funding Amount") and (b), assets in an amount necessary to make the trust assets equal the New Funding Amount. If the Trustee determines that assets of the Trust Fund, including such assets as are delivered by the Company on the Delivery Date, equal or exceed the New Funding Amount, the Trustee shall accept the amended Exhibit B. Any amended Exhibit B so accepted shall be deemed incorporated with the same effect as if otherwise included herein. Unless an Exhibit B amended after a Change of Control is accepted by the Trustee as provided in this Section, the Trustee shall have no liability, responsibility, or obligation with respect to a Participant named in any amended Exhibit B unless such Participant is named in the Exhibit B then in effect on the date of a Change of Control. 3.5 Collection. In the event the Company fails to pay over to the Trustee within one hundred and twenty (120) days of notice and demand from the Trustee (or, upon the occurrence of a Potential Change of Control or a Change of Control, - 10 - 16 within seven (7) days of notice and demand from the Trustee), any amount determined to be payable by the Company to the Trustee under Sections 3.2, 6.5 or 7.4(a) of the Trust, the Trustee may commence legal action, (which is expressly deemed to include without limitation an alternate dispute resolution proceeding), to compel the Company to pay to the Trustee any amount determined to be payable to it under the Trust. The Trustee may bring such action against the Company in any court of competent jurisdiction, and shall be entitled to recover for the benefit of the Trust from the Company such amount, plus interest for each day at the rate of interest per annum of five (5) percentage points in excess of the prime lending rate as announced by NBD Bank, from the due date specified in the Trustee's notice and demand (or the date(s) from which pro rata payments were made, if such action is brought by the Trustee pursuant to Section 6.5 hereof) to the date of payment, plus all costs of collection, including reasonable attorneys fees and costs of litigation. The Trustee is authorized to bring action to compel payment by the Company, and, in connection with reasonable claims for delinquent contributions by the Company, to retain, at the expense of the Company, counsel and other appropriate experts, including actuaries and accountants, to aid it in pursuing litigation for collection against the Company. The Trustee's anticipated reasonable costs and expenses incurred pursuant to this Section 3.5 are payable by the Company in advance; and should the Company not make timely payment, the Trustee may charge the Trust Fund for such reasonably anticipated costs and expenses. The Trustee shall in no event be required to advance or expend its own funds in order to comply with the provisions of this Section 3.5. IV. ACCOUNTING AND ADMINISTRATION 4.1 Trustee Recordkeeping. The Trustee shall keep or cause to be kept accurate and detailed records of any investments, receipts, disbursements, and all other transactions required to be made by the Trustee hereunder, in accordance with such rules as may be established by the Company, including such specific records as shall be agreed upon in writing between the Company and the Trustee. All accounts, books, and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company. All such accounts, books, and records shall be preserved (in original form, or on microfilm, magnetic tape, or any other similar process) for such period as the Company may determine, and the Trustee may only destroy such accounts, books, and records after first notifying the Company in writing of its intention to so, and transferring to the Company any of such accounts, books, and records requested by the Company. - 11 - 17 4.2 Company Recordkeeping. The Company shall keep full, accurate, and detailed books and records with respect to the Participants and benefits paid and payable under the Plan, which records shall be made available to the Trustee at its request. 4.3 Periodic Accounting. Within sixty (60) days following a Valuation Date, the Trustee shall deliver to Company a written accounting, dated as of the Valuation Date, of its administration of the Trust Fund during such year or during the period from the most recent Valuation Date to the date of such current Valuation Date, which accounting shall be in accordance with the following provisions: (a) Such accounting shall set forth all investments, receipts, disbursements, and other transactions effected the by Trust Fund during the preceding year, or during the period from the most recent Valuation Date to the date of such current Valuation Date, including a description of all securities and investments purchased and sold, with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities or other property held in the Trust Fund, less liabilities known to the Trustee (other than liabilities to Participants entitled to benefits under the Plans) at the end of such year or other period, as the case may be. In making a valuation, all cash, securities or other property held in the Trust Fund shall be valued at their then fair market value, and shall be in a format as may be established by the Company. A copy of each accounting so delivered to the Company shall be open to inspection at the office of the Trustee during normal business hours. (b) If within ninety (90) days after the filing of such written accounting, the Company has not delivered to the Trustee notice of any objection to any act or transaction of the Trustee, the initial accounting shall become an account stated as between the Trustee and the Company. If any objection has been delivered to the Trustee by the Company, and if the Company is satisfied that it should be withdrawn, the Company shall signify its approval of the accounting in writing filed with the Trustee, and the accounting shall become an account stated as between the Trustee and the Company. If the accounting is adjusted following an objection thereto, the Trustee shall file and deliver the adjusted accounting to the Company. If within fifteen (15) days after such filing of an adjusted accounting, the - 12 - 18 Company has not delivered to the Trustee notice of any objection to the transactions as so adjusted, the adjusted accounting shall become an account stated as between the Trustee and the Company. (c) Unless an accounting is fraudulent, when it becomes an account stated, it shall be finally settled, and the Trustee shall, to the extent permitted by applicable law, be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions shown in such accounting. 4.4 Administrative Powers of Trustee. Except to the extent that authority with respect to the administration of the Trust has been allocated to others in accordance with this Trust, and subject to Article V, the Trustee shall have exclusive authority and discretion to manage and administer the Trust. The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Company which is contemplated by, and in conformity with, the terms of the Trustee's responsibilities under this Trust, and is given in writing by Company. The responsibility for maintenance of individual benefit records shall be retained by the Company, and may be delegated to such person or entity as the Company may employ from time to time. Except as otherwise provided herein, the Trustee shall have, without exclusion, all powers conferred on trustees by law and, without limiting the foregoing, shall have the following administrative powers, rights, and duties in addition to those provided elsewhere in this Trust: (a) to manage, sell, insure, and otherwise deal with all assets held by the Trustee on such terms and conditions as the Trustee shall decide; provided however, that if the Company delivers written instructions to the Trustee, the Trustee shall follow such instructions; (b) when directed by the Company or requested by a Participant pursuant to Article VI, to make payments from the Trust Fund to Participants and, when required by Article VII, to make payments from the Trust Fund to General Creditors entitled to payments thereunder; - 13 - 19 (c) except as provided in Article VI and Article VII, to waive, modify, reduce, compromise, release, contest, submit to arbitration, or settle or extend the time of payment of any claims, debts, damages, or demands of any nature in favor of or against the Trustee or all or any part of the Trust Fund; (d) to retain any disputed property until an appropriate final adjudication or release is obtained, and to represent the Trust in, or commence or defend, any litigation the Trustee considers in its discretion necessary in connection with the Trust Fund; (e) to withhold, if the Company so directs, all or any part of any payment required to be made hereunder as may be necessary and proper to protect the Trustee or the Trust Fund against any liability or claim on account of any estate, inheritance, income or other tax or assessment attributable to any amount payable hereunder, and to discharge any such liability with any part or all of such payment so withheld in accordance with Section 6.7; (f) to maintain records reflecting all receipts and payments under this Trust and such other records as the Company may specify and to which the Trustee agrees, which records may be audited from time to time by the Company or anyone named by the Company; and to furnish a written accounting to the Company as of each Valuation Date, as provided in Section 4.3; (g) if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy from a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. Notwithstanding the preceding sentence, the Trustee may loan to the Company the proceeds of any borrowing against an insurance policy held as an asset of the Trust; (h) to furnish the Company with such information for tax or other purposes which the Company may reasonably request and which the Trustee may not unreasonably withhold; - 14 - 20 (i) to employ accountants, advisors, agents, legal counsel (who, except following a Change of Control, may be legal counsel to the Company and who are not in the Company's reasonable judgment deemed to have a conflict of interest), consultants, custodians, depositories, experts and other providers of services, to consult with them with respect to the implementation and construction of this Trust, the duties of the Trustee hereunder, the transactions contemplated by this Trust, or any act which the Trustee proposes to take or omit, and to rely upon the advice of and services performed by such persons; to delegate discretionary powers to such persons and to reasonably rely upon information and advice furnished by such persons; provided that each such delegation and the acceptance thereof by each such person shall be in writing; and provided further that the Trustee may not delegate its responsibilities as to the management or control of the assets of the Trust Fund; (j) to determine whether the Company is Insolvent, and to hold assets of the Trust Fund for the benefit of General Creditors in the event of Insolvency, as provided in Article VII hereof; (k) to make payments to Participants, including after a Change of Control, as provided in Article VI hereof; (l) to perform all other acts which in the Trustee's judgment are appropriate for the proper protection, management, investment, and distribution of the Trust Fund, and to carry out the purposes of the Trust. - 15 - 21 V. INVESTMENTS 5.1 Generally. With respect to assets for which the Trustee has investment responsibility, the Trustee shall invest and reinvest the principal and income of the Trust Fund and keep the Trust Fund invested, without distinction between principal and income, in accordance with the written investment guidelines established by the Company and provided to the Trustee by the Company. If no such written investment guidelines are received by the Trustee, the assets of the Trust Fund shall be invested in such investments as determined by the Trustee in accordance with the powers contained herein. 5.2 Investment Powers of Trustee. Except to the extent that authority with respect to the management of all or a portion of the Trust Fund has been allocated to others in accordance with this Trust, the Trustee shall have exclusive authority and discretion to manage and control the Trust Fund, subject only to broad investment guidelines the Company may establish from time to time. The authority to assume responsibility for investment of assets of the Trust Fund has been retained by the Company, and the authority to hold assets of the Trust Fund may be allocated to one or more custodians or insurance companies. Except as otherwise provided herein, the Trustee shall have, without exclusion, all powers conferred on trustees by applicable law and, without limiting the foregoing, shall have the following powers, rights, and duties in addition to those provided elsewhere in this Trust: (a) to invest and reinvest in any property wherever situated, whether real, personal, mixed, foreign or domestic, including common and preferred stocks, bonds, notes, and debentures (including convertible stocks and securities, but not including any stock, securities, or debt instruments of the Company [unless held in a collective or commingled fund and such Company securities comprise 5% or less of the assets of such fund]), leaseholds, mortgages (including, without limitation, any collective or part interest in any bond and mortgage or note and mortgage), certificates of deposit, life insurance contracts, guaranteed investment contracts, and guaranteed annuity contract, all regardless of diversification and without being limited to investments authorized by law for the investment of trust funds; (b) to invest and reinvest, without distinction between principal and income, in contracts for future delivery of United States Treasury Bills, other financial instruments, or indices based on any group of securities, and in - 16 - 22 options to buy or sell indices based on any group of securities or any kind of evidences of ownership or indebtedness, including financial instruments or futures contracts relating thereto; (c) to invest and reinvest part or all of the Trust Fund in any deposit accounts, deposit administration fund maintained by a legal reserve life insurance company in accordance with an agreement between the Trustee and such insurance company, a group annuity contract or life insurance policies issued by such insurance company to the Trustee as contract holder, any interest bearing deposits held by any financial institution having total capital and surplus of at least Fifty Million Dollars ($50,000,000), investments in any stocks, bonds, debentures, mutual fund shares, notes, commercial paper, treasury bills, and any mutual, common, commingled or collective trust funds or pooled investment funds, and to diversify such investments so as to minimize the risk of losses; (d) to commingle assets of the Trust Fund, for investment purposes only, with assets of any common, collective, or commingled trust fund which has been or may hereafter be established and maintained by the Trustee, or by any other financial institution; provided that to the extent that any part or all of the assets of the Trust Fund for which the Trustee has investment responsibility are invested in any such common, collective or commingled trust fund or pooled investment fund which is maintained by a bank or trust company (including a bank or trust company acting as Trustee), the provisions of the documents under which such common, collective or commingled trust fund or pooled investment fund are maintained shall govern any investment therein and provided further that prior to investing any portion of the Trust Fund for the first time in any such common, collective, or commingled trust fund, the Trustee shall advise the Company of its intent to make such an investment, and furnish to the Company any information it may reasonably request with respect to such common, collective, or commingled trust fund (other than a trust fund established by the Company), and provided further that the Trustee shall maintain separate records with respect to each other trust of the Trust Fund; (e) to vote stock and other voting securities personally or by proxy (and to delegate the Trustee's powers and discretion with respect to such stock or other voting securities to such proxy), to exercise subscription, - 17 - 23 conversion and other rights and options (and make payments from the Trust Fund in connection therewith), to take any action and to abstain from taking any action with respect to any reorganization, consolidation, merger, dissolution, recapitalization, refinancing and any other plan or change affecting any property constituting a part of the Trust Fund (and in connection therewith to delegate the Trustee's discretionary powers and pay assessments, subscriptions and other charges from the Trust Fund), to hold or register any property from time to time in the Trustee's name or in the name of a nominee or to hold it unregistered or in such form that title shall pass by delivery; and to borrow from anyone, including itself (to the extent permitted by law), such amounts from time to time as the Trustee considers desirable to carry out this Trust (and to mortgage or pledge all or part of the Trust Fund as security); to participate in any plan or reorganization, consolidation, merger, combination, liquidation, or other similar plan relating to any such property, and to consent to or oppose any such plan or any action thereunder, or any contract, lease, mortgage, purchase, sale, or other action by any corporation or other entity any of the securities of which may at any time be held in the Trust Fund, and to do any act with reference thereto; (f) to retain in cash such amounts as the Trustee considers advisable and as are permitted by applicable law, and to deposit any cash so retained in any depository (including any bank acting as Trustee) which the Trustee may select, provided such depository must have total capital and surplus of at least Fifty Million Dollars ($50,000,000); (g) when directed by the Company, and subject to Section 4.4(g), to apply for, pay premiums on, and maintain in force individual, ordinary or universal life insurance policies on the lives of Participants, which policies may contain provisions which the Company may approve or direct; to receive or acquire such policy or policies from the Company, but the Trustee may purchase a life insurance policy from a person other than the insurer which issues a policy only if the Trustee pays, transfers, or otherwise exchanges an amount no more than the cash surrender value of the policy or policies, and the policy or policies is (are) not subject to a mortgage or similar lien which the Trustee would be required to assume; to have with respect to such policy or policies any rights, powers, options, privileges, and benefits usually comprised in the term "incidents of ownership", and normally vested in an - 18 - 24 owner of such policy or policies to be exercised only pursuant to Company direction; (h) to retain any property at any time received by it; (i) to sell, to exchange, to convey, to transfer, or to dispose of, and to grant options for the purchase or exchange with respect to it, any property at any time held by it, by public or private sale, for cash or on credit, or partly for cash and partly for credit; (j) to deposit any such property with any protective, reorganization, or similar committee; to delegate discretionary power to any such committee; and to pay part of the expenses and compensation of any such committee and any assessments levied with respect to any property so deposited; (k) to exercise any conversion privilege or subscription right available in connection with any such property, and to do any act with reference thereto, including the exercise of options, the making of agreements or subscription, and the payment of expenses, assessment or subscription, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities or other property which it may so acquire; (l) to extend the time of payment of any obligation held in the Trust Fund; (m) to enter into standby agreements for future investment, either with or without a standby fee; (n) to acquire, renew, or extend, or participate in the renewal or extension of any mortgage, and to agree to a reduction in the rate of interest on any indebtedness or mortgage or to any other modification or change in the terms of any indebtedness or mortgage, or of any guarantee pertaining thereto, in any manner and to any extent that may be deemed advisable for the protection of the Trust Fund or the preservation of any covenant or condition of any indebtedness or mortgage or in the performance of any guarantee, or to enforce any default in such manner and to such extent as may be deemed advisable; and to exercise and enforce any and all rights of foreclosure, to bid on any property in foreclosure, to take a deed in lieu of foreclosure with or - 19 - 25 without paying a consideration therefor, and in connection therewith to release the obligation on the bond secured by such mortgage; and to exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect of any such indebtedness or mortgage or guarantee; (o) to make, execute, and deliver, as Trustee, any and all deeds, leases, notes, bonds, guarantees, mortgage, conveyance, contracts, waivers, releases, or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers; (p) to organize under the laws of any state one or more corporations, partnerships, or trusts for the purpose of acquiring and holding title to any property that it is authorized to acquire under this Trust, and to exercise with respect thereto any or all of the powers set forth in this Trust; (q) notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated under the IRC; and (r) generally to do all acts, whether or not expressly authorized, that the Trustee deems necessary or desirable for the protection of the Trust Fund, and to carry out the purposes of the Trust. 5.3 Investment Managers. The Company may appoint one or more Investment Managers to direct the investment of any part or all of the assets of the Trust Fund by the Trustee. Appointment of an Investment Manager shall be made by written notice to the Investment Manager(s) and to the Trustee, which notice shall specify those powers, rights, and duties of the Trustee under this Trust that are allocated to the Investment Manager(s) and the portion of the assets of the Trust Fund subject to the Investment Manager(s). After it receives written notice of such appointment, the Trustee shall have no obligation or responsibility for those investment duties which are allocated to an Investment Manager. An Investment Manager so appointed pursuant to this paragraph shall be either a registered investment adviser under the Investment Advisers Act of 1940, a bank, as defined in said Act, or an insurance company qualified to manage, acquire and dispose of the - 20 - 26 assets of the Plans under the laws of more than one state of the United States. Any such Investment Manager shall acknowledge to the Company in writing that is accepts such appointment. The Trustee shall not be liable for any loss or diminution of any assets managed by an Investment Manager, including without limitation, any loss or diminution caused by any action or inaction taken or omitted by it at the direction of an Investment Manager. In addition, the Trustee shall not be liable for the diversification of any assets managed by Investment Managers of the Company, each of which shall be solely the responsibility of the Company. An Investment Manager may resign at any time upon written notice to the Trustee and the Company. The Company may remove an Investment Manager at any time by written notice to the Investment Manager and the Trustee. The Company may by written notice to the Trustee assume investment responsibility for any portion or all of the Trust assets. The Trustee shall have no responsibility for any investments or review of such investments and shall act with respect to such assets only as directed by the Company. 5.4 Reserved. 5.5 Single Fund. All assets of the Trust Fund and of each investment fund, and the income thereon, shall be held and invested as a single fund, and the Trustee shall not make any separate investment of the Trust Fund, or make any separate investment fund, for the account of any Participant or other General Creditors prior to receipt of directions to make payments to such Participant or other General Creditors in accordance with Article VI or Article VII. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Participants. VI. PAYMENTS FROM THE TRUST 6.1 Obligation of Trustee to Make Payments to Participants. The Trustee's obligation to distribute to any Participant out of the assets of the Trust Fund shall be limited to payment at such times and in such amounts as are properly in conformance with the provisions of Section 6.3. Payments to Participants pursuant to this Article VI shall be made by the Trustee to the extent that funds in the Trust Fund are sufficient for such purpose, and shall at all times be subject to the provisions of Article VII. In the event the Company determines that it will pay benefits directly to Participants as they become due under the terms of the Plan, the - 21 - 27 Company shall notify Trustee of its decision prior to the time amounts are payable to Participants. 6.2 Obligation of the Company to Make Payments to Participants. Notwithstanding anything in the Trust to the contrary, the Company shall remain primarily liable to pay benefits under the Plan. Distributions to Participants from the Trust Fund shall discharge, reduce, and offset the Company's obligation to pay benefits to or on behalf of the Participant, to the extent of the distributions, with respect to the Plan. If the Company's obligation to pay a benefit under the Plan is not fully discharged, reduced, and offset by a distribution from the Trust, then the Company shall make the balance of each such benefit payment as it becomes due. 6.3 Distributions to Participants. Distributions which shall be made from the Trust Fund to pay benefits in accordance with the Plan shall be initiated by: (a) written direction to the Trustee from the Plan Administrator, which direction shall certify that such distribution(s) is(are) in accordance with the Plan, and specify the timing, form, payee, and amount of such benefit payments, including any federal, state, or local income taxes to be withheld, and the Trustee shall make or commence the directed distributions after receipt of such written direction; or (b) by the submission to the Trustee by a Participant of a certified copy of the non-appealable order of an appropriate forum with jurisdiction to settle a claim for payment(s) under the Plan. 6.4 Reserved. 6.5 Insufficient Trust Fund Assets. If at any time the Trustee determines or is advised that the Trust Fund does not have sufficient assets to permit the Trustee to make a payment property directed pursuant to this Trust, including a payment provided for under Section 10.7 of this Trust, the Trustee shall pay any benefits due (if otherwise payable hereunder) to Participants on a pro rata basis as directed by the Plan Administrator, and the Company shall make the balance of such payments as they become due. If the Plan Administrator determines that the Trust Fund does not have sufficient funds to provide for the payment of all amounts otherwise payable to Participants (or their Beneficiary(ies)) from the Trust under the Plans, it shall notify the Company and the Trustee of the amount of the deficiency, and, within forty-five - 22 - 28 (45) days of such notice, the Company deposit in trust with the Trustee the additional amounts needed to make such payments. Upon receipt of such amount by the Trustee from the Company, proceeds shall first be used by the Trustee to pay any benefits previously due remaining unpaid, in the order in which they were due, pursuant to Plan Administrator instructions. 6.6 Payment of Excess Assets to Company. Subject to Article VII, and except as otherwise provided in this Section and Section 6.8 hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust Fund before payment of all benefits due or to become due have been made to Participants (or their Beneficiary(ies)) pursuant to the terms of the Plan. If, as of a Valuation Date, and based on the fair market value of the Trust Fund as determined by the Trustee in accordance with Section 4.3 hereof, the Trust Fund holds Excess Assets, then in the event the Trustee has received within ninety (90) days after the most recent Valuation Date a written request executed by the Company, the Trustee shall transfer to the Company, within thirty (30) days after the receipt of the request, and provided that a Potential Change of Control Period does not exist on the date of the transfer, such assets of the Trust Fund selected by the Company which have a fair market value equal to the amount of such Excess Assets, after converting such assets to cash if requested by the Company. Any payment of Excess Assets to the Company under this Section shall not discharge or release the Company of its obligation to make any contribution required under Article III (including the requirement of a Company contribution to the Trust upon the occurrence of a Potential Change of Control or a Change of Control), and its obligation to pay benefits to Participants under the Plan. Any payment of Excess Assets in accordance with this Section shall be subject to the provisions of Article VII. 6.7 Company to Pay Withholding and Employment Taxes. Any amount paid to a Participant by the Trustee in accordance with this Article VI shall be reduced by the amount of taxes required to be withheld pursuant to Plan Administrator instructions, and the Trustee shall inform the Company of all amounts so withheld. The Company shall direct that the Trustee shall either (a) pay to the Company a sum equal to the amount of such taxes as are required to be withheld, whereupon the Company shall have full responsibility for the payment of all withholding taxes to the appropriate taxing authorities, or - 23 - 29 (b) pay such taxes directly to the appropriate taxing authorities for the benefit of the Company. The Company shall be solely responsible for the payment of any employment taxes for which it is directly liable as a result of payments by the Trustee. The Company shall furnish each Participant with the appropriate tax information form evidencing payments under the Trust and the amount(s) thereof. 6.8 Payment in Reversion to Company. Subject to Article VII, upon receipt of written certification from the Company that all obligations of the Company to Participants with respect to the Plan have been satisfied, and if the Trust Fund shall have any assets remaining, the Trustee shall distribute such remaining assets of the Trust Fund to the Company, after converting such assets to cash if requested by the Company, subject to the Trustee's right to retain such reasonable amount for compensation and expenses as provided in Section 10.7. The Trust shall thereafter terminate as provided in Section 9.2. 6.9 Reserved. VII. PAYMENTS ON INSOLVENCY OF THE COMPANY 7.1 No Security Interest. No Participant shall have any claim on or beneficial ownership interest in the Trust Fund before such assets are paid to the Participant, except as an unsecured creditor of the Company. The Company shall not create a security interest in the Trust Fund in favor of any Participant or any other General Creditor. At all times during the continuance of this Trust, as provided in this Article VII hereof, the principal and income of the Trust Fund shall be subject to the claims of General Creditors under federal and state law. If at any time the Trustee has received notice as provided below that Company is Insolvent, Trustee shall discontinue payments to Participants, and shall hold assets of the Trust Fund for the benefit of the Company's General Creditors, pursuant to the provisions of Section 7.3, with no preference whatsoever given claims of employes over claims of other unsecured creditors of the Company. 7.2 Determination of Insolvency. Notwithstanding any other provisions of this Trust, the following provisions shall apply: - 24 - 30 (a) The Board of Directors and the Chief Executive Officer of the Company shall have the fiduciary duty and responsibility on behalf of General Creditors to notify the Trustee promptly in writing in the event the Company is Insolvent, and the Trustee shall have the right to rely thereon to the exclusion of all directions or claims for payment made thereafter by Participants. (b) If the Trustee has actual knowledge that the Company is Insolvent, the Trustee shall act in accordance with Section 7.3 hereof. (c) Unless the Trustee receives written notice from the Board of Directors or the Chief Executive Officer of the Company that the Company is Insolvent, or from a person claiming to be a General Creditor and claiming that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. If the Trustee receives a written allegation from a person claiming to be a General Creditor that the Company is Insolvent, the Trustee's only duty of inquiry shall be to request that the Company's independent public accountants determine whether the Company is Insolvent, and shall suspend benefit payments pending such determination. If the Company's independent public accountants advise the Trustee that the Company is not Insolvent, it shall resume payments in accordance with this Trust. If the Trustee receives notice of the Company's Insolvency pursuant to this Section 7.2(c), it shall act in accordance with [this Section and] Section 7.3 hereof. 7.3 Payments When Company Is Insolvent. Notwithstanding any other provision of this Trust to the contrary, if the Trustee has actual knowledge as described in 7.2(b), has been advised pursuant to 7.2(c) or receives actual notice described in Section 7.2(a) that the Company is Insolvent (a) by reason of Section 1.11(b), the Trustee shall suspend payments to Participants and shall notify Participants of the suspension, and shall hold the Trust Fund for the benefit of the General Creditors, and shall pay and deliver the entire amount of the Trust Fund only as a court competent jurisdiction, or duly appointed receiver or other person authorized to act by such court, may order or direct to make the Trust Fund available to satisfy the claims of the General Creditors (payments to Participants in accordance with the terms of the Plan may be resumed only pursuant to Section 7.4 hereof); or - 25 - 31 (b) by reason of Section 1.11(a), the Trustee shall suspend payments to Participants and shall notify Participants of the suspension, and shall (i) hold the Trust Fund for the benefit of General Creditors or (ii) pay over all or a portion of the Trust Fund to General Creditors if directed by the Company or an appropriate judicial forum. Nothing in this Trust Agreement shall in any way diminish any rights of Participants to pursue their rights as unsecured creditors of Company with respect to benefits under the Plan, or otherwise. 7.4 Resumption of Duties after Insolvency. In the absence of notice of a Court order to the contrary, the Trustee shall resume all of its duties and responsibilities under the Trust, including payments to Participants if otherwise provided for herein, within thirty (30) days of the Trustee's receipt of a determination from the Company's independent public accounting firm that the Company is no longer Insolvent. (a) Trust Recovery of Payments to Creditors. In the event that amounts are paid from the Trust Fund to General Creditors of the Company, then as soon as practicable after the Company is no longer Insolvent, the Company shall deposit into the Trust Fund a sum to equal to the Funding Amount, determined as of the date the Company is no longer Insolvent, which date shall be a Valuation Date. The Company (or, after a Change of Control, the Company's independent public accountants) shall provide the Trustee with written certification of such Funding Amount. If the Funding Amount is not paid by the Company within ninety (90) days of the Trustee's receipt of such notice, the Trustee shall demand payment and the provisions of Section 3.5 shall apply. (b) Determination of Payment Amount; Resumption of Payments. Provided that there are sufficient assets of the Trust Fund, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 7.3 and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plan for the period of such discontinuance, as determined by the Plan Administrator, less the aggregate amount of any payments made to Participants by the Company in lieu of the payments - 26 - 32 provided for hereunder during any such period of discontinuance. If the Trustee suspends a payment to a Participant under this Section, and subsequently makes such payment, the payment shall include interest at the rate of interest per annum equal to the prime rate as published by NBD Bank for each day from the date of suspension to the date of payment, as calculated by the Plan Administrator. 7.5 Reserved. VIII. RESIGNATION OR REMOVAL OF TRUSTEE 8.1 Resignation or Removal of Trustee. The Trustee may resign for any reason or for no reason and at any time by giving thirty (30) days prior written notice to the Company (or such shorter notice as may be agreed to by the Company and the Trustee). Subject to Section 8.2(b) hereof, the Company may remove the Trustee, for any reason and with or without cause, by giving thirty (30) days prior written notice to the Trustee (or such shorter notice as may be agreed to by the Company and the Trustee). 8.2 Successor Trustee. In the event of the resignation or removal of a Trustee, a successor Trustee shall be appointed. Any successor Trustee appointed pursuant to this Section must be a corporation which is not an affiliate of the Company and which is authorized under the laws of the United States or of any state to administer trusts and has at the time of its appointment total capital and surplus of at least Fifty Million Dollars ($50,000,000). The Company shall give notice of any such appointment to the retiring Trustee and the successor Trustee. A successor Trustee shall be appointed in accordance with the following provisions: (a) At any time prior to a Change of Control, a successor Trustee shall be appointed by the Company. If a Trustee should resign or be removed, and the Company does not notify the Trustee of the appointment of a successor Trustee within forty-five (45) days of its notice of its resignation or removal, then the Company shall be deemed to have failed to have appointed a successor Trustee, and the Trustee shall apply to a court of competent jurisdiction for appointment of a successor Trustee. (b) After the occurrence of a Change of Control, the Trustee who is the Trustee on the date of the Change of Control may be removed by the - 27 - 33 Company for three (3) years from the date of the Change of Control. If a Trustee resigns or is removed at any time after the date of a Change of Control, the Trustee shall apply to a court of competent jurisdiction for appointment of a successor Trustee. Notwithstanding Section 8.1, no resignation by or removal of the Trustee shall be effective prior to the effective date of the appointment of a successor Trustee by the Company or a court of competent jurisdiction. 8.3 Duties of Retiring and Successor Trustees. In the event of the resignation or removal of a Trustee, the retiring Trustee shall within thirty (30) days after the effective date of resignation or removal furnish to the successor Trustee and the Company a final accounting of its administration of the Trust. A successor Trustee shall succeed to the right and title of the predecessor Trustee in the assets of the Trust Fund and the retiring Trustee shall deliver the property comprising the assets of the Trust Fund (less any unpaid fees and expenses of the retiring trustee) to the successor Trustee, together with any instruments of transfer, conveyance, assignment, and further assurance as the successor Trustee may reasonably require. All of the provisions of the Trust set forth herein with respect to the Trustee shall relate to each successor Trustee with the same force and effect as if such successor Trustee had been originally named as the Trustee hereunder. To the extent permitted by law, neither the Trustee nor the successor Trustee shall be liable for any act or failure to act, and shall not be required to examine the accounts, records, or acts of the other. 8.4 Reserved. IX. AMENDMENT AND TERMINATION OF TRUST 9.1 Amendment. Except as otherwise provided in Section 2.3 of this Trust, the Trust may be amended (but may not be not revoked unless all of the Company's obligations with respect to the Plan have been satisfied) in writing from time to time by delivery to the Trustee of such amendment executed by the Company, which amendment shall include the effective date of such amendment. Any amendment of the Trust may be made: (a) prior to a Change of Control, without limitation and in any manner and effective as of any date, including a retroactive effective date, if - 28 - 34 accompanied by the written certification that no Change of Control has occurred; (b) after a Change of Control, only if a period of three (3) years has elapsed since the Change of Control, and either: (1) such amendment is accompanied by the specific written consent to the amendment by Participants whose actuarial interests under the Plan, computed by the Company's independent public accountants as of the effective date of such amendment, represent at least 51% of the total of all actuarial interests under the Plan; or (2) such amendment is accompanied by the opinion of legal counsel satisfactory to the Trustee that the amendment is necessary for the purpose of conforming the Trust to any present or future federal or state law (including revenue laws) relating to trusts of this or similar nature, as such laws may be amended from time to time, and a certification that a copy of such notice and opinion of counsel has been delivered to each Participant. No amendment shall conflict with the terms of the Plan subject to amendment, and no amendment may reduce the "Funding Amount" or the contribution requirements of Article III to less than 50% of the actual benefit obligation on the books of the Company; provided such amendment shall be effective prior to a Potential Change of Control or a Change of Control. No amendment shall operate to change the duties and liabilities of the Trustee without its consent, or make the Trust revocable after it has become irrevocable in accordance with Section 2.3 hereof unless the Company has satisfied all obligations it may have with respect to the Plan as of the date of such amendment. The Company and the Trustee shall execute such amendments of the Trust as shall be necessary to give effect to any amendment made in accordance with this Section. 9.2 Termination. After all assets of the Trust Fund have been distributed by the Trustee to the Participants or their Beneficiaries in accordance with Article VI, the Trustee shall render an accounting, which shall be the final accounting, in the manner provided for in Section 4.3. Upon acceptance of the accounting by the Company, any assets remaining in the Trust Fund, after deduction of such reasonable amount for compensation and expenses as provided for in Section 10.7, - 29 - 35 shall be returned to the Company in the manner provided in Section 6.8, and the Trust shall terminate thereupon. The Trust and all the rights, titles, powers, duties, discretions and immunities imposed on or reserved to the Trustee and the Company, shall continue in effect until all assets of the Trust Fund have been distributed as provided herein. 9.3 Reserved. X. GENERAL PROVISIONS 10.1 Coordination with Plan. The responsibilities of the Trustee shall be governed solely by the terms of this Trust Agreement. 10.2 Litigation. In any action or proceeding regarding the Trust, the Company, any assets of the Trust Fund, or the administration of the Trust, any creditors who are not parties to such action or proceedings and any other persons having or claiming to have a beneficial interest in the Trust shall not be necessary parties and shall not be entitled to any notice of process. Any final judgment which is not appealed or appealable and which may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto and all persons having or claiming to have a beneficial interest in the Trust. Acceptance by a creditor of assets of the Trust Fund shall constitute a release of an equal amount of any obligations of the Company to such creditor. 10.3 Trustee's Action Conclusive. The Trustee's exercise or non-exercise of its powers and discretion in good faith shall be conclusive on all persons. No one other than the Company shall be obliged to see to the application of any money paid or property delivered to the Trustee. The certificate of the Trustee that it is acting according to this Trust will fully protect all persons dealing with the Trustee. 10.4 No Guarantee or Responsibility. Notwithstanding any other provision of this Trust to the contrary, the Trustee does not guarantee payment of any amount which may become due and payable to a Participant. The Trustee shall have no responsibility for the disclosure to Participants regarding the terms of the Plan or of this Trust, or for the validity thereof. The Trustee shall not be responsible for administrative functions under the Plan and shall have only such responsibilities under this Trust Agreement as specifically set forth herein. The Trustee will be under no liability or obligation to anyone with respect to any failure on the part of - 30 - 36 the Company, the Plan Administrator, the Company's independent public accounting firm, an Investment Manager, or a Participant to perform any of their respective obligations under the Plan or this Trust. The Trustee shall be fully protected in relying upon any notice or direction provided to it from any party in connection with the Trustee's duties hereunder which the Trustee in good faith believes to be genuine, and executed and delivered in accordance with this Trust. Nothing in this Trust shall be construed as requiring the Trustee to make any payment in excess of the amounts held in the Trust Fund at the time of such payment or otherwise to risk or expend its own funds. 10.5 Liabilities Mutually Exclusive. Each of the Trustee and the Company shall be responsible only for its own acts or omissions. 10.6 Indemnification. The Company agrees to indemnify to the extent permitted by law the Trustee and hold it harmless against Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) arising out of or in connection with the performance of the Trustee's duties arising hereunder (but excluding costs arising as a result of the Trustee's bad faith or gross negligence in the performance of its responsibilities hereunder), and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. This Section shall survive the termination of the Trust. 10.7 Expenses and Compensation. The Trustee shall be paid compensation by the Company in an amount agreed to by the Company and the Trustee. The Trustee shall be reimbursed by the Company for reasonable expenses incurred by it in the management and administration of this Trust Agreement, including the reasonable compensation of the Trustee's counsel and other agents; and if the Trustee is not timely reimbursed with respect to amounts due pursuant to this Section 10.7 (or in the case of expenses to be incurred pursuant to Section 3.5 hereof), the Trustee may charge such amounts against the Trust Fund. Any compensation or expenses so agreed upon or otherwise payable not paid by the Company on a timely basis may be charged to the Trust Fund no more frequently than quarter-annually upon notice to the Company. 10.8 Reserved. - 31 - 37 10.9 Notice. Any notice to the Trustee or to the Company required or permitted under this Trust shall be duly and properly given and delivered if sent by certified United States mail, return receipt requested, to the Trustee at: The Northern Trust Company Attn: Trust Department Fifty South LaSalle Street Chicago, Illinois 60675 and to the Company at: The Detroit Edison Company Attn: Vice President and Treasurer 2000 Second Street Detroit, Michigan 48226 or to such other address as the Trustee or the Company may specify by written notice to the other. 10.10 Antiassignment Clause. Benefits payable to Participants and their Beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. 10.11 True and Correct Document. Any persons dealing with the Trustee may rely upon a copy of this Trust and any amendments thereto certified to be true and correct by the Trustee. 10.12 Waiver of Notice. Any notice required under this Trust may be waived by the person entitled to such notice. 10.13 Counterparts. This Trust may be executed in two or more counterparts, any one of which will be an original without reference to the others. 10.14 Gender and Number. Words denoting the masculine gender shall include the feminine and neuter genders and the singular shall include the plural and the plural shall include the singular wherever required by the context. - 32 - 38 10.15 Successors. This Trust shall be binding on all persons entitled to payments hereunder and their respective heirs and legal representatives, and on the Company, the Trustee, and their respective successors. 10.16 Severability. If any provision of this Trust is held to be illegal or invalid, such illegality or invalidity shall not affect the remaining provisions of this Trust, which shall be construed and enforced as if such illegal or invalid provisions had never been inserted herein. 10.17 Applicable Law. The Trust shall be governed by and construed in accordance with the laws of the State of Michigan with respect to the Company's obligations and in accordance with the laws of the State of Illinois with respect to the Trustee's obligations and Trust Administration. IN WITNESS WHEREOF, the Company and the Trustee have caused this trust agreement to be signed by their duly authorized representatives, and have caused their respective seals to be hereunto affixed, as of the Effective Date. THE DETROIT EDISON COMPANY By ------------------------ Its ------------------------ THE NORTHERN TRUST COMPANY as Trustee By ------------------------ Its ------------------------ - 33 - EX-99.31 13 EX-99.31 1 EXHIBIT 99.31 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST EFFECTIVE JULY 24, 1995 2 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST TABLE OF CONTENTS I. DEFINITIONS....................................... 2 1.1 Beneficiary 2 1.2 Board of Directors............................................. 2 1.3 Change of Control.............................................. 2 1.4 Company .................................................. 4 1.5 Effective Date................................................. 4 1.6 Reserved .................................................. 4 1.7 Excess Assets.................................................. 4 1.8 Funding Amount................................................. 4 1.9 General Creditors.............................................. 4 1.10 Reserved .................................................. 4 1.11 Insolvent .................................................. 4 1.12 Investment Manager............................................. 4 1.13 IRC............................................................ 4 1.14 Participant .................................................. 5 1.15 Reserved .................................................. 5 1.16 Plan Administrator............................................. 5 1.17 Potential Change of Control.................................... 5 1.18 Potential Change of Control Period............................. 6 1.19 Reserved .................................................. 6 1.20 Trust.......................................................... 6 1.21 Trust Fund .................................................. 6 1.22 Trustee........................................................ 7 1.23 Valuation Date................................................. 7
3 II. ESTABLISHMENT OF THE TRUST........................ 7 2.1 Trust.......................................................... 7 2.2 Description of Trust........................................... 7 2.3 Irrevocability................................................. 9 2.4 Acceptance by the Trustee...................................... 9 III. CONTRIBUTIONS..................................... 9 3.1 Calculations of Funding Amount................................. 9 3.2 Contributions as of Each Valuation Date........................ 9 3.3 Reserved....................................................... 9 3.4 No Dilution of Trust........................................... 10 3.5 Collection..................................................... 10 IV. ACCOUNTING AND ADMINISTRATION..................... 11 4.1 Trustee Recordkeeping.......................................... 11 4.2 Company Recordkeeping.......................................... 11 4.3 Periodic Accounting............................................ 11 4.4 Administrative Powers of Trustee............................... 12 V. INVESTMENTS....................................... 15 5.1 Generally...................................................... 15 5.2 Investment Powers of Trustee................................... 15 5.3 Investment Managers............................................ 19 5.4 Reserved....................................................... 20 5.5 Single Fund.................................................... 20 VI. PAYMENTS FROM THE TRUST........................... 20 6.1 Obligation of Trustee to Make Payments to Participants................................................ 20 6.2 Obligation of the Company to Make Payments to Participants..... 20 6.3 Distributions to Participants.................................. 21
4 6.4 Reserved....................................................... 21 6.5 Insufficient Trust Fund Assets................................. 21 6.6 Payment of Excess Assets to Company............................ 21 6.7 Company to Pay Withholding and Employment Taxes................ 22 6.8 Payment in Reversion to Company................................ 22 6.9 Reserved....................................................... 23 VII. PAYMENTS ON INSOLVENCY OF THE COMPANY............. 23 7.1 No Security Interest......................................... 23 7.2 Determination of Insolvency.................................. 23 7.3 Payments When Company Is Insolvent........................... 24 7.4 Resumption of Duties after Insolvency........................ 25 7.5 Reserved..................................................... 25 VIII. RESIGNATION OR REMOVAL OF TRUSTEE................. 25 8.1 Resignation or Removal of Trustee............................ 25 8.2 Successor Trustee............................................ 25 8.3 Duties of Retiring and Successor Trustees.................... 26 8.4 Reserved..................................................... 26 IX. AMENDMENT AND TERMINATION OF TRUST................ 27 9.1 Amendment.................................................... 27 9.2 Termination.................................................. 28 9.3 Reserved..................................................... 28 X. GENERAL PROVISIONS................................ 28 10.1 Coordination with Plan....................................... 28 10.2 Litigation................................................... 28 10.3 Trustee's Action Conclusive.................................. 28 10.4 No Guarantee or Responsibility............................... 29 10.5 Liabilities Mutually Exclusive............................... 29 10.6 Indemnification.............................................. 29 10.7 Expenses and Compensation.................................... 29
5 10.8 Reserved..................................................... 30 10.9 Notice....................................................... 30 10.10 Antiassignment Clause........................................ 30 10.11 True and Correct Document.................................... 30 10.12 Waiver of Notice............................................. 30 10.13 Counterparts................................................. 30 10.14 Gender and Number............................................ 31 10.15 Successors................................................... 31 10.16 Severability................................................. 31 10.17 Applicable Law............................................... 31
EXHIBIT A The Detroit Edison Company IRREVOCABLE GRANTOR TRUST FOR THE BENEFIT EQUALIZATION PLAN EXHIBIT B The Detroit Edison Company IRREVOCABLE GRANTOR TRUST PARTICIPANTS (as defined in the Trust) 6 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST THIS TRUST AGREEMENT is made this 24th day of July, 1995 by and between The Detroit Edison Company, a Michigan corporation, and The Northern Trust Company, an Illinois corporation, of Chicago, Illinois ("Trustee"), and any successor provided for in the Trust hereby evidenced, as Trustee. WITNESSETH THAT: WHEREAS, the Company has established and maintains the Benefit Equalization Plan ("Plan"), an unfunded benefit plan, a copy of which is attached hereto as Exhibit A, for the benefit of certain Company Executives listed on Exhibit B hereto, which Exhibits may be amended from time to time by the Company prior to a potential Change of Control and/or Change of Control, and without the Trustee's consent; and WHEREAS, the Company has incurred and expects to continue to incur liabilities pursuant to the terms of the Plan, and wishes to establish an irrevocable trust by placing assets in trust, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, to pay benefits under the Plan or to be applied as otherwise provided for herein; and WHEREAS, it is the intention of the Company that amounts transferred to the Trust and the earnings thereon shall be used by the Trustee, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, to satisfy the liabilities of the Company in accordance with the provisions hereof; and, upon satisfaction of all liabilities of the Company with respect to all Participants (and their Beneficiaries, if applicable), the assets, if any, remaining in the Trust shall revert to the Company; and WHEREAS, the Company intends that the existence of the Trust shall not alter the characteristics of the Plan as an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management and/or highly-compensated employes, and shall not be construed to provide income -1- 7 for federal income tax purposes to a Participant (or his or her Beneficiary) prior to the actual payment of benefits under the Plans; and WHEREAS, the Trustee has agreed to serve as trustee of such trust; NOW, THEREFORE, in consideration of the mutual undertakings of the Company and the Trustee, the parties do hereby establish the Trust, and agree that the Trust shall be comprised, held, and disposed of as follows: I. DEFINITIONS Unless the context requires otherwise, definitions as used herein shall have the same meaning as in the Plan when applied to said Plan. 1.1 "Beneficiary" means the beneficiary designated as provided in the Plan as set forth in Exhibit A. 1.2 "Board of Directors" means the Company's Board of Directors, as constituted from time to time. 1.3 "Change of Control" means the occurrence of any of the following events: (a) a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the Securities Act of 1934, as amended (the "Exchange Act"), or any successor provisions, whether or not the Company is then subject to such reporting requirement; or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an employe benefit plan maintained by the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of the Board of Directors (the "Base Capital Stock"); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's -2- 8 ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company; or (c) a change in the composition of the Company's Board of Directors, as a result of which fewer than two-thirds of the incumbent directors are directors who either (1) had been directors of the Company 24 months prior to such change, or (2) were elected, or nominated for election, to the Company's Board of Directors with the affirmative votes of at least a majority of the directors who had been directors of the Company 24 months prior to such change and who were still in office at the time of the election or nomination; or (d) there shall be consummated (1) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted into cash, securities, or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (2) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (3) the stockholders of the Company approve a plan or proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing provisions of this Section 1.3 a "Change of Control" shall not be deemed to have occurred by reason of the corporate reorganization (the "Reorganization") of the Company implemented pursuant to the resolution adopted -3- 9 by the Board of Directors of the Company on December 5, 1994 (as such resolution may be amended or supplemented from time to time), whereby it is proposed that a corporation will become the parent holding company of the Company. The Company shall promptly notify the Trustee of a Change of Control and the Trustee may conclusively rely upon such notice and shall have no duty to independently determine whether a Change of Control has occurred. 1.4 "Company" means The Detroit Edison Company, a Michigan corporation, its successors and assigns. 1.5 "Effective Date" means July 24, 1995. 1.6 Reserved. 1.7 "Excess Assets" means assets of the Trust in excess of one hundred and twenty-five per cent (125%) of the Funding Amount. 1.8 "Funding Amount" means the actual benefit obligation on the books of the Company as of the most recent Valuation Date, certified by the Company to the Trustee. Upon any Potential Change of Control and during any Potential Change of Control Period, "Funding Amount" means one hundred and twenty per cent (120%) of the actual benefit obligation on the books of the Company as of the most recent Valuation Date, as certified by the Company to the Trustee. 1.9 "General Creditors" means the unsecured general creditors of the Company, including the Participants. 1.10 Reserved. 1.11 "Insolvent" and "Insolvency" mean that the Company (a) is unable to pay its debts as they become due; or (b) is subject to a pending proceeding as a debtor under the Bankruptcy Code. -4- 10 1.12 "Investment Manager" means the investment manager(s) appointed by the Company in the manner provided in Section 5.3 to direct the investment of any part or all of the assets of the Trust Fund in accordance with Article V. 1.13 "IRC" means the Internal Revenue Code of 1986, as amended. 1.14 "Participant" means a Participant in the Plan and includes an individual who is otherwise eligible to participate in the Plan but cannot due to age, years of service or active employment. The Company agrees to list all Participants on Exhibit B attached hereto. Except after a Change of Control as provided in Section 3.4, the Company may add or delete Participants by delivering a new Exhibit B to the Trustee. 1.15 Reserved. 1.16 "Plan Administrator" means the party designated under the Plan as responsible for the management, operation, and administration of the Plan. 1.17 "Potential Change of Control" means the date of the earliest occurrence of any of the following events: (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control of the Company; or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an employee benefit plan maintained by the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 9.5% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of the Board of Directors (the "Base Capital Stock"); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's ownership of securities, shall be disregarded until such person increases in -5- 11 any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company; or (c) the public announcement by any individual or entity, other than the Company, that such individual or entity intends to take or to consider taking actions which, if consummated, would constitute a Change of Control of the Company; or (d) the public announcement of any merger, acquisition, consolidation, or reorganization of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company's common stock would be converted into cash, securities, or other property, other than a transaction in which the holders of the Company's common stock immediately prior to the merger, acquisition, consolidation, or reorganization have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, acquisition, consolidation, or reorganization, including, but not limited to, the creation of a parent entity to oversee the Company; or (e) the public announcement of the sale or other transfer of substantially all of the assets of the Company to any third party; or (f) the Board of Directors of the Company adopts a resolution to the effect that a Potential Change of Control of the Company has occurred for purposes of this Trust. Notwithstanding the foregoing provisions of this Section 1.17, a "Potential Change of Control" shall not be deemed to have occurred by reason of the Reorganization (as defined in Section 1.3). 1.18 "Potential Change of Control Period" means the one (1) year period immediately following the date of a Potential Change of Control. If a subsequent Potential Change of Control occurs during any Potential Change of Control Period, the Potential Change of Control Period shall end one (1) year following the date of the most recent Potential Change of Control. The Company shall promptly notify the Trustee of a Potential Change of Control and the Trustee may conclusively rely upon such notice and shall have -6- 12 no duty to independently determine whether a Potential Change of Control has occurred. 1.19 Reserved. 1.20 "Trust" means the irrevocable trust established pursuant to this Trust Agreement and all of the terms and conditions of this Trust Agreement, which is intended to constitute a grantor trust under IRC sections 671 et seq. 1.21 "Trust Fund" means all moneys, securities, and other property held by the Trustee, any custodian, or any insurance company under this Trust. 1.22 "Trustee" shall mean the trustee named herein, and any successor trustee appointed pursuant to Article VIII. 1.23 "Valuation Date" means the day in each calendar year which is the last day of the Company's fiscal year in each year, and such other times as the Company may determine. Each of (a) any date of a Potential Change of Control, (b) the date of a Change of Control, (c) the effective date of a Trustee's resignation or removal, and (d) the date of termination of the Trust shall also be a Valuation Date if any such date occurs other than on the last business day of the Company's fiscal Year. The first Valuation Date shall be December 31, 1994. II. ESTABLISHMENT OF THE TRUST 2.1 Trust. The Company hereby establishes the Trust with the Trustee, which Trust shall consist of such sums of money and other property acceptable to the Trustee as from time to time have been and shall be paid or delivered by the Company to the Trustee as provided herein. All such money and other property, all investments and reinvestments made therewith, or the proceeds thereof, and all investment earnings and profits thereon, less all payments and charges as authorized herein, shall constitute the Trust Fund. The Trust Fund shall be held in trust by the Trustee, and shall be dealt with in accordance with the provisions of this Trust. 2.2 Description of Trust. The Company represents and agrees that: (a) the Trust is intended to be a grantor trust under IRC sections 671-678, and shall be construed accordingly. The Company intends and agrees that it is -7- 13 the "owner" or grantor of the Trust in its entirety, as that term is defined in subpart E, part I, subchapter J, chapter 1, subtitle A of the IRC and that, for income tax purposes, all income, deductions, and credits of the Trust Fund belong to it as owner, and will be included on its income tax or other required tax returns, and any income tax determined to be payable as a result thereof will be the sole obligation of, and will be paid by, the Company; (b) a true and correct copy of the Plan, as in effect on the Effective Date hereof, is attached hereto as Exhibit A. The Company shall file with the Trustee, promptly upon its adoption, a true and correct copy of each amendment to the Plan; (c) the Trust Fund is to be used to satisfy the legal obligations of the Company to Participants under the Plan as provided herein, subject to the claims of General Creditors in the event of Insolvency, and the balance of the Trust Fund, if any, remaining after payment of the Company's obligation to Participants under the Plan will revert to the Company in accordance with the Trust; (d) contributions by the Company to the Trust which are made coincident with and subsequent to the Effective Date shall be in amounts determined under Article III hereof. The Company agrees to fund the Trust as provided therein; (e) the principal of the Trust, and any earnings thereon shall be held by the Trustee separate and apart from other funds of Company, and shall be used exclusively for the uses and purposes as herein set forth; (f) the Trust established under this agreement does not fund and is not intended to fund the Plan, or any other employe benefit plan or program of the Company. Neither the establishment of the Trust, nor the payment or delivery of assets to the Trustee shall vest any Participant in any right, title, or interest in or to any assets of the Trust Fund; (g) participants shall have no preferred claim on, or any beneficial ownership interest in, assets of the Trust. To the extent that any Participant acquires the right to receive payment(s) under the Plan, any such right shall be mere unsecured contractual rights of Participants against the Company, -8- 14 and such Participants (or their Beneficiary(ies)) shall have only the unsecured promise of the Company that such payment(s) will be made. Any assets held by the Trust will be subject to the claims of General Creditors under federal and state law in the event of Insolvency, as defined herein, with no preference whatsoever given to claims of employes over claims of other unsecured creditors of the Company; and (h) to the extent the Plan is covered by ERISA, the Plan is a plan for a select group of management or highly compensated employes, and as such are exempt from the application of ERISA except for the disclosure requirements applicable to such plan, for which the Company bears full responsibility as to compliance. The Company further represents that the Plan is not qualified under IRC ss. 401 and therefore, is not subject to any IRC requirements applicable to tax-qualified plans. 2.3 Irrevocability. Except as provided in Article 9 and this Section 2.3, the Trust shall be irrevocable from the effective date, and the assets of the Trust Fund shall be held in accordance with the provisions hereof for the exclusive purpose of providing for the payment of the Company's obligations to pay benefits to Participants under the Plan and to satisfy the claims of General Creditors in the event of Insolvency, and defraying the expenses of the Trust. Except as provided in Section 6.6 and Section 6.8 and in the event of Insolvency, no part of the income or corpus of the Trust Fund shall be recoverable by or for the benefit of the Company. 2.4 Acceptance by the Trustee. The Trustee accepts the Trust established under this Trust Agreement on the terms and subject to the provisions set forth herein, and agrees to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under this Trust. III. CONTRIBUTIONS 3.1 Calculations of Funding Amount. By September 30, 1995, the Company shall contribute to the Trust the Funding Amount as determined on the first Valuation Date. As of each Valuation Date, and until the entire Trust Fund has been distributed, the Company (or, after a Change of Control, the Company's independent public accountants) shall recalculate the Funding Amounts. -9- 15 3.2 Contributions as of Each Valuation Date. During the life of the Trust but no later than September 30 of each year, commencing no later than September 30, 1996, the Company shall contribute to the Trust such amount as is necessary to make trust assets equal the Funding Amount as of the previous Valuation Date. The Plan Administrator or its delegate (or, after a Change of Control, the Company's independent public accountants) shall provide the Trustee with written notice of the amount of the necessary contribution on or before the date such contribution is due to the Trust. Any such payments to the Trustee do not discharge or release the Company of its obligation under the Plan or Section 6.2 to pay benefits to Participants under the Plan, and shall at all times be subject to the provisions of Article VII. 3.3 Reserved. 3.4 No Dilution of Trust. After a Change of Control, the Exhibit B in effect on the date of a Change of Control shall not be amended to include a Participant not named in the Exhibit B in effect on the date of a Change of Control, unless pursuant to the requirements of this Section 3.4, at the time of delivery to the Trustee of a proposed amended Exhibit B (the "Delivery Date"), the Company shall deliver to the Trustee a determination by the Company's independent public accountants as of the Delivery Date of the proposed amended Exhibit B of the Funding Amount calculated based on the Participants named in the Exhibit B in effect on the Date of the Change of Control and any new or additional Participants named in the proposed amended Exhibit B (the "New Funding Amount") and (b), assets in an amount necessary to make the trust assets equal the New Funding Amount. If the Trustee determines that assets of the Trust Fund, including such assets as are delivered by the Company on the Delivery Date, equal or exceed the New Funding Amount, the Trustee shall accept the amended Exhibit B. Any amended Exhibit B so accepted shall be deemed incorporated with the same effect as if otherwise included herein. Unless an Exhibit B amended after a Change of Control is accepted by the Trustee as provided in this Section, the Trustee shall have no liability, responsibility, or obligation with respect to a Participant named in any amended Exhibit B unless such Participant is named in the Exhibit B then in effect on the date of a Change of Control. 3.5 Collection. In the event the Company fails to pay over to the Trustee within one hundred and twenty (120) days of notice and demand from the Trustee (or, upon the occurrence of a Potential Change of Control or a Change of Control, -10- 16 within seven (7) days of notice and demand from the Trustee), any amount determined to be payable by the Company to the Trustee under Sections 3.2, 6.5 or 7.4(a) of the Trust, the Trustee may commence legal action, (which is expressly deemed to include without limitation an alternate dispute resolution proceeding), to compel the Company to pay to the Trustee any amount determined to be payable to it under the Trust. The Trustee may bring such action against the Company in any court of competent jurisdiction, and shall be entitled to recover for the benefit of the Trust from the Company such amount, plus interest for each day at the rate of interest per annum of five (5) percentage points in excess of the prime lending rate as announced by NBD Bank, from the due date specified in the Trustee's notice and demand (or the date(s) from which pro rata payments were made, if such action is brought by the Trustee pursuant to Section 6.5 hereof) to the date of payment, plus all costs of collection, including reasonable attorneys fees and costs of litigation. The Trustee is authorized to bring action to compel payment by the Company, and, in connection with reasonable claims for delinquent contributions by the Company, to retain, at the expense of the Company, counsel and other appropriate experts, including actuaries and accountants, to aid it in pursuing litigation for collection against the Company. The Trustee's anticipated reasonable costs and expenses incurred pursuant to this Section 3.5 are payable by the Company in advance; and should the Company not make timely payment, the Trustee may charge the Trust Fund for such reasonably anticipated costs and expenses. The Trustee shall in no event be required to advance or expend its own funds in order to comply with the provisions of this Section 3.5. IV. ACCOUNTING AND ADMINISTRATION 4.1 Trustee Recordkeeping. The Trustee shall keep or cause to be kept accurate and detailed records of any investments, receipts, disbursements, and all other transactions required to be made by the Trustee hereunder, in accordance with such rules as may be established by the Company, including such specific records as shall be agreed upon in writing between the Company and the Trustee. All accounts, books, and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company. All such accounts, books, and records shall be preserved (in original form, or on microfilm, magnetic tape, or any other similar process) for such period as the Company may determine, and the Trustee may only destroy such accounts, books, and records after first notifying the Company in writing of its intention to so, and transferring to the Company any of such accounts, books, and records requested by the Company. -11- 17 4.2 Company Recordkeeping. The Company shall keep full, accurate, and detailed books and records with respect to the Participants and benefits paid and payable under the Plan, which records shall be made available to the Trustee at its request. 4.3 Periodic Accounting. Within sixty (60) days following a Valuation Date, the Trustee shall deliver to Company a written accounting, dated as of the Valuation Date, of its administration of the Trust Fund during such year or during the period from the most recent Valuation Date to the date of such current Valuation Date, which accounting shall be in accordance with the following provisions: (a) Such accounting shall set forth all investments, receipts, disbursements, and other transactions effected the by Trust Fund during the preceding year, or during the period from the most recent Valuation Date to the date of such current Valuation Date, including a description of all securities and investments purchased and sold, with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities or other property held in the Trust Fund, less liabilities known to the Trustee (other than liabilities to Participants entitled to benefits under the Plans) at the end of such year or other period, as the case may be. In making a valuation, all cash, securities or other property held in the Trust Fund shall be valued at their then fair market value, and shall be in a format as may be established by the Company. A copy of each accounting so delivered to the Company shall be open to inspection at the office of the Trustee during normal business hours. (b) If within ninety (90) days after the filing of such written accounting, the Company has not delivered to the Trustee notice of any objection to any act or transaction of the Trustee, the initial accounting shall become an account stated as between the Trustee and the Company. If any objection has been delivered to the Trustee by the Company, and if the Company is satisfied that it should be withdrawn, the Company shall signify its approval of the accounting in writing filed with the Trustee, and the accounting shall become an account stated as between the Trustee and the Company. If the accounting is adjusted following an objection thereto, the Trustee shall file and deliver the adjusted accounting to the Company. If within fifteen (15) days after such filing of an adjusted accounting, the -12- 18 Company has not delivered to the Trustee notice of any objection to the transactions as so adjusted, the adjusted accounting shall become an account stated as between the Trustee and the Company. (c) Unless an accounting is fraudulent, when it becomes an account stated, it shall be finally settled, and the Trustee shall, to the extent permitted by applicable law, be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions shown in such accounting. 4.4 Administrative Powers of Trustee. Except to the extent that authority with respect to the administration of the Trust has been allocated to others in accordance with this Trust, and subject to Article V, the Trustee shall have exclusive authority and discretion to manage and administer the Trust. The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Company which is contemplated by, and in conformity with, the terms of the Trustee's responsibilities under this Trust, and is given in writing by Company. The responsibility for maintenance of individual benefit records shall be retained by the Company, and may be delegated to such person or entity as the Company may employ from time to time. Except as otherwise provided herein, the Trustee shall have, without exclusion, all powers conferred on trustees by law and, without limiting the foregoing, shall have the following administrative powers, rights, and duties in addition to those provided elsewhere in this Trust: (a) to manage, sell, insure, and otherwise deal with all assets held by the Trustee on such terms and conditions as the Trustee shall decide; provided however, that if the Company delivers written instructions to the Trustee, the Trustee shall follow such instructions; (b) when directed by the Company or requested by a Participant pursuant to Article VI, to make payments from the Trust Fund to Participants and, when required by Article VII, to make payments from the Trust Fund to General Creditors entitled to payments thereunder; -13- 19 (c) except as provided in Article VI and Article VII, to waive, modify, reduce, compromise, release, contest, submit to arbitration, or settle or extend the time of payment of any claims, debts, damages, or demands of any nature in favor of or against the Trustee or all or any part of the Trust Fund; (d) to retain any disputed property until an appropriate final adjudication or release is obtained, and to represent the Trust in, or commence or defend, any litigation the Trustee considers in its discretion necessary in connection with the Trust Fund; (e) to withhold, if the Company so directs, all or any part of any payment required to be made hereunder as may be necessary and proper to protect the Trustee or the Trust Fund against any liability or claim on account of any estate, inheritance, income or other tax or assessment attributable to any amount payable hereunder, and to discharge any such liability with any part or all of such payment so withheld in accordance with Section 6.7; (f) to maintain records reflecting all receipts and payments under this Trust and such other records as the Company may specify and to which the Trustee agrees, which records may be audited from time to time by the Company or anyone named by the Company; and to furnish a written accounting to the Company as of each Valuation Date, as provided in Section 4.3; (g) if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy from a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. Notwithstanding the preceding sentence, the Trustee may loan to the Company the proceeds of any borrowing against an insurance policy held as an asset of the Trust; (h) to furnish the Company with such information for tax or other purposes which the Company may reasonably request and which the Trustee may not unreasonably withhold; -14- 20 (i) to employ accountants, advisors, agents, legal counsel (who, except following a Change of Control, may be legal counsel to the Company and who are not in the Company's reasonable judgment deemed to have a conflict of interest), consultants, custodians, depositories, experts and other providers of services, to consult with them with respect to the implementation and construction of this Trust, the duties of the Trustee hereunder, the transactions contemplated by this Trust, or any act which the Trustee proposes to take or omit, and to rely upon the advice of and services performed by such persons; to delegate discretionary powers to such persons and to reasonably rely upon information and advice furnished by such persons; provided that each such delegation and the acceptance thereof by each such person shall be in writing; and provided further that the Trustee may not delegate its responsibilities as to the management or control of the assets of the Trust Fund; (j) to determine whether the Company is Insolvent, and to hold assets of the Trust Fund for the benefit of General Creditors in the event of Insolvency, as provided in Article VII hereof; (k) to make payments to Participants, including after a Change of Control, as provided in Article VI hereof; (l) to perform all other acts which in the Trustee's judgment are appropriate for the proper protection, management, investment, and distribution of the Trust Fund, and to carry out the purposes of the Trust. -15- 21 V. INVESTMENTS 5.1 Generally. With respect to assets for which the Trustee has investment responsibility, the Trustee shall invest and reinvest the principal and income of the Trust Fund and keep the Trust Fund invested, without distinction between principal and income, in accordance with the written investment guidelines established by the Company and provided to the Trustee by the Company. If no such written investment guidelines are received by the Trustee, the assets of the Trust Fund shall be invested in such investments as determined by the Trustee in accordance with the powers contained herein. 5.2 Investment Powers of Trustee. Except to the extent that authority with respect to the management of all or a portion of the Trust Fund has been allocated to others in accordance with this Trust, the Trustee shall have exclusive authority and discretion to manage and control the Trust Fund, subject only to broad investment guidelines the Company may establish from time to time. The authority to assume responsibility for investment of assets of the Trust Fund has been retained by the Company, and the authority to hold assets of the Trust Fund may be allocated to one or more custodians or insurance companies. Except as otherwise provided herein, the Trustee shall have, without exclusion, all powers conferred on trustees by applicable law and, without limiting the foregoing, shall have the following powers, rights, and duties in addition to those provided elsewhere in this Trust: (a) to invest and reinvest in any property wherever situated, whether real, personal, mixed, foreign or domestic, including common and preferred stocks, bonds, notes, and debentures (including convertible stocks and securities, but not including any stock, securities, or debt instruments of the Company [unless held in a collective or commingled fund and such Company securities comprise 5% or less of the assets of such fund]), leaseholds, mortgages (including, without limitation, any collective or part interest in any bond and mortgage or note and mortgage), certificates of deposit, life insurance contracts, guaranteed investment contracts, and guaranteed annuity contract, all regardless of diversification and without being limited to investments authorized by law for the investment of trust funds; (b) to invest and reinvest, without distinction between principal and income, in contracts for future delivery of United States Treasury Bills, other financial instruments, or indices based on any group of securities, and in -16- 22 options to buy or sell indices based on any group of securities or any kind of evidences of ownership or indebtedness, including financial instruments or futures contracts relating thereto; (c) to invest and reinvest part or all of the Trust Fund in any deposit accounts, deposit administration fund maintained by a legal reserve life insurance company in accordance with an agreement between the Trustee and such insurance company, a group annuity contract or life insurance policies issued by such insurance company to the Trustee as contract holder, any interest bearing deposits held by any financial institution having total capital and surplus of at least Fifty Million Dollars ($50,000,000), investments in any stocks, bonds, debentures, mutual fund shares, notes, commercial paper, treasury bills, and any mutual, common, commingled or collective trust funds or pooled investment funds, and to diversify such investments so as to minimize the risk of losses; (d) to commingle assets of the Trust Fund, for investment purposes only, with assets of any common, collective, or commingled trust fund which has been or may hereafter be established and maintained by the Trustee, or by any other financial institution; provided that to the extent that any part or all of the assets of the Trust Fund for which the Trustee has investment responsibility are invested in any such common, collective or commingled trust fund or pooled investment fund which is maintained by a bank or trust company (including a bank or trust company acting as Trustee), the provisions of the documents under which such common, collective or commingled trust fund or pooled investment fund are maintained shall govern any investment therein and provided further that prior to investing any portion of the Trust Fund for the first time in any such common, collective, or commingled trust fund, the Trustee shall advise the Company of its intent to make such an investment, and furnish to the Company any information it may reasonably request with respect to such common, collective, or commingled trust fund (other than a trust fund established by the Company), and provided further that the Trustee shall maintain separate records with respect to each other trust of the Trust Fund; (e) to vote stock and other voting securities personally or by proxy (and to delegate the Trustee's powers and discretion with respect to such stock or other voting securities to such proxy), to exercise subscription, -17- 23 conversion and other rights and options (and make payments from the Trust Fund in connection therewith), to take any action and to abstain from taking any action with respect to any reorganization, consolidation, merger, dissolution, recapitalization, refinancing and any other plan or change affecting any property constituting a part of the Trust Fund (and in connection therewith to delegate the Trustee's discretionary powers and pay assessments, subscriptions and other charges from the Trust Fund), to hold or register any property from time to time in the Trustee's name or in the name of a nominee or to hold it unregistered or in such form that title shall pass by delivery; and to borrow from anyone, including itself (to the extent permitted by law), such amounts from time to time as the Trustee considers desirable to carry out this Trust (and to mortgage or pledge all or part of the Trust Fund as security); to participate in any plan or reorganization, consolidation, merger, combination, liquidation, or other similar plan relating to any such property, and to consent to or oppose any such plan or any action thereunder, or any contract, lease, mortgage, purchase, sale, or other action by any corporation or other entity any of the securities of which may at any time be held in the Trust Fund, and to do any act with reference thereto; (f) to retain in cash such amounts as the Trustee considers advisable and as are permitted by applicable law, and to deposit any cash so retained in any depository (including any bank acting as Trustee) which the Trustee may select, provided such depository must have total capital and surplus of at least Fifty Million Dollars ($50,000,000); (g) when directed by the Company, and subject to Section 4.4(g), to apply for, pay premiums on, and maintain in force individual, ordinary or universal life insurance policies on the lives of Participants, which policies may contain provisions which the Company may approve or direct; to receive or acquire such policy or policies from the Company, but the Trustee may purchase a life insurance policy from a person other than the insurer which issues a policy only if the Trustee pays, transfers, or otherwise exchanges an amount no more than the cash surrender value of the policy or policies, and the policy or policies is (are) not subject to a mortgage or similar lien which the Trustee would be required to assume; to have with respect to such policy or policies any rights, powers, options, privileges, and benefits usually comprised in the term "incidents of ownership", and normally vested in an -18- 24 owner of such policy or policies to be exercised only pursuant to Company direction; (h) to retain any property at any time received by it; (i) to sell, to exchange, to convey, to transfer, or to dispose of, and to grant options for the purchase or exchange with respect to it, any property at any time held by it, by public or private sale, for cash or on credit, or partly for cash and partly for credit; (j) to deposit any such property with any protective, reorganization, or similar committee; to delegate discretionary power to any such committee; and to pay part of the expenses and compensation of any such committee and any assessments levied with respect to any property so deposited; (k) to exercise any conversion privilege or subscription right available in connection with any such property, and to do any act with reference thereto, including the exercise of options, the making of agreements or subscription, and the payment of expenses, assessment or subscription, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities or other property which it may so acquire; (l) to extend the time of payment of any obligation held in the Trust Fund; (m) to enter into standby agreements for future investment, either with or without a standby fee; (n) to acquire, renew, or extend, or participate in the renewal or extension of any mortgage, and to agree to a reduction in the rate of interest on any indebtedness or mortgage or to any other modification or change in the terms of any indebtedness or mortgage, or of any guarantee pertaining thereto, in any manner and to any extent that may be deemed advisable for the protection of the Trust Fund or the preservation of any covenant or condition of any indebtedness or mortgage or in the performance of any guarantee, or to enforce any default in such manner and to such extent as may be deemed advisable; and to exercise and enforce any and all rights of foreclosure, to bid on any property in foreclosure, to take a deed in lieu of foreclosure with or -19- 25 without paying a consideration therefor, and in connection therewith to release the obligation on the bond secured by such mortgage; and to exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect of any such indebtedness or mortgage or guarantee; (o) to make, execute, and deliver, as Trustee, any and all deeds, leases, notes, bonds, guarantees, mortgage, conveyance, contracts, waivers, releases, or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers; (p) to organize under the laws of any state one or more corporations, partnerships, or trusts for the purpose of acquiring and holding title to any property that it is authorized to acquire under this Trust, and to exercise with respect thereto any or all of the powers set forth in this Trust; (q) notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated under the IRC; and (r) generally to do all acts, whether or not expressly authorized, that the Trustee deems necessary or desirable for the protection of the Trust Fund, and to carry out the purposes of the Trust. 5.3 Investment Managers. The Company may appoint one or more Investment Managers to direct the investment of any part or all of the assets of the Trust Fund by the Trustee. Appointment of an Investment Manager shall be made by written notice to the Investment Manager(s) and to the Trustee, which notice shall specify those powers, rights, and duties of the Trustee under this Trust that are allocated to the Investment Manager(s) and the portion of the assets of the Trust Fund subject to the Investment Manager(s). After it receives written notice of such appointment, the Trustee shall have no obligation or responsibility for those investment duties which are allocated to an Investment Manager. An Investment Manager so appointed pursuant to this paragraph shall be either a registered investment adviser under the Investment Advisers Act of 1940, a bank, as defined in said Act, or an insurance company qualified to manage, acquire and dispose of the -20- 26 assets of the Plans under the laws of more than one state of the United States. Any such Investment Manager shall acknowledge to the Company in writing that is accepts such appointment. The Trustee shall not be liable for any loss or diminution of any assets managed by an Investment Manager, including without limitation, any loss or diminution caused by any action or inaction taken or omitted by it at the direction of an Investment Manager. In addition, the Trustee shall not be liable for the diversification of any assets managed by Investment Managers of the Company, each of which shall be solely the responsibility of the Company. An Investment Manager may resign at any time upon written notice to the Trustee and the Company. The Company may remove an Investment Manager at any time by written notice to the Investment Manager and the Trustee. The Company may by written notice to the Trustee assume investment responsibility for any portion or all of the Trust assets. The Trustee shall have no responsibility for any investments or review of such investments and shall act with respect to such assets only as directed by the Company. 5.4 Reserved. 5.5 Single Fund. All assets of the Trust Fund and of each investment fund, and the income thereon, shall be held and invested as a single fund, and the Trustee shall not make any separate investment of the Trust Fund, or make any separate investment fund, for the account of any Participant or other General Creditors prior to receipt of directions to make payments to such Participant or other General Creditors in accordance with Article VI or Article VII. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Participants. VI. PAYMENTS FROM THE TRUST 6.1 Obligation of Trustee to Make Payments to Participants. The Trustee's obligation to distribute to any Participant out of the assets of the Trust Fund shall be limited to payment at such times and in such amounts as are properly in conformance with the provisions of Section 6.3. Payments to Participants pursuant to this Article VI shall be made by the Trustee to the extent that funds in the Trust Fund are sufficient for such purpose, and shall at all times be subject to the provisions of Article VII. In the event the Company determines that it will pay benefits directly to Participants as they become due under the terms of the Plan, the -21- 27 Company shall notify Trustee of its decision prior to the time amounts are payable to Participants. 6.2 Obligation of the Company to Make Payments to Participants. Notwithstanding anything in the Trust to the contrary, the Company shall remain primarily liable to pay benefits under the Plan. Distributions to Participants from the Trust Fund shall discharge, reduce, and offset the Company's obligation to pay benefits to or on behalf of the Participant, to the extent of the distributions, with respect to the Plan. If the Company's obligation to pay a benefit under the Plan is not fully discharged, reduced, and offset by a distribution from the Trust, then the Company shall make the balance of each such benefit payment as it becomes due. 6.3 Distributions to Participants. Distributions which shall be made from the Trust Fund to pay benefits in accordance with the Plan shall be initiated by: (a) written direction to the Trustee from the Plan Administrator, which direction shall certify that such distribution(s) is(are) in accordance with the Plan, and specify the timing, form, payee, and amount of such benefit payments, including any federal, state, or local income taxes to be withheld, and the Trustee shall make or commence the directed distributions after receipt of such written direction; or (b) by the submission to the Trustee by a Participant of a certified copy of the non-appealable order of an appropriate forum with jurisdiction to settle a claim for payment(s) under the Plan. 6.4 Reserved. 6.5 Insufficient Trust Fund Assets. If at any time the Trustee determines or is advised that the Trust Fund does not have sufficient assets to permit the Trustee to make a payment property directed pursuant to this Trust, including a payment provided for under Section 10.7 of this Trust, the Trustee shall pay any benefits due (if otherwise payable hereunder) to Participants on a pro rata basis as directed by the Plan Administrator, and the Company shall make the balance of such payments as they become due. If the Plan Administrator determines that the Trust Fund does not have sufficient funds to provide for the payment of all amounts otherwise payable to Participants (or their Beneficiary(ies)) from the Trust under the Plans, it shall notify the Company and the Trustee of the amount of the deficiency, and, within forty-five -22- 28 (45) days of such notice, the Company deposit in trust with the Trustee the additional amounts needed to make such payments. Upon receipt of such amount by the Trustee from the Company, proceeds shall first be used by the Trustee to pay any benefits previously due remaining unpaid, in the order in which they were due, pursuant to Plan Administrator instructions. 6.6 Payment of Excess Assets to Company. Subject to Article VII, and except as otherwise provided in this Section and Section 6.8 hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust Fund before payment of all benefits due or to become due have been made to Participants (or their Beneficiary(ies)) pursuant to the terms of the Plan. If, as of a Valuation Date, and based on the fair market value of the Trust Fund as determined by the Trustee in accordance with Section 4.3 hereof, the Trust Fund holds Excess Assets, then in the event the Trustee has received within ninety (90) days after the most recent Valuation Date a written request executed by the Company, the Trustee shall transfer to the Company, within thirty (30) days after the receipt of the request, and provided that a Potential Change of Control Period does not exist on the date of the transfer, such assets of the Trust Fund selected by the Company which have a fair market value equal to the amount of such Excess Assets, after converting such assets to cash if requested by the Company. Any payment of Excess Assets to the Company under this Section shall not discharge or release the Company of its obligation to make any contribution required under Article III (including the requirement of a Company contribution to the Trust upon the occurrence of a Potential Change of Control or a Change of Control), and its obligation to pay benefits to Participants under the Plan. Any payment of Excess Assets in accordance with this Section shall be subject to the provisions of Article VII. 6.7 Company to Pay Withholding and Employment Taxes. Any amount paid to a Participant by the Trustee in accordance with this Article VI shall be reduced by the amount of taxes required to be withheld pursuant to Plan Administrator instructions, and the Trustee shall inform the Company of all amounts so withheld. The Company shall direct that the Trustee shall either (a) pay to the Company a sum equal to the amount of such taxes as are required to be withheld, whereupon the Company shall have full responsibility for the payment of all withholding taxes to the appropriate taxing authorities, or -23- 29 (b) pay such taxes directly to the appropriate taxing authorities for the benefit of the Company. The Company shall be solely responsible for the payment of any employment taxes for which it is directly liable as a result of payments by the Trustee. The Company shall furnish each Participant with the appropriate tax information form evidencing payments under the Trust and the amount(s) thereof. 6.8 Payment in Reversion to Company. Subject to Article VII, upon receipt of written certification from the Company that all obligations of the Company to Participants with respect to the Plan have been satisfied, and if the Trust Fund shall have any assets remaining, the Trustee shall distribute such remaining assets of the Trust Fund to the Company, after converting such assets to cash if requested by the Company, subject to the Trustee's right to retain such reasonable amount for compensation and expenses as provided in Section 10.7. The Trust shall thereafter terminate as provided in Section 9.2. 6.9 Reserved. VII. PAYMENTS ON INSOLVENCY OF THE COMPANY 7.1 No Security Interest. No Participant shall have any claim on or beneficial ownership interest in the Trust Fund before such assets are paid to the Participant, except as an unsecured creditor of the Company. The Company shall not create a security interest in the Trust Fund in favor of any Participant or any other General Creditor. At all times during the continuance of this Trust, as provided in this Article VII hereof, the principal and income of the Trust Fund shall be subject to the claims of General Creditors under federal and state law. If at any time the Trustee has received notice as provided below that Company is Insolvent, Trustee shall discontinue payments to Participants, and shall hold assets of the Trust Fund for the benefit of the Company's General Creditors, pursuant to the provisions of Section 7.3, with no preference whatsoever given claims of employes over claims of other unsecured creditors of the Company. 7.2 Determination of Insolvency. Notwithstanding any other provisions of this Trust, the following provisions shall apply: -24- 30 (a) The Board of Directors and the Chief Executive Officer of the Company shall have the fiduciary duty and responsibility on behalf of General Creditors to notify the Trustee promptly in writing in the event the Company is Insolvent, and the Trustee shall have the right to rely thereon to the exclusion of all directions or claims for payment made thereafter by Participants. (b) If the Trustee has actual knowledge that the Company is Insolvent, the Trustee shall act in accordance with Section 7.3 hereof. (c) Unless the Trustee receives written notice from the Board of Directors or the Chief Executive Officer of the Company that the Company is Insolvent, or from a person claiming to be a General Creditor and claiming that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. If the Trustee receives a written allegation from a person claiming to be a General Creditor that the Company is Insolvent, the Trustee's only duty of inquiry shall be to request that the Company's independent public accountants determine whether the Company is Insolvent, and shall suspend benefit payments pending such determination. If the Company's independent public accountants advise the Trustee that the Company is not Insolvent, it shall resume payments in accordance with this Trust. If the Trustee receives notice of the Company's Insolvency pursuant to this Section 7.2(c), it shall act in accordance with [this Section and] Section 7.3 hereof. 7.3 Payments When Company Is Insolvent. Notwithstanding any other provision of this Trust to the contrary, if the Trustee has actual knowledge as described in 7.2(b), has been advised pursuant to 7.2(c) or receives actual notice described in Section 7.2(a) that the Company is Insolvent (a) by reason of Section 1.11(b), the Trustee shall suspend payments to Participants and shall notify Participants of the suspension, and shall hold the Trust Fund for the benefit of the General Creditors, and shall pay and deliver the entire amount of the Trust Fund only as a court competent jurisdiction, or duly appointed receiver or other person authorized to act by such court, may order or direct to make the Trust Fund available to satisfy the claims of the General Creditors (payments to Participants in accordance with the terms of the Plan may be resumed only pursuant to Section 7.4 hereof); or -25- 31 (b) by reason of Section 1.11(a), the Trustee shall suspend payments to Participants and shall notify Participants of the suspension, and shall (i) hold the Trust Fund for the benefit of General Creditors or (ii) pay over all or a portion of the Trust Fund to General Creditors if directed by the Company or an appropriate judicial forum. Nothing in this Trust Agreement shall in any way diminish any rights of Participants to pursue their rights as unsecured creditors of Company with respect to benefits under the Plan, or otherwise. 7.4 Resumption of Duties after Insolvency. In the absence of notice of a Court order to the contrary, the Trustee shall resume all of its duties and responsibilities under the Trust, including payments to Participants if otherwise provided for herein, within thirty (30) days of the Trustee's receipt of a determination from the Company's independent public accounting firm that the Company is no longer Insolvent. (a) Trust Recovery of Payments to Creditors. In the event that amounts are paid from the Trust Fund to General Creditors of the Company, then as soon as practicable after the Company is no longer Insolvent, the Company shall deposit into the Trust Fund a sum to equal to the Funding Amount, determined as of the date the Company is no longer Insolvent, which date shall be a Valuation Date. The Company (or, after a Change of Control, the Company's independent public accountants) shall provide the Trustee with written certification of such Funding Amount. If the Funding Amount is not paid by the Company within ninety (90) days of the Trustee's receipt of such notice, the Trustee shall demand payment and the provisions of Section 3.5 shall apply. (b) Determination of Payment Amount; Resumption of Payments. Provided that there are sufficient assets of the Trust Fund, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 7.3 and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plan for the period of such discontinuance, as determined by the Plan Administrator, less the aggregate amount of any payments made to Participants by the Company in lieu of the payments -26- 32 provided for hereunder during any such period of discontinuance. If the Trustee suspends a payment to a Participant under this Section, and subsequently makes such payment, the payment shall include interest at the rate of interest per annum equal to the prime rate as published by NBD Bank for each day from the date of suspension to the date of payment, as calculated by the Plan Administrator. 7.5 Reserved. VIII. RESIGNATION OR REMOVAL OF TRUSTEE 8.1 Resignation or Removal of Trustee. The Trustee may resign for any reason or for no reason and at any time by giving thirty (30) days prior written notice to the Company (or such shorter notice as may be agreed to by the Company and the Trustee). Subject to Section 8.2(b) hereof, the Company may remove the Trustee, for any reason and with or without cause, by giving thirty (30) days prior written notice to the Trustee (or such shorter notice as may be agreed to by the Company and the Trustee). 8.2 Successor Trustee. In the event of the resignation or removal of a Trustee, a successor Trustee shall be appointed. Any successor Trustee appointed pursuant to this Section must be a corporation which is not an affiliate of the Company and which is authorized under the laws of the United States or of any state to administer trusts and has at the time of its appointment total capital and surplus of at least Fifty Million Dollars ($50,000,000). The Company shall give notice of any such appointment to the retiring Trustee and the successor Trustee. A successor Trustee shall be appointed in accordance with the following provisions: (a) At any time prior to a Change of Control, a successor Trustee shall be appointed by the Company. If a Trustee should resign or be removed, and the Company does not notify the Trustee of the appointment of a successor Trustee within forty-five (45) days of its notice of its resignation or removal, then the Company shall be deemed to have failed to have appointed a successor Trustee, and the Trustee shall apply to a court of competent jurisdiction for appointment of a successor Trustee. (b) After the occurrence of a Change of Control, the Trustee who is the Trustee on the date of the Change of Control may be removed by the -27- 33 Company for three (3) years from the date of the Change of Control. If a Trustee resigns or is removed at any time after the date of a Change of Control, the Trustee shall apply to a court of competent jurisdiction for appointment of a successor Trustee. Notwithstanding Section 8.1, no resignation by or removal of the Trustee shall be effective prior to the effective date of the appointment of a successor Trustee by the Company or a court of competent jurisdiction. 8.3 Duties of Retiring and Successor Trustees. In the event of the resignation or removal of a Trustee, the retiring Trustee shall within thirty (30) days after the effective date of resignation or removal furnish to the successor Trustee and the Company a final accounting of its administration of the Trust. A successor Trustee shall succeed to the right and title of the predecessor Trustee in the assets of the Trust Fund and the retiring Trustee shall deliver the property comprising the assets of the Trust Fund (less any unpaid fees and expenses of the retiring trustee) to the successor Trustee, together with any instruments of transfer, conveyance, assignment, and further assurance as the successor Trustee may reasonably require. All of the provisions of the Trust set forth herein with respect to the Trustee shall relate to each successor Trustee with the same force and effect as if such successor Trustee had been originally named as the Trustee hereunder. To the extent permitted by law, neither the Trustee nor the successor Trustee shall be liable for any act or failure to act, and shall not be required to examine the accounts, records, or acts of the other. 8.4 Reserved. IX. AMENDMENT AND TERMINATION OF TRUST 9.1 Amendment. Except as otherwise provided in Section 2.3 of this Trust, the Trust may be amended (but may not be not revoked unless all of the Company's obligations with respect to the Plan have been satisfied) in writing from time to time by delivery to the Trustee of such amendment executed by the Company, which amendment shall include the effective date of such amendment. Any amendment of the Trust may be made: (a) prior to a Change of Control, without limitation and in any manner and effective as of any date, including a retroactive effective date, if -28- 34 accompanied by the written certification that no Change of Control has occurred; (b) after a Change of Control, only if a period of three (3) years has elapsed since the Change of Control, and either: (1) such amendment is accompanied by the specific written consent to the amendment by Participants whose actuarial interests under the Plan, computed by the Company's independent public accountants as of the effective date of such amendment, represent at least 51% of the total of all actuarial interests under the Plan; or (2) such amendment is accompanied by the opinion of legal counsel satisfactory to the Trustee that the amendment is necessary for the purpose of conforming the Trust to any present or future federal or state law (including revenue laws) relating to trusts of this or similar nature, as such laws may be amended from time to time, and a certification that a copy of such notice and opinion of counsel has been delivered to each Participant. No amendment shall conflict with the terms of the Plan subject to amendment, and no amendment may reduce the "Funding Amount" or the contribution requirements of Article III to less than 50% of the actual benefit obligation on the books of the Company; provided such amendment shall be effective prior to a Potential Change of Control or a Change of Control. No amendment shall operate to change the duties and liabilities of the Trustee without its consent, or make the Trust revocable after it has become irrevocable in accordance with Section 2.3 hereof unless the Company has satisfied all obligations it may have with respect to the Plan as of the date of such amendment. The Company and the Trustee shall execute such amendments of the Trust as shall be necessary to give effect to any amendment made in accordance with this Section. 9.2 Termination. After all assets of the Trust Fund have been distributed by the Trustee to the Participants or their Beneficiaries in accordance with Article VI, the Trustee shall render an accounting, which shall be the final accounting, in the manner provided for in Section 4.3. Upon acceptance of the accounting by the Company, any assets remaining in the Trust Fund, after deduction of such reasonable amount for compensation and expenses as provided for in Section 10.7, -29- 35 shall be returned to the Company in the manner provided in Section 6.8, and the Trust shall terminate thereupon. The Trust and all the rights, titles, powers, duties, discretions and immunities imposed on or reserved to the Trustee and the Company, shall continue in effect until all assets of the Trust Fund have been distributed as provided herein. 9.3 Reserved. X. GENERAL PROVISIONS 10.1 Coordination with Plan. The responsibilities of the Trustee shall be governed solely by the terms of this Trust Agreement. 10.2 Litigation. In any action or proceeding regarding the Trust, the Company, any assets of the Trust Fund, or the administration of the Trust, any creditors who are not parties to such action or proceedings and any other persons having or claiming to have a beneficial interest in the Trust shall not be necessary parties and shall not be entitled to any notice of process. Any final judgment which is not appealed or appealable and which may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto and all persons having or claiming to have a beneficial interest in the Trust. Acceptance by a creditor of assets of the Trust Fund shall constitute a release of an equal amount of any obligations of the Company to such creditor. 10.3 Trustee's Action Conclusive. The Trustee's exercise or non-exercise of its powers and discretion in good faith shall be conclusive on all persons. No one other than the Company shall be obliged to see to the application of any money paid or property delivered to the Trustee. The certificate of the Trustee that it is acting according to this Trust will fully protect all persons dealing with the Trustee. 10.4 No Guarantee or Responsibility. Notwithstanding any other provision of this Trust to the contrary, the Trustee does not guarantee payment of any amount which may become due and payable to a Participant. The Trustee shall have no responsibility for the disclosure to Participants regarding the terms of the Plan or of this Trust, or for the validity thereof. The Trustee shall not be responsible for administrative functions under the Plan and shall have only such responsibilities under this Trust Agreement as specifically set forth herein. The Trustee will be under no liability or obligation to anyone with respect to any failure on the part of -30- 36 the Company, the Plan Administrator, the Company's independent public accounting firm, an Investment Manager, or a Participant to perform any of their respective obligations under the Plan or this Trust. The Trustee shall be fully protected in relying upon any notice or direction provided to it from any party in connection with the Trustee's duties hereunder which the Trustee in good faith believes to be genuine, and executed and delivered in accordance with this Trust. Nothing in this Trust shall be construed as requiring the Trustee to make any payment in excess of the amounts held in the Trust Fund at the time of such payment or otherwise to risk or expend its own funds. 10.5 Liabilities Mutually Exclusive. Each of the Trustee and the Company shall be responsible only for its own acts or omissions. 10.6 Indemnification. The Company agrees to indemnify to the extent permitted by law the Trustee and hold it harmless against Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) arising out of or in connection with the performance of the Trustee's duties arising hereunder (but excluding costs arising as a result of the Trustee's bad faith or gross negligence in the performance of its responsibilities hereunder), and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. This Section shall survive the termination of the Trust. 10.7 Expenses and Compensation. The Trustee shall be paid compensation by the Company in an amount agreed to by the Company and the Trustee. The Trustee shall be reimbursed by the Company for reasonable expenses incurred by it in the management and administration of this Trust Agreement, including the reasonable compensation of the Trustee's counsel and other agents; and if the Trustee is not timely reimbursed with respect to amounts due pursuant to this Section 10.7 (or in the case of expenses to be incurred pursuant to Section 3.5 hereof), the Trustee may charge such amounts against the Trust Fund. Any compensation or expenses so agreed upon or otherwise payable not paid by the Company on a timely basis may be charged to the Trust Fund no more frequently than quarter-annually upon notice to the Company. 10.8 Reserved. -31- 37 10.9 Notice. Any notice to the Trustee or to the Company required or permitted under this Trust shall be duly and properly given and delivered if sent by certified United States mail, return receipt requested, to the Trustee at: The Northern Trust Company Attn: Trust Department Fifty South LaSalle Street Chicago, Illinois 60675 and to the Company at: The Detroit Edison Company Attn: Vice President and Treasurer 2000 Second Street Detroit, Michigan 48226 or to such other address as the Trustee or the Company may specify by written notice to the other. 10.10 Antiassignment Clause. Benefits payable to Participants and their Beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. 10.11 True and Correct Document. Any persons dealing with the Trustee may rely upon a copy of this Trust and any amendments thereto certified to be true and correct by the Trustee. 10.12 Waiver of Notice. Any notice required under this Trust may be waived by the person entitled to such notice. 10.13 Counterparts. This Trust may be executed in two or more counterparts, any one of which will be an original without reference to the others. 10.14 Gender and Number. Words denoting the masculine gender shall include the feminine and neuter genders and the singular shall include the plural and the plural shall include the singular wherever required by the context. -32- 38 10.15 Successors. This Trust shall be binding on all persons entitled to payments hereunder and their respective heirs and legal representatives, and on the Company, the Trustee, and their respective successors. 10.16 Severability. If any provision of this Trust is held to be illegal or invalid, such illegality or invalidity shall not affect the remaining provisions of this Trust, which shall be construed and enforced as if such illegal or invalid provisions had never been inserted herein. 10.17 Applicable Law. The Trust shall be governed by and construed in accordance with the laws of the State of Michigan with respect to the Company's obligations and in accordance with the laws of the State of Illinois with respect to the Trustee's obligations and Trust Administration. IN WITNESS WHEREOF, the Company and the Trustee have caused this trust agreement to be signed by their duly authorized representatives, and have caused their respective seals to be hereunto affixed, as of the Effective Date. THE DETROIT EDISON COMPANY By________________________ Its_______________________ THE NORTHERN TRUST COMPANY as Trustee By_______________________ Its______________________ -33- EX-99.32 14 EX-99.32 1 EXHIBIT 99.32 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST EFFECTIVE JULY 17, 1995 2 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST TABLE OF CONTENTS I. DEFINITIONS.............................................. 2 1.1 Beneficiary ................................................... 2 1.2 Board of Directors............................................. 2 1.3 Change of Control.............................................. 2 1.4 Company ....................................................... 4 1.5 Effective Date................................................. 4 1.6 Reserved ...................................................... 4 1.7 Excess Assets ................................................. 4 1.8 Funding Amount................................................. 4 1.9 General Creditors.............................................. 4 1.10 Reserved ...................................................... 4 1.11 Insolvent ..................................................... 4 1.12 Investment Manager............................................. 4 1.13 IRC............................................................ 4 1.14 Participant ................................................... 5 1.15 Reserved ...................................................... 5 1.16 Plan Administrator............................................. 5 1.17 Potential Change of Control.................................... 5 1.18 Potential Change of Control Period............................. 6 1.19 Reserved ...................................................... 6 1.20 Trust.......................................................... 6 1.21 Trust Fund .................................................... 6 1.22 Trustee........................................................ 7 1.23 Valuation Date................................................. 7
3 II. ESTABLISHMENT OF THE TRUST............................... 7 2.1 Trust.......................................................... 7 2.2 Description of Trust........................................... 7 2.3 Irrevocability................................................. 9 2.4 Acceptance by the Trustee...................................... 9 III. CONTRIBUTIONS............................................ 9 3.1 Calculations of Funding Amount................................. 9 3.2 Contributions as of Each Valuation Date........................ 9 3.3 Reserved....................................................... 9 3.4 No Dilution of Trust........................................... 10 3.5 Collection..................................................... 10 IV. ACCOUNTING AND ADMINISTRATION............................ 11 4.1 Trustee Recordkeeping.......................................... 11 4.2 Company Recordkeeping.......................................... 11 4.3 Periodic Accounting............................................ 11 4.4 Administrative Powers of Trustee............................... 12 V. INVESTMENTS.............................................. 15 5.1 Generally...................................................... 15 5.2 Investment Powers of Trustee................................... 15 5.3 Investment Managers............................................ 19 5.4 Reserved....................................................... 20 5.5 Single Fund.................................................... 20 VI. PAYMENTS FROM THE TRUST.................................. 20 6.1 Obligation of Trustee to Make Payments to Participants................................................ 20 6.2 Obligation of the Company to Make Payments to Participants..... 20 6.3 Distributions to Participants.................................. 21
4 6.4 Reserved....................................................... 21 6.5 Insufficient Trust Fund Assets................................. 21 6.6 Payment of Excess Assets to Company............................ 21 6.7 Company to Pay Withholding and Employment Taxes................ 22 6.8 Payment in Reversion to Company................................ 22 6.9 Reserved....................................................... 23 VII. PAYMENTS ON INSOLVENCY OF THE COMPANY.................... 23 7.1 No Security Interest......................................... 23 7.2 Determination of Insolvency.................................. 23 7.3 Payments When Company Is Insolvent........................... 24 7.4 Resumption of Duties after Insolvency........................ 25 7.5 Reserved..................................................... 25 VIII. RESIGNATION OR REMOVAL OF TRUSTEE........................ 25 8.1 Resignation or Removal of Trustee............................ 25 8.2 Successor Trustee............................................ 25 8.3 Duties of Retiring and Successor Trustees.................... 26 8.4 Reserved..................................................... 26 IX. AMENDMENT AND TERMINATION OF TRUST....................... 27 9.1 Amendment.................................................... 27 9.2 Termination.................................................. 28 9.3 Reserved..................................................... 28 X. GENERAL PROVISIONS....................................... 28 10.1 Coordination with Plan....................................... 28 10.2 Litigation................................................... 28 10.3 Trustee's Action Conclusive.................................. 28 10.4 No Guarantee or Responsibility............................... 29 10.5 Liabilities Mutually Exclusive............................... 29 10.6 Indemnification.............................................. 29 10.7 Expenses and Compensation.................................... 29
5 10.8 Reserved..................................................... 30 10.9 Notice....................................................... 30 10.10 Antiassignment Clause........................................ 30 10.11 True and Correct Document.................................... 30 10.12 Waiver of Notice............................................. 30 10.13 Counterparts................................................. 30 10.14 Gender and Number............................................ 31 10.15 Successors................................................... 31 10.16 Severability................................................. 31 10.17 Applicable Law............................................... 31
EXHIBIT A The Detroit Edison Company IRREVOCABLE GRANTOR TRUST FOR THE MANAGEMENT SUPPLEMENTAL BENEFIT PLAN EXHIBIT B The Detroit Edison Company IRREVOCABLE GRANTOR TRUST PARTICIPANTS (as defined in the Trust) 6 THE DETROIT EDISON COMPANY IRREVOCABLE GRANTOR TRUST THIS TRUST AGREEMENT is made this 17th day of July, 1995 by and between The Detroit Edison Company, a Michigan corporation, and The Northern Trust Company, an Illinois corporation, of Chicago, Illinois ("Trustee"), and any successor provided for in the Trust hereby evidenced, as Trustee. WITNESSETH THAT: WHEREAS, the Company has established and maintains the Management Supplemental Benefit Plan ("Plan"), an unfunded benefit plan, a copy of which is attached hereto as Exhibit A, for the benefit of certain Company Executives listed on Exhibit B hereto, which Exhibits may be amended from time to time by the Company prior to a potential Change of Control and/or Change of Control, and without the Trustee's consent; and WHEREAS, the Company has incurred and expects to continue to incur liabilities pursuant to the terms of the Plan, and wishes to establish an irrevocable trust by placing assets in trust, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, to pay benefits under the Plan or to be applied as otherwise provided for herein; and WHEREAS, it is the intention of the Company that amounts transferred to the Trust and the earnings thereon shall be used by the Trustee, subject to the claims of the Company's creditors in the event the Company becomes Insolvent, to satisfy the liabilities of the Company in accordance with the provisions hereof; and, upon satisfaction of all liabilities of the Company with respect to all Participants (and their Beneficiaries, if applicable), the assets, if any, remaining in the Trust shall revert to the Company; and WHEREAS, the Company intends that the existence of the Trust shall not alter the characteristics of the Plan as an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management and/or highly-compensated employes, and shall not be construed to provide income -1- 7 for federal income tax purposes to a Participant (or his or her Beneficiary) prior to the actual payment of benefits under the Plans; and WHEREAS, the Trustee has agreed to serve as trustee of such trust; NOW, THEREFORE, in consideration of the mutual undertakings of the Company and the Trustee, the parties do hereby establish the Trust, and agree that the Trust shall be comprised, held, and disposed of as follows: I. DEFINITIONS Unless the context requires otherwise, definitions as used herein shall have the same meaning as in the Plan when applied to said Plan. 1.1 "Beneficiary" means the beneficiary designated as provided in the Plan as set forth in Exhibit A. 1.2 "Board of Directors" means the Company's Board of Directors, as constituted from time to time. 1.3 "Change of Control" means the occurrence of any of the following events: (a) a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the Securities Act of 1934, as amended (the "Exchange Act"), or any successor provisions, whether or not the Company is then subject to such reporting requirement; or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an employe benefit plan maintained by the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of the Board of Directors (the "Base Capital Stock"); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's -2- 8 ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company; or (c) a change in the composition of the Company's Board of Directors, as a result of which fewer than two-thirds of the incumbent directors are directors who either (1) had been directors of the Company 24 months prior to such change, or (2) were elected, or nominated for election, to the Company's Board of Directors with the affirmative votes of at least a majority of the directors who had been directors of the Company 24 months prior to such change and who were still in office at the time of the election or nomination; or (d) there shall be consummated (1) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company's common stock would be converted into cash, securities, or other property, other than a merger of the Company in which the holders of the Company's common stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (2) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (3) the stockholders of the Company approve a plan or proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing provisions of this Section 1.3 a "Change of Control" shall not be deemed to have occurred by reason of the corporate reorganization (the "Reorganization") of the Company implemented pursuant to the resolution adopted -3- 9 by the Board of Directors of the Company on December 5, 1994 (as such resolution may be amended or supplemented from time to time), whereby it is proposed that a corporation will become the parent holding company of the Company. The Company shall promptly notify the Trustee of a Change of Control and the Trustee may conclusively rely upon such notice and shall have no duty to independently determine whether a Change of Control has occurred. 1.4 "Company" means The Detroit Edison Company, a Michigan corporation, its successors and assigns. 1.5 "Effective Date" means July 17, 1995. 1.6 Reserved. 1.7 "Excess Assets" means assets of the Trust in excess of one hundred and twenty-five per cent (125%) of the Funding Amount. 1.8 "Funding Amount" means the actual benefit obligation on the books of the Company as of the most recent Valuation Date, certified by the Company to the Trustee. Upon any Potential Change of Control and during any Potential Change of Control Period, "Funding Amount" means one hundred and twenty per cent (120%) of the actual benefit obligation on the books of the Company as of the most recent Valuation Date, as certified by the Company to the Trustee. 1.9 "General Creditors" means the unsecured general creditors of the Company, including the Participants. 1.10 Reserved. 1.11 "Insolvent" and "Insolvency" mean that the Company (a) is unable to pay its debts as they become due; or (b) is subject to a pending proceeding as a debtor under the Bankruptcy Code. -4- 10 1.12 "Investment Manager" means the investment manager(s) appointed by the Company in the manner provided in Section 5.3 to direct the investment of any part or all of the assets of the Trust Fund in accordance with Article V. 1.13 "IRC" means the Internal Revenue Code of 1986, as amended. 1.14 "Participant" means a Participant in the Plan and includes an individual who is otherwise eligible to participate in the Plan but cannot due to age, years of service or active employment. The Company agrees to list all Participants on Exhibit B attached hereto. Except after a Change of Control as provided in Section 3.4, the Company may add or delete Participants by delivering a new Exhibit B to the Trustee. 1.15 Reserved. 1.16 "Plan Administrator" means the party designated under the Plan as responsible for the management, operation, and administration of the Plan. 1.17 "Potential Change of Control" means the date of the earliest occurrence of any of the following events: (a) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control of the Company; or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or an employee benefit plan maintained by the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 9.5% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of the Board of Directors (the "Base Capital Stock"); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's ownership of securities, shall be disregarded until such person increases in -5- 11 any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company; or (c) the public announcement by any individual or entity, other than the Company, that such individual or entity intends to take or to consider taking actions which, if consummated, would constitute a Change of Control of the Company; or (d) the public announcement of any merger, acquisition, consolidation, or reorganization of the Company in which the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company's common stock would be converted into cash, securities, or other property, other than a transaction in which the holders of the Company's common stock immediately prior to the merger, acquisition, consolidation, or reorganization have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, acquisition, consolidation, or reorganization, including, but not limited to, the creation of a parent entity to oversee the Company; or (e) the public announcement of the sale or other transfer of substantially all of the assets of the Company to any third party; or (f) the Board of Directors of the Company adopts a resolution to the effect that a Potential Change of Control of the Company has occurred for purposes of this Trust. Notwithstanding the foregoing provisions of this Section 1.17, a "Potential Change of Control" shall not be deemed to have occurred by reason of the Reorganization (as defined in Section 1.3). 1.18 "Potential Change of Control Period" means the one (1) year period immediately following the date of a Potential Change of Control. If a subsequent Potential Change of Control occurs during any Potential Change of Control Period, the Potential Change of Control Period shall end one (1) year following the date of the most recent Potential Change of Control. The Company shall promptly notify the Trustee of a Potential Change of Control and the Trustee may conclusively rely upon such notice and shall have -6- 12 no duty to independently determine whether a Potential Change of Control has occurred. 1.19 Reserved. 1.20 "Trust" means the irrevocable trust established pursuant to this Trust Agreement and all of the terms and conditions of this Trust Agreement, which is intended to constitute a grantor trust under IRC ss. ss. 671 et seq. 1.21 "Trust Fund" means all moneys, securities, and other property held by the Trustee, any custodian, or any insurance company under this Trust. 1.22 "Trustee" shall mean the trustee named herein, and any successor trustee appointed pursuant to Article VIII. 1.23 "Valuation Date" means the day in each calendar year which is the last day of the Company's fiscal year in each year, and such other times as the Company may determine. Each of (a) any date of a Potential Change of Control, (b) the date of a Change of Control, (c) the effective date of a Trustee's resignation or removal, and (d) the date of termination of the Trust shall also be a Valuation Date if any such date occurs other than on the last business day of the Company's fiscal Year. The first Valuation Date shall be December 31, 1994. II. ESTABLISHMENT OF THE TRUST 2.1 Trust. The Company hereby establishes the Trust with the Trustee, which Trust shall consist of such sums of money and other property acceptable to the Trustee as from time to time have been and shall be paid or delivered by the Company to the Trustee as provided herein. All such money and other property, all investments and reinvestments made therewith, or the proceeds thereof, and all investment earnings and profits thereon, less all payments and charges as authorized herein, shall constitute the Trust Fund. The Trust Fund shall be held in trust by the Trustee, and shall be dealt with in accordance with the provisions of this Trust. 2.2 Description of Trust. The Company represents and agrees that: (a) the Trust is intended to be a grantor trust under IRC ss. ss. 671-678, and shall be construed accordingly. The Company intends and agrees that it is -7- 13 the "owner" or grantor of the Trust in its entirety, as that term is defined in subpart E, part I, subchapter J, chapter 1, subtitle A of the IRC and that, for income tax purposes, all income, deductions, and credits of the Trust Fund belong to it as owner, and will be included on its income tax or other required tax returns, and any income tax determined to be payable as a result thereof will be the sole obligation of, and will be paid by, the Company; (b) a true and correct copy of the Plan, as in effect on the Effective Date hereof, is attached hereto as Exhibit A. The Company shall file with the Trustee, promptly upon its adoption, a true and correct copy of each amendment to the Plan; (c) the Trust Fund is to be used to satisfy the legal obligations of the Company to Participants under the Plan as provided herein, subject to the claims of General Creditors in the event of Insolvency, and the balance of the Trust Fund, if any, remaining after payment of the Company's obligation to Participants under the Plan will revert to the Company in accordance with the Trust; (d) contributions by the Company to the Trust which are made coincident with and subsequent to the Effective Date shall be in amounts determined under Article III hereof. The Company agrees to fund the Trust as provided therein; (e) the principal of the Trust, and any earnings thereon shall be held by the Trustee separate and apart from other funds of Company, and shall be used exclusively for the uses and purposes as herein set forth; (f) the Trust established under this agreement does not fund and is not intended to fund the Plan, or any other employe benefit plan or program of the Company. Neither the establishment of the Trust, nor the payment or delivery of assets to the Trustee shall vest any Participant in any right, title, or interest in or to any assets of the Trust Fund; (g) participants shall have no preferred claim on, or any beneficial ownership interest in, assets of the Trust. To the extent that any Participant acquires the right to receive payment(s) under the Plan, any such right shall be mere unsecured contractual rights of Participants against the Company, -8- 14 and such Participants (or their Beneficiary(ies)) shall have only the unsecured promise of the Company that such payment(s) will be made. Any assets held by the Trust will be subject to the claims of General Creditors under federal and state law in the event of Insolvency, as defined herein, with no preference whatsoever given to claims of employes over claims of other unsecured creditors of the Company; and (h) to the extent the Plan is covered by ERISA, the Plan is a plan for a select group of management or highly compensated employes, and as such are exempt from the application of ERISA except for the disclosure requirements applicable to such plan, for which the Company bears full responsibility as to compliance. The Company further represents that the Plan is not qualified under IRC ss. 401 and therefore, is not subject to any IRC requirements applicable to tax-qualified plans. 2.3 Irrevocability. Except as provided in Article 9 and this Section 2.3, the Trust shall be irrevocable from the effective date, and the assets of the Trust Fund shall be held in accordance with the provisions hereof for the exclusive purpose of providing for the payment of the Company's obligations to pay benefits to Participants under the Plan and to satisfy the claims of General Creditors in the event of Insolvency, and defraying the expenses of the Trust. Except as provided in Section 6.6 and Section 6.8 and in the event of Insolvency, no part of the income or corpus of the Trust Fund shall be recoverable by or for the benefit of the Company. 2.4 Acceptance by the Trustee. The Trustee accepts the Trust established under this Trust Agreement on the terms and subject to the provisions set forth herein, and agrees to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under this Trust. III. CONTRIBUTIONS 3.1 Calculations of Funding Amount. By September 30, 1995, the Company shall contribute to the Trust the Funding Amount as determined on the first Valuation Date. As of each Valuation Date, and until the entire Trust Fund has been distributed, the Company (or, after a Change of Control, the Company's independent public accountants) shall recalculate the Funding Amounts. -9- 15 3.2 Contributions as of Each Valuation Date. During the life of the Trust but no later than September 30 of each year, commencing no later than September 30, 1996, the Company shall contribute to the Trust such amount as is necessary to make trust assets equal the Funding Amount as of the previous Valuation Date. The Plan Administrator or its delegate (or, after a Change of Control, the Company's independent public accountants) shall provide the Trustee with written notice of the amount of the necessary contribution on or before the date such contribution is due to the Trust. Any such payments to the Trustee do not discharge or release the Company of its obligation under the Plan or Section 6.2 to pay benefits to Participants under the Plan, and shall at all times be subject to the provisions of Article VII. 3.3 Reserved. 3.4 No Dilution of Trust. After a Change of Control, the Exhibit B in effect on the date of a Change of Control shall not be amended to include a Participant not named in the Exhibit B in effect on the date of a Change of Control, unless pursuant to the requirements of this Section 3.4, at the time of delivery to the Trustee of a proposed amended Exhibit B (the "Delivery Date"), the Company shall deliver to the Trustee a determination by the Company's independent public accountants as of the Delivery Date of the proposed amended Exhibit B of the Funding Amount calculated based on the Participants named in the Exhibit B in effect on the Date of the Change of Control and any new or additional Participants named in the proposed amended Exhibit B (the "New Funding Amount") and (b), assets in an amount necessary to make the trust assets equal the New Funding Amount. If the Trustee determines that assets of the Trust Fund, including such assets as are delivered by the Company on the Delivery Date, equal or exceed the New Funding Amount, the Trustee shall accept the amended Exhibit B. Any amended Exhibit B so accepted shall be deemed incorporated with the same effect as if otherwise included herein. Unless an Exhibit B amended after a Change of Control is accepted by the Trustee as provided in this Section, the Trustee shall have no liability, responsibility, or obligation with respect to a Participant named in any amended Exhibit B unless such Participant is named in the Exhibit B then in effect on the date of a Change of Control. 3.5 Collection. In the event the Company fails to pay over to the Trustee within one hundred and twenty (120) days of notice and demand from the Trustee (or, upon the occurrence of a Potential Change of Control or a Change of Control, -10- 16 within seven (7) days of notice and demand from the Trustee), any amount determined to be payable by the Company to the Trustee under Sections 3.2, 6.5 or 7.4(a) of the Trust, the Trustee may commence legal action, (which is expressly deemed to include without limitation an alternate dispute resolution proceeding), to compel the Company to pay to the Trustee any amount determined to be payable to it under the Trust. The Trustee may bring such action against the Company in any court of competent jurisdiction, and shall be entitled to recover for the benefit of the Trust from the Company such amount, plus interest for each day at the rate of interest per annum of five (5) percentage points in excess of the prime lending rate as announced by NBD Bank, from the due date specified in the Trustee's notice and demand (or the date(s) from which pro rata payments were made, if such action is brought by the Trustee pursuant to Section 6.5 hereof) to the date of payment, plus all costs of collection, including reasonable attorneys fees and costs of litigation. The Trustee is authorized to bring action to compel payment by the Company, and, in connection with reasonable claims for delinquent contributions by the Company, to retain, at the expense of the Company, counsel and other appropriate experts, including actuaries and accountants, to aid it in pursuing litigation for collection against the Company. The Trustee's anticipated reasonable costs and expenses incurred pursuant to this Section 3.5 are payable by the Company in advance; and should the Company not make timely payment, the Trustee may charge the Trust Fund for such reasonably anticipated costs and expenses. The Trustee shall in no event be required to advance or expend its own funds in order to comply with the provisions of this Section 3.5. IV. ACCOUNTING AND ADMINISTRATION 4.1 Trustee Recordkeeping. The Trustee shall keep or cause to be kept accurate and detailed records of any investments, receipts, disbursements, and all other transactions required to be made by the Trustee hereunder, in accordance with such rules as may be established by the Company, including such specific records as shall be agreed upon in writing between the Company and the Trustee. All accounts, books, and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company. All such accounts, books, and records shall be preserved (in original form, or on microfilm, magnetic tape, or any other similar process) for such period as the Company may determine, and the Trustee may only destroy such accounts, books, and records after first notifying the Company in writing of its intention to so, and transferring to the Company any of such accounts, books, and records requested by the Company. -11- 17 4.2 Company Recordkeeping. The Company shall keep full, accurate, and detailed books and records with respect to the Participants and benefits paid and payable under the Plan, which records shall be made available to the Trustee at its request. 4.3 Periodic Accounting. Within sixty (60) days following a Valuation Date, the Trustee shall deliver to Company a written accounting, dated as of the Valuation Date, of its administration of the Trust Fund during such year or during the period from the most recent Valuation Date to the date of such current Valuation Date, which accounting shall be in accordance with the following provisions: (a) Such accounting shall set forth all investments, receipts, disbursements, and other transactions effected the by Trust Fund during the preceding year, or during the period from the most recent Valuation Date to the date of such current Valuation Date, including a description of all securities and investments purchased and sold, with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities or other property held in the Trust Fund, less liabilities known to the Trustee (other than liabilities to Participants entitled to benefits under the Plans) at the end of such year or other period, as the case may be. In making a valuation, all cash, securities or other property held in the Trust Fund shall be valued at their then fair market value, and shall be in a format as may be established by the Company. A copy of each accounting so delivered to the Company shall be open to inspection at the office of the Trustee during normal business hours. (b) If within ninety (90) days after the filing of such written accounting, the Company has not delivered to the Trustee notice of any objection to any act or transaction of the Trustee, the initial accounting shall become an account stated as between the Trustee and the Company. If any objection has been delivered to the Trustee by the Company, and if the Company is satisfied that it should be withdrawn, the Company shall signify its approval of the accounting in writing filed with the Trustee, and the accounting shall become an account stated as between the Trustee and the Company. If the accounting is adjusted following an objection thereto, the Trustee shall file and deliver the adjusted accounting to the Company. If within fifteen (15) days after such filing of an adjusted accounting, the -12- 18 Company has not delivered to the Trustee notice of any objection to the transactions as so adjusted, the adjusted accounting shall become an account stated as between the Trustee and the Company. (c) Unless an accounting is fraudulent, when it becomes an account stated, it shall be finally settled, and the Trustee shall, to the extent permitted by applicable law, be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions shown in such accounting. 4.4 Administrative Powers of Trustee. Except to the extent that authority with respect to the administration of the Trust has been allocated to others in accordance with this Trust, and subject to Article V, the Trustee shall have exclusive authority and discretion to manage and administer the Trust. The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by Company which is contemplated by, and in conformity with, the terms of the Trustee's responsibilities under this Trust, and is given in writing by Company. The responsibility for maintenance of individual benefit records shall be retained by the Company, and may be delegated to such person or entity as the Company may employ from time to time. Except as otherwise provided herein, the Trustee shall have, without exclusion, all powers conferred on trustees by law and, without limiting the foregoing, shall have the following administrative powers, rights, and duties in addition to those provided elsewhere in this Trust: (a) to manage, sell, insure, and otherwise deal with all assets held by the Trustee on such terms and conditions as the Trustee shall decide; provided however, that if the Company delivers written instructions to the Trustee, the Trustee shall follow such instructions; (b) when directed by the Company or requested by a Participant pursuant to Article VI, to make payments from the Trust Fund to Participants and, when required by Article VII, to make payments from the Trust Fund to General Creditors entitled to payments thereunder; -13- 19 (c) except as provided in Article VI and Article VII, to waive, modify, reduce, compromise, release, contest, submit to arbitration, or settle or extend the time of payment of any claims, debts, damages, or demands of any nature in favor of or against the Trustee or all or any part of the Trust Fund; (d) to retain any disputed property until an appropriate final adjudication or release is obtained, and to represent the Trust in, or commence or defend, any litigation the Trustee considers in its discretion necessary in connection with the Trust Fund; (e) to withhold, if the Company so directs, all or any part of any payment required to be made hereunder as may be necessary and proper to protect the Trustee or the Trust Fund against any liability or claim on account of any estate, inheritance, income or other tax or assessment attributable to any amount payable hereunder, and to discharge any such liability with any part or all of such payment so withheld in accordance with Section 6.7; (f) to maintain records reflecting all receipts and payments under this Trust and such other records as the Company may specify and to which the Trustee agrees, which records may be audited from time to time by the Company or anyone named by the Company; and to furnish a written accounting to the Company as of each Valuation Date, as provided in Section 4.3; (g) if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy from a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. Notwithstanding the preceding sentence, the Trustee may loan to the Company the proceeds of any borrowing against an insurance policy held as an asset of the Trust; (h) to furnish the Company with such information for tax or other purposes which the Company may reasonably request and which the Trustee may not unreasonably withhold; -14- 20 (i) to employ accountants, advisors, agents, legal counsel (who, except following a Change of Control, may be legal counsel to the Company and who are not in the Company's reasonable judgment deemed to have a conflict of interest), consultants, custodians, depositories, experts and other providers of services, to consult with them with respect to the implementation and construction of this Trust, the duties of the Trustee hereunder, the transactions contemplated by this Trust, or any act which the Trustee proposes to take or omit, and to rely upon the advice of and services performed by such persons; to delegate discretionary powers to such persons and to reasonably rely upon information and advice furnished by such persons; provided that each such delegation and the acceptance thereof by each such person shall be in writing; and provided further that the Trustee may not delegate its responsibilities as to the management or control of the assets of the Trust Fund; (j) to determine whether the Company is Insolvent, and to hold assets of the Trust Fund for the benefit of General Creditors in the event of Insolvency, as provided in Article VII hereof; (k) to make payments to Participants, including after a Change of Control, as provided in Article VI hereof; (l) to perform all other acts which in the Trustee's judgment are appropriate for the proper protection, management, investment, and distribution of the Trust Fund, and to carry out the purposes of the Trust. -15- 21 V. INVESTMENTS 5.1 Generally. With respect to assets for which the Trustee has investment responsibility, the Trustee shall invest and reinvest the principal and income of the Trust Fund and keep the Trust Fund invested, without distinction between principal and income, in accordance with the written investment guidelines established by the Company and provided to the Trustee by the Company. If no such written investment guidelines are received by the Trustee, the assets of the Trust Fund shall be invested in such investments as determined by the Trustee in accordance with the powers contained herein. 5.2 Investment Powers of Trustee. Except to the extent that authority with respect to the management of all or a portion of the Trust Fund has been allocated to others in accordance with this Trust, the Trustee shall have exclusive authority and discretion to manage and control the Trust Fund, subject only to broad investment guidelines the Company may establish from time to time. The authority to assume responsibility for investment of assets of the Trust Fund has been retained by the Company, and the authority to hold assets of the Trust Fund may be allocated to one or more custodians or insurance companies. Except as otherwise provided herein, the Trustee shall have, without exclusion, all powers conferred on trustees by applicable law and, without limiting the foregoing, shall have the following powers, rights, and duties in addition to those provided elsewhere in this Trust: (a) to invest and reinvest in any property wherever situated, whether real, personal, mixed, foreign or domestic, including common and preferred stocks, bonds, notes, and debentures (including convertible stocks and securities, but not including any stock, securities, or debt instruments of the Company [unless held in a collective or commingled fund and such Company securities comprise 5% or less of the assets of such fund]), leaseholds, mortgages (including, without limitation, any collective or part interest in any bond and mortgage or note and mortgage), certificates of deposit, life insurance contracts, guaranteed investment contracts, and guaranteed annuity contract, all regardless of diversification and without being limited to investments authorized by law for the investment of trust funds; (b) to invest and reinvest, without distinction between principal and income, in contracts for future delivery of United States Treasury Bills, other financial instruments, or indices based on any group of securities, and in -16- 22 options to buy or sell indices based on any group of securities or any kind of evidences of ownership or indebtedness, including financial instruments or futures contracts relating thereto; (c) to invest and reinvest part or all of the Trust Fund in any deposit accounts, deposit administration fund maintained by a legal reserve life insurance company in accordance with an agreement between the Trustee and such insurance company, a group annuity contract or life insurance policies issued by such insurance company to the Trustee as contract holder, any interest bearing deposits held by any financial institution having total capital and surplus of at least Fifty Million Dollars ($50,000,000), investments in any stocks, bonds, debentures, mutual fund shares, notes, commercial paper, treasury bills, and any mutual, common, commingled or collective trust funds or pooled investment funds, and to diversify such investments so as to minimize the risk of losses; (d) to commingle assets of the Trust Fund, for investment purposes only, with assets of any common, collective, or commingled trust fund which has been or may hereafter be established and maintained by the Trustee, or by any other financial institution; provided that to the extent that any part or all of the assets of the Trust Fund for which the Trustee has investment responsibility are invested in any such common, collective or commingled trust fund or pooled investment fund which is maintained by a bank or trust company (including a bank or trust company acting as Trustee), the provisions of the documents under which such common, collective or commingled trust fund or pooled investment fund are maintained shall govern any investment therein and provided further that prior to investing any portion of the Trust Fund for the first time in any such common, collective, or commingled trust fund, the Trustee shall advise the Company of its intent to make such an investment, and furnish to the Company any information it may reasonably request with respect to such common, collective, or commingled trust fund (other than a trust fund established by the Company), and provided further that the Trustee shall maintain separate records with respect to each other trust of the Trust Fund; (e) to vote stock and other voting securities personally or by proxy (and to delegate the Trustee's powers and discretion with respect to such stock or other voting securities to such proxy), to exercise subscription, -17- 23 conversion and other rights and options (and make payments from the Trust Fund in connection therewith), to take any action and to abstain from taking any action with respect to any reorganization, consolidation, merger, dissolution, recapitalization, refinancing and any other plan or change affecting any property constituting a part of the Trust Fund (and in connection therewith to delegate the Trustee's discretionary powers and pay assessments, subscriptions and other charges from the Trust Fund), to hold or register any property from time to time in the Trustee's name or in the name of a nominee or to hold it unregistered or in such form that title shall pass by delivery; and to borrow from anyone, including itself (to the extent permitted by law), such amounts from time to time as the Trustee considers desirable to carry out this Trust (and to mortgage or pledge all or part of the Trust Fund as security); to participate in any plan or reorganization, consolidation, merger, combination, liquidation, or other similar plan relating to any such property, and to consent to or oppose any such plan or any action thereunder, or any contract, lease, mortgage, purchase, sale, or other action by any corporation or other entity any of the securities of which may at any time be held in the Trust Fund, and to do any act with reference thereto; (f) to retain in cash such amounts as the Trustee considers advisable and as are permitted by applicable law, and to deposit any cash so retained in any depository (including any bank acting as Trustee) which the Trustee may select, provided such depository must have total capital and surplus of at least Fifty Million Dollars ($50,000,000); (g) when directed by the Company, and subject to Section 4.4(g), to apply for, pay premiums on, and maintain in force individual, ordinary or universal life insurance policies on the lives of Participants, which policies may contain provisions which the Company may approve or direct; to receive or acquire such policy or policies from the Company, but the Trustee may purchase a life insurance policy from a person other than the insurer which issues a policy only if the Trustee pays, transfers, or otherwise exchanges an amount no more than the cash surrender value of the policy or policies, and the policy or policies is (are) not subject to a mortgage or similar lien which the Trustee would be required to assume; to have with respect to such policy or policies any rights, powers, options, privileges, and benefits usually comprised in the term "incidents of ownership", and normally vested in an -18- 24 owner of such policy or policies to be exercised only pursuant to Company direction; (h) to retain any property at any time received by it; (i) to sell, to exchange, to convey, to transfer, or to dispose of, and to grant options for the purchase or exchange with respect to it, any property at any time held by it, by public or private sale, for cash or on credit, or partly for cash and partly for credit; (j) to deposit any such property with any protective, reorganization, or similar committee; to delegate discretionary power to any such committee; and to pay part of the expenses and compensation of any such committee and any assessments levied with respect to any property so deposited; (k) to exercise any conversion privilege or subscription right available in connection with any such property, and to do any act with reference thereto, including the exercise of options, the making of agreements or subscription, and the payment of expenses, assessment or subscription, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities or other property which it may so acquire; (l) to extend the time of payment of any obligation held in the Trust Fund; (m) to enter into standby agreements for future investment, either with or without a standby fee; (n) to acquire, renew, or extend, or participate in the renewal or extension of any mortgage, and to agree to a reduction in the rate of interest on any indebtedness or mortgage or to any other modification or change in the terms of any indebtedness or mortgage, or of any guarantee pertaining thereto, in any manner and to any extent that may be deemed advisable for the protection of the Trust Fund or the preservation of any covenant or condition of any indebtedness or mortgage or in the performance of any guarantee, or to enforce any default in such manner and to such extent as may be deemed advisable; and to exercise and enforce any and all rights of foreclosure, to bid on any property in foreclosure, to take a deed in lieu of foreclosure with or -19- 25 without paying a consideration therefor, and in connection therewith to release the obligation on the bond secured by such mortgage; and to exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect of any such indebtedness or mortgage or guarantee; (o) to make, execute, and deliver, as Trustee, any and all deeds, leases, notes, bonds, guarantees, mortgage, conveyance, contracts, waivers, releases, or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers; (p) to organize under the laws of any state one or more corporations, partnerships, or trusts for the purpose of acquiring and holding title to any property that it is authorized to acquire under this Trust, and to exercise with respect thereto any or all of the powers set forth in this Trust; (q) notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated under the IRC; and (r) generally to do all acts, whether or not expressly authorized, that the Trustee deems necessary or desirable for the protection of the Trust Fund, and to carry out the purposes of the Trust. 5.3 Investment Managers. The Company may appoint one or more Investment Managers to direct the investment of any part or all of the assets of the Trust Fund by the Trustee. Appointment of an Investment Manager shall be made by written notice to the Investment Manager(s) and to the Trustee, which notice shall specify those powers, rights, and duties of the Trustee under this Trust that are allocated to the Investment Manager(s) and the portion of the assets of the Trust Fund subject to the Investment Manager(s). After it receives written notice of such appointment, the Trustee shall have no obligation or responsibility for those investment duties which are allocated to an Investment Manager. An Investment Manager so appointed pursuant to this paragraph shall be either a registered investment adviser under the Investment Advisers Act of 1940, a bank, as defined in said Act, or an insurance company qualified to manage, acquire and dispose of the -20- 26 assets of the Plans under the laws of more than one state of the United States. Any such Investment Manager shall acknowledge to the Company in writing that is accepts such appointment. The Trustee shall not be liable for any loss or diminution of any assets managed by an Investment Manager, including without limitation, any loss or diminution caused by any action or inaction taken or omitted by it at the direction of an Investment Manager. In addition, the Trustee shall not be liable for the diversification of any assets managed by Investment Managers of the Company, each of which shall be solely the responsibility of the Company. An Investment Manager may resign at any time upon written notice to the Trustee and the Company. The Company may remove an Investment Manager at any time by written notice to the Investment Manager and the Trustee. The Company may by written notice to the Trustee assume investment responsibility for any portion or all of the Trust assets. The Trustee shall have no responsibility for any investments or review of such investments and shall act with respect to such assets only as directed by the Company. 5.4 Reserved. 5.5 Single Fund. All assets of the Trust Fund and of each investment fund, and the income thereon, shall be held and invested as a single fund, and the Trustee shall not make any separate investment of the Trust Fund, or make any separate investment fund, for the account of any Participant or other General Creditors prior to receipt of directions to make payments to such Participant or other General Creditors in accordance with Article VI or Article VII. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Participants. VI. PAYMENTS FROM THE TRUST 6.1 Obligation of Trustee to Make Payments to Participants. The Trustee's obligation to distribute to any Participant out of the assets of the Trust Fund shall be limited to payment at such times and in such amounts as are properly in conformance with the provisions of Section 6.3. Payments to Participants pursuant to this Article VI shall be made by the Trustee to the extent that funds in the Trust Fund are sufficient for such purpose, and shall at all times be subject to the provisions of Article VII. In the event the Company determines that it will pay benefits directly to Participants as they become due under the terms of the Plan, the -21- 27 Company shall notify Trustee of its decision prior to the time amounts are payable to Participants. 6.2 Obligation of the Company to Make Payments to Participants. Notwithstanding anything in the Trust to the contrary, the Company shall remain primarily liable to pay benefits under the Plan. Distributions to Participants from the Trust Fund shall discharge, reduce, and offset the Company's obligation to pay benefits to or on behalf of the Participant, to the extent of the distributions, with respect to the Plan. If the Company's obligation to pay a benefit under the Plan is not fully discharged, reduced, and offset by a distribution from the Trust, then the Company shall make the balance of each such benefit payment as it becomes due. 6.3 Distributions to Participants. Distributions which shall be made from the Trust Fund to pay benefits in accordance with the Plan shall be initiated by: (a) written direction to the Trustee from the Plan Administrator, which direction shall certify that such distribution(s) is(are) in accordance with the Plan, and specify the timing, form, payee, and amount of such benefit payments, including any federal, state, or local income taxes to be withheld, and the Trustee shall make or commence the directed distributions after receipt of such written direction; or (b) by the submission to the Trustee by a Participant of a certified copy of the non-appealable order of an appropriate forum with jurisdiction to settle a claim for payment(s) under the Plan. 6.4 Reserved. 6.5 Insufficient Trust Fund Assets. If at any time the Trustee determines or is advised that the Trust Fund does not have sufficient assets to permit the Trustee to make a payment property directed pursuant to this Trust, including a payment provided for under Section 10.7 of this Trust, the Trustee shall pay any benefits due (if otherwise payable hereunder) to Participants on a pro rata basis as directed by the Plan Administrator, and the Company shall make the balance of such payments as they become due. If the Plan Administrator determines that the Trust Fund does not have sufficient funds to provide for the payment of all amounts otherwise payable to Participants (or their Beneficiary(ies)) from the Trust under the Plans, it shall notify the Company and the Trustee of the amount of the deficiency, and, within forty-five -22- 28 (45) days of such notice, the Company deposit in trust with the Trustee the additional amounts needed to make such payments. Upon receipt of such amount by the Trustee from the Company, proceeds shall first be used by the Trustee to pay any benefits previously due remaining unpaid, in the order in which they were due, pursuant to Plan Administrator instructions. 6.6 Payment of Excess Assets to Company. Subject to Article VII, and except as otherwise provided in this Section and Section 6.8 hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust Fund before payment of all benefits due or to become due have been made to Participants (or their Beneficiary(ies)) pursuant to the terms of the Plan. If, as of a Valuation Date, and based on the fair market value of the Trust Fund as determined by the Trustee in accordance with Section 4.3 hereof, the Trust Fund holds Excess Assets, then in the event the Trustee has received within ninety (90) days after the most recent Valuation Date a written request executed by the Company, the Trustee shall transfer to the Company, within thirty (30) days after the receipt of the request, and provided that a Potential Change of Control Period does not exist on the date of the transfer, such assets of the Trust Fund selected by the Company which have a fair market value equal to the amount of such Excess Assets, after converting such assets to cash if requested by the Company. Any payment of Excess Assets to the Company under this Section shall not discharge or release the Company of its obligation to make any contribution required under Article III (including the requirement of a Company contribution to the Trust upon the occurrence of a Potential Change of Control or a Change of Control), and its obligation to pay benefits to Participants under the Plan. Any payment of Excess Assets in accordance with this Section shall be subject to the provisions of Article VII. 6.7 Company to Pay Withholding and Employment Taxes. Any amount paid to a Participant by the Trustee in accordance with this Article VI shall be reduced by the amount of taxes required to be withheld pursuant to Plan Administrator instructions, and the Trustee shall inform the Company of all amounts so withheld. The Company shall direct that the Trustee shall either (a) pay to the Company a sum equal to the amount of such taxes as are required to be withheld, whereupon the Company shall have full responsibility for the payment of all withholding taxes to the appropriate taxing authorities, or -23- 29 (b) pay such taxes directly to the appropriate taxing authorities for the benefit of the Company. The Company shall be solely responsible for the payment of any employment taxes for which it is directly liable as a result of payments by the Trustee. The Company shall furnish each Participant with the appropriate tax information form evidencing payments under the Trust and the amount(s) thereof. 6.8 Payment in Reversion to Company. Subject to Article VII, upon receipt of written certification from the Company that all obligations of the Company to Participants with respect to the Plan have been satisfied, and if the Trust Fund shall have any assets remaining, the Trustee shall distribute such remaining assets of the Trust Fund to the Company, after converting such assets to cash if requested by the Company, subject to the Trustee's right to retain such reasonable amount for compensation and expenses as provided in Section 10.7. The Trust shall thereafter terminate as provided in Section 9.2. 6.9 Reserved. VII. PAYMENTS ON INSOLVENCY OF THE COMPANY 7.1 No Security Interest. No Participant shall have any claim on or beneficial ownership interest in the Trust Fund before such assets are paid to the Participant, except as an unsecured creditor of the Company. The Company shall not create a security interest in the Trust Fund in favor of any Participant or any other General Creditor. At all times during the continuance of this Trust, as provided in this Article VII hereof, the principal and income of the Trust Fund shall be subject to the claims of General Creditors under federal and state law. If at any time the Trustee has received notice as provided below that Company is Insolvent, Trustee shall discontinue payments to Participants, and shall hold assets of the Trust Fund for the benefit of the Company's General Creditors, pursuant to the provisions of Section 7.3, with no preference whatsoever given claims of employes over claims of other unsecured creditors of the Company. 7.2 Determination of Insolvency. Notwithstanding any other provisions of this Trust, the following provisions shall apply: -24- 30 (a) The Board of Directors and the Chief Executive Officer of the Company shall have the fiduciary duty and responsibility on behalf of General Creditors to notify the Trustee promptly in writing in the event the Company is Insolvent, and the Trustee shall have the right to rely thereon to the exclusion of all directions or claims for payment made thereafter by Participants. (b) If the Trustee has actual knowledge that the Company is Insolvent, the Trustee shall act in accordance with Section 7.3 hereof. (c) Unless the Trustee receives written notice from the Board of Directors or the Chief Executive Officer of the Company that the Company is Insolvent, or from a person claiming to be a General Creditor and claiming that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. If the Trustee receives a written allegation from a person claiming to be a General Creditor that the Company is Insolvent, the Trustee's only duty of inquiry shall be to request that the Company's independent public accountants determine whether the Company is Insolvent, and shall suspend benefit payments pending such determination. If the Company's independent public accountants advise the Trustee that the Company is not Insolvent, it shall resume payments in accordance with this Trust. If the Trustee receives notice of the Company's Insolvency pursuant to this Section 7.2(c), it shall act in accordance with [this Section and] Section 7.3 hereof. 7.3 Payments When Company Is Insolvent. Notwithstanding any other provision of this Trust to the contrary, if the Trustee has actual knowledge as described in 7.2(b), has been advised pursuant to 7.2(c) or receives actual notice described in Section 7.2(a) that the Company is Insolvent (a) by reason of Section 1.11(b), the Trustee shall suspend payments to Participants and shall notify Participants of the suspension, and shall hold the Trust Fund for the benefit of the General Creditors, and shall pay and deliver the entire amount of the Trust Fund only as a court competent jurisdiction, or duly appointed receiver or other person authorized to act by such court, may order or direct to make the Trust Fund available to satisfy the claims of the General Creditors (payments to Participants in accordance with the terms of the Plan may be resumed only pursuant to Section 7.4 hereof); or -25- 31 (b) by reason of Section 1.11(a), the Trustee shall suspend payments to Participants and shall notify Participants of the suspension, and shall (i) hold the Trust Fund for the benefit of General Creditors or (ii) pay over all or a portion of the Trust Fund to General Creditors if directed by the Company or an appropriate judicial forum. Nothing in this Trust Agreement shall in any way diminish any rights of Participants to pursue their rights as unsecured creditors of Company with respect to benefits under the Plan, or otherwise. 7.4 Resumption of Duties after Insolvency. In the absence of notice of a Court order to the contrary, the Trustee shall resume all of its duties and responsibilities under the Trust, including payments to Participants if otherwise provided for herein, within thirty (30) days of the Trustee's receipt of a determination from the Company's independent public accounting firm that the Company is no longer Insolvent. (a) Trust Recovery of Payments to Creditors. In the event that amounts are paid from the Trust Fund to General Creditors of the Company, then as soon as practicable after the Company is no longer Insolvent, the Company shall deposit into the Trust Fund a sum to equal to the Funding Amount, determined as of the date the Company is no longer Insolvent, which date shall be a Valuation Date. The Company (or, after a Change of Control, the Company's independent public accountants) shall provide the Trustee with written certification of such Funding Amount. If the Funding Amount is not paid by the Company within ninety (90) days of the Trustee's receipt of such notice, the Trustee shall demand payment and the provisions of Section 3.5 shall apply. (b) Determination of Payment Amount; Resumption of Payments. Provided that there are sufficient assets of the Trust Fund, if Trustee discontinues the payment of benefits from the Trust pursuant to Section 7.3 and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plan for the period of such discontinuance, as determined by the Plan Administrator, less the aggregate amount of any payments made to Participants by the Company in lieu of the payments -26- 32 provided for hereunder during any such period of discontinuance. If the Trustee suspends a payment to a Participant under this Section, and subsequently makes such payment, the payment shall include interest at the rate of interest per annum equal to the prime rate as published by NBD Bank for each day from the date of suspension to the date of payment, as calculated by the Plan Administrator. 7.5 Reserved. VIII. RESIGNATION OR REMOVAL OF TRUSTEE 8.1 Resignation or Removal of Trustee. The Trustee may resign for any reason or for no reason and at any time by giving thirty (30) days prior written notice to the Company (or such shorter notice as may be agreed to by the Company and the Trustee). Subject to Section 8.2(b) hereof, the Company may remove the Trustee, for any reason and with or without cause, by giving thirty (30) days prior written notice to the Trustee (or such shorter notice as may be agreed to by the Company and the Trustee). 8.2 Successor Trustee. In the event of the resignation or removal of a Trustee, a successor Trustee shall be appointed. Any successor Trustee appointed pursuant to this Section must be a corporation which is not an affiliate of the Company and which is authorized under the laws of the United States or of any state to administer trusts and has at the time of its appointment total capital and surplus of at least Fifty Million Dollars ($50,000,000). The Company shall give notice of any such appointment to the retiring Trustee and the successor Trustee. A successor Trustee shall be appointed in accordance with the following provisions: (a) At any time prior to a Change of Control, a successor Trustee shall be appointed by the Company. If a Trustee should resign or be removed, and the Company does not notify the Trustee of the appointment of a successor Trustee within forty-five (45) days of its notice of its resignation or removal, then the Company shall be deemed to have failed to have appointed a successor Trustee, and the Trustee shall apply to a court of competent jurisdiction for appointment of a successor Trustee. (b) After the occurrence of a Change of Control, the Trustee who is the Trustee on the date of the Change of Control may be removed by the -27- 33 Company for three (3) years from the date of the Change of Control. If a Trustee resigns or is removed at any time after the date of a Change of Control, the Trustee shall apply to a court of competent jurisdiction for appointment of a successor Trustee. Notwithstanding Section 8.1, no resignation by or removal of the Trustee shall be effective prior to the effective date of the appointment of a successor Trustee by the Company or a court of competent jurisdiction. 8.3 Duties of Retiring and Successor Trustees. In the event of the resignation or removal of a Trustee, the retiring Trustee shall within thirty (30) days after the effective date of resignation or removal furnish to the successor Trustee and the Company a final accounting of its administration of the Trust. A successor Trustee shall succeed to the right and title of the predecessor Trustee in the assets of the Trust Fund and the retiring Trustee shall deliver the property comprising the assets of the Trust Fund (less any unpaid fees and expenses of the retiring trustee) to the successor Trustee, together with any instruments of transfer, conveyance, assignment, and further assurance as the successor Trustee may reasonably require. All of the provisions of the Trust set forth herein with respect to the Trustee shall relate to each successor Trustee with the same force and effect as if such successor Trustee had been originally named as the Trustee hereunder. To the extent permitted by law, neither the Trustee nor the successor Trustee shall be liable for any act or failure to act, and shall not be required to examine the accounts, records, or acts of the other. 8.4 Reserved. IX. AMENDMENT AND TERMINATION OF TRUST 9.1 Amendment. Except as otherwise provided in Section 2.3 of this Trust, the Trust may be amended (but may not be not revoked unless all of the Company's obligations with respect to the Plan have been satisfied) in writing from time to time by delivery to the Trustee of such amendment executed by the Company, which amendment shall include the effective date of such amendment. Any amendment of the Trust may be made: (a) prior to a Change of Control, without limitation and in any manner and effective as of any date, including a retroactive effective date, if -28- 34 accompanied by the written certification that no Change of Control has occurred; (b) after a Change of Control, only if a period of three (3) years has elapsed since the Change of Control, and either: (1) such amendment is accompanied by the specific written consent to the amendment by Participants whose actuarial interests under the Plan, computed by the Company's independent public accountants as of the effective date of such amendment, represent at least 51% of the total of all actuarial interests under the Plan; or (2) such amendment is accompanied by the opinion of legal counsel satisfactory to the Trustee that the amendment is necessary for the purpose of conforming the Trust to any present or future federal or state law (including revenue laws) relating to trusts of this or similar nature, as such laws may be amended from time to time, and a certification that a copy of such notice and opinion of counsel has been delivered to each Participant. No amendment shall conflict with the terms of the Plan subject to amendment, and no amendment may reduce the "Funding Amount" or the contribution requirements of Article III to less than 50% of the actual benefit obligation on the books of the Company; provided such amendment shall be effective prior to a Potential Change of Control or a Change of Control. No amendment shall operate to change the duties and liabilities of the Trustee without its consent, or make the Trust revocable after it has become irrevocable in accordance with Section 2.3 hereof unless the Company has satisfied all obligations it may have with respect to the Plan as of the date of such amendment. The Company and the Trustee shall execute such amendments of the Trust as shall be necessary to give effect to any amendment made in accordance with this Section. 9.2 Termination. After all assets of the Trust Fund have been distributed by the Trustee to the Participants or their Beneficiaries in accordance with Article VI, the Trustee shall render an accounting, which shall be the final accounting, in the manner provided for in Section 4.3. Upon acceptance of the accounting by the Company, any assets remaining in the Trust Fund, after deduction of such reasonable amount for compensation and expenses as provided for in Section 10.7, -29- 35 shall be returned to the Company in the manner provided in Section 6.8, and the Trust shall terminate thereupon. The Trust and all the rights, titles, powers, duties, discretions and immunities imposed on or reserved to the Trustee and the Company, shall continue in effect until all assets of the Trust Fund have been distributed as provided herein. 9.3 Reserved. X. GENERAL PROVISIONS 10.1 Coordination with Plan. The responsibilities of the Trustee shall be governed solely by the terms of this Trust Agreement. 10.2 Litigation. In any action or proceeding regarding the Trust, the Company, any assets of the Trust Fund, or the administration of the Trust, any creditors who are not parties to such action or proceedings and any other persons having or claiming to have a beneficial interest in the Trust shall not be necessary parties and shall not be entitled to any notice of process. Any final judgment which is not appealed or appealable and which may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto and all persons having or claiming to have a beneficial interest in the Trust. Acceptance by a creditor of assets of the Trust Fund shall constitute a release of an equal amount of any obligations of the Company to such creditor. 10.3 Trustee's Action Conclusive. The Trustee's exercise or non-exercise of its powers and discretion in good faith shall be conclusive on all persons. No one other than the Company shall be obliged to see to the application of any money paid or property delivered to the Trustee. The certificate of the Trustee that it is acting according to this Trust will fully protect all persons dealing with the Trustee. 10.4 No Guarantee or Responsibility. Notwithstanding any other provision of this Trust to the contrary, the Trustee does not guarantee payment of any amount which may become due and payable to a Participant. The Trustee shall have no responsibility for the disclosure to Participants regarding the terms of the Plan or of this Trust, or for the validity thereof. The Trustee shall not be responsible for administrative functions under the Plan and shall have only such responsibilities under this Trust Agreement as specifically set forth herein. The Trustee will be under no liability or obligation to anyone with respect to any failure on the part of -30- 36 the Company, the Plan Administrator, the Company's independent public accounting firm, an Investment Manager, or a Participant to perform any of their respective obligations under the Plan or this Trust. The Trustee shall be fully protected in relying upon any notice or direction provided to it from any party in connection with the Trustee's duties hereunder which the Trustee in good faith believes to be genuine, and executed and delivered in accordance with this Trust. Nothing in this Trust shall be construed as requiring the Trustee to make any payment in excess of the amounts held in the Trust Fund at the time of such payment or otherwise to risk or expend its own funds. 10.5 Liabilities Mutually Exclusive. Each of the Trustee and the Company shall be responsible only for its own acts or omissions. 10.6 Indemnification. The Company agrees to indemnify to the extent permitted by law the Trustee and hold it harmless against Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) arising out of or in connection with the performance of the Trustee's duties arising hereunder (but excluding costs arising as a result of the Trustee's bad faith or gross negligence in the performance of its responsibilities hereunder), and to be primarily liable for such payments. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, Trustee may obtain payment from the Trust. This Section shall survive the termination of the Trust. 10.7 Expenses and Compensation. The Trustee shall be paid compensation by the Company in an amount agreed to by the Company and the Trustee. The Trustee shall be reimbursed by the Company for reasonable expenses incurred by it in the management and administration of this Trust Agreement, including the reasonable compensation of the Trustee's counsel and other agents; and if the Trustee is not timely reimbursed with respect to amounts due pursuant to this Section 10.7 (or in the case of expenses to be incurred pursuant to Section 3.5 hereof), the Trustee may charge such amounts against the Trust Fund. Any compensation or expenses so agreed upon or otherwise payable not paid by the Company on a timely basis may be charged to the Trust Fund no more frequently than quarter-annually upon notice to the Company. 10.8 Reserved. -31- 37 10.9 Notice. Any notice to the Trustee or to the Company required or permitted under this Trust shall be duly and properly given and delivered if sent by certified United States mail, return receipt requested, to the Trustee at: The Northern Trust Company Attn: Trust Department Fifty South LaSalle Street Chicago, Illinois 60675 and to the Company at: The Detroit Edison Company Attn: Vice President and Treasurer 2000 Second Street Detroit, Michigan 48226 or to such other address as the Trustee or the Company may specify by written notice to the other. 10.10 Antiassignment Clause. Benefits payable to Participants and their Beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. 10.11 True and Correct Document. Any persons dealing with the Trustee may rely upon a copy of this Trust and any amendments thereto certified to be true and correct by the Trustee. 10.12 Waiver of Notice. Any notice required under this Trust may be waived by the person entitled to such notice. 10.13 Counterparts. This Trust may be executed in two or more counterparts, any one of which will be an original without reference to the others. 10.14 Gender and Number. Words denoting the masculine gender shall include the feminine and neuter genders and the singular shall include the plural and the plural shall include the singular wherever required by the context. -32- 38 10.15 Successors. This Trust shall be binding on all persons entitled to payments hereunder and their respective heirs and legal representatives, and on the Company, the Trustee, and their respective successors. 10.16 Severability. If any provision of this Trust is held to be illegal or invalid, such illegality or invalidity shall not affect the remaining provisions of this Trust, which shall be construed and enforced as if such illegal or invalid provisions had never been inserted herein. 10.17 Applicable Law. The Trust shall be governed by and construed in accordance with the laws of the State of Michigan with respect to the Company's obligations and in accordance with the laws of the State of Illinois with respect to the Trustee's obligations and Trust Administration. IN WITNESS WHEREOF, the Company and the Trustee have caused this trust agreement to be signed by their duly authorized representatives, and have caused their respective seals to be hereunto affixed, as of the Effective Date. THE DETROIT EDISON COMPANY By ------------------------ Its ----------------------- THE NORTHERN TRUST COMPANY as Trustee By ------------------------ Its ----------------------- -33-