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EXHIBIT 1.2
THE DETROIT EDISON COMPANY
$__________________
Secured Medium-Term Notes, Series __
Due Not Less than Two Years from Date of Issue
FORM OF
DISTRIBUTION AGREEMENT
_______________,
[Names and addresses of Agents]
Dear Sirs:
The Detroit Edison Company, a Michigan corporation (the "Company"),
confirms its agreement with you with respect to the issue and sale from time to
time by the Company of up to $_____________ aggregate initial public offering
price of its Secured Medium-Term Notes, Series _, due not less than two years
from date of issue (the "Notes"). The Notes are to be issued under and secured
by the Mortgage and Deed of Trust dated as of October 1, 1924 between the
Company and First Chicago Trust Company of New York, as successor trustee (the
"Trustee"), as amended and supplemented by various Supplemental Indentures and
as to be further amended and supplemented by a Supplemental Indenture to be
dated as of____________, creating the Notes (the "Mortgage"). Reference is
hereby made to the Mortgage for full and complete statements of the provisions
thereof, including the definitions of certain terms used, and for other
information with respect to the Notes. The Notes will have the maturities,
interest rates, redemption provisions, if any, and other terms as set forth in
supplements to the Basic Prospectus referred to below.
Subject to the terms and conditions stated herein and subject to the
reservation by the Company of the right to sell Notes directly to investors
(other than broker-dealers) on its own behalf, the Company hereby appoints
you as its exclusive agents for the purpose of soliciting and receiving offers
to purchase Notes from the Company by others and, on the basis of the
representations and warranties herein contained, but subject to the terms and
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conditions herein set forth, you agree to use reasonable efforts to
solicit and receive offers to purchase Notes upon terms acceptable to the
Company at such times and in such amounts as the Company shall from time
to time specify. In addition, you may also purchase Notes as principal
pursuant to the terms of a Terms Agreement relating to such sale (a "Terms
Agreement") in accordance with the provisions of Section 2(b) hereof.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Notes. Such registration statement, including the exhibits thereto, as
amended at the Commencement Date (as hereinafter defined), is hereinafter
referred to as the "Registration Statement." The Company proposes to file with
the Commission from time to time, pursuant to Rule 424 under the Securities
Act of 1933, as amended (the "Securities Act"), supplements to the prospectus
included in the Registration Statement that will describe certain terms of the
Notes. The prospectus in the form in which it appears in the Registration
Statement is hereinafter referred to as the "Basic Prospectus." The term
"Prospectus" means the Basic Prospectus together with the prospectus supplement
or supplements (each a "Prospectus Supplement") specifically relating to
Notes, as filed with, or transmitted for filing to, the Commission pursuant to
Rule 424. As used herein, the terms "Basic Prospectus" and "Prospectus" shall
include in each case the documents, if any, incorporated by reference
therein. The terms "supplement," "amendment" and "amend" as used herein shall
include all documents deemed to be incorporated by reference in the Prospectus
that are filed subsequent to the date of the Basic Prospectus by the Company
with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
1. Representations and Warranties. The Company represents and
warrants to and agrees with you as of the Commencement Date, as of each date on
which you solicit offers to purchase Notes, as of each date on which the
Company accepts an offer to purchase Notes (including any purchase by you as
principal pursuant to a Terms Agreement), as of each date the Company issues
and sells Notes and as of each date the Registration Statement or the Basic
Prospectus is amended or supplemented, as follows (it being understood that
such representations, warranties and agreements shall be deemed to relate to
the Registration Statement, the Basic Prospectus and the Prospectus, each
as amended or supplemented to each such date):
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(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Exchange Act and
the applicable rules and regulations of the Commission thereunder, (ii) each
part of the Registration Statement (including material incorporated by
reference therein), when such part became effective, did not contain, and each
such part, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (iii) the Registration Statement and the Prospectus comply, and, as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations of the
Commission thereunder and (iv) the Registration Statement and the Prospectus
do not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that (1) the
representations and warranties set forth in this Section 1(b) do not apply (A)
to statements or omissions in the Registration Statement or the Prospectus
based upon information relating to you furnished to the Company in writing by
you expressly for use therein or (B) to those parts of the Registration
Statement that constitute the Statements of Eligibility (Form T-1) under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the
Trustee and (2) the representations and warranties set forth in clauses
(iii) and (iv) above, when made as of the Commencement Date or as of any
date on which you solicit offers to purchase Notes or on which the Company
accepts an offer to purchase Notes, shall be deemed not to cover information
concerning an offering of particular Notes to the extent such information will
be set forth in a supplement to the Basic Prospectus.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Michigan, has the
corporate power and authority to own its property and to conduct its busi-
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ness as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(d) This Agreement and any applicable Written Terms Agreement has
been duly authorized, executed and delivered by the Company.
(e) The Mortgage has been duly qualified under the Trust Indenture
Act and has been duly authorized, executed and delivered by the Company and
is a valid and binding agreement of the Company, enforceable in accordance
with its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability.
(f) The forms of Notes have been duly authorized and established in
conformity with the provisions of the Mortgage and, when the Notes have been
executed and authenticated in accordance with the provisions of the Mortgage
and delivered to and duly paid for by the purchasers thereof, the Notes will
be entitled to the benefits of the Mortgage and will be valid and binding
obligations of the Company, enforceable in accordance with their respective
terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii)
rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(g) The execution and delivery by the Company of this Agreement, the
Notes, the Mortgage and any applicable Written Terms Agreement, and the
performance by the Company of its obligations under, this Agreement, the Notes,
the Mortgage and any applicable Terms Agreement will not contravene any
provision of applicable law or the articles of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its subsidiaries, taken
as a whole, or any judgment, order or decree of any governmental body, agency
or court having
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jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of or qualification with any governmental
body or agency not already obtained is required for the performance by the
Company of its obligations under this Agreement, the Notes, the Mortgage and
any applicable Terms Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Notes.
(h) There has not been any material adverse change, or any
development involving a prospective material adverse change (in either case not
in the ordinary course of business), in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus.
(i) Other than as disclosed in the Prospectus, there are no legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed or
incorporated by reference as exhibits to the Registration Statement that are
not described, filed or incorporated as required.
(j) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of and
from, and has made all declarations and filings with, all federal, state,
local and other governmental authorities and all courts and other tribunals, to
own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Prospectus, except to the extent that
the failure to obtain or file would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(k) The Company has good and marketable title to all properties
standing of record in its name (which includes, without limitation, all of
those properties, except pollution control facilities standing in the names of
certain municipalities which are being purchased by the Company pursuant to
installment sales contracts and the undivided ownership interest of Michigan
Public Power Agen-
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cy in a portion of the Belle River Power Plant, in each case as described in the
Prospectus, which constitute or on which there are erected its principal plants,
generating stations and substations and on which its general office and service
buildings are constructed and all other important parcels of real estate) and
improvements thereon, subject to the lien of the Mortgage and 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 the Company has adequate
rights to maintain and operate such of its distribution facilities as are
located on public or other property not owned by the Company.
(1) The Mortgage is a first lien (subject to no prior liens, charges,
encumbrances or security interests, except current taxes and assessments not
yet due and minor encumbrances which do not materially impair the use of such
property for the purpose for which it is held by the Company), duly filed and
recorded, on substantially all of the Company's tangible properties and
franchises (other than items purchased for resale in the ordinary course of
business) and (subject to the necessity for particular filings and
recordings in the case of certain personal property such as railroad rolling
stock) will constitute a like lien on any such properties hereafter acquired by
the Company except that any such after-property will be subject to
prior liens and encumbrances, if any, existing when acquired by the Company,
except that the Mortgage will not become a lien upon after-acquired real
property in a new county until it has been duly filed and recorded and except
that the Mortgage may not be effective as to property acquired subsequent to
the filing of a case with respect to the Company under the Bankruptcy Code.
2. Solicitations as Agent; Purchases as Principal.
(a) Solicitations as Agent. In connection with your actions as
agent hereunder, you agree to use reasonable efforts to solicit offers to
purchase Notes upon the terms and conditions set forth in the Prospectus as
then amended or supplemented.
The Company reserves the right, in its sole discretion, to instruct
you to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase Notes. Upon receipt of at least one
business
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day's prior notice from the Company, you will forthwith suspend solicitations
of offers to purchase Notes from the Company until such time as the Company
has advised you that such solicitation may be resumed. While such
solicitation is suspended, the Company shall not be required to deliver any
certificates, opinions or letters in accordance with Sections 5(a), 5(b) and
5(c); provided, however, that if the Registration Statement or Prospectus is
amended or supplemented during the period of suspension (other than by an
amendment or supplement providing solely for a change in the interest rates,
redemption provisions, amortization schedules or maturities offered on the
Notes or for a change you deem to be immaterial), you shall not be required to
resume soliciting offers to purchase Notes until the Company has delivered such
certificates, opinions and letters as you may reasonably request.
The Company agrees to pay to you, as consideration for the sale of
each Note resulting from a solicitation made or an offer to purchase received
by you, a commission, by means of a deduction from the proceeds of a sale of
Notes, equal to the applicable percentage of the public offering price of each
Note sold by the Company as a result of a solicitation made by such Agent as
set forth in Schedule I hereto or such other discount as may be specified in
the Prospectus Supplement relating to such Note.
You shall communicate to the Company, orally or in writing, each offer
to purchase Notes received by you as agent that in your judgment should be
considered by the Company. The Company shall have the sole right to accept
offers to purchase Notes and may reject any offer in whole or in part. You
shall have the right to reject any offer to purchase Notes that you consider to
be unacceptable, and any such rejection shall not be deemed a breach of your
agreements contained herein. The procedural details relating to the issue
and delivery of Notes sold by you as agent and the pavement therefor shall be
as set forth in the Administrative Procedures (as hereinafter defined).
(b) Purchases as Principal. Each sale of Notes to you as principal
shall be made in accordance with the terms of this Agreement. In connection
with each such sale, the Company will enter into a Terms Agreement that will
provide for the sale of such Notes to and the purchase thereof by you. Each
Terms Agreement will take the form of either (i) a written agreement between
you and the Company, which may be substantially in the form of Exhibit A hereto
(a "Written Terms Agreement"), or (ii) an oral agreement
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between you and the Company confirmed in writing by you to the Company.
Your commitment to purchase Notes as principal, pursuant to a Terms
Agreement, shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Each Terms Agreement
shall specify the principal amount of Notes to be purchased by you pursuant
thereto, the maturity date of such Notes, the price to be paid to the Company
for such Notes, the interest rate and interest rate formula, if any,
applicable to such Notes and any other terms of such Notes. Each such Terms
Agreement may also specify any requirements for officers' certificates,
opinions of counsel and letters from the independent auditors of the Company
pursuant to Section 4 hereof. A Terms Agreement may also specify certain
provisions relating to the reoffering of such Notes by you.
Each Terms Agreement shall specify the time and place of delivery of
and payment for such Notes. Unless otherwise specified in a Terms Agreement,
the procedural details relating to the issue and delivery of Notes purchased
by you as principal and the payment therefor shall be as set forth in the
Administrative Procedures. Each date of delivery of and payment for Notes to
be purchased by you as principal pursuant to a Terms Agreement is referred to
herein as a "Settlement Date."
Unless otherwise specified in a Terms Agreement, if you are purchasing
Notes as principal you may resell such Notes to other dealers. Any such sales
may be at a discount, which shall not exceed the amount set forth in the
Prospectus Supplement relating to such Notes.
(c) Administrative Procedures. You and the Company agree to
perform the respective duties and obligations specifically provided to be
performed in the Secured Medium-Term Notes Administrative Procedures
(attached hereto as Exhibit B) (the "Administrative Procedures"), as amended
from time to time. The Administrative Procedures may be amended only by
written agreement of the Company and you.
(d) Delivery. The documents required to be delivered by Section 4
of this Agreement as a condition precedent to your obligation to begin
soliciting offers to purchase Notes as agent of the Company shall be delivered
at or telecopied and confirmed to (in which case, an origi-
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nal hard copy shall promptly be forwarded) the office of your counsel,
not later than 4:00 p.m., New York time, on the date hereof, or at such other
time and/or place as you and the Company may agree upon in writing, but in no
event later than the day prior to the earlier of (i) the date on which you
begin soliciting offers to purchase Notes and (ii) the first date on which the
Company accepts any offer by you to purchase Notes as principal. The date of
delivery of such documents is referred to herein as the "Commencement Date."
3. Agreements. The Company agrees with you that:
(a) Prior to the termination of the offering of the Notes pursuant to
this Agreement or any Terms Agreement, the Company will not file any
Prospectus Supplement relating to the Notes or any amendment to the
Registration Statement unless the Company has previously furnished to you a
copy thereof for your review and will not file any such proposed supplement or
amendment to which you reasonably object; provided, however, that the
foregoing requirement shall not apply to any of the Company's periodic filings
with the Commission required to be filed pursuant to Section 13(a),
13(c), 13(f), 14 or 15(d) of the Exchange Act, copies of which filings the
Company will cause to be delivered to you promptly after being transmitted for
filing with the Commission. Subject to the foregoing sentence, the
Company will promptly cause each Prospectus Supplement to be filed with or
transmitted for filing to the Commission in accordance with Rule 424(b) under
the Securities Act. The Company will promptly advise you (i) of the filing of
any amendment or supplement to the Basic Prospectus, (ii) of the filing and
effectiveness of any amendment to the Registration Statement, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Basic Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution
or threatening of any proceeding for that purpose and (v) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use its
best efforts to prevent the issuance of any such stop order or notice of
suspension of qualification and, if issued, to obtain as soon as possible the
withdrawal thereof. If the Basic Prospectus is amended or supple-
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mented as a result of the filing under the Exchange Act of any document
incorporated by reference in the Prospectus, you shall not be obligated to
solicit offers to purchase Notes so long as you are not reasonably satisfied
with such document.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Securities Act, any event occurs or
condition exists as a result of which the Prospectus, as then amended or
supplemented, would include an untrue statement of a material fact, or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances when the prospectus, as then amended or supplemented, is
delivered to a purchaser, not misleading, or if, in your opinion or in the
opinion of the Company, it is necessary at any time to amend or supplement the
Prospectus, as then amended or supplemented, to comply with applicable law, the
Company will immediately notify you by telephone (with confirmation in writing)
to suspend solicitation of offers to purchase Notes and, if so notified by the
Company, you shall forth-with suspend such solicitation and cease using the
Prospectus, as then amended or supplemented. If the Company shall decide to
amend or supplement the Registration Statement or Prospectus, as then amended
or supplemented, it shall so advise you promptly by telephone (with
confirmation in writing) and, at its expense, shall prepare and cause to be
filed promptly with the Commission an amendment or supplement to the
Registration Statement or Prospectus, as then amended or supplemented,
satisfactory in all respects to you, that will correct such statement or
omission or effect such compliance and will supply such amended or supplemented
Prospectus to you in such quantities as you may reasonably request. If any
documents, certificates, opinions and letters furnished to you pursuant to
paragraph (f) below and Sections 5(a), 5(b) and 5(c) in connection with the
preparation and filing of such amendment or supplement are satisfactory in all
respects to you, upon the filing with the Commission of such amendment or
supplement to the Prospectus or upon the effectiveness of an amendment to the
Registration Statement, you will resume the solicitation of offers to purchase
Notes hereunder. Notwithstanding any other provision of this Section 3(b),
until the distribution of any Notes you may own as principal has been
completed, if any event described above in this paragraph (b) occurs, the
Company will, at its own expense, forthwith prepare and cause to be filed
promptly with the Commission an amendment or supplement to the Registration
Statement or Prospectus, as then amended or supplemented, satisfactory
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in all respects to you, will supply such amended or supplemented
Prospectus to you in such quantities as you may reasonably request and shall
furnish to you pursuant to paragraph (f) below and Sections 5(a), 5(b) and 5(c)
such documents, certificates, opinions and letters as you may request in
connection with the preparation and filing of such amendment or supplement.
(c) The Company will make generally available to its security holders
and to you as soon as practicable earning statements that satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations
of the Commission thereunder covering twelve month periods beginning, in each
case, not later than the first day of the Company's fiscal quarter next
following the "effective date" (as defined in Rule 158 under the Securities
Act) of the Registration Statement with respect to each sale of Notes. If
such fiscal quarter is the last fiscal quarter of the Company's fiscal year,
such earning statement shall be made available not later than 90 days after the
close of the period covered thereby and in all other cases shall be made
available not later than 45 days after the close of the period covered thereby.
(d) The Company will furnish to you, without charge, a signed copy of
the Registration Statement, including exhibits and all amendments thereto, and
as many copies of the Prospectus, any documents incorporated by reference
therein and any supplements and amendments thereto as you may reasonably
request.
(e) The Company will endeavor to qualify the Notes for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request and to maintain such qualifications for as long as you shall
reasonably request.
(f) During the term of this Agreement, the Company shall furnish to
you such relevant documents and certificates of officers of the Company
relating to the business, operations and affairs of the Company, the
Registration Statement, the Basic Prospectus, any amendments or supplements
thereto, the Mortgage, the Notes, this Agreement, the Administrative
Procedures, any Terms Agreement and the performance by the Company of its
obligations hereunder or thereunder as you may from time to time reasonably
request and shall notify you promptly in writing of any downgrading, or of its
receipt of any notice of any intended or potential downgrading or of any
review for possible
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change that does not indicate the direction of the possible change, in
the rating accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act.
(g) During the term of this Agreement, the Company will, whether or
not any sale of Notes is consummated, pay all expenses incident to the
performance of its obligations under this Agreement and any Terms Agreement,
including: (i) the preparation and filing of the Registration Statement and
the Prospectus and all amendments and supplements thereto, (ii) the
preparation, issuance and delivery of the Notes, (iii) the fees and
disbursements of the Company's counsel and accountants and of the Trustee and
their counsel, (iv) the qualification of the Notes under securities or Blue
Sky laws in accordance with the provisions of Section 3(e), including filing
fees and the fees and disbursements of your counsel in connection therewith
and in connection with the preparation of any Blue Sky or Legal Investment
Memoranda, (v) the printing and delivery to you in quantities as hereinabove
stated of copies of the Registration Statement and all amendments thereto and
of the Basic Prospectus and any amendments or supplements thereto, (vi) the
printing and delivery to you of copies of the Mortgage and any Blue Sky or
Legal Investment Memoranda, (vii) any fees charged by rating agencies for the
rating of the Notes, (viii) the fees and expenses, if any, incurred with
respect to any filing with the National Association of Securities Dealers,
Inc., (ix) the fees and disbursements of your counsel incurred in connection
with the offering and sale of the Notes, including any opinions to be rendered
by such counsel hereunder, and (x) any reasonable out-of-pocket expenses
incurred by you; provided that any advertising expenses incurred by you shall
have been approved by the Company.
(h) Between the date of any Terms Agreement and the Settlement Date
with respect to such Terms Agreement, the Company will not, without your prior
consent, offer, sell, contract to sell or otherwise dispose of any debt
securities of the Company substantially similar to such Notes (other than (i)
the Notes that are to be sold pursuant to such Terms Agreement, (ii) Notes
previously determined to be sold by the Company and disclosed to the relevant
Agent or Agents (including, without limitation, Mortgage Bonds collateralizing
industrial development revenue bonds) and (iii) commercial paper issued in
the ordinary
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course of business), except as may otherwise be provided in such Terms
Agreement.
4. Conditions of the Obligations of the Agents. Your obligation to
solicit offers to purchase Notes as agent of the Company, your obligation to
purchase Notes as principal pursuant to any Terms Agreement and the obligation
of any other purchaser to purchase Notes will be subject to the accuracy
of the representations and warranties on the part of the Company herein, to the
accuracy of the statements of the Company's officers made in each certificate
furnished pursuant to the provisions hereof and to the performance and
observance by the Company of all covenants and agreements herein contained on
its part to be performed and observed (in the case of your obligation to
solicit offers to purchase Notes, at the time of such solicitation, and, in
the case of your or any other purchaser's obligation to purchase Notes, at
the time the Company accepts the offer to purchase such Notes and at the time
of purchase) and (in each case) to the following additional conditions
precedent when and as specified:
(a) Prior to such solicitation or purchase, as the case may be:
(i) there shall not have occurred any change, or any development
involving a prospective change (other than such as may have occurred in the
ordinary course of business), in the condition, financial or otherwise, or
in the earnings, business or operations, of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus, as
amended or supplemented at the time of such solicitation or at the time
such offer to purchase was made, that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to market the
Notes on the terms and in the manner contemplated by the Prospectus, as so
amended or supplemented;
(ii) there shall not have occurred any (A) suspension or material
limitation of trading generally on or by, as the case may be, the New York
Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (B) suspension of
trading of any securities of the Company on any exchange or in any
over-the-counter market, (C) declaration of a general moratorium on
commercial banking activities in New York by either Federal or New York
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State authorities or (D) any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis that, in your
judgment, is material and adverse and, in the case of any of the events
described in clauses (ii)(A) through (D), such event, singly or together
with any other such event, makes it, in your judgment, impracticable to
market the Notes on the terms and in the manner contemplated by the
Prospectus, as amended or supplemented at the time of such solicitation or
at the time such offer to purchase was made; and
(iii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act;
(A) except, in each case described in paragraph (i), (ii) or (iii)
above, as disclosed to you in writing by the Company prior to such
solicitation or, in the case of a purchase of Notes, before the offer to
purchase such Notes was made or (B) unless in each case described in (ii)
above, the relevant event shall have occurred and been known to you prior to
such solicitation or, in the case of a purchase of Notes, before the offer
to purchase such Notes was made.
(b) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, you shall have received:
(i) The opinion, dated as of such date, of the General Counsel of the
Company, to the effect that:
(A) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
State of Michigan, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus,
as amended or supplemented, and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of
its business or its
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ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its consolidated subsidiaries, taken as a whole;
(B) the Company has all necessary consents, authorizations,
approvals, orders, certificates and permits of and from, and has made
all declarations and filings with, all federal, state, local and other
governmental authorities and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Prospectus, as amended or
supplemented, except to the extent that the failure to obtain or file
would not have a material adverse effect on the Company and its
consolidated subsidiaries, taken as a whole;
(C) each of this Agreement and any applicable Written Terms
Agreement has been duly authorized, executed and delivered by the
Company;
(D) the Mortgage has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability;
(E) the forms of Notes have been duly authorized and
established in conformity with the provisions of the Mortgage and,
when the Notes are executed by the Company and authenticated by the
Trustee or its duly appointed agent in accordance with the provisions
of the Mortgage and delivered to and duly paid for by the
purchasers thereof on
-15-
16
the date of such opinion, the Notes will be entitled to the
benefits of the Mortgage and would be valid and binding obligations of
the Company, enforceable in accordance with their respective terms
except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability;
(F) the execution and delivery by the Company of the Notes,
the Mortgage and any applicable Written Terms Agreement, and the
performance by the Company of its obligations under, this Agreement,
the Notes, the Mortgage and any applicable Terms Agreement will not
contravene any provision of applicable law or the articles of
incorporation or by-laws of the Company or, to the best of such
counsel's knowledge after due inquiry, any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its consolidated subsidiaries, taken as a
whole, or, to the best of such counsel's knowledge after due inquiry,
any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of or qualification with
any governmental body or agency not already obtained is required for
the performance by the Company of its obligations under this
Agreement, the Notes, the Mortgage and any applicable Terms
Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale
of the Notes;
(G) the statements (1) in the Prospectus Supplement as of
the date hereof, under the captions "Description of Secured Medium-
Term Notes, Series "and "Plan of Distribution" and (2) in'the
Basic Prospectus, as supplemented as of the date hereof,
-16-
17
under the caption "Description of General and Refunding
Mortgage Bonds" (except insofar as such statements specify the
amount of bonds which could be issued), in each case insofar as such
statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(H) after due inquiry, such counsel does not know of any
legal or governmental proceeding pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus, as then amended or supplemented, and are not so
described or of any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus, as then amended or supplemented, or to
be filed or incorporated by reference as exhibits to such Registration
Statement that are not described, filed or incorporated by reference
as required;
(I) such counsel (1) is of the opinion that each document
filed pursuant to the Exchange Act and incorporated by reference in
the Prospectus, as then amended or supplemented (except for
financial statements and schedules included therein as to which such
counsel need not express any opinion), complied when so filed as to
form in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (2) believes
that (except for financial statements and schedules indicated
therein and that part of the Registration Statement that constitutes
the Forms T-1 heretofore referred to as to which such counsel need not
express any belief) each part of the Registration Statement, as then
amended, if applicable, when such part
-17-
18
became effective did not, and as of the date such opinion is
delivered, does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (3) is of
the opinion that the Registration Statement and Prospectus, as then
amended or supplemented, if applicable (except for the content of
the financial statements and schedules included therein as to which
such counsel need not express any opinion), comply as to form in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder including such rules and
regulations as govern the financial statements required to be included
therein and (4) believes that (except for financial statements and
schedules indicated therein as to which such counsel need not
express any belief) the Prospectus, as then amended or supplemented,
if applicable, as of the date such opinion is delivered does not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided that in the case of an opinion delivered on the
Commencement Date or pursuant to Section 5(b), the opinion and
belief set forth in clauses (3) and (4) above shall be deemed not to
cover information concerning an offering of particular Notes to the
extent such information will be set forth in a supplement to the
Basic Prospectus;
(J) the Company has good and marketable title to all
properties standing of record in its name (which includes, without
limitation, all of those properties, except pollution control
facilities standing in the names of certain municipalities which are
being purchased by the Company pursuant to installment sales contracts
and the undivided ownership interest of Michigan Public Power Agency
in a portion of the Belle River Power Plant, in each case as
described in
-18-
19
the Prospectus, which constitute or on which there are erected its
principal plants, generating stations and substations and on which its
general office and service buildings are constructed and all other
important parcels of real estate) and improvements thereon, subject to
the lien of the Mortgage and 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 the Company has adequate rights to
maintain and operate such of its distribution facilities as are located
on public or other property not owned by the Company; and
(K) the Mortgage is a first lien (subject to no prior
liens, charges, encumbrances or security interests, except current
taxes and assessments not yet due and minor encumbrances which, in
such counsel's opinion, do not materially impair the use of such
property for the purpose for which it is held by the Company), duly
filed and recorded, on substantially all of the Company's tangible
properties and franchises (other than items purchased for resale in
the ordinary course of business) and (subject to the necessity for
particular filings and recordings in the case of certain personal
property such as railroad rolling stock) will constitute a like lien
on any such properties hereafter acquired by the Company except that
any such after-acquired property will be subject to prior liens and
encumbrances, if any, existing when acquired by the Company, except
that the Mortgage will not become a lien upon after-acquired real
property in a new county until it has been duly filed and recorded and
except that the Mortgage may not be effective as to property acquired
subsequent to the filing of a case with respect to the Company under
the Bankruptcy Code.
(ii) The opinion, dated as of such date, of ________ your special
counsel, covering the matters in
-19-
20
subparagraphs (C), (D), (E) and (G) (with respect to statements in
the Prospectus, as then amended or supplemented, under the captions
"Description of Notes" (in the Prospectus Supplement), "Description of
Debt Securities" (in the Basic Prospectus) and "Plan of Distribution" (in
the Prospectus Supplement and in the Basic Prospectus)) and clauses (2),
(3) and (4) of subparagraph (I) in paragraph (b)(i) above, with such
changes therein as you may approve.
With respect to subparagraph (I) of paragraph (b)(i) above, the
General Counsel of the Company may state that his opinion and belief are
based upon his participation, or the participation of someone under his
supervision, in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and documents
incorporated therein by reference and review and discussion of the contents
thereof, but are without independent check or verification, except as
specified. With respect to clauses (2), (3) and (4) of subparagraph
(I) of paragraph (b)(i) above, may state that their opinion and belief are
based upon their participation in the preparation of the Registration
Statement and Prospectus (or review thereof) and any amendments or
supplements thereto (but not including documents incorporated therein by
reference) and review and discussion of the contents thereof (including
documents incorporated therein by reference), but are without independent
check or verification, except as specified.
(c) On the Commencement Date and, if called for by any Terms
Agreement, on the corresponding Settlement Date, you shall have received a
certificate, dated such Commencement Date or Settlement Date, as the case may
be, signed by an executive officer of the Company to the effect set forth in
subparagraph (a)(iii) above and to the effect that the representations and
warranties of the Company contained herein are true and correct as of such date
and that the Company has complied with all of the agreements and satisfied all
of the conditions on its part to be performed or satisfied on or before such
date and that there have been no material adverse change or any development
involving a prospective material adverse change (other than such as may have
occurred in the ordinary course of business) in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus, as
supplemented.
-20-
21
The officer signing and delivering such certifi-
cate may rely upon the best of his knowledge as to proceed-
ings threatened.
(d) On the Commencement Date and, if called for
by any Terms Agreement, on the corresponding Settlement
Date, the Company's independent auditors shall have fur-
nished to you a letter or letters, dated as of the Com-
mencement Date or such Settlement Date, as the case may be,
in form and substance satisfactory to you containing state-
ments and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect
to the financial statements and certain financial informa-
tion contained in or incorporated by reference into the
Prospectus, as then amended or supplemented.
(e) On the Commencement Date and on each Settle-
ment Date, the Company shall have furnished to you such
appropriate further information, certificates and documents
as you may reasonably request.
5. Additional Agreements of the Company. (a)
Each time the Registration Statement or Prospectus is amen-
ded or supplemented (other than by an amendment or supple-
ment providing solely for a change in the interest rates,
redemption provisions, amortization schedules or maturities
offered on the Notes or for a change you deem to be immate-
rial), the Company will deliver or cause to be delivered
forthwith to you a certificate signed by an executive offi-
cer of the Company, dated the date of such amendment or
supplement, as the case may be, in form reasonably satis-
factory to you, of the same tenor as the certificate
referred to in Section 4(c) relating to the Registration
Statement or the Prospectus as amended or supplemented to
the time of delivery of such certificate.
(b) Each time the Company furnishes a certifi-
cate pursuant to Section 5(a), the Company will furnish or
cause to be furnished forthwith to you a written opinion of
counsel for the Company. Any such opinion shall be dated
the date of such amendment or supplement, as the case may
be, shall be in a form satisfactory to you and shall be of
the same tenor as the opinion referred to in Section
4(b)(i), but modified to relate to the Registration State-
ment and the Prospectus as amended and supplemented to the
time of delivery of such opinion. In lieu of such opinion,
counsel last furnishing such an opinion to you may furnish
to you a letter to the effect that you may rely on such
last opinion to the same extent as though it were dated the
-21-
22
date of such letter (except that statements in such last
opinion will be deemed to relate to the Registration State-
ment and the Prospectus as amended or supplemented to the
time of delivery of such letter.)
(c) Each time the Registration Statement or the
Prospectus is amended or supplemented to set forth amended
or supplemental financial information or such amended or
supplemental information is incorporated by reference in
the Registration Statement or the Prospectus, the Company,
upon the written request of an Agent, shall cause its inde-
pendent public accountants forthwith to furnish you with a
letter, dated the date of such amendment or supplement, as
the case may be, in form satisfactory to you, of the same
tenor as the letter referred to in Section 4(d), with
regard to the amended or supplemental financial information
included or incorporated by reference in the Registration
Statement or the Prospectus as amended or supplemented to
the date of such letter.
6. Indemnification and Contribution. (a) The
Company agrees to indemnify and hold harmless you and each
person, if any, who controls you within the meaning of
either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limita-
tion, any legal or other expenses reasonably incurred by
you or any such controlling person in connection with
investigating or defending any such action or claim) caused
by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or in
any amendment thereof or the Prospectus (as amended or
supplemented if the Company shall have furnished any amend-
ments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or
omission based upon information relating to you furnished
to the Company in writing by you expressly for use therein.
(b) You agree to indemnify and hold harmless the
Company, its directors, its officers who sign the Registra-
tion Statement and each person, if any, who controls the
Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to
you, but only with reference to information relating to you
-22-
23
furnished to the Company in writing by you expressly for
use in the Registration Statement or the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any gov-
ernmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant
to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemni-
fying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to repre-
sent the indemnified party and any others the indemnifying
party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing inter-
ests between them. It is understood that the indemnifying
party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate
firm (in addition to one local counsel) for all such indem-
nified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be desig-
nated in writing by you, in the case of parties indemnified
pursuant to paragraph (a) above, and by the Company, in the
case of parties indemnified pursuant to paragraph (b)
above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judg-
ment. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemni-
fying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by the third sentence
of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding
-23-
24
effected without its written consent if (i) such settlement
is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemni-
fied party in accordance with such request prior to the
date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened proceed-
ing in respect of which any indemnified party is or could
have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in para-
graph (a) or (b) of this Section 6 is unavailable to an
indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein in con-
nection with any offering of Notes, then each indemnifying
party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the rela-
tive benefits received by the Company on the one hand and
you on the other hand from the offering of such Notes or
(ii) if the allocation provided by clause (i) is not per-
mitted by applicable law, in such proportion as is appro-
priate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the
Company on the one hand and you on the other hand in con-
nection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative
benefits received by the Company on the one hand and you on
the other hand in connection with the offering of such
Notes shall be deemed to be in the same respective propor-
tions as the total net proceeds from the offering of such
Notes (before deducting expenses) received by the Company
bear to the total discounts and commissions received by you
in respect thereof. The relative fault of the Company on
the one hand and of you on the other hand shall be deter-
mined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact
relates to information supplied by the Company or by you
and the parties' relative intent, knowledge, access to
-24-
25
information and opportunity to correct or prevent such
statement or omission.
(e) The Company and you agree that it would not
be just or equitable if contribution pursuant to this Sec-
tion 6 were determined by pro rata allocation or by any
other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities
referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indem-
nified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions
of this Section 6, you shall not be required to contribute
any amount in excess of the amount by which the total price
at which the Notes referred to in paragraph (d) above that
were offered and sold to the public through you exceeds the
amount of any damages that you have otherwise been required
to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contrib-
ution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Sec-
tion 6 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemni-
fied party at law or in equity.
7. Position of the Agent. In acting under this
Agreement and in connection with the sale of any Notes by
the Company (other than Notes sold to you as principal),
you are acting solely as agent of the Company and do not
assume any obligation towards or relationship of agency or
trust with any purchaser of Notes. You shall make reason-
able efforts to assist the Company in obtaining performance
by each purchaser whose offer to purchase Notes has been
solicited by you and accepted by the Company, but you shall
not have any liability to the Company in the event any such
purchase is not consummated for any reason. If the Company
shall default in its obligations to deliver Notes to a pur-
chaser whose offer it has accepted, the Company shall hold
you harmless against any loss, claim, damage or liability
arising from or as a result of such default and shall, in
particular, pay to you the commission you would have
received had such sale been consummated.
-25-
26
8. Termination. This Agreement may be termi-
nated at any time either by the Company or by you upon the
giving of written notice of such termination to the other
party hereto, but without prejudice to any rights, obliga-
tions or liabilities of either party hereto accrued or
incurred prior to such termination. The termination of
this Agreement shall not require termination of any Terms
Agreement, and the termination of any such Terms Agreement
shall not require termination of this Agreement. If this
Agreement is terminated, the provisions of the third para-
graph of Section 2(a), the last sentence of Section 3(b)
and Sections 3(c), 3(g), 6, 7, 9, 11 and 13 shall survive;
provided that if at the time of termination an offer to
purchase Notes has been accepted by the Company but the
time of delivery to the purchaser or its agent of such
Notes has not occurred, the provisions of Sections 2(b),
2 (c) , 3 (a), 3 (b), 3 (e), 3 (f) , 3 (h), 4 and 5 shall also
survive until such delivery has been made.
9. Representations and Indemnities to Survive.
The respective indemnity and contribution agreements,
representations, warranties and other statements of the
Company, its officers and you set forth in or made pursuant
to this Agreement or any Terms Agreement will remain in
full force and effect, regardless of any termination of
this Agreement or any such Terms Agreement, any investiga-
tion made by or on behalf of you or the Company or any of
the officers, directors or controlling persons referred to
in Section 6 and delivery of and payment for the Notes.
10. Notices. All communications hereunder will
be in writing and effective only on receipt, and, if sent
to you, will be mailed, delivered or telefaxed and con-
firmed if to [names, addresses and telefax numbers of
Agents]; or, if sent to the Company, will be mailed, deliv-
ered or telefaxed and confirmed to the Company at 2000
2nd Avenue, Detroit, Michigan 48226, Attention:
(telefax number: (313) ).
11. Successors. This Agreement and any Terms
Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in
Section 6 and the purchasers of Notes (to the extent ex-
pressly provided in Section 4), and no other person will
have any right or obligation hereunder.
12. Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be an
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27
original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
13. APPLICABLE LAW. THIS AGREEMENT WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK.
14. Headings. The headings of the sections of
this Agreement have been inserted for convenience of refer-
ence only and shall not be deemed a part of this Agreement.
-27-
28
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to
us the enclosed duplicate hereof, whereupon this letter and
your acceptance shall represent a binding agreement between
the Company and you.
Very truly yours,
THE DETROIT EDISON COMPANY
By______________________
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
[ NAME OF AGENT ]
By __________________________
Title:
[ NAME OF AGENT ]
By __________________________
Title:
[NAME OF AGENT]
By __________________________
Title:
-28 -
29
EXHIBIT A
THE DETROIT EDISON COMPANY
SECURED MEDIUM-TERM NOTES, SERIES
TERMS AGREEMENT
_________________, 20____
[Name and Address of
Agent ]
Attention:
Re: Distribution Agreement dated ________________,
(the "Distribution Agreement")
The undersigned agrees to purchase your Secured
Medium-Term Notes, Series _, having the following
terms:
Principal Interest
Amount: Rate:
Purchase Applicability
Price: of Modified
Payment upon
Acceleration:
Price to
Public:
If yes, state
Settlement issue price:
Date and Time:
Place of Amortization
Delivery: Schedule:
A-1
30
EXHIBIT A
Face Amount Applicability
(if any): of Annual
Interest
Original Issue Payments:
Date:
Interest Accrual
Date:
Maturity
Date:
Initial Accrual
Period OID:
Total Amount of
OID:
Original Yield
to Maturity:
Optional Repayment
Date(s):
Optional Redemption
Date(s):
Initial Redemption
Date:
Initial Redemption
Percentage:
Annual Redemption
Percentage
Reduction:
Other Terms:
The provisions of Sections 1, 2(b) and 2(c) and 3
through 6 and 9 through 13 of the Distribution Agreement
and the related definitions are incorporated by reference
A-2
31
EXHIBIT A
herein and shall be deemed to have the same force and
effect as if set forth in full herein.
This Agreement is subject to termination on the
terms incorporated by reference herein. If this Agreement
is so terminated, the provisions of Sections 3(g), 6, 9, 11
and 13 of the Distribution Agreement shall survive for the
purposes of this Agreement.
The following information, opinions, certifi-
cates, letters and documents referred to in Section 4 of
the Distribution Agreement will be required: ____________
[ NAME OF AGENT ]
By__________________
Title:
Accepted:
THE DETROIT EDISON COMPANY
By________________________
Title:
A-3
32
EXHIBIT B
THE DETROIT EDISON COMPANY
SECURED MEDIUM-TERM NOTES, SERIES _
ADMINISTRATIVE PROCEDURES
_________________________
Explained below are the administrative procedures
and specific terms of the offering of Secured Medium-Term
Notes, ____ Series _ (the "Notes"), on a continuous basis
by The Detroit Edison Company (the "Company") pursuant to
the Distribution Agreement, dated , (the
"Distribution Agreement") between the Company and [names of
Agents] (each an "Agent" and collectively the "Agents").
The Notes are to be issued under and secured by the Mortgage
and Deed of Trust dated as of October 1, 1924 between
the Company and First Chicago Trust Company of New York, as
successor trustee (the "Trustee"), as amended and supplemented by
various Supplemental Indentures and as to be further amended and
supplemented by a Supplemental Indenture dated as of ,
creating the Notes (the "Mortgage"). Reference is
hereby made to the Mortgage for full and complete statements
of the provisions thereof, including the definitions of certain
terms used, and for other information with respect to the Note.
In the Distribution Agreement, the Agent has agreed to use
reasonable efforts to solicit purchases of the Notes, and
the administrative procedures explained below will govern
the issuance and settlement of any Notes sold through the Agent,
as agent of the Company. An Agent, as principal, may also purchase
Notes for its own account, and if requested by such Agent, the
Company and the Agent will enter into a terms agreement (a "Terms
Agreement"), as contemplated by the Distribution Agreement.
The administrative procedures explained below will govern
the issuance and settlement of any Notes purchased by an
Agent, as principal, unless otherwise specified in the
applicable Terms Agreement.
First Chicago Trust Company of New York ("First
Chicago") will be the Paying Agent for the Notes and will
perform the duties specified herein. Each Note will be
represented by a Global Security (as defined below)
delivered to First Chicago, as agent for The Depository
Trust Company ("DTC"),
B-1
33
EXHIBIT B
and recorded in the book-entry system maintained by DTC (a
"Book-Entry Note").
Book-Entry Notes, which may be payable only in
U.S. dollars, will be issued in accordance with the
administrative procedures set forth herein as they may
subsequently be amended as the result of changes in DTC's
operating procedures. Unless otherwise defined herein, terms
defined in the Mortgage, the Notes or any Prospectus Supplement
relating to the Notes shall be used herein as therein defined.
The Company will advise the Agents in writing of
the employees of the Company with whom the Agents are to
communicate regarding offers to purchase Notes and the
related settlement details.
In connection with the qualification of the Book-Entry
Notes for eligibility in the book-entry system maintained by DTC,
First Chicago will perform the custodial, document control and
administrative functions described below, in accordance with its
respective obligations under a Letter of Representations from
the Company and First Chicago to DTC, dated as of ,
(the "Letter of Representations"), and a
Medium-Term Note Certificate Agreement between First Chicago and
DTC, dated as of _______________________, and its obligations as
a participant in DTC, including DTC's Same-Day Funds Settlement
System ("SDFS").
Issuance: On any date of settlement (as
defined under "Settlement" below)
for one or more Book-Entry Notes,
the Company will issue one or more
global securities in fully registered
form without coupons (collectively
the "Global Security"), registered
in the name of Cede & Co. representing
up to U.S. $400,000,000 principal amount
of all such Notes that have the same
Original Issue Date, Maturity Date
and other terms. Each Global
Security will be dated and issued
as of the date of its authentication by
First Chicago. Each Global Security
will bear an
B-2
34
EXHIBIT B
"Interest Accrual Date," which will
be (i) with respect to an original
Global Security (or any portion
thereof), its original issuance
date and (ii) with respect to any
Global Security (or any portion
thereof) issued subsequently upon
exchange of a Global Security, or
in lieu of a destroyed, lost or
stolen Global Security, the most
recent Interest Payment Date to
which interest has been paid or
duly provided for on the
predecessor Global Security or
Securities (or if no such payment
or provision has been made, the
original issuance date of the
predecessor Global Security),
regardless of the date of
authentication of such subsequently
issued Global Security. Book-Entry
Notes may be payable only in U.S.
dollars.
Identification The Company has arranged with the
Numbers: CUSIP Service Bureau of Standard &
Poor's Ratings Services (the "CUSIP
Service Bureau") for the
reservation of a series of
approximately 900 CUSIP numbers
(including tranche numbers) for
assignment to the Global Securities
representing the Book-Entry Notes.
The Company has obtained from the
CUSIP Service Bureau a written list
of each series of reserved CUSIP
numbers and has delivered to First
Chicago and DTC the written
list of 900 CUSIP numbers of such
series. First Chicago will assign
CUSIP numbers to Global Securities.
DTC will notify the CUSIP Service
Bureau periodically of the CUSIP
numbers that the First Chicago has
assigned to Global Securities. At
any time when fewer than 100 of
B-3
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EXHIBIT B
the reserved CUSIP numbers of
either series remain unassigned to
Global Securities, First Chicago
shall so advise the Company and,
if it deems necessary, the Company
will reserve additional CUSIP
numbers for assignment to Global
Securities representing Book-Entry
Notes. Upon obtaining such
additional CUSIP numbers, the
Company shall deliver a list of
such additional CUSIP numbers to
First Chicago and DTC.
Denominations: Book-Entry Notes will be issued in
principal amounts of U.S. $1,000
or any amount in excess thereof
that is an integral multiple of
U.S. $1,000. Global Securities
will be denominated in principal
amounts not in excess of U.S.
$400,000,000. If one or more
Book-Entry Notes having an
aggregate principal amount in
excess of $400,000,000 would, but
for the preceding sentence, be
represented by a single Global
Security, then one Global Security
will be issued to represent each
U.S. $400,000,000 principal amount
of such Book-Entry Note or Notes
and an additional Global Security
will be issued to represent any
remaining principal amount of such
Book-Entry Note or Notes. In
such a case, each of the Global
Securities representing such
Book-Entry Note or Notes shall be
assigned the same CUSIP number.
Manner of Payment: The total amount of any principal
and interest due on Global
Securities on any Interest Payment
Date or at maturity or upon
redemption or repayment shall be
paid by the Company to First
Chicago in funds
B-4
36
EXHIBIT B
available for immediate use by
First Chicago not later than 9:30
A.M. (New York City time) on such
date. The Company will make such
payment on such Global Securities
by instructing First Chicago to
withdraw funds from an account
maintained by the Company at First
Chicago. The Company will confirm
such instructions in writing to
First Chicago. Payment shall be
made prior to 10:00 A.M. (New York
City time) or as soon thereafter as
practicable, on each Maturity Date
or redemption or repayment date or,
if either such date is not a
Business Day, as soon as possible
thereafter, First Chicago will pay
by separate wire transfer (using
Fedwire message entry instructions
in a form previously specified by
DTC) to an account at the Federal
Reserve Bank of New York previously
specified by DTC, in funds
available for immediate use by DTC,
each payment of principal
(together with interest thereon)
due on Global Securities or
Maturity Date or redemption or
repayment date. On each Interest
Payment Date or, if any such date
is not a Business Day, as soon as
possible thereafter, interest
payments and, in the case of
Amortizing Notes, interest and
principal payments shall be made to
DTC in same day funds in accordance
with existing arrangements between
First Chicago and DTC. Thereafter
on each such date, DTC will pay,
in accordance with its SDFS
operating procedures then in
effect, such amounts in funds
available for immediate use to the
respective participants in whose
names the Book-Entry Notes
B-5
37
EXHIBIT B
represented by such Global
Securities are recorded in the
book-entry system maintained by DTC.
Neither the Company nor First
Chicago shall have any
responsibility or liability for the
payment by DTC to such participants
of the principal of an interest on
the Book-Entry Notes.
Withholding Taxes: The amount of any taxes required
under applicable law to be withheld
from any interest payment on a
Book-Entry Note will be determined
and withheld by the participant,
indirect participant in DTC or other
person responsible for forwarding
payments directly to the beneficial
owner of such Note.
Preparation If any order to purchase a
of Pricing Book-Entry Note is accepted by or on
Supplement: behalf of the Company, the Company
will prepare a pricing supplement
(a "Pricing Supplement") reflecting
the terms of such Note. The Company
(i) will arrange to file 10 copies
of such Pricing Supplement with the
Commission in accordance with the
applicable paragraph of Rule 424(b)
under the Act and (ii) will, as soon
as possible and in any event not
later than the date on which such
Pricing Supplement is filed with the
Commission, deliver the number of
copies of such Pricing Supplement to
the Agent as the Agent shall
request. The Agent will cause such
Pricing Supplement to be delivered
to the purchaser of the Note.
In each instance that a Pricing
Supplement is prepared, the Agent
will affix the Pricing Supplement
B-6
38
EXHIBIT B
to Prospectuses prior to their
use. Outdated Pricing Supple-
ments, and the Prospectuses to
which they are attached (other
than those retained for files),
will be destroyed.
Settlement: The receipt by the Company of
immediately available funds in
payment for a Book-Entry Note and
the authentication and issuance of
the Global Security representing
such Note shall constitute "set-
tlement" with respect to such
Note. All orders accepted by the
Company will be settled on the
fifth Business Day pursuant to the
timetable for settlement set forth
below unless the Company and the
purchaser agree to settlement on
another day, which shall be no
earlier than the next Business
Day.
Settlement Settlement Procedures with
Procedures: regard to each Book-Entry Note
sold by the Company to or through
the Agent (unless otherwise speci-
fied pursuant to a Terms Agree-
ment), shall be as follows:
A. The Agent will advise the
Company by telephone that such
Note is a Book-Entry Note and
of the following settlement
information:
1. Principal amount.
2. Maturity Date.
3. The Interest Rate, whether
such Note will pay
interest annually or
semiannually, the
Interest Payment
Date or Dates specifying
B-7
39
EXHIBIT B
the Initial Interest
Payment Date and
whether such
Note is an Amortizing
Note, and, if so, the
amortization schedule.
4. Redemption or repayment
provisions, if any.
5. Settlement date and time
(Original Issue Date).
6. Interest Accrual Date.
7. Price.
8. Net proceeds to Company.
9. Agent's commission, if
any, determined as
provided in the
Distribution Agreement.
10. Whether the Note is an
Original Issue Discount
Note (an "OID Note"), and
if it is an OID Note, the
total amount of OID, the
yield to maturity, the
initial accrual period
OID and the applicability
of Modified Payment upon
Acceleration (and, if so,
the Issue Price).
11. Any other applicable
terms.
B. The Company will advise
First Chicago by telephone or
electronic transmission
(confirmed in a written
request for authentication
and delivery at any time on
the same date) of the
information set forth in
Settlement Procedure
B-8
40
EXHIBIT B
"A" above. First Chicago will
then assign a CUSIP number to
the Global Security
representing such Note and will
notify the Company and the
Agent of such CUSIP number by
telephone as soon as
practicable.
C. First Chicago will enter a
pending deposit message
through DTC's Participant
Terminal System, providing the
following settlement
information to DTC, the Agent
and Standard & Poor's
Corporation:
1. The information set forth
in Settlement Procedure
"A."
2. The Initial Interest
Payment Date for such Note,
the number of days by
which such date succeeds
the related DTC Record
Date which shall be the
Record Date as defined in
the Note) and the amount
of interest payable on
such Initial Interest
Payment Date.
3. The CUSIP number of the
Global Security
representing such Note.
4. Whether such Global
Security will represent any
other Book-Entry Note (to
the extent known at such
time).
5. Whether such Note is an
Amortizing Note (by an
appropriate notation in
the comments field of
B-9
41
EXHIBIT B
DTC's participant
Terminal System).
6. The number of
participant accounts
to be maintained
by DTC on behalf of
the Agent and
First Chicago.
D. First Chicago will
complete and authenticate
the Global Security
representing such Note and
will send a copy by first
class mail to the Company.
E. DTC will credit such
Note to First Chicago's
participant account at
DTC.
F. First Chicago will enter
an SDFS deliver order
through DTC's Participant
Terminal System
instructing DTC to (i)
debit such Note to First
Chicago's participant
account and credit such
Note to the Agent's
participant account and
(ii) debit the Agent's
settlement account and
credit First Chicago's
settlement account for an
amount equal to the price
of such Note less the
Agent's commission, if
any. The entry of such a
deliver order shall
constitute a
representation and
warranty by First Chicago
to DTC that (a) the Global
Security representing such
Book-Entry Note has been
issued and authenticated
and (b) First Chicago is
holding such Global
Security pursuant to the
Medium Term Note
Certificate Agreement
between First Chicago and
DTC.
B-10
42
EXHIBIT B
G. Unless the Agent is the end
purchaser of such Note, the
Agent will enter an SDFS
deliver order through DTC's
Participant Terminal System
instructing DTC (i) to debit
such Note to the Agent's
participant account and
credit such Note to the
participant accounts of
the Participants with
respect to such Note and
(ii) to debit the settlement
accounts of such
Participants and credit the
settlement account of the
Agent for an amount equal
to the price of such Note.
H. Transfers of funds in
accordance with SDFS deliver
orders described in
Settlement Procedures "F"
and "G" will be settled in
accordance with SDFS
operating procedures in
effect on the settlement
date.
I. First Chicago will credit to
the account of the Company
(Account # ___________ at
First Chicago Trust Company
of New York, New York,
New York), in funds
available for immediate use
in the amount transferred to
First Chicago in accordance
with Settlement
Procedure "F".
J. Unless the Agent is the end
purchaser of such Note, the
Agent will confirm the
purchase of such Note to the
purchaser either by
transmitting to the
Participants with respect
to such Note a confirmation
order or orders through
DTC's institutional delivery
system or by mailing
B-11
43
EXHIBIT B
a written confirmation to such
purchaser.
K. Monthly, First Chicago will
send to the Company a
statement setting forth the
principal amount of Notes
outstanding as of that date
under the Mortgage and setting
forth a brief description of
any sales of which the Company
has advised First Chicago that
have not yet been settled.
Settlement For sales by the Company of
Procedures Book-Entry Notes to or through the
Timetable: Agent (unless otherwise specified
pursuant to a Terms Agreement) for
settlement on the first Business
Day after the sale date,
Settlement Procedures "A" through
"J" set forth above shall be
completed as soon as possible but
not later than the respective
times in New York City set forth
below:
Settlement
Procedure Time
---------- ----
A 11:00 A.M. on the sale date
B 12:00 Noon on the sale date
C 2:00 P.M. on the sale date
D 9:00 A.M. on settlement date
E 10:00 A.M. on settlement date
F-G 2:00 P.M. on settlement date
H 4:45 P.M. on settlement date
I-J 5:00 P.M. on settlement date
If a sale is to be settled more
than one Business Day after the
sale date, Settlement Procedures
"A", "B" and "C" shall be
completed as soon as practicable
but no later than 11:00 A.M.,
12 Noon and 2:00 P.M.,
respectively, on the
B-12
44
EXHIBIT B
first Business Day after the sale
date.
If settlement of a Book-Entry Note
is rescheduled or cancelled, First
Chicago, after receiving notice
from the Company or the Agent,
will deliver to DTC, through DTC's
Participant Terminal System, a
cancellation message to such
effect by no later than 2:00 P.M.
on the Business Day immediately
preceding the scheduled settlement
date.
Failure If First Chicago fails to enter an
to Settle: SDFS deliver order with respect to
a Book-Entry Note pursuant to
Settlement Procedure "F", First
Chicago may deliver to DTC,
through DTC's Participant Terminal
System, as soon as practicable a
withdrawal message instructing DTC
to debit such Note to First
Chicago's participant account,
provided that First Chicago's
participant account contains a
principal amount of the Global
Security representing such Note
that is at least equal to the
principal amount to be debited. If
a withdrawal message is processed
with respect to all the Book-Entry
Notes represented by a Global
Security, First Chicago will mark
such Global Security "cancelled,"
make appropriate entries in First
Chicago's records and send such
cancelled Global Security to the
Company. The CUSIP number assigned
to such Global Security shall, in
accordance with the procedures of
the CUSIP Service Bureau of
Standard & Poor's Corporation, be
cancelled and not immediately
reassigned. If a
B-13
45
EXHIBIT B
withdrawal message is processed
with respect to one or more, but
not all, of the Book-Entry Notes
represented by a Global Security,
First Chicago will exchange such
Global Security for two Global
Securities, one of which shall
represent such Book-Entry Note or
Notes and shall be cancelled
immediately after issuance and
the other of which shall
represent the remaining
Book-Entry Notes previously
represented by the surrendered
Global Security and shall bear
the CUSIP number of the
surrendered Global Security.
If the purchase price for any
Book-Entry Note is not timely
paid to the Participants with
respect to such Note by the
beneficial purchaser thereof
(or a person, including an
indirect participant in DTC,
acting on behalf of such
purchaser), such Participants
and, in turn, the Agent may
enter SDFS deliver orders
through DTC's Participant
Terminal System reversing
the orders entered pursuant to
Settlement Procedures "F" and
"G," respectively. Thereafter,
First Chicago will deliver the
withdrawal message and take the
related actions described in
the preceding paragraph.
Notwithstanding the foregoing,
upon any failure to settle with
respect to a Book-Entry Note, DTC
may take any actions in
accordance with its SDFS
operating procedures then in
effect.
In the event of a failure to
settle with respect to one or
more, but not all, of the
Book-Entry
B-14
46
EXHIBIT B
Notes to have been represented by
a Global Security, First Chicago
will provide, in accordance with
Settlement Procedures "D" and
"F," for the authentication and
issuance of a Global Security
representing the Book-Entry
Notes to be represented by such
Global Security and will make
appropriate entries in its
records.
First Chicago Nothing herein will be deemed to
Not to Risk Funds: require First Chicago to risk or
expend its own funds in
connection with any payment to
the Company, the Agents, DTC or
any beneficial owner of a Note,
it being understood by all
parties that payments made by
First Chicago to any party will
be made only to the extent
that funds are provided to
First Chicago for such purposes.
B-15
47
SCHEDULE I
----------
SECURED MEDIUM-TERM NOTE FEE SCHEDULE
-------------------------------------
Maturity Commission
- -------- ----------
2 years to < 3 years
3 years to < 4 years
4 years to < 5 years
5 years to < 6 years
6 years to < 7 years
7 years to < 8 years
8 years to < 9 years
9 years to < 10 years
10 years to < 15 years
15 years to < 20 years
20 years to < 30 years