-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FGpWnuVJf3hV8b3MgppTFPWJBMJR4n0hpa7NU7pGJp5zCa2RWQtOZbdnyJFUTyLr aDlh/ZETEm3jXgE8WyjY1Q== 0000950124-98-004474.txt : 19980817 0000950124-98-004474.hdr.sgml : 19980817 ACCESSION NUMBER: 0000950124-98-004474 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DTE ENERGY CO CENTRAL INDEX KEY: 0000936340 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 383217752 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11607 FILM NUMBER: 98688010 BUSINESS ADDRESS: STREET 1: 2000 2ND AVENUE STREET 2: ROOM 2412 CITY: DETRIOT STATE: MI ZIP: 48226-1279 BUSINESS PHONE: 3132378666 MAIL ADDRESS: STREET 1: 2000 2ND AVENUE STREET 2: ROOM 2412 CITY: DETRIOT STATE: MI ZIP: 48226 FORMER COMPANY: FORMER CONFORMED NAME: DTE HOLDINGS INC DATE OF NAME CHANGE: 19950127 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: SEC FILE NUMBER: 001-02198 FILM NUMBER: 98688011 BUSINESS ADDRESS: STREET 1: 2000 SECOND AVE - 2112 WCB CITY: DETROIT STATE: MI ZIP: 48226 BUSINESS PHONE: 3132378000 10-Q 1 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 THE QUARTER ENDED JUNE 30, 1998
COMMISSION REGISTRANTS; STATE OF INCORPORATION; I.R.S. EMPLOYER FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO. 1-11607 DTE Energy Company 38-3217752 (a Michigan corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-4000 1-2198 The Detroit Edison Company 38-0478650 (a Michigan corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-8000
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. YES X NO ---- ---- At June 30, 1998, 145,075,152 shares of DTE Energy's Common Stock, substantially all held by non-affiliates, were outstanding. ================================================================================ 2 DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998 This document contains the Quarterly Reports on Form 10-Q for the quarter ended June 30, 1998 for each of DTE Energy Company and The Detroit Edison Company. Information contained herein relating to an individual registrant is filed by such registrant on its own behalf. Accordingly, except for its subsidiaries, The Detroit Edison Company makes no representation as to information relating to any other companies affiliated with DTE Energy Company. TABLE OF CONTENTS
Page Definitions................................................................................ 3 Quarterly Report on Form 10-Q for DTE Energy Company: Part I - Financial Information...................................................... 4 Item 1 - Condensed Consolidated Financial Statements (Unaudited)......... 4 Notes to Condensed Consolidated Financial Statements (Unaudited)......................................... 15 Independent Accountants' Report................................ 19 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 20 Item 3 - Quantitative and Qualitative Disclosures about Market Risk..... 27 Part II - Other Information......................................................... 28 Item 4 - Submission of Matters to a Vote of Security Holders.............. 28 Item 5 - Other Information............................................... 29 Quarterly Report on Form 10-Q for The Detroit Edison Company: Part I - Financial Information..................................................... 30 Item 1 - Condensed Consolidated Financial Statements (Unaudited)........ 30 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 30 Part II - Other Information......................................................... 30 Item 5 - Other Information................................................ 30 Quarterly Reports on Form 10-Q for DTE Energy Company and The Detroit Edison Company: Item 6 - Exhibits and Reports on Form 8-K............................... 32 Signature Page to DTE Energy Company Quarterly Report on Form 10-Q........................ 39 Signature Page to The Detroit Edison Company Quarterly Report on Form 10-Q................ 40
2 3 DEFINITIONS Annual Report....................1997 Annual Report to the Securities and Exchange Commission on Form 10-K for DTE Energy Company or The Detroit Edison Company, as the case may be Annual Report Notes..............Notes to Consolidated Financial Statements appearing on pages 39 through 61 and 65 through 67 of the 1997 Annual Report to the Securities and Exchange Commission on Form 10-K for DTE Energy Company and The Detroit Edison Company Company..........................DTE Energy Company and Subsidiary Companies Detroit Edison...................The Detroit Edison Company (a wholly owned subsidiary of DTE Energy Company) and Subsidiary Companies Direct Access....................Gives all retail customers equal opportunity to utilize the transmission system which results in access to competitive generation resources DTE Capital......................DTE Capital Corporation (a wholly owned subsidiary of DTE Energy Company) Market Power.....................Exists when one company owns a sufficiently large percentage of generation, transmission, or distribution capabilities in a region which allows it to set the market price of electricity MPSC.............................Michigan Public Service Commission MW...............................Megawatt MWh..............................Megawatthour Note(s)..........................Note(s) to Condensed Consolidated Financial Statements (Unaudited) appearing herein PSCR.............................Power Supply Cost Recovery Quarterly Report.................Quarterly Report to the Securities and Exchange Commission on Form 10-Q for DTE Energy Company or The Detroit Edison Company, as the case may be, for the quarter ended March 31, 1998 Quarterly Report Notes...........Notes to Condensed Consolidated Financial Statements (Unaudited) appearing on pages 15 through 16 of the Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the quarter ended March 31, 1998 for DTE Energy Company and The Detroit Edison Company QUIDS............................Quarterly Income Debt Securities Registrant.......................Company or Detroit Edison, as the case may be 3 4 QUARTERLY REPORT ON FORM 10-Q FOR DTE ENERGY COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED): DTE ENERGY COMPANY CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (In Millions, Except Per Share Amounts)
Three Months Ended Six Months Ended June 30 June 30 ------------------------------------------------------------- 1998 1997 1998 1997 ------------------------------------------------------------- OPERATING REVENUES $ 1,064 $ 892 $ 2,009 $ 1,761 - ----------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Fuel and purchased power 285 197 493 395 Operation and maintenance 300 240 568 474 Depreciation and amortization 162 165 327 330 Taxes other than income 69 66 140 135 - ------------------------------------------------------------------------------------------------------------------------- Total Operating Expenses 816 668 1,528 1,334 - ------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME 248 224 481 427 - ------------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE AND OTHER Interest expense 79 72 153 143 Preferred stock dividends of subsidiary 2 3 5 6 Other - net 5 3 5 8 - ------------------------------------------------------------------------------------------------------------------------- Total Interest Expense and Other 86 78 163 157 - ------------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 162 146 318 270 Income Taxes 61 61 113 114 - ------------------------------------------------------------------------------------------------------------------------- NET INCOME $ 101 $ 85 $ 205 $ 156 ========================================================================================================================= AVERAGE COMMON SHARES OUTSTANDING 145 145 145 145 - ----------------------------------------------------------------------------------------------------------------------- EARNINGS PER COMMON SHARE - BASIC AND DILUTED $ 0.69 $ 0.59 $ 1.41 $ 1.07 - -----------------------------------------------------------------------------------------------------------------------
See notes to condensed consolidated financial statements (unaudited). 4 5 DTE ENERGY COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (In Millions)
Three Months Ended Six Months Ended June 30 June 30 ------------------------------------------------------------ 1998 1997 1998 1997 ------------------------------------------------------------ OPERATING ACTIVITIES Net Income $ 101 $ 85 $ 205 $ 156 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 162 165 327 330 Other (6) (43) (3) 8 Changes in current assets and liabilities: Accounts receivable (95) (7) (48) (25) Inventories (42) (29) (30) (25) Payables 55 (74) 60 (41) Other 46 35 (51) (36) - ------------------------------------------------------------------------------------------------------------------------------ Net cash from operating activities 221 132 460 367 - ------------------------------------------------------------------------------------------------------------------------------ INVESTING ACTIVITIES Plant and equipment expenditures (116) (336) (241) (427) Investment in limited partnership - - (200) - Nuclear decommissioning trust funds (12) (27) (41) (37) Other (17) 1 (11) 1 - ------------------------------------------------------------------------------------------------------------------------------ Net cash used for investing activities (145) (362) (493) (463) - ------------------------------------------------------------------------------------------------------------------------------ FINANCING ACTIVITIES Issuance of long-term debt 200 243 200 250 (Decrease) Increase in short-term borrowings (115) 215 262 209 Redemption of long-term debt (18) (139) (187) (185) Redemption of preferred stock (100) - (100) - Dividends on common stock (75) (75) (149) (149) Other 3 - 2 (1) - ------------------------------------------------------------------------------------------------------------------------------ Net cash (used for) from financing activities (105) 244 28 124 - ------------------------------------------------------------------------------------------------------------------------------ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (29) 14 (5) 28 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 123 67 99 53 - ------------------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 94 $ 81 $ 94 $ 81 ============================================================================================================================== SUPPLEMENTARY CASH FLOW INFORMATION Interest paid (excluding interest capitalized) $ 61 $ 61 $ 146 $ 138 Income taxes paid 30 127 66 128 New capital lease obligations 31 - 48 33
See notes to condensed consolidated financial statements (unaudited). 5 6 DTE ENERGY COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (In Millions, Except Per Share Amounts and Shares)
June 30 December 31 1998 1997 -------------- ---------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 94 $ 99 Accounts receivable Customer (less allowance for doubtful accounts of $20) 304 305 Accrued unbilled revenues 167 137 Other 97 78 Inventories (at average cost) Fuel 164 130 Materials and supplies 171 173 Assets from risk management activities 129 - Other 52 13 --------------- ---------------- 1,178 935 --------------- ---------------- INVESTMENTS Nuclear decommissioning trust funds 280 239 Other 267 57 --------------- ---------------- 547 296 --------------- ---------------- PROPERTY Property, plant and equipment 14,692 14,495 Property under capital leases 256 256 Nuclear fuel under capital lease 655 607 Construction work in progress 22 16 --------------- ---------------- 15,625 15,374 --------------- ---------------- Less accumulated depreciation and amortization 6,728 6,440 --------------- ---------------- 8,897 8,934 --------------- ---------------- OTHER ASSETS Regulatory assets 747 856 Other 226 202 --------------- ---------------- 973 1,058 --------------- ---------------- TOTAL ASSETS $ 11,595 $ 11,223 =============== ================
See notes to condensed consolidated financial statements (unaudited). 6 7
June 30 December 31 1998 1997 ---------------- ---------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 194 $ 161 Accrued interest 56 57 Dividends payable 76 78 Accrued payroll 86 81 Short-term borrowings 304 42 Liabilities from risk management activities 135 - Accumulated deferred income taxes 83 64 Current portion long-term debt 159 205 Current portion capital leases 131 110 Other 236 219 --------------- ---------------- 1,460 1,017 --------------- ---------------- OTHER LIABILITIES Accumulated deferred income taxes 1,930 1,983 Accumulated deferred investment tax credits 294 301 Capital leases 132 137 Other 283 302 --------------- ---------------- 2,639 2,723 --------------- ---------------- LONG-TERM DEBT 3,835 3,777 --------------- ---------------- SHAREHOLDERS' EQUITY Detroit Edison cumulative preferred stock, $100 par value, 6,747,484 shares authorized, 5,207,657 issued, 500,000 and 1,501,223 shares outstanding, respectively 48 144 Common stock, without par value, 400,000,000 shares authorized, 145,075,152 and 145,097,829 issued and outstanding, respectively 1,951 1,951 Retained earnings 1,662 1,611 --------------- ---------------- TOTAL SHAREHOLDERS' EQUITY 3,661 3,706 --------------- ---------------- CONTINGENCIES (NOTE 5) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,595 $ 11,223 =============== ================
See notes to condensed consolidated financial statements (unaudited). 7 8 DTE ENERGY COMPANY CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (In Millions, Except Per Share Amounts; Shares in Thousands)
1998 ----------------------------------- Shares Amount ----------------------------------- DETROIT EDISON CUMULATIVE PREFERRED STOCK Balance at beginning of year 1,501 $ 144 Redemption of cumulative preferred stock (1,001) (100) Preferred stock expense 4 ------------- -------------- Balance at June 30, 1998 500 $ 48 - ------------------------------------------------------------------------------------------------------------------- COMMON STOCK Balance at beginning of year 145,098 $ 1,951 Repurchase and retirement of common stock (23) - -------------- -------------- Balance at June 30, 1998 145,075 $ 1,951 - ------------------------------------------------------------------------------------------------------------------- RETAINED EARNINGS Balance at beginning of year $ 1,611 Net income 205 Dividends declared on common stock ($0.515 per share) (150) Preferred stock expense (4) --------------- Balance at June 30, 1998 $ 1,662 - ------------------------------------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY $ 3,661 ===================================================================================================================
See notes to condensed consolidated financial statements (unaudited). 8 9 [This page intentionally left blank.] 9 10 THE DETROIT EDISON COMPANY CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (In Millions)
Three Months Ended Six Months Ended June 30 June 30 ------------------------------------------------------------------- 1998 1997 1998 1997 ------------------------------------------------------------------- OPERATING REVENUES $ 992 $ 878 $ 1,893 $ 1,742 - ----------------------------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Fuel and purchased power 266 197 474 395 Operation and maintenance 247 226 470 454 Depreciation and amortization 161 165 324 330 Taxes other than income 70 65 140 134 - ----------------------------------------------------------------------------------------------------------------------------------- Total Operating Expenses 744 653 1,408 1,313 - ----------------------------------------------------------------------------------------------------------------------------------- OPERATING INCOME 248 225 485 429 - ----------------------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE AND OTHER Interest expense 68 70 136 141 Other - net 5 4 10 9 - ----------------------------------------------------------------------------------------------------------------------------------- Total Interest Expense and Other 73 74 146 150 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 175 151 339 279 Income Taxes 80 65 146 119 - ---------------------------------------------------------------------------------------------------------------------------------- NET INCOME 95 86 193 160 PREFERRED STOCK DIVIDENDS 2 3 5 6 - ---------------------------------------------------------------------------------------------------------------------------------- NET INCOME AVAILABLE FOR COMMON STOCK $ 93 $ 83 $ 188 $ 154 ===================================================================================================================================
Note: Detroit Edison's condensed consolidated financial statements (unaudited) are presented here for ease of reference and are not considered to be part of Item 1 of the Company's report. See notes to condensed consolidated financial statements (unaudited). 10 11 THE DETROIT EDISON COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (In Millions)
Three Months Ended Six Months Ended June 30 June 30 ------------------------------------------------------------ 1998 1997 1998 1997 ------------------------------------------------------------ OPERATING ACTIVITIES Net Income $ 95 $ 86 $ 193 $ 160 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 161 165 324 330 Other (36) (7) (37) 45 Changes in current assets and liabilities: Accounts receivable (84) (1) (30) (16) Inventories (36) (17) (34) (14) Payables 27 (81) 49 (48) Other 50 36 (58) (35) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash from operating activities 177 181 407 422 - ----------------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Plant and equipment expenditures (102) (123) (220) (209) Nuclear decommissioning trust funds (12) (27) (41) (37) Other (1) 5 (4) 7 - ----------------------------------------------------------------------------------------------------------------------------------- Net cash used for investing activities (115) (145) (265) (239) - ----------------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Issuance of long-term debt 100 - 100 - Increase in short-term borrowings 23 182 187 176 Redemption of long-term debt - (139) (169) (185) Redemption of preferred stock (100) - (100) - Dividends on common and preferred stock (83) (83) (165) (165) Other 4 - 3 - - ----------------------------------------------------------------------------------------------------------------------------------- Net cash used for financing activities (56) (40) (144) (174) - ----------------------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6 (4) (2) 9 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 7 15 15 2 - ----------------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 13 $ 11 $ 13 $ 11 =================================================================================================================================== SUPPLEMENTARY CASH FLOW INFORMATION Interest paid (excluding interest capitalized) $ 58 $ 60 $ 137 $ 137 Income taxes paid 53 131 111 132 New capital lease obligations 17 - 31 33
See notes to condensed consolidated financial statements (unaudited). 11 12 THE DETROIT EDISON COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) (In Millions, Except Per Share Amounts and Shares)
June 30 December 31 1998 1997 --------------- ---------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 13 $ 15 Accounts receivable Customer (less allowance for doubtful accounts of $20) 294 300 Accrued unbilled revenues 167 137 Other 69 63 Inventories (at average cost) Fuel 164 130 Materials and supplies 154 150 Other 51 11 --------------- ---------------- 912 806 --------------- ---------------- INVESTMENTS Nuclear decommissioning trust funds 280 239 Other 43 38 --------------- ---------------- 323 277 --------------- ---------------- PROPERTY Property, plant and equipment 14,387 14,204 Property under capital leases 256 256 Nuclear fuel under capital lease 655 607 Construction work in progress 9 12 --------------- ---------------- 15,307 15,079 --------------- ---------------- Less accumulated depreciation and amortization 6,712 6,431 --------------- ---------------- 8,595 8,648 --------------- ---------------- OTHER ASSETS Regulatory assets 747 856 Other 182 158 --------------- ---------------- 929 1,014 --------------- ---------------- TOTAL ASSETS $ 10,759 $ 10,745 =============== ================
See notes to condensed consolidated financial statements (unaudited). 12 13
June 30 December 31 1998 1997 --------------- ---------------- LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES Accounts payable $ 175 $ 150 Accrued interest 54 56 Dividends payable 80 83 Accrued payroll 84 80 Short-term borrowings 187 - Accumulated deferred income taxes 85 64 Current portion long-term debt 119 169 Current portion capital leases 131 110 Other 227 218 --------------- ---------------- 1,142 930 --------------- ---------------- OTHER LIABILITIES Accumulated deferred income taxes 1,906 1,973 Accumulated deferred investment tax credits 294 301 Capital leases 132 137 Other 272 300 --------------- ---------------- 2,604 2,711 --------------- ---------------- LONG-TERM DEBT 3,512 3,531 --------------- ---------------- SHAREHOLDER'S EQUITY Cumulative preferred stock, $100 par value, 6,747,484 shares authorized, 5,207,657 issued, 500,000 and 1,501,223 shares outstanding, respectively 48 144 Common stock, $10 par value, 400,000,000 shares authorized, 145,119,875 issued and outstanding 1,451 1,451 Premium on common stock 548 548 Common stock expense (48) (48) Retained earnings 1,502 1,478 --------------- ---------------- TOTAL SHAREHOLDER'S EQUITY 3,501 3,573 --------------- ---------------- CONTINGENCIES (NOTE 5) TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 10,759 $ 10,745 ============== ===============
See notes to condensed consolidated financial statements (unaudited). 13 14 THE DETROIT EDISON COMPANY CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (UNAUDITED) (In Millions, Except Per Share Amounts; Shares in Thousands)
1998 ---------------------------------- Shares Amount ---------------------------------- CUMULATIVE PREFERRED STOCK Balance at beginning of year $ 1,501 $ 144 Redemption of cumulative preferred stock (1,001) (100) Preferred stock expense 4 ------------- -------------- Balance at June 30, 1998 500 $ 48 - ------------------------------------------------------------------------------------------------------------------ COMMON STOCK Balance at beginning of year 145,120 $ 1,451 ------------- -------------- Balance at June 30, 1998 145,120 $ 1,451 - ------------------------------------------------------------------------------------------------------------------ PREMIUM ON COMMON STOCK Balance at beginning of year $ 548 -------------- Balance at June 30, 1998 $ 548 - ------------------------------------------------------------------------------------------------------------------ COMMON STOCK EXPENSE Balance at beginning of year $ (48) -------------- Balance at June 30, 1998 $ (48) - ------------------------------------------------------------------------------------------------------------------ RETAINED EARNINGS Balance at beginning of year $ 1,478 Net income 193 Dividends declared Common stock ($0.55 per share) (160) Cumulative preferred stock* (5) Preferred stock expense (4) --------------- Balance at June 30, 1998 $ 1,502 - ------------------------------------------------------------------------------------------------------------------ TOTAL SHAREHOLDER'S EQUITY $ 3,501 ==================================================================================================================
* At established rate for each series. See notes to condensed consolidated financial statements (unaudited). 14 15 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY NOTE 1 - ANNUAL REPORT NOTES These condensed consolidated financial statements (unaudited) should be read in conjunction with the Annual Report Notes and the Quarterly Report Notes. The Notes contained herein update and supplement matters discussed in the Annual Report Notes. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The condensed consolidated financial statements are unaudited, but in the opinion of the Company and Detroit Edison, with respect to its own financial statements, 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 - ACCOUNTING FOR RISK MANAGEMENT ACTIVITIES DTE Energy Trading, Inc. (DTE ET) is an indirect wholly owned subsidiary of the Company and began operations in the first quarter of 1998. The new subsidiary markets and trades electricity and natural gas physical products and financial instruments, and provides risk management services utilizing energy commodity derivative instruments which include futures, exchange traded and over-the-counter options, and forward purchase and sale commitments. Activities for trading purposes of DTE ET are accounted for using the mark-to-market method of accounting. Under such method, DTE ET's electric power trading contracts, including both transactions for physical delivery and financial instruments, are recorded at market value. The resulting unrealized gains and losses from changes in market value of open positions are recorded as "Assets or Liabilities from risk management activities" on the Consolidated Balance Sheet. Current period changes in the "Assets or Liabilities from risk management activities" are recognized as net gains or losses in "Operating Revenues" on the Consolidated Statement of Income. The market prices used to value these transactions reflect management's best estimate considering various factors including closing exchange and over-the-counter quotations, time value and volatility factors underlying the commitments. Detroit Edison continues to account for its forward purchase and sale commitments and over-the-counter options on a settlement basis. 15 16 NOTE 3 - SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS At June 30, 1998, Detroit Edison had total short-term credit arrangements of approximately $634 million under which $187 million was outstanding. The amounts outstanding at June 30, 1998 consisted of $87 million of commercial paper and $100 million secured by its customer accounts receivable and unbilled revenues portfolio. At June 30, 1998, DTE Capital had $117 million of commercial paper outstanding, backed by a Support Agreement from the Company. NOTE 4 - LONG-TERM DEBT In May 1998, Detroit Edison issued $100 million of 7.54% QUIDS. The proceeds were used to redeem all of the outstanding 7.75% Series Cumulative Preferred Stock totaling approximately $100 million. In June 1998, DTE Capital issued $100 million of Remarketed Notes, Series A due 2038. The notes pay interest at 6.17% through 2003. DTE Capital's obligations have the benefit of a Support Agreement from the Company. The Company had $62 million in cash and cash equivalents restricted by debt covenants at June 30, 1998. NOTE 5 - CONTINGENCIES LEGAL PROCEEDINGS Detroit Edison and plaintiffs in a class action pending in the Circuit Court for Wayne County, Michigan (Gilford, et al v. Detroit Edison), as well as plaintiffs in two other pending actions which make class claims (Sanchez, et al v. Detroit Edison, Circuit Court for Wayne County, Michigan; and Frazier v. Detroit Edison, United States District Court, Eastern District of Michigan), have continued negotiations following a February 1998 agreement to settle the matters through binding arbitration. In July 1998, Detroit Edison and the plaintiffs reached agreement on the terms of a Consent Judgement, which is subject to approval by the Court. A Fairness Hearing with respect to the terms of the settlement is scheduled for August 1998. The agreement provides that Detroit Edison's monetary liability is to be no less than $17.5 million and no greater than $65 million after the conclusion of all related proceedings. An amount related to this proceeding was accrued in 1997. 16 17 NOTE 6 - FINANCIAL INSTRUMENTS TRADING ACTIVITIES NOTIONAL AMOUNTS AND TERMS The notional amounts and terms of DTE ET's outstanding energy trading financial instruments at June 30, 1998 were:
Fixed Price Fixed Price Maximum Payor Receiver Terms in Years (Thousands of MWh) Electricity Commodities 523 1,063 1.5 years --- -----
At June 30, 1998, DTE ET also had sales and purchase commitments for physical delivery associated with contracts based on fixed prices totaling 2,692,394 MWh with terms extending up to 1.5 years. Notional amounts reflect the volume of transactions but do not necessarily represent the amounts exchanged by the parties to the energy commodity derivative instruments. Accordingly, notional amounts do not accurately measure DTE ET's exposure to market or credit risks. The maximum terms in years detailed above are not indicative of likely future cash flows as these positions may be offset in the markets at any time in response to DTE ET's risk management needs. FAIR VALUE At June 30, 1998, the fair values of DTE ET's energy commodity derivative instruments were :
Current Current Assets Liabilities (Dollars in Millions) Average Fair Value for the Three Months Ended June 30, 1998 $ 49 $ 54 ======= ====== Fair Value as of June 30, 1998 $ 129 $ 135 ======= ======
The weighted average term of DTE ET's energy commodity derivative instruments as of June 30, 1998 was less than three months. MARKET RISK DTE ET manages, on a portfolio basis, the market risks inherent in its activities subject to parameters established by the Company's Risk Management Committee (RMC), which is 17 18 authorized by its Board of Directors. Market risks are monitored by the RMC to ensure compliance with the Company's stated risk management policies. DTE ET marks its portfolio to market and measures its risk on a daily basis in accordance with Value-at-Risk (VaR) and other risk methodologies. The quantification of market risk using VaR provides a consistent measure of risk across diverse energy markets and products. CREDIT RISK DTE ET is exposed to credit risk in the event of nonperformance by customers or counterparties of its contractual obligations. The concentration of customers and/or counterparties may impact overall exposure to credit risk, either positively or negatively, in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. However, DTE ET maintains credit policies with regard to its customers' and counterparties' that management believes significantly minimize overall credit risk. These policies include an evaluation of potential customers and counterparties financial condition and credit rating, collateral requirements or other credit enhancements such as letters of credit or guarantees, and the use of standardized agreements which allow for the netting or offsetting of positive and negative exposures associated with a single counterparty. Based on these policies, the Company does not anticipate a materially adverse effect on financial position or results of operations as a result of customer or counterparty nonperformance. Those futures and option contracts which are traded on the New York Mercantile Exchange are financially guaranteed by the Exchange and have nominal credit risk. ----------------------------------- This Quarterly Report on Form 10-Q, including the report of Deloitte & Touche LLP (on page 19) will automatically be incorporated by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (Registration Nos. 33-53207 and 33-64296) of The Detroit Edison Company and Form S-8 (Registration Nos. 333-00023 and 333-47247) and Form S-3 (Registration No. 33-57545) of DTE Energy Company, filed under the Securities Act of 1933. Such report of Deloitte & Touche LLP, however, is not a "report" or "part of the Registration Statement" within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11(a) of such Act do not apply. 18 19 INDEPENDENT ACCOUNTANTS' REPORT To the Boards of Directors and Shareholders of DTE Energy Company and The Detroit Edison Company We have reviewed the accompanying condensed consolidated balance sheets of DTE Energy Company and subsidiaries and The Detroit Edison Company and subsidiaries as of June 30, 1998, and the related condensed consolidated statements of income and of cash flows for the three-month and six-month periods ended June 30, 1998 and 1997, and the condensed consolidated statements of changes in shareholders' equity for the six-month period ended June 30, 1998. These financial statements are the responsibility of DTE Energy Company's management and The Detroit Edison Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists primarily 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 reviews, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheets of DTE Energy Company and subsidiaries and The Detroit Edison Company and subsidiaries as of December 31, 1997, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated January 26, 1998, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheets as of December 31, 1997 is fairly stated, in all material respects, in relation to the consolidated balance sheets from which they have been derived. DELOITTE & TOUCHE LLP Detroit, Michigan July 27, 1998 19 20 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY This analysis for the three and six months ended June 30, 1998, as compared to the same periods in 1997, should be read in conjunction with the condensed consolidated financial statements (unaudited), the accompanying Notes, the Quarterly Report Notes and the Annual Report Notes. Detroit Edison is the principal subsidiary of the Company, and, as such, unless otherwise identified, this discussion explains material changes in results of operations of both the Company and Detroit Edison and identifies recent trends and events affecting both the Company and Detroit Edison. GROWTH During the second quarter of 1998, the Company invested in DTE Energy Solutions Inc., an indirect subsidiary of the Company, which provides high quality and innovative utility products and services, specifically in the area of system distribution and customer service for utilities, municipals and cooperatives. DTE Energy Solutions Inc. and Probyn & Co. of Toronto have formed a joint venture to market utility and energy related services to municipal electric utilities in Canada. The new company, DTE/Probyn Energy Solutions Inc., will combine the energy expertise of the Company with Probyn, a provider of financial and energy advisory services, and the owner-operator of five generating stations in four Canadian provinces. DTE Energy Solutions Inc. also formed a partnership with National Pole Recycling Inc. to develop a sawmill operation to recycle, manufacture and market products from retired utility poles supplied by Detroit Edison. DTE Energy Services, Inc. a wholly owned subsidiary of the Company, purchased a coke oven battery from Bethlehem Steel Corp. in the third quarter of 1998. The coke battery will serve the Bethlehem Burns Harbor, Indiania a Steelmaking plant. Non-regulated operations are projected to increase over the five year period ending 2002, which could result in earnings of as much as $150 million annually from those operations. A new record electrical demand of 10,701 MW was set in June 1998. Detroit Edison was able to meet the record demand through careful planning and implementation of a summer electricity supply plan. See Detroit Edison's Part II, "Item 5 - Other Information" for a discussion of proceedings related to Detroit Edison's Conners Creek Power Plant. ELECTRIC INDUSTRY DEREGULATION Federal and state legislators and regulators are working to introduce competition and customer choice into the generation segment of the electric public utility industry, believing that competition will lead to reduced electric rates and stimulate economic growth. Traditional utility services are being unbundled, with many of such services becoming competitive; and a demand is being created for new energy-related services. As discussed in the Annual Report and the Quarterly Report, there are ongoing Michigan legislative, judicial and administrative proceedings, which address among other things, deregulation of the generation segment of the Michigan electric public 20 21 utility industry. Federal legislation relating to deregulation has also been proposed. Although the Company and Detroit Edison expect a favorable outcome, neither the Company nor Detroit Edison are able to predict the outcome or timing of these proceedings. The Financial Accountings Standards Board (FASB) and the Securities and Exchange Commission (SEC) have been considering various accounting issues as a result of the transition to competition. Regulatory Accounting Issues As discussed in Note 1 of the Annual Report, Detroit Edison is subject to regulation by the MPSC and the Federal Energy Regulatory Commission (FERC). Detroit Edison meets the criteria of Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation." This accounting standard recognizes the cost based ratemaking process which results in differences in the application of generally accepted accounting principles between regulated and non-regulated businesses. SFAS No. 71 permits the recording of regulatory assets and liabilities that would have been treated as revenue and expense in non-regulated businesses. The deferred amounts are being amortized to revenue and expense as they are included in rates. Continued applicability of SFAS No. 71 requires that rates be designed to recover specific costs of providing regulated services and products, including regulatory assets, and that it be reasonable to assume that rates are set at levels that will recover a utility's costs and can be charged to and collected from customers. In guidance issued in 1997, the Emerging Issues Task Force (EITF) of the FASB concluded that the application of SFAS No. 71 to a separable portion of a business which is subject to a deregulation plan should cease when legislation is passed and/or a rate order is issued that contains sufficient detail on a transition plan. Various MPSC Orders and proposed Michigan legislation would alter the regulatory process in Michigan and provide a plan for transition to competition for the generation segment of Detroit Edison's business. However, Detroit Edison has appealed the MPSC Orders that require the implementation of a Direct Access program in Michigan. Detroit Edison believes that it continues to qualify under the accounting model prescribed by SFAS No. 7l. The continued applicability of SFAS No. 71 will depend on the outcome of legal and legislative proceedings discussed herein. During the second quarter of 1998, the SEC issued guidance regarding the accounting treatment for the recovery of stranded costs during the transition to competition. The SEC concluded that when an entity ceases to apply SFAS No. 71, any impaired portion of plant assets, identified for recovery in legislation/rate order by means of a regulated cash flow, should be treated as a regulatory asset in the separable portion of the enterprise from which the regulated cash flows are derived. The plant impairment analysis, performed at the lowest level of identifiable cash flows based on the facts and circumstances, should be exclusive of the regulated cash flows. The EITF 1997 guidance also concluded that regulatory assets and liabilities originating in the separable portion of the business which is no longer under SFAS No. 71 should not 21 22 be written off if they are recoverable from a separable portion of business which still meets the criteria of SFAS No. 71. Detroit Edison's ability to recover regulatory assets and investment in generation plant in the transition to competition will depend on the outcome of regulatory and/or legislative action which provides for and permits recovery of such assets. Detroit Edison has $383 million of net regulatory assets and $4.9 billion of net investment in generation plant recorded in Property, Plant and Equipment at June 30, 1998. At the present time Detroit Edison believes that a satisfactory mechanism to recover regulatory assets and the investment in generation plant will be adopted by its regulators and/or legislators, although there can be no assurances that this will occur. Michigan Public Service Commission In July 1998, Detroit Edison filed an application with the MPSC for accounting authority to accelerate amortization of the Fermi 2 plant and its related regulatory assets by $164.2 million annually beginning January 1, 1999. Detroit Edison believes approval of its request will allow a reasonable opportunity, consistent with SFAS No. 71 and EITF guidance, to recover its stranded assets by the MPSC imposed deadline for recovery, December 31, 2007. An expedited hearing schedule has been requested. Detroit Edison filed an application with the MPSC in June 1998 requesting approval of its Customer Choice Plan and accounting authority to defer costs that would be incurred to implement Direct Access. In its filing, Detroit Edison estimated that the cost to implement Direct Access would be approximately $100 million. Deferral of $19.9 million has been specifically requested in 1998. Detroit Edison also indicated in its filings with the MPSC that recovery of Fermi 2 assets and other stranded assets must be reasonably assured before implementation of any Direct Access program begins. Under current accounting rules, to the extent that Detroit Edison cannot be assured recovery prior to implementation of a Direct Access program, it would be required to write off such assets; however, the Company and Detroit Edison do not anticipate a write off at this time. The MPSC staff's Market Power Report was issued in June 1998. The MPSC staff concluded that Detroit Edison and Consumers Energy Company will both possess Market Power in a Michigan electricity market unless implementation of a proactive regulatory strategy to counterbalance utility Market Power is undertaken. The report notes, "The current Michigan market is so highly concentrated and the advantages of incumbent utility companies are so pervasive that proactive measures are imperative." Divestiture of generation, while discussed as an effective and popular option in other states, is not recommended by the MPSC staff at this time. However, the MPSC staff believes if measures undertaken to mitigate Market Power are not successful, divestiture could be revisited. Detroit Edison has withdrawn its March 1998 request to suspend the PSCR clause, but continues to pursue the suspension through its ongoing 1998 PSCR case. 22 23 LIQUIDITY AND CAPITAL RESOURCES CASH PROVIDED BY OPERATING ACTIVITIES Net cash from operating activities was higher in the three and six month periods due to decreases in accounts payable partially offset by increases in accounts receivable. CASH USED FOR INVESTING ACTIVITIES Net cash used for investing was lower for the three month period due to lower plant and equipment expenditures and lower contributions to the nuclear decommissioning trust funds. Net cash used for investing was higher for the six month period due to higher investment in non-regulated investments, partially offset by lower plant and equipment expenditures. Cash requirements for non-regulated investments are estimated to be approximately $488 million in 1998, of which $221 million had been expended as of June 30, 1998. DTE Energy Services Inc., a wholly owned subsidiary of the Company, purchased a coke battery from Bethlehem Steel Corp. for approximately $227 million in the third quarter of 1998. Detroit Edison's 1998 cash requirements for its capital expenditure program are estimated at $512 million, of which $220 million had been expended as of June 30, 1998. CASH (USED FOR) FROM FINANCING ACTIVITIES Net cash used for financing was higher in the three month period due primarily to the repayment of short-term borrowings and redemption of preferred stock. Net cash from financing was lower in the six month period due primarily to the redemption of preferred stock partially offset by higher short-term borrowings. Detroit Edison will redeem tax exempt obligations Series A-1989 of $100 million and A-1989 B of $18.4 million in December 1999 utilizing the proceeds of a forward refinancing, with the issuance of refunding bonds planned for September 1999, subject to the satisfactory completion of all documentation. Detroit Edison is also considering refinancing approximately $157 million of tax exempt obligations (Series I-1989, I-1989 B, CC, I-1990) issued on its behalf by Monroe County, MI. RESULTS OF OPERATIONS For the three months ended June 30, 1998, the Company's net income was $101 million or $0.69 per common share as compared to $85 million or $0.59 per common share earned in the three months ended June 30, 1997. For the six months ended June 30, 1998 net income was $205 million or $1.41 per common share compared to $156 million or $1.07 per common share earned in the six months ended June 30, 1997. 23 24 The 1998 three month and six month earnings were higher than 1997 due to higher sales and increased earnings from non-regulated subsidiary operations, partially offset by higher operating expenses. On July 21, 1998, the Detroit Edison service territory experienced a severe thunderstorm. High winds and lightning strikes caused approximately $28 million of damage to its distribution system. Approximately $24 million will be a charge to earnings in the third quarter of 1998. OPERATING REVENUES Increases in operating revenues were due primarily to higher non-regulated subsidiary revenues, higher system sales and sales between utilities. Detroit Edison kWh sales increased as compared to the prior year as follows:
Three Six Months Months -------- -------- Residential 9.8 % 4.9 % Commercial 8.4 5.7 Industrial 4.9 3.1 Other (primarily sales for resale) 20.7 35.0 Total System 8.1 5.8 Sales between utilities 157.3 194.3 Total 14.6 13.2
The increase in residential sales resulted from growth in the customer base, increased usage and increased cooling related sales in the second quarter due to unusually warm weather. Commercial sales increased, reflecting a continuation of favorable economic conditions. The increase in industrial sales reflects increased demand in the construction and automotive sectors in spite of the General Motors strike. Sales to other customers increased reflecting increased demand from sales for resale customers. Sales between utilities increased due to greater demand for energy and increased availability of energy for sale. OPERATING EXPENSES FUEL AND PURCHASED POWER Net system output and average fuel and purchased power unit costs for Detroit Edison were as follows: 24 25
Three Months Six Months ---------------- ------------------ 1998 1997 1998 1997 ---- ---- ---- ---- (Thousands of MWh) Power plant generation Fossil 10,353 10,032 21,397 20,398 Nuclear 2,305 1,260 4,288 1,247 Purchased power 1,817 1,368 2,783 3,572 -------- --------- --------- -------- Net system output 14,475 12,660 28,468 25,217 ======== ========= ========= ======== Average unit cost ($/MWh) $ 17.69 $ 14.26 $ 15.65 $ 14.59 ======== ========= ========= ========
Fuel and purchased power expense increased in the three month period due to higher average unit costs because of higher purchased power unit costs as a result of increased market demand for power during periods of hot weather and higher net output. For the six month period, fuel and purchased power expense increased due to higher net system output, higher average unit costs because of higher purchased power unit costs as a result of increased market demand for power during periods of hot weather and the prior-period receipt of Fermi 2 business insurance proceeds. OPERATION AND MAINTENANCE Operation and maintenance expense increased for the three month period due primarily to new non-regulated subsidiary operation expense ($39 million), the Conners Creek restart ($7.3 million), storm expense ($5.2 million) and Year 2000 expenses ($3.5 million). Operation and maintenance expense increased for the six month period due primarily to non-regulated subsidiary operation expense ($78 million), prior year storm amoritization ($7.5 million), the Conners Creek restart ($7.3 million) and Year 2000 expense ($4.5 million), partially offset by lower storm expense ($14.2 million). Storm damage costs of $30 million incurred during the first three quarters of 1997 were deferred in the fourth quarter of 1997 and are being amortized to expense over a 24 month period beginning in January 1998. INCOME TAXES Although income before income taxes was higher in 1998 than 1997, income tax expense for the Company did not increase due primarily to increased alternate fuels credits in 1998, partially offset by an increase relating to prior years income taxes of Detroit Edison. 25 26 NEW ACCOUNTING STANDARD In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". This Statement requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company has not yet determined the impact of this Statement on the consolidated financial statements. This Statement is effective for fiscal years beginning after June 15, 1999, with earlier adoption encouraged. The Company will adopt this accounting standard as required by January 1, 2000. FORWARD-LOOKING STATEMENTS Certain information presented in this Quarterly Report on Form 10-Q is based upon the expectations of the Company and Detroit Edison and, as such, is forward-looking. The Private Securities Litigation Reform Act of 1995 encourages reporting companies to provide analyses and estimates of future prospects and also permits reporting companies to point out that actual results may differ from those anticipated. Actual results for the Company and Detroit Edison may differ from those expected due to a number of variables including, but not limited to, actual sales, the effects of competition, the implementation of utility restructuring in Michigan (which involves pending regulatory proceedings, pending and proposed statutory changes and the recovery of stranded costs), environmental and nuclear requirements, the impact of newly-required FERC tariffs and the success of non-regulated lines of business. While the Company and Detroit Edison believe that estimates given accurately measure the expected outcome, actual results could vary materially due to the variables mentioned as well as others. 26 27 ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY The Company measures the risk inherent in DTE ET's portfolio utilizing VaR analysis and other methodologies, which simulate forward price curves in electric power markets to quantify estimates of the magnitude and probability of potential future losses related to open contract positions. DTE ET's VaR expresses the potential loss in fair value of its forward contract and option position over a particular period of time, with a specified likelihood of occurrence, due to an adverse market movement. The Company reports VaR as a percentage of its earnings, based on a 95% confidence interval, utilizing 10 day holding periods. At of June 30, 1998, DTE ET's VaR from its power marketing and trading activities was less than 1% of the Company's consolidated "Income Before Income Taxes" for the six month period ended June 30, 1998. The VaR model uses the variance-covariance statistical modeling technique, and implied and historical volatilities and correlations over the past 20 day period. The estimated market prices used to value these transactions for VaR purposes reflect the use of established pricing models and various factors including quotations from exchanges and over-the-counter markets, price volatility factors, the time value of money, and location differentials. For further information, see the Company's and Detroit Edison's Note 2 - Accounting for Risk Management Activities and Note 6 - Financial Instruments. 27 28 DTE ENERGY COMPANY PART II - OTHER INFORMATION 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 27, 1998. Proxies for the meeting were solicited pursuant to Regulation 14(a). (b) The following four directors were elected to serve until the annual meeting in the year 2001 with the votes shown: Total Vote Total Vote For Withheld From Each Director Each Director --------------- -------------- Terence E. Adderley 111,704,821 3,736,422 Anthony F. Earley, Jr. 111,714,268 3,725,697 Allan D. Gilmour 111,715,170 3,725,221 Theodore S. Leipprandt 111,684,996 3,754,969 The terms of the previously elected nine directors listed below continue until the annual meeting dates shown after each name: Lillian Bauder April 28, 1999 David Bing April 28, 1999 Larry G. Garberding April 28, 1999 Alan E. Schwartz April 28, 1999 William Wegner April 28, 1999 William C. Brooks April 26, 2000 John E. Lobbia April 26, 2000 Eugene A. Miller April 26, 2000 Dean E. Richardson April 26, 2000 (c) (i) Shareholders ratified the apointment of Deloitte & Touche LLP as the Company's independent auditors for the year 1998 with the votes shown: For Against Abstain --- ------- ------- 114,070,736 561,936 807,730 (ii) Shareholders also voted on the item below: A shareholder proposal regarding the impact of deregulation, including its impact on the operation of Fermi 2. For Against Abstain --- ------- ------- 6,027,145 88,875,815 7,312,687 (d) Not applicable. 28 29 DTE ENERGY COMPANY PART II - OTHER INFORMATION ITEM 5 - OTHER INFORMATION. Effective August 1, 1998, Mr. Anthony F. Earley, Jr., currently President and Chief Operating Officer of the Company and Detroit Edison, assumed the positions of Chairman of the Board, Chief Executive Officer, President, and member of a newly created Office of the President of the Company and Detroit Edison. In addition to Mr. Earley, members of the Office of the President are Gerard M. Anderson, currently Executive Vice President, who will also assume the position of President and Chief Operating Officer, DTE Energy Resources and Robert J. Buckler, currently Executive Vice President, who will assume the position of President and Chief Operating Officer, DTE Energy Distribution. DTE Energy Resources encompasses Detroit Edison's non-nuclear power generation and fuel supply activities and the Company's non-regulated operating units. DTE Energy Distribution includes Detroit Edison's electric transmission and distribution activities and the Company's non-regulated retail product and service activities. Also effective August 1, 1998, Mr. John E. Lobbia retired from his duties as Chairman of the Board and Chief Executive Officer of the Company and Detroit Edison. He will continue as a director of both companies. 29 30 QUARTERLY REPORT ON FORM 10-Q FOR THE DETROIT EDISON COMPANY PART I - FINANCIAL INFORMATION ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED). See pages 10 through 18. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. See the Company's and Detroit Edison's "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations," which is incorporated herein by this reference. PART II - OTHER INFORMATION ITEM 5 - OTHER INFORMATION. In March 1998, Detroit Edison filed its 1997 PSCR Reconciliation Case with the MPSC. PSCR costs for 1997 which were under-recovered by $2.7 million, when combined with Fermi 2 performance standards, would result in a refund to customers of approximately $21 million. The Company has accrued for the refund. In an April 24, 1998 informational filing with the MPSC, Detroit Edison proposed customer options that will assist in meeting customer demand this summer. Detroit Edison also proposed an experimental program permitting certain industrial customers with interruptible service to secure their own backup power during summer peak periods in 1998 and 1999. The filing also suggested that large customers may be permitted to negotiate for reduced usage under a capacity release program. Detroit Edison declined to implement the 90 MW retail wheeling experiment for the reason that it would not contribute to meeting the capacity need. In June 1998, the MPSC approved customer capacity options conditioned on customer backup power being obtained from sources not available to Detroit Edison. In July 1998, Detroit Edison filed a required review of its current depreciation expense with the MPSC. The application requests a change in the current non-nuclear depreciation accrual rate from 3.35% to 4.01%, in effect increasing annual depreciation expenses by 20%, or $68 million. An adjustment in electric rates is not being sought at this time. As discussed in Detroit Edison's Part II, "Item 5 - Other Information" of the Quarterly Report, on April 14, 1998 the MPSC issued an order granting Detroit Edison's March 31, 1998 request to waive competitive bidding for Conners Creek and restart the plant. Although Detroit Edison believes that the plant complies with all applicable environmental requirements, the Michigan Department of Environmental Quality and 30 31 the Wayne County Michigan Air Quality Management Division have issued notices of violation contending that Detroit Edison is required to obtain a series of new licenses prior to plant operation. Detroit Edison is contesting these notices of violation. Effective May 26, 1998, Lynne Halpin was elected Vice President and Chief Information Officer. Since 1996 she was Vice President of Business Applications at Netscape Communications Corp. From 1993 to 1996, she was Director of Business Systems Development and Acting Vice President of Global Systems Development at Xerox Corp. Effective August 1, 1998, Ron A. May, currently Assistant Vice President, Energy Delivery, was elected Vice President, Energy Delivery and Service. See the Company's Part II, "Item 5 - Other Information" which is incorporated herein by reference. 31 32 QUARTERLY REPORTS ON FORM 10-Q FOR DTE ENERGY COMPANY AND THE DETROIT EDISON COMPANY ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits (i) Exhibits filed herewith. Exhibit Number -------- 4-193 - Sixth Supplemental Note Indenture, dated as of May 1, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.54% Quarterly Income Debt Securities ("QUIDS"), including form of QUIDS. 4-194 - $100,000,000 Support Agreement, dated as of June 16, 1998, between DTE Energy Company and DTE Capital Corporation. 4-196 - Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee. 4-197 - First Supplemental Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee, creating the $100,000,000 Remarketed Notes, Series A due 2038, including form of Note. 10-26* - Employment Agreement, dated April 16, 1998, between Detroit Edison and Lynn Halpin. 11-12 - DTE Energy Company Basic and Diluted Earnings Per Share. 12-12 - The Detroit Edison Company Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends. 15-8 - Awareness Letter of Deloitte & Touche LLP regarding their report dated July 27, 1998. 27-21 - Financial Data Schedule for the period ended June 30, 1998 for DTE Energy Company. 27-22 - Financial Data Schedule for the period ended June 30, 1998 for The Detroit Edison Company. (ii) Exhibits incorporated herein by reference. 3(a) - Amended and Restated Articles of Incorporation of DTE Energy Company, dated December 13, 1995. (Exhibit 3-5 to Form 10-Q for quarter ended September 30, 1997). 32 33 3(b) - Certificate of Designation of Series A Junior Participating Preferred Stock of DTE Energy Company. (Exhibit 3-6 to Form 10-Q for quarter ended September 30, 1997). 3(c) - Restated Articles of Incorporation of Detroit Edison, as filed December 10, 1991 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-117 to Form 10-Q for quarter ended March 31, 1993). 3(d) - Certificate containing resolution of the Detroit Edison Board of Directors establishing the Cumulative Preferred Stock, 7.75% Series as filed February 22, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-134 to Form 10-Q for quarter ended March 31, 1993). 3(e) - Certificate containing resolution of the Detroit Edison Board of Directors establishing the Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau (Exhibit 4-140 to Form 10-Q for quarter ended March 31, 1993). 3(f) - Rights Agreement, dated as of September 23, 1997, by and between DTE Energy Company and The Detroit Edison Company, as Rights Agent (Exhibit 4-1 to DTE Energy Company Current Report on Form 8-K, dated September 22, 1997). 3(g) - Agreement and Plan of Exchange (Exhibit 1(2) to DTE Energy Form 8-B filed January 2, 1996, File No. 1-11607). 4(a) - Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison (File No. 1-2198) and Bankers Trust Company as Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings as set forth below: September 1, 1947 Exhibit B-20 to Registration No. 2-7136 October 1, 1968 Exhibit 2-B-33 to Registration No. 2-30096 November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160 January 15, 1973 Exhibit 2-B-39 to Registration No. 2-46595 June 1, 1978 Exhibit 2-B-51 to Registration No. 2-61643 June 30, 1982 Exhibit 4-30 to Registration No. 2-78941
33 34 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 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 April 1, 1991 Exhibit 4-15 to Form 10-K for year ended December 31, 1996 May 1, 1991 Exhibit 4-178 to Form 10-K for year ended December 31, 1996 May 15, 1991 Exhibit 4-179 to Form 10-K for year ended December 31, 1996 September 1, 1991 Exhibit 4-180 to Form 10-K for year ended December 31, 1996 November 1, 1991 Exhibit 4-181 to Form 10-K for year ended December 31, 1996 January 15, 1992 Exhibit 4-182 to Form 10-K for year ended December 31, 1996 February 29, 1992 Exhibit 4-187 to form 10-Q for quarter ended March 31, 1998 April 15, 1992 Exhibit 4-188 for quarter ended March 31, 1998 July 15, 1992 Exhibit 4-189 for quarter ended March 31, 1998 July 31, 1992 Exhibit 4-190 for quarter ended March 31, 1998 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 4-191 to form 10-Q for quarter ended March 31, 1998 March 15, 1993 Exhibit 4-192 to Form 10-Q for quarter ended March 31, 1998 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
34 35 March 1, 1994 Exhibit 4-163 to Registration No. 33-53207 June 15, 1994 Exhibit 4-166 to Form 10-Q for quarter ended June 30, 1994 August 15, 1994 Exhibit 4-168 to Form 10-Q for quarter ended September 30, 1994 December 1, 1994 Exhibit 4-169 to Form 10-K for year ended December 31, 1994 August 1, 1995 Exhibit 4-174 to Form 10-Q for quarter ended September 30, 1995
4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325). 4(c) - First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration No. 33-50325). 4(d) - Second Supplemental Note Indenture, dated as of September 15, 1993 (Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993). 4(e) - First Amendment, dated as of August 15, 1996, to Second Supplemental Note Indenture (Exhibit 4-17 to Form 10-Q for quarter ended September 30, 1996). 4(f) - Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994). 4(g) - First Amendment, dated as of December 12, 1995, to Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-12 to Registration No. 333-00023). 4(h) - Fourth Supplemental Note Indenture, dated as of August 15, 1995 (Exhibit 4-175 to Detroit Edison Form 10-Q for quarter ended September 30, 1995). 4(i) - Fifth Supplemental Note Indenture, dated as of February 1, 1996 (Exhibit 4-14 to Form 10-K for year ended December 31, 1996). 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). 35 36 99(a) - Belle River Participation Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-5 to Registration No. 2-81501). 99(b) - Belle River Transmission Ownership and Operating Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501). 99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance Energy Company (an unaffiliated company) ("Renaissance") and Detroit Edison (Exhibit 99-6 to Registration No. 33-50325). 99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between Detroit Edison and Renaissance (Exhibit 99-7 to Registration No. 33-50325). 99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between Detroit Edison and Renaissance (Exhibit 99-8 to Registration No. 33-50325). 99(f) - Third Amendment, dated as of August 28, 1997, to 1988 Amended and Restated Loan Agreement between Detroit Edison and Renaissance. (Exhibit 99-22 to Form 10-Q for quarter ended September 30, 1997). 99(g) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-12 to Registration No. 33-50325). 99(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, 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) - Third Amendment, dated as of March 8, 1996, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-11 to Form 10-Q for quarter ended March 31, 1996). 99(j) - Fourth Amendment, dated as of August 29, 1996, to $200,000,000 364-Day Credit Agreement as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York 36 37 Branch, as Agent (Exhibit 99-13 to Form 10-Q for quarter ended September 30, 1996). 99(k) - Fifth Amendment, dated as of September 1, 1997, to $200,000,000 Multi-Year Credit Agreement, dated as of September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks Party thereto and Barclays Bank PLC, New York Branch, as Agent. (Exhibit 99-24 to Form 10-Q for quarter ended September 30, 1997). 99(l) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325). 99(m) - First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q for quarter ended September 30, 1994). 99(n) - Third Amendment, dated as of March 8, 1996, to $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-12 to Form 10-Q for quarter ended March 31, 1996). 99(o) - Fourth Amendment, dated as of September 1, 1996, to $200,000,000 Multi-Year (formerly Three-Year) Credit Agreement, dated as of September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-14 to Form 10-Q for quarter ended September 30, 1996). 99(p) - Fifth Amendment, dated as of August 28, 1997, to $200,000,000 364-Day Credit Agreement, dated as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks Party thereto and Barclays Bank PLC, New York Branch, as Agent. (Exhibit 99-25 to Form 10-Q for quarter ended September 30, 1997). 99(q) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance (Exhibit 99-9 to Registration No. 33-50325). 99(r) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between Detroit Edison and Renaissance (Exhibit 99-10 to Registration No. 33-50325). 37 38 99(s) - Second Amendment, dated as of September 1, 1993, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract between Detroit Edison and Renaissance (Exhibit 99-11 to Registration No. 33-50325). 99(t) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance (Exhibit 99-21 to Form 10-Q for quarter ended September 30, 1994). 99(u) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of October 4, 1988, between Detroit Edison and Renaissance (Exhibit 99-10 to Form 10-Q for quarter ended March 31, 1996). 99(v) - Sixth Amendment, dated as of August 28, 1997, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract between Detroit Edison and Renaissance. (Exhibit 99-23 to Form 10-Q for quarter ended September 30, 1997). 99(w) - Standby Note Purchase Credit Facility, dated as of September 12, 1997, among Detroit Edison and the Bank's Signatory thereto and The Chase Manhattan Bank, as Administrative Agent, and Citicorp Securities, Inc., Lehman Brokers, Inc., as Remarketing Agents and Chase Securities, Inc. as Arranger. (Exhibit 999-26 to Form 10-Q for quarter ended September 30, 1997). 99(x) - Amended and Restated Credit Agreement, Dated as of January 21, 1998 among DTE Capital Corporation, the Initial Lenders, Citibank, N.A., as Agent, and Barclays Bank PLC, New York Branch and The First National Bnak of Chicago, as Co-Agents, and Citicorp Securities, Inc., as Arranger. 99(y) - $60,000,000 Support Agreement, dated as of January 21, 1998, between DTE Energy Company and DTE Capital Corporation. 99(z) - $400,000,000 Support Agreement, dated as of January 21, 1998, between DTE Energy Company and DTE Capital Corporation. (b) Registrants did not file any reports on Form 8-K during second quarter 1998. (c) *Denotes management contract or compensatory plan or arrangement. 38 39 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DTE ENERGY COMPANY --------------------------------------------- (Registrant) Date August 13, 1998 /s/ SUSAN M. BEALE --------------------- --------------------------------------------- Susan M. Beale Vice President and Corporate Secretary Date August 13, 1998 /s/ DAVID E. MEADOR --------------------- --------------------------------------------- David E. Meador Vice President and Controller 39 40 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE DETROIT EDISON COMPANY --------------------------------------------- (Registrant) Date August 13, 1998 /s/ SUSAN M. BEALE --------------------- --------------------------------------------- Susan M. Beale Vice President and Corporate Secretary Date August 13, 1998 /s/ DAVID E. MEADOR --------------------- --------------------------------------------- David E. Meador Vice President and Controller 40 41 QUARTERLY REPORTS ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998 DTE ENERGY COMPANY FILE NO. 1-11607 DETROIT EDISON COMPANY FILE NO. 1-2198 EXHIBIT INDEX Exhibits filed herewith. Exhibit Number 4-193 - Sixth Supplemental Note Indenture, dated as of May 1, 1998, between Detroit Edison and Bankers Trust Company, as Trustee creating the 7.54% Quarterly Income Debt Securities ("QUIDS"), including form of QUIDS. 4-194 - $100,000,000 Support Agreement, dated as of June 16, 1998 between DTE Energy Company and DTE Capital Corporation. 4-196 - Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee. 4-197 - First Supplemental Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee, creating the $100,000,000 Remarketed Notes, Series A due 2038, including form of Note. 10-26* - Employment Agreement, dated April 16, 1998, between Detroit Edison and Lynn Halpin. 11-12 - DTE Energy Company and Diluted Earnings Per Share. 12-12 - The Detroit Edison Company Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends. 15-8 - Awareness Letter of Deloitte & Touche LLP regarding their report dated July , 1998. 41 42 27-21 - Financial Data Schedule for the period ended June 30. 1998 for DTE Energy Company. 27-22 - Financial Data Schedule for the period ended June 30, 1998 for The Detroit Edison Company and Subsidiary Companies. Exhibits incorporated herein by reference. See Page Nos.___ through ___ for location of exhibits incorporated by reference 3(a) - Amended and Restated Articles of Incorporation of DTE Energy Company, dated December 13, 1995. 3(b) - Certificate of Designation of Series A Junior Participating Preferred Stock of DTE Energy Company. 3(c) - Restated Articles of Incorporation of Detroit Edison, as filed December 10, 1991 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau. 3(d) - Certificate containing resolution of the Detroit Edison Board of Directors establishing the Cumulative Preferred Stock, 7.75% Series as filed February 22, 1993 with the State of Michigan, Department of Commerce Corporation and Securities Bureau. 3(e) - Certificate containing resolution of the Detroit Edison Board of Directors establishing the Cumulative Preferred Stock, 7.74% Series, as filed April 21, 1993 with the State of Michigan, Department of Commerce - Corporation and Securities Bureau. 3(f) - Rights Agreement, dated as of September 23, 1997, by and between DTE Energy Company and The Detroit Edison Company, as Rights Agent. 3(g) - Agreement and Plan of Exchange. 4(a) - Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison and Bankers Trust Company as Trustee and indentures supplemental thereto, dated as of dates indicated below: September 1, 1947 October 1, 1968 November 15, 1971 January 15, 1973 42 43 February 29, 1992 April 5, 1992 July 15, 1992 July 31, 1992 June 1, 1978 June 30, 1982 August 15, 1982 October 15, 1985 July 15, 1989 December 1, 1989 February 15, 1990 April 1, 1991 May 1, 1991 May 15, 1991 September 1, 1991 November 1, 1991 January 15, 1992 November 30, 1992 January 1, 1993 April 1, 1993 April 26, 1993 May 31, 1993 June 30, 1993 June 30, 1993 September 15, 1993 March 1, 1994 June 15, 1994 August 15, 1994 December 1 1994 August 1, 1995 4(b) - Collateral Trust Indenture (notes), dated as of June 30, 1993. 4(c) - First Supplemental Note Indenture, dated as of June 30, 1993. 4(d) - Second Supplemental Note Indenture, dated as of September 15, 1993. 4(e) - First Amendment, dated as of August 15, 1996, to Second Supplemental Note Indenture. 4(f) - Third Supplemental Note Indenture, dated as of August 15, 1994. 4(g) - First Amendment, dated as of December 12, 1995, to Third Supplemental Note Indenture, dated as of August 15, 1994. 43 44 4(h) - Fourth Supplemental Note Indenture, dated as of August 15, 1995. 4(i) - Fifth Supplemental Note Indenture, dated as of February 1, 1996. 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 Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982. 99(b) - Belle River Transmission Ownership and Operating Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 . 99(c) - 1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance Energy Company (an unaffiliated company) ("Renaissance") and Detroit Edison. 99(d) - First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between Detroit Edison and Renaissance. 99(e) - Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between Detroit Edison and Renaissance. 99(f) - Third Amendment, dated as of August 28, 1997, to 1988 Amended and Restated Loan Agreement between Detroit Edison and Renaissance. 99(g) - $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New York Branch, as Agent. 99(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, 44 45 Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(i) - Third Amendment, dated as of March 8, 1996, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(j) - Fourth Amendment, dated as of August 29, 1996, to $200,000,000 364-Day Credit Agreement as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(k) - Fifth Amendment, dated as of September 1, 1997, to $200,000,000 Multi-Year Credit Agreement, dated as of September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks Party thereto and Barclays Bank PLC, New York Branch, as Agent. 99(l) - $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank, PLC, New York Branch, as Agent. 99(m) - First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(n) - Third Amendment, dated as of March 8, 1996, to $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(o) - Fourth Amendment, dated as of September 1, 1996, to $200,000,000 Multi-Year (formerly Three-Year) Credit Agreement, dated as of September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent. 99(p) - Fifth Amendment, dated as of August 28, 1997, to $200,000,000 364-Day Credit Agreement, dated as of September 1, 1990, as amended, among Detroit Edison, 45 46 Renaissance, the Banks Party thereto and Barclays Bank PLC, New York Branch, as Agent. 99(q) - 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance. 99(r) - First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between Detroit Edison and Renaissance. 99(s) - Second Amendment, dated as of September 1, 1993, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract between Detroit Edison and Renaissance. 99(t) - Third Amendment, dated as of August 31, 1994, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance. 99(u) - Fourth Amendment, dated as of March 8, 1996, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract Agreement, dated as of October 4, 1988, between Detroit Edison and Renaissance. 99(v) - Sixth Amendment, dated as of August 28, 1997, to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract between Detroit Edison and Renaissance. 99(w) - Standby Note Purchase Credit Facility, dated as of September 12, 1997, among Detroit Edison and the Bank's Signatory thereto and The Chase Manhattan Bank, as Administrative Agent, and Citicorp Securities, Inc., Lehman Brokers, Inc., as Remarketing Agents and Chase Securities, Inc. as Arranger. 99(x) - Amended and Restated Credit Agreement, Dated as of January 21, 1998 among DTE Capital Corporation, the Initial Lenders, Citibank, N.A., as Agent, and Barclays Bank PLC, New York Branch and The First National Bnak of Chicago, as Co-Agents, and Citicorp Securities, Inc., as Arranger. 99(y) - $60,000,000 Support Agreement dated as of January 21, 1998 between DTE Energy Company and DTE Capital Corporation. 46 47 99(z) - $400,000,000 Support Agreement, dated as of January 21, 1998, between DTE Energy Company and DTE Capital Corporation. *Denotes management contract or compensatory plan or arrangement required to be entered as an exhibit to this report. 47 EX-4.193 2 EX-4.193 1 EXHIBIT 4.193 THE DETROIT EDISON COMPANY AND BANKERS TRUST COMPANY TRUSTEE SIXTH SUPPLEMENTAL INDENTURE DATED AS OF MAY 1, 1998 SUPPLEMENTING THE COLLATERAL TRUST INDENTURE DATED AS OF JUNE 30,1993 PROVIDING FOR 7.54% QUARTERLY INCOME DEBT SECURITIES ("QUIDS") (JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES, DUE 2028) 2 SIXTH SUPPLEMENTAL INDENTURE, dated as of the 1st day of May 1998 between THE DETROIT EDISON COMPANY, a corporation organized and existing under the laws of the State of Michigan (the "Company"), and BANKERS TRUST COMPANY, a New York banking corporation, having its principal office in The City of New York, New York, as trustee (the "Trustee"); WHEREAS, the Company has heretofore executed and delivered to the Trustee a Collateral Trust Indenture dated as of June 30, 1993 (the "Original Indenture"), as supplemented by a First Supplemental Indenture dated as of June 30, 1993, a Second Supplemental Indenture dated as of September 15, 1993, as amended, a Third Supplemental Indenture dated as of August 15, 1994, as amended, a Fourth Supplemental Indenture dated as of August 15, 1995 and a Fifth Supplemental Trust Indenture dated as of February 1, 1996 (the "Prior Supplemental Indentures") providing for the issuance by the Company from time to time of its debt securities; and WHEREAS, the Company now desires to provide for the issuance of an additional series of its unsecured, subordinated debt securities pursuant to the Original Indenture; and WHEREAS, the Company intends hereby to designate a series of debt securities which shall not have the benefit of the provisions of Article Four of the Original Indenture and the other related provisions of the Original Indenture relating to the grant of security and which shall have the terms and variations from the provisions of the Original Indenture as set forth herein; and WHEREAS, the Company, in the exercise of the power and authority conferred upon and reserved to it under the provisions of the Original Indenture, including Section 1001 thereof, and pursuant to appropriate resolutions of the Board of Directors, has duly determined to make, execute and deliver to the Trustee this Sixth Supplemental Indenture to the Original Indenture as permitted by Sections 201 and 301 of the Original Indenture in order to establish the form or terms of, and to provide for the creation and issue of, a series of its debt securities under the Original Indenture, which shall be known as the 7.54% Quarterly Income Debt Securities (the "QUIDS") Junior Subordinated Deferrable Interest Debentures, Due 2028; and WHEREAS, all things necessary to make such debt securities, when executed by the Company and authenticated and delivered by the Trustee or any Authenticating Agent and issued upon the terms and subject to the conditions hereinafter and in the Original Indenture set forth against payment therefor, the valid, binding and legal obligations of the Company and to make this Sixth Supplemental Indenture a valid, binding and legal agreement of the Company, have been done; NOW, THEREFORE, THIS SIXTH SUPPLEMENTAL INDENTURE WITNESSETH that, in order to establish the terms of a series of debt securities, and for and in consideration of the premises and of the covenants contained in the Original Indenture and in this Sixth Supplemental Indenture and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, it is mutually covenanted and agreed as follows: 3 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. Each capitalized term that is used herein and is defined in the Original Indenture shall have the meaning specified in the Original Indenture unless such term is otherwise defined herein. "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions located in the State of Michigan or in the state in which the principal corporate trust office of the Trustee is located, are authorized or obligated by or pursuant to law or executive order to close. "Capital Stock" means any and all shares of the Company's Preferred Stock, Preference Stock or Common Stock or any other equity securities of the Company. "Payment Obligation", when used with respect to Senior Indebtedness, means an obligation stated in an agreement, instrument or lease to pay money (whether for principal, premium, interest, sinking fund, periodic rent, stipulated value, termination value, liquidated damages or otherwise), but excluding an obligation to pay money in respect of fees of, or as payment or reimbursement for expenses incurred by or on behalf of, or as indemnity for losses, damages, taxes or other indemnity claims of any kind owed to, any holder of Senior Indebtedness or other party to such agreement, instrument or lease. "Senior Indebtedness" means each of the following, whether outstanding on the date hereof or hereafter created, incurred or assumed: (a) (i) any Payment Obligation of the Company in respect of any indebtedness, directly or indirectly, created, incurred or assumed for borrowed money other than (A) the $49.9 million in aggregate principal amount of Quarterly Income Debt Securities (Junior Subordinated Deferrable Interest Debentures, Due 2025) and (B) the $185 million in aggregate principal amount of Quarterly Income Debt Securities (Junior Subordinated Deferrable Interest Debentures, Due 2026), each of which has been expressly deemed by its terms to be subordinate or (ii) in connection with the acquisition of any business, property or asset (including securities), other than any account payable or other indebtedness created, incurred or assumed in the ordinary course of business in connection with the obtaining of materials or services; (b) any Payment Obligation of the Company in respect of any lease that would, in accordance with generally accepted accounting principles, be required to be classified and accounted for as a capital lease; (c) any Payment Obligation of the Company in respect of any interest rate exchange agreement, currency exchange agreement or similar agreement that provides 2 4 for payment (whether or not contingent) over a period or term (including any renewals or extensions) longer than one year from the execution thereof; (d) any Payment Obligation of the Company in respect of any agreement relating to the acquisition (including a sale and buyback) or lease (including a sale and leaseback) of real or personal property that provides for payment (whether or not contingent) over a period or term (including any renewals or extensions) longer than one year from the execution thereof; (e) any Payment Obligation of any Subsidiary or of others of the kind described in the preceding clauses (a) through (d) assumed or guaranteed by the Company or for which the Company is otherwise responsible or liable; and (f) any amendment, renewal, extension or refunding of any Payment Obligation described in the preceding subparagraphs (a) through (e); unless in the agreement, instrument or lease in which any such Payment Obligation is stated it is expressly provided that such Payment Obligation is not senior in right of payment to the QUIDS. "Tax Event" means that the Company shall have received an opinion of counsel (which may be counsel to the Company or an affiliate but not an employee thereof) experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change), in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such pronouncement or decision is announced on or after the date of original issuance of the QUIDS, there is more than an insubstantial risk that interest payable by the Company on the QUIDS is not, or will not be, deductible by the Company for federal income tax purposes. SECTION 102. Section References. Each reference to a particular section set forth in this Supplemental Indenture shall, unless the context otherwise requires, refer to this Sixth Supplemental Indenture. ARTICLE TWO TITLE AND TERMS OF THE QUIDS SECTION 201. Title of the QUIDS. This Sixth Supplemental Indenture hereby establishes a series of QUIDS, which shall be known as the Company's 7.54% Quarterly Income Debt Securities (Junior Subordinated Deferrable Interest Debentures, Due 2028) (referred to herein as the "QUIDS"). For purposes of the Original Indenture, the QUIDS shall constitute a single series of Securities. The stated maturity of the QUIDS will be June 30, 2028. 3 5 SECTION 202. Variations from the Original Indenture. Notwithstanding the provisions of the Original Indenture, the QUIDS shall be without benefit of any security and shall be subordinated to Senior Indebtedness as and to the extent provided in Article Four of this Supplemental Indenture. The QUIDS shall not have the benefit of the provisions of Article Four of the Original Indenture and shall not have the benefit of, or be subject to, the other related provisions of the Original Indenture relating to the grant of security, including (for avoidance of doubt and not for purposes of limitation) the Granting Clause, the definitions of "Deliverable Mortgage Bonds," "Deliverable Securities," "Designated Mortgage Bonds," "Grant," "Mortgage," "Mortgage Bonds," "Mortgage Trustee," "Previously Delivered Mortgage Bonds," and "Trust Estate," Section 301 (20), Sections 301 (a) (v), (ix), (x) and (xi), Sections 301 (b) (ii) and (iii), Section 301 (d), and Sections 601(4) and (8). SECTION 203. Amount and Denominations; DTC. The aggregate principal amount of QUIDS that may be issued under this Sixth Supplemental Indenture is limited to $100,122,300. The QUIDS shall be issuable only in fully registered form and, as permitted by Sections 301 and 302 of the Original Indenture, in denominations of $25 and integral multiples thereof. The QUIDS will initially be issued under a book-entry system, registered in the name of The Depository Trust Company, as depository ("DTC"), or its nominee, who is hereby designated as "U.S. Depository" under the Original Indenture. SECTION 204. Interest Rate and Interest Payment Dates. (a) The QUIDS will bear interest at the rate of 7.54% per annum from the date of original issuance until the principal thereof becomes due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum during such overdue period. Interest on the QUIDS will be payable quarterly (subject to deferral as set forth herein) in arrears on March 31, June 30, September 30 and December 31 of each year (each an "Interest Payment Date"), commencing June 30, 1998, to the persons in whose names the QUIDS are registered at the close of business on the relevant record date for such interest installment, which will be one Business Day prior to the relevant Interest Payment Date or, in the case of a Deferral Period (as described herein), one Business Day prior to the Interest Payment Date for such Deferral Period (each a "Record Date"); provided, however, that, in the event that any Interest Payment Date shall not be a Business Day, then interest shall be payable on the next day that is a Business Day (but without interest or other payment in respect of such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day without reduction in amount due to such early payment (and in which case the relevant Record Date shall be on the Business Day immediately preceding such Interest Payment Date), in each case with the same force and effect as if made on such Interest Payment Date, subject to certain rights of deferral described in Section 204(b) hereof. The amount of interest payable in any period will be computed on the basis of twelve 30-day months and a 360-day year and, for any period shorter than a full quarterly interest period, will be computed on the basis of the actual number of days elapsed in such period. 4 6 (b) The provisions of Section 204(a) notwithstanding, the Company shall have the right at any time, on one or more occasions so long as an Event of Default with respect to the QUIDS has not occurred and is not continuing, to extend any interest payment period on the QUIDS for a period (a "Deferral Period") not to exceed 20 consecutive quarterly interest payment periods; provided that the date on which such Deferral Period ends must be an Interest Payment Date and must be no later than June 30, 2028 or any date on which any QUIDS are fixed for redemption. The quarterly interest payments on the QUIDS so deferred will continue to accrue with interest thereon at the rate of interest of the QUIDS during such Deferral Period. On the Interest Payment Date at the end of the Deferral Period, the Company shall pay all interest then accrued and unpaid, which shall be compounded quarterly at the rate of interest on the QUIDS (except to the extent prohibited by law) to the date of payment, to the persons in whose names the QUIDS are registered on the Record Date for such Deferral Period. The Company shall give the Holders of the QUIDS notice of its election to defer interest payments or to extend the Deferral Period ten Business Days prior to the earlier of (1) the next scheduled quarterly payment date and (2) the date the Company is required to give notice of the record date of such related interest payment to the New York Stock Exchange or other applicable self-regulatory organization or to the Holders of the QUIDS, but in any event not less than two Business Days prior to such record date. During the Deferral Period the Company shall not declare or pay any dividend on or redeem, purchase, acquire or make a liquidation payment with respect to, any of its Capital Stock or make any guaranty payment with respect to the foregoing, other than redemptions of any series of Capital Stock of the Company pursuant to the terms of any sinking fund provisions with respect thereto. During any Deferral Period, the Company may not (i) make any distributions, loans or guarantees for the benefit of, (ii) purchase, defease, redeem or otherwise acquire or retire for value any securities of or (iii) make any other investment in, any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, for the purpose of, or to enable the payment of, directly or indirectly, dividends on any equity securities of DTE Energy Company and its successors or assigns. During any Deferral Period, the Company may continue to extend the interest payment period by extending the Deferral Period, on one or more occasions, by notice given as aforesaid in this paragraph (b), provided that such Deferral Period, as so extended, must end on an Interest Payment Date and in no event shall the aggregate Deferral Period, as extended, exceed 20 consecutive quarterly interest payment periods or extend beyond June 30, 2028 or any date on which QUIDS are fixed for redemption. No interest shall be due and payable during a Deferral Period except at the end thereof. SECTION 205. Optional Redemption of QUIDS. Other than in accordance with Section 206 below, the QUIDS shall not be redeemable prior to June 30, 2003. Thereafter, upon notice given by mailing the same, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption, any or all of the QUIDS may be redeemed by the Company, at its option, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the QUIDS to be redeemed plus accrued and unpaid interest thereon to the date fixed for redemption. 5 7 SECTION 206. Tax Event Redemption of QUIDS. If a Tax Event has occurred and is continuing, the Company has the right, within 90 days following the occurrence of such Tax Event, to redeem the QUIDS, in whole but not in part, at a redemption price equal to the aggregate principal amount of the QUIDS plus accrued and unpaid interest to the date of redemption. SECTION 207. Form of QUIDS. Attached hereto as Exhibit A is a form of the definitive QUIDS. ARTICLE THREE ADDITIONAL EVENTS OF DEFAULT AND COVENANTS SECTION 301. Inapplicability of Certain Events of Default. The Events of Default set forth in Sections 601(4) and 601(8) of the Original Indenture shall not apply to the QUIDS. The omission by the Company to pay interest on the QUIDS during a Deferral Period as permitted by Section 204 shall not constitute an Event of Default under Section 601 (1) of the Original Indenture. ARTICLE FOUR SUBORDINATION OF QUIDS SECTION 401. QUIDS Subordinate to Senior Indebtedness. The Company for itself, its successors and assigns, covenants and agrees, and each Holder of QUIDS issued, whether upon original issue or upon transfer or assignment thereof, by its acceptance thereof likewise covenants and agrees, that the payment of principal of and interest on each and all of the QUIDS is hereby expressly subordinated, to the extent and in the manner hereinafter in this Article set forth, in right of payment to the prior payment in full of all existing and future Senior Indebtedness of the Company. SECTION 402. Payments to Securityholders. (a) Upon (i) any acceleration of the principal amount due on the QUIDS or (ii) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest, if any, due upon all Senior Indebtedness shall first be paid in full, or payment thereof provided for in money or money's worth in accordance with its terms, before any payment is made on account of the principal of or interest on the indebtedness evidenced by the QUIDS, and upon any such dissolution or winding-up or liquidation or reorganization any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the QUIDS under the terms of this Supplemental Indenture would be entitled, except for the provisions hereof, shall (subject to the power of a court of competent jurisdiction to make other equitable provision reflecting the rights conferred by the provisions hereof upon the Senior Indebtedness and the holders thereof with respect to the 6 8 QUIDS and the Holders thereof by a lawful plan of reorganization under applicable bankruptcy law), be paid by the Company or any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, or by the Holders of the QUIDS if received by them, directly to the holders of Senior Indebtedness (pro rata to each such holder on the basis of the respective amounts of Senior Indebtedness held by such holder) or their representatives, to the extent necessary to pay all Senior Indebtedness (including interest thereon) in full, in money or money's worth, in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness, before any payment or distribution is made to the Holders of the indebtedness evidenced by the QUIDS. The consolidation of the Company with, or a merger of the Company into, another Person or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another Person upon the terms and conditions provided in Section 901 of the Original Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 402(a). (b) In the event that any payment or distribution of assets of the Company of any kind or character not permitted by Section 402(a), whether in cash, property or securities, shall be received by the Trustee or the Holders of QUIDS before all Senior Indebtedness is paid in full, or provision made for such payment, in accordance with its terms, upon written notice to the Trustee or, as the case may be, such Holder, such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of such Senior Indebtedness or their representative or representatives, or to the Trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all such Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 706 of the Original Indenture. In addition, nothing in this Article shall prevent the Company from making or the Trustee from receiving or applying any payment in connection with the redemption of the QUIDS if the first publication of notice of such redemption (whether by mail or otherwise in accordance with this Supplemental Indenture) has been made, and the Trustee has received such payment from the Company, prior to the occurrence of any of the contingencies specified in this Section 402. (c) No payment on account of principal of or interest on the QUIDS shall be made unless full payment of amounts then due for principal, premium, if any, sinking funds and interest on any Senior Indebtedness has been made or duly provided for in money or money's worth in accordance with the terms of such Senior Indebtedness. No payment on account of principal or interest on the QUIDS shall be made if, at the time of such payment or immediately after giving effect thereto, (i) there shall exist a default in the payment of principal, premium, if any, sinking fund or interest with respect to any Senior Indebtedness, or (ii) there shall have occurred an event of default (other than a default in the payment of principal, premium, if any, sinking funds or interest) with respect to any Senior Indebtedness, as defined therein or in the instrument under which the same is outstanding, permitting the holders thereof to accelerate the 7 9 maturity thereof and upon written notice thereof given to the Trustee, with a copy to the Company (the delivery of which shall not affect the validity of the notice to the Trustee), and such event of default shall not have been cured or waived or shall not have ceased to exist; provided, however, that if the holders of the Senior Indebtedness to which the default relates have not declared such Senior Indebtedness to be immediately due and payable within 180 days after the occurrence of such default (or have declared such Senior Indebtedness to be immediately due and payable and within such period have rescinded such declaration of acceleration), then the Company shall resume making any and all required payments in respect of the QUIDS (including any missed payments). Only one payment blockage period under the immediately preceding sentence may be commenced within any consecutive 365-day period with respect to the QUIDS of any series. No event of default which existed or was continuing on the date of the commencement of any 180-day payment blockage period with respect to the Senior Indebtedness initiating such payment blockage period shall be, or be made, the basis for the commencement of a second payment blockage period by a registered holder or representative of such Senior Indebtedness whether or not within a period of 365 consecutive days unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days (and, in the case of any such waiver, no payment shall be made by the Company to the holders of Senior Indebtedness in connection with such waiver other than amounts due pursuant to the terms of the Senior Indebtedness as in effect at the time of such default). SECTION 403. Subrogation to Rights of Holders of Senior Indebtedness. From and after the payment in full of all Senior Indebtedness, the Holders of the QUIDS (together with the holders of any other indebtedness of the Company which is subordinate in right of payment to the payment in full of all Senior Indebtedness, which is not subordinate in right of payment to the QUIDS and which by its terms grants such right of subrogation to the holder thereof) shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets or securities of the Company applicable to the Senior Indebtedness until the QUIDS shall be paid in full, and, for the purposes of such subrogation, no such payments or distributions to the holders of Senior Indebtedness of assets or securities, which otherwise would have been payable or distributable to Holders of the QUIDS, shall, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the QUIDS, be deemed to be a payment by the Company to or on account of the Senior Indebtedness, it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the QUIDS, on the one hand, and the holders of the Senior Indebtedness, on the other hand, and nothing contained herein is intended to or shall impair as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders of the QUIDS, the obligation of the Company, which is unconditional and absolute, to pay to the Holders of the QUIDS the principal of and interest on the QUIDS as and when the same shall become due and payable in accordance with their terms, or to affect the relative rights of the Holders of the QUIDS and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the Holder of QUIDS from exercising all remedies otherwise permitted by applicable law upon default hereunder with respect to the QUIDS subject to the rights of the holders of Senior Indebtedness, under Section 8 10 402, to receive cash, property or securities of the Company otherwise payable or deliverable to the Trustee or the Holders of the QUIDS or to a representative of such Holders, on their behalf. Upon any distribution or payment in connection with any proceedings or sale referred to in Section 402(a), the Trustee and each Holder of the QUIDS then Outstanding, shall be entitled to rely upon a certificate of the liquidating trustee or agent or other Person making any distribution or payment to the Trustee or such Holder for the purpose of ascertaining the holders of Senior Indebtedness entitled to participate in such payment or distribution, the amount of such Senior Indebtedness or the amount payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. SECTION 404. No Impairment of Subordination. Nothing contained in this Article or elsewhere in this Supplemental Indenture or the QUIDS shall prevent at any time the Company from making payments at any time of principal of or interest on the QUIDS, except under the conditions described in Section 402 or during the pendency of any proceedings or sale therein referred to. SECTION 405. Trustee to Effectuate Subordination. Each Holder of QUIDS by his acceptance thereof, whether upon original issue or upon transfer or assignment, authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provisions in this Article and appoints the Trustee his attorney-in-fact for any and all such purposes. No rights of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Trustee or any Holder of the QUIDS then Outstanding, or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by any such holder, with the terms, provisions and covenants of this Supplemental Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Holders of the QUIDS, without incurring responsibility to the Holders of the QUIDS and without impairing or releasing the subordination provided in this Article or the obligations of the Holders of the QUIDS to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 406. Notice to Trustee. The Company shall give prompt written notice to the Trustee in the form of an Officers' Certificate of any fact known to the Company which would 9 11 prohibit the making of any payment of money to or by the Trustee in respect of the QUIDS pursuant to the provisions of this Article. Notwithstanding the provisions of this Article or any other provisions of this Supplemental Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the QUIDS pursuant to the provisions of this Article, unless and until the Trustee shall have received at its Corporate Trust Office written notice thereof from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor at least two Business Days prior to such payment date; and, prior to the receipt of any such written notice, the Trustee, shall be entitled in all respects to assume that no such facts exist. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a trustee on behalf of any such holder. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under the Article, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 407. Reliance on Certificate of Liquidating Agent. Upon any payment or distribution referred to in this Article, the Trustee and the Holders of the QUIDS shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which a dissolution, winding up or total or partial liquidation or reorganization of the Company is pending, or a certificate of the trustee in bankruptcy, liquidating trustee, custodian, receiver, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of the QUIDS, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. SECTION 408. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of the QUIDS of any series or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. SECTION 409. Rights of Trustee as Holder of Senior Indebtedness. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder 10 12 of Senior Indebtedness, and nothing in this Supplemental Indenture shall deprive the Trustee of any of its rights as such holder. SECTION 410. Article Applicable to Paying Agent. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that this Section shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. ARTICLE FIVE MISCELLANEOUS PROVISIONS The Trustee makes no undertaking or representations in respect of, and shall not be responsible in any manner whatsoever for and in respect of, the validity or sufficiency of this Sixth Supplemental Indenture or the proper authorization or the due execution hereof by the Company or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Except as expressly amended hereby, the Original Indenture shall continue in full force and effect in accordance with the provisions thereof and the Original Indenture is in all respects hereby ratified and confirmed. This Sixth Supplemental Indenture and all its provisions shall be deemed a part of the Original Indenture in the manner and to the extent herein and therein provided. This Sixth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. This Sixth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 11 13 IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. THE DETROIT EDISON COMPANY By:______________________________ Name: Title: ATTEST: By:_____________________________ 12 14 [Corporate Seal] STATE OF MICHIGAN ) ) : COUNTY OF WAYNE ) On the , day of May 1998, before me personally came , to me known, who, being by me duly sworn, did depose and say that he is of THE DETROIT EDISON COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and he signed his name thereto by like authority. ___________________________ Notary Public My Commission Expires [Notarial Seal] BANKERS TRUST COMPANY, as Trustee By:_________________________________ Name: Title: ATTEST: By:________________________ 13 15 [Corporate Seal] STATE OF NEW YORK ) ) : COUNTY OF NEW YORK ) On the day of May 1998, before me personally came , to me known, who, being by me duly sworn, did depose and say that he is of BANKERS TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and she signed her name thereto by like authority. ______________________________ [Notarial Seal] 14 16 EXHIBIT A THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY ("DTC"), TO A NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. NO. R-1 $100,122,300 THE DETROIT EDISON COMPANY 7.54% QUARTERLY INCOME DEBT SECURITIES (JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE 2028) ISSUE PRICE ISSUE DATE CUSIP NO. $25.00, or any integral multiple thereof. May 11, 1998 250847696 THE DETROIT EDISON COMPANY, a corporation duly organized and existing under the laws of the State of Michigan (herein referred to as the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of $100,122,300 on June 30, 2028 and to pay interest at the rate of 7.54% per annum on said principal sum from the date of issuance until the principal of this Debenture ("Note") hereof becomes due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum during such overdue period. Interest on this Note will be payable quarterly (subject to deferral as set forth 1 17 herein) in arrears on March 31, June 30, September 30 and December 31 of each year (each such date, an "Interest Payment Date"), commencing June 30, 1998. The amount of interest payable for any period shall be computed on the basis of twelve 30-day months and a 360-day year and, for any period shorter than a full quarterly interest period, will be computed on the basis of the actual number of days elapsed in such period. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of the amount payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day without reduction in the amount due to such early payment (and in which case the relevant Record Date shall be on the Business Day immediately preceding such Interest Payment Date), in each case with the same force and effect as if made on such date, subject to certain rights of deferral described below. A "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions located in the State of Michigan or in the state in which the principal corporate trust office of the Trustee is located are authorized or obligated by or pursuant to law or executive order to close. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date (other than interest payable on redemption or maturity) will, as provided in the Indenture (as defined herein), be paid to the person in whose name this Note (or one or more Predecessor Notes, as defined in said Indenture) is registered at the close of business on the relevant record date for such interest installment, which shall be one Business Day prior to the relevant Interest Payment Date or, in the case of a Deferral Period (as defined in the Indenture), one Business Day prior to Interest Payment Date for such Deferral Period (each a "Record Date"). Interest payable on redemption or maturity shall be payable to the person to whom the principal is paid. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered holders on such Record Date, and may be paid to the person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the registered holders of this series of Notes not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of and the interest on this Note shall be payable at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered holder at the close of business on the Record Date at such address as shall appear in the Security Register. Payment of the principal of and interest on this Note is, to the extent provided in the Indenture, subordinated and subject in right of payment to the prior payment in full of all existing and future Senior Indebtedness, as defined in the Indenture, of the Company and this 2 18 Note is issued subject to the provisions of the Indenture with respect thereto. Each registered holder of this Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee as his or her attorney-in-fact for any and all such purposes. Each registered holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. This Note shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. Unless the Certificate of Authentication hereon has been executed by the Trustee or a duly appointed Authentication Agent referred to herein, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. This Note is one of a duly authorized series of Notes of the Company (herein sometimes referred to as the "Notes"), specified in the Indenture, all issued or to be issued in one or more series under and pursuant to a Collateral Trust Indenture dated as of June 30, 1993 (the "Original Indenture") duly executed and delivered between the Company and Bankers Trust Company, a New York banking corporation, as Trustee (herein referred to as the "Trustee"), as supplemented by the First Supplemental Indenture dated as of June 30, 1993, a Second Supplemental Indenture dated as of September 15, 1993, as amended, a Third Supplemental Indenture dated as of August 15, 1994, as amended, a Fourth Supplemental Indenture dated as of August 15, 1995 , a Fifth Supplemental Indenture dated as of February 1, 1996 and a Sixth Supplemental Indenture dated as of May 1, 1998 (together with the Original Indenture, the "Indenture") between the Company and the Trustee, to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the registered holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. By the terms of the Indenture, the Notes are issuable in series which may vary as to amount, date of maturity, rate of interest and in other respects as in the Indenture provided. This series of Notes is limited in aggregate principal amount as specified in said Sixth Supplemental Indenture. Notwithstanding the provisions of the Original Indenture, this Note shall be without benefit of any security and shall be subordinated to Senior Indebtedness (as defined in the Indenture) as and to the extent provided in Article Four of said Sixth Supplemental Indenture. This Note shall not have the benefit of the provisions of Article Four of the Original Indenture and shall not have the benefit of, or be subject to, the other related provisions of the Original Indenture relating to the grant of security, including (for avoidance of doubt and not for purposes of limitation) the Granting Clause, the definitions of "Deliverable Mortgage Bonds," "Deliverable Securities," "Designated Mortgage Bonds," "Grant," "Mortgage," "Mortgage 3 19 Bonds," "Mortgage Trustee," "Previously Delivered Mortgage Bonds," and "Trust Estate," Section 301(20), Sections 301 (a) (v), (ix), (x) and (xi), Sections 301 (b) (ii) and (iii), and Section 301 (d). In addition, the Events of Default set forth in Sections 601(4) and 601 (8) of the Original Indenture shall not apply to this Note. The omission by the Company to pay interest on this Note during a Deferral Period as permitted by Section 204 of said Sixth Supplemental Indenture shall not constitute an Event of Default under Section 601(l) of the Original Indenture. The Company shall have the right to redeem this Note at the option of the Company, without premium or penalty, in whole or in part, at any time on or after June 30, 2003 and prior to maturity at a redemption price equal to 100% of the principal amount redeemed plus the accrued and unpaid interest thereon to the date fixed for redemption. Any redemption pursuant to this paragraph will be made upon not less than 30 nor more than 60 days notice. If the Notes are only partially redeemed by the Company, the Notes will be redeemed pro rata or by lot or by any other method utilized by the Trustee; provided that if, at the time of redemption, the Notes are registered as a Global Note, the Depositary shall determine by lot the principal amount of such Notes held by each Note holder to be redeemed. If a Tax Event (as hereinafter defined) has occurred and is continuing, the Company shall have the right, within 90 days following the occurrence of such Tax Event, to redeem the QUIDS, in whole but not in part, at a redemption price equal to the aggregate principal amount of the QUIDS plus accrued and unpaid interest to the date of redemption. "Tax Event" means that the Company shall have received an opinion of counsel (which may be counsel to the Company or an affiliate but not an employee thereof) experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such pronouncement or decision is announced on or after the date of original issuance of the QUIDS, there is more than an insubstantial risk that interest payable by the Company on the QUIDS is not, or will not be, deductible by the Company for federal income tax purposes. In the event of redemption of this Note in part only, a new Note or Notes of this series for the unredeemed portion hereof will be issued in the name of the registered holder hereof upon the cancellation hereof. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Notes may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Note upon compliance by the Company with certain conditions set forth therein. 4 20 The Indenture contains provisions permitting the Company and the Trustee, with the consent of the registered holders of not less than a majority in aggregate principal amount of the outstanding Notes of each series affected at the time, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the registered holders of the Notes; provided, however, that no such supplemental indenture shall (i) extend the fixed maturity of any Notes of any series, or reduce the principal amount thereof, or reduce the rate of or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of the registered holder of each Note so affected or (ii) reduce the aforesaid percentage of Notes, the registered holders of which are required to consent to any such supplemental indenture, without the consent of the registered holders of each Note then outstanding and affected thereby. The Indenture also contains provisions permitting (i) the registered holders of at least 66 2/3% in aggregate principal amount of the Notes of all series at the time outstanding affected thereby, on behalf of the registered holders of the Notes of such series, to waive compliance by the Company with certain provisions of the Indenture and (ii) the registered holders of a majority in aggregate principal amount of the Notes of all series at the time outstanding affected thereby, on behalf of the registered holders of the Notes of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the registered bolder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such registered holder and upon all future registered holders and owners of this Note and of any Note issued in exchange hereof or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the time and place and at the rate and in the coin or currency herein prescribed. The Company shall have the right at any time, on one or more occasions, so long as an Event of Default has not occurred and is not continuing under the Indenture with respect to the Notes, to extend any interest payment period on this Note to a period not to exceed 20 consecutive quarterly interest payment periods and, as a consequence, the quarterly interest payment on the Notes would be deferred (but would continue to accrue with interest thereon compounded quarterly at the rate of interest on the Notes, except as provided by law) during any such Deferral Period (as defined in the Indenture). At the end of each Deferral Period, the Company shall pay all interest then accrued and unpaid (compounded quarterly, at the rate of interest on the Notes, except to the extent provided by law) to the persons in whose name the QUIDS are registered on the Record Date for such Deferral Period. In the event the Company exercises this right, the Company shall not declare or pay any dividends on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its Capital Stock (as defined in the Indenture) or make any guarantee payments with respect to the foregoing during such Deferral Period, other than redemptions of any series of Capital Stock of the Company pursuant to the 5 21 terms of any sinking fund provisions with respect thereto. In addition, during any Deferral Period, the Company may not (i) make any distributions, loans or guarantees for the benefit of, (ii) purchase, defease, redeem or otherwise acquire or retire for value any securities of or (iii) make any other investment in any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, for the purpose of, or to enable the payment of, directly or indirectly, dividends on any equity security of DTE Energy Company and its successors or assigns. During any Deferral Period, the Company may continue to extend the interest payment period by extending the Deferral Period, provided that the aggregate Deferral Period, as extended, must end on an Interest Payment Date and in no event shall the aggregate Deferral Period exceed 20 consecutive quarterly interest payment periods or extend beyond the maturity of the Notes or any date on which any of the Notes are fixed for redemption. No interest shall be due and payable on the Notes during a Deferral Period except at the end thereof. The Company shall give the registered holders of Notes notice of its election to defer interest payments or to extend the Deferral Period ten Business Days prior to the earlier of (i) the next scheduled quarterly payment date or (ii) the date the Company is required to give notice of the record date of such related interest payment to the New York Stock Exchange or other applicable self-regulatory organization or to the holders of the Notes, but in any event not less than two Business Days prior to such record date. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of and any interest on this Note are payable or at such other offices or agencies as the Company may designate, duly endorsed by or accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Security Registrar or any transfer agent duly executed by the registered holder hereof or his or her attorney duly authorized in writing, and thereupon one or more new Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Note, the Company, the Trustee, any paying agent and any Note Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Note shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Note Registrar) for the purpose of receiving payment of or on account of the principal hereof and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Note Registrar shall be affected by any notice to the contrary. The Notes of this series are issuable only in fully registered form without coupons in denominations of $25 and any integral multiple thereof. This Global Note is exchangeable for Notes in definitive form only under certain limited circumstances set forth in the Indenture. Notes of this series so issued are issuable only in registered form without coupons in 6 22 denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series of a different authorized denomination, as requested by the registered holder surrendering the same. As set forth in, and subject to the provisions of, the Indenture, no registered owner of any Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless (i) such registered owner shall have previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes of this series, (ii) the registered owners of not less than 25% in principal amount of the outstanding Notes of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, (iii) the Trustee shall have failed to institute such proceeding within 60 days and (iv) the Trustee shall not have received from the registered owners of a majority in principal amount of the outstanding Notes of this series a direction inconsistent with such request within such 60-day period; provided, however, that such limitations do not apply to a suit instituted by the registered owner hereof for the enforcement of payment of the principal of or any interest on this Note on or after the respective due dates expressed herein, subject to deferral as set forth herein. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 7 23 IN WITNESS WHEREOF, the Company has caused this Instrument to be executed. THE DETROIT EDISON COMPANY By_____________________________ Attest: By_______________________________________ [Corporate Seal] CERTIFICATE OF AUTHENTICATION This is one of the Notes of the series of Notes described in the within mentioned Indenture. BANKERS TRUST COMPANY as Trustee By__________________________ Authorized Signatory Date: 8 24 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ________________________________________________________________________________ (Please insert Social Security or Other Identifying Number of Assignee) ________________________________________________________________________________ (Please print or type name and address, including zip code of assignee) the within Note and all rights thereunder, hereby irrevocably constituting and appointing such person attorneys to transfer the within Note on the books of the Issuer, with full power of substitution in the premises. Dated:________________________ NOTICE: The signature of this assignment must correspond with the name as written upon the face of the within Note in every particular, without alteration or enlargement or any change whatever and NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of the Securities Transfer Agents Medallion Program ("STAMP"), the Stock Exchange, Inc. Medallion Signature Program ("MSP"). When assignment is made by a guardian, trustee, executor or administrator, an officer of a corporation, or anyone in a representative capacity, proof of his or her authority to act must accompany this Note. 9 EX-4.194 3 EX-4.194 1 EXHIBIT 4.194 FORM OF SUPPORT AGREEMENT BETWEEN DTE ENERGY COMPANY AND DTE CAPITAL CORPORATION THIS SUPPORT AGREEMENT, dated as of June 16, 1998, is between DTE ENERGY COMPANY, a Michigan corporation ("Parent"), and DTE CAPITAL CORPORATION, a Michigan corporation ("Subsidiary"). WHEREAS, Parent is the owner of 100% of the outstanding common stock of Subsidiary; WHEREAS, Subsidiary intends to issue $100,000,000 aggregate principal amount of debt securities (hereinafter referred to as the "Debt Securities," and such amount and all interest and other amounts, if any, payable with respect thereto being hereinafter collectively referred to as "Debt") to parties other than Parent pursuant to the Indenture dated as of June 15, 1998 (as amended or supplemented with respect to the Debt Securities, the "Indenture") between Subsidiary and The Bank of New York (or any successor or replacement trustee), as trustee (the "Trustee"); WHEREAS, Parent and Subsidiary desire to take certain actions to enhance and maintain the financial condition of Subsidiary as hereinafter set forth in order to enable Subsidiary and its subsidiaries to incur indebtedness on more advantageous and reasonable terms; and WHEREAS, the Lenders (as defined below) will rely upon this Agreement in making loans or extending credit or otherwise acquiring Debt Securities of Subsidiary. NOW THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Stock Ownership. During the term of this Agreement, Parent will own directly or indirectly all of the voting common stock of Subsidiary and The Detroit Edison Company ("DECO") now or hereafter issued and outstanding. 2. Negative Pledge. During the term of this Agreement, Parent will not create or suffer to exist any lien, security interest or other charge of encumbrance, upon or with respect to any voting common stock of DECO from time to time owned directly or indirectly by Parent or 2 any capital stock of Subsidiary from time to time owned directly or indirectly by Parent, provided, however, that any restriction on the payment of dividends by DECO or Subsidiary contained in any subordinated debt instrument, preferred stock or preference stock of DECO or Subsidiary shall not constitute a lien, security interest or other charge or encumbrance. 3. Liquidity Provision. If, during the term of this Agreement, Subsidiary is unable to make timely payment on the relevant payment date of interest, principal or premium, if any, on, or other amounts due in respect of, all or any portion of the Debt Securities issued by it or related Debt, Parent promptly shall provide to Subsidiary, at its request, such funds (in the form of cash or liquid assets) in an amount sufficient to permit Subsidiary to make timely payment on the relevant payment date in respect of such Debt as equity or as a loan, as Parent shall determine in its sole discretion. If such funds are advanced to Subsidiary as a loan, such loan shall be on such terms and conditions, including maturity and rate of interest, as Parent and Subsidiary shall agree. Notwithstanding the foregoing, any such loan shall be subordinated to any and all debt of Subsidiary owing to any lender (including any Lender) other than Parent. Each of the parties hereto acknowledges that Parent's obligations hereunder do not constitute a guarantee by Parent of Debt of Subsidiary. As used herein, the term "Lender" shall mean (i) any person, firm, corporation or other entity to which Subsidiary is indebted for any Debt or which is acting as the Trustee or a trustee or authorized representative on behalf of such person, firm corporation or other entity or which is acting as SPURS Agent (as defined in the Indenture), and (ii) Citicorp Securities, Inc. and Salomon Brothers Inc, and their respective successors (the "Initial Purchasers"), with respect to Debt owing by Subsidiary to the Initial Purchasers in accordance with the terms of that certain Purchase Agreement, dated as of June 16, 1998, relating to the Debt Securities; provided that, notwithstanding the foregoing, the claims of the Initial Purchasers shall be subordinated to the claims of the holders of the Debt Securities and the Insurer (as defined below) hereunder. 4. Waivers. Parent hereby waives any failure or delay on the part of Subsidiary in asserting or enforcing any of its rights or in making any claims or demands hereunder. Subsidiary or any Lender may at any time, without Parent's consent, without notice to Parent and without affecting or impairing Subsidiary's or such Lender's rights or Parent's obligations hereunder, do any of the following with respect to any Debt: (a) make changes, modifications, amendments or alterations, by operation of law or otherwise, including, without limitation, any changes in the rate of interest payable thereon or any changes in the method of calculating the rate of interest payable thereon, (b) grant renewals and extensions and extensions of time, for payment or otherwise, (c) accept new or additional documents, instruments or agreements relating to or in substitution of said Debt, or (d) otherwise handle the enforcement of their respective rights and remedies in accordance with their business judgment. 5. Amendment; Suspension. This Agreement may be amended or terminated at any time by written amendment or agreement signed by both parties; provided that such amendment or termination does not adversely affect the rights of the Initial Purchasers; and provided further, however, that except as set forth in the next succeeding sentence, no amendment to the Agreement which adversely affects the rights of Subsidiary or any Lender and no termination of 2 3 this Agreement shall be effective as to Subsidiary or any Lender until such time as all Debt owing to such Lender by Subsidiary on the date of such amendment or termination shall have been paid in full, unless such Lender shall consent in writing to the contrary. Notwithstanding the foregoing, (A) upon not less than 30 days prior notice to the applicable Remarketing Agent and the Trustee, Subsidiary and Parent may amend this Agreement (subject to the proviso that such amendment shall not adversely affect the rights of the Initial Purchasers) on any Interest Rate Adjustment Date (as defined in the Indenture) for Debt Securities, effective commencing on such Interest Rate Adjustment Date; provided that such amendment shall not be applicable to such Debt Securities until after the Debt Securities have been tendered for remarketing and successfully remarketed on such Interest Rate Adjustment Date; and provided further that no such amendment shall be of such nature as would require (i) registration or re-registration of the Debt Securities under the Securities Act of 1933, as amended (the "Securities Act"), unless Subsidiary has a registration statement under the Securities Act effective with respect thereto or (ii) registration of Subsidiary under the Investment Company Act of 1940, as amended, and (B) Parent's obligations under this Agreement shall be suspended and shall be of no force and effect as to the parties hereto and as to all Lenders if and for so long as (i) Subsidiary shall have a long-term debt rating of not less than "A-" from Standard & Poor's Ratings Services or its successor or a long-term debt rating of not less than "A3" from Moody's Investors Service, Inc. or its successor and (ii) Parent shall have submitted a written request to Subsidiary that its obligations under this Agreement be so suspended (with a copy to the Trustee, if applicable) and shall not have revoked such request in writing. Parent covenants that it will revoke any such request to the extent that the suspension of Parent's obligations under this Agreement has an adverse effect on any debt rating of Subsidiary. For purposes of this Section 5, ratings shall be based upon unsecured non-credit enhanced debt of Subsidiary. 6. Rights of Lenders. Subsidiary hereby assigns and pledges to the Lenders, for the ratable benefit of each Lender (subject to the subordination of claims of the Initial Purchasers pursuant to Section 3 hereof), Subsidiary's right under Sections 1, 2, 3 and 4 of this Agreement, and, if Subsidiary fails or refuses to take timely action to enforce its rights under Section 1, 2, 3 or 4 of this Agreement, any Lender may enforce such rights on behalf of Subsidiary directly against Parent. Parent hereby consents to such assignment and pledge. This assignment and pledge secures all obligations of Subsidiary under the Debt. Subsidiary and Parent agree, for the benefit of the Lenders to execute and deliver all further instruments and documents, and take all further action, that the Lenders may request in order to perfect and protect any security interest purported to be granted hereby or to enable the Lenders to enforce their rights and remedies hereunder. 7. Parity. Parent's obligations hereunder shall be pari passu with Parent's obligations under any existing as well as additional "make-well," "keep-well" or support agreements (that are not by their terms subordinated) as are entered into between Parent and Subsidiary from time to time. 8. Notices. Any notice, instruction, request, consent, demand or other communication required or contemplated by this Agreement shall be in writing, shall be given or 3 4 made by United States first class mail, telex, facsimile transmission or hand delivery, addressed as follows: If to Parent: 2000 2nd Avenue Detroit, Michigan 48226-1279 Attention: Assistant Treasurer-Banking If to Subsidiary: 2000 2nd Avenue Detroit, Michigan 48226-1279 Attention: Assistant Treasurer 9. Successors. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and is also intended for the benefit of Lenders, and, notwithstanding that such Lenders are not parties hereto, each Lender shall be entitled to the full benefits of this Agreement and to enforce the covenants and agreements contained herein as set forth in Section 6. This Agreement is not intended for the benefit of any person other than Lenders and shall not confer or be deemed to confer upon any such person any benefits, rights or remedies hereunder. 10. Governing Law. This Agreement shall be governed by the laws of the State of New York. 11. Insurer Provisions. (a) Notwithstanding anything to the contrary herein, if a Financial Guaranty Insurance Policy (hereinafter the "Policy") issued by MBIA Insurance Corporation (the "Insurer") is in effect with respect to any Debt Securities and the Insurer is not in default with respect to its obligations under the Policy, the Insurer shall be deemed a Lender for all purposes of this Agreement and shall possess the same rights, in all respects, as any Lender under this Agreement for such time as the Policy is in effect and the Insurer shall possess the exclusive right to exercise or direct the exercise of the rights of all Lenders in accordance with the terms of this Agreement. (b) For so long as the Policy is in effect or the Insurer is a holder of any Debt Securities, this Agreement shall not be amended or terminated without the prior written consent of the Insurer, and the Insurer's consent shall be required for any action by the Subsidiary or Parent that would require the Lenders' consent under the terms of this Agreement. (c) Notwithstanding anything to the contrary herein, for so long as a Policy is in effect or the Insurer is a holder of any Debt Securities, the Parent's obligations hereunder shall not be suspended pursuant to Section 5 of this Agreement. 4 5 IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be duly executed as of the day and year first above written. DTE ENERGY COMPANY By:______________________________ Name: Title: DTE CAPITAL CORPORATION By:______________________________ Name: Title: 5 EX-4.196 4 EX-4.196 1 EXHIBIT 4-196 DTE CAPITAL CORPORATION TO THE BANK OF NEW YORK TRUSTEE _________________ INDENTURE DATED AS OF JUNE 15, 1998 _________________ DEBT SECURITIES 2 Table of Contents ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Page SECTION 101. Definitions.....................................................................................1 SECTION 102. Compliance Certificates and Opinions............................................................9 SECTION 103. Form of Documents Delivered to Trustee..........................................................9 SECTION 104. Acts of Holders................................................................................10 SECTION 105. Notices, Etc...................................................................................12 SECTION 106. Notice to Holders of Securities; Waiver........................................................13 SECTION 107. Language of Notice, Etc........................................................................14 SECTION 108. Trust Indenture Act............................................................................14 SECTION 109. Effect of Headings And Table of Contents.......................................................14 SECTION 110. Successors and Assigns.........................................................................14 SECTION 111. Separability Clause............................................................................14 SECTION 112. Benefits of Indenture..........................................................................14 SECTION 113. Governing Law..................................................................................14 SECTION 114. Legal Holidays.................................................................................14 SECTION 115. Corporate Obligation...........................................................................15 ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally................................................................................15 SECTION 202. Form of Trustee's Certificate of Authentication................................................15 SECTION 203. Securities in Global Form......................................................................16 ARTICLE THREE THE SECURITIES SECTION 301. Amount Unlimited: Issuable in Series...........................................................17 SECTION 302. Denominations..................................................................................23 SECTION 303. Execution; Authentication; Delivery and Dating.................................................23 SECTION 304. Temporary Securities; Exchange of Temporary Securities.........................................24 SECTION 305. Registration...................................................................................25 SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities and Coupons...................................28 SECTION 307. Payment of Interest; Interest Rights Preserved.................................................29 SECTION 308. Persons Deemed Owners..........................................................................30 SECTION 309. Cancellation...................................................................................31 SECTION 310. Computation of Interest........................................................................32 SECTION 311. Support Agreement..............................................................................32 SECTION 312. CUSIP Numbers..................................................................................32
i 3 ARTICLE FOUR SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture........................................................32 SECTION 402. Application of Trust Money.....................................................................33 SECTION 403. Satisfaction, Discharge and Defeasance of Securities of any Series.............................34 SECTION 404. Reinstatement..................................................................................35 ARTICLE FIVE REMEDIES SECTION 501. Events of Default..............................................................................35 SECTION 502. Acceleration of Maturity: Rescission and Annulment.............................................37 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee................................38 SECTION 504. Trustee May File Proofs of Claim...............................................................39 SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons.......................................................................40 SECTION 506. Application of Money Collected.................................................................40 SECTION 507. Limitation on Suits............................................................................40 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium, Interest and Additional Amounts.............................................................................41 SECTION 509. Restoration of Rights and Remedies.............................................................41 SECTION 510. Rights and Remedies Cumulative.................................................................41 SECTION 511. Delay or Omission Not Waiver...................................................................42 SECTION 512. Control by Holders of Securities...............................................................42 SECTION 513. Waiver of Past Defaults........................................................................42 SECTION 514. Undertaking for Costs..........................................................................43 SECTION 515. Waiver of Stay or Extension Laws...............................................................43 ARTICLE SIX THE TRUSTEE SECTION 601. Notice of Defaults.............................................................................43 SECTION 602. Certain Rights of Trustee......................................................................44 SECTION 603. Not Responsible for Recitals or Issuance of Securities.........................................45 SECTION 604. May Hold Securities............................................................................45 SECTION 605. Money Held in Trust............................................................................45 SECTION 606. Compensation and Reimbursement.................................................................46 SECTION 607. Corporate Trustee Required; Eligibility........................................................46 SECTION 608. Disqualification, Conflicting Interests........................................................47 SECTION 609. Resignation and Removal; Appointment of Successor..............................................47 SECTION 610. Acceptance of Appointment by Successor.........................................................48 SECTION 611. Merger, Conversion, Consolidation or Succession to Business....................................49 SECTION 612. Preferential Collection of Claims Against the Company..........................................50 SECTION 613. Appointment of Authenticating Agent............................................................50
ii 4 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders......................................52 SECTION 702. Preservation of Information; Communications to Holders.........................................52 SECTION 703. Reports by Trustee.............................................................................52 SECTION 704. Reports by Company.............................................................................53 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, Etc...................................................................55 SECTION 802. Successor Person Substituted...................................................................56 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders.............................................56 SECTION 902. Supplemental Indentures with Consent of Holders................................................58 SECTION 903. Execution of Supplemental Indentures...........................................................59 SECTION 904. Effect of Supplemental Indentures..............................................................59 SECTION 905. Conformity with Trust Indenture Act............................................................59 SECTION 906. Reference in Securities to Supplemental Indentures.............................................59 ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest.....................................................59 SECTION 1002. Maintenance of Office or Agency................................................................60 SECTION 1003. Money for Securities Payments to Be Held in Trust..............................................61 SECTION 1004. Additional Amounts.............................................................................62 SECTION 1005. Existence......................................................................................63 SECTION 1006. Payment of Taxes and Other Claims..............................................................63 SECTION 1007. Change in Nature of Business...................................................................63 SECTION 1008. Accounting Changes.............................................................................63 SECTION 1009. Statement by Officers as to Default............................................................63 SECTION 1010. Waiver of Certain Covenants....................................................................64 ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Applicability of Article.......................................................................64 SECTION 1102. Election to Redeem; Notice to Trustee..........................................................64 SECTION 1103. Selection by Trustee of Securities to Be Redeemed..............................................64 SECTION 1104. Notice of Redemption...........................................................................65 SECTION 1105. Deposit of Redemption Price....................................................................66 SECTION 1106. Securities Payable on Redemption Date..........................................................66 SECTION 1107. Securities Redeemed in Part....................................................................67
5
ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article.......................................................................67 SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..........................................68 SECTION 1203. Redemption of Securities for Sinking Fund......................................................68 ARTICLE THIRTEEN MEETINGS OF HOLDERS OF SECURITIES SECTION 1301. Purposes for Which Meetings May Be Called......................................................68 SECTION 1302. Call, Notice and Place of Meetings.............................................................69 SECTION 1303. Persons Entitled to Vote at Meetings...........................................................69 SECTION 1304. Quorum; Action.................................................................................69 SECTION 1305. Determination of Voting Rights; Conduct and Adjournment of Meetings............................70 SECTION 1306. Counting Votes and Recording Action of Meetings................................................71
iv 6 INDENTURE, dated as of June 15, 1998, between DTE CAPITAL CORPORATION, a corporation duly organized and existing under the laws of the State of Michigan (herein called the "Company"), having its principal office at 2000 Second Avenue, Detroit, Michigan 48226, and THE BANK OF NEW YORK, a New York banking corporation, as Trustee (herein called the "Trustee"), the office of the Trustee at which at the date hereof its corporate trust business is principally administered being 101 Barclay Street, Floor 21W, New York, New York 10286. RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture (as hereinafter defined) to provide for the issuance from time to time of its debt securities (herein called the "Securities"), to be issued in one or more series as in this Indenture provided. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders (hereinafter defined) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to themtherein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP, and, except as otherwise herein expressly provided, the term "GAAP" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America at the date of such computation; and (4) the words, "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. 7 Certain terms, used principally in certain Articles hereof, are defined in those Articles. "Accountant" means any Person engaged in the practice of accounting who (except when this Indenture provides that an Accountant must be Independent) may be employed by or affiliated with the Company or an Affiliate of the Company. "Act", when used with respect to any holder of a Security, has the meaning specified in Section 104. "Additional Amounts" means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes imposed on Holders specified therein and which are owing to such Holders. "Affiliate" of any specified Person means any other person on directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting Securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any person authorized by the Trustee pursuant to Section 613 to act on behalf of the Trustee to authenticate Securities of one or more series. "Authorized Newspaper" means a newspaper, in the English language or in an official language of the country of publication, customarily published on each Business Day, whether or not published an Saturdays, Sundays or holidays, and of general circulation in the place in which publication is required under the terms hereof or under the terms of a Security or in the financial community of such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any Business Day. "Bearer Security" means any Security established pursuant to Section 201 which is payable to bearer including, without limitation, unless the context otherwise indicates, a Security in temporary or permanent global bearer form. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee. "Business Day", when used with respect to any Place of Payment or any other particular location referred to in this Indenture or in the Securities, means, unless otherwise specified with respect to any Securities pursuant to Section 301, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment, the State 2 8 of Michigan or other location are authorized or obligated by or pursuant to law or executive order to close. "Cedel" means Cedel Bank, societe anonyme, a corporation organized under the laws of the Grand Duchy of Luxembourg or, if any time after the execution of this instrument Cedel is not existing and performing the duties now being performed by it, then the successor Person performing such duties. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President, a Vice President, its Treasurer, an Assistant Treasurer, its Controller, an Assistant Controller, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Corporate Trust Office" means the principal office of the Trustee in The City of New York, at which at any particular time its corporate trust business shall be principally administered, which office at the date hereof is that indicated in the introductory paragraph of this Indenture. "Corporation" means a corporation, association, company, joint-stock company or business trust. "Coupon" means any interest coupon appertaining to a Bearer Security. "Debt" of any Person at any date of determination means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days incurred in the ordinary course of such Person's business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) all obligations of such Person in respect of interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements, (h) all Debt of others referred to in clauses (a) 3 9 through (g) above or clause (i) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such person through an agreement (1) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (i) all Debt referred to in clauses (a) through (h) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. "DECO" means The Detroit Edison Company, a Michigan corporation and a regulated public utility. "Defaulted Interest" has the meaning specified in Section 307. "Dollar" or "$" means a dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts. "DTE Energy" means DTE Energy Company, a Michigan corporation and an exempt holding company under the Public Utility Holding Company Act of 1935, as amended. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System, or, if at any time after the execution of this instrument Morgan Guaranty Trust Company of New York, Brussels Office, is not existing and performing the duties now being performed by it, then the successor Person performing such duties. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Event of Default" has the meaning specified in Section 501. "Exchange Date" has the meaning specified in Section 304. "Exchange Rate" has the meaning specified in Section 501. "GAAP" means generally accepted accounting principles, as in effect from time to time, as used in the United States applied on a consistent basis. "Holder", when used with respect to any Security, means in the case of a Registered Security the Person in whose name the Security is registered in the Security Register and in the case of a Bearer Security the bearer thereof and, when used with respect to any coupon, means the bearer thereof. 4 10 "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Independent", when used with respect to any specified Person, means such a Person who is in fact independent of the Company and any other obligor upon the Securities, does not have any direct financial interest or any material indirect financial interest in the Company or in any such other obligor or in an Affiliate of the Company or such other obligor and is not connected with the Company or any such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions. Whenever it is herein provided that an opinion or certificate of any Independent Person shall be furnished to the Trustee, such Person shall be appointed by Company Order and approved by the Trustee in the exercise of reasonable care and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. "Interest", when used with respect to an original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity and, with respect to any Security which provides for the payment of Additional Amounts pursuant to Section 1004, includes such Additional Amounts. "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. "Judgment Currency" has the meaning specified in Section 506. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof or any agreement to give any security interest). "Maturity", when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity, by declaration of acceleration, upon any redemption or otherwise. "Officers' Certificate" means a certificate signed by (i) the Chairman of the Board, the President or a Vice President of the Company, and (ii) the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel who shall be acceptable to the Trustee and, where applicable, the Company which counsel may be counsel for or an employee of the Company. "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. 5 11 "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore cancelled by the Security Registrar or Authenticating Agent or delivered to the Security Registrar or an Authenticating Agent for cancellation; (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities and any coupons thereto appertaining; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee or Authenticating Agent proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder or whether a quorum is present at a meeting of Holders of Securities (a) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the principal amount thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof pursuant to Section 502, (b) the principal amount of a Security denominated in a foreign currency shall be the U.S. dollar equivalent, determined on the date of original issuance of such Security by the Company in good faith, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent, determined on the date of original issuance of such Security, of the amount determined as provided in (a) above) , of such Security, and (c) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver or upon any such determination as to the presence of a quorum, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person, including the Company, authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. 6 12 "Person" means any individual, partnership, corporation (including a business trust), joint-stock company, trust, unincorporated association, joint venture, limited liability company or other entity or a government or any political subdivision or agency thereof. "Place of Payment", when used with respect to the Securities of any series, means the Corporate Trust Office of the Trustee or such place or places specified in a supplemental indenture where, subject to the provisions of Section 1002, the principal of (and premium, if any) and interest on the Securities of that series are payable as specified in accordance with Section 301. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security or a Security to which a mutilated, destroyed, lost or stolen coupon appertains shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security or the Security to which the mutilated, destroyed, lost or stolen coupon appertains, as the case may be. "Redemption Date", when used with respect to any Security or portion thereof to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security or portion thereof to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registered Security" means any Security established pursuant to Section 201 which is registered in the Security Register. "Regular Record Date" for the interest payable on any Interest Payment Date on the Registered Securities of any series means the date, if any, specified in such Security as the "Regular Record Date". "Responsible Officer", when used with respect to the Trustee, means any officer within the Corporate Trust Division, Trustee Administration (or any successor group of the Trustee), including any vice president, any assistant vice president, the secretary, any assistant secretary, any trust officer or assistant trust officer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture. "Securities Act" means the Securities Act of 1933, as amended. "Security Register" has the meaning specified in Section 305. "Security Registrar" means the Person appointed by the Company to register Registered Securities and transfers of Registered Securities as provided in Section 305. 7 13 "Special Record Date" for the payment of any Defaulted Interest on the Registered Securities of any series means the date determined pursuant to Section 307. "Stated Maturity", when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security or a coupon representing such installment of interest as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Support Agreement" means an agreement, by and between the Company and DTE Energy, in support of any series of Debt Securities. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that Series. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, and any reference herein to the Trust Indenture Act or a particular provision thereof shall mean such Act or provision, as the case may be, as amended or replaced from time to time or as supplemented from time to time by rule or regulations adopted by the Commission under or in furtherance of the purposes of such Act or provision, as the case may be except as provided in Section 905. "United States" means the United States of America (including the states thereof and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. "United States Alien" means any Person who, for United States Federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. "U.S. Depositary" or "Depositary" means, with respect to any Security issuable or issued in the form of one or more global Securities, the Person designated as U.S. Depositary by the Company pursuant to Section 301, which must be a clearing agency registered under the Exchange Act, and, if so provided pursuant to Section 301 with respect to any Security, any successor to such Person. If at any time there is more than one such Person, "U.S. Depositary" or 8 14 "Depositary" shall mean, with respect to any Securities, the qualifying entity which has been appointed with respect to such Securities. "Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. SECTION 102. Compliance Certificates and Opinions. Except as otherwise expressly provided by this Indenture, upon any application or request by the Company (i) to the Trustee to take any action under any provision of this Indenture or (ii) to any Authenticating Agent to authenticate Securities of any series upon original issuance, the Company shall furnish to the Trustee or such Authenticating Agent (with a copy to the Trustee) an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, and, in the case of conditions precedent compliance with which is subject to verification by Accountants, engineers, appraisers or other experts, a certificate or opinion of an Accountant, engineer, appraiser or other expert (which Accountant, engineer, appraiser or other expert shall be Independent if required by the Trust Indenture Act) , except that in the case of any such application or request as to which the furnishing of such documents is specifically required by. any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such covenant or condition has been complied with. 9 15 SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Any Opinion of Counsel may be based on the written opinion of other counsel, in which event such Opinion of Counsel shall be accompanied by a copy of such other counsel's opinion and shall include a statement to the effect that such counsel believes that such counsel and the Trustee may reasonably rely upon the opinion of such other counsel. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. If Securities of a series are issuable as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of such series may, alternatively, be embodied in and evidenced by the record of Holders of Securities of such series voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities of such series duly called and held in accordance with the provisions of Article Thirteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and conclusive 10 16 in favor of the Trustee and the Company, if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 1306. Without limiting the generality of this Section 104, unless otherwise established in or pursuant to a Board Resolution or set forth or determined in an Officers' Certificate, or established in one or more indentures supplemental hereto, pursuant to Section 301, a Holder, including a U.S. Depositary that is a Holder of a global Security, may make, give or take, by a proxy, or proxies, duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and a U.S. Depositary that is a Holder of a global Security may provide its proxy or proxies to the beneficial owners of interests in any such global Security through such U.S. Depositary's standing instructions and customary practices. The Trustee or the Company shall fix a record date, which shall be not more than 60 days prior to the first solicitation of such Holders, for the purpose of determining the Persons who are beneficial owners of interest in any permanent global Security held by a U.S. Depositary entitled under the procedures of such U.S. Depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 120 days after such record date. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership, principal amount and serial numbers of Registered Securities held by any Person, and the date of commencement and the date of termination of holding the same, shall be proved by the Security Register. (d) The ownership, principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had 11 17 on deposit with such depositary, or exhibited to it, the Bearer Securities therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (1) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (2) such Bearer Security is produced to the Trustee by some other Person, or (3) such Bearer Security is surrendered in exchange for a Registered Security, or (4) such Bearer Security is no longer Outstanding. The ownership, principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may also be proved in any other manner which the Trustee deems sufficient. (e) If the Company shall solicit from the Holders of any Registered Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may at its option, by a Board Resolution, fix in advance a record date, which shall be not more than 60 days prior to the first solicitation of such Holders, for the determination of Holders of Registered Securities entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of Registered Securities of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. (f) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. Notices, Etc., to Trustee and Company. SECTION 105. Notices, etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office and unless otherwise herein expressly provided, any such document shall be deemed to be sufficiently made, given, furnished or filed upon its receipt by a Responsible Officer of the Trustee, or 12 18 (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument, or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders of Securities; Waiver. Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of Securities of any event, (1) such notice shall be sufficiently given to Holders of Registered Securities if in writing and mailed, first-class postage prepaid, to each Holder of a Registered Security affected by such event, at the address of such Holder as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice; and (2) such notice shall be sufficiently given to Holders of Bearer Securities if published on a Business Day in an Authorized Newspaper in The City of New York and in such other city or cities as may be specified in such Securities, at least twice, each such publication to be not earlier than the earliest date, and not later than the latest date, prescribed for the giving of such notice. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders of Registered Securities by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case where notice to Holders of Registered Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Registered Security, shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice to Holders of Bearer Securities given as provided herein.. In case by reason of the suspension of publication of any Authorized Newspaper or Authorized Newspapers or by reason of any other cause it shall be impracticable to publish any notice to Holders of Bearer Securities as provided above, then such notification to Holders of Bearer Securities as shall be given with the approval of the Trustee shall constitute sufficient notice to such Holders for every purpose hereunder. Neither the failure to give notice by publication to Holders of Bearer Securities as provided above, nor any defect in any notice so published, shall affect the sufficiency of any notice mailed to holders of Registered Securities given as provided herein. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of Securities shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. 13 19 SECTION 107. Language of Notice, Etc. Any request, demand, authorization, direction, notice, consent or waiver required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication. SECTION 108. Trust Indenture Act. The parties hereto agree that this Indenture shall be subject to the provisions of the Trust Indenture Act that are required to be part of an Indenture to be qualified under the Trust Indenture Act, and that all provisions which the Trust Indenture Act provides as automatically deemed to be included in an indenture to be qualified thereunder shall be included herein. In the event of any conflict between the provisions hereof and the provisions of the Trust Indenture Act, the provisions of the Trust Indenture Act shall control. SECTION 109. Effect of Headings And Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 110. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 111. Separability Clause. In case any provision in this Indenture or the Securities or coupons shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 112. Benefits of Indenture. Nothing in this Indenture or the Securities or coupons, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder and the Holders of Securities and coupons, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 113. Governing Law. This Indenture and the Securities and coupons shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in such state. SECTION 114. Legal Holidays. Except as specified pursuant to Section 301, in any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, or where any date on which notice is required to be mailed or published shall 14 20 not be a Business Day at the Corporate Trust Office, then (notwithstanding any other provision of this Indenture or of the Securities or coupons other than a provision in the Securities of any series which specifically states that such provision shall apply in lieu of this Section) payment of interest or principal (and premium, if any) or mailing or publication of such notice need not be made at such Place of Payment or at such Corporate Trust Office on such date, but may be made, mailed or published on the next succeeding Business Day at such Place of Payment or at such Corporate Trust Office with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, or other required date for the mailing or publication of such notice, as the case may be, and in the case of payment to be made on any such Security, no interest shall accrue or be payable as a result of the making of such payment after any such nominal date, provided such payment is made in full on such next succeeding Business Day. SECTION 115. Corporate Obligation. No recourse may be taken, directly or indirectly, against any incorporator, subscriber to the capital stock, stockholder, officer, director or employee of the Company or the Trustee or of any predecessor or successor of the Company or the Trustee with respect to the Company's obligations on the Securities or the obligations of the Company or the Trustee under this Indenture or any certificate or other writing delivered in connection herewith or therewith except as otherwise expressly provided in any such certificate or other writing. ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. The Registered Securities, if any, of each series and the Bearer Securities, if any, of each series and related coupons shall be in such form (including temporary or permanent global form) as shall be authorized by a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any Securities exchange or as may, consistently herewith, be determined by the officers executing such Securities or coupons, as evidenced by their execution of the Securities or coupons. Unless otherwise specified as contemplated by Section 301, Bearer Securities other than Bearer Securities in global form shall have interest coupons attached. The definitive Securities and coupons, if any, shall be printed, typewritten, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities or coupons. SECTION 202. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: 15 21 This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. The Bank of New York as Trustee By __________________________________ Authorized Signatory SECTION 203. Securities in Global Form. If Securities of a series are issuable in global form, then any such Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced to reflect exchanges. Any endorsement of a Security in global form to reflect the amount, or any increase or decrease in the amount, of outstanding Securities represented thereby shall be made by the Security Registrar in such manner and upon instructions given by such Person or Persons as shall be specified in such Security or in a Company Order delivered to the Security Registrar with such Security. Subject to the provisions of Section 303 and, if applicable, Section 304, the Trustee or Authenticating Agent shall deliver and redeliver any Security in permanent global form in the manner and upon instructions given by the Person or Persons specified in such Security or in a Company Order delivered pursuant to Section 303 or Section 304, as applicable. If a Company Order pursuant to Section 303 or Section 304 has been, or simultaneously is, delivered, any instructions by the Company with respect to endorsement or delivery or redelivery of a Security in global form shall be in writing but need not comply with Section 102 and need not be accompanied by an Opinion of Counsel. The provisions of the last sentence of Section 303 shall apply to any Security in global form if such Security was never issued and sold by the Company and the Company delivers to the Security Registrar the Security in global form together with written instructions (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) (a copy of which instructions shall be delivered to the Trustee) with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 303. Notwithstanding the provisions of Section 307, unless otherwise specified as contemplated by Section 301, payment of principal of (and premium, if any) and interest on any Security in permanent global form shall be made to the Holder thereof. Notwithstanding the provisions of Section 308 and except as provided in the preceding paragraph, the Company, the Trustee and any agent of the Company or of the Trustee shall treat a Person as the Holder of such principal amount of Outstanding Securities represented by a global Security (i) in the case of a permanent global Security in registered form, the Holder of such permanent global Security in registered form, or (ii) in the case of a permanent global Security in Bearer form, the Person or Persons as may be specified pursuant to Section 301. 16 22 ARTICLE THREE THE SECURITIES SECTION 301. Amount Unlimited: Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to one or more Board Resolutions, and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto: (1) the title of the Securities of the series in which such Securities shall be included; (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder) (3) whether Securities of the series are to represent senior or subordinated indebtedness of the Company; (4) whether Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Securities of the series are to be issuable with or without coupons or both, whether any Securities of the series are to be issuable initially in temporary global form and whether any Securities of the series are to be issuable in permanent global form and, if so, whether beneficial owners of interests in any such permanent global Security may exchange such interests for Securities of such series and of like tenor of any authorized form and denomination and the circumstances under which any such exchanges may occur, if other than in the manner provided in Section 305, the name of the Depositary or the U.S. Depositary, as the case may be, with respect to such global Security; (5) (i) the Person to whom any interest on any Registered Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, (ii) the manner in which, or the Person to whom, any interest on any Bearer Security of the series shall be payable, if otherwise than upon presentation and surrender of the coupons appertaining thereto as they severally mature, and (iii) the extent to which, or the manner in which, any interest payable on a temporary global Security on an Interest Payment Date will be paid if other than in the manner provided in Section 304; 17 23 (6) the date or dates on which the principal (and premium, if any) of the Securities of the series is payable or the method of determination thereof; (7) the rate or rates at which the Securities of the series shall bear interest, if any, or the method or methods, if any, pursuant to which such rate or rates shall be determined, the date or dates from which any such interest shall accrue or the method or methods, if any, by which such dates are to be determined, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date, if any, for any interest payable on any Registered Securities on any Interest Payment Date whether and under what circumstances Additional Amounts on such Securities or any of them shall be payable, and the basis upon which interest shall be calculated, if other than that of a 360-day year of twelve 30-day months; (8) the place or places where, subject to the provisions of Section 1002, the principal of (and premium, if any) and interest (including Additional Amounts) on Securities of the series shall be payable, any Registered Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange, notices and demands to or upon the Company in respect of the Securities of the series and this Indenture may be served and where notice to Holders pursuant to Section 106 will be published; (9) whether the Securities of a series or any of them are to be redeemable at the option of the Company and, if so, the date or dates on which, the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company; (10) whether the Company is obligated to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the date or dates on which, the period or period within which, the price or prices at which and the terms and condition upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation and any provision for the remarketing of the Securities of the series so redeemed or purchased; (11) the denominations in which any Registered Securities of the series shall be issuable, if other than the denominations provided in Section 302, and the denomination or denominations in which any Bearer Securities of the series shall be issuable, if other than the denominations provided in Section 302; (12) if other than the principal amount thereof, the portion of the principal amount of the Securities of the series or any of them which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502 or the method by which such portion is to be determined; (13) if other than such coin or currency of the United States of America is at the time of payment legal tender for payment of public or private debts, the coin or currency, composite currencies or currency unit or units in which payment of the 18 24 principal of (and premium, if any) or interest, if any, on or any Additional Amounts in respect of the Securities of the series or any of them shall be payable; (14) if the principal of (and premium, if any) or interest on the Securities of the series are to be payable, at the election of the Company or a Holder thereof, in a coin or currency, composite currencies or currency unit or units other than that in which the Securities are stated to be payable, the currency in which payment of the principal of (and premium, if any) and interest on Securities of such series as to which such election is made shall be payable, and the periods within which and the terms and conditions upon which such election is to be made; (15) whether the amount of payments of principal of (and premium, if any) or interest (including Additional Amounts), if any, on the Securities of the series may be determined with reference to an index, formula or other method (which index, formula or method may be based, without limitation, on one or more currencies, currency units, composite currencies, commodities, equity indices or other indices), and, if so, the terms and conditions upon which and the manner in which such amounts shall be determined and paid or payable; (16) whether the principal of (and premium, if any) or interest (including Additional Amounts), if any, on the Securities of the series are to be payable, at the election of the Company or any Holder thereof or otherwise, in a currency or currencies, currency unit or units or composite currency or currencies other than that in which such Securities or any of them are denominated or stated to be payable, the period or periods within which, and the other terms and conditions upon which, such election, if any, may be made, and the time and manner of determining the exchange rate between the currency or currencies, currency unit or units or composite currency or currencies in which such Securities or any of them are denominated or stated to be payable and the currency or currencies, currency unit or units or composite currency or currencies in which such Securities or any of them are to be so payable; (17) any deletions from, modifications of or additions to the Events of Default or covenants of the Company with respect to the Securities of the series or any of them, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein; (18) if the Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, then the form and terms of such certificates, documents or conditions; (19) with respect to any Securities that may be issued in a private offering, the restrictions on transfer and legends relating to such Securities of the series and whether Securities of the series are entitled to registration or exchange rights; 19 25 (20) if there is more than one Trustee, the identity of the Trustee and, if not the Trustee, the identity of each Security Registrar, Paying Agent and/or Authenticating Agent with respect to the Securities of the series; (21) whether the Securities or such series will be entitled to the benefit of a Support Agreement between the Company and DTE Energy, or other form of credit enhancement; (22) whether any of the Securities of a series shall be issued as Original Issue Discount Securities; (23) whether a credit facility or other form of credit support will apply to Securities of such series, which may be different from any credit facility for any other series; and (24) any other terms of the Securities of the series or any of them (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series, and the coupons appertaining to any Bearer Securities of such series, shall be substantially identical except as to denomination and the rate or rates of interest, if any, and Stated Maturity, the date from which interest, if any, shall accrue and except as may otherwise be provided by the Company in or pursuant to one or more Board Resolutions and set forth in such Officers' Certificate or in any indenture or indentures supplemental hereto pertaining to such series of Securities. All Securities of any one series need not be issued at the same time and, unless otherwise so provided by the Company, a series may be reopened for issuances of additional Securities of such series or to establish additional terms of such series of Securities. If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action (including but not limited to such Board Resolution) shall be certified by the Secretary or an Assistant Secretary of the Company or certified by Company Order and delivered to the Trustee at or prior to the delivery of the Officers' Certificate or Company Order setting forth the terms of the series. The Trustee shall be entitled to receive the following only at or before the issuance of the first Security of each series issued under this Indenture: (a) Opinion(s) of Counsel. Opinion(s) of Counsel (such counsel being entitled to rely upon certificates, opinions or by Section 103 and, as to matters involving the laws of any state other than the state in which such counsel is admitted to practice, upon an Opinion of Counsel who shall be satisfactory to the Trustee) complying with the requirement of Section 102, if applicable, containing such qualifications and assumptions as may be appropriate in the circumstances, and addressed to the Trustee substantially to the effect that: (i) the Company is a corporation duly organized and validly existing in good standing under the laws of the State of Michigan, with corporate power and authority to own its properties and conduct its business as currently conducted; 20 26 (ii) the Indenture and, if applicable, any supplemental indenture that is permitted by Sections 201 and 301 and which relates to the series of Securities to which such opinion relates, have been duly authorized, executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company, enforceable (except for Section 111 of the Indenture as to which no opinion need be expressed) in accordance with their terms (assuming the due authorization, execution and delivery thereof by the Trustee), except as such enforceability is subject to the effect of any applicable bankruptcy, insolvency, reorganization or other law relating to or affecting creditors' rights generally and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (iii) the execution and delivery of the Indenture and, if applicable, any supplemental indenture that is permitted by Sections 201 and 301 and which relates to the series of Securities to which such opinion relates, do not and, assuming no change in the facts existing on the date such opinion is rendered, the performance of and compliance with the terms and provisions of the Indenture and, if applicable, any such supplemental indenture, will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any existing statute, rule, regulation or order of any governmental agency or body or any court having jurisdiction over the Company or any of its properties or, to the best of the knowledge of such counsel, any existing agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the properties of the Company is subject, or the existing charter or bylaws of the Company; (iv) if applicable, the Indenture has been duly qualified under the Trust Indenture Act. (v) the series of Securities to which such opinion relates, together with any coupons appertaining thereto, have been duly and validly authorized by all necessary corporate action on the part of the Company, and any such Security, when the terms thereof have been established in accordance with the terms of the Indenture and when such Security has been executed and authenticated in accordance with the terms of the Indenture (assuming the due authentication, execution and delivery thereof by the Trustee or any Authenticating Agent, which fact counsel need not verify by an inspection of such Securities) and delivered and paid for in accordance with the terms of any underwriting agreement, agency agreement or other agreement providing for the sale thereof, will constitute (assuming no change in the facts or in the law and governmental rules and regulations, in either case in existence on the date such Opinion of Counsel is rendered) the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except as such enforceability is subject to the effect of any applicable bankruptcy, insolvency, reorganization or other law relating to or affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); 21 27 (vi) the forms and terms of the series of Securities to which such opinion relates and any coupons related thereto have been established in conformity with the provisions of this Indenture or, if such forms and terms are being established pursuant to one or more instruments being furnished to the Trustee concurrently with the delivery of such opinion, such instruments conform to the requirements of this Indenture; (vii) all instruments furnished to the Trustee in connection with the first issuance of Securities of the series to which such opinion relates (which instrument shall be listed in such opinion) conform to the requirements of this Indenture and, except for (a) Securities of such series, together with any coupons appertaining thereto, to be delivered for authentication subsequent to the date of such opinion pursuant to Section 303, (b) the Company Order(s) to be delivered subsequent to the date of such opinion pursuant to Sections 201, 301 or 303 and (c) any certificate required to be delivered subsequent to the date of such opinion pursuant to paragraph (b) of this Section 301 and (d) any other documents or items required to be delivered subsequent to the date of such opinion pursuant to such instruments, such instruments constitute all the documents required by this Indenture to be delivered hereunder at or before the first issuance of Securities of the series to which the opinion relates; (viii) the Company has good and marketable title to all properties standing of record in its name and improvements thereon, subject to minor exceptions and minor defects, irregularities and deficiencies which, in the opinion of the Company, do not materially impair the use of such property for the purpose for which it is held by the Company; and (ix) if applicable, a registration statement relating to the series of Securities to which such opinion relates has become effective under the Securities Act, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of such registration statement or of any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act. (b) Officers' Certificate. An Officers' Certificate stating that no Event of Default has occurred and is continuing, and the execution and delivery of the Indenture will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, the articles of incorporation or bylaws of the Company, or any order of any court or administrative agency entered in any proceeding to which the Company is a party or by which it is bound or to which it is subject; and (c) Board Resolution. A Board Resolution authorizing this Indenture and, if applicable, any supplemental indenture that is permitted by Sections 201 and 301 and that relates to such series of Securities. 22 28 SECTION 302. Denominations. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, any Registered Securities of a series denominated in Dollars shall be issuable in denominations of $1,000 and any integral multiple thereof and any Bearer Securities of a series denominated in Dollars shall be issuable in the denomination of $5,000. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, any Securities of a series denominated in a currency other than Dollars shall be issuable in denominations that are the equivalent, as determined by the Company by reference to the noon buying rate in The City of New York for cable transfers for such currency, as such rate is reported or otherwise made available by the Federal Reserve Bank of New York, on the applicable trade date for such Securities, of $100,000 (rounded down to an integral multiple of 10,000 units of such currency), and any larger amount that is, as nearly as is practicable, an integral multiple of $1,000. SECTION 303. Execution; Authentication; Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its President, its Treasurer, any Assistant Treasurer or one of its Vice Presidents attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Coupons shall bear the facsimile signature of the Chairman of the Board of the Company, its President, its Treasurer, any Assistant Treasurer or one of its Vice Presidents, attested by its Secretary or one of its Assistant Secretaries. Securities and coupons bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or coupons or did not hold such offices at the date of such Securities or coupons. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series, together with any coupons appertaining thereto, executed by the Company to the Trustee or Authenticating Agent for authentication, together with a Company Order for the authentication and delivery of such Securities and the Trustee or such Authenticating Agent in accordance with the Company Order shall authenticate and deliver such Securities; provided, however, that, in connection with its original issuance, no Bearer Security shall be mailed or otherwise delivered to any location in the United States; and provided further, that a Bearer Security other than a temporary global Bearer Security may be delivered in connection with its original issuance only if Cedel or Euroclear, as the case may be, shall have furnished to the Security Registrar a certificate substantially to the effect that the Person entitled to receive such Bearer Security shall have furnished to Cedel or Euroclear, as the case may be, a certificate substantially in the form set forth in Exhibit A to this Indenture or in such other form of certificate as shall contain information then required by federal income tax laws, dated no earlier than 15 days prior to the earlier of (i) the date on which such Bearer Security is delivered and (ii) the date on which any temporary Security first becomes exchangeable for such Bearer Security in accordance with the terms of such temporary Security and this Indenture. A confirmation shall be sent by the Company or an agent thereof to each purchaser of a Bearer Security. If any Security shall be represented by a permanent global Bearer Security, then, for 23 29 purposes of this Section 303 and Section 304, the notation of a beneficial owner's interest therein upon original issuance of such Security or upon exchange of a portion of a temporary global Security shall be deemed to be delivery in connection with its original issuance of such beneficial owner's interest in such permanent global Bearer Security. Except as permitted by Section 306, the Trustee or Authenticating Agent shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured have been detached and cancelled. The Trustee or any Authenticating Agent shall have the right to decline to authenticate and deliver such Securities if the Trustee or such Authenticating Agent, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee or such Authenticating Agent, in good faith by its board of directors or trustees, executive committee or a trust committee of directors or trustees and/or vice presidents, shall determine that such action would expose the Trustee or such Authenticating Agent to personal liability to existing Holders. Each Registered Security shall be dated the date of its authentication. Each Bearer Security and any temporary Bearer Security in global form shall be dated as of the date specified as contemplated by Section 301. Each Security will also bear an original issue date (the "Issue Date") which, with respect to any Security (or portion thereof), shall mean the date of its original issuance and shall be specified therein. The Issue Date shall remain the same for all Securities subsequently issued upon transfer, exchange or substitution of Securities, regardless of their dates of authentication. No Security or coupon shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee or any Authenticating Agent by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been duly authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Security Registrar for cancellation as provided in Section 309 together with a written statement (which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) (a copy of which statement shall be delivered to the Trustee) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. SECTION 304. Temporary Securities; Exchange of Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and, upon Company Order, the Trustee or an Authenticating Agent, as the case may be, shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in registered form or, if authorized, in bearer form with one or more coupons or without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may 24 30 determine, as evidenced by their execution of such Securities. In the case of any series issuable as Bearer Securities, such temporary Securities may be in global form. Except in the case of temporary Securities in global form (which shall be exchanged in accordance with the provisions thereof), if temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company maintained pursuant to Section 1002 in a Place of Payment for such series for the purpose of exchanges of Securities of such series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series (accompanied by any unmatured coupons appertaining thereto) the Company shall execute and the Trustee or any Authenticating Agent shall authenticate and deliver in exchange therefor a like aggregate principal amount of definitive Securities of authorized denominations of the same series containing identical terms and provisions; provided, however, that no definitive Bearer Security, except as provided pursuant to Section 301, shall be delivered in exchange for a temporary Registered Security; and provided further, that a definitive Bearer Security shall be delivered in exchange for a temporary Bearer Security only in compliance with the conditions set forth in Section 303. Unless otherwise specified as contemplated by Section 301 with respect to a temporary global Security, until so exchanged the temporary Security of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. SECTION 305. Registration. Registration of Transfer and Exchange. The Company shall cause to be kept for each series of Securities at one of the offices or agencies maintained pursuant to Section 1002 a register (each such register being referred to herein as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Registered Securities and the registration of transfers of Registered Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Registered Securities and transfers and exchanges of Registered Securities as herein provided; provided, that the Company may, from time to time, designate (or change any designation of) any other Person or Persons to act as Security Registrar or co-Security Registrars with respect to the Securities of one or more series, with notice to the Trustee and as provided in Section 106 to the Holders. At all reasonable times the Security Register shall be open for inspection by the Company. In the event that the Trustee shall not be the Security Registrar, it shall have the right to examine the Security Register at all reasonable times. Upon surrender for registration of transfer of any Registered Security of any series at the office or agency of the Company maintained pursuant to Section 1002 for such purpose in a Place of Payment for such series, the Company shall execute, and the Trustee or an Authenticating Agent shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of the same series and of like tenor of any authorized denominations and of a like aggregate principal amount and Stated Maturity. 25 31 At the option of the Holder, Registered Securities of any series may be exchanged for other Registered Securities of the same series of any authorized denominations and of a like aggregate principal amount and Stated Maturity, upon surrender of the Securities to be exchanged at any such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee or an Authenticating Agent shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. If specified as contemplated by Section 301 with respect to Securities of any series, at the option of the Holder, Bearer Securities of any series may be exchanged for Registered Securities of the same series and of like tenor, of any authorized denominations and of a like aggregate principal amount and Stated Maturity, upon surrender of the Bearer Securities to be exchanged at any such office or agency, with all unmatured coupons and all matured coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or matured coupon or coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company in an amount equal to the face amount of such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee or an Authenticating Agent if there is furnished to them such Security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of such payment; provided, however, that, except as otherwise provided in Section 1002, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such office or agency in exchange for a Registered Security of the same series and of like tenor after the close of business at such office or agency on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date or proposed date for payment, as the case may be, and interest or Defaulted Interest, as the case may be, will not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee or an Authenticating Agent shall authenticate and deliver, the Securities which the holder making the exchange is entitled to receive. Notwithstanding the foregoing, except as otherwise specified as contemplated by Section 301, any permanent global Security shall be exchangeable only as provided in this paragraph. If the beneficial owners of interests in a permanent global Security are entitled to exchange such interests for Securities of such series and of like tenor and principal amount of another authorized form and denomination as specified as contemplated by Section 301, then without unnecessary delay but in any event not later than the earliest date on which such interests may be 26 32 so exchanged, the Company shall deliver to the Trustee or Authenticating Agent definitive Securities in aggregate principal amount equal to the principal amount of such permanent global Security, executed by the Company. On or after the earliest date on which such interests may be so exchanged, such permanent global Security shall be surrendered by the U.S. Depositary or such other Depositary as shall be specified in the Company Order with respect thereto, to the Trustee or an Authenticating Agent, as the Company's agent for such purpose, to be exchanged, in whole or from time to time in part, for definitive Securities without charge and the Trustee or Authenticating Agent shall authenticate and deliver, in exchange for each portion of such permanent global Security, an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor as the portion of such permanent global Security to be exchanged which, unless the Securities of the series are not issuable both as Bearer Securities and as Registered Securities, as specified as contemplated by Section 301, shall be in the form of Bearer Securities or Registered Securities, or any combination thereof, as shall be specified by the beneficial owner thereof; provided, however, that no such exchanges may occur during a period beginning at the opening of business 15 days before any selection of Securities of that series to be redeemed and ending on the relevant Redemption Date; and provided further, that (unless otherwise specified as contemplated by Section 301) no Bearer Security delivered in exchange for a portion of a permanent global Security shall be mailed or otherwise delivered to any location in the United States. If a Registered Security is issued in exchange for any portion of a permanent global Security after the close of business at the office or agency where such exchange occurs on (i) any Regular Record Date and before the opening of business at such office or agency on the relevant Interest Payment Date, or (ii) any Special Record Date and the opening of business at such office or agency on the related proposed date for payment of Defaulted Interest, interest or Defaulted Interest, as the case may be, will not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of such Registered Security, but will be payable on such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to whom interest in respect of such portion of such permanent global Security is payable in accordance with the provisions of this Indenture. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Registered Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Security Registrar or any transfer agent) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar or any transfer agent duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer. 27 33 Except as otherwise specified as contemplated by Section 301, the Company shall not be required to (i) issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before any selection of Securities of that series to be redeemed and ending at the close of business on (A) if Securities of the series are issuable only as Registered Securities, the day of the mailing of the relevant notice of redemption and (B) if Securities of the series are issuable as Bearer Securities, the day of the first publication of the relevant notice of redemption, or, if Securities of the series are also issuable as Registered Securities and there is no publication, the mailing of the relevant notice of redemption, or (ii) register the transfer of or exchange any Registered Security so selected for redemption, in whole or in part, except the unredeemed portion of any Security being redeemed in part, (iii) exchange any Bearer Security so selected for redemption except that such a Bearer Security may be exchanged for a Registered Security of the same series and of like tenor, provided that such Registered Security shall be simultaneously surrendered for redemption or (iv) issue, register the transfer of or exchange any Security which, in accordance with its terms specified as contemplated by Section 301, has been surrendered for repayment at the option of the Holder, except the portion, if any, of such Security not repaid. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities and Coupons. If any mutilated Security or a Security with a mutilated coupon appertaining to it is surrendered to the Trustee or an Authenticating Agent, the Company shall execute and the Trustee or such Authenticating Agent shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any, appertaining to the surrendered Security. If there shall be delivered to the Company and the Trustee or an Authenticating Agent (i) evidence to their satisfaction of the destruction, loss or theft of any Security or coupon and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee or such Authenticating Agent that such Security or coupon has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee or such Authenticating Agent shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security or in exchange for the Security to which a destroyed, lost or stolen coupon appertains (with all appurtenant coupons not destroyed, lost or stolen), a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding, with coupons corresponding to the coupons, if any, appertaining to such destroyed, lost or stolen Security or to the Security to which such destroyed, lost or stolen coupon appertains. In case any such mutilated, destroyed, lost or stolen Security or coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security or coupon; provided, however, that principal of (and premium, if any) and interest on Bearer Securities shall, except as otherwise provided in Section 1002, be payable only at an office or agency located outside the United States and unless otherwise specified as contemplated by Section 301, any interest on Bearer Securities shall be payable only upon presentation and surrender of the coupons appertaining thereto. 28 34 Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee or Authenticating Agent) connected therewith. Every new Security of any series, with its coupons, if any, issued pursuant to this Section in lieu of any destroyed, lost or stolen Security, or in exchange for a Security to which a destroyed, lost or stolen coupon appertains shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security and its coupons, if any, or the destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and any such new Security and coupons, if any, shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series and of like tenor and their coupons, if any, duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons. SECTION 307. Payment of Interest; Interest Rights Preserved. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency in a Place of Payment for such series) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange of such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. Any interest on any Registered Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest. The Company shall, no less than 15 calendar days prior to the date of the Special Record Date (fixed as set forth below), notify the Trustee and the Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Registered Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Paying Agent an amount of 29 35 money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Paying Agent for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Special Record Date for the payment of such Defaulted Interest shall be the close of business on the tenth calendar day prior to the date of the proposed payment. The Trustee shall in the name and at the expense of the Company, cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Holder of Registered Securities of such series at the address of such Holder as it appears in the Security Register, not less than 10 calendar days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Registered Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). In case a Bearer Security of any series is surrendered at the office or agency in a Place of Payment for such series in exchange for a Registered Security of such series after the close of business at such office or agency on any Special Record Date and before the opening of business at such office or agency an the related proposed date for payment of Defaulted Interest, such Bearer Security shall be surrendered with the coupon relating to such proposed date of payment and Defaulted Interest will not be payable on such proposed date of payment in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such coupon when due in accordance with the provisions of this Indenture. (2) The Company may make payment of any Defaulted Interest on the Registered Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee and the Paying Agent of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Paying Agent. At the option of the Company, interest on the Registered Securities of any series that bears interest may be paid by mailing a check to the address of any Holder as such address shall appear in the Securities Register. Subject to the foregoing provisions of this Section 307 and Section 305, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 308. Persons Deemed Owners. Prior to due presentment of a Registered Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Registered Security is registered as the owner of such Registered Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Sections 30 36 305 and 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. Title to any Bearer Security and any coupons appertaining thereto shall pass by delivery. The Company, the Trustee and any agent of the Company or the Trustee may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Security or coupon be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. No owner of any beneficial interest in any global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such global Security, and such Depositary may be treated by the Company, the trustee, and any agent of the Company or the trustee as the owner of such global Security for all purposes whatsoever. None of the Company, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. SECTION 309. Cancellation. All Securities and coupons surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Security Registrar, be delivered to the Security Registrar. All Registered Securities and matured coupons so delivered shall be promptly cancelled by the Security Registrar. All Bearer Securities and unmatured coupons so delivered shall be held by the Security Registrar and, upon instruction of the Company, shall be cancelled or held for reissuance. Bearer Securities and unmatured coupons held for reissuance may be reissued only in replacement of mutilated, lost, stolen or destroyed Bearer Securities of the same series and of like tenor or the related coupons pursuant to Section 306. All Bearer Securities and unmatured coupons held by the Security Registrar pending such cancellation or reissuance shall be deemed to be delivered for cancellation for all purposes of this Indenture and the Securities. The Company may at any time deliver to the Security Registrar for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever and may deliver to the Security Registrar (or to any Person f or delivery to the Security Registrar) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Security Registrar. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities and coupons held by the Security Registrar shall be disposed of as directed by the Company. 31 37 SECTION 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 311. Support Agreement. If so provided for in a supplemental indenture hereto with respect to a series of Securities, Holders of such series of Securities and coupons and the Trustee will be entitled to the benefits of a Support Agreement on the terms, and subject to the conditions, set forth in such Support Agreement; it being understood and agreed that such series of Securities, including any coupons appertaining thereto, shall constitute Debt (as defined in any such Support Agreement) for purposes of such Support Agreement. SECTION 312. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for, and any right to receive Additional Amounts, as provided in Section 1004), and the Trustee, at the expense of the Company, when (1) either (A) all Securities theretofore authenticated and delivered and all coupons, if any, appertaining thereto (other than (i) coupons appertaining to Bearer Securities surrendered in exchange for Registered Securities and maturing after such exchange, whose surrender is not required or has been waived as provided in Section 305, (ii) Securities and coupons which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (iii) coupons appertaining to Securities called for redemption and maturing after the relevant Redemption Date, whose surrender has been waived as provided in Section 1106, and (iv) Securities and coupons for whose payment money has 32 38 theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Security Registrar for cancellation; or (B) all such Securities and, in the case of (i) or (ii) below, any coupons appertaining thereto not theretofore delivered to the Security Registrar for cancellation (i) have become due and payable; or (ii) will become due and payable at their Stated Maturity within one year; or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities and coupons not theretofore delivered to the Security Registrar for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the rights, privileges and immunities of the Trustee under Article Seven, the obligations of the Company to the Trustee under Section 606, the obligations of the Trustee to any Authenticating Agent under Section 613 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 501 shall be held in trust and applied by it, in accordance with the provisions of the Securities, the coupons and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for the payment of which such money has been deposited with the Trustee. 33 39 SECTION 403. Satisfaction, Discharge and Defeasance of Securities of any Series. If this Section is specified, as contemplated by Section 301, to be applicable to Securities of any series, the Company shall be deemed to have paid and discharged the entire indebtedness on all the Outstanding Securities of any such series and the Trustee, at the expense of the Company and upon Company Request, shall execute proper instruments acknowledging satisfaction and discharge of such indebtedness, if (1) either (A) with respect to all Outstanding Securities of such series, (i) the Company has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on all outstanding Securities of such series for principal (and premium, if any) and interest to the Stated Maturity or any Redemption Date as contemplated by the penultimate paragraph of this Section, as the case may be; or (ii) the Company has deposited or caused to be deposited with the Trustee as obligations in trust for the purpose such amount of direct noncallable obligations of, or noncallable obligations the payment of principal of and interest on which is fully guaranteed by, the United States of America, or to the payment of which obligations or guarantees the full faith and credit of the United States of America is pledged, maturing as to principal and interest in such amounts and at such times as will, without consideration of any reinvestment thereof, be sufficient to pay and discharge the entire indebtedness on all out standing Securities of such series for principal (and premium, if any) and interest to the Stated Maturity or any Redemption Date as contemplated by the penultimate paragraph of this Section, as the case may be; or (B) the Company has properly fulfilled such other means of satisfaction and discharge as is specified, as contemplated by Section 301, to be applicable to the Securities of such series; and (2) the Company has paid or caused to be paid all other sums payable with respect to the Outstanding Securities of such series; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of the entire indebtedness on all outstanding Securities of any such series have been complied with. Any deposits with the Trustee referred to in Section 403(l)(A) above shall be irrevocable and shall be made under the terms of an escrow trust agreement. If any Outstanding Securities of such series are to be redeemed prior to their Stated Maturity, whether pursuant to any optional redemption provisions or in accordance with any mandatory sinking fund requirements, the 34 40 applicable escrow trust agreement shall provide therefor and the Company shall make such arrangements as are satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company. Upon the satisfaction of the conditions set forth in this Section with respect to all the Outstanding Securities of any series, the terms and conditions of such series, including the terms and conditions with respect thereto set forth in this Indenture, shall no longer be binding upon, or applicable to, the Company; provided, that the Company shall not be discharged from any payment obligations in respect of Securities of such series which are deemed not to be Outstanding under clause (iii) of the definition thereof if such obligations continue to be valid obligations of the Company under applicable law or pursuant to Section 305 or 306. SECTION 404. Reinstatement. If the Trustee is unable to apply any money in accordance with Section 40l or Section 403 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities and coupons, if any, of such series shall be revived and reinstated as though no deposit had occurred pursuant to Section 401 or Section 403 until such time as the Trustee is permitted to apply all such money in accordance with Section 401 or Section 403; provided, however, that if the Company has made any payment of interest on or principal of (and premium, if any, on) any Securities and coupons, if any, of such series because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such series of Securities and coupons, if any, to receive such payment from the money held by the Trustee. ARTICLE FIVE REMEDIES SECTIONS 501. Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, means any of the following events (whatsoever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) unless it is either inapplicable to a particular series or it is specifically deleted or modified in or pursuant to the supplemental indenture or Board Resolution establishing such series of Securities or in the form of Security for such series: (1) default in the payment of any interest upon or any Additional Amounts payable in respect of any Security of such series when such interest or Additional Amounts become due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of (or any premium, if any, on) any Security of such series at its Maturity; or 35 41 (3) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series; or (4) default in the observance or performance of any covenant or agreement on its part to be observed or performed contained in this Indenture (other than a covenant or agreement a default in the performance of which is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of one or more series of Securities other than that series), and continuance of such default or breach for a period of ten (10) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) default in the observance or performance by DTE Energy of any covenant or agreement contained in a Support Agreement, if any, with respect to the Securities of such series; or (6) any event of default by the Company, DTE Energy or any of their respective Subsidiaries as defined in any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any Debt of the Company, DTE Energy or any of their respective Subsidiaries, as the case may be, whether such Debt now exists or shall hereafter be created, resulting in such Debt in principal amount of at least $10,000,000 becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration shall not be rescinded or annulled within a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (7) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company, DTE Energy or DECO in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company, DTE Energy or DECO bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company, DTE Energy or DECO under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company, DTE Energy or DECO or of any substantial part the property of the Company, DTE Energy or DECO, or ordering the winding up or liquidation of the affairs of the Company, DTE Energy or DECO, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or (8) the commencement by the Company, DTE Energy or DECO of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, 36 42 reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company, DTE Energy or DECO to the entry of a decree or order for relief in respect of it in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by the Company, DTE Energy or DECO of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company, DTE Energy or DECO or of any substantial part of their respective property, or the making by it of an assignment for the benefit of creditors, or the admission by the Company, DTE Energy or DECO in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company, DTE Energy or DECO in furtherance of any such action; (9) final judgment of money in excess of $10,000,000, singularly or in the aggregate, shall be rendered against the Company, DTE Energy or any of their respective Subsidiaries and shall remain undischarged for a period (during which execution shall not be effectively stayed) of 10 days after such judgment becomes final; or (10) DTE Energy shall, at any time, directly or indirectly cease to hold 100% of the Voting Stock of the Company or DECO; or (11) any other Event of Default provided in or pursuant to this Indenture with respect to Securities of such series. SECTION 502. Acceleration of Maturity: Rescission and Annulment. If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of that series may declare the principal amount (or, if any of the Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified in the terms of that series) of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest on and any Additional Amounts payable in respect of all Securities of that series, 37 43 (B) the principal of (and premium, if any, on) any Securities of that series which has become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of that series, other than the non payment of the principal of Securities which has become due solely by such declaration of acceleration, have been cured or waived as provided in Section 613. No such rescission shall affect any subsequent default or, impair any right consequent thereon. An Event of Default described in paragraph (7) or (8) of Section 501 shall cause the principal amount and accrued interest (or such lessor amount as provided for in the Securities of such series) to become immediately due and payable without any declaration or other act by the Trustee or any Holder. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (1) default is made in payment of any interest on or any Additional Amounts payable in respect of any Security when such interest or Additional Amounts become due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities and coupons, the whole amount then due and payable on such Securities and coupons for principal (and premium, if any) and interest or Additional Amounts, if any, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest or any Additional Amounts, at the rate or rates prescribed therefor in such Securities and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect 38 44 the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default occurs and is continuing with respect to Securities of any series, the Trustee may in its discretion proceed to protect and enforce its rights, including the rights of the Holders of Securities of such series and any related coupons, by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy including, without limitation, instituting a proceeding prior to any declaration of acceleration of the Maturity of the Securities for the collection of all amounts then due and unpaid on the Securities, prosecuting such proceeding to final judgment or decree and collecting out of the property, wherever situated, of the Company the moneys adjudged or decreed to be payable in the manner provided by law. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company, DTE Energy or DECO or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest and any Additional Amounts owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders of Securities and coupons allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such Judicial proceeding is hereby authorized by each Holder of Securities and coupons to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities and coupons, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 606. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security or coupon any plan of reorganization, arrangement, adjustment or composition affecting the Securities or coupons or the rights of any 39 45 Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder of a Security or coupon in any such proceeding. SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons. All rights of action and claims under this Indenture or the Securities or coupons may be prosecuted and enforced by the Trustee without the possession of any of the Securities or coupons or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities and coupons in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest or any Additional Amounts, upon presentation of the Securities or coupons, or both, as the case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 606; SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest or any Additional Amounts payable in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities and coupons for principal and any premium and interest or any Additional Amounts, respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 507. Limitation on Suits. No Holder of any Security of any series or any related coupons shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made a written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; 40 46 (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture (including, without limitation, the provisions of Section 512) to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium, Interest and Additional Amounts. Notwithstanding any other provision in this Indenture, the Holder of any Security or coupon shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Sections 305 and 307) any interest on or any Additional Amounts in respect of such Security or payment of such coupon on the Stated Maturity or Maturities expressed in such Security or coupon (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder of a Security or coupon has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders of Securities and coupons shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities or coupons is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 41 47 SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security or coupon to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders of Securities or coupons may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Securities or coupons, as the case may be. SECTION 512. Control by Holders of Securities. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series and any coupons appertaining thereto; provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (3) the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or officers of the Trustee, determine that the action so directed would involve the Trustee in personal liability. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series and any related coupons waive any past default hereunder with respect to the Securities of such series and its consequences, except a default (1) in the payment of the principal of (or premium, if any) or interest on or Additional Amounts payable in respect of any Security of such series or coupons appertaining thereto, or (2) in respect of a covenant or provision hereof which under Article Ten cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist, and any Event of Default with respect to such series arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 42 48 SECTION 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security or coupon by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder of any Security or coupon for the enforcement of the payment of the principal of (or premium, if any) or interest on or any Additional Amounts in respect of any Security or the payment of any coupon on or after the Stated Maturity or Maturities expressed in such Security or coupon (or, in the case of redemption, on or after the Redemption Date). SECTION 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE SECTION 601. Notice of Defaults. Within 90 days after the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest or any Additional Amounts with respect to, any Security of such series, the Trustee shall be protected in withholding such notice of and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Securities of such series; and provided, further, that in the case of any default of the character specified in Section 501(4) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event 43 49 which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. SECTION 602. Certain Rights of Trustee. The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not herein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. Subject to the provisions of Sections 315(a) through 315(d) of the Trust Indenture Act: (a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order or as otherwise expressly provided herein and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Securities of any series or any related coupons pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the 44 50 Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (h) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture; and (i) the Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. SECTION 603. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities (except the Trustee's certificates of authentication) and in any coupons shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or coupons, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and, if applicable, that the statements made by it in a Statement of Eligibility on Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 604. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and coupons and, subject to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or other agent. SECTION 605. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. 45 51 SECTION 606. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (premium, if any) or interest, if any, on particular Securities. The obligations of the Company under this Section to compensate and indemnify the Trustee for expenses, disbursements and advances shall constitute additional indebtedness under this Indenture and shall survive the resignation or removal of the Trustee, the satisfaction and discharge of this Indenture and any rejection or termination of this Indenture under any applicable bankruptcy law. If the Trustee incurs expenses or renders services after an Event of Default specified in Section 501(7) or (8) has occurred, those expenses (including the reasonable charges and expenses of its agents and attorneys) and its compensation for services shall be preferred over the status of the Holders in any reorganization or similar proceeding and the parties hereto, and the Holders, by their acceptance of the Securities, hereby agree that such expenses, compensation and indemnity are intended to constitute expenses of administration under any applicable bankruptcy law. SECTION 607. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder that is a corporation permitted by Section 310(a)(1) and (5) of the Trust Indenture Act to act as trustee under the Trust Indenture Act, and that has a combined capital, and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 46 52 SECTION 608. Disqualification, Conflicting Interests. If the Trustee has or shall acquire any conflicting interest, as defined in Section 310(b) of the Trust Indenture Act, with respect to the Securities of any series, the Trustee shall either eliminate such conflicting interest or resign, to the extent and in the manner provided by, and subject to, Section 310 of the Trust Indenture Act and this Indenture. SECTION 609. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 610. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 610 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with the obligations imposed on it under Section 310(b) of the Trust Indenture Act after written request therefor by the Company or by any Holder of a Security who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 607 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by Company Order may remove the Trustee with respect to all Securities, or (ii) subject to Section 514, any Holder of a Security who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated (including those who have been Holders for less than six months), petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. 47 53 (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and such successor Trustee or Trustees shall comply with the applicable requirements of Section 610. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 610, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders of Securities and accepted appointment in the manner required by Section 610, any Holder of a Security who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated (including those who have been Holders for less than six months), petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first class mail, postage prepaid, to the Holders of Registered Securities, if any, of such series as their names and addresses appear in the Security Register and, if Securities of such series are issued as Bearer Securities, by publishing notice of such event once in an Authorized Newspaper in each Place of Payment located outside the United States. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. SECTION 610. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. 48 54 (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees as co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 611. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such 49 55 authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 612. Preferential Collection of Claims Against the Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of Section 311 of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). SECTION 613. Appointment of Authenticating Agent. The Trustee may, with the consent of the Company, appoint an Authenticating Agent or Authenticating Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue or upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and if the Trustee is required to appoint one or more Authenticating Agents with respect to any series of Securities, to authenticate Securities of such series upon original issuance and to take such other actions as are specified in Sections 303, 304 and 309, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Notwithstanding anything to the contrary in this Section 613 or in any other Section of this Indenture, an Authenticating Agent shall not be authorized to authenticate Securities constituting the first issuance of Securities of any series until and unless the requirements of Section 301 hereof have been, or are concurrently therewith being, complied with. Each Authenticating Agent shall be acceptable to the Company, and except as specified by Section 301, each Authenticating Agent shall at all times be a corporation that would be permitted by Section 310(a) (1) and (5) of the Trust Indenture Act to be able to act as a trustee under an indenture qualified under the Trust Indenture Act, is authorized under applicable law and by its charter to act as such and that has a combined capital and surplus (computed in accordance with Section 310(a) (2) of the Trust Indenture Act) of not less than $50,000,000. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. If the Authenticating Agent has or shall acquire any conflicting, interest, as defined in Section 310(b) of the Trust Indenture Act, with respect to Securities of any series, the Authenticating Agent shall take action as is required pursuant to said Section 310(b). Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party or any corporation succeeding to the corporate agency or corporate trust business of such Authenticating Agent, shall continue to be an Authenticating Agent; provided, that such corporation shall be otherwise eligible under 50 56 this Section, without the execution or filing of any paper or any further act on the part of the Trustee or such Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first class mail, postage prepaid, to all Holders of Registered Securities, if any, of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor. Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If the Trustee makes such payments, it shall be entitled to be reimbursed for such payments, subject to the provisions of Section 606. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. The Bank of New York as Trustee __________________________________ As Authenticating Agent By________________________________ Authorized Signatory If all of the Securities of a series may not be originally issued at one time, and if the Trustee does not have an office capable of authenticating Securities upon original issuance located in a Place of Payment where the Company wishes to have Securities of such series authenticated upon original issuance, the Trustee, if so requested by the Company in writing (which writing need not comply with Section 102 and need not be accompanied by an opinion of Counsel), shall appoint in, accordance with this Section an Authenticating Agent having an office in a Place of Payment designated by the Company with respect to such series of Securities. 51 57 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. In accordance with Section 312(a) of the Trust Indenture Act, the Company will furnish or cause to be furnished to the Trustee: (a) semiannually, on dates mutually acceptable to the Trustee and the Company, a list, in such form as the Trustee may reasonably require, the names and addresses of the Holders of Securities as of a date mutually acceptable to the Trustee and the Company, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content, such list to be dated as of a date not more than 15 days prior to the time such list is furnished; notwithstanding the foregoing, so long as the Trustee is the Security Registrar with respect to a particular series of Securities, no such list shall be required to be furnished in respect of such series. SECTION 702. Preservation of Information; Communications to Holders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act. Every Holder of Securities or coupons, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with Section 312 of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act. SECTION 703. Reports by Trustee. (a) Within 60 days after June 15 of each year commencing with the year following the first issuance of Securities pursuant to Section 301, if required by Section 313(a) of the Trust Indenture Act, the Trustee shall transmit pursuant to Section 313(c) of 52 58 the Trust Indenture Act, a brief report dated as of such June 15 with respect to any of the events specified in said Section 313(g) which may have occurred since the later of the immediately preceding June 15 and the date of this Indenture. (b) The Trustee shall transmit the reports required by Section 313(a) of the Trust Indenture Act at the times specified therein. (c) Reports pursuant to this Section shall be transmitted in the manner and to the Persons required by Sections 313(c) and (d) of the Trust Indenture Act. SECTION 704. Reports by Company. (a) The Company, pursuant to Section 314(a) of the Trust Indenture Act, shall: (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a Security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) unless the Company furnishes information to the Commission in accordance with Rule 12g3-2(b) under or pursuant to Section 13 or 15(d) of the Exchange Act, the Company shall promptly furnish or cause to be furnished such information as is specified pursuant to Rule 144(d)(4) under the Securities Act (or any successor provision thereto) to any Holder or beneficial owner of a Security or to a prospective purchaser of a Security who is designated by such Holder or beneficial owner and is a qualified institutional buyer (as defined in Rule 144A), upon the request of such Holder or beneficial owner or prospective purchaser, in order to permit compliance by such Holder or beneficial owner with Rule 144A under the Securities Act. (3) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; (4) transmit within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; and 53 59 (5) transmit within 30 days after June 15 of each year to the Trustee, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer of the Company as to his or her knowledge of such obligor's compliance with all conditions and covenants under the Indenture as determined without regard to any period of grace or requirement of notice provided under the Indenture. In addition, the Company shall furnish, or cause to be furnished, to the Trustee: (6) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, a copy of the Consolidated (as defined herein) balance sheet of the Company and its Subsidiaries, if any, as of the end of such fiscal year and Consolidated statements of income, cash flows and changes in shareholder's equity of the Company and its Subsidiaries, if any, for such fiscal year, in each case accompanied by an opinion by Deloitte & Touche LLP or other nationally recognized firm of independent public accountants, in each case having been prepared in accordance with GAAP; (7) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, the unaudited Consolidated balance sheet of the Company and its Subsidiaries, if any, as of the end of such quarter and unaudited Consolidated statements of income, cash flows and changes in shareholder's equity of the Company and its Subsidiaries, if any, for such quarter and for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by a financial officer of the Company as having been prepared in accordance with GAAP; (8) as soon as available and in any event within 90 days after the end of each fiscal year of DTE Energy, a copy of the annual report to shareholders for such year for DTE Energy and its Subsidiaries, containing the Consolidated balance sheet of DTE Energy and its Subsidiaries as of the end of each fiscal year and Consolidated statements of income, cash flows and changes in shareholders' equity of DTE Energy and its Subsidiaries for such fiscal year, in each case accompanied by an opinion by Deloitte & Touche LLP or other nationally recognized firm of independent public accountants having been prepared in accordance with GAAP; (9) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of DTE Energy, the unaudited Consolidated balance sheet of DTE Energy and its Subsidiaries as of the end of such quarter and unaudited Consolidated statements of income, cash flows and changes in shareholders' equity of DTE Energy and its Subsidiaries for such quarter and for the period commencing at the end of the previous fiscal year and ending with the end of such quarter; and (10) promptly after sending or filing thereof, copies of all other reports and registration statements that the Company or any of its Subsidiaries, if any, files with the Commission or any national securities exchange. 54 60 (11) as soon as possible, and in any event within five days after the occurrence of each Event of Default (or an event that, with the passage of time or the giving of notice, or both, would become an Event of Default) continuing on the date of such statement, a statement of the chief financial officer of the Company setting forth details of such Event of Default or event and the action that the Company has taken and proposes to take with respect thereto. (b) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not merge or consolidate with or into any other Person or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to any Person, or permit any of its Subsidiaries to do so, and the Company shall not permit any Person to consolidate into with or merge with the Company or any Subsidiary or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions all or substantially all of its assets to the Company or any Subsidiary, unless: (1) in case the Company or any Subsidiary shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets as an entity or substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company or any Subsidiary is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company or any Subsidiary as an entity or substantially as an entirety shall be a [corporation, partnership or trust,] shall be organized and validly existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including all Additional Amounts, if any, payable pursuant to Section 1004) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) at the time of such proposed transaction and immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or a Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and 55 61 (3) the Company or the successor Person shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and Article Nine and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Person Substituted. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company as an entity or substantially as an entirety in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities and coupons. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders of Securities or coupons, the Company, when authorized by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or (2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company with respect to all or any series of the Securities; or (3) to add any additional Events of Default with respect to all or any series of the Securities (and, if such Event of Default is applicable to less than all series of Securities, specifying the series to which such Event of Default is applicable); or (4) to add to or change any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal of (or premium, if any) or interest on Bearer Securities, to permit Bearer Securities to be issued in exchange for Registered Securities, 56 62 to permit Bearer Securities to be issued in exchange for Bearer Securities of other authorized denominations or to permit or facilitate the issuance of Securities in uncertificated form; provided, that any such action shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material respect; or (5) to establish the form or terms of Securities of any series and any related coupons as permitted by Sections 201 and 301; or (6) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 610(b); or (7) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture; provided, that such other provisions as may be made shall not adversely affect the interests of the Holders of Securities of any series or any related coupons in any material respect; or (8) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary or helpful to effect the qualification of the Indenture under the Trust Indenture Act and to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary or helpful to conform to any mandatory or optional provisions of the Trust Indenture Act as the same may from time to time be amended; or (9) to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of Securities, as herein set forth; or (10) to modify, eliminate or add to the provisions of any Security to allow for such Security to be held in certificated form by the Holder thereof; or (11) to secure the Securities of the applicable series; or (12) to amend or supplement any provision contained herein or in any supplemental indenture, provided that no such amendment or supplement shall adversely affect the interests of the Holders of any Securities then Outstanding in any material respect; or (13) to modify, delete or add to any of the provisions of this Indenture other than as contemplated by clauses (1) through (10) of this Section, provided that any such modification, deletion or addition shall become effective only with respect to series of Securities established pursuant to Section 301 after the effective date of such modification, deletion or addition. 57 63 SECTION 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series and any related coupons under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1)change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change any obligation of the Company to pay Additional Amounts pursuant to Section 1004 (except as contemplated by Section 801(1) and permitted by Section 901(1)), or reduce the amount of the principal of an original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change the Place of Payment, coin or currency in which any Security or any premium or any interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or reduce the requirements of Section 1304 for quorum or voting; or (3) change any obligation of the Company to maintain an office or agency in the places and for the purposes specified in Section 1002(2); or (4) modify any of the provisions of this Section, Section 513 or Section 1010, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. 58 64 It shall not be necessary for any Act of Holders of Securities under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 315 of the Trust Indenture Act) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, immunities or liabilities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder and of any coupons appertaining shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 906. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Company, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated delivered by the Trustee or an Authenticating Agent in exchange for Outstanding Securities of such series. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest on or any Additional Amounts payable in respect of the Securities of that series in accordance with the terms of the Securities, any coupons appertaining thereto and this Indenture. Unless otherwise specified as contemplated by Section 301 with respect to any series of Securities; any interest due on and any Additional Amounts payable in respect of Bearer Securities other than Additional Amounts, if 59 65 any, payable as provided in Section 1004 in respect of principal of (or premium, if any, on) such Security shall be payable only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for such series (but not Bearer Securities, except as otherwise provided below, unless such Place of Payment is located outside the United States) an office or agency where Securities of that series may be presented or surrendered for payments, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. If Securities of a series are issuable as Bearer Securities, the Company will maintain, subject to any laws or regulations applicable thereto, in a Place of Payment for that series located outside the United States, an office or agency where Securities of that series and related coupons may be presented and surrendered for payment (including payment of any Additional Amounts payable on Securities of that series pursuant to Section 1004); provided, however, that if the Securities of that series are listed on The Stock Exchange of the United Kingdom and the Republic of Ireland, the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, the Company will maintain a Paying Agent for the Securities of that series in London, Luxembourg or any other required city located outside the United States, as the case may be, so long as the Securities of that series are listed on such exchange. The Company will give prompt written notice to the Trustee and the Holders of such series of the location, and any change in the location, of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency in respect of any series of Securities or shall fail to furnish the Trustee with the address thereof, such presentations and surrenders of Securities of that series may be made and notices and demands may be made or served at the Corporate Trust Office of the Trustee, except that Bearer Securities of that series and the related coupons may be presented and surrendered for payment (including payment of any Additional Amounts payable on Bearer Securities of that series pursuant to Section 1004) at the place specified for that purpose pursuant to Section 301, and the Company hereby appoints the same as its agent to receive such respective presentations, surrenders, notices and demands. Except as otherwise specified or contemplated by Section 301, no payment of principal, premium or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, that, if the Securities of a series are denominated and payable in Dollars, payment of principal of (and premium, if any) and interest on any Bearer Security (including any Additional Amounts payable on Securities of such series pursuant to Section 1004) shall be made at the office of the Company's Paying Agent in the Borough of Manhattan, The City of New York, if (but only if) payment in Dollars of the full amount of such principal, premium, interest or Additional Amounts, as the case may be, at all offices or agencies outside the United States maintained for that purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions. 60 66 The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in accordance with the requirements set forth above for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee and the Holders of such series of any such designation or rescission and of any change in the location of any such other office or agency. Unless otherwise specified as contemplated by Section 301, the Company hereby designates as the Place of Payment for each series the Corporate Trust Office. SECTION 1003. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1)hold all sums held by it for the payment of the principal of (and premium, if any) or interest on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal of (and premium, if any) or interest on the Securities of that series and, if so, the amount of such defaulted payment; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were 61 67 held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Except as otherwise provided hereby or pursuant hereto, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest or Additional Amounts on any Security of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security or any coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense and at the direction of the Company cause to be published once, in an Authorized Newspaper in each Place of Payment, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Additional Amounts. If the Securities of a series provide for the payment of Additional Amounts, the Company will pay to the Holder of any Security of such series or any coupon appertaining thereto Additional Amounts as provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Security of any series or payment of any related coupon or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided for in this Section to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of Additional Amounts (if applicable) in any provisions hereof shall not be construed as excluding Additional Amounts in those provisions hereof where such express mention is not made. Except as otherwise provided herein or pursuant hereto, if the Securities of a series provide for the payment of Additional Amounts, at least 10 days prior to the first Interest Payment Date with respect to that series of Securities (or if the Securities of that series will not bear interest prior to Maturity, the first day on which a payment of principal and any premium is made), and at least 10 days prior to each date of payment of principal and any premium or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company will furnish the Trustee and the principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of and any premium or interest on the Securities of that series shall be made to Holders of Securities of that series or any related coupons who are United States Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of that series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the 62 68 amount, if any, required to be withheld on such payments to such Holders of Securities or coupons and the Company will pay to such Paying Agent the Additional Amounts required by this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section. SECTION 1005. Existence. Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Company and the Holders. SECTION 1006. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1007. Change in Nature of Business. The Company will not make any material change in the nature of its business as carried on at the date of the issuance of the Securities. SECTION 1008. Accounting Changes. The Company will not make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by GAAP. SECTION 1009. Statement by Officers as to Default . The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company (which as of the date hereof ends on December 31 of each year) ending after the date hereof so long as any Security is outstanding hereunder, an Officers' Certificate, stating that in the course of the performance by the signers of their duties as such officers of the Company or Company Agent(s) they would normally obtain knowledge of any default by the Company in the performance or fulfillment of any covenant, agreement or condition contained in this Indenture, and stating whether or not they have obtained knowledge of any such default existing on the date 63 69 of such statement and, if so, specifying each such default of which the signers have knowledge and the nature thereof. SECTION 1010. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 1001 to 1008, inclusive, with respect to the Securities of any series if before the time for such compliance the Holders of at least 66-2/3% in principal amount of the outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise provided herein or therein pursuant hereto) in accordance with this Article. SECTION 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by either a Board Resolution or an Officers' Certificate. In the case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities (i) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, or (ii) pursuant to an election of the Company which is subject to a condition specified in the terms of such Securities, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction or condition. SECTION 1103. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities of any series with identical terms and conditions are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by lot or by such other method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Registered Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. Notwithstanding the preceding 64 70 sentence, if the list of Holders of Securities of any series to be redeemed is maintained by computer or other data processing equipment by a Security Registrar, a Paying Agent or another Person authorized to maintain such a list under this Indenture, the Trustee may, and if reasonably requested by the Company shall, utilize the computer or data processing equipment of such Security Registrar, Paying Agent or other authorized Person for the purpose of determining by lot or by such other method as the Trustee shall deem fair and appropriate the Securities to be redeemed. No partial redemption shall reduce the portion of the principal amount of a Registered Security of a series not redeemed to less than the minimum denominations for a Security of such series established herein pursuant hereto. The Trustee shall promptly notify the Company and the Security Registrar (if other than itself) in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 1104. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106 to the Holders of Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date unless a shorter period is specified pursuant to Section 301 with respect to the Securities to be redeemed. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon and Additional Amounts, if any, will cease to accrue on and after said date, (5) the place or places where such Securities, together in the case of Bearer Securities with all coupons appertaining thereto, if any, maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price, (6) that the redemption is for a sinking fund, if such is the case, and (7) The CUSIP numbers of the Securities to be so redeemed. 65 71 A notice of redemption published as contemplated by Section 106 need not identify particular Registered Securities to be redeemed. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company, in which event the Company shall provide the Trustee with the information required by Clauses (1) through (6) above. If at the time notice of redemption shall be given the Company shall not have deposited with a Paying Agent and/or irrevocably directed the Trustee or a Paying Agent to apply, from money held by it available to be used for the redemption of Securities which are to be redeemed, an amount in cash sufficient to redeem all of the Securities called for redemption, including accrued interest and Additional Amounts to the Redemption Date, such notice shall state that it is subject to the receipt of the redemption monies by the Trustee or a Paying Agent on or before the Redemption Date and such notice shall be of no effect unless such monies are so received before such date. SECTION 1105. Deposit of Redemption Price. On or before any Redemption Date, the Company shall deposit with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on and any Additional Amounts with respect thereto, all the Securities which are to be redeemed on that date The Paying Agent shall provide notice to the Trustee of such deposit. SECTION 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid if required pursuant to the terms of the Securities being redeemed, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Security for redemption in accordance with said notice, together with all coupons, if any, appertaining thereto maturing after the Redemption Date, such Security shall be paid by the Company at the Redemption Price, together with accrued interest (and any Additional Amounts) to the Redemption Date; provided, however, that installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only at an office or agency located outside the United States (except as otherwise provided in Section 1002) and, unless otherwise specified as contemplated by Section 301, only upon presentation and surrender of coupons for such interest; and provided, further, that, unless otherwise specified as contemplated by Section 301, installments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. 66 72 If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee or Authenticating Agent if there be furnished to them such Security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to the Trustee or Authenticating Agent or any paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted; provided, however, that interest represented by coupons shall be payable only at an office or agency located outside the United states (except as otherwise provided in Section 1002) and, unless otherwise specified as contemplated by Section 301, only upon presentation and surrender of those coupons. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. SECTION 1107. Securities Redeemed in Part. Any Registered Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Security Registrar so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee or Authenticating Agent shall authenticate and deliver to the Holder of such Security without service charge, a new Registered Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. If a Security in global form is so surrendered, the Company shall execute, and the Trustee shall authenticate and deliver to the U.S. Depositary or other Depositary for such Security in global form as shall be specified in the Company Order with respect thereto to the Trustee, without service charge, a new Security in global form in a denomination equal to and in exchange for the Unredeemed portion of the principal of the Security in global form so surrendered. ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 301 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series 67 73 is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series. SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption), together in the case of any Bearer Securities of such series with all unmatured coupons appertaining thereto, and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided, that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Security Registrar at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. SECTION 1203. Redemption of Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for Securities of any series, the Company will deliver to the Trustee a Company Order specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1202 and will also deliver to the Security Registrar any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in or permitted by Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107. ARTICLE THIRTEEN MEETINGS OF HOLDERS OF SECURITIES SECTION 1301. Purposes for Which Meetings May Be Called. A meeting of Holders of Securities of any or all series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities of such series. 68 74 SECTION 1302. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Securities of any series for any purpose specified in Section 1301, to be held at such time and at such place in the Borough of Manhattan, The City of New York, or if the Securities of such series are issued as Bearer Securities, in London as the Trustee shall determine. Notice of every meeting of Holders of Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 20 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in aggregate principal amount of the outstanding Securities of any series shall have requested the Trustee to call a meeting of the Holders of Securities of such series for any purpose specified in Section 1301, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 20 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities of such series in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York, or in London, as the case may be, for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section. SECTION 1303. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1304. Quorum; Action. The Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of a series shall constitute a quorum for a meeting of Holders of Securities of such series; provided, however, that if any action is to be taken at such meeting with respect to a consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66-2/3% in aggregate principal amount of the Outstanding Securities of a series, the Persons entitled to vote 66-2/3% in aggregate principal amount of the Outstanding Securities of such series shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities of such series, be dissolved. In any other case, the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such 69 75 adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 1302(a), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the aggregate principal amount of the outstanding Securities of such series which shall constitute a quorum. Except as limited by the proviso to Section 902, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series; provided, however, that, except as limited by the proviso to Section 902, any resolution with respect to any consent or waiver which this Indenture expressly provides may be given by the Holders of not less than 66-2/3% in aggregate principal amount of the outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly convened and at which a quorum is present as aforesaid only by the affirmative vote of the Holders of 66-2/3% in aggregate principal amount of the outstanding Securities of that series; and provided, further, that, except as limited by the proviso to Section 902, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in aggregate principal amount of the Outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in aggregate principal amount of the Outstanding Securities of that series. Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with this Section shall be binding on all the Holders of Securities of a series and the related coupons, whether or not present or represented at the meeting. SECTION 1305. Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities of a series in regard to proof of the holding of Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104 or by having the signature of the person executing the proxy witnessed or guaranteed by any trust company, bank or banker authorized by Section 104 to certify to the holding of Bearer Securities. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. 70 76 (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 1302(b), in which case the Company or the Holders of Securities of the series calling the meeting, as the case may be, shall appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of such series represented at the meeting. (c) At any meeting each Holder of a Security of such series and each proxy shall be entitled to one vote for each $1,000 principal amount of the Outstanding Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security of such series or as a proxy. (d) Any meeting of Holders of Securities of any series duly called pursuant to Section 1302 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of such series represented at the meeting; and the meeting may be held as so adjourned without further notice. SECTION 1306. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate of the proceedings of each meeting of Holders of Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that such a notice was given as provided in Section 1302 and, if applicable, Section 1304. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 71 77 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. DTE CAPITAL CORPORATION By: __________________________________ Name: Christopher C. Arvani Title: Assistant Treasurer Attest: THE BANK OF NEW YORK By: __________________________________ Name: Title: Attest: 72 78 STATE OF MICHIGAN ) : ss.: COUNTY OF WAYNE ) On the day of , 1998, before me personally came , to me known, who., being by me duly sworn, did depose and say that he is of DTE CAPITAL CORPORATION, one of the corporations described in and which executed the foregoing instrument and that he signed his name thereto by like authority. ________________________________ Notary Public, State of Michigan My Commission Expires STATE OF NEW YORK ) : ss.: COUNTY OF NEW YORK ) On the [ ]th day of [ ] , 1998, before me personally came [ ], to me known, who., being by me duly sworn, did depose and say that she is [ ] of THE BANK OF NEW YORK, one of the corporations described in and which executed the foregoing instrument and that she signed her name thereto by like authority. ________________________________ Notary Public, State of New York Commission Expires 73 79 EXHIBIT A [FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO RECEIVE BEARER SECURITY] CERTIFICATE DTE CAPITAL CORPORATION [Insert title or sufficient description of Securities to be delivered] This is to certify that the above-captioned Securities are not being acquired by or on behalf of a United States person or for offer to resell or for resale to a United States person or any person inside the United States or, if a beneficial interest in the Securities is being acquired by or on behalf of a United States person or any person inside the United States, that such United States person is a financial institution within the meaning of Section 1.165-12(c)(1)(v) of the United States Treasury regulations which agrees to comply with the requirements of Section 165 (j) (3) (A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder and which is not purchasing for offer to resell or for resale inside the United States. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States and any estate the income of which is subject to United States Federal income taxation regardless of its source or a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have authority to control all substantial decisions of the trust, and "United States" means the United States of America (including the States and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. We undertake to advise you by telex if the above statement as to beneficial ownership is not correct on the date of delivery of the above-captioned Securities in bearer form as to all of such Securities. This certificate excepts and does not relate to U.S. $ principal amount of the above-captioned Securities appearing in your books as being held for our account as to which we are not able to certify as to the matters set forth herein and as to which we understand exchange and delivery of definitive Securities cannot be made until we are able so to certify. 80 We understand that this certificate may be required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably authorize you to produce this certificate or a copy thereof to any interested party in such proceedings. Dated:_______________, 19__ [To be dated on or after _______________, 19____(the date determined as provided in Section 303 of the Indenture)] [Name of Person Entitled to Receive Bearer Security] _____________________________________ (Authorized Signatory] Name: Title: 2 EX-4.197 5 EX-4.197 1 EXHIBIT 4-197 ================================================================================ DTE CAPITAL CORPORATION AND THE BANK OF NEW YORK Trustee ------------ FIRST SUPPLEMENTAL INDENTURE Dated as of June 15, 1998 Supplementing the Indenture Dated as of June 15, 1998 -------------- $100,000,000 Remarketed Notes, Series A due 2038 ================================================================================ 2 FIRST SUPPLEMENTAL INDENTURE, dated as of the 15th day of June, 1998, between DTE CAPITAL CORPORATION, a corporation organized and existing under the laws of the State of Michigan (the "Company"), and THE BANK OF NEW YORK, a New York banking corporation, having its principal office in The City of New York, New York, as trustee (the "Trustee"); WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture dated as of June 15, 1998 (the "Original Indenture" and, together with this First Supplemental Indenture, the "Indenture") providing for the issuance by the Company from time to time of its debt securities to be issued in one or more series (in the Original Indenture and herein called the "Securities"); and WHEREAS, the Company, in the exercise of the power and authority conferred upon and reserved to it under the provisions of the Original Indenture, including Section 901 thereof, and pursuant to appropriate resolutions of the Board of Directors, has duly determined to make, execute and deliver to the Trustee this First Supplemental Indenture to the Original Indenture as permitted by Sections 201 and 301 of the Original Indenture in order to establish the form or terms of, and to provide for the creation and issue of, a series of Securities under the Original Indenture in the aggregate principal amount of up to $100,000,000; and WHEREAS, all things necessary to make the Securities, when executed by the Company and authenticated and delivered by the Trustee or any Authenticating Agent and issued upon the terms and subject to the conditions hereinafter and in the Original Indenture set forth against payment therefor, the valid, binding and legal obligations of the Company and to make this First Supplemental Indenture a valid, binding and legal agreement of the Company, have been done; NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH that, in order to establish the terms of a series of Securities, and for and in consideration of the premises and of the covenants contained in the Original Indenture and in this First Supplemental Indenture and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, it is mutually covenanted and agreed as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. Each capitalized term that is used herein and is defined in the Original Indenture shall have the meaning specified in the Original Indenture unless such term is otherwise defined herein. "Administrative Agent" means the entity designated as such in the applicable Standby Note Purchase Agreement, if any. 2 3 "Base Rate" means the interest rate established by the SPURS Agent, after consultation with the Company, as the applicable "Base Rate" at or prior to the commencement of the SPURS Mode and set forth on Annex A to the applicable Note. "Beneficial Owner" means, for Notes in book-entry form, the person who acquires an interest in the Notes which is reflected on the records of DTC through its participants. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions located in the State of Michigan or in the state in which the principal corporate trust office of the Trustee is located, are authorized or obligated by or pursuant to law or executive order to close; provided, however, that with respect to Notes in the Long Term Rate Mode or the SPURS Mode as to which LIBOR is an applicable Interest Rate Basis, such day is also a London Business Day (as hereinafter defined). "London Business Day" means (i) if the Index Currency (as hereinafter defined) is other than European Currency Units ("ECU"), any day on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, any day that does not appear as an ECU non-settlement day on the display designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so designated by the ECU Banking Association) or, if ECU non-settlement days do not appear on the page (and are not so designated), is not a day on which payments in ECU cannot be settled in the international interbank market. "Calculation Agent" has the meaning specified in Section 204 hereof. "Calculation Date" has the meaning set forth in Section 204 hereof. "CD Rate" has the meaning specified in Section 204 hereof. "Commercial Paper Term Mode" means, with respect to any Note, the Interest Rate Mode in which the interest rate on such Note is reset on a periodic basis which shall not be less than one calendar day nor more than 364 consecutive calendar days and interest is paid as provided for such Interest Rate Mode in Section 204 hereof. "Commercial Paper Term Period" means an Interest Rate Period of not less than one year nor more than 364 consecutive calendar days, as determined by the Company, or if not so determined, by the Remarketing Agent. "Conversion Date" has the meaning set forth in Section 205(d) hereof. "Conversion Notice" means a notice, promptly confirmed in writing in substantially the form of Exhibit H hereto (which includes facsimile or appropriate electronic media) from the Company, that sets forth applicable Note to which it relates, the new Interest Rate Mode (if applicable), the new Interest Rate Period, the Conversion Date, and with respect to any Long Term Rate Period, any optional redemption or repayment terms for such Note. 3 4 "Determination Date" means the third Business Day preceding the applicable SPURS Remarketing Date. "DTC" has the meaning specified in Section 203 hereof. "DTE Energy" means DTE Energy Company, a Michigan corporation and the owner, directly or indirectly, of 100% of the outstanding common stock of the Company. "Floating Interest Rate Notice" has the meaning specified in Section 204 hereof. The form of Floating Rate Interest Notice is set forth as Exhibit G to this First Supplemental Indenture. "Floating Rate Maximum Interest Rate" and "Floating Rate Minimum Interest Rate" have the respective meanings specified in Section 204 hereof. "Index Maturity" means the period to maturity of the instrument or obligation with respect to which the related Interest Rate Basis or Bases will be calculated. "Initial Interest Rate" means the annual rate of interest applicable to the Notes during the Initial Interest Rate Period. "Initial Interest Rate Adjustment Date" means June 15, 2003. "Initial Interest Rate Period" means the period commencing on the date of issuance for the Notes and ending on the Business Day immediately preceding the Initial Interest Rate Adjustment Date. "Insurer" means, with respect to the Initial Interest Rate Period, MBIA Insurance Corporation, and, with respect to any subsequent Interest Rate Period, such issuer of a financial guaranty insurance policy as may be purchased by the Company from time to time. "Interest Determination Date" has the meaning specified in Section 204 hereof. "Interest Rate Adjustment Date" means, for a particular Interest Rate Period in any Interest Rate Mode, each date, which shall be a Business Day, on which interest and, in the case of a floating interest rate, the Spread (if any) and the Spread Multiplier (if any) on the Notes subject thereto commences to accrue at the rate determined and announced by the applicable Remarketing Agent for such Interest Rate Period and for Notes bearing interest at the Initial Interest Rate (as hereinafter defined), the Business Day following the expiration of the Initial Interest Rate Period (as hereinafter defined). "Interest Rate Basis" has the meaning specified in Section 204 hereof. "Interest Rate Mode" means the mode in which the Interest Rate on a Note is being determined, i.e., the Commercial Paper Term Mode, the Long Term Rate Mode or the SPURS Mode. 4 5 "Interest Rate Period" means, with respect to any Note in the Commercial Paper Mode or Long Term Rate Mode, the period of time commencing on the Interest Rate Adjustment Date to, but not including, the immediately succeeding Interest Rate Adjustment Date during which such Note bears interest at a particular fixed interest rate or floating interest rate, and with respect to any Note in the SPURS Mode, a SPURS Rate Period. "Interest Reset Date", "Initial Interest Reset Date" and "Interest Reset Period" have the respective meanings specified in Section 204 hereof. "Liquidity Provider" means, any bank or other credit provider whose obligations such as those under the applicable Standby Note Purchase Agreement with respect to any Notes are exempt from registration under the Securities Act of 1933, as amended, with long term senior debt ratings from Standard & Poor's Ratings Services and Moody's Investors Service, Inc. at least equal to those of the Company as of the date of the Standby Note Purchase Agreement, and a minimum combined capital and surplus of at least $50,000,000, that has entered into a Standby Note Purchase Agreement with the Company for the purpose of purchasing unremarketed Notes on any Interest Rate Adjustment Date. "Long Term Rate Mode" means, with respect to any Note, the Interest Rate Mode in which the interest rate on such Note is reset in a Long Term Rate Period and interest is paid as provided for such Interest Rate Mode in Section 204 hereof. "Long Term Rate Period" means, with respect to any Note, any period of more than 364 days and not exceeding the remaining term to the Stated Maturity of such Note. "Notes" or "Note" have the meaning specified in Section 201. "Notification Date" means the Business Day not later than ten (10) days prior to the applicable SPURS Remarketing Date on which the SPURS Agent gives notice to the Company and the Trustee of its intention to purchase the Notes for remarketing. "Optional Redemption" means the redemption of any Note prior to its maturity at the option of the Company as described herein. "Optional Redemption Price" has the meaning set forth in Section 304(c) hereof. "Policy" means, with respect to the Initial Interest Rate Period, the financial guaranty insurance policy issued by MBIA Insurance Corporation and attached as Exhibit F hereto, and, with respect to any subsequent Interest Rate Period, such financial guaranty insurance policy as may be purchased by the Company from an Insurer from time to time. "Principal Financial Center" means the capital city of the country issuing the Index Currency, except that with respect to United States dollars, Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECUs, the Principal Financial Center shall be The City of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. 5 6 "Remarketing Agent" means such agent or agents, including any standby remarketing agent (each a "Standby Remarketing Agent"), as the Company may appoint from time to time for the purpose of remarketing of the Notes, as set forth in the remarketing agreement which the Company shall enter into prior to the remarketing of such Notes. "Special Interest Rate" means the rate of interest equal to the rate per annum announced by Citibank, N.A., or such other nationally recognized bank located in the United States as the Company may select, as its prime lending rate. "Special Mandatory Purchase" means the obligation of the Company (or, if applicable, a Liquidity Provider) to purchase Notes not successfully remarketed by the Remarketing Agent and the applicable Standby Remarketing Agent(s) by 12:00 o'clock noon, New York City time, on any Interest Rate Adjustment Date. "Spread" means, with respect to any Note, the number of basis points to be added to or subtracted from the related Interest Rate Basis or Bases applicable to an Interest Rate Period for such Note. "Spread Multiplier" means the percentage of the related Interest Rate Basis or Bases applicable to an Interest Rate Period by which such Interest Rate Basis or Bases will be multiplied to determine the applicable interest rate from time to time for an Interest Rate Period. "SPURS Agent" means such Remarketing Agent as the Company may appoint from time to time for the purpose of remarketing Notes in the SPURS Mode. "SPURS Mode" means, with respect to any Note, the Interest Rate Mode in which such Note shall bear interest and be subject to remarketing as "Structured PUtable Remarketable Securities" ("SPURS") as provided for in Article Three hereof. "SPURS Rate Period" means an Interest Rate Period for any Note in the SPURS Mode established by the Company as a period of more than 364 days and not exceeding the remaining term to the Stated Maturity of such Note; provided, however, that such Interest Rate Period must end on the day prior to an Interest Payment Date for such Note. The SPURS Rate Period shall consist of the period to and excluding the SPURS Remarketing Date and the period from and including the SPURS Remarketing Date to but excluding the next succeeding Interest Rate Adjustment Date. "SPURS Remarketing Agreement" shall mean the agreement dated as of the Interest Rate Adjustment Date commencing the applicable SPURS Rate Period which sets forth the rights and obligations of the Company and the applicable SPURS Agent with respect to the remarketing of the SPURS. "SPURS Remarketing Date" means the date designated by the applicable SPURS Agent after consultation with the Company, upon which the applicable SPURS Agent may elect to remarket the Notes at the SPURS Interest Rate. 6 7 "Standby Note Purchase Agreement" means the agreement, which the Company may, at its option, enter into from time to time with a Liquidity Provider for the purpose of purchasing unremarketed Notes. "Weekly Rate Period" means a Commercial Paper Term Period with an Interest Rate Period of generally seven days. Section 102. Section References. Each reference to a particular section set forth in this First Supplemental Indenture shall, unless the context otherwise requires, refer to this First Supplemental Indenture. ARTICLE TWO TITLE, RANKING AND TERMS OF THE NOTES Section 201. Title and Ranking of the Notes. This First Supplemental Indenture hereby establishes a series of senior Securities designated as the "Remarketed Notes, Series A due 2038" of the Company (referred to herein as the "Notes"), and shall rank equally with each other and all other senior and unsubordinated indebtedness of the Company. For purposes of the Original Indenture, the Notes shall constitute a single series of Securities. Section 202. Variations in Terms of Notes. Subject to the terms and conditions set forth in the Original Indenture and in this First Supplemental Indenture, the terms of any particular Note may vary from the terms of any other Note as contemplated by Section 301. of the Original Indenture, and the terms for a particular Note will be set forth in such Note as delivered to the Trustee or an Authenticating Agent for authentication pursuant to Section 303. of the Original Indenture. Section 203. Amount and Denominations; DTC. The aggregate principal amount of Notes that may be issued under this First Supplemental Indenture is limited to $100,000,000. The Notes shall be issuable only in fully registered form and will initially be registered in the name of The Depository Trust Company, as depositary ("DTC"), or its nominee who is hereby designated as "U.S. Depositary" under the Original Indenture. The authorized denominations of Notes shall be $100,000 and integral multiples of $1,000 in excess thereof. Section 204. Interest, Interest Rates and Interest Rate Modes. The Notes will initially bear interest at the Initial Interest Rate as set forth on Annex A thereof for the Initial Interest Rate Period. Thereafter, each Note at the option of the Company will bear interest in the Commercial Paper Term Mode, the Long Term Rate Mode or the SPURS Mode. Each Note may bear interest for designated Interest Rate Periods in the same or a different Interest Rate Mode from other Notes. The interest rate for the Notes will be established periodically as described herein by the applicable Remarketing Agent. 7 8 Interest will be payable on any Note at Maturity and (i) in the Initial Interest Rate Period, on the date or dates set forth on Annex A thereto; (ii) for any Interest Rate Period in the Commercial Paper Term Mode, on the Interest Rate Adjustment Date commencing the next succeeding Interest Rate Period for such Note and on such other dates (if any) as will be established upon conversion of such Note to the Commercial Paper Term Mode or upon remarketing of the Note in a new Interest Rate Period in the Commercial Paper Term Mode and set forth in the applicable Note; and (iii) in the Long Term Rate Mode or SPURS Mode, no less frequently than semiannually on such dates as will be established upon conversion of such Note to the Long Term Rate Mode or the SPURS Mode (or upon remarketing of the Note in a new Interest Rate Period in the Long Term Rate Mode or the SPURS Mode, as the case may be) and set forth in the applicable Note in the case of a fixed interest rate, or as described below under "Floating Interest Rates" in the case of a floating interest rate, and on the Interest Rate Adjustment Date commencing the next succeeding Interest Rate Period. Such interest will be payable to the Holder thereof as of the related Record Date, which, for any Note (x) in the Initial Interest Rate Period, is the date or dates set for therein; (y) in the Commercial Paper Term Mode, is the Business Day prior to the related Interest Payment Date; and (z) bearing interest in the Long Term Rate Mode or the SPURS Mode, is 15 days prior to the related Interest Payment Date. Except as provided below under "Floating Interest Rates," if any Interest Payment Date would otherwise be a day that is not a Business Day, such Interest Payment Date will be postponed to the next succeeding Business Day, and no interest will accrue on such payment for the period from and after such Interest Payment Date to the date of such payment on the next succeeding Business Day. Interest on Notes bearing interest in the Commercial Paper Term Mode or at a floating interest rate during an Interest Rate Period in the Long Term Rate Mode or the SPURS Mode will be computed on the basis of actual days elapsed over 360; provided that, if an applicable Interest Rate Basis is the CMT Rate or Treasury Rate (each as defined below), interest will be computed on the basis of actual days elapsed over the actual number of days in the year. Interest on Notes bearing interest at a fixed rate in the Long Term Rate Mode or SPURS Mode will be computed on the basis of a year of 360 days consisting of twelve 30-day months. Interest on Notes at the Initial Interest Rate will be computed on the basis of a year of 360 days consisting of twelve 30-day months. Determination of Interest Rates. General. The interest rate and, in the case of a floating interest rate, the Spread (if any) and the Spread Multiplier (if any) for any Note will be established by the applicable Remarketing Agent in a remarketing as described in Section 207 hereof or otherwise not later than each Interest Rate Adjustment Date for such Note as the minimum rate of interest and, in the case of a floating interest rate, Spread (if any) and Spread Multiplier (if any) necessary in the judgment of such Remarketing Agent to produce a par bid in the secondary market for such Note on the date the interest rate is established. Such rate will be effective for the next succeeding Interest Rate Period for such Note commencing on such Interest Rate Adjustment Date. In the event that (i) the applicable Remarketing Agent has been removed or has resigned and no successor has been appointed, or (ii) such Remarketing Agent has failed to announce the appropriate interest rate, Spread, if any, or Spread Multiplier, if any, as the case 8 9 may be, on the Interest Rate Adjustment Date for any Note for whatever reason, or (iii) the appropriate interest rate, Spread, if any, or Spread Multiplier, if any, as the case may be, or Interest Rate Period cannot be determined for any Note for whatever reason, then such Note shall be automatically converted to the Commercial Paper Term Mode with a Weekly Rate Period, determined as provided below under "Interest Rate Modes - Commercial Paper Term Period", and the rate of interest thereon shall be equal to the Special Interest Rate. The Trustee shall, upon request of any Beneficial Owner of a Note, advise such Beneficial Owner or the applicable Remarketing Agent of the interest rate and, in the case of a floating interest rate, the Interest Rate Basis or Bases, Spread (if any) and Spread Multiplier (if any), and in each case the other terms applicable to such Beneficial Owner's Notes for the next Interest Rate Period. Neither the Trustee nor the Company will otherwise be required to advise Beneficial Owners of the applicable interest rate. The interest rate and other terms announced by the Remarketing Agent, absent manifest error, will be binding and conclusive upon the Beneficial Owners, the Company and the Trustee. Floating Interest Rates. While any Note bears interest in the Long Term Rate Mode or the SPURS Mode (with respect to the period from, and including, the Interest Rate Adjustment Date commencing such period to, but excluding, the SPURS Remarketing Date), the Company may elect a floating interest rate by providing notice, which will be in or promptly confirmed in writing (which includes facsimile or appropriate electronic media), received by the Trustee and the Remarketing Agent for such Note (the "Floating Interest Rate Notice") not less than ten (10) days prior to the Interest Rate Adjustment Date for such Long Term Rate Period or SPURS Rate Period. The Floating Interest Rate Notice must identify by CUSIP number or otherwise the portion of the Note to which it relates and state the Interest Rate Period (or portion thereof, in the case of the SPURS Mode) therefor to which it relates. Each Floating Interest Rate Notice must also state the Interest Rate Basis or Bases, the Initial Interest Reset Date, the Interest Reset Period and Dates, the Interest Payment Period and Dates, the Index Maturity and the Floating Rate Maximum Interest Rate and/or Floating Rate Minimum Interest Rate, if any. If one or more of the applicable Interest Rate Bases is LIBOR or the CMT Rate, the Floating Interest Rate Notice shall also specify the Index Currency and Designated LIBOR Page or the Designated CMT Maturity Index and Designated CMT Telerate Page, respectively. If any Note bears interest at a floating rate in a Long Term Rate Period or SPURS Rate Period, such Note shall bear interest at the rate determined by reference to the applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if any, and/or (b) multiplied by the Spread Multiplier, if any, specified by the Remarketing Agent, in the case of a Long Term Rate Period, or the SPURS Agent, in the case of a SPURS Rate Period, and recorded in Annex A to such Note. Commencing on the Interest Rate Adjustment Date for such Interest Rate Period, the rate at which interest on such Note shall be payable shall be reset as of each Interest Reset Date during such Interest Rate Period specified in the applicable Floating Interest Rate Notice. 9 10 The applicable floating interest rate on any Note during any Interest Rate Period will be determined by reference to the applicable Interest Rate Basis or Interest Rate Bases, which may include (i) the CD Rate, (ii) the CMT Rate, (iii) the Federal Funds Rate, (iv) LIBOR, (v) the Prime Rate, (vi) the Treasury Rate, or (vii) such other Interest Rate Basis or interest rate formula as may be specified in the applicable Floating Interest Rate Notice (each, an "Interest Rate Basis"). Unless otherwise specified in the applicable Floating Interest Rate Notice, the interest rate with respect to each Interest Rate Basis will be determined in accordance with the applicable provisions below. Except as set forth above or in the applicable Floating Interest Rate Notice, the interest rate in effect on each day shall be (i) if such day is an Interest Reset Date, the interest rate determined as of the Interest Determination Date immediately preceding such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the interest rate determined as of the Interest Determination Date immediately preceding the most recent Interest Reset Date. If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date will be postponed to the next succeeding Business Day, unless LIBOR is an applicable Interest Rate Basis and such Business Day falls in the next succeeding calendar month, in which case such Interest Reset Date will be the immediately preceding Business Day. In addition, if the Treasury Rate is an applicable Interest Rate Basis and the Interest Determination Date would otherwise fall on an Interest Reset Date, then such Interest Reset Date will be postponed to the next succeeding Business Day. The applicable Floating Interest Rate Notice will specify whether the rate of interest will be reset daily, weekly, monthly, quarterly, semiannually or annually or on such other specified basis (each, an "Interest Reset Period") and the dates on which such rate of interest will be reset (each, an "Interest Reset Date"). Unless otherwise specified in the applicable Floating Interest Rate Notice, the Interest Reset Dates will be, in the case of a floating interest rate which resets: (i) daily, each Business Day; (ii) weekly, the Wednesday of each week (unless the Treasury Rate is an applicable Interest Rate Basis, in which case the Tuesday of each week except as described below); (iii) monthly, the third Wednesday of each month; (iv) quarterly, the third Wednesday of March, June, September and December of each year, (v) semiannually, the third Wednesday of the two months specified in the applicable Floating Interest Rate Notice; and (vi) annually, the third Wednesday of the month specified in the applicable Floating Interest Rate Notice. The interest rate applicable to each Interest Reset Period commencing on the related Interest Reset Date will be the rate determined as of the applicable Interest Determination Date. The "Interest Determination Date" with respect to the CD Rate, the CMT Rate, the Federal Funds Rate and the Prime Rate will be the second Business Day immediately preceding the applicable Interest Reset Date; and the "Interest Determination Date" with respect to LIBOR shall be the second London Business Day immediately preceding the applicable Interest Reset Date, unless the Index Currency is British pounds sterling, in which case the "Interest Determination Date" will be the applicable Interest Reset Date. The "Interest Determination Date" with respect to the Treasury Rate shall be the day in the week in which the applicable Interest Reset Date falls on which day Treasury Bills (as defined below) are normally auctioned (Treasury Bills are normally sold at an auction held on Monday of each week, unless that day is 10 11 a legal holiday, in which case the auction is normally held on the following Tuesday, except that such auction may be held on the preceding Friday); provided, however, that if an auction is held on the Friday of the week preceding the applicable Interest Reset Date, the "Interest Determination Date" shall be such preceding Friday. If the interest rate of any Note is a floating interest rate determined with reference to two or more Interest Rate Bases specified in the applicable Floating Interest Rate Notice, the "Interest Determination Date" pertaining to the Note shall be the most recent Business Day which is at least two Business Days prior to the applicable Interest Reset Date on which each Interest Rate Basis is determinable. Each Interest Rate Basis shall be determined as of such date, and the applicable interest rate shall take effect on the related Interest Reset Date. Either or both of the following may also apply to the floating interest rate on any Note for an Interest Rate Period: (i) a floating rate maximum interest rate, or ceiling, that may accrue during any Interest Reset Period (the "Floating Rate Maximum Interest Rate") and (ii) a floating rate minimum interest rate, or floor, that may accrue during any Interest Reset Period (the "Floating Rate Minimum Interest Rate"). In addition to any Floating Rate Maximum Interest Rate that may apply, the interest rate on any Note will in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States laws of general application. Except as provided below or in the applicable Floating Interest Rate Notice, interest will be payable, in the case of floating interest rates which reset: (i) daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified in the applicable Floating Interest Rate Notice; (ii) quarterly, on the third Wednesday of March, June, September and December of each year; (iii) semiannually, on the third Wednesday of the two months of each year specified in the applicable Floating Interest Rate Notice; and (iv) annually, on the third Wednesday of the month of each year specified in the applicable Floating Interest Rate Notice and, in each case, on the Business Day immediately following the applicable Long Term Rate Period or SPURS Rate Period, as the case may be. If any Interest Payment Date for the payment of interest at a floating rate (other than following the end of the applicable Long Term Rate Period or SPURS Rate Period, as the case may be) would otherwise be a day that is not a Business Day, such Interest Payment Date will be postponed to the next succeeding Business Day, except that if LIBOR is an applicable Interest Rate Basis and such Business Day falls in the next succeeding calendar month, such Interest Payment Date will be the immediately preceding Business Day. All percentages resulting from any calculation of floating interest rates will be rounded to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in or resulting from such calculation will be rounded, in the case of United States dollars, to the nearest cent or, in the case of a foreign currency or composite currency, to the nearest unit (with one-half cent or unit being rounded upwards). 11 12 Accrued floating rate interest will be calculated by multiplying the principal amount of the applicable Note by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factor calculated for each day in the applicable Interest Reset Period. Unless otherwise specified in the applicable Floating Interest Rate Notice, the interest factor for each such day will be computed by dividing the interest rate applicable to such day by 360, if an applicable Interest Rate Basis is the CD Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of days in the year if an applicable Interest Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise specified in the applicable Floating Interest Rate Notice, if the floating interest rate is calculated with reference to two or more Interest Rate Bases, the interest factor will be calculated in each period in the same manner as if only one of the applicable Interest Rate Bases applied as specified in the applicable Floating Interest Rate Notice. Unless otherwise specified in the applicable Floating Interest Rate Notice, The Bank of New York will be the "Calculation Agent." For any Remarketed Note bearing interest at a floating rate, the applicable Remarketing Agent will determine the interest rate in effect from the Interest Rate Adjustment Date for such Remarketed Note to the Initial Interest Reset Date. The Calculation Agent will determine the interest rate in effect for each Interest Reset Period thereafter. Upon request of the Beneficial Owner of a Note, after any Interest Rate Adjustment Date, the Calculation Agent or the Remarketing Agent shall disclose the interest rate and, in the case of a floating interest rate, Interest Rate Basis or Bases, Spread (if any) and Spread Multiplier (if any), and in each case the other terms applicable to such Note then in effect and, if determined, the interest rate that will become effective as a result of a determination made for the next succeeding Interest Reset Date with respect to such Note. Except as described herein with respect to a Note earning interest at floating rates, no notice of the applicable interest rate, Spread (if any) or Spread Multiplier (if any) shall be sent to the Beneficial Owner of any Note. Unless otherwise specified in the applicable Floating Interest Rate Notice, the "Calculation Date", if applicable, pertaining to any Interest Determination Date will be the earlier of (i) the tenth calendar day after such Interest Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. CD Rate. If an Interest Rate Basis for any Note is specified in the applicable Floating Interest Rate Notice as the "CD Rate," the CD Rate means with respect to any Interest Determination Date relating to a Note for which the interest rate is determined with reference to the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date for negotiable United States dollar certificates of deposit having the Index Maturity specified in the applicable Floating Interest Rate Notice as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)") under the heading "CDs (Secondary Market)," or, if not published by 3:00 p.m., New York City time, on the related Calculation Date, the rate on such CD Rate Interest Determination Date for negotiable United States dollar certificates of deposit of the Index Maturity specified in the applicable Floating Interest Rate Notice as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for 12 13 United States Government Securities" or any successor publication ("Composite Quotations") under the heading "Certificates of Deposit." If such rate is not yet published in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on the related Calculation Date, then the CD Rate on such CD Rate Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York City time, on such CD Rate Interest Determination Date, of three leading nonbank dealers in negotiable United States dollar certificates of deposit in The City of New York (which may include the Remarketing Agent or its affiliates) selected by the Calculation Agent, after consultation with the Company, for negotiable United States dollars certificates of deposit of major United States money center banks for negotiable certificates of deposit with a remaining maturity closest to the Index Maturity specified in the applicable Floating Interest Rate Notice in an amount that is representative for a single transaction in that market at that time; provided, however, that if the dealers so selected by the Calculation Agent are not quoting as mentioned in this sentence, the CD Rate determined as of such CD Rate Interest Determination Date will be the CD Rate in effect on such CD Rate Interest Determination Date. CMT Rate. If an Interest Rate Basis for any Note is specified in the applicable Floating Interest Rate Notice as the "CMT Rate," the CMT Rate means, with respect to any Interest Determination Date relating to a Note for which the interest is determined with reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed on the Designated CMT Telerate Page (as defined below) under the caption "...Treasury Constant Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the weekly or monthly average, as specified in the Floating Interest Rate Notice, for the week or the month, as applicable, ended immediately preceding the week in which the related CMT Rate Interest Determination Date occurs. If such rate is no longer displayed on the relevant page or is not displayed by 3:00 p.m., New York City time, on the related Calculation Date, then the CMT Rate for such CMT Rate Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index as published in H.15(519). If such rate is no longer published or is not published by 3:00 p.m., New York City time, on the related Calculation Date, then the CMT Rate on such CMT Rate Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in H.15(519). If such information is not provided by 3:00 p.m., New York City time, on the related Calculation Date, then the CMT Rate on the CMT Rate Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 p.m., New York City time, on such CMT Rate Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York (which may include the Remarketing Agent or its 13 14 affiliates) selected by the Calculation Agent after consultation with the Company (from five such Reference Dealers selected by the Calculation Agent, after consultation with the Company, and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent is unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT Rate Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 p.m., New York City time, on such CMT Rate Interest Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent, after consultation with the Company, and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least U.S.$100 million. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference Dealers so selected by the Calculation Agent, after consultation with the Company, are quoting as mentioned herein, the CMT Rate determined as of such CMT Rate Interest Determination Date will be the CMT Rate in effect on such CMT Rate Interest Determination Date. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the Calculation Agent, after consultation with the Company, will obtain from five Reference Dealers quotations for the Treasury Note with the shorter remaining term to maturity. "Designated CMT Telerate Page" means the display on the Dow Jones Markets Limited (or any successor service) on the page specified in the applicable Floating Interest Rate Notice (or any other page as may replace such page on such service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)) for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified in the applicable Floating Interest Rate Notice, the Designated CMT Telerate Page shall be 7052 for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in the applicable Floating Interest Rate Notice with respect to which the CMT Rate will be calculated. If no such maturity is specified in the applicable Floating Interest Rate Notice, the Designated CMT Maturity Index shall be 2 years. Federal Funds Rate. If an Interest Rate Basis for any Note is specified in the applicable Floating Interest Rate Notice as the "Federal Funds Rate," the Federal Funds Rate means, with 14 15 respect to any Interest Determination Date relating to a Note for which the interest rate is determined with reference to the Federal Funds Rate (a "Federal Funds Rate Interest Determination Date"), the rate on such date for United States dollar federal funds as published in H.15(519) under the heading "Federal Funds (Effective)" or, if not published by 3:00 p.m., New York City time, on the Calculation Date, the rate on such Federal Funds Rate Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate." If such rate is not published in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on the related Calculation Date, then the Federal Funds Rate on such Federal Funds Rate Interest Determination Date shall be calculated by the Calculation Agent and will be the arithmetic mean of the rates for the last transaction in overnight United States dollar federal funds arranged by three leading brokers of federal funds transactions in The City of New York (which may include the Remarketing Agent or its affiliates) selected by the Calculation Agent after consultation with the Company, prior to 9:00 a.m., New York City time, on such Federal Funds Rate Interest Determination Date; provided, however, that if the brokers so selected by the Calculation Agent are not quoting as mentioned in this sentence, the Federal Funds Rate determined as of such Federal Funds Rate Interest Determination Date will be the Federal Funds Rate in effect on such Federal Funds Rate Interest Determination Date. LIBOR. If an Interest Rate Basis for any Note is specified in the applicable Floating Interest Rate Notice as "LIBOR," LIBOR means the rate determined by the Calculation Agent as of the applicable Interest Determination Date (a "LIBOR Interest Determination Date") in accordance with the following provisions: (i) if (a) "LIBOR Reuters" is specified in the applicable Floating Interest Rate Notice, the arithmetic mean of the offered rates (unless the Designated LIBOR Page (as defined below) by its terms provides only for a single rate, in which case such single rate will be used) for deposits in the Index Currency having the Index Maturity specified in the applicable Floating Interest Rate Notice, commencing on the applicable Interest Reset Date, that appear (or, if only a single rate is required as aforesaid, appears) on the Designated LIBOR Page as of 11:00 a.m., London time, on such LIBOR Interest Determination Date, or (b) "LIBOR Telerate" is specified in the applicable Floating Interest Rate Notice, or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable Floating Interest Rate Notice as the method for calculating LIBOR, the rate for deposits in the Index Currency having the Index Maturity specified in the applicable Floating Interest Rate Notice, commencing on such Interest Reset Date, that appears on the Designated LIBOR Page as of 11:00 a.m., London time, on such LIBOR Interest Determination Date. If fewer than two such offered rates appear, or if no such rate appears, as applicable, LIBOR on such LIBOR Interest Determination Date shall be determined in accordance with the provisions described in clause (ii) below. (ii) With respect to a LIBOR Interest Determination Date on which fewer than two offered rates appear, or no rate appears, as the case may be, on the Designated LIBOR Page as specified in clause (i) above, the Calculation Agent shall request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, after consultation with the Company, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity 15 16 specified in the applicable Floating Interest Rate Notice, commencing on the applicable Interest Reset Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are so provided, then LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two such quotations are so provided, then LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in the applicable Principal Financial Center, on such LIBOR Interest Determination Date by three major banks in such Principal Financial Center selected by the Calculation Agent, after consultation with the Company, for loans in the Index Currency to leading European banks, having the Index Maturity specified in the applicable Floating Interest Rate Notice and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date shall be LIBOR in effect on such LIBOR Interest Determination Date. "Index Currency" means the currency or composite currency specified in the applicable Floating Interest Rate Notice as to which LIBOR shall be calculated. If no such currency or composite currency is specified in the applicable Floating Interest Rate Notice, the Index Currency shall be United States dollars. "Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the applicable Floating Interest Rate Notice, the display on the Reuter Monitor Money Rates Service (or any successor service) on the page specified in such Floating Interest Rate Notice (or on any other page as may replace such page on such service) for the purpose of displaying the London interbank rates of major banks for the Index Currency, or (b) if "LIBOR Telerate" is specified in the applicable Floating Interest Rate Notice or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable Floating Interest Rate Notice as the method for calculating LIBOR, the display on the Dow Jones Markets Limited (or any successor service) on the page specified in such Floating Interest Rate Notice (or on any other page as may replace such page on such service) for the purpose of displaying the London interbank rates of major banks for the Index Currency. Prime Rate. If an Interest Rate Basis for any Note is specified in the applicable Floating Interest Rate Notice as the "Prime Rate," the Prime Rate means, with respect to any Interest Determination Date relating to a Note for which the interest rate is determined with reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the rate on such date as such rate is published in H.15(519) under the heading "Bank Prime Loan." If such rate is not published prior to 3:00 p.m., New York City time, on the related Calculation Date, then the Prime Rate shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen U.S. PRIME 1 Page (as defined below) as such bank's prime rate or base lending rate as in effect for such Prime Rate Interest Determination Date. If fewer than four such rates appear on the Reuters Screen U.S. PRIME 1 Page for such Prime Rate Interest Determination Date, the Prime Rate shall be the arithmetic mean of the prime rates quoted on the basis of the 16 17 actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Interest Determination Date by four major money center banks (which may include The Bank of New York) in The City of New York selected by the Calculation Agent, after consultation with the Company. If fewer than four such quotations are so provided, the Prime Rate shall be the arithmetic mean of four prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Interest Determination Date as furnished in The City of New York by the major money center banks, if any, that have provided such quotations and by as many substitute banks or trust companies (which may include The Bank of New York) as necessary in order to obtain four such prime rate quotations, provided such substitute banks or trust companies are organized and doing business under the laws of the United States, or any State thereof, have total equity capital of at least U.S.$500 million and are each subject to supervision or examination by Federal or State authority, selected by the Calculation Agent, after consultation with the Company, to provide such rate or rates; provided, however, that if the banks or trust companies so selected by the Calculation Agent are not quoting as mentioned in this sentence, the Prime Rate determined as of such Prime Rate Interest Determination Date will be the Prime Rate in effect on such Prime Rate Interest Determination Date. "Reuters Screen U.S. PRIME 1 Page" means the display designated as page "U.S. PRIME 1" on the Reuter Monitor Money Rates Service (or any successor service) on the U.S. PRIME 1 Page (or such other page as may replace the U.S. PRIME 1 page on that service) for the purpose of displaying prime rates or base lending rates of major United States banks). Treasury Rate. If an Interest Rate Basis for any Note is specified in the applicable Floating Interest Rate Notice as the "Treasury Rate," the Treasury Rate means, with respect to any Interest Determination Date relating to a Note for which the interest rate is determined with reference to the Treasury Rate (a "Treasury Rate Interest Determination Date"), as the rate from the auction held on such Treasury Rate Interest Determination Date (the "Auction") of direct obligations of the United States ("Treasury Bills") having the Index Maturity specified in the applicable Floating Interest Rate Notice, as such rate is published in H.15(519) under the heading "Treasury bills-auction average (investment)" or, if not published by 3:00 p.m., New York City time, on the related Calculation Date, the auction average rate of such Treasury Bills (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of Treasury. In the event that the results of the Auction of Treasury Bills having the Index Maturity specified in the applicable Floating Interest Rate Notice are not reported as provided above by 3:00 p.m., New York City time, on such Calculation Date, or if no such Auction is held, then the Treasury Rate shall be calculated by the Calculation Agent, and shall be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate Interest Determination Date, of three leading primary United States government securities dealers (which may include the Remarketing Agent or its affiliates) selected by the Calculation Agent, after consultation with the Company, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified in the applicable Floating Interest Rate Notice; provided, however, that if the dealers so selected by the 17 18 Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate determined as of such Treasury Rate Interest Determination Date will be the Treasury Rate in effect on such Treasury Rate Interest Determination Date. Interest Rate Modes. Commercial Paper Term Mode. The Interest Rate Period for any Note in the Commercial Paper Term Mode shall be a period of not less than one nor more than 364 consecutive calendar days, as determined by the Company (as described below in Section 205) or, if not so determined, by the Remarketing Agent for (a "Commercial Paper Term Period") such Note (in its best judgment in order to obtain the lowest interest cost for such Note). Each Commercial Paper Term Period will commence on the Interest Rate Adjustment Date therefor and end on the day preceding the date specified by such Remarketing Agent as the first day of the next Interest Rate Period for such Note. A "Weekly Rate Period" is a Commercial Paper Term Period and will be a period of seven days commencing on any Interest Rate Adjustment Date and ending on the day preceding the first day of the next Interest Rate Period for such Note. The interest rate for any Commercial Paper Term Period relating to a Note will be determined not later than 11:50 a.m., New York City time, on the Interest Rate Adjustment Date for such Note (subject to Section 207), which is the first day of each Interest Rate Period for such Note. Long Term Rate Mode. The Interest Rate Period for any Note in the Long Term Rate Mode will be established by the Company (as described in Section 205 below) as a period of more than 364 days and not exceeding the remaining term to the Stated Maturity of such Note; provided, however, that such Interest Rate Period must end on the day prior to an Interest Payment Date for such Note; and provided further that, if so provided in a Note in the Long Term Rate Mode and specified at the time of remarketing into a Long Term Rate Period, the Company may shorten the Interest Rate Period and provide for payment of a premium, if any, in respect thereof for any such Note upon written notice to the Remarketing Agent and the Trustee not less than thirty (30) days prior to the date upon which such shortened Interest Rate Period shall expire. Promptly upon receipt of such notice and, in any case, not later than the close of business on such date, the Trustee will transmit such information to DTC in accordance with DTC's procedures as in effect from time to time. In such case, the next Interest Rate Adjustment Date otherwise set forth in such Note shall instead be the Business Day immediately following the expiration of such Interest Rate Period. The interest rate, or Spread (if any) and Spread Multiplier (if any) for any Note in the Long Term Rate Mode will be determined not later than 11:50 a.m., New York City time, on the Interest Rate Adjustment Date for such Notes (subject to Section 207), which is the first day of the Interest Rate Period for such Note. If any Note is subject to early remarketing as provided above, the Interest Rate Period may be shortened by the Company to end on any date on or after the Initial Early Remarketing Date, if any, specified in the Note, upon prior written notice as provided above. On or after the Initial Early Remarketing Date, if any, on the Interest Rate Adjustment Date relating to such shortened Interest Rate Period for such Note, the Company will pay a premium to the tendering Beneficial Owner of the Note, together with accrued interest, if any, thereon at the applicable rate payable to such Interest Rate Adjustment Date. Unless otherwise specified in the Note, the 18 19 premium shall be an amount equal to the Initial Early Remarketing Premium specified therein (as adjusted by the Annual Early Remarketing Premium Percentage Reduction specified therein, if applicable), multiplied by the principal amount of the Note subject to early remarketing. The Initial Early Remarketing Premium, if any, shall decline at each anniversary of the Initial Early Remarketing Date by an amount equal to the applicable Annual Early Remarketing Premium Percentage Reduction, if any, specified in the Note until the premium is equal to 0. SPURS Mode. So long as any Notes are in the SPURS Mode, the provisions set forth in Article Two applicable to the remarketing of Notes generally shall apply to such Notes only to the extent expressly provided in Article Three. The Interest Rate Period for any Note in the SPURS Mode will be established by the Company (as described in Section 205 below) as a period of more than 364 days and not exceeding the remaining term to the Stated Maturity of such Note; provided, however, that such Interest Rate Period must end on the day prior to an Interest Payment Date for such Note. The SPURS Rate Period shall consist of the period from and including the Interest Rate Adjustment Date commencing such Interest Rate Period to and excluding the SPURS Remarketing Date and the period from and including the SPURS Remarketing Date to, but excluding, the next succeeding Interest Rate Adjustment Date, as described in Article Three and subject to the conditions therein and otherwise herein described. The interest rate and, in the case of a floating interest rate, the Spread, if any, and the Spread Multiplier, if any, to the SPURS Remarketing Date for any Note in the SPURS Mode will be determined not later than 11:50 a.m., New York City time, on the Interest Rate Adjustment Date for such Note, which for the SPURS Mode is the first day of the Interest Rate Period for such Note. Section 205. Conversion. The Company may change the Interest Rate Mode at its option in the manner described below. (a) Conversion Between Commercial Paper Term Periods. Each Note in Commercial Paper Term Period may be remarketed into the same Interest Rate Period or converted at the option of the Company to a different Commercial Paper Term Period on any Interest Rate Adjustment Date for such Note upon receipt by the applicable Remarketing Agent and the Trustee of a Conversion Notice prior to 9:30 a.m., New York City time, or the remarketing of such Note, whichever later occurs, on such Interest Rate Adjustment Date. (b) Conversion from the Commercial Paper Term Mode to the Long Term Rate Mode or the SPURS Mode. Each Note in the Commercial Paper Term may be converted at the option of the Company to the Long Term Rate Mode or the SPURS Mode on any Interest Rate Adjustment Date upon receipt not less than ten days prior to such Interest Rate Adjustment Date by the applicable Remarketing Agent and the Trustee of a Conversion Notice from the Company. (c) Conversion Between Long Term Rate Periods or from the Long Term Rate Mode or the SPURS Mode to the Commercial Paper Term Mode or the SPURS Mode. Each Note in a Long Term Rate Period may be remarketed into the same Interest Rate Period or converted at the option of the Company to a different Long Term Rate Period or from the Long 19 20 Term Rate Mode to the Commercial Paper Term Mode or the SPURS Mode, or from the SPURS Mode to a different SPURS Mode or to the Long Term Rate Mode or the Commercial Paper Term Mode, on any Interest Rate Adjustment Date for such Note upon receipt by the Trustee and the Remarketing Agent of a Conversion Notice from the Company not less than ten days prior to such Interest Rate Adjustment Date. (d) Conversion Notice. Each Conversion Notice must state each Note to which it relates and the new Interest Rate Mode (if applicable), the new Interest Rate Period, the Conversion Date and, with respect to any Long Term Rate Period, any optional redemption or repayment terms for each such Note. If the Company revokes a Conversion Notice or the Trustee and the Remarketing Agent fail to receive a Conversion Notice from the Company by the specified date in advance of the Interest Rate Adjustment Date for a Note, the Note shall be converted automatically to a Weekly Rate Period. (e) Revocation or Change of Conversion Notice or Floating Interest Rate Notice. The Company may, upon written notice received by the Trustee, the applicable Remarketing Agent, revoke any Conversion Notice or Floating Interest Rate Notice or change the Interest Rate Mode to which such Conversion Notice relates or change any Floating Interest Rate Notice up to 9:30 a.m., New York City time, on the Conversion Date, subject to the provisions of subsection (f) below. (f) Limitation on Conversion, Change of Conversion Notice or Floating Interest Rate Notice and Revocation. Notwithstanding the foregoing subsections (a), (b), (c), (d) and (e) the Company may not, without the consent of the applicable Remarketing Agent, convert any Note or revoke or change any Conversion Notice or Floating Interest Rate Notice at or after the time at which such Remarketing Agent has determined the interest rate, or Spread (if any) and Spread Multiplier (if any), for any Note being remarketed (i.e., the time at which such Note has been successfully remarketed, subject to settlement on the related Interest Rate Adjustment Date). The Remarketing Agent will advise the Company of indicative rates from time to time, or at any time upon the request of the Company, prior to making such determination of the interest rate, Spread or Spread Multiplier, as the case may be. Section 206. Mandatory Tender of Notes. Each Note will be automatically tendered for purchase, or deemed tendered for purchase, on each Interest Rate Adjustment Date relating thereto. Notes will be purchased on the Interest Rate Adjustment Date relating thereto as described in Section 207. hereof. Section 207. Remarketing. The interest rate on each Note will be established from time to time by each Remarketing Agent responsible for the remarketing thereof in accordance with the following procedures: (a) Interest Rate Adjustment Date; Determination of Interest Rate. By 11:00 a.m., New York City time, on the Interest Rate Adjustment Date for any Note, the applicable Remarketing Agent will determine the interest rate for such Note being remarketed to the nearest one hundred-thousandth (0.00001) of one percent per annum for the next Interest Rate Period in 20 21 the case of a fixed interest rate, and the Spread (if any) and Spread Multiplier (if any) in the case of a floating interest rate; provided, that between 11:00 a.m., New York City time, and 11:50 a.m., New York City time, the Remarketing Agent and the Standby Remarketing Agent(s), if any, shall use their reasonable efforts to determine the interest rate for any Notes not successfully remarketed as of the applicable deadline specified in this paragraph. In determining the applicable interest rate for such Note and other terms, such Remarketing Agent will, after taking into account market conditions as reflected in the prevailing yields on fixed and variable rate taxable debt securities, (i) consider the principal amount of all Notes tendered or to be tendered on such date and the principal amount of such Notes prospective purchasers are or may be willing to purchase and (ii) contact, by telephone or otherwise, prospective purchasers and ascertain the interest rates therefor at which they would be willing to hold or purchase such Notes. (b) Notification of Results; Settlement. By 12:30 p.m., New York City time, on the Interest Rate Adjustment Date for any Notes, the applicable Remarketing Agent will notify the Company and the Trustee in writing (which may include facsimile or other electronic transmission), of (i) the interest rate or, in the case of a floating interest rate, the initial interest rate, the Spread and Spread Multiplier and the Initial Interest Reset Date, applicable to such Notes for the next Interest Rate Period, (ii) the Interest Rate Adjustment Date, (iii) the Interest Payment Dates, for any Notes in the Commercial Paper Term Mode (if other than the Interest Rate Adjustment Date), the Long Term Rate Mode or the SPURS Mode, (iv) the optional redemption terms, if any, and early remarketing terms, if any, in the case of a remarketing into a Long Term Rate Period, (v) the aggregate principal amount of tendered Notes and (vi) the aggregate principal amount of such tendered Notes which such Remarketing Agent was able to remarket, at a price equal to 100% of the principal amount thereof plus accrued interest, if any. Immediately after receiving such notice, and in any case, not later than 1:30 p.m. New York City time, the Trustee will transmit such information and any other settlement information required by DTC to DTC in accordance with DTC's procedures as in effect from time to time. By telephone at approximately 1:00 p.m., New York City time, on such Interest Rate Adjustment Date, the applicable Remarketing Agent will advise each purchaser of such Notes (or the DTC participant of each such purchaser who it is expected in turn will advise such purchaser) of the principal amount of such Notes that such purchaser is to purchase. Each purchaser of Notes in a remarketing will be required to give instructions to its DTC participant to pay the purchase price therefor in same day funds to the applicable Remarketing Agent against delivery of the principal amount of such Notes by book-entry through DTC by 3:00 p.m., New York City time, on the Interest Rate Adjustment Date. All tendered Notes will be automatically delivered to the account of the Trustee (or such other account meeting the requirements of DTC's procedures as in effect from time to time), by book-entry through DTC against payment of the purchase price or redemption price therefor, on the Interest Rate Adjustment Date relating thereto. 21 22 The applicable Remarketing Agent will make, or cause the Trustee to make, payment to the DTC participant of each tendering Beneficial Owner of Notes subject to a remarketing, by book-entry through DTC by the close of business on the Interest Rate Adjustment Date against delivery through DTC of such Beneficial Owner's tendered Notes, of the purchase price for tendered Notes that have been sold in the remarketing. If any such Notes were purchased pursuant to a Special Mandatory Purchase, subject to receipt of funds from the Company or the Liquidity Provider, if any, as the case may be, the Trustee will make such payment of the purchase price of such Notes plus accrued interest, if any, to such date. The transactions described above for a remarketing of any Notes will be executed on the Interest Rate Adjustment Date for such Notes through DTC in accordance with the procedures of DTC, and the accounts of the respective DTC participants will be debited and credited and such Notes delivered by book-entry as necessary to effect the purchases and sales thereof, in each case as determined in the related remarketing. Except as otherwise set forth in Section 208 hereof, any Notes tendered in a remarketing will be purchased solely out of the proceeds received from purchasers of such Notes in such remarketing, and none of the Trustee, the applicable Remarketing Agent, any Standby Remarketing Agent or the Company will be obligated to provide funds to make payment upon any Beneficial Owner's tender in a remarketing. Although tendered Notes will be subject to purchase by a Remarketing Agent in a remarketing, such Remarketing Agent and any Standby Remarketing Agent will not be obligated to purchase any such Notes. The settlement and remarketing procedures described above, including provisions for payment by purchasers of tendered Notes or for payment to selling Beneficial Owners of tendered Notes, may be modified to the extent required by DTC. In addition, each Remarketing Agent may, without the consent of the Holders of the Notes, modify the settlement and remarketing procedures set forth above in order to facilitate the settlement and remarketing process. As long as DTC's nominee holds the certificates representing the Notes in the book-entry system of DTC, no certificates for such Notes will be delivered by any selling Beneficial Owner to reflect any transfer of Notes effected in any remarketing. The Trustee shall confirm to DTC the interest rate for the following Interest Rate Period in accordance with DTC's procedures as in effect from time to time. The interest rate announced by the applicable Remarketing Agent, absent manifest error, shall be binding and conclusive upon the Beneficial Owners, the Company and the Trustee. (c) Failed Remarketing. Notes not successfully remarketed will be subject to Special Mandatory Purchase by the Company (a "Special Mandatory Purchase"). The obligation of the Company to effect a Special Mandatory Purchase of the Notes (the "Special Mandatory 22 23 Purchase Right") can be satisfied either directly by the Company or through a Liquidity Provider. By 12:00 o'clock noon, New York City time, on any Interest Rate Adjustment Date, the applicable Remarketing Agent will notify the Liquidity Provider, if any, the Trustee and the Company by telephone or facsimile, confirmed in writing, of the principal amount of Notes that such Remarketing Agent and the applicable Standby Remarketing Agent, if any, were unable to remarket on such date. In the event that the Company has entered into a Standby Note Purchase Agreement which is in effect on such date, such notice will constitute a demand for the benefit of the Company to the Liquidity Provider to purchase such unremarketed Notes at a price equal to the outstanding principal amount thereof pursuant to the terms of such Standby Note Purchase Agreement. If a Standby Note Purchase Agreement is not in effect on such date, or if the Liquidity Provider fails to advance funds under the Standby Note Purchase Agreement, the Company hereby agrees to purchase such unremarketed Notes. In each case the Company will pay all accrued and unpaid interest, if any, on unremarketed Notes to such Interest Rate Adjustment Date. Payment of the principal amount of unremarketed Notes by the Company or the Liquidity Provider, as the case may be, and payment of accrued and unpaid interest, if any, by the Company, shall be made by deposit of same-day funds with the Trustee (or such other account meeting the requirements of DTC's procedures as in effect from time to time) irrevocably in trust for the benefit of the Beneficial Owners of Notes subject to Special Mandatory Purchase by 3:00 p.m., New York City time, on such Interest Rate Adjustment Date. Section 208. Purchase and Redemption of Notes. (a) Special Mandatory Purchase. If by 12:00 o'clock noon, New York City time, on any Interest Rate Adjustment Date for any Notes, the applicable Remarketing Agent and the applicable Standby Remarketing Agent(s) have not remarketed all such Notes, the Notes that are unremarketed are subject to Special Mandatory Purchase. Either the Company or, subject to the terms and conditions of a Standby Note Purchase Agreement, if any, which may be in effect on such date, the Liquidity Provider (if any), will deposit same-day funds in the account of the Trustee (or such other account meeting the requirements of DTC's procedures as in effect from time to time) irrevocably in trust for the benefit of the Beneficial Owners of Notes subject to Special Mandatory Purchase by 3:00 p.m., New York City time, on such Interest Rate Adjustment Date. Such funds shall be in an amount sufficient to pay the aggregate purchase price of such unremarketed Notes, equal to 100% of the principal amount thereof. In the event a Standby Note Purchase Agreement is in effect but the Liquidity Provider shall fail to advance funds for whatever reason thereunder, the Company hereby agrees to purchase such unremarketed Notes on such Interest Rate Adjustment Date. The Company hereby agrees to pay the accrued interest, if any, on such Notes by depositing sufficient same-day funds therefor in the account of the Trustee (or such other account meeting the requirements of DTC's procedures as in effect from time to time) by 3:00 p.m., New York City time, on such Interest Rate Adjustment Date. Failure by the Company to purchase Notes pursuant to a Special Mandatory Purchase in the manner provided in the Notes will constitute an Event of Default under the Original Indenture in which event the date of such failure shall constitute a date of Maturity for such Notes and the principal amount thereof may be declared due and payable in the manner and with 23 24 the effect provided for in the Original Indenture. Following such failure to pay pursuant to a Special Mandatory Purchase, such Notes will bear interest at the Special Interest Rate as provided for in Section 204 hereof. If the Company enters into a Standby Note Purchase Agreement with a Liquidity Provider, Notes purchased by the Liquidity Provider ("Purchased Notes") shall bear interest at the rates and be payable on the dates as may be agreed upon by the Company and the Liquidity Provider. Upon purchase of any Note by the Liquidity Provider, all interest accruing thereon from the last date for which interest was paid shall accrue for the benefit of and be payable to the Liquidity Provider. Unless an event of default under the Standby Note Purchase Agreement occurs, the applicable Remarketing Agent shall continue its remarketing efforts with respect to Purchased Notes until the earlier to occur of a successful remarketing of such Purchased Notes or the expiration of the Standby Note Purchase Agreement. In the event the Liquidity Provider holds Purchased Notes on the date the Standby Note Purchase Agreement expires, the Company will be required to purchase such Notes on such date at a purchase price equal to the principal amount thereof plus accrued interest thereon to the purchase date. Such Notes will remain outstanding and enjoy the benefits of the Original Indenture and this First Supplemental Indenture until such time as the Company delivers the Notes to the Trustee for cancellation. (b) Optional Redemption on any Interest Rate Adjustment Date. Each Note is subject to redemption at the option of the Company in whole or in part on any Interest Rate Adjustment Date, without notice to the Holders thereof, at a redemption price equal to the aggregate principal amount of such Notes to be redeemed plus accrued interest thereon to the redemption date. (c) Redemption While Notes are in the Long Term Rate Mode. Any Notes in the Long Term Rate Mode are subject to redemption at the option of the Company at the times and upon the terms specified at the time of conversion to or within such Long Term Rate Mode. (d) Notice of Redemption. In the case of any Note being redeemed on an Interest Rate Adjustment Date therefor, the Company shall give the applicable Remarketing Agent and the Trustee written notice of such redemption prior to the time the interest rate applicable to the next Interest Rate Period for such Note is established by such Remarketing Agent. In any other case, the Company shall give the Remarketing Agents and the Trustee written notice of redemption of any Note at least two Business Days prior to the date notice is required to be given to Holders. In addition, the Company shall give each Remarketing Agent with respect to any Note being repaid at the option of the Holder thereof and the Trustee notice as soon as practicable, and in any event not later than twelve Business Days prior to the next succeeding Interest Rate Adjustment Date therefor of each such Note which will be repaid by the Company at the option of the Holder thereof on or prior to such Interest Rate Adjustment Date. Each Remarketing Agent's obligation to remarket any Note shall terminate immediately upon receipt by it from the Company of any notice of redemption or repayment thereof. (e) Allocation. Except in the case of a Special Mandatory Purchase, if the Notes are to be redeemed in part, DTC, after receiving notice of redemption specifying the 24 25 aggregate principal amount of Notes to be so redeemed, will determine by lot (or otherwise in accordance with the procedures of DTC) the principal amount of such Notes to be redeemed from the account of each DTC participant. After making its determination as described above, DTC will give notice of such determination to each DTC participant from whose account such Notes are to be redeemed. Each such DTC participant, upon receipt fo such notice, will in turn determine the principal amount of Notes to be redeemed from the accounts of the Beneficial Owners of such Notes for which it serves as DTC participant, and give notice of such determination to the Remarketing Agent. Section 209. Form and Other Terms of the Notes. (a) Attached hereto as Exhibit A is the form of Note, which form is hereby established as the form in which Notes may be issued bearing interest at the Initial Interest Rate or in the Commercial Paper Term Mode, the Long Term Rate Mode or the SPURS Mode. Annex A to Exhibit A is deemed to be a part of such Note and such Annex may be changed upon the mutual agreement of the Company and the Trustee to reflect changes occasioned by remarketings. The Notes will initially bear legends indicating that they have not been registered under the Securities Act of 1933, as amended, and restricting transfers thereof. (b) Attached hereto as Exhibit B is a form of Liquidity Provider Note, which form is hereby established as a form in which Notes held by the Liquidity Provider may be issued. The form of Liquidity Provider Note may be amended to reflect changes occasioned by remarketings upon the mutual agreement of the Company and the Trustee, but only with the consent of the applicable Administrative Agent. (c) Subject to (a) and (b) above, any Note may be issued in such other form as may be provided by, or not inconsistent with, the terms of the Original Indenture and this First Supplemental Indenture. ARTICLE THREE THE SPURS MODE Section 301. Applicability of Article. The provisions of this Article Three shall apply to any Note in the SPURS Mode. To the extent that any provision of this Article Three conflicts with any provision of Article Two, the provisions set forth in this Article Three shall govern. Section 302. Interest To Remarketing Date. Each Note in the SPURS Mode shall bear interest at the annual interest rate established by the SPURS Agent from, and including the Interest Rate Adjustment Date commencing the Interest Rate Period for the SPURS Mode to, but excluding, the date (the "SPURS Remarketing Date") designated at such time by the SPURS Agent after consultation with the Company and set forth in Annex A to the applicable Note. Such interest rate will be the minimum rate of interest and, in the case of a floating interest rate, Spread (if any) and Spread Multiplier (if any) necessary in the judgment of such SPURS Agent 25 26 to produce a par bid in the secondary market for such Note on the date the interest rate is established. The designated SPURS Remarketing Date shall be an Interest Payment Date within such Interest Rate Period. Section 303. Tender; Remarketing. The SPURS Agent's obligations set forth herein shall be performed pursuant to the SPURS Remarketing Agreement. (a) Mandatory Tender. Provided that the SPURS Agent gives notice to the Company and the Trustee on a Business Day not later than ten (10) days prior to the SPURS Remarketing Date of its intention to purchase the Notes for remarketing (the "Notification Date"), each Note shall be automatically tendered, or deemed tendered, to the SPURS Agent for remarketing on the SPURS Remarketing Date, except in the circumstances set forth in Section 304. The purchase price for the tendered Notes to be paid by the SPURS Agent shall equal 100% of the principal amount thereof. When the Notes are tendered for remarketing, the SPURS Agent may remarket the Notes for its own account at varying prices to be determined by the SPURS Agent at the time of each sale. From, and including, the SPURS Remarketing Date to, but excluding, the next succeeding Interest Rate Adjustment Date, the Notes shall bear interest at the SPURS Interest Rate. If the SPURS Agent elects to remarket the Notes, the obligation of the SPURS Agent to purchase the Notes on the SPURS Remarketing Date is subject to, among other things, the conditions specified in the applicable SPURS Remarketing Agreement. If the SPURS Agent for any reason does not purchase all tendered Notes on the SPURS Remarketing Date or if the SPURS Agent gives notice of its intention to remarket the Notes but for any reason does not purchase all tendered Notes on the SPURS Remarketing Date, then as of such date the Notes will cease to be in the SPURS Mode, the SPURS Remarketing Date will constitute an Interest Rate Adjustment Date, and the Notes may be subject to remarketing on such date by a Remarketing Agent appointed by the Company in the Commercial Paper Mode or the Long Term Rate Mode or a new SPURS Mode established by the Company in accordance with the procedures set forth in Section 205 hereof, provided that, in such case, the notice period required for conversion shall be the lesser of ten (10) days and the period commencing the date that the SPURS Agent notifies the Company that it will not purchase the Notes for remarketing on the SPURS Remarketing Date or fails to so purchase, as the case may be. (b) Remarketing. The SPURS Interest Rate shall be established by the SPURS Agent in accordance with the following procedures: (i) The SPURS Interest Rate. Subject to the SPURS Agent's election to remarket the Notes as provided in subsection (a) above, the SPURS Interest Rate shall be determined by the SPURS Agent by 3:30 p.m., New York City time, on the third Business Day preceding the SPURS Remarketing Date (the "Determination Date") to the nearest one hundred-thousandth (0.00001) of one percent per annum, and shall be equal to the Base Rate established by the SPURS Agent, after consultation with the Company, at or prior to the commencement of the SPURS Mode (the "Base Rate"), plus the Applicable Spread (as defined below), which will be based on the Dollar Price (as defined below) of the Notes. 26 27 The "Applicable Spread" will be the lowest bid indication, expressed as a spread (in the form of a percentage or in basis points) above the Base Rate, obtained by the SPURS Agent on the Determination Date from the bids quoted by up to five Reference Corporate Dealers (as defined below) for the full aggregate principal amount of the Notes at the Dollar Price, but assuming (i) an issue date equal to the SPURS Remarketing Date, with settlement on such date without accrued interest, (ii) a maturity date equal to the next succeeding Interest Adjustment Date of the Notes and (iii) a stated annual interest rate, payable semiannually on each Interest Payment Date, equal to the Base Rate plus the spread bid by the applicable Reference Corporate Dealer. If fewer than five Reference Corporate Dealers bid as set forth in this subsection (b)(i) of Section 303, then the Applicable Spread shall be the lowest of such bid indications obtained as set forth in this subsection (b)(i) of Section 303. The SPURS Interest Rate announced by the SPURS Agent, absent manifest error, shall be binding and conclusive upon the Beneficial Owners and Holders of the Notes, the Company and the Trustee. "Dollar Price" shall mean, with respect to the Notes, the present value determined by the SPURS Agent, as of the SPURS Remarketing Date, of the Remaining Scheduled Payments (as defined below) discounted to the SPURS Remarketing Date, on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), at the Treasury Rate (as defined below). "Reference Corporate Dealers" means such Reference Corporate Dealers as shall be appointed by the SPURS Agent after consultation with the Company. "Treasury Rate" shall mean, with respect to the SPURS Remarketing Date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated (on a day count basis) yield to maturity of the Comparable Treasury Issues (as defined below), assuming a price for the Comparable Treasury Issues (expressed as a percentage of its principal amount), equal to the Comparable Treasury Price (as defined below) for such SPURS Remarketing Date. "Comparable Treasury Issues" shall mean the United States Treasury security or securities selected by the SPURS Agent as having an actual or interpolated maturity or maturities comparable or applicable to the remaining term to the next succeeding Interest Adjustment Date of the Notes being purchased. "Comparable Treasury Price" means, with respect to the SPURS Remarketing Date, (a) the offer prices for the Comparable Treasury Issues (expressed in each case as a percentage of its principal amount) on the Determination Date, as set forth on "Telerate Page 500" (or such other page as may replace Telerate Page 500) or (b) if such page (or any successor page) is not displayed or does not contain such offer prices on such Determination Date, (i) the average of the Reference Treasury Dealer Quotations (as defined below) for such SPURS Remarketing Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the SPURS Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. "Telerate Page 500" means the display designated as "Telerate Page 500" on Dow Jones Markets Limited (or such 27 28 other page as may replace Telerate Page 500 on such service) or such other service displaying the offer prices specified in (a) above as may replace Dow Jones Markets Limited. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and the SPURS Remarketing Date, the offer prices for the Comparable Treasury Issues (expressed in each case as a percentage of its principal amount) quoted in writing to the SPURS Agent by such Reference Treasury Dealer by 3:30 p.m. New York City time, on the Determination Date. "Reference Treasury Dealer" means such Reference Treasury Dealers as shall be appointed by the SPURS Agent after consultation with the Company. "Remaining Scheduled Payments" shall mean, with respect to the Notes, the remaining scheduled payments of the principal thereof and interest thereon, calculated at the Base Rate only, that would be due after the SPURS Remarketing Date to and including the next succeeding Interest Adjustment Date as determined by the SPURS Agent. (ii) Notification of Results; Settlement. Provided the SPURS Agent has previously notified the Company and the Trustee on the Notification Date of its intention to purchase all tendered Notes on the SPURS Remarketing Date, the SPURS Agent shall notify the Company, the Trustee and DTC by telephone, confirmed in writing, by 4:00 p.m., New York City time, on the Determination Date, of the SPURS Interest Rate. All of the tendered Notes shall be automatically delivered to the account of the Trustee, by book-entry through DTC pending payment of the purchase price therefor, on the SPURS Remarketing Date. In the event that the SPURS Agent purchases the tendered Notes on the SPURS Remarketing Date, the SPURS Agent shall make or cause the Trustee to make payment to the DTC Participant of each tendering Beneficial Owner of Notes, by book-entry through DTC by the close of business on the SPURS Remarketing Date against delivery through DTC of such Beneficial Owner's tendered Notes, of 100% of the principal amount of the tendered Notes that have been purchased for remarketing by the SPURS Agent. If the SPURS Agent does not purchase all of the Notes on the SPURS Remarketing Date, the Company may attempt to convert the Notes to a new Interest Rate Mode; the interest will be determined as provided above in Section 204 and settlement will be effected as described above in Section 207(b) or Section 207(c), as the case may be. In any case, the Company shall make or cause the Trustee to make payment of interest to each Beneficial Owner of Notes due on the SPURS Remarketing Date by book-entry through DTC by the close of business on the SPURS Remarketing Date. The transactions set forth in this Section 303 shall be executed on the SPURS Remarketing Date through DTC in accordance with the procedures of DTC, and the accounts of the respective DTC participants will be debited and credited and the Notes delivered by book-entry as necessary to effect the purchases and sales thereof. 28 29 Transactions involving the sale and purchase of Notes remarketed by the SPURS Agent on and after the SPURS Remarketing Date will settle in immediately available funds through DTC's Same-Day Funds Settlement System. The tender and settlement procedures set forth above, including provisions for payment by purchasers of Notes in the remarketing or for payment to selling Beneficial Owners of tendered Notes, may be modified to the extent required by DTC or to the extent required to facilitate the tender and remarketing of Notes in certificated form, if the book-entry system is no longer available for the Notes at the time of the remarketing. In addition, the SPURS Agent may, without the consent of the Holders of the Notes, modify the settlement procedures set forth above in order to facilitate the tender and settlement process. As long as DTC's nominee holds the certificates representing any Notes in the book-entry system of DTC, no certificates for such Notes will be delivered by any selling Beneficial Owner to reflect any transfer of such Notes effected in the remarketing. Section 304. Conversion or Redemption Following Election by the SPURS Agent to Remarket. (a) If the SPURS Agent elects to remarket the Notes on the SPURS Remarketing Date, the Notes will be subject to mandatory tender to the SPURS Agent for remarketing on such date, in each case subject to the conditions set forth in Section 303 hereof and to the Company's right to either convert the Notes to a new Interest Rate Mode on the SPURS Remarketing Date or to redeem the Notes from the SPURS Agent, in each case as described in the next sentence. The Company will notify the SPURS Agent and the Trustee, not later than the Business Day immediately preceding the Determination Date, if the Company irrevocably elects to exercise its right to either convert the Notes to a new Interest Rate Mode, or to redeem the Notes, in whole but not in part, from the SPURS Agent at the Optional Redemption Price, in each case on the SPURS Remarketing Date. (b) In the event that the Company irrevocably elects to convert the Notes to a new Interest Rate Mode, then as of the SPURS Remarketing Date the Notes will cease to be in the SPURS Mode, the SPURS Remarketing Date will constitute an Interest Rate Adjustment Date, and the Notes will be subject to remarketing on such date by a Remarketing Agent appointed by the Company in the Commercial Paper Term Mode or the Long Term Rate Mode or a new SPURS Mode established by the Company in accordance with the set forth in Section 205 above; provided that in such case, the notice period required for conversion shall be the period commencing the Business Day immediately preceding the Determination Date. In such case, the Company shall pay to the SPURS Agent the excess of the Dollar Price of the Notes over 100% of the principal amount of the Notes in same-day funds by wire transfer to an account designated by the SPURS Agent on the SPURS Remarketing Date. (c) In the event that the Company irrevocably elects to redeem the Notes, the "Optional Redemption Price" shall be the greater of (i) 100% of the principal amount of the Notes and (ii) the Dollar Price, plus in either case accrued and unpaid interest from the SPURS 29 30 Remarketing Date on the principal amount being redeemed to the date of redemption. If the Company elects to redeem the Notes, it shall pay the redemption price therefor in same-day funds by wire transfer to an account designated by the SPURS Agent on the SPURS Remarketing Date. (d) If notice has been given as provided in the Original Indenture and funds for the redemption of any Notes called for redemption shall have been made available on the redemption date referred to in such notice, such Notes shall cease to bear interest on the date fixed for such redemption specified in such notice and the only right of the SPURS Agent from and after the redemption date shall be to receive payment of the Optional Redemption Price upon surrender of such Notes in accordance with such notice. ARTICLE FOUR ADDITIONAL EVENT OF DEFAULT With respect to the Notes, the following will be an additional Event of Default to follow subsection (11) under Section 501 of the Indenture: (12) default in the performance of the Company's obligation to purchase Notes held by the Liquidity Provider under the terms of the Standby Note Purchase Agreement, if any, and continuance of such default for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder. ARTICLE FIVE ADDITIONAL COVENANT With respect to the Notes, the following covenant shall replace, and hereby supersedes, the provisions of Section 801 of the Original Indenture in their entirety: "SECTION 801. Company May Consolidate, Etc., Only on Certain Terms The Company will not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to any Person, or permit any of its Subsidiaries to do so, except that any Subsidiary of the Company may merger or consolidate with or into any other Subsidiary of the Company, and except that any Subsidiary of the Company may merge into or dispose of assets to the Company, provided, in each case, that no 30 31 Event of Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom." ARTICLE SIX AUTHENTICATION AND DELIVERY OF THE NOTES Section 601. Authentication and Delivery. As provided in and pursuant to Section 303. of the Original Indenture, each time that the Company delivers Notes to the Trustee or Authenticating Agent for authentication, the Company shall deliver a Supplemental Company Order in the form of Exhibit C to this First Supplemental Indenture for the authentication and delivery of such Notes and the Trustee or such Authenticating Agent shall authenticate and deliver such Notes. ARTICLE SEVEN THE SUPPORT AGREEMENT Section 701. The Support Agreement. The Notes shall be entitled to the benefit of that certain support agreement (the "Support Agreement"), dated as of June 16, 1998, by and between the Company and DTE Energy. The form of Support Agreement is attached as Exhibit D hereto. The Company has assigned and pledged its rights under the Support Agreement to the Lenders (as defined therein), pursuant to the terms and conditions of that certain collateral assignment agreement (the "Collateral Assignment Agreement"), dated as of June 16, 1998, by and between the Company and the Lenders. The form of Collateral Assignment Agreement is attached as Exhibit E hereto. The foregoing are subject to amendment or termination in accordance with the terms of the Support Agreement or, as the case may be, the Collateral Assignment Agreement. ARTICLE EIGHT INSURANCE PROVISIONS Section 801. Applicability of Article. During the Initial Interest Rate Period, the Notes shall be entitled to the benefit of a Policy issued by the Insurer. The form of Policy with respect to the Initial Interest Rate Period is attached as Exhibit F hereto. The provisions of this Article Eight shall be applicable to the Notes for the Initial Interest Rate Period and any subsequent Interest Rate Period so long as a Policy is in effect with respect to the Notes and the Insurer is not in default of its obligation to make payments thereunder. Section 802. Rights of Insurer Controlling. Anything herein or under the Original Indenture to the contrary notwithstanding, if a Policy is in effect with respect to the Notes and the Insurer is not in default of its obligation to make payments thereunder, the Insurer shall be deemed to be the Holder of all Notes then Outstanding for all purposes under the 31 32 Indenture and shall have the exclusive right to exercise or direct the exercise of remedies on behalf of the Holders of the Notes in accordance with the terms of the Indenture following an Event of Default, and the principal of all such Notes Outstanding may not be declared to be due and payable immediately without the prior written consent of the Insurer. Section 803. Payments Under the Policy in Respect of the Initial Interest Rate Period. (a) If, as of the opening of business on any Interest Payment Date in the Initial Interest Rate Period, through and including the Initial Interest Rate Adjustment Date, the Trustee has not received payments from the Company pursuant to this First Supplemental Indenture (and after making demand from DTE Energy pursuant to the Support Agreement) in such amounts so that sufficient moneys are available under this First Supplemental Indenture to pay all interest due on the Notes on such Interest Payment Date, the Trustee shall promptly notify the Insurer or its designee by telephone, confirmed in writing by registered or certified mail, of the amount of the deficiency. (b) If, as of 3:00 p.m. New York City time, on the Initial Interest Rate Adjustment Date in the event of a Special Mandatory Purchase, the Trustee has not received payments from the Company pursuant to this First Supplemental Indenture (and after making demand from DTE Energy pursuant to the Support Agreement) in such amounts so that sufficient moneys are available under this First Supplemental Indenture to pay 100% of the aggregate principal amount of the Notes subject to Special Mandatory Purchase on the Initial Interest Rate Adjustment Date, the Trustee shall promptly notify the Insurer or its designee by telephone, confirmed in writing by registered or certified mail, of the amount of the deficiency. (c) If the deficiency in clause (a) or (b) is made up in whole or in part on the applicable payment or purchase date, the Trustee shall so notify the Insurer or its designee. (d) In addition, if the Trustee has notice that any of the Holders have been required to disgorge payments on Notes as described in clauses (a) or (b) to the Company or to a trustee in bankruptcy for creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Holders within the meaning of any applicable bankruptcy laws, then the Trustee shall notify the Insurer or its designee of such fact by telephone, confirmed in writing by registered or certified mail. (e) The Trustee is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Holders of the Notes as follows: If and to the extent there is a deficiency in amounts required to pay interest on the Notes, the Trustee shall (A) execute and deliver to State Street Bank and Trust Company, N.A., or its successors under the Policy (the "Insurance Paying Agent"), in form provided by the Insurance Paying Agent, an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (B) receive as designee of the respective Holders in accordance with the tenor of the Policy payment from 32 33 the Insurance Paying Agent with respect to the claims for interest so assigned and (C) disburse the same at the written direction of the Insurance Paying Agent to such respective Holders; (f) Irrespective of whether any such assignment is executed and delivered, the Company and the Trustee hereby agree for the benefit of the Insurer that: (i) they recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Trustee), on account of interest on the Notes, the Insurer will be subrogated to the rights of such Holders to receive the amount of such interest from the Company, with interest thereon as provided and solely from the sources stated in this First Supplemental Indenture and the Notes; and (ii) they will accordingly pay to the Insurer the amount of such interest (including interest recovered under subparagraph (ii) of the first paragraph of the Policy, which interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Indenture and the Note, but only from the sources and in the manner provided herein for the payment of interest on the Notes to Holders and will otherwise treat the Insurer as the owner of such rights to the amount of such interest. (g) On the date of purchase, the Company shall execute and the Trustee shall authenticate and make available for delivery to the Insurer or the Insurer's designee all Notes purchased with the proceeds under the Policy which Notes shall be registered and made available in the name of or as directed in writing by the Insurer. (h) Payments with respect to claims for interest on and principal of Notes disbursed by the Trustee from proceeds of the Policy shall not be considered to discharge the obligation of the Company with respect to such Notes, and the Insurer shall become the owner of such unpaid Notes and claims for interest in accordance with the tenor of the assignment made to it under the provisions of this section. Section 804. Payments Under a Policy in Respect of Subsequent Interest Rate Periods. Except as otherwise provided in an amendment or supplement to this First Supplemental Indenture on or prior to commencement of a subsequent Interest Rate Period, so long as a Policy is in effect with respect to the Notes and the Insurer is not in default of its obligations to make payments thereunder, the provisions of Section 803 shall apply to each such Interest rate Period, except that provisions in this Article Eight applicable to the "Initial Interest Rate Period" shall apply to such Interest Rate Period, and provisions in this Article Eight applicable to the "Initial Interest Rate Adjustment Date" shall apply to the Interest Rate Adjustment Date immediately succeeding such Interest Rate Period. Section 805. Amendments. Copies of any amendments made to the documents executed in connection with the issuance of the Notes which are consented to by the Insurer shall be sent at the expense of the Company to the rating agencies then rating the Notes. 33 34 Section 806. Notice of Defaults. Notwithstanding Section 601 of the Original Indenture, the Insurer is to receive from the Trustee prompt notice of all defaults of which the Trustee has actual knowledge. Section 807. Company Acting as Paying Agent. Notwithstanding anything to the contrary in the Indenture, so long as a Policy is in effect or the Insurer is the Holder of Notes, the Company shall not act as its own Paying Agent. Section 808. Redemption of Insurer Notes. Notwithstanding Section 1103 of the Original Indenture, all Notes of which the Insurer is the Holder shall be redeemed prior to any other Notes. Section 809. Change in Trustee. The Insurer shall receive notice of the resignation or removal of the Trustee and the appointment of a successor thereto. Section 810. Effect of Amendments. In determining whether any amendments or supplement to the Indenture may be made without the consent of the Holders or in determining whether any action should be taken the effect of such action on the rights of the Holders shall be considered as if the Policy were not in effect. Section 811. Copies of Financial Statements. The Insurer shall receive a copy of all financial statements and reports to be delivered to the Trustee pursuant to Section 704 of the Original Indenture at the time such financial statements and reports are delivered to the Trustee. The address of the initial Insurer is MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention: Insured Portfolio Management--PF. Section 812. Defeasance. Notwithstanding Section 403 of the Original Indenture, for so long as the Policy in effect and the Insurer is not in default of its obligation to make payments thereunder, the Company shall not exercise its rights to satisfy and discharge the entire indebtedness on the Notes without the consent of the Insurer, which consent shall not be unreasonably withheld. Section 813. Notices to Holders. Any notice, certificate or report that is required to be given to a Holder of the Notes or to the Trustee pursuant to the Indenture shall also be provided by the Company to the Insurer. All notices, certificates or reports required to be given to the Insurer shall be in writing and shall be sent by registered or certified mail to such address as shall be designated in writing by the Insurer from time to time. Section 814. Third Party Beneficiary. Notwithstanding Section 112 of the Original Indenture, so long as the Policy in effect and the Insurer is not in default of its obligation to make payments thereunder, the Insurer is an express third-party beneficiary of the Indenture. ARTICLE NINE AMENDMENTS 34 35 Section 901. Notwithstanding anything herein or in the Original Indenture to the contrary, this First Supplemental Indenture and the Original Indenture (in the case of the Original Indenture, with respect to any amendment of or affecting the Notes or the Insurer) may be amended at any time in accordance with the provisions of Article Nine of the Original Indenture, but subject to the consent of the Insurer (which consent shall not be unreasonably withheld) so long as the Policy is in effect and the Insurer is not in default of its obligation to make payments under the Policy. ARTICLE TEN MISCELLANEOUS PROVISIONS The Trustee makes no undertaking or representations in respect of, and shall not be responsible in any manner whatsoever for and in respect of, the validity or sufficiency of this First Supplemental Indenture or the proper authorization or the due execution hereof by the Company or for or in respect of the recitals and statements contained herein, all of which recitals and statements are made solely by the Company. Except as expressly amended hereby, the Original Indenture shall continue in full force and effect in accordance with the provisions thereof and the Original Indenture is in all respects hereby ratified and confirmed. This First Supplemental Indenture and all its provisions shall be deemed a part of the Original Indenture in the manner and to the extent herein and therein provided. This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York. This First Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 35 36 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed and attested, all as of the day and year first above written. DTE CAPITAL CORPORATION Name: Title: ATTEST: By: ______________ THE BANK OF NEW YORK, as Trustee Name: Title: ATTEST: By: ______________ 36 37 STATE OF MICHIGAN ) ) : COUNTY OF WAYNE ) On the __th day of June ____, 1998, before me personally came_____, to me known, who, being by me duly sworn, did depose and say that he is Assistant Treasurer of DTE CAPITAL CORPORATION, one of the corporations described in and which executed the foregoing instrument and he signed his name thereto by like authority. Notary Public, State of Michigan [Notarial Seal] STATE OF NEW YORK ) ) : COUNTY OF ) On the _____ day of June ____, 1998, before me personally came_____, to me known, who, being by me duly sworn, did depose and say that she is _____________ of THE BANK OF NEW YORK, one of the corporations described in and which executed the foregoing instrument and she signed his name thereto by like authority. Notary Public, State of New York [Notarial Seal] 37 38 EXHIBIT A FORM OF NOTE (Attached) 38 39 THIS CERTIFICATE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $100,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (D) IN A TRANSACTION OTHERWISE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT UPON THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION 39 40 SATISFACTORY TO THE COMPANY, SUBJECT IN EACH OF THE FOREGOING CASES, TO A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS NOTE BEING COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE COMPANY. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER OF THIS NOTE (A) IS NOT ITSELF, AND IS NOT ACQUIRING THIS NOTE WITH "PLAN ASSETS" OF, AN EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY") OR (B) (1) IS ITSELF, OR IS ACQUIRING THIS NOTE WITH THE ASSETS OF, AN "INVESTMENT FUND" (WITHIN THE MEANING OF PART V(b) OF PTCE 84-14) MANAGED BY A "QUALIFIED PROFESSIONAL ASSET MANAGER" (WITHIN THE MEANING OF PART V(a) OF PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 84-14) WHICH HAS MADE OR PROPERLY AUTHORIZED THE DECISION FOR SUCH FUND TO PURCHASE THIS NOTE, UNDER CIRCUMSTANCES SUCH AS PTCE 84-14 IS APPLICABLE TO THE PURCHASE AND HOLDING OF THIS NOTE, (2) IS ITSELF, OR IS ACQUIRING THIS NOTE WITH THE ASSETS OF, A PLAN MANAGED BY AN "IN-HOUSE ASSET MANAGER" (WITHIN THE MEANING OF PART IV(a) OF PTCE 96-23) WHICH HAS MADE OR PROPERLY AUTHORIZED THE DECISION FOR SUCH PLAN TO PURCHASE THIS NOTE, UNDER CIRCUMSTANCES SUCH THAT PTCE 96-23 IS APPLICABLE TO THE PURCHASE AND HOLDING OF THIS NOTE, (3) IS AN INSURANCE COMPANY POOLED SEPARATE ACCOUNT PURCHASING THIS NOTE PURSUANT TO PART I OF PTCE 90-1, OR A BANK COLLECTIVE INVESTMENT FUND PURCHASING THIS NOTE PURSUANT TO SECTION I OF PTCE 91-38, AND IN EITHER CASE, NO PLAN OWNS MORE THAN 10% OF THE ASSETS OF SUCH ACCOUNT OR COLLECTIVE FUND (WHEN AGGREGATED WITH OTHER PLANS OF THE SAME EMPLOYER (OR ITS AFFILIATES) OR EMPLOYEE ORGANIZATION) OR (4) IS AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO PURCHASE THIS NOTE PURSUANT TO PART I OF PTCE 95-60, IN WHICH CASE THE RESERVES AND LIABILITIES FOR THE GENERAL ACCOUNT CONTRACTS HELD BY OR ON BEHALF OF ANY PLAN, TOGETHER WITH ANY OTHER PLANS MAINTAINED BY THE SAME EMPLOYER (OR ITS AFFILIATES) OR EMPLOYEE ORGANIZATION, DO NOT EXCEED 10% OF THE TOTAL RESERVES AND LIABILITIES OF THE INSURANCE COMPANY GENERAL ACCOUNT (EXCLUSIVE OF SEPARATE ACCOUNT LIABILITIES), PLUS SURPLUS AS SET FORTH IN THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONS ANNUAL STATEMENT FILED WITH THE STATE OF DOMICILE OF THE INSURER. 40 41 No: DTE CAPITAL CORPORATION REMARKETED NOTE, SERIES A DUE 2038 THIS NOTE SHALL NOT BE VALID FOR ANY PURPOSE UNLESS PRESENTED TOGETHER WITH ANNEX A HERETO (INCLUDING ANY CONTINUATION THEREOF). REFERENCE IS MADE TO ANNEX A FOR CERTAIN TERMS OF THIS NOTE. DTE CAPITAL CORPORATION, a corporation duly organized and existing under the laws of the State of Michigan (the "Company"), for value received hereby promises to pay to CEDE & CO., or registered assigns, the principal sum specified in Annex A on June 15, 2038 (the "Stated Maturity"), upon the presentation and surrender hereof at the principal corporate trust office of The Bank of New York, or its successor in trust (the "Trustee") or such other office as the Trustee has designated in writing, and to pay interest on the unpaid principal balance hereof from, and including, the Original Issue Date specified in Annex A to, but excluding, the Initial Interest Rate Adjustment Date specified in Annex A (the "Initial Interest Rate Period") at the Initial Interest Rate specified therein payable on the related Interest Payment Date or Dates specified in Annex A, to the person in whose name this Note is registered at the close of business on the related Record Date. From and after the Initial Interest Rate Adjustment Date, this Note will bear interest in either the Commercial Paper Term Mode, the Long Term Rate Mode or the SPURS Mode, in each case as provided in this Note and set forth in Annex A, and interest will be payable on the Interest Payment Dates to the person in whose name this Note is registered at the close of business on the related Record Date as provided below or as set forth in Annex A. In each case, payments shall be made in accordance with the provisions hereof and Annex A, including any additional terms specified in Annex A, until the principal hereof is paid or duly made available for payment. References herein to "this Note", "hereof", "herein" and comparable terms shall include Annex A. So long as this Note bears interest in the Commercial Paper Term Mode, interest will be payable on the Interest Rate Adjustment Date which commences the next succeeding Interest Rate Period for this Note and on such other dates (if any) as will be established by the Company and set forth in Annex A upon conversion of this Note to the Commercial Paper Term Mode or upon remarketing of this Note in a new Interest Rate Period in the Commercial Paper Term Mode. So long as this Note bears interest in the Long Term Rate Mode or the SPURS Mode, interest will be payable no less frequently than semiannually on such dates as will be established by the Company and set forth in Annex A upon conversion of this Note to the Long Term Rate Mode or the SPURS Mode (or upon remarketing of this Note in a new Interest Rate Period in the Long Term Rate Mode or the SPURS Mode, as the case may be) in the case of a fixed interest rate, or as set forth below under "Interest Rate" in the case of a floating interest rate and on the Interest Rate Adjustment Date commencing the next succeeding Interest Rate Period. Such interest will be payable to the Holder hereof as of the related Record Date, which, so long as this 41 42 Note bears interest (i) in the Initial Interest Rate Period, are the dates specified in Annex A; (ii) in the Commercial Paper Term Mode, is the Business Day prior to the related Interest Payment Date; and (iii) in the Long Term Rate Mode or the SPURS Mode, is 15 days prior to the related Interest Payment Date. Except as provided below under "Interest Rate-Floating Interest Rates," if any Interest Payment Date would otherwise be a day that is not a Business Day, such Interest Payment Date will be postponed to the next succeeding Business Day, and no interest will accrue on such payment for the period from and after such Interest Payment Date to the date of such payment on the next succeeding Business Day. Interest on this Note while bearing interest in the Commercial Paper Term Mode or at a floating interest rate during a Long Term Rate Period or a SPURS Rate Period will be computed on the basis of actual days elapsed over 360; provided that, if an applicable Interest Rate Basis is the CMT Rate or Treasury Rate (each as defined below), interest will be computed on the basis of actual days elapsed over the actual number of days in the year. Interest on this Note while bearing interest in the Long Term Rate Mode or the SPURS Mode will be computed on the basis of a year of 360 days consisting of twelve 30-day months. Interest on this Note while bearing interest at the Initial Interest Rate will be computed on the basis a year of 360 days consisting of twelve 30-day months. Payment of the principal of and interest on this Note will be made at the office or agency maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the person in whose name this Note is registered at the close of business on the related Record Date. This Note is one of a duly authorized series of Securities of the Company (herein called the "Notes") issued and to be issued under an Indenture, dated as of June 15, 1998, as supplemented by the First Supplemental Indenture, dated as of June 15, 1998 (as further amended or supplemented, the "Indenture"), between the Company and the Trustee, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the registered owners of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is entitled to the benefit of that certain support agreement (the "Support Agreement"), dated as of June 16, 1998, by and between the Company and DTE Energy Company, the owner, directly or indirectly, of 100% of the outstanding common stock of the Company and that certain assignment and pledge of the Company's rights under the Support Agreement to the Lenders (as defined in the Support Agreement), pursuant to the terms and conditions of the collateral assignment agreement (the "Collateral Assignment Agreement"), dated as of June 16, 1998, by and between the Company and the Lenders, subject in each case to amendment or termination of the Support Agreement or, as the case may be, the Collateral Assignment Agreement, in accordance with their respective terms. In addition, if a Policy (as defined below) is in effect with respect to any Interest Rate Period, this Note shall be entitled to the benefit of such Policy for such Interest Rate Period to the extent and subject to the conditions 42 43 set forth in the First Supplemental Indenture, as then amended. . A copy of the Policy is on file at the office of the Trustee. DEFINITIONS The following terms, as used herein, have the following meanings unless the context or use clearly indicates another or different meaning or intent: "Applicable Spread" means the lowest bid indication, expressed as a spread (in the form of a percentage or in basis points) above the Base Rate, obtained by the SPURS Agent on the Determination Date from the bids quoted by up to five Reference Corporate Dealers for the full aggregate principal amount of this Note at the Dollar Price, but assuming (i) an issue date equal to the SPURS Remarketing Date, with settlement on such date without accrued interest, (ii) a maturity date equal to the next succeeding Interest Rate Adjustment Date and (iii) a stated annual interest rate, payable semiannually on each Interest Payment Date, equal to the Base Rate plus the spread bid by the applicable Reference Corporate Dealer. If fewer than five Reference Corporate Dealers bid as set forth herein, then the Applicable Spread shall be the lowest of such bid indications obtained. "Base Rate" means the interest rate established by the SPURS Agent, after consultation with the Company, as the applicable "Base Rate" at or prior to the commencement of the SPURS Mode and set forth on Annex A hereto. "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions located in the State of Michigan or in the state in which the principal corporate trust office of the Trustee is located, are authorized or obligated by or pursuant to law or executive order to close; provided, however, that with respect to Notes in the Long Term Rate Mode or the SPURS Mode as to which LIBOR is an applicable Interest Rate Basis, such day is also a London Business Day (as hereinafter defined). "London Business Day" means (i) if the Index Currency (as hereinafter defined) is other than European Currency Units ("ECU"), any day on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, any day that does not appear as an ECU non-settlement day on the display designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so designated by the ECU Banking Association) or, if ECU non-settlement days do not appear on the page (and are not so designated), is not a day on which payments in ECU cannot be settled in the international interbank market. "Commercial Paper Term Mode" means, with respect to this Note, the Interest Rate Mode in which the interest rate on this Note is reset on a periodic basis which shall not be less than one calendar day nor more than 364 consecutive calendar days and interest is paid as provided for such Interest Rate Mode as set forth herein. "Commercial Paper Term Period" shall mean the Interest Rate Period for this Note in the Commercial Paper Term Mode that is a period of not less than one or more than 364 consecutive calendar days, as determined by the Company (as described below under "Conversion") or, if not 43 44 so determined, by the Remarketing Agent for this Note (in its best judgment in order to obtain the lowest interest cost for this Note). The interest rate for any Commercial Paper Term Period relating to this Note will be determined not later than 11:50 a.m., New York City time, on the Interest Rate Adjustment Date for this Note, which is the first day of each Interest Rate Period for this Note. Each Commercial Paper Term Period shall commence on the Interest Rate Adjustment Date therefor and end on the day preceding the date specified by such Remarketing Agent as the first day of the next Interest Rate Period for this Note. "Comparable Treasury Issues" shall mean the United States Treasury security or securities selected by the SPURS Agent as having an actual or interpolated maturity or maturities comparable or applicable to the remaining term to the next succeeding Interest Rate Adjustment Date. "Comparable Treasury Price" shall mean, with respect to the SPURS Remarketing Date, (a) the offer prices for the Comparable Treasury Issues (expressed in each case as a percentage of its principal amount) on the Determination Date, as set forth on "Telerate Page 500" (or such other page as may replace Telerate Page 500) or (b) if such page (or any successor page) is not displayed or does not contain such offer prices on such Determination Date, (i) the average of the Reference Treasury Dealer Quotations for such SPURS Remarketing Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the SPURS Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. "Telerate Page 500" shall mean the display designated as "Telerate Page 500" on Dow Jones Markets Limited (or such other page as may replace Telerate Page 500 on such service) or such other service displaying the offer prices specified in (a) above as may replace Dow Jones Markets Limited. "Determination Date" means the third Business Day preceding the applicable SPURS Remarketing Date. "Dollar Price" shall mean the present value determined by the SPURS Agent, as of the SPURS Remarketing Date, of the Remaining Scheduled Payments discounted to the SPURS Remarketing Date, on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), at the Treasury Rate. "DTC" or the "Depositary" shall mean The Depository Trust Company, or its nominee. "Floating Interest Rate Notice" has the meaning specified under "Interest Rate - (c) Floating Interest Rates" below. The form of Floating Rate Interest Notice is set forth as Exhibit G to the First Supplemental Indenture. "Floating Rate Maximum Interest Rate" and "Floating Rate Minimum Interest Rate" have the respective meanings specified under "Interest Rate - (c) Floating Interest Rates" below. "Index Maturity" means the period to maturity of the instrument or obligation with respect to which the related Interest Rate Basis or Bases will be calculated. 44 45 "Initial Interest Rate" means the annual rate of interest applicable to this Note during the Initial Interest Rate Period. "Initial Interest Rate Adjustment Date" means June 15, 2003. "Initial Interest Rate Period" means the period commencing on the date of issuance for this Note and ending on the Business Day immediately preceding the Initial Interest Rate Adjustment Date. "Insurer" means, with respect to the Initial Interest Rate Period, MBIA Insurance Corporation, and, with respect to any subsequent Interest Rate Period, such issuer of a financial guaranty policy as may be purchased by the Company from time to time. "Interest Determination Date" has the meaning specified under "Interest Rate - (c) Floating Interest Rates" below. "Interest Rate Adjustment Date" means for a particular Interest Rate Period in any Interest Rate Mode, each date, which shall be a Business Day, on which interest and, in the case of a floating interest rate, the Spread (if any) and the Spread Multiplier (if any) on this Note commences to accrue at the rate determined and announced by the applicable Remarketing Agent for such Interest Rate Periods, and if this Note is bearing interest at the Initial Interest Rate, the Business Day following the expiration of the Initial Interest Rate Period. "Interest Rate Basis" has the meaning specified under "Interest Rate - (c) Floating Interest Rates" below. "Interest Rate Mode" means the mode in which the Interest Rate on this Note is being determined, i.e., the Commercial Paper Term Mode, the Long Term Rate Mode, or the SPURS Mode. "Interest Rate Period" means, with respect to the Commercial Paper Term Mode or the Long Term Rate Mode, the period of time commencing on the Interest Rate Adjustment Date to, but not including, the immediately succeeding Interest Rate Adjustment Date during which this Note bears interest at a particular fixed interest rate or floating interest rate, and, with respect to an Interest Rate Period for this Note in the SPURS Mode, a SPURS Rate Period. So long as this Note bears interest in the Long Term Rate Mode, if so provided in Annex A at "Interest Rate Period Adjustment" and if specified by the Company at the time of remarketing into such Long Term Rate Period, the Company may shorten the Interest Rate Period and provide for payment of a premium in respect thereof for this Note upon written notice to the Remarketing Agent and the Trustee not less than thirty (30) days prior to the date upon which such shortened Interest Rate Period shall expire. Promptly upon receipt of such notice and, in any case, not later than the close of business on such date, the Trustee will transmit such information to DTC in accordance with DTC's procedures as in effect from time to time. In such case, the next Interest Rate Adjustment Date otherwise set forth in Annex A shall instead be the date upon which such Interest Rate Period shall expire. 45 46 If this Note is subject to early remarketing as provided above, the Interest Rate Period may be shortened by the Company on any date on and after the Initial Early Remarketing Date, if any, specified in Annex A, upon prior written notice as provided above. On and after the Initial Early Remarketing Date, if any, on the Interest Rate Adjustment Date relating to such shortened Interest Rate Period for this Note, the Company will pay a premium to the tendering beneficial owner of this Note, together with accrued interest, if any, hereon at the applicable rate payable to such Interest Rate Adjustment Date. Unless otherwise specified in Annex A, the premium shall be an amount equal to the Initial Early Remarketing Premium specified in Annex A, the premium shall be an amount equal to the Initial Early Remarketing Premium specified in Annex A (as adjusted by the Annual Early Remarketing Premium Percentage Reduction, if applicable), multiplied by the principal amount of this Note subject to early remarketing. The Initial Early Remarketing Premium, if any, shall decline at each anniversary of the Initial Early Remarketing Date by an amount equal to the applicable Annual Early Remarketing Premium Percentage Reduction, if any, specified in Annex A until the premium is equal to 0. "Interest Reset Date", "Initial Interest Reset Date" and "Interest Reset Period" have the respective meanings specified under "Interest Rate - (c) Floating Interest Rates" below. "Liquidity Provider" means, any bank or other credit provider whose obligations such as those under the applicable Standby Note Purchase Agreement with respect to any Notes are exempt from registration under the Securities Act of 1933, as amended, with long term senior debt ratings from Standard & Poor's Ratings Services and Moody's Investors Service, Inc. at least equal to those of the Company as of the date of the Standby Note Purchase Agreement, and a minimum combined capital and surplus of at least $50,000,000, that has entered into a Standby Note Purchase Agreement with the Company for the purpose of purchasing unremarketed Notes on any Interest Rate Adjustment Date. "Long Term Rate Mode" means, with respect to this Note, the Interest Rate Mode in which the interest rate on this Note is reset in a Long Term Rate Period and interest is paid as provided for such Interest Rate Mode as set forth herein. "Long Term Rate Period" means any period of more than 364 days and not exceeding the remaining term to the Stated Maturity of this Note. "Notification Date" means the Business Day not later than ten (10) days prior to the applicable SPURS Remarketing Date on which the SPURS Agent gives notice to the Company and the Trustee of its intention to purchase this Note for remarketing. "Optional Redemption" means the redemption of this Note prior to its maturity at the option of the Company as described herein. "Policy" means, with respect to the Initial Interest Rate Period, the financial guaranty insurance policy issued by MBIA Insurance Corporation and attached as Exhibit F to the First Supplemental Indenture, and, with respect to any subsequent Interest Rate Period, such financial guaranty insurance policy as may be purchased by the Company from time to time. 46 47 "Principal Financial Center" means the capital city of the country issuing the Index Currency, except that with respect to United States dollars, Australian dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECUs, the Principal Financial Center shall be The City of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg, respectively. "Reference Corporate Dealers" means such Reference Corporate Dealers as shall be appointed by the SPURS Agent after consultation with the Company. "Reference Treasury Dealer" shall mean such Reference Treasury Dealers as shall be appointed by the SPURS Agent after consultation with the Company. "Reference Treasury Dealer Quotations" shall mean, with respect to each Reference Treasury Dealer and the SPURS Remarketing Date, the offer prices for the Comparable Treasury Issues (expressed in each case as a percentage of its principal amount) quoted in writing to the SPURS Agent by such Reference Treasury Dealer by 3:30 p.m. New York City time, on the Determination Date. "Remaining Scheduled Payments" shall mean with respect to this Note the remaining scheduled payments of the principal hereof and interest hereon, calculated at the Base Rate only, that would be due after the SPURS Remarketing Date to and including the next succeeding Interest Rate Adjustment Date as determined by the SPURS Agent. "Remarketing Agent" means such Remarketing Agent or agent, including any standby Remarketing Agent (each a "Standby Remarketing Agent"), appointed by the Company from time to time, for this Note. "Special Interest Rate" means the rate of interest equal to the rate per annum announced by Citibank, N.A., or such other nationally recognized bank located in the United States as the Company may select, as its prime lending rate. "Special Mandatory Purchase" means the obligation of the Company (or, if applicable, a Liquidity Provider) to purchase Notes not successfully remarketed by the Remarketing Agent and the applicable Standby Remarketing Agent(s) by 12:00 o'clock noon, New York City time, on any Interest Rate Adjustment Date. "Spread" means the number of basis points to be added to or subtracted from the related Interest Rate Basis or Bases applicable to an Interest Rate Period, as the case may be, for this Note. "Spread Multiplier" means the percentage of the related Interest Rate Basis or Bases applicable to an Interest Rate Period by which such Interest Rate Basis or Bases will be multiplied to determine the applicable interest rate from time to time for such Long Term Interest Rate Period, as the case may be. 47 48 "SPURS Interest Rate" means the rate equal to the Base Rate established by the SPURS Agent, after consultation with the Company, at or prior to the commencement of the SPURS Mode plus the Applicable Spread, which will be based on the Dollar Price. "SPURS Mode" means the Interest Rate Mode in which this Note shall bear interest and be subject to remarketing as "Structured PUtable Remarketable Securities" ("SPURS"). "SPURS Rate Period" means an Interest Rate Period in the SPURS Mode established by the Company as a period of more than 364 days and not exceeding the remaining term to the Stated Maturity of this Note; provided, however, that such Interest Rate Period must end on the day prior to an Interest Payment Date for this Note. The SPURS Rate Period shall consist of the period to and excluding the SPURS Remarketing Date and the period from and including the SPURS Remarketing Date to but excluding the next succeeding Interest Rate Adjustment Date. "SPURS Remarketing Agreement" shall mean the agreement dated as of the Interest Rate Adjustment Date commencing the applicable SPURS Rate Period which sets forth the rights and obligations of the Company and the applicable SPURS Agent with respect to the remarketing of Notes in the SPURS Mode. "SPURS Remarketing Date" means the date designated by the applicable SPURS Agent, after consultation with the Company, within the SPURS Rate Period on which the applicable SPURS Agent may elect to remarket the Note at the SPURS Interest Rate. "Standby Note Purchase Agreement" means the agreement, which the Company may, at its option, enter into from time to time with a Liquidity Provider for the purpose of purchasing unremarketed Notes. "Treasury Rate" shall mean, with respect to the SPURS Remarketing Date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated (on a day count basis) yield to maturity of the Comparable Treasury Issues, assuming a price for the Comparable Treasury Issues (expressed as a percentage of its principal amount), equal to the Comparable Treasury Price for such SPURS Remarketing Date. "Weekly Rate Period" means a Commercial Paper Term Period with an Interest Rate Period of generally seven days. INTEREST RATE (a) Initial Interest Rate. From the Original Issue Date set forth in Annex A to the Initial Interest Rate Adjustment Date set forth in Annex A, this Note will bear interest at the Initial Interest Rate specified therein. Thereafter, this Note will bear interest in the Commercial Paper Term Mode, the Long Term Rate Mode or the SPURS Mode. (b) Interest Rates. The interest rate and, in the case of a floating interest rate, the Spread (if any) and the Spread Multiplier (if any) for this Note will be announced by the Remarketing Agent on or prior to the Interest Rate Adjustment Date for the next succeeding 48 49 Interest Rate Period and will be the minimum interest rate per annum and, in the case of a floating interest rate, the Spread (if any) and the Spread Multiplier (if any) necessary, during the Interest Rate Period commencing on such Interest Rate Adjustment Date, in the judgment of the Remarketing Agent, to produce a par bid in the secondary market for this Note on the date the interest rate is established. Such rate will be effective for the next succeeding Interest Rate Period for this Note commencing on such Interest Rate Adjustment Date. (c) Floating Interest Rates. While this Note bears interest in the Long Term Rate Mode or the SPURS Mode (with respect to the period from, and including, the Interest Rate Adjustment Date commencing such period to, but excluding, the SPURS Remarketing Date), the Company may elect a floating interest rate by providing notice, which will be in or promptly confirmed in writing (which includes facsimile or appropriate electronic media), received by the Trustee and the Remarketing Agent for this Note (the "Floating Interest Rate Notice") not less than ten (10) days prior to the Interest Rate Adjustment Date for such Long Term Rate Period or SPURS Rate Period. The Floating Interest Rate Notice must identify by CUSIP number or otherwise the portion of this Note to which it relates and state the Interest Rate Period (or portion thereof, in the case of the SPURS Mode) therefor to which it relates. Each Floating Interest Rate Notice must also state the Interest Rate Basis or Bases, the Initial Interest Reset Date, the Interest Reset Period and Dates, the Interest Payment Period and Dates, the Index Maturity, the Floating Rate Maximum Interest Rate and/or Floating Rate Minimum Interest Rate, if any, and the Day Count Convention. If one or more of the applicable Interest Rate Bases is LIBOR or the CMT Rate, the Floating Interest Rate Notice shall also specify the Index Currency and Designated LIBOR Page or the Designated CMT Maturity Index and Designated CMT Telerate Page, respectively. If this Note bears interest at a floating rate in a Long Term Rate Period or a SPURS Rate Period, this Note shall bear interest at the rate determined by reference to the applicable Interest Rate Basis or Bases (a) plus or minus the Spread, if any, and/or (b) multiplied by the Spread Multiplier, if any, specified by the Remarketing Agent, in the case of a Long Term Rate Period, or the SPURS Agent in the case of a SPURS Rate Period, and recorded in Annex A to this Note. Commencing on the Interest Rate Adjustment Date for such Interest Rate Period, the rate at which interest on this Note shall be payable shall be reset as of each Interest Reset Date during such Interest Rate Period specified in the applicable Floating Interest Rate Notice. The applicable floating interest rate on this Note during any Interest Rate Period will be determined by reference to the applicable Interest Rate Basis or Interest Rate Bases, which may include (i) the CD Rate, (ii) the CMT Rate, (iii) the Federal Funds Rate, (iv) LIBOR, (v) the Prime Rate, (vi) the Treasury Rate, or (vii) such other Interest Rate Basis or interest rate formula as may be specified in the applicable Floating Interest Rate Notice (each, an "Interest Rate Basis"). Unless otherwise specified in the applicable Floating Interest Rate Notice, the interest rate with respect to each Interest Rate Basis will be determined in accordance with the applicable provisions below. Except as set forth above or in the applicable Floating Interest Rate Notice, the interest rate in effect on each day shall be (i) if such day is an Interest Reset Date, the interest 49 50 rate determined as of the Interest Determination Date immediately preceding such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the interest rate determined as of the Interest Determination Date immediately preceding the most recent Interest Reset Date. If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date will be postponed to the next succeeding Business Day, unless LIBOR is an applicable Interest Rate Basis and such Business Day falls in the next succeeding calendar month, in which case such Interest Reset Date will be the immediately preceding Business Day. In addition, if the Treasury Rate is an applicable Interest Rate Basis and the Interest Determination Date would otherwise fall on an Interest Reset Date, then such Interest Reset Date will be postponed to the next succeeding Business Day. The applicable Floating Interest Rate Notice will specify whether the rate of interest will be reset daily, weekly, monthly, quarterly, semiannually or annually or on such other specified basis (each, an "Interest Reset Period") and the dates on which such rate of interest will be reset (each, an "Interest Reset Date"). Unless otherwise specified in the applicable Floating Interest Rate Notice, the Interest Reset Dates will be, in the case of a floating interest rate which resets: (i) daily, each Business Day; (ii) weekly, the Wednesday of each week (unless the Treasury Rate is an applicable Interest Rate Basis, in which case the Tuesday of each week except as described below); (iii) monthly, the third Wednesday of each month; (iv) quarterly, the third Wednesday of March, June, September and December of each year, (v) semiannually, the third Wednesday of the two months specified in the applicable Floating Interest Rate Notice; and (vi) annually, the third Wednesday of the month specified in the applicable Floating Interest Rate Notice. The interest rate applicable to each Interest Reset Period commencing on the related Interest Reset Date will be the rate determined as of the applicable Interest Determination Date. The "Interest Determination Date" with respect to the CD Rate, the CMT Rate, the Federal Funds Rate and the Prime Rate will be the second Business Day immediately preceding the applicable Interest Reset Date; and the "Interest Determination Date" with respect to LIBOR shall be the second London Business Day immediately preceding the applicable Interest Reset Date, unless the Index Currency is British pounds sterling, in which case the "Interest Determination Date" will be the applicable Interest Reset Date. The "Interest Determination Date" with respect to the Treasury Rate shall be the day in the week in which the applicable Interest Reset Date falls on which day Treasury Bills (as defined below) are normally auctioned (Treasury Bills are normally sold at an auction held on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except that such auction may be held on the preceding Friday); provided, however, that if an auction is held on the Friday of the week preceding the applicable Interest Reset Date, the "Interest Determination Date" shall be such preceding Friday. If the interest rate of this Note is a floating interest rate determined with reference to two or more Interest Rate Bases specified in the applicable Floating Interest Rate Notice, the "Interest Determination Date" pertaining to this Note shall be the most recent Business Day which is at least two Business Days prior to the applicable Interest Reset Date on which each Interest Rate Basis is determinable. Each Interest Rate Basis shall be determined as of such date, and the applicable interest rate shall take effect on the related Interest Reset Date. 50 51 Either or both of the following may also apply to the floating interest rate on this Note for an Interest Rate Period: (i) a floating rate maximum interest rate, or ceiling, that may accrue during any Interest Reset Period (the "Floating Rate Maximum Interest Rate") and (ii) a floating rate minimum interest rate, or floor, that may accrue during any Interest Reset Period (the "Floating Rate Minimum Interest Rate"). In addition to any Floating Rate Maximum Interest Rate that may apply, the interest rate on this Note will in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States laws of general application. Except as provided below or in the applicable Floating Interest Rate Notice, interest will be payable, in the case of floating interest rates which reset: (i) daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified in the applicable Floating Interest Rate Notice; (ii) quarterly, on the third Wednesday of March, June, September and December of each year; (iii) semiannually, on the third Wednesday of the two months of each year specified in the applicable Floating Interest Rate Notice; and (iv) annually, on the third Wednesday of the month of each year specified in the applicable Floating Interest Rate Notice and, in each case, on the Business Day immediately following the applicable Long Term Rate Period or SPURS Rate Period, as the case may be. If any Interest Payment Date for the payment of interest at a floating rate (other than following the end of the applicable Long Term Rate Period or SPURS Rate Period, as the case may be) would otherwise be a day that is not a Business Day, such Interest Payment Date will be postponed to the next succeeding Business Day, except that if LIBOR is an applicable Interest Rate Basis and such Business Day falls in the next succeeding calendar month, such Interest Payment Date will be the immediately preceding Business Day. All percentages resulting from any calculation of floating interest rates will be rounded to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in or resulting from such calculation will be rounded, in the case of United States dollars, to the nearest cent or, in the case of a foreign currency or composite currency, to the nearest unit (with one-half cent or unit being rounded upwards). Accrued floating rate interest will be calculated by multiplying the principal amount of this Note by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factor calculated for each day in the applicable Interest Reset Period. Unless otherwise specified in the applicable Floating Interest Rate Notice, the interest factor for each such day will be computed by dividing the interest rate applicable to such day by 360, if an applicable Interest Rate Basis is the CD Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of days in the year if an applicable Interest Rate Basis is the CMT Rate or the Treasury Rate. Unless otherwise specified in the applicable Floating Interest Rate Notice, if the floating interest rate is calculated with reference to two or more Interest Rate Bases, the interest factor will be calculated in each period in the same manner as if only one of the applicable Interest Rate Bases applied as specified in the applicable Floating Interest Rate Notice. 51 52 Unless otherwise specified in the applicable Floating Interest Rate Notice, The Bank of New York will be the "Calculation Agent." If this Note is bearing interest at a floating rate, the applicable Remarketing Agent will determine the interest rate in effect from the Interest Rate Adjustment Date to the Initial Interest Reset Date. The Calculation Agent will determine the interest rate in effect for each Interest Reset Period thereafter. Upon request of the beneficial owner of this Note, after any Interest Rate Adjustment Date, the Calculation Agent or the Remarketing Agent shall disclose the interest rate and, in the case of a floating interest rate, Interest Rate Basis or Bases, Spread (if any) and Spread Multiplier (if any), and in each case the other terms applicable to this Note then in effect and, if determined, the interest rate that will become effective as a result of a determination made for the next succeeding Interest Reset Date with respect to this Note. Except as described herein, no notice of the applicable interest rate, Spread (if any) or Spread Multiplier (if any) shall be sent to the beneficial owner of this Note. Unless otherwise specified in the applicable Floating Interest Rate Notice, the "Calculation Date", if applicable, pertaining to any Interest Determination Date will be the earlier of (i) the tenth calendar day after such Interest Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. CD Rate. If an Interest Rate Basis for this Note is specified in the applicable Floating Interest Rate Notice as the "CD Rate," the CD Rate means with respect to any Interest Determination Date relating to this Note for which the interest rate is determined with reference to the CD rate (a "CD Rate Interest Determination Date"), the rate on such date for negotiable United States dollar certificates of deposit having the Index Maturity specified in the applicable Floating Interest Rate Notice as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)") under the heading "CDs (Secondary Market)," or, if not published by 3:00 p.m., New York City time, on the related Calculation Date (as defined above), the rate on such CD Rate Interest Determination Date for negotiable United States dollar certificates of deposit of the Index Maturity specified in the applicable Floating Interest Rate Notice as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for United States Government Securities" or any successor publication ("Composite Quotations") under the heading "Certificates of Deposit." If such rate is not yet published in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on the related Calculation Date, then the CD Rate on such CD Rate Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York City time, on such CD Rate Interest Determination Date, of three leading nonbank dealers in negotiable United States dollar certificates of deposit in The City of New York (which may include the Remarketing Agent or its affiliates) selected by the Calculation Agent, after consultation with the Company, for negotiable United States dollars certificates of deposit of major United States money market banks for negotiable certificates of deposit with a remaining maturity closest to the Index Maturity specified in the applicable Floating Interest Rate Notice in an amount that is representative for a single transaction in that market at that time; provided, however, that if the dealers so selected by the Calculation Agent are not quoting as mentioned in this sentence, the CD Rate determined as of such CD Rate 52 53 Interest Determination Date will be the CD Rate in effect on such CD Rate Interest Determination Date. CMT Rate. If an Interest Rate Basis for this Note is specified in the applicable Floating Interest Rate Notice as the "CMT Rate," the CMT Rate means, with respect to any Interest Determination Date relating to this Note for which the interest rate is determined with reference to the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed on the Designated CMT Telerate Page (as defined below) under the caption "...Treasury Constant Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the weekly or monthly average, as specified in the Floating Interest Rate Notice, for the week or the month, as applicable, ended immediately preceding the week or the month, as applicable, in which the related CMT Rate Interest Determination Date occurs. If such rate is no longer displayed on the relevant page or is not displayed by 3:00 p.m., New York City time, on the related Calculation Date, then the CMT Rate for such CMT Rate Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index as published in H.15(519). If such rate is no longer published or is not published by 3:00 p.m., New York City time, on the related Calculation Date, then the CMT Rate on such CMT Rate Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in H.15(519). If such information is not provided by 3:00 p.m., New York City time, on the related Calculation Date, then the CMT Rate on the CMT Rate Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 p.m., New York City time, on such CMT Rate Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York (which may include the Remarketing Agent or its affiliates) selected by the Calculation Agent after consultation with the Company (from five such Reference Dealers selected by the Calculation Agent, after consultation with the Company, and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent is unable to obtain three such Treasury Note quotations, the CMT Rate on such CMT Rate Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 p.m., New York City time, on such CMT Rate Interest Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent, after consultation with the 53 54 Company, and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least U.S.$100 million. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference Dealers so selected by the Calculation Agent, after consultation with the Company, are quoting as mentioned herein, the CMT Rate determined as of such CMT Rate Interest Determination Date will be the CMT Rate in effect on such CMT Rate Interest Determination Date. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the Calculation Agent, after consultation with the Company, will obtain from five References Dealers quotations for the Treasury Note with the shorter remaining term to maturity. "Designated CMT Telerate Page" means the display on the Dow Jones Markets Limited (or any successor service) on the page specified in the applicable Floating Interest Rate Notice (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)) for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified in the applicable Floating Interest Rate Notice, the Designated CMT Telerate Page shall be 7052 for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in the applicable Floating Interest Rate Notice with respect to which the CMT Rate will be calculated. If no such maturity is specified in the applicable Floating Interest Rate Notice, the Designated CMT Maturity Index shall be 2 years. Federal Funds Rate. If an Interest Rate Basis for this Note is specified in the applicable Floating Interest Rate Notice as the "Federal Funds Rate," the Federal Funds Rate means, with respect to any Interest Determination Date relating to this Note for which the interest rate is determined with reference to the Federal Funds Rate (a "Federal Funds Rate Interest Determination Date"), the rate on such date for United States dollar federal funds as published in H.15(519) under the heading "Federal Funds (Effective)" or, if not published by 3:00 p.m., New York City time, on the Calculation Date, the rate on such Federal Funds Rate Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If such rate is not published in either H.15(519) or Composite Quotations by 3:00 p.m., New York City time, on the related Calculation Date, then the Federal Funds Rate on such Federal Funds Rate Interest Determination Date shall be calculated by the Calculation Agent and will be the arithmetic mean of the rates for the last transaction in overnight United States dollar federal funds arranged by three leading brokers of federal funds transactions in The City of New York (which may include the Remarketing Agent or its affiliates) selected by the Calculation Agent after consultation with the Company, prior to 9:00 a.m., New York City time, 54 55 on such Federal Funds Rate Interest Determination Date; provided, however, that if the brokers so selected by the Calculation Agent are not quoting as mentioned in this sentence, the Federal Funds Rate determined as of such Federal Funds Rate Interest Determination Date will be the Federal Funds Rate in effect on such Federal Funds Rate Interest Determination Date. LIBOR. If an Interest Rate Basis for this Note is specified in the applicable Floating Interest Rate Notice as "LIBOR," LIBOR means the rate determined by the Calculation Agent as of the applicable Interest Determination Date (a "LIBOR Interest Determination Date"), in accordance with the following provisions: (i) if (a) "LIBOR Reuters" is specified in the applicable Floating Interest Rate Notice, the arithmetic mean of the offered rates (unless the Designated LIBOR Page (as defined below) by its terms provides only for a single rate, in which case such single rate will be used) for deposits in the Index Currency having the Index Maturity specified in the applicable Floating Interest Rate Notice, commencing on the applicable Interest Reset Date, that appear (or, if only a single rate is required as aforesaid, appears) on the Designated LIBOR Page as of 11:00 a.m., London time, on such LIBOR Interest Determination Date, or (b) "LIBOR Telerate" is specified in the applicable Floating Interest Rate Notice, or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable Floating Interest Rate Notice as the method for calculating LIBOR, the rate for deposits in the Index Currency having the Index Maturity specified in the applicable Floating Interest Rate Notice, commencing on such Interest Reset Date, that appears on the Designated LIBOR Page as of 11:00 a.m., London time, on such LIBOR Interest Determination Date. If fewer than two such offered rates appear, or if no such rate appears, as applicable, LIBOR on such LIBOR Interest Determination Date shall be determined in accordance with the provisions described in clause (ii) below. (ii) With respect to a LIBOR Interest Determination Date on which fewer than two offered rates appear, or no rate appears, as the case may be, on the Designated LIBOR Page as specified in clause (i) above, the Calculation Agent shall request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, after consultation with the Company, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity specified in the applicable Floating Interest Rate Notice, commencing on the applicable Interest Reset Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are so provided, then LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two such quotations are so provided, then LIBOR on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in the applicable Principal Financial Center, on such LIBOR Interest Determination Date by three major banks in such Principal Financial Center selected by the Calculation Agent, after consultation with the Company, for loans in the Index Currency to leading European banks, having the Index Maturity specified in the applicable Floating Interest Rate Notice and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the 55 56 banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date shall be LIBOR in effect on such LIBOR Interest Determination Date. "Index Currency" means the currency or composite currency specified in the applicable Floating Interest Rate Notice as to which LIBOR shall be calculated. If no such currency or composite currency is specified in the applicable Floating Interest Rate Notice, the Index Currency shall be United States dollars. "Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the applicable Floating Interest Rate Notice, the display on the Reuter Monitor Money Rates Service (or any successor service) on the page specified in such Floating Interest Rate Notice (or on any other page as may replace such page on such service) for the purpose of displaying the London interbank rates of major banks for the Index Currency, or (b) if "LIBOR Telerate" is specified in the applicable Floating Interest Rate Notice or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable Floating Interest Rate Notice as the method for calculating LIBOR, the display on the Dow Jones Markets Limited (or any successor service) on the page specified in such Floating Interest Rate Notice (or on any other page as may replace such page on such service) for the purpose of displaying the London interbank rates of major banks for the Index Currency. Prime Rate. If an Interest Rate Basis for this Note is specified in the applicable Floating Interest Rate Notice as the "Prime Rate," the Prime Rate means, with respect to any Interest Determination Date relating to this Note for which the interest rate is determined with reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the rate on such date as such rate is published in H.15(519) under the heading "Bank Prime Loan." If such rate is not published prior to 3:00 p.m., New York City time, on the related Calculation Date, then the Prime Rate shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen U.S. PRIME 1 Page (as defined below) as such bank's prime rate or base lending rate as in effect for such Prime Rate Interest Determination Date. If fewer than four such rates appear on the Reuters Screen U.S. PRIME 1 Page for such Prime Rate Interest Determination Date, the Prime Rate shall be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Interest Determination Date by four major money center banks (which may include The Bank of New York) in The City of New York selected by the Calculation Agent, after consultation with the Company. If fewer than four such quotations are so provided, the Prime Rate shall be the arithmetic mean of four prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Interest Determination Date as furnished in The City of New York by the major money center banks, if any, that have provided such quotations and by as many substitute banks or trust companies (which may include The Bank of New York) as necessary in order to obtain four such prime rate quotations, provided such substitute banks or trust companies are organized and doing business under the laws of the United States, or any State thereof, have total equity capital of at least U.S.$500 million and are each subject to supervision or examination by Federal or State authority, selected by the Calculation Agent, after consultation with the Company, to 56 57 provide such rate or rates; provided, however, that if the banks or trust companies so selected by the Calculation Agent are not quoting as mentioned in this sentence, the Prime Rate determined as of such Prime Rate Interest Determination Date will be the Prime Rate in effect on such Prime Rate Interest Determination Date. "Reuters Screen U.S. PRIME 1 Page" means the display designated as page "U.S. PRIME 1" on the Reuter Monitor Money Rates Service (or any successor service) on the U.S. PRIME 1 Page (or such other page as may replace the U.S. PRIME 1 page on that service) for the purpose of displaying prime rates or base lending rates of major United States banks. Treasury Rate. If an Interest Rate Basis for this Note is specified in the applicable Floating Interest Rate Notice as the "Treasury Rate," the Treasury Rate means, with respect to any Interest Determination Date relating to this Note for which the interest rate is determined with reference to the Treasury Rate (a "Treasury Rate Interest Determination Date"), as the rate from the auction held on such Treasury Rate Interest Determination Date (the "Auction") of direct obligations of the United States ("Treasury Bills") having the Index Maturity specified in the applicable Floating Interest Rate Notice, as such rate is published in H.15(519) under the heading "Treasury bills-auction average (investment)" or, if not published by 3:00 p.m., New York City time, on the related Calculation Date, the auction average rate of such Treasury Bills (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of Treasury. In the event that the results of the Auction of Treasury Bills having the Index Maturity specified in the applicable Floating Interest Rate Notice are not reported as provided above by 3:00 p.m., New York City time, on such Calculation Date, or if no such Auction is held, then the Treasury Rate shall be calculated by the Calculation Agent, and shall be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate Interest Determination Date, of three leading primary United States government securities dealers (which may include the Remarketing Agent or its affiliates) selected by the Calculation Agent, after consultation with the Company, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified in the applicable Floating Interest Rate Notice; provided, however, that if the dealers so selected by the Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate determined as of such Treasury Rate Interest Determination Date will be the Treasury Rate in effect on such Treasury Rate Interest Determination Date. (d) Failure of Remarketing Agent or Agents to Announce Interest. In the event that (i) the Remarketing Agent has been removed or has resigned and no successor has been appointed, or (ii) the Remarketing Agent has failed to announce the appropriate interest rate, Spread, if any, or Spread Multiplier, if any, as the case may be, on an Interest Rate Adjustment Date for whatever reason, or (iii) the appropriate interest rate, Spread, if any, or Spread Multiplier, if any, as the case may be, or Interest Rate Period cannot be determined for whatever reason, then this Note shall be automatically converted to a Weekly Rate Period, and the rate of interest hereon shall be equal to the Special Interest Rate. 57 58 (e) Notice of Interest Rate, Binding Effect. On each Interest Rate Adjustment Date of this Note, the Remarketing Agent or the SPURS Agent, as the case may be, will notify the Company and the Trustee of the interest rate, Spread, if any, or Spread Multiplier, if any, as the case may be, to be borne by this Note for the following Interest Rate Period. After such Interest Rate Adjustment Date, any beneficial owner of this Note may contact the Trustee or the Remarketing Agent in order to be advised of the applicable interest rate and, in the case of a floating interest rate, the Spread (if any) and the Spread Multiplier (if any). Immediately upon receipt of such notice, the Trustee will transmit such information to DTC in accordance with DTC's procedures as in effect from time to time and note such rate in Annex A. The Trustee shall confirm to DTC the interest rate for the following Interest Rate Period in accordance with DTC's procedures as in effect from time to time. No notice of the applicable interest rate will be sent to the beneficial owner of this Note. The interest rate announced by the Remarketing Agent, absent manifest error, is binding and conclusive upon the beneficial owner of this Note, the Company and the Trustee. (f) Conversion. This Note may be converted at the option of the Company to the Commercial Paper Term Mode, Long Term Rate Mode or SPURS Mode on any Interest Rate Adjustment Date for this Note in accordance with the procedures set forth in the Indenture, and will be subject to mandatory tender by the beneficial owner hereof as described herein on such Interest Rate Adjustment Date. The beneficial owner of this Note will be deemed to have tendered such Note as of the Interest Rate Adjustment Date upon which such conversion occurs and will not be entitled to further accrual of interest on this Note after such date. TENDER This Note will be automatically tendered for purchase, or deemed tendered for purchase by the beneficial owner hereof, on each Interest Rate Adjustment Date relating hereto. Notes will be purchased on such Interest Rate Adjustment Date in accordance with the procedures set forth in "Remarketing and Settlement" or, as the case may be, "SPURS Mode" below. REMARKETING AND SETTLEMENT Interest Rate Adjustment Date; Determination of Interest Rate. By 11:00 a.m., New York City time on each Interest Rate Adjustment Date for this Note, the applicable Remarketing Agent will determine the interest rate hereon to the nearest one hundred-thousandth (0.00001) of one percent per annum for the next Interest Rate Period in the case of a fixed interest rate, and the Spread (if any) and Spread Multiplier (if any) in the case of a floating interest rate; provided, that between 11:00 a.m., New York City time and 11:50 a.m., New York City time, the Remarketing Agent and the Standby Remarketing Agent(s), if any, shall use their reasonable efforts to determine the interest rate for this Note if it is not successfully remarketed as of the applicable deadline specified in this paragraph. In determining the applicable interest rate for this Note and other terms, the Remarketing Agent will, after taking into account market conditions as reflected in the prevailing yields on fixed and variable rate taxable debt securities, (i) consider the principal amount of all Notes tendered or to be tendered on such date and the 58 59 principal amount of such Notes prospective purchasers are or may be willing to purchase and (ii) contact, by telephone or otherwise, prospective purchasers and ascertain the interest rates or the Spread or Spread Multiplier therefor at which they would be willing to hold or purchase this Note. Notification of Results; Settlement. By 12:30 p.m., New York City time, on each Interest Rate Adjustment Date for this Note, the applicable Remarketing Agent will notify the Company and the Trustee in writing (which may include facsimile or other electronic transmission), of (i) the interest rate or, in the case of a floating interest rate, the initial interest rate, the Spread and Spread Multiplier and the Initial Interest Reset Date, applicable to this Note for the next Interest Rate Period, (ii) the Interest Rate Adjustment Date, (iii) the Interest Payment Dates, if this Note will then be in the Commercial Paper Term Mode (if other than the Interest Rate Adjustment Date), the Long Term Rate Mode or the SPURS Mode, (iv) the optional redemption terms, if any, and early remarketing terms, if any, in the case of remarketing into a Long Term Rate Period, (v) the aggregate principal amount of all Notes tendered for remarketing on such date, and (vi) the aggregate principal amount of such tendered Notes which such Remarketing Agent was able to remarket, at a price equal to 100% of the principal amount thereof plus accrued interest, if any. Immediately after receiving such notice and, in any case, not later than 1:30 p.m., New York City time, the Trustee will transmit such information and any other settlement information required by DTC to DTC in accordance with DTC's procedures as in effect from time to time. By telephone at approximately 1:00 p.m., New York City time, on such Interest Rate Adjustment Date, the applicable Remarketing Agent will advise the purchaser of this Note (or the DTC participant of each such purchaser who it is expected in turn will advise such purchaser) of the principal amount of such Notes that such purchaser is to purchase. The purchaser of this Note in a remarketing will be required to give instructions to its DTC participant to pay the purchase price therefor in same day funds to the applicable Remarketing Agent against delivery of the principal amount of this Note by book-entry through DTC by 3:00 p.m., New York City time, on the Interest Rate Adjustment Date. When tendered, or deemed tendered, this Note will be automatically delivered to the account of the Trustee (or such other account meeting the requirements of DTC's procedures as in effect from time to time), by book-entry through DTC against payment of the purchase price or redemption price herefor, on the Interest Rate Adjustment Date relating hereto. The applicable Remarketing Agent will make, or cause the Trustee to make, payment to the DTC participant of the tendering beneficial owner hereof subject to a remarketing, by book-entry through DTC by the close of business on the related Interest Rate Adjustment Date against delivery through DTC of the beneficial owner's tendered Note, of the purchase price for this Note. If this Note was purchased pursuant to a Special Mandatory Purchase, subject to receipt of funds from the Company or the Liquidity Provider (if any), as the case may be, the Trustee will make such payment of the purchase price for this Note plus accrued interest, if any, to such date. 59 60 The transactions described above for a remarketing of this Note will be executed on each Interest Rate Adjustment Date for this Note through DTC in accordance with the procedures of DTC, and the accounts of the respective DTC participants will be debited and credited and this Note will be delivered by book-entry as necessary to effect the purchases and sales hereof, in each case as determined in the related remarketing. Except as otherwise set forth below, the purchase price for this Note to the tendering beneficial owner shall be paid solely out of the proceeds received from a purchaser of this Note in such remarketing, and neither the Trustee, the applicable Remarketing Agent, any Standby Remarketing Agent(s) nor the Company (except as set forth below) will be obligated to provide funds to make payment upon any beneficial owner's tender of this Note in a remarketing. The tender and settlement procedures described above, including provisions for payment by purchasers of this Note or for payment to the selling beneficial owners of this Note, may be modified to the extent required by DTC. In addition, each Remarketing Agent may, without the consent of the Holders of the Notes, modify the tender and settlement procedures set forth above in order to facilitate the settlement and remarketing process. As long as DTC's nominee holds the certificates representing this Note in the book-entry system of DTC, no certificates for this Note will be delivered by any selling beneficial owner to reflect any transfer of this Note effected in any remarketing. Failed Remarketing. If this Note is not successfully remarketed, this Note shall be subject to Special Mandatory Purchase by the Company (a "Special Mandatory Purchase"). The obligation of the Company to effect a Special Mandatory Purchase can be satisfied either directly by the Company or through a Liquidity Provider. By 12:00 o'clock noon, New York City time, on any Interest Rate Adjustment Date for this Note, the applicable Remarketing Agent will notify the Liquidity Provider, if any, the Trustee and the Company by telephone or facsimile, confirmed in writing, if it, or the Standby Remarketing Agent or Agents were unable to remarket all or a portion of the principal amount of this Note on such date. In the event that the Company has entered into a Standby Note Purchase Agreement which is in effect on such date, such notice will constitute a demand for the benefit of the Company to the Liquidity Provider, if any, to purchase this Note at a price equal to the outstanding principal amount hereof pursuant to the terms of such Standby Note Purchase Agreement. If a Standby Note Purchase Agreement is not in effect on such date, or if the Liquidity Provider fails to advance funds under the Standby Note Purchase Agreement, the Company hereby agrees to purchase this Note. In each case, the Company will pay all accrued and unpaid interest, if any, on this Note to such Interest Rate Adjustment Date. Payment of the principal amount of this Note by the Company or the Liquidity Provider, as the case may be, and payment of accrued and unpaid interest, if any, by the Company, shall be made by deposit of same-day funds in the account of the Trustee (or such other account meeting the requirements of DTC's procedures as in effect from time to time) irrevocably in trust for the benefit of the beneficial owners of this Note subject to Special Mandatory Purchase by 3:00 p.m., New York City time, on the related Interest Rate Adjustment Date. 60 61 TRANSFER OR EXCHANGE As provided in the Indenture and subject to certain limitations set forth therein and herein, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of and premium, if any, and any interest on this Note are payable or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in the form attached hereto, the Company and the Security Registrar or any transfer agent duly executed, by the registered owner hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. The Notes are issuable only in fully registered form in denominations of $100,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations set forth therein and herein, this Note is exchangeable for a like aggregate principal amount of Notes of this series and of like tenor of any authorized denomination, as requested by the registered owner surrendering the same. No service charge shall be made for any registration of transfer or exchange of this Note, but, subject to certain limitations set forth in the Indenture, the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Subject to the terms of the Indenture, prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. REDEMPTION AND ACCELERATION Special Mandatory Purchase. If by 12:00 o'clock noon, New York City time, on any Interest Rate Adjustment Date for this Note, the applicable Remarketing Agent and the applicable Standby Remarketing Agent(s) have not remarketed this Note, this Note shall be subject to Special Mandatory Purchase. Either the Company or, subject to the terms and conditions of a Standby Note Purchase Agreement, if any, which may be in effect on such date, the Liquidity Provider (if any), will deposit same-day funds in the account of the Trustee (or such other account meeting the requirements of DTC's procedures as in effect from time to time) irrevocably in trust for the benefit of the beneficial owners of this Note subject to Special Mandatory Purchase by 3:00 p.m., New York City time, on such Interest Rate Adjustment Date. Such funds shall be in an amount sufficient to pay the aggregate purchase price of this Note, equal to 100% of the principal amount thereof. In the event a Standby Note Purchase Agreement is in effect but the Liquidity Provider shall fail to advance funds for whatever reason thereunder, the Company hereby agrees to purchase this Note on such Interest Rate Adjustment Date. The Company has agreed in the Indenture to pay the accrued interest, if any, on this Note by 61 62 depositing sufficient same-day funds therefor with the Trustee (or such other account meeting the requirements of DTC's procedures as in effect from time to time) by 3:00 p.m., New York City time, on such Interest Rate Adjustment Date. Failure by the Company to purchase this Note pursuant to a Special Mandatory Purchase in the manner provided in this Note will constitute an Event of Default under the Indenture in which event the date of such failure shall constitute a date of Maturity for this Note and the principal hereof may be declared due and payable in the manner and with the effect provided in the Indenture. Following such failure to pay pursuant to a Special Mandatory Purchase, this Note will bear interest at the Special Interest Rate as provided above under "Interest." Optional Redemption on any Interest Rate Adjustment Date. This Note is subject to Optional Redemption, at the direction of the Company and without notice to the Holders, on any Interest Rate Adjustment Date relating hereto, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest to the date set for redemption (the "Redemption Date"). Optional Redemption While This Note is in the Long Term Rate Mode. So long as this Note bears interest in the Long Term Rate Mode, this Note is subject to Optional Redemption at the written direction of the Company if so specified at the time of conversion to or within such Long Term Rate Mode (a) commencing on the Commencement Date, if any, specified in Annex A, in whole or in part at any time, at the applicable redemption prices for any Redemption Date (dates inclusive) (i) from the Commencement Date to but not including the first anniversary of the Commencement Date, (ii) from the first anniversary of the Commencement Date to but not including the second anniversary of the Commencement Date, and (iii) from the second anniversary of the Commencement Date and thereafter (expressed as percentage of the principal amount so redeemed) set forth in Annex A, plus accrued interest to the Redemption Date or (b) otherwise as set forth in Annex A. Notice of redemption shall be given by mail to the registered owner of this Note, 30 days prior to the Redemption Date, all as provided in the Indenture. As provided in the Indenture, notice of redemption as aforesaid may state that such redemption shall be conditioned upon the receipt by the Trustee of the redemption monies on or before the date fixed for such redemption; a notice of redemption so conditioned shall be of no force or effect if such money is not so received. The Company shall not be required to (a) issue, register the transfer of or exchange Notes of this series during a period beginning at the opening of business 15 days before any selection of Notes of this series to be redeemed and ending at the close of business on the day of the mailing of the relevant notice of redemption or (b) register the transfer of or exchange any Notes selected for redemption, in whole or in part, except the unredeemed portion of any Note being redeemed in part. 62 63 In the event of redemption of this Note in part only, a new Note or Notes of this series, of like tenor, for the unredeemed portion hereof will be issued in the name of the registered owner hereof upon the cancellation hereof. Allocation. Except in the case of a Special Mandatory Purchase, if this Note is to be redeemed in part, DTC, after receiving notice of redemption specifying the aggregate principal amount of this Note to be so redeemed, will determine by lot (or otherwise in accordance with the procedures of DTC) the principal amount of this Note to be redeemed from the account of each DTC participant. After making its determination as described above, DTC will give notice of such determination to each DTC participant from whose account this Note is to be redeemed. Each such DTC participant, upon receipt of such notice, will in turn determine the principal amount of this Note to be redeemed from the accounts of the beneficial owners of this Note for which it serves as DTC participant, and give notice of such determination to the Remarketing Agent. Acceleration. If any Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. SPURS MODE Notwithstanding anything herein to the contrary, the provisions of this section shall apply to this Note upon conversion to the SPURS Mode, and shall supersede any conflicting provisions of general applicability contained elsewhere herein, during the period from, and including, the Interest Rate Adjustment Date beginning a SPURS Rate Period to, but excluding, the next succeeding Interest Rate Adjustment Date (or if the SPURS Agent does not elect to purchase this Note on the SPURS Remarketing Date designated for such SPURS Mode or if after electing to so purchase this Note the SPURS Agent fails for any reason to so purchase this Note, to the SPURS Remarketing Date). (a) Interest To SPURS Remarketing Date. The Interest Rate Period for this Note in the SPURS Mode will be established by the Company (as described in "Interest Rate" above) as a period of more than 364 days and not exceeding the remaining term to the Stated Maturity of this Note; provided, however, that such Interest Rate Period must end on the day prior to an Interest Payment Date for this Note. The SPURS Rate Period shall consist of the period from and including the Interest Rate Adjustment Date commencing such Interest Rate Period to and excluding the date (the "SPURS Remarketing Date") designated at such time by the SPURS Agent after consultation with the Company and set forth in Annex A hereto. The interest rate and, in the case of a floating interest rate, the Spread, if any, and the Spread Multiplier, if any, to the SPURS Remarketing Date for this Note in the SPURS Mode will be determined not later than 11:50 a.m., New York City time, on the Interest Rate Adjustment Date for this Note, which for the SPURS Mode is the first day of the SPURS Rate Period for this Note. Such interest rate will be the minimum rate of interest and, in the case of a floating interest rate, Spread (if any) and Spread Multiplier (if any) necessary in the judgment of such SPURS Agent to produce a par 63 64 bid in the secondary market for this Note on the date the interest is established. The designated SPURS Remarketing Date shall be an Interest Payment Date within such Interest Rate Period. (b) Mandatory Tender. Provided that the SPURS Agent gives notice to the Company and the Trustee on a Business Day not later than ten (10) days prior to the SPURS Remarketing Date of its intention to purchase this Note for remarketing (the "Notification Date"), this Note shall be automatically tendered, or deemed tendered, to the SPURS Agent for purchase on the SPURS Remarketing Date, except in the circumstances described in "Redemption" below, for 100% of the principal amount hereof. Upon tender, the SPURS Agent may remarket this Note for its own account at varying prices to be determined by the SPURS Agent at the time of such sale. From, and including, the SPURS Remarketing Date to, but excluding, the next succeeding Interest Rate Adjustment Date, this Note shall bear interest at the SPURS Interest Rate. If the SPURS Agent elects to remarket this Note, the obligation of the SPURS Agent to purchase this Note on the SPURS Remarketing Date is subject to, among other things, the conditions that, since the Notification Date, no material adverse change in the condition of the Company and its subsidiaries, considered as one enterprise, shall have occurred and that no Event of Default (as defined in the Indenture), or any event which, with the giving of notice or passage of time, or both, would constitute an Event of Default, with respect to this Note shall have occurred and be continuing. (c) Remarketing; Establishing the SPURS Interest Rate. Subject to the SPURS Agent's election to remarket this Note, the SPURS Interest Rate shall be determined by the SPURS Agent by 3:30 p.m., New York City time, on the third Business Day immediately preceding the SPURS Remarketing Date (the "Determination Date") to the nearest one hundred-thousandth (0.00001) of one percent per annum, and shall be equal to the Base Rate established by the SPURS Agent, after consultation with the Company, at or prior to the commencement of the SPURS Mode (the "Base Rate") plus the Applicable Spread, which shall be based on the Dollar Price of this Note as of the SPURS Remarketing Date. (d) Notification of Results; Settlement. Provided the SPURS Agent has previously notified the Company and the Trustee on the Notification Date of its intention to purchase this Note on the SPURS Remarketing Date, the SPURS Agent shall notify the Company, the Trustee and DTC by telephone, confirmed in writing, by 4:00 p.m., New York City time, on the Determination Date, of the SPURS Interest Rate, and this Note shall be automatically delivered to the account of the Trustee, by book-entry through DTC pending payment of the purchase price therefor, on the SPURS Remarketing Date. In the event that the SPURS Agent purchases this Note on the SPURS Remarketing Date, the SPURS Agent shall make or cause the Trustee to make payment to the DTC participant of each tendering beneficial owner hereof, by book-entry through DTC by the close of business on the SPURS Remarketing Date against delivery through DTC of such beneficial owner's interest herein, of 100% of the principal amount for this Note. If the SPURS Agent does not purchase this Note on the SPURS Remarketing Date, the Company may attempt to convert this Note to a new Interest Rate Mode; the interest rate will be determined as provided above in "Interest Rate" and settlement will be effected as described under "Remarketing and Settlement" above. In any 64 65 case, the Company shall make or cause the Trustee to make payment of interest to each beneficial owner of this Note due on the SPURS Remarketing Date by book-entry through DTC by the close of business on the SPURS Remarketing Date. The transactions set forth above shall be executed on the SPURS Remarketing Date through DTC in accordance with the procedures of DTC, and the accounts of the respective DTC participants shall be debited and credited and this Note shall be delivered by book-entry as necessary to effect the purchases and sales thereof. Transactions involving the sale and purchase of Notes remarketed by the SPURS Agent on and after the SPURS Remarketing Date will settle in immediately available funds through DTC's Same-Day Funds Settlement System. The tender and settlement procedures set forth above, including provisions for payment by purchasers of this Note in the remarketing or for payment to selling beneficial owners of this Note, may be modified to the extent required by DTC or to the extent required to facilitate the tender and remarketing of this Note in certificated form, if the book-entry system is no longer available for this Note at the time of the remarketing. In addition, the SPURS Agent may, without the consent of the Holders of the Notes, modify the settlement procedures set forth above in order to facilitate the tender and settlement process. As long as DTC's nominee holds the certificates representing this Note in the book-entry system of DTC, no certificates for this Note shall be delivered by any selling beneficial owner to reflect any transfer of such Notes effected in the remarketing. (e) Conversion or Redemption Following Election by the SPURS Agent to Remarket. If the SPURS Agent elects to remarket this Note on the SPURS Remarketing Date, this Note will be subject to a mandatory tender to the SPURS Agent for remarketing on such date, in each case subject to the conditions set forth above and to the Company's right to either convert this Note to a new Interest Rate Mode on the SPURS Remarketing Date or to redeem this Note from the SPURS Agent, in each case as described in the next sentence. The Company will notify the SPURS Agent and the Trustee, not later than the Business Day immediately preceding the Determination Date, if the Company irrevocably elects to exercise its right to either convert the Notes to a new Interest Rate Mode, or to redeem the Notes, in whole but not in part, from the SPURS Agent at the Optional Redemption Price, in each case on the SPURS Remarketing Date. In the event that the Company irrevocably elects to convert this Note to a new Interest Rate Mode, then as of the SPURS Remarketing Date the Notes will cease to be in the SPURS Mode, the SPURS Remarketing Date will constitute an Interest Rate Adjustment Date, and this Note will be subject to remarketing on such date by a Remarketing Agent appointed by the Company in the Commercial Paper Term Mode or the Long Term Rate Mode or a new SPURS Mode established by the Company in accordance with the procedures set forth herein; provided that in such case, the notice period required for conversion shall be the period commencing the Business Day immediately preceding the Determination Date. In such case, the Company shall pay to the SPURS Agent the excess of the Dollar Price of this Note over 100% of the principal 65 66 amount of this Note in same-day funds by wire transfer to an account designated by the SPURS Agent on the SPURS Remarketing Date. In the event that the Company irrevocably elects to redeem this Note, the "Optional Redemption Price" shall be the greater of (i) 100% of the principal amount of this Note and (ii) the Dollar Price, plus in either case accrued and unpaid interest from the SPURS Remarketing Date on the principal amount being redeemed to the date of redemption. If the Company elects to redeem this Note, it shall pay the redemption price therefor in same-day funds by wire transfer to an account designated by the SPURS Agent on the SPURS Remarketing Date. If notice has been given as provided in the Indenture and funds for the redemption of any Notes called for redemption shall have been made available on the redemption date referred to in such notice, this Note shall cease to bear interest on the date fixed for such redemption specified in such notice and the only right of the SPURS Agent from and after the redemption date shall be to receive payment of the Optional Redemption Price upon surrender of this Note in accordance with such notice. OTHER PROVISIONS The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the registered owners of the securities of each series thereunder to be affected under the Indenture at any time by the Company and the Trustee with the consent of the registered owners of not less than a majority in principal amount of such securities then Outstanding of each series to be affected. The Indenture also contains provisions permitting the registered owners of specified percentages in principal amount of the securities of each series thereunder at the time Outstanding, on behalf of the registered owners of all securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the registered owner of this Note shall be conclusive and binding upon such registered owner and upon all future registered owners of this Note issued upon the registration of transfer hereof or in exchange for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. As set forth in, and subject to the provisions of, the Indenture, no registered owner of any Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless (i) such registered owner shall have previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes of this series, (ii) the registered owners of not less than 25% in principal amount of the Outstanding Notes of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, (iii) the Trustee shall have failed to institute such proceeding within 60 days and (iv) the Trustee shall not have received from the registered owners of a majority in principal amount of the Outstanding Notes of this series a direction inconsistent with such request within such 60 day period; provided, however, that such limitations do not apply to a suit instituted by the registered owner hereof for the enforcement of payment of the principal of 66 67 and premium, if any, or any interest on this Note on or after the respective due dates expressed herein. Notwithstanding anything to the contrary contained herein, if a Policy is in effect with respect to this Note and the Insurer is not in default of its obligations to make payments thereunder, the Insurer shall be deemed to be the Holder of this Note for all purposes under the Indenture and shall have the exclusive right to exercise or direct the exercise of remedies on behalf of the Holders of this Note in accordance with the terms of the Indenture following an Event of Default, and the principal of this Note may not be declared due and payable immediately without the prior written consent of the Insurer. No reference to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and any interest including additional amounts, on this Note at the times, places and rate, and in the coin or currency, herein prescribed. The Indenture and this Note shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Note which are not defined herein and which are defined in the Indenture shall have the meanings assigned to them in the Indenture. This Note shall not be valid or become obligatory for any purpose until the Trustee's Certificate of Authentication hereon shall have been executed by the Trustee. 67 68 IN WITNESS WHEREOF, DTE CAPITAL CORPORATION has caused this instrument to be duly executed. DTE CAPITAL CORPORATION _________________________________________ Name: Title: Attest: By __________________________ Name: Title: This is one of the Notes of the series designated herein, referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee By _______________________________ Authorized Signatory Date: 68 69 ASSIGNMENT FORM AND CERTIFICATE OF TRANSFER To assign this Note fill in the form below: (I) or (we) assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's social security or tax identification number, if any) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) Your signature:________________________________________________________ (Sign exactly as your name appears on the other side of this Note) Date:_____________________________________________ Signature Guarantee:*_____________________________ In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the date that is two years (or such shorter period as may then be applicable under Rule 144(k) of the United States Securities Act or 1933, as amended (the "Securities Act") (or any successor provision)) after the later of the date of original issuance of such Notes and the last date, if any, on which this Note is owned by the Company or any Affiliate (as defined in the Indenture) of the Company, the undersigned confirms that this Note is being transferred: CHECK ONE BOX BELOW (1) [ ] to the Company or a Subsidiary thereof; or (2) [ ] pursuant to and in compliance with Rule 144A under the Securities Act; or (3) [ ] pursuant to Rule 144 under the Securities Act; or (4) [ ] pursuant to an effective registration statement under the Securities Act; or (5) [ ] pursuant to another available exemption from the registration requirements of the Securities Act. Unless one of the boxes is checked, the Trustee will refuse to register this Note in the name of any person other than the registered Holder thereof; provided, however, that if box (5) is checked, the Trustee (as instructed by the Company) and the Company may require, prior to registering any transfer of ______________________ * Signature must be guaranteed by a commercial bank, trust company or member firm or a major stock exchange. 69 70 this Note, such certifications, legal opinions or other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. 70 71 ANNEX A(1) DTE CAPITAL CORPORATION Remarketed Notes, Series A due 2038 Initial Interest Rate Period CUSIP Number: 23333MAA9 Principal Amount: $100,000,000 Original Issue Date: June 23, 1998 Issue Price: 100% Stated Maturity: June 15, 2038 Initial Interest Rate: 6.17% per annum Interest Payment Dates: June 15 and December 15, commencing December 15, 1998 Record Dates: 15 days prior to the related Interest Payment Date Initial Interest Rate Adjustment Date: June 15, 2003 Subsequent Interest Rate Period(s): CUSIP Number: Principal Amount: Interest Rate Adjustment Date: Record Date(s): Interest Payment Date(s): ________________________ (1) Trustee may complete this Annex A or attach a copy of the applicable Conversion Notice or Floating Interest Rate Notice from the Company, or notice from the applicable Remarketing Agent containing all of the applicable terms set forth herein, as Annex A. 71 72 Interest Rate Mode: [ ] Commercial Paper Term Mode [ ] Long Term Rate Mode [ ] SPURS Mode [ ] SPURS Agent: _____________ [ ] Base Rate: _________________ [ ] SPURS Remarketing Date: ________________ [ ] Reference Corporate Dealers: [ ] Reference Treasury Dealer: ________________ [ ] SPURS Interest Rate: ___________ Interest Rate: [ ] Fixed Rate: [ ] Floating Rate: Calculation Agent (if other than The Bank of New York): Initial Interest Rate to Initial Interest Reset Date: Interest Rate Basis(es): [ ] CD Rate Index Maturity: [ ] CMT Rate Index Maturity: Designated CMT Telerate Page: [ ] Commercial Paper Rate Index Maturity: [ ] Federal Funds Rate [ ] LIBOR 72 73 [ ] LIBOR Reuters Index Currency: Index Maturity: [ ] LIBOR Telerate Index Currency: Index Maturity: [ ] Prime Rate [ ] Treasury Rate Index Maturity: Spread (+/-): Spread Multiplier: Floating Rate Maximum Interest Rate: Floating Rate Minimum Interest Rate: Initial Interest Reset Date: Interest Reset Date: Interest Reset Period(s): Day Count Convention: [ ] Actual/360 [ ] Actual/Actual [ ] 30/360 Applicable Interest Rate Basis: Optional Redemption Provisions (Long Term Rate Mode): Commencement Dates: Redemption Price: (i) __________________% (ii) __________________% (iii) __________________% Other or Alternative Terms of Optional Repayment: 73 74 Early Remarketing Provisions (Long Term Rate Mode): Initial Early Remarketing Date: _________________ Initial Early Remarketing Premium: ______________ Annual Early Remarketing Premium Percentage Reduction: _____________ Other or Alternative Terms of Early Remarketing: Other Provisions: _________________________________________________________ _________________________________________________________ _________________________________________________________ 74 75 STATEMENT OF INSURANCE MBIA Insurance Corporation (the "Insurer") has issued a policy containing the following provisions, such policy being on file at the office of The Bank of New York, New York, New York. MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to The Bank of New York or its successor (the "Paying Agent") of an amount equal to (i) the principal of the Obligations (as that term is defined below) on the initial mandatory tender date of June 15, 2003 and interest on the Obligations as such payments become due on and prior to such initial mandatory tender date but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption, or acceleration resulting from default or otherwise, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: $100,000,000 DTE Capital Corporation Remarketed Notes, Series A due on the initial interest rate adjustment date of June 15, 2003 Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to State Street Bank and Trust Company, N.A., State Street Bank and Trust Company, N.A. shall disburse to such owners, or the Payment Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. 75 76 As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancelable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. This policy is not covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law. MBIA INSURANCE COPRORATION 76 77 EXHIBIT B FORM OF LIQUIDITY PROVIDER NOTE (Attached) 77 78 THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY . UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. LIQUIDITY PROVIDER NOTE No. $____________ DTE CAPITAL CORPORATION REMARKETED NOTES, SERIES A DUE 2038 Facility Expiration Date of Original Date Maturity Issue Date CUSIP June 15, 2038 DTE CAPITAL CORPORATION, a corporation duly organized and existing under the laws of the State of Michigan (the "Company"), for value received hereby promises to pay to _______________________ or registered assigns, the principal sum of $________________ on 78 79 June 15, 2038, upon the presentation and surrender hereof at the principal office of The Bank of New York, or its successor in trust (the "Trustee"), and to pay interest on the unpaid principal balance hereof from the Original Issue Date specified above or such date to which interest has been paid or duly provided for, until such principal balance has been paid in full, at such interest rates, and payable at such times, as are specified in the applicable Standby Note Purchase Agreement and are notified to the Trustee by the Administrative Agent under such Standby Note Purchase Agreement. Payment of the principal of and interest on this Note will be made at the office or agency maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the person in whose name this Note is registered at the close of business on the Record Date. This Note is one of a duly authorized series of Securities of the Company (the "Notes"), issued and to be issued under an Indenture, dated as of June 15, 1998, as amended and supplemented by the First Supplemental Indenture, dated as of June 15, 1998 (together, the "Indenture"), between the Company and the Trustee, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the registered owners of the Notes and of the terms upon which the Notes are, and are to be authenticated and delivered. This Note is entitled to the benefit of that certain support agreement (the "Support Agreement"), dated as of June 16, 1998, by and between the Company and DTE Energy Company, the owner, directly or indirectly, of 100% of the outstanding common stock of the Company and that certain assignment and pledge of the Company's rights under the Support Agreement to the Lenders (as defined in the Support Agreement), pursuant to the terms and conditions of the collateral assignment agreement (the "Collateral Assignment Agreement"), dated as of June 16, 1998, by and between the Company and the Lenders, subject in each case to amendment or termination of the Support Agreement or, as the case may be, the Collateral Assignment Agreement, in accordance with their respective terms. REMARKETING, TENDER AND SETTLEMENT In the event of a successful remarketing, this Note will automatically be tendered for purchase, or deemed tendered for purchase, by the beneficial owner hereof on the day set forth in a notice by the applicable Remarketing Agent to the Company, the Liquidity Provider and the Trustee (the "Tender Date"). The applicable Remarketing Agent will make payment to the DTC participant of the tendering beneficial owner hereof subject to a remarketing, by book-entry through DTC by the close of business on such Tender Date against delivery through DTC of the beneficial owner's tendered Note, of the purchase price for this Note, plus accrued interest, if any, to such date. The transactions described above for a remarketing of this Note will be executed through DTC in accordance with the procedures of DTC, and the accounts of the respective DTC 79 80 participants will be debited and credited and this Note will be delivered by book-entry as necessary to effect the purchases and sales hereof, in each case as determined in the related remarketing. The purchase price for this Note to the beneficial owner hereof shall be paid solely out of the proceeds received from a purchaser of this Note in such remarketing and neither the Remarketing Agent nor the Company will be obligated to provide funds to make payment upon any beneficial owner's tender of this Note in a remarketing. The settlement procedures described above, including provisions for payment by purchasers of this Note or for payment to the beneficial owner of this Note, may be modified to the extent required by DTC. In addition, the Remarketing Agent may, in accordance with the terms of the Indenture, modify the settlement procedures set forth above in order to facilitate the settlement process. As long as DTC's nominee holds the certificates representing this Note in the book-entry system of DTC, no certificates for this Note will be delivered by the beneficial owner hereof to reflect any transfer of this Note effected in any remarketing. TRANSFER OR EXCHANGE As provided in the Indenture and subject to certain limitations set forth therein and herein, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of and premium, if any, and any interest on this Note are payable or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to, the Company and the Security Register or any transfer agent duly executed, by the registered owner hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. The Notes are issuable only in fully registered form in denominations of $100,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for a like aggregate principal amount of Notes of this series and of like tenor of any authorized denomination, as requested by the registered owner surrendering the same. No service charge shall be made for any registration of transfer or exchange of this Note, but, subject to certain limitations set forth in the Indenture, the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Subject to the terms of the Indenture, prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, 80 81 whether or not this Note is overdue, and neither the company, the Trustee nor any such agent shall be affected by notice to the contrary. ACCELERATION If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and to the effect provided in the Indenture. OTHER PROVISIONS The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the registered owners of the securities of each series thereunder to be affected under the Indenture at any time by the Company and the Trustee with the consent of the registered owners of not less than a majority in principal amount of such securities then Outstanding of each series to be affected. The Indenture also contains provisions permitting the registered owners of specified percentages in principal amount of the securities of each series thereunder at the time Outstanding, on behalf of the registered owners of all securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the registered owner of this Note shall be conclusive and binding upon such registered owner and upon all future registered owners of this Note issued upon the registration of transfer hereof or in exchange for or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. As set forth in, and subject to the provisions of, the Indenture, no registered owner of any Note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless (i) such registered owner shall have previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes of this series, (ii) the registered owners of not less than 25% in principal amount of the Outstanding Notes of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, (iii) the Trustee shall have failed to institute such proceeding within 60 days and (iv) the Trustee shall not have received from the registered owners of a majority in principal amount of the Outstanding Notes of this series a direction inconsistent with such request within such 60-day period; provided, however, that such limitations do not apply to a suit instituted by the registered owner hereof for the enforcement of payment of the principal of and premium, if any, or any interest on this Note on or after the respective due dates expressed herein. No reference to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and any interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed. 81 82 The Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. This Note shall not be valid or become obligatory for any purpose until the Trustee's Certificate of Authentication hereon shall have been executed by the Trustee. IN WITNESS WHEREOF, DTE CAPITAL CORPORATION has caused this instrument to be duly executed. DTE CAPITAL CORPORATION By: _______________________________ Attest: By:____________________________ This Note is one of the Notes of the series designated herein, referred to in the within-mentioned Indenture. THE BANK OF NEW YORK, By: ________________________________ Authorized Signatory Date: 82 83 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ____________________________________________________________________________| Please insert Social Security or Other Identifying Number of Assignee ____________________________________________________________________________ (please print or type name and address of transferee) the within Note and all rights thereunder and does hereby irrevocably constitute and appoint ________________ attorney to transfer the within Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: _________________________________ ________________________________ In the presence of: ________________________________________________________________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration or enlargement or any change whatever. When assignment is made by a guardian, trustee, executor or administrator, an officer of a corporation, or anyone in a representative capacity, proof of his authority to act must accompany the Note. 83 84 EXHIBIT C DTE CAPITAL CORPORATION REMARKETED NOTES, SERIES A DUE 2038 SUPPLEMENTAL COMPANY ORDER Pursuant to Article Six of the First Supplemental Indenture, dated as of June 15, 1998, to the Indenture, dated as of June 15, 1998, as amended, you are instructed to prepare and authenticate a Note, of the series identified above, in the principal amount of $____________. The Note is being delivered in exchange for issued and outstanding Notes of the series identified above. IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of June __, 1998. ___________________________ Christopher C. Arvani Assistant Treasurer DTE Capital Corporation 84 85 EXHIBIT D [FORM OF SUPPORT AGREEMENT] (Attached) 85 86 [FORM OF SUPPORT AGREEMENT] BETWEEN DTE ENERGY COMPANY AND DTE CAPITAL CORPORATION THIS SUPPORT AGREEMENT, dated as of June 16, 1998, is between DTE ENERGY COMPANY, a Michigan corporation ("Parent"), and DTE CAPITAL CORPORATION, a Michigan corporation ("Subsidiary"). WHEREAS, Parent is the owner of 100% of the outstanding common stock of Subsidiary; WHEREAS, Subsidiary intends to issue $100,000,000 aggregate principal amount of debt securities (hereinafter referred to as the "Debt Securities," and such amount and all interest and other amounts, if any, payable with respect thereto being hereinafter collectively referred to as "Debt") to parties other than Parent pursuant to the Indenture dated as of June 15, 1998 (as amended or supplemented with respect to the Debt Securities, the "Indenture") between Subsidiary and The Bank of New York (or any successor or replacement trustee), as trustee (the "Trustee"); WHEREAS, Parent and Subsidiary desire to take certain actions to enhance and maintain the financial condition of Subsidiary as hereinafter set forth in order to enable Subsidiary and its subsidiaries to incur indebtedness on more advantageous and reasonable terms; and WHEREAS, the Lenders (as defined below) will rely upon this Agreement in making loans or extending credit or otherwise acquiring Debt Securities of Subsidiary. NOW THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Stock Ownership. During the term of this Agreement, Parent will own directly or indirectly all of the voting common stock of Subsidiary and The Detroit Edison Company ("DECO") now or hereafter issued and outstanding. 2. Negative Pledge. During the term of this Agreement, Parent will not create or suffer to exist any lien, security interest or other charge of encumbrance, upon or with respect to any voting common stock of DECO from time to time owned directly or indirectly by Parent or any capital stock of Subsidiary from time to time owned directly or indirectly by Parent, 86 87 provided, however, that any restriction on the payment of dividends by DECO or Subsidiary contained in any subordinated debt instrument, preferred stock or preference stock of DECO or Subsidiary shall not constitute a lien, security interest or other charge or encumbrance. 3. Liquidity Provision. If, during the term of this Agreement, Subsidiary is unable to make timely payment on the relevant payment date of interest, principal or premium, if any, on, or other amounts due in respect of, all or any portion of the Debt Securities issued by it or related Debt, Parent promptly shall provide to Subsidiary, at its request, such funds (in the form of cash or liquid assets) in an amount sufficient to permit Subsidiary to make timely payment on the relevant payment date in respect of such Debt as equity or as a loan, as Parent shall determine in its sole discretion. If such funds are advanced to Subsidiary as a loan, such loan shall be on such terms and conditions, including maturity and rate of interest, as Parent and Subsidiary shall agree. Notwithstanding the foregoing, any such loan shall be subordinated to any and all debt of Subsidiary owing to any lender (including any Lender) other than Parent. Each of the parties hereto acknowledges that Parent's obligations hereunder do not constitute a guarantee by Parent of Debt of Subsidiary. As used herein, the term "Lender" shall mean (i) any person, firm, corporation or other entity to which Subsidiary is indebted for any Debt or which is acting as the Trustee or a trustee or authorized representative on behalf of such person, firm corporation or other entity or which is acting as SPURS Agent (as defined in the Indenture), and (ii) Citicorp Securities, Inc. and Salomon Brothers Inc, and their respective successors (the "Initial Purchasers"), with respect to Debt owing by Subsidiary to the Initial Purchasers in accordance with the terms of that certain Purchase Agreement, dated as of June 16, 1998, relating to the Debt Securities; provided that, notwithstanding the foregoing, the claims of the Initial Purchasers shall be subordinated to the claims of the holders of the Debt Securities and the Insurer (as defined below) hereunder. 4. Waivers. Parent hereby waives any failure or delay on the part of Subsidiary in asserting or enforcing any of its rights or in making any claims or demands hereunder. Subsidiary or any Lender may at any time, without Parent's consent, without notice to Parent and without affecting or impairing Subsidiary's or such Lender's rights or Parent's obligations hereunder, do any of the following with respect to any Debt: (a) make changes, modifications, amendments or alterations, by operation of law or otherwise, including, without limitation, any changes in the rate of interest payable thereon or any changes in the method of calculating the rate of interest payable thereon, (b) grant renewals and extensions and extensions of time, for payment or otherwise, (c) accept new or additional documents, instruments or agreements relating to or in substitution of said Debt, or (d) otherwise handle the enforcement of their respective rights and remedies in accordance with their business judgment. 5. Amendment; Suspension. This Agreement may be amended or terminated at any time by written amendment or agreement signed by both parties; provided that such amendment or termination does not adversely affect the rights of the Initial Purchasers; and provided further, however, that except as set forth in the next succeeding sentence, no amendment to the Agreement which adversely affects the rights of Subsidiary or any Lender and no termination of this Agreement shall be effective as to Subsidiary or any Lender until such time as all Debt owing to such Lender by Subsidiary on the date of such amendment or termination shall have 87 88 been paid in full, unless such Lender shall consent in writing to the contrary. Notwithstanding the foregoing, (A) upon not less than 30 days prior notice to the applicable Remarketing Agent and the Trustee, Subsidiary and Parent may amend this Agreement (subject to the proviso that such amendment shall not adversely affect the rights of the Initial Purchasers) on any Interest Rate Adjustment Date (as defined in the Indenture) for Debt Securities, effective commencing on such Interest Rate Adjustment Date; provided that such amendment shall not be applicable to such Debt Securities until after the Debt Securities have been tendered for remarketing and successfully remarketed on such Interest Rate Adjustment Date; and provided further that no such amendment shall be of such nature as would require (i) registration or re-registration of the Debt Securities under the Securities Act of 1933, as amended (the "Securities Act"), unless Subsidiary has a registration statement under the Securities Act effective with respect thereto or (ii) registration of Subsidiary under the Investment Company Act of 1940, as amended, and (B) Parent's obligations under this Agreement shall be suspended and shall be of no force and effect as to the parties hereto and as to all Lenders if and for so long as (i) Subsidiary shall have a long-term debt rating of not less than "A-" from Standard & Poor's Ratings Services or its successor or a long-term debt rating of not less than "A3" from Moody's Investors Service, Inc. or its successor and (ii) Parent shall have submitted a written request to Subsidiary that its obligations under this Agreement be so suspended (with a copy to the Trustee, if applicable) and shall not have revoked such request in writing. Parent covenants that it will revoke any such request to the extent that the suspension of Parent's obligations under this Agreement has an adverse effect on any debt rating of Subsidiary. For purposes of this Section 5, ratings shall be based upon unsecured non-credit enhanced debt of Subsidiary. 6. Rights of Lenders. Subsidiary hereby assigns and pledges to the Lenders, for the ratable benefit of each Lender (subject to the subordination of claims of the Initial Purchasers pursuant to Section 3 hereof), Subsidiary's right under Sections 1, 2, 3 and 4 of this Agreement, and, if Subsidiary fails or refuses to take timely action to enforce its rights under Section 1, 2, 3 or 4 of this Agreement, any Lender may enforce such rights on behalf of Subsidiary directly against Parent. Parent hereby consents to such assignment and pledge. This assignment and pledge secures all obligations of Subsidiary under the Debt. Subsidiary and Parent agree, for the benefit of the Lenders to execute and deliver all further instruments and documents, and take all further action, that the Lenders may request in order to perfect and protect any security interest purported to be granted hereby or to enable the Lenders to enforce their rights and remedies hereunder. 7. Parity. Parent's obligations hereunder shall be pari passu with Parent's obligations under any existing as well as additional "make-well," "keep-well" or support agreements (that are not by their terms subordinated) as are entered into between Parent and Subsidiary from time to time. 8. Notices. Any notice, instruction, request, consent, demand or other communication required or contemplated by this Agreement shall be in writing, shall be given or made by United States first class mail, telex, facsimile transmission or hand delivery, addressed as follows: 88 89 If to Parent: 2000 2nd Avenue Detroit, Michigan 48226-1279 Attention: Assistant Treasurer-Banking If to Subsidiary: 2000 2nd Avenue Detroit, Michigan 48226-1279 Attention: Assistant Treasurer 9. Successors. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and is also intended for the benefit of Lenders, and, notwithstanding that such Lenders are not parties hereto, each Lender shall be entitled to the full benefits of this Agreement and to enforce the covenants and agreements contained herein as set forth in Section 6. This Agreement is not intended for the benefit of any person other than Lenders and shall not confer or be deemed to confer upon any such person any benefits, rights or remedies hereunder. 10. Governing Law. This Agreement shall be governed by the laws of the State of New York. 11. Insurer Provisions. (a) Notwithstanding anything to the contrary herein, if a Financial Guaranty Insurance Policy (hereinafter the "Policy") issued by MBIA Insurance Corporation (the "Insurer") is in effect with respect to any Debt Securities and the Insurer is not in default with respect to its obligations under the Policy, the Insurer shall be deemed a Lender for all purposes of this Agreement and shall possess the same rights, in all respects, as any Lender under this Agreement for such time as the Policy is in effect and the Insurer shall possess the exclusive right to exercise or direct the exercise of the rights of all Lenders in accordance with the terms of this Agreement. (b) For so long as the Policy is in effect or the Insurer is a holder of any Debt Securities, this Agreement shall not be amended or terminated without the prior written consent of the Insurer, and the Insurer's consent shall be required for any action by the Subsidiary or Parent that would require the Lenders' consent under the terms of this Agreement. (c) Notwithstanding anything to the contrary herein, for so long as a Policy is in effect or the Insurer is a holder of any Debt Securities, the Parent's obligations hereunder shall not be suspended pursuant to Section 5 of this Agreement. 89 90 IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be duly executed as of the day and year first above written. DTE ENERGY COMPANY By:______________________________ Name: Title: DTE CAPITAL CORPORATION By:______________________________ Name: Title: 90 91 EXHIBIT E [FORM OF COLLATERAL ASSIGNMENT AGREEMENT] (Attached) 91 92 COLLATERAL ASSIGNMENT AGREEMENT dated as of June 16, 1998, made by DTE CAPITAL CORPORATION, a Michigan corporation (the "Grantor"), to the Lenders (as defined in the Support Agreement (as hereinafter defined)). PRELIMINARY STATEMENTS: (1) the Grantor and The Bank of New York, as trustee (the "Trustee") have entered into an Indenture dated as of June 15, 1998 (the "Original Indenture") pursuant to which the Grantor may issue its debt securities from time to time. The Grantor and the Trustee have also entered into a supplemental indenture (together with the Original Indenture, and as it may hereafter be amended or otherwise modified from time to time, being the "Indenture") pursuant to the terms of which the Grantor has agreed to issue $100,000,000 Remarketed Notes, Series A due 2038 (the "Debt Securities"). (2) the Grantor and the Initial Purchasers (as defined in the Support Agreement) have entered into a Purchase Agreement, dated as of June 16, 1998, relating to the issuance and sale of the Debt Securities by the Company. (3) the Grantor has entered into a support agreement, dated as of June 16, 1998 (the "Support Agreement") with DTE Energy Company, a Michigan corporation and the parent of the Grantor (the "Parent"), to provide for support with respect to payments due by the Grantor on the Debt Securities and related Debt (as defined in the Support Agreement) to the Lenders, and the Grantor desires to grant the assignment and security interest contemplated by this Agreement in accordance with the Support Agreement. Terms defined in the Support Agreement and not otherwise defined herein are used herein as therein defined. (4) the Grantor and the Lenders wish to set forth their respective understandings as to the enforcement of the Lenders rights hereunder relating to the Collateral (as defined below). NOW, THEREFORE, in consideration of the premises, and subject to the terms and conditions set forth herein, the Grantor hereby agrees with the Lenders as follows: Section 1. Collateral Assignment. The Grantor hereby assigns to the Lenders for their ratable benefit, and hereby grants to the Lenders for their ratable benefit a security interest in, all of the Grantor's right, title and interest in and to the following (the "Collateral"): the Support Agreement as it may be amended or otherwise modified from time to time) (the "Assigned Agreement"), including, without limitation, (i) all rights of the Grantor to receive moneys due and to become due under or pursuant to the Assigned Agreement, (ii) all rights of the Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreement, (iii) claims of the Grantor for damages arising out of or for breach of or default under the Assigned Agreement, (iv) the right of the Grantor to terminate the Assigned Agreement, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder, and (v) all proceeds of any and all of the foregoing Collateral, subject, in each case, to the subordination provisions set forth in Section 15 hereof. 92 93 Section 2. Security for Obligations. This Agreement secures the payment of all obligations of the Grantor now or hereafter existing under the Debt Securities or related Debt, whether for principal, interest, premium, fees, expenses or otherwise, and all obligations of the Grantor now or hereafter existing under this Agreement (all such obligations of the Grantor being the "Obligations"). Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Obligations and would be owed by the Grantor to the Lenders but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Grantor. Section 3. Grantor Remains Liable. Anything herein to the contrary notwithstanding, (a) the Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by any Lender of any of the rights hereunder shall not release the Grantor from any of its duties or obligations under the Debt Securities, and the contracts and agreements included in the Collateral, and (c) no Lender shall have any obligation or liability under the Debt Securities, or the contracts and agreements included in the Collateral, by reason of this Agreement, nor shall any Lender be obligated to perform any of the obligations or duties of the Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. Section 4. Representations and Warranties. The Grantor represents and warrants as follows: (a) The Assigned Agreement, a true and complete copy of which has been furnished to the Lenders, has been duly authorized, executed and delivered by all parties thereto, has not been amended or otherwise modified except as permitted by Section 7, is in full force and effect and is binding upon and enforceable against all parties thereto in accordance with its terms. There exists no default under the Assigned Agreement by any party thereto. (b) The chief place of business and chief executive office of the Grantor and the office where the Grantor keeps it records concerning the Collateral are located at its address specified in Section 12. None of the Collateral is evidenced by a promissory note or other instrument (it being understood that the Assigned Agreement does not constitute a promissory note or other instrument). (c) The Grantor is the legal and the beneficial owner of the Collateral free and clear of any lien, security interest, option or other charge or encumbrance except for the security interest created by this Agreement. No effective financing statement or other document similar in effect covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of the Lenders relating to this Agreement. The Grantor has no trade names but is known from time to time as a DTE Energy Company. 93 94 (d) This Agreement creates a valid and perfected first priority security interest in the Collateral, securing the payment of the Obligations, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken. (e) No consent of any other person or entity and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required (i) for the grant by the Grantor of the assignment and security interest granted hereby or for the execution, delivery or performance of this Agreement by the Grantor, (ii) for the perfection or maintenance of the assignment and security interest created hereby (including the first priority nature of such assignment and security interest) or (iii) for the exercise by any Lender of its rights and remedies hereunder. (f) There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived. (g) The Grantor has, independently and without reliance upon any Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Section 5. Further Assurances. (a) The Grantor agrees that from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or any Lender may reasonably request, in order to perfect and protect the assignment and security interest granted or purported to be granted hereby or to enable the Lenders for their ratable benefit to exercise and enforce their rights and remedies, hereunder with respect to any Collateral. Without limiting the generality of the foregoing, the Grantor will execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Lenders may reasonably request, in order to perfect and preserve the assignment and security interest granted or purported to be granted hereby. (b) The Grantor hereby authorizes the Lenders to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral without the signature of the Grantor where permitted by law. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. Section 6. Place of Perfection: Records. The Grantor shall keep its chief place of business and chief executive office and the office where it keeps its records concerning the Collateral at the location therefor specified in Section 4(b) or, upon 30 days' prior written notice to the Lenders, at any other locations in a jurisdiction where all action required by Section 5 shall have been taken with respect to the Collateral. The Grantor will hold and preserve such records 94 95 and will permit representatives of the Lenders at any time during normal business hours to inspect and make abstracts from such records. 95 96 Section 7. As to the Assigned Agreement. (a) The Grantor shall at its expense: (i) perform and observe all the terms and provisions of the Assigned Agreement to be performed or observed by it, maintain the Assigned Agreement in full force and effect, enforce the Assigned Agreement in accordance with its terms, and take all such action to such end as may be from time to time reasonably requested by the Lenders. (ii)furnish to the Lenders promptly upon receipt thereof copies of all notices, requests and other documents received by the Grantor under or pursuant to the Assigned Agreement, and from time to time (A) furnish to the Lenders such information and reports regarding the Collateral as the Lenders may reasonably request and (B) upon request of the Lenders make to any other party to the Assigned Agreement such demands and requests for information and other reports or for the action as the Grantor is entitled to make thereunder. (b) The Grantor shall not: (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, or create or permit to exist any lien, security interest, option or other charge or encumbrance upon or with respect to any of the Collateral, except for the assignment and security interest under by this Agreement. (ii)cancel or terminate the Assigned Agreement or consent to or accept any cancellation or termination thereof, other than in accordance with the terms thereof; (iii) amend or otherwise modify the Assigned Agreement or give any consent, waiver or approval thereunder, other than in accordance with the terms thereof; (iv)waive any default under or breach of the Assigned Agreement; or (v) take any other action in connection with the Assigned Agreement which would impair the value of the interest or rights of the Grantor thereunder or which would impair the interest or rights of the Lenders. Section 8. Payments Under the Assigned Agreement. (a) The Grantor agrees, and has effectively so instructed the Parent that upon the occurrence and during the continuance of an Event of Default (as defined in the Indenture) or any event that, with the passage of time or the giving of notice, or both, would become an Event of Default, subject to the subordination provision set forth in Section 15, all payments due or to become due under or in connection with the Assigned Agreement shall be made directly to the Lenders, as applicable, at their respective addresses set forth in Section 12. 96 97 (b) All moneys received or collected pursuant to subsection (a) above shall be applied ratably to the Obligations owed to the Lenders in accordance with the terms hereof. Section 9. Lenders May Perform; Expenses (a) If the Grantor fails to perform any agreement contained herein, any Lender may itself perform, or cause performance of, such agreement, and the reasonable expenses of such Lender incurred in connection therewith shall be payable by the Grantor under (b) below. (b) The Grantor will, upon demand, pay to the applicable Lender (in the case of the holders of the Debt Securities, the Trustee) the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, which such Lender may incur in connection with (1) the administration of this Agreement, (2) the custody or preservation of, or the sale of, collection from or other realization upon, any of the Collateral, (3) the exercise or enforcement of any rights of such Lender hereunder or (4) the failure by the Grantor to perform or observe any of the provisions hereof. Section 10. Remedies. If any Event of Default, or any event that, with the passage of time or the giving of notice, or both, would become an Event of Default, shall have occurred and be continuing: (a) The Lenders may exercise any and all rights and remedies of the Grantor under or in connection with the Assigned Agreement or otherwise in respect of the Collateral, including, without limitation, any and all rights of the Grantor to demand or otherwise require payment of any amount under, or performance of any provision of, the Assigned Agreement. (b) All payments received by the Grantor under or in connection with the Assigned Agreement or otherwise in respect of the Collateral shall be received in trust for the ratable benefit of the Lenders in accordance with the terms hereof, shall be segregated from other funds of the Grantor and shall be forthwith paid over to the Lenders in the same form as so received (with any necessary endorsement). (c) The Lenders may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code in effect in the State of New York at that time (the "Code") (whether or not the Code applies to the affected Collateral). Section 11. Amendments; Etc. No amendment or waiver of any provision of this Agreement, and no consent to any departure by the Grantor herefrom shall in any event be effective unless the same shall be in writing and signed by the Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 97 98 Section 12. Addresses for Notices. All notices and other communications provided for hereunder shall be in writing (including telecopier, telex or cable communication) and mailed, telecopied, telexed, cabled or delivered to: if to the Grantor, at the following address: DTE Capital Corporation 2000 2nd Avenue Detroit, MI 48226 Attention: Corporate Secretary if to the Trustee or to the holders of the Debt Securities, at its address specified for the Trustee in the Indenture; if to the Insurer (as defined in the Indenture), at the following address: MBIA Insurance Corporation 113 King Street Armonk, NY 10504 Attn: Insured Portfolio Management -PF if to the Initial Purchasers at the following addresses: Citicorp Securities, Inc. 399 Park Avenue New York, NY 10043 Attn: Syndicate Desk Salomon Smith Barney Seven World Trade Center New York, NY 10048 Attn: Howard L. Hiller or, as to any party, at such other address as shall be designated by such party in a written notice to each other Lender. All such notices and other communications shall, when mailed or telecopied, be effective when deposited in the mails or telecopied, respectively. Section 13. Continuing Assignment and Security Interest; Assignments under the Indenture. This Agreement shall create a continuing assignment of and security interest in the Collateral and shall (i) remain in full force and effect until the payment in full of the Obligations 98 99 and all other amounts payable under this Agreement, (ii) be binding upon the Grantor, its successors and assigns, and (iii) inure to the benefit of the Lenders and their respective successors, transferees and assigns. Upon the earlier of the payment in full of the Obligations and all other amounts payable under this Agreement or the termination of the Support Agreement in accordance with its terms, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor. Upon any such termination, the Lenders will, at the Grantor's expense, execute and deliver to the Grantor such documents as the Grantor shall reasonably request to evidence such termination. Section 14. Trustee Provisions. (a) Trustee Appointed Attorney-in-Fact. The Grantor hereby appoints the Trustee, as the Grantor's attorney-in-fact to administer all matters concerning the rights of the holders of the Debt Securities, as Lenders, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time to take any action and to execute any instrument which is necessary or advisable or which the Trustee may deem necessary or advisable to accomplish the purposes of this Agreement with respect to the interests of the holders of the Debt Securities hereunder, including, without limitation: (i) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under on connection with the Collateral; (ii) to receive, indorse and collect any drafts or other instruments or documents in connection therewith; and (iii) to file any claims or take any action or institute any proceedings which is necessary or desirable or which the Trustee may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce compliance with the terms and conditions of the Assigned Agreement or the rights of the holders of the Debt Securities with respect to any of the Collateral. (b) Payments Received By Trustee. All payments made under or in connection with the Assigned Agreement or otherwise in respect of the Collateral, and all cash proceeds in respect of any sale of, collection from, or other realization upon all or any part of the Collateral, received by the Trustee for the benefit of the holders of the Debt Securities shall be applied by the Trustee in accordance with the terms of the Indenture. Any surplus of such payments or cash proceeds held by the Trustee and the remaining after payment in full of all the Obligations shall be paid over to the Grantor. (c) The Trustee's Duties. The Trustee shall act on behalf of the holders of the Debt Securities hereunder in accordance with the same standard of care as under the Indenture. 99 100 (d) Indemnity and Expenses. The Grantor agrees to indemnify the Trustee from and against any and all claims, losses and liabilities (including reasonable attorneys' fees and expenses) growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting solely from the Trustee's own negligence or willful misconduct. Section 15. Initial Purchasers' Provisions. Each Initial Purchaser is a Lender for all purposes of this Agreement as to any amounts owing to such Initial Purchaser in accordance with the terms of the Purchase Agreement (as defined in the Support Agreement) and shall possess the same rights, in all respects, as any Lender under this Agreement, except that (i) for so long as the Policy (as defined in the Indenture) in respect of the Initial Interest Rate Period (as defined in the Indenture) is in effect and the Insurer is not in default of its payment obligations thereunder, the Insurer shall be entitled to exercise or direct the exercise of the rights of the Initial Purchasers, as Lenders, in accordance with Section 16 hereof, and (ii) the claims of the Initial Purchasers with respect to the Collateral shall be subordinated to the claims of the holders of the Debt Securities and, for so long as the Policy is in effect and the Insurer is not in default of its payment obligations thereunder, the Insurer. Subject only to the foregoing and notwithstanding any other provision herein, including, without limitation, Section 14 hereof, the Initial Purchasers, as Lenders, may act hereunder in their own behalf. Section 16. Insurer Provisions. (a) Notwithstanding anything to the contrary herein, if a Policy issued by an Insurer is in effect with respect to any Debt Securities and the Insurer is not in default with respect to its obligations under the Policy, the Insurer shall be deemed a Lender for all purposes of this Agreement and shall possess the same rights, in all respects, as any Lender under this Agreement for such time as the Policy is in effect and the Insurer shall possess the exclusive right to exercise or direct the exercise of the rights of all Lenders in accordance with the terms of this Agreement. (b) For so long as the Policy is in effect or the Insurer is a holder of any Debt Securities, the Insurer's consent shall be required for any action by the Grantor that would require the Lenders' consent under the terms of this Agreement. Section 17. Governing Law; Terms. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, except to the extent that the validity or perfection of the assignment and security interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York. Unless otherwise defined herein, terms used in Article 9 of the Code are used herein as therein defined. 100 101 IN WITNESS WHEREOF, each of the Grantor and the other parties indicated below has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. DTE CAPITAL CORPORATION By: ________________________________ Title: THE BANK OF NEW YORK, as Trustee By: ________________________________ Authorized Signatory MBIA INSURANCE CORPORATION By: ________________________________ Title: CITICORP SECURITIES, INC. Consented to as of the date By: ________________________________ first above written: Title: DTE ENERGY COMPANY SALOMON BROTHERS INC By: ________________________________ By: ________________________________ Title: Title: 101 102 102 103 EXHIBIT F [FORM OF POLICY] (Attached) 103 104 EXHIBIT G [DTE Capital Corporation Letterhead] FLOATING INTEREST RATE NOTICE [Date] To: [Remarketing Agent(s)] [Address] The Bank of New York 101 Barclay Street New York, New York 10286 Attention: Corporate Trust Trustee Administration Telecopy: (212) 815-5915 Re: Remarketed Notes, Series A due 2038 (the "Notes") Ladies and Gentlemen: This Floating Interest Rate Notice relates to (i) $____________________ principal amount of the Notes (CUSIP No. ____________) and (ii) the proposed [Long Term Rate Period] [SPURS Rate Period] of the Note (the "Interest Rate Period") commencing on ______________ and ending on ___________. Capitalized terms used and not otherwise defined herein shall have their respective meanings assigned to them in the Notes. We hereby notify you that the above-referenced Notes will bear the following floating rate terms during the Interest Rate Period specified above: 1. The Interest Rate Basis(es) shall be: [ ] CD Rate, where the Index Maturity will be _______________; [ ] CMT Rate, where the Designated CMT Maturity Index will be ______________, and the Designated CMT Telerate Page will be _______________; [ ] Federal Funds Rate; 104 105 [ ] LIBOR Reuters, where the Index Currency will be __________, and the Designated LIBOR Page will be ____________; [ ] LIBOR Telerate, where the Index Currency will be __________, and the Designated LIBOR Page will be ____________; [ ] Prime Rate; [ ] Treasury Rate ____________. 2. The floating interest rate will be reset as follows: [ ] Initial Interest Reset Date will be _____________; [ ] Interest Reset Dates will be _____________; [ ] Interest Reset Period will be ______________. 3. The interest will be paid as follows: [ ] Interest Payment Dates will be _____________; [ ] Interest Payment Period will be _____________; [ ] Index Maturity will be _____________; [ ] Floating Rate Maximum Interest Rate will be _____________; [ ] Floating Rate Minimum Interest Rate will be ______________. 4. Day Count Convention: [ ] Actual/360 _____________; [ ] Actual/Actual _____________; [ ] 30/360. Applicable Interest Rate Basis: 5. Other terms: [ ] 105 106 Each Beneficial Owner of the Note will be deemed to have tendered such Note as of the Interest Rate Adjustment Date and will not be entitled to further accrual of interest after the Interest Rate Adjustment Date. DTE CAPITAL CORPORATION By: ____________________________ Name: Title: 106 107 EXHIBIT H [FORM OF CONVERSION NOTICE] (Attached) 107 108 [DTE Capital Corporation Letterhead] CONVERSION NOTICE [Date] To: [Remarketing Agent(s)] THE BANK OF NEW YORK 101 Barclay Street, Floor 21W New York, New York 10286 Attn: Jason Gregory Re: Remarketed Notes, Series A due 2038 Dear Sirs: This Conversion Notice relates to $ ______ principal amount of the Remarketed Notes (CUSIP No. ________), (the "Notes"). Capitalized terms used and not otherwise defined herein shall have their respective meanings assigned to them in the Notes. We hereby notify you each of the following, to become effective for the Interest Rate Period commencing on _____________ (the "Conversion Date"): Interest Rate Mode: [ ] Commercial Paper Term Mode [ ] Long Term Rate Mode [ ] SPURS Mode [ ] SPURS Agent: _____________ [ ] Base Rate: _________________ [ ] SPURS Remarketing Date: ________________ [ ] Reference Corporate Dealers: [ ] Reference Treasury Dealer: ________________ [ ] Interest Rate Period: ___________ 108 109 [ ] Interest Rate Adjustment Date: _______________ [ ] Optional Redemption Provisions (Long Term Rate Mode): [ ] Commencement Date: [ ] Redemption Price: (i) __________________% (ii) __________________% (iii) __________________% [ ] Other or Alternative Terms of Optional Redemption: [ ] Early Remarketing Provisions (Long Term Rate Mode): [ ] Initial Early Remarketing Date: _________________ [ ] Initial Early Remarketing Premium: ______________ [ ] Annual Early Remarketing Premium Percentage Reduction: __________ [ ] Other or Alternative Terms of Early Remarketing: _____________ Each beneficial owner of the Notes will be deemed to have tendered such Notes as of the Conversion Date and will not be entitled to further accrual of interest after the Conversion Date. DTE CAPITAL CORPORATION By:_____________________________________ Name: Title: 109 EX-10.26 6 EX-10.26 1 EXHIBIT 10.26 [DETROIT EDISON LOGO] April 6, 1998 Ms. Lynne Halpin 21109 Brush Road Los Gatos, California 95033 Dear Lynne: Pursuant to approval by the Board of Directors, I am pleased to offer you employment in the position of Vice President and Chief Information Officer at an annual salary of $215,000. Upon employment, you will be eligible for the benefits described in the Benefit Highlights brochure enclosed, as well as the perquisites described on a separate listing also enclosed. In addition, you will receive the following: - You will receive an immediate annual benefit of three (3) weeks vacation for 1998. - You will be paid an amount (considered imputed income to be grossed up for taxes) to cover the premium for three (3) months health care coverage under the Company's plan. - You will receive a signing bonus of $35,000. - You will be eligible for relocation assistance that will include interim living for 45 days, moving your household goods, assistance in selling your home, and you will receive $18,000 to offset your living expenses (all to be grossed up for taxes). Subject to the approval of the Special Committee on Compensation of the Board of Directors, you will be granted the following shares of stock pursuant to our Long-Term Incentive Plan: - 2,000 shares of restricted stock (without performance measures) with a vesting period of four (4) years from the date of grant. - 10,000 shares of nonqualified stock options (25 percent of the shares vest annually from the date of grant). 2 Ms. Lynne Halpin April 6, 1998 Page 2 This offer is subject to successful completion of a pre-employment physical examination, a review of references, and completion of our employment history form. Please contact me at (313) 235-8610 after you have completed your review of this offer of employment. I hope to hear from you soon. Sincerely, Sandea J. Miller /smh Attachments ACCEPTED: /s/ Lynne Halpin 4/7/98 - ----------------------------------- Lynne Halpin Date EX-11.12 7 EX-11.12 1 EXHIBIT 11-12 DTE ENERGY COMPANY BASIC AND DILUTED EARNINGS PER SHARE OF COMMON STOCK
Three Months Six Months Ended Ended June 30, 1998 June 30, 1998 -------------- ------------- (Thousands, except per share amounts) BASIC: Net Income........................................................$ 100,194 $ 204,600 Weighted average number of common shares outstanding (a).......................................... 145,075 145,079 Earnings per share of Common Stock based on weighted average number of shares outstanding...........................................$ 0.69 $ 1.41 DILUTED: Net Income........................................................$ 100,194 $ 204,600 Weighted average number of common shares outstanding (a).......................................... 145,075 145,079 Incremental shares from assumed exercise of options...................................................... 97 84 -------------- ------------ 145,172 145,163 ============== ============ Earnings per share of Common Stock assuming exercise of options....................................$ 0.69 $ 1.41
- --------------------------------- (a) Based on a daily average. EX-12.12 8 EX-12.12 1 EXHIBIT 12-12 THE DETROIT EDISON COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Six Months Year Ended December 31 Ended ------------------------------- 6/30/98 1997 1996 1995 --------- --------- --------- --------- (Millions, except for ratio) Net income $ 193 $ 417 $ 328 $ 434 --------- --------- --------- --------- Taxes based on income: Current income taxes 144 308 224 221 Deferred taxes - net 9 (6) 16 79 Investment tax credit adjustments - net (7) (14) (15) (17) Municipal and state 2 4 3 3 --------- --------- --------- --------- Total taxes based on income 148 292 228 286 --------- --------- --------- --------- Fixed charges: Interest on long-term debt 126 262 275 275 Amortization of debt discount, premium and expense 5 11 12 11 Other interest 5 9 4 10 Interest factor of rents 17 34 34 29 --------- --------- --------- --------- Total fixed charges 153 316 325 325 --------- --------- --------- --------- Earnings before taxes based on income and fixed charges $ 494 $ 1,025 $ 881 $ 1,045 ========= ========= ========= ========= Preferred stock dividends $ 5 $ 12 $ 16 $ 28 Dividends meeting requirement of IRC Section 247 2 4 4 4 Percent deductible for income tax purposes 40.00% 40.00% 40.00% 40.00% Amount deductible 1 2 2 2 Amount not deductible 4 10 14 26 Ratio of pretax income to net income 1.76 1.70 1.70 1.66 Dividend factor for amount not deductible 7 17 24 43 Amount deductible 1 2 2 2 --------- --------- --------- --------- Total preferred stock dividend factor 8 19 26 45 Total fixed charges 153 316 325 325 --------- --------- --------- --------- Total fixed charges and preferred stock dividends $ 161 $ 335 $ 351 $ 370 ========= ========= ========= ========= Ratio of earnings to fixed charges and preferred stock dividends 3.07 3.06 2.51 2.82
EX-15.8 9 EX-15.8 1 EXHIBIT 15-8 DTE Energy Company and The Detroit Edison Company Detroit, Michigan We have made reviews, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of DTE Energy Company and subsidiaries and The Detroit Edison Company and subsidiaries for the periods ended June 30, 1998 and 1997, as indicated in our report dated July 27, 1998. 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, 1998, is incorporated by reference in the following Registration Statements: FORM REGISTRATION NUMBER DTE Energy Company Form S-3 33-57545 Form S-8 333-00023 Form S-8 333-47247 The Detroit Edison Company Form S-3 33-53207 Form S-3 33-64296 We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement 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 and Touche Detroit, Michigan July 27, 1998 EX-27.21 10 EX-27.21
5 0000936340 DTE ENERGY COMPANY 1,000,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 94 0 588 20 335 1,178 15,625 6,728 11,595 1,460 3,835 0 48 1,951 1,662 11,595 0 2,009 0 1,528 5 0 153 318 113 205 0 0 0 205 1.41 1.41
EX-27.22 11 EX-27.22
5 0000028385 THE DETROIT EDISION COMPANY 1,000,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 13 0 550 20 318 912 15,307 6,712 10,759 1,142 3,512 0 48 1,951 1,502 10,759 0 1,893 0 1,408 10 0 136 339 146 193 0 0 0 193 0 0
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