UNITED STATES
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, 2002
Commission file number 1-11607
DTE ENERGY COMPANY
(Exact name of registrant as specified in its charter)
Michigan
(State or other jurisdiction of incorporation or organization) |
38-3217752
(I.R.S. Employer Identification No.) |
|
2000 2nd Avenue, Detroit, Michigan
(Address of principal executive offices) |
48226-1279
(Zip Code) |
313-235-4000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
At July 31, 2002, 167,466,850 shares of DTE Energys Common Stock, substantially all held by non-affiliates, were outstanding.
DTE Energy Company
Quarterly Report on Form 10-Q
Quarter Ended June 30, 2002
Table of Contents
DEFINITIONS
Company | DTE Energy Company and Subsidiary Companies | |
Customer Choice | The choice programs are statewide initiatives giving customers in Michigan the option to choose alternative suppliers for electricity and gas. | |
Detroit Edison | The Detroit Edison Company (a wholly owned subsidiary of DTE Energy Company) and Subsidiary Companies | |
Enterprises | DTE Enterprises Inc. (successor to MCN Energy), a wholly owned subsidiary of DTE Energy Company | |
EPA | United States Environmental Protection Agency | |
FERC | Federal Energy Regulatory Commission | |
GCR | A gas cost recovery mechanism authorized by the MPSC that was reinstated by MichCon in January 2002 that permits MichCon to pass the cost of natural gas to its customers. | |
ITC | International Transmission Company (a wholly owned subsidiary of DTE Energy Company) | |
KWh | Kilowatthour | |
MCN Energy | MCN Energy Group Inc. | |
MichCon | Michigan Consolidated Gas Company | |
MPSC | Michigan Public Service Commission | |
MW | Megawatt | |
MWh | Megawatthour | |
PSCR | A power supply cost recovery mechanism authorized by the MPSC that allowed Detroit Edison to recover through rates its fuel, fuel-related and purchased power electric expenses. The clause was suspended under Michigans restructuring legislation signed into law June 5, 2000, which lowered and froze electric customer rates. | |
SEC | Securities and Exchange Commission | |
Securitization | A mechanism used by Detroit Edison to refinance specific stranded costs at lower interest rates through the sale of rate reduction bonds. | |
SFAS | Statement of Financial Accounting Standards | |
Stranded Costs | Costs incurred by utilities in order to serve customers in a regulated environment, but some of which may not be recoverable if customers switch to alternative suppliers of electricity and gas. |
3
DTE Energy Company
Managements Discussion and Analysis
of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
Certain information presented herein includes forward-looking statements. Forward-looking statements involve certain risks and uncertainties that may cause actual future results to differ materially from those contemplated, projected, estimated or budgeted in such forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to, interest rates, effects of new accounting pronouncements, access to the capital markets, the level of borrowings, weather, actual sales, changes in the cost of fuel and purchased power due to the suspension of the PSCR mechanism, changes in the cost of natural gas, the effects of competition and the implementation of electric and gas Customer Choice programs, the implementation of electric and gas utility restructuring in Michigan, the impact of changes in and interpretations of tax laws, environmental and nuclear requirements, the impact of FERC and MPSC proceedings and regulations, the timing of the accretive effects of DTE Energys merger with MCN Energy, and the contributions to earnings by non-regulated businesses.
RESULTS OF OPERATIONS
DTE Energy reported earnings of $68 million or $.42 per diluted share for the 2002 second quarter, compared to losses of $87 million or $.60 per diluted share for the 2001 second quarter. For the 2002 six-month period, net income was $268 million or $1.66 per diluted share, compared to $51 million or .36 per diluted share for the same period in 2001. The comparability of earnings was affected by merger and restructuring charges and goodwill amortization associated with the MCN Energy merger that reduced after-tax earnings for the 2001 second quarter by $168 million or $1.15 per diluted share and the 2001 six-month period by $169 million or $1.17 per diluted share. Excluding merger and restructuring charges and goodwill amortization, earnings decreased $13 million in the 2002 second quarter and increased by $48 million in the 2002 six-month period as compared to the corresponding 2001 periods. Both periods were affected by increased contributions from the Energy Resources Regulated segment and the Energy Gas business unit, and reduced earnings from the Wholesale Marketing & Trading segment and Corporate & Other. The issuance of 29 million shares in conjunction with the May 2001 MCN Energy merger, net of 10.5 million shares repurchased in 2001, also impacted the earnings per share comparison.
New reporting alignment - Beginning in 2002, DTE Energy realigned its internal and external financial reporting structure into three strategic business units (Energy Resources, Energy Distribution and Energy Gas) that have both regulated and non-regulated operations. This structure is how management sets strategic goals, allocates resources and evaluates performance. The realignment resulted in the following nine reportable segments:
Energy Resources
| Regulated operations include the power generation services of Detroit Edison, the Companys electric utility. Electricity is generated from Detroit Edisons numerous fossil plants or its nuclear plant and sold throughout Southeastern Michigan to residential, commercial, industrial and wholesale customers. |
4
Managements Discussion and Analysis
| Non-regulated |
| Energy Services is comprised of various businesses that develop and manage energy-related assets and services. Such projects include coke production, synfuels production, independent power plants, on-site energy projects and cogeneration facilities. The economic viability of synfuels projects is tied to their generation of alternate fuels tax credits. | ||
| Wholesale Marketing & Trading consists of the electric and gas marketing and trading operations of DTE Energy Trading Company and the natural gas marketing and trading operations of DTE Enterprises, which was acquired as part of the MCN Energy merger. Wholesale Marketing & Trading enters into forwards, futures, swaps and option contracts as part of its trading strategy. Wholesale Marketing & Trading focuses on physical power marketing and structured transactions, as well as the enhancement of returns from its power plant, pipeline and storage assets. | ||
| Other non-regulated operations consist of businesses involved in coal services and landfill gas recovery along with an independent generating unit. |
Energy Distribution
| Regulated operations include the electric distribution services of Detroit Edison, and the electric transmission services of the International Transmission Company (ITC). Energy Distribution distributes electricity generated by Energy Resources and alternative electric suppliers to Detroit Edisons 2.1 million residential, commercial and industrial customers. The transmission assets of ITC are operated by the Midwest Independent System Operator, a regional transmission operator. | |
| Non-regulated operations primarily consist of DTE Energy Technologies, businesses that market and distribute a broad portfolio of distributed generation products, provide application engineering, and monitor and manage system operations. |
Energy Gas
| Regulated operations include gas distribution services primarily provided by MichCon, the Companys gas utility that purchases, stores and distributes natural gas throughout Michigan to 1.2 million residential, commercial and industrial customers. | |
| Non-regulated operations include the exploration and production of gas and the gathering, processing and storing of gas. Certain pipeline and storage assets are used to support the Wholesale Marketing & Trading segment. |
Corporate & Other includes administrative and general expenses, and interest costs of DTE Energy corporate that have not been allocated to the regulated and non-regulated businesses. Corporate & Other also includes various other non-regulated operations, including investments in new emerging energy technologies.
5
Managements Discussion and Analysis
The following tables and related discussion depicts the operations of each of
these segments.
Three Months Ended
Six Months Ended
June 30
June 30
(in Millions)
2002
2001
2002
2001
$
57
$
12
$
128
$
88
25
26
53
55
(5
)
24
13
25
4
7
8
11
24
57
74
91
81
69
202
179
23
26
48
63
(4
)
(3
)
(7
)
(5
)
19
23
41
58
(1
)
1
53
1
8
1
14
1
7
2
67
2
(39
)
(13
)
(42
)
(19
)
79
39
229
152
(11
)
42
39
68
68
81
268
220
(164
)
(165
)
(4
)
(4
)
$
68
$
(87
)
$
268
$
51
6
Managements Discussion and Analysis
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
$
.35
$
.08
$
.79
$
.61
.15
.18
.33
.38
(.03
)
.17
.08
.17
.03
.04
.05
.08
.15
.39
.46
.63
.50
.47
1.25
1.24
.14
.17
.30
.44
(.02
)
(.02
)
(.04
)
(.03
)
.12
.15
.26
.41
(.01
)
.01
.33
.01
.05
.01
.09
.01
.04
.02
.42
.02
(.24
)
(.09
)
(.27
)
(.14
)
.48
.26
1.42
1.06
(.06
)
.29
.24
.47
.42
.55
1.66
1.53
(1.13
)
(1.15
)
(.02
)
(.02
)
$
.42
$
(.60
)
$
1.66
$
.36
Energy Resources
Regulated earnings increased $45 million and $40 million during the 2002 second quarter and six-month period reflecting higher gross margins due to lower fuel and purchased power costs, partially offset by a decrease in operating revenue. Fuel and purchased power costs reflect favorable energy market prices and an increase in unrealized mark to market gains. The operating revenues decrease was attributable to the impact of a 5% legislatively mandated, securitization based, rate reduction for commercial and industrial customers that began in April 2001. The higher gross margins were partially offset by increased operations and maintenance expenses for health care and pension costs. Depreciation and amortization expense decreased reflecting the extension of the amortization period from seven years to 15 years for certain regulatory assets that were securitized in 2001.
7
Managements Discussion and Analysis
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
$
654
$
704
$
1,271
$
1,407
240
351
428
595
$
414
$
353
$
843
$
812
$
57
$
12
$
128
$
88
System output and average fuel and purchased power costs were as follows:
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
9,519
9,390
18,630
19,618
2,334
2,316
4,624
4,729
2,178
1,736
3,818
3,268
14,031
13,442
27,072
27,615
$
12.64
$
12.03
$
12.41
$
12.20
$
37.77
$
69.96
$
34.48
$
57.47
(1) | Represents fuel costs associated with power plants. | ||
(2) | The average purchased power amounts include hedging activities. |
Non-regulated earnings decreased $33 million and $17 million for the 2002 second quarter and six-month period, respectively, reflecting the operations of the Wholesale Marketing & Trading segment. In the 2001 second quarter, this segment had substantial mark to market gains, largely on gas supply contracts. In late 2001, these gas contracts were hedged, reducing future earnings volatility due to swings in gas prices.
Outlook - Regulatory changes have resulted and will continue to result in increased competition in the electric generation business. Effective January 1, 2002, the electric Customer Choice Program was expanded whereby all electric customers can choose to purchase their electricity from suppliers other than their local utility. Detroit Edison expects to lose 5% to 8% of its retail sales as a result of customers choosing to participate in the electric Choice Program during 2002. To the extent Detroit Edison experiences net stranded costs as a result of customers switching to an alternative electric supplier, Michigan legislation provides for the recovery of such stranded costs. Detroit Edison disagrees with the MPSCs methodology for determining and recovering net stranded costs and has asked for rehearing, clarification and substantial changes on certain aspects of the applicable order. In May 2002, the MPSC denied Detroit Edisons request for rehearing and clarification on certain aspects of the order. In June 2002, Detroit Edison filed an appeal of the MPSC order at the Michigan Court of Appeals. See Note 4.
8
Managements Discussion and Analysis
Energy Distribution
Regulated
earnings declined $3 million and $15 million during the 2002 second
quarter and six-month period, respectively, due primarily to increased
operation and maintenance expenses. The increased operation and maintenance
expenses are attributable to higher health care and pension costs, heat-related
maintenance costs on the distribution system and costs associated with
restoring power to customers who lost service during two storms in the 2002
six-month period. Operating revenues increased due primarily to higher
residential sales due to warm June weather.
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
$
312
$
288
$
627
$
609
$
23
$
26
$
48
$
63
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
3,527
3,236
7,247
6,906
4,718
4,753
9,060
9,255
3,537
3,649
6,869
7,323
550
537
1,092
1,116
85
92
197
187
12,417
12,267
24,465
24,787
761
406
1,642
572
13,178
12,673
26,107
25,359
Non-regulated results declined $1 million and $2 million during the 2002 second quarter and six-month period, respectively, due primarily to expenses associated with the establishment of new sales offices in the distributed generation business.
Outlook - Regulated electric system deliveries are expected to increase in 2002 due to the economic recovery and continue to grow modestly in 2003. Operating results will vary as a result of various external factors such as weather, changes in economic conditions and the severity and frequency of storms. As a result of the continued restructuring of the electric industry, DTE Energy is currently negotiating the sale of ITC. Any divestiture will be independently evaluated to maximize shareholder value.
9
Managements Discussion and Analysis
Energy Gas
Regulated
had a loss of $1 million for the 2002 second quarter and had earnings
of $53 million for the 2002 six-month period compared to income of $1 million
in both the 2001 comparable periods, reflecting primarily the operations of
MichCon, DTE Energys natural gas utility. MichCon was acquired in conjunction
with the MCN Energy merger in May 2001, and was part of DTE Energys operations
for only one month in the 2001 second quarter and six-month period. Due to the
seasonal nature of the gas utility business, MichCons earnings in the second
quarter of each year are typically negligible.
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
$
251
$
44
$
841
$
44
120
29
511
29
$
131
$
15
$
330
$
15
$
(1
)
$
1
$
53
$
1
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
.9
%
7.5
%
(9.6
)%
7.5
%
.5
.1
(13.8
)
.1
$
.5
$
.1
$
(12.2
)
$
.1
Non-regulated earnings were $8 million and $14 million for the 2002 second quarter and six-month period, respectively, compared to earnings of $1 million in both the 2001 comparable periods, reflecting the operations of the gas exploration and production business, and pipeline and processing activities.
Outlook - In December 2001, the MPSC issued an order that continues the Gas Customer Choice Program on a permanent and expanding basis. Beginning April 1, 2002, up to 40% of customers can elect to purchase gas from suppliers other than MichCon. Beginning in April 2003, up to 60% of customers could participate and beginning April 2004, all 1.2 million of MichCons gas customers could choose to participate. As of June 2002, approximately 127,000 customers are participating in the gas Customer Choice program. Since MichCon continues to transport and deliver the gas to the participating customers premises at prices comparable to the non-gas sales prices, customers switching to other suppliers have no impact on MichCons margins.
Weather is the most significant factor that will effect Energy Gas sales and therefore its earnings.
Corporate & Other
The net loss attributable to Corporate & Other increased $26 million and $23 million for the 2002 second quarter and six-month period, respectively, due to unfavorable effective income tax rate adjustments and
10
Managements Discussion and Analysis
higher interest costs. The income tax provisions of the segments are determined
on a stand alone basis. Corporate & Other records necessary adjustments in
order that the consolidated income tax expense during the quarter reflects the
estimated calendar year 2002 effective rate. Interest expense increased due to
the debt assumed in the MCN Energy merger.
CAPITAL RESOURCES AND LIQUIDITY
Operating Activities
Net cash from operating activities decreased $19 million during the 2002
six-month period as compared to the same 2001 period. The decline reflects a
$21 million increase in working capital and other assets and liabilities,
partially offset by an increase of $2 million in net income, after adjusting
for depreciation, depletion and amortization and $223 million in non-cash
merger and restructuring charges in the 2001 six-month period. Partially
offsetting this decline was the incremental contribution of Enterprises
operating cash inflows in 2002, tempered somewhat by the impact of the recently
implemented gas cost recovery mechanism (GCR). Cash flow was negatively
impacted by the under-recovery of gas costs totaling $38 million, as part of
the GCR mechanism implemented in January 2002, where MichCon is allowed to
recover its actual gas costs from gas customers. Over the balance of 2002 this
amount is expected to reverse with a small remaining under-recovery balance by
year-end that will be trued-up as part of 2002s GCR reconciliation process.
Higher working capital levels reflect increased accounts receivables of $148
million, largely the result of the impact of the economy on collections and the
under-recovery of gas costs. Management expects lower receivables outstanding
by year end. Increased electric sales due to warm June weather also
contributed to the higher receivable balance. In addition, lower accounts
payable levels represent the internal focus on managing external payments and
taking greater advantage of purchase discounts.
11
Managements Discussion and Analysis
Investing Activities
Net cash used for investing activities decreased $1.22 billion during the 2002
six-month period as compared to the same 2001 period. The decrease is
primarily due to the acquisition of MCN Energy in the 2001 six-month period.
Financing Activities
Net cash from financing activities decreased $1.67 billion during the 2002
six-month period as compared to the same 2001 period. The decrease is
primarily due to the issuance of $1.75 billion of securitization bonds in March
2001 and the issuance of $1.35 billion of long-term debt to finance the cash
consideration portion of the acquisition of MCN Energy.
In April 2002, DTE Energy issued $200 million of 6.65% senior notes due 2009.
The proceeds were used to retire MCN Energy Enterprises Remarketed Securities,
which had an aggregate principal amount of $100 million, and to reduce
short-term borrowings.
In June 2002, DTE Energy issued 6.9 million equity security units at $25 per
unit. An equity security unit consists of a stock purchase contract and a
senior note of DTE Energy. DTE Energy used the net proceeds of $166.9 million from this
issuance for general corporate purposes, including the repayment of short-term
borrowings.
In June 2002, DTE Energy also issued 6.325 million shares of common stock at
$43.25 per share, grossing $273.6 million. Net proceeds from the common stock
offering were approximately $265 million and are recorded in the accompanying consolidated statement of shareholders equity.
ENVIRONMENTAL MATTERS
EPA ozone transport regulations and final new air quality standards relating to
ozone and particulate air pollution will impact the Company. Detroit Edison
has spent approximately $348 million through June 2002 and estimates that it
will incur an additional $400 to $500 million of future capital expenditures
over the next three years to comply.
NEW ACCOUNTING PRONOUNCEMENTS
During 2001, the Financial Accounting Standards Board (FASB) issued new
accounting pronouncements concerning business combinations, goodwill and other
intangible assets, asset retirement obligations and impairment or disposal of
long-lived assets. See Note 9 for a discussion of the Companys evaluation of
the adoption of these new accounting pronouncements.
12
Managements Discussion and Analysis
FAIR VALUE OF CONTRACTS
The following table reflects the maturity and sources of the net fair value
gain (loss) of contracts at
June 30, 2002:
The Prices from quotes category represents the Companys positions for which
forward price curves were developed using published NYMEX exchange prices and
over the counter (OTC) gas and power quotes. The NYMEX currently publishes gas
futures prices for the next six years.
The Prices from external sources category represents the Companys forward
positions in power at points for which OTC broker quotes are not always
directly available. The Company values these positions against internally
developed forward market price curves that are constantly validated and recalibrated against OTC broker quotes for closely correlated points. This
category also includes strip transactions whose prices are obtained from
external sources and then modeled to daily or monthly prices as appropriate.
A reconciliation of the Companys estimated net fair value of trading contracts
follows:
13
Quantitative and Qualitative Disclosures about Market Risk
Commodity Price Risk
Risk Management Activities
DTE Energy is subject to commodity price risk in conjunction with the
anticipated purchase of electricity to meet reliability obligations. Exposure
to commodity price risk arises from market fluctuations in commodity prices.
To limit the sensitivity to commodity price fluctuations, DTE Energy has
entered into a series of forward electricity contracts and option contracts.
The Company is exposed to the risk of market price fluctuations on gas sale and
purchase contracts, gas production and gas inventories. To manage this risk,
the Company uses natural gas futures, options, forwards and swap agreements.
The Company performed a sensitivity analysis to calculate the impact of changes
in fair values utilizing applicable forward commodity rates in effect at June
30, 2002. The Company estimates that if commodity prices were 10% higher or
lower, the net fair value of commodity contracts would decrease $8.6 million
and increase $8.6 million, respectively.
Trading Activities
Wholesale Marketing & Trading trades electricity, gas and related fuels, in
addition to providing price risk management services using energy commodity
derivatives. Wholesale Marketing & Trading performed a sensitivity analysis to
calculate the impact of changes in fair values utilizing applicable forward
commodity rates in effect at June 30, 2002. The Company estimates that if
commodity prices were 10% higher or lower, the net fair value of commodity
contracts would decrease $10.3 million and increase $11.3 million,
respectively.
14
DTE Energy Company
See Notes to Consolidated Financial Statements (Unaudited)
15
DTE Energy Company
See Notes to Consolidated Financial Statements (Unaudited)
16
DTE Energy Company
See Notes to Consolidated Financial Statements (Unaudited)
17
DTE Energy Company
See Notes to Consolidated Financial Statements (Unaudited)
18
DTE Energy Company
The following table displays comprehensive income (loss) for the six-month
periods in 2002 and 2001:
See Notes to Consolidated Financial Statements (Unaudited)
19
DTE ENERGY COMPANY
NOTE 1 GENERAL
These consolidated financial statements (unaudited) should be read in
conjunction with the notes to consolidated financial statements included in the
Annual Report to the Securities and Exchange Commission on Form 10-K.
The accompanying consolidated financial statements were prepared in conformity
with accounting principles generally accepted in the United States of America.
In connection with their preparation, management makes estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
The consolidated financial statements are unaudited, but in the opinion of the
Companys management, 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.
Certain prior year balances have been reclassified to conform to the current
years presentation.
NOTE 2 MCN ENERGY ACQUISITION
On May 31, 2001, the Company completed the acquisition of MCN Energy by
acquiring all of its outstanding shares of common stock for a combination of
cash and shares of the Companys common stock. The Company purchased the
outstanding common stock of MCN Energy for $2.3 billion and assumed existing
MCN Energy debt and preferred securities of $1.5 billion.
The Company accounted for the acquisition using the purchase method. The excess
purchase price over the fair value of net assets acquired totaled $2.1 billion
and was classified as goodwill. The Company began amortizing goodwill on June
1, 2001, on a straight-line basis using a 40-year life. In accordance with the
adoption of SFAS No. 142, Goodwill and Other Intangible Assets, on January 1,
2002, the amortization of goodwill ceased, and is tested for impairment on an
annual basis.
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition:
NOTE 3 MERGER AND RESTRUCTURING CHARGES
On May 31, 2001, the Company completed the acquisition of MCN Energy. The
Company incurred merger-related charges and restructuring charges associated
with the acquisition. The merger-related charges of $16 million ($10 million
after tax) in the 2001 second quarter and $18 million ($12 million after tax)
in the 2001 six-month period, consisted primarily of system integration,
relocation, legal, accounting and consulting costs. Restructuring charges of
$236 million ($153 million after tax) in the 2001 second quarter, were
primarily associated with a work force reduction plan. The plan included early
retirement incentives along with voluntary separation arrangements for 1,184
employees, primarily in overlapping corporate support functions. The merger
and restructuring costs had the effect of decreasing earnings by $252 million
($164 million after tax) and $254 million ($165 million after tax) for the 2001
second quarter and six-month period, respectively.
NOTE 4 REGULATORY MATTERS
Electric Industry Restructuring
The MPSC initiated a case to determine the methodology of calculating net
stranded costs as required by Public Act (PA) 141. As a result of an MPSC
order in December 2001, Detroit Edison would recover the net stranded costs
associated with its electric generation operations. Specifically, there would
be an annual filing with the MPSC comparing actual revenues from generation
services to the revenue requirements, including an allowance for the cost of
capital, to recover the costs of generation services. The MPSC, in its orders,
determined that Detroit Edison had no stranded costs using 2000 data, and
consequently established a zero 2002 transition charge. The MPSC authorized
Detroit Edison to establish a deferred regulatory asset in order to recover its
2002 incurred stranded cost in a subsequent annual net stranded cost filing.
The MPSC also determined that Detroit Edison should provide a full and
offsetting credit for the securitization and tax charges applied to electric
Customer Choice bills in 2002 and maintained an additional credit on
21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
electric Customer Choice bills equivalent to the 5% rate reduction benefiting
full service customers, both funded by savings derived from securitization.
This order combined with lower wholesale power prices has encouraged additional
customer participation in the electric Customer Choice program and has resulted
in the loss of margins from providing generation services. In May 2002, the
MPSC denied Detroit Edisons request for rehearing and clarification on certain
aspects of the order. In June 2002, Detroit Edison filed an appeal of the MPSC
order at the Michigan Court of Appeals, challenging the legality of the MPSC
order.
In May 2002, Detroit Edison submitted its 2002 annual net stranded cost filing
with the MPSC. The filing provides refinements to the MPSC Staffs calculation
of net stranded costs, seeks more timely recovery of stranded costs and
responds to the issue of securitization offsets and rate equalization credits.
Detroit Edisons filing supports the following conclusions: (i) Detroit Edison
had no recoverable stranded costs in 2000, however when 2001 data is
incorporated into the approved methodology, Detroit Edison has recoverable
stranded costs attributable to electric Customer Choice of $13 million for
2001; (ii) Detroit Edison requested the recovery of 2001 net stranded costs through use of
excess residual securitization savings; (iii) Detroit Edison expects to incur
additive net stranded costs during 2002 and 2003 as a result of increased
electric Customer Choice participation; and (iv) a pro-forma transition charge
should be approved for billing during the remainder of 2002 and for 2003 to
eliminate the time lag between the incidence and recovery of stranded costs
inherent in the previously approved methodology.
In another December 2001 order, the MPSC finalized the prices, terms and
conditions contained in the Retail Access Service Tariff (RAST). Detroit
Edison requested rehearing and clarification on certain aspects of the order.
In an order issued in April 2002, the MPSC modified its December 2001 order
approving Detroit Edisons RAST and reduced the requirements imposed on Detroit
Edison in the December 2001 order concerning meter installation, meter reading
and computer system enhancements for customers that elect to participate in the
electric Customer Choice program.
In several orders issued in June 2000, the MPSC determined that adjusting rates
for changes in fuel and purchased power expenses through continuance of the
PSCR clause would be inconsistent with the rate
freeze required by PA 141. Detroit Edison was not permitted to collect
the 1998 PSCR under-recovery of $9 million, plus accrued interest of $3
million. Also, Detroit Edison was not required to refund approximately $55
million of liabilities for over-recoveries of PSCR expenses for 1999 and 2000,
and disallowances under the Fermi 2 performance standard mechanism. In January
and March 2002, the Michigan Court of Appeals rejected appeals and motions for
rehearing filed by parties opposing the MPSCs actions in this proceeding. In
March 2002, the Michigan Attorney General applied for leave to appeal at the
Michigan Supreme Court. The court has not yet determined whether or not it
will hear the case.
Gas Industry Restructuring
MichCon returned to the gas cost recovery (GCR) mechanism in January 2002 when
the Gas Sales Program expired. Under the GCR mechanism, the gas commodity
component of MichCons gas sales rates is designed to recover the actual costs
of reasonably and prudently incurred gas purchases. In December 2001, the
Michigan Public Service Commission (MPSC) issued an order that permitted
MichCon to implement GCR factors up to $3.62 per Mcf for January 2002
billings and up to $4.38 per Mcf for the remainder of 2002. The order also
allowed MichCon to recognize a regulatory asset of approximately $14 million
representing the difference between the $4.38 factor and the $3.62 factor for
volumes that were unbilled at December 31, 2001. The regulatory asset will be
subject to the 2002 GCR reconciliation process. As of June 30, 2002, MichCon
has accrued a $52.4 million regulatory asset representing the under-recovery of
actual gas costs incurred. In July 2002, in response to a petition for
rehearing filed by the Michigan Attorney General, the MPSC directed the parties
to address MichCons implementation of the December 2001 order and the impact
of that implementation on rates charged to MichCons customers. In addition,
parties are to address the advisability and lawfulness of
22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
granting MichCons request to record a regulatory asset. In July 2002, an MPSC
Administrative Law Judge (ALJ) issued a Proposal for Decision on MichCons
2002 GCR plan case. In that decision the ALJ recommended the adoption the MPSC
Staffs proposed $26.5 million reduction in gas cost due to MichCons decision
to utilize storage gas during 2001 that resulted in a gas inventory decrement
for the 2001 calendar year.
In December 2001, the MPSC also approved MichCons application for a voluntary,
expanded permanent gas Customer Choice program, which would replace the
experimental program that expired in March 2002. Effective April 2002, up to
40% of MichCons customers could elect to purchase gas from suppliers other
than MichCon. Effective April 2003, up to 60% of customers would be eligible
and by April 2004, all of MichCons 1.2 million customers can participate in
the program. The MPSC also approved the use of deferred accounting for the
recovery of implementation costs of the gas Customer Choice program. As of
June 2002, approximately 127,000 customers are participating in the gas
Customer Choice program.
Through December 2001, MichCon was operating under an MPSC-approved Regulatory
Reform Plan which included an income sharing mechanism. The income sharing
mechanism allowed customers to share in profits when actual returns on equity
from utility operations exceed predetermined thresholds. Based on the MPSC
approved formula, the Company believes that no income sharing is required in
2001. In July 2002, the MPSC issued an order regarding MichCons 2001 income
sharing. The MPSC ordered a hearing be held to determine the issue of the
appropriate treatment of $766,000 of pipeline refunds received by MichCon
during 2001. MichCon is directed to make a filing setting forth a refund
methodology in August 2002.
Other
In accordance with a November 1997 MPSC order, Detroit Edison reduced rates by
$53 million annually to reflect the scheduled reduction in the revenue
requirement for Fermi 2. The $53 million reduction was effective in January
1999. In addition, the November 1997 MPSC order authorized the deferral of $30
million of storm damage costs and amortization and recovery of the costs over a
24-month period commencing January 1998. After various legal appeals, the
Michigan Court of Appeals remanded back to the MPSC for hearing the November
1997 order. In December 2000, the MPSC issued an order reopening the case for
hearing. The parties in the case have agreed to a stipulation of fact and
waiver of hearing. In June 2002, the MPSC issued an order modifying in part,
and reaffirming in part, previous orders which allowed Detroit Edison to
amortize and collect in rates the storm damage costs incurred in 1997. The
MPSC modified its 1997 order regarding the calculation of the storm damage
costs, and in doing so ordered Detroit Edison to refund approximately $1.5
million after January 1, 2004. The 2004 refund will also include interest
accrued from January 1, 2000 at Detroit Edisons authorized rate of return. In
July 2002, the Michigan Attorney General filed a claim of appeal at the
Michigan Court of Appeals regarding the June 2002 MPSC order.
The Company is unable to predict the outcome of the regulatory matters
discussed herein. Resolution of these matters is dependent upon future MPSC
orders, which may impact the financial position and results of operations of
the Company.
NOTE 5 PREFERRED SECURITIES OF SUBSIDIARIES
In January 2002, DTE Energy Trust I, a wholly owned trust of the Company,
issued $180 million of 7.8% Trust Preferred Securities with a liquidation value
of $25 per share due February 2032. The earliest date the securities can be
redeemed is February 2007. The proceeds were used to redeem 8-5/8% Trust
Originated Preferred Securities and 9-3/8% Redeemable Cumulative Preferred
Securities in February 2002.
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 6 DEBT AND EQUITY TRANSACTIONS
Long-term Debt
During the first six months of 2002, DTE issued long-term debt consisting of:
During the first six months of 2002, DTE Energy and its subsidiaries repaid
$339 million of long-term debt securities.
Equity-Linked Debt Securities
In June 2002, DTE Energy issued 6.9 million equity-linked debt securities that
yield 8.75% with a stated amount of $25 per security. Gross proceeds from
the issuance totaled $172.5 million. A security unit consists of a stock
purchase contract and a senior note of DTE Energy. Under each stock purchase
contract, DTE Energy is obligated to sell, and the security unit holder is
obligated to purchase between 0.4817 and 0.578 shares of DTE Energy common
stock in August 2005 for $25. The exact number of DTE Energy common shares to
be sold is dependent on the market value of a share in August 2005, but will
not be less than 3.3 million or more than 4.0 million shares. DTE Energy is
also obligated to pay the security unit holders a quarterly contract adjustment
payment at an annual rate of 4.15% of the stated amount. DTE Energy has
recorded $21 million as the present value of the contract adjustment payments in long-term debt with an
offsetting reduction in common shareholders equity. The liability is reduced
as the contract adjustment payments are made.
Each senior note has a stated value of $25, pays an annual interest rate of
4.60% and matures in August 2007. The senior notes are pledged as collateral
to secure the security unit holders obligation to purchase DTE Energy common
stock under the stock purchase contracts. The security unit holders may
satisfy their obligations under the stock purchase contracts by allowing the
senior notes to be remarketed with proceeds being paid to DTE Energy as
consideration for the purchase of stock under the stock purchase contracts.
Alternatively, holders may choose to continue holding the senior notes and use
cash as consideration for the purchase of stock under the stock purchase
contracts.
Net proceeds from the equity security issuance totaled $166.9 million.
Expenses incurred in connection with this issuance totaled $5.6 million
and were allocated between the senior notes and the stock purchase contracts.
The amount allocated to the senior notes was deferred and will be recognized as
interest expense over the term of the notes. The amount allocated to the
purchase contracts was charged to equity.
Debt Covenants
The Companys bank financing arrangements require it to maintain a debt to
total capitalization ratio (as defined) of no more than .65 to 1 and an
earnings before interest, taxes, depreciation and amortization (EBITDA) to
interest ratio of no less than 2 to 1. Additionally, financing arrangements
contain cross-default provisions which would occur if the Company or any of its
significant subsidiaries fail to pay principal or interest on a timely basis.
The Company is currently in compliance with these financial covenants.
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Common Stock
DTE Energy issued 6.325 million shares of common stock at $43.25 per share,
grossing $273.6 million. Net proceeds from the offering were approximately
$265 million. The total fees charged to equity relative to this issuance of
common stock and the offering of the equity-linked debt securities described
above, amounted to $9.1 million and $4.9 million, respectively.
NOTE 7 EARNINGS PER SHARE
The Company reports both basic and diluted earnings per share. Basic earnings
per share is computed by dividing income before accounting changes by the
weighted average number of common shares outstanding during the period.
Diluted earnings per share assumes the issuance of potentially dilutive common
shares outstanding during the period and the repurchase of common shares that
would have occurred with proceeds from the assumed issuance. These include the
assumed exercise of stock options, vesting of non-vested stock awards and the
issuance of common shares for performance share awards.
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A reconciliation of both calculations for the 2002 and 2001 quarter and
six-month period is presented in the table below. In each period presented,
potentially dilutive securities have been excluded from the diluted EPS
calculation since their inclusion would have been antidilutive based on average
market prices during the respective periods.
NOTE 8 CONTINGENCIES
Personal Property Taxes
Detroit Edison, MichCon and other Michigan utilities have asserted that
Michigans valuation tables result in the substantial overvaluation of utility
personal property. Valuation tables established by the Michigan State Tax
Commission (STC) are used to determine the taxable value of personal property
based on the propertys age. In November 1999, the STC approved new valuation
tables that more accurately recognize the value of a utilitys personal
property. The new tables became effective in 2000 and are currently used to
calculate property tax expense. However, several local taxing jurisdictions
have taken legal action attempting to prevent the STC from implementing the new
valuation tables and have continued to prepare assessments based on the
superseded tables. The legal actions regarding the appropriateness of the new
tables were before the Michigan Tax Tribunal (MTT) which, in April 2002, issued
its decision essentially affirming the validity of the STCs new tables. In
June 2002, petitioners in the case filed an appeal of the MTTs decision with
the Michigan Court of Appeals.
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Other
DTE Energy subsidiaries purchase and sell electricity and gas to numerous
companies operating in the steel, automotive, energy and retail industries.
During 2001 and 2002, a number of customers have filed for bankruptcy
protection under Chapter 11 of the U.S. Bankruptcy Code, including certain
Enron Corporation affiliates, National Steel Company and Bethlehem Steel
Company. Management regularly reviews contingent matters relating to purchase
and sale contracts and records provisions for amounts considered probable of
loss. Management believes its previously accrued amounts are adequate for
losses that are probable of occurring. The final resolution of these matters
are not expected to have a material effect on the Companys financial
statements in the period they are resolved.
NOTE 9 NEW ACCOUNTING PRONOUNCEMENTS
Business Combinations
- Effective July 1, 2001, the Company adopted Statement
of Financial Accounting Standards (SFAS) No. 141, Business Combinations.
SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. The adoption of SFAS 141
did not have an impact on the consolidated financial statements.
Goodwill and Other Intangible Assets
- Effective January 1, 2002, the Company
adopted SFAS No. 142, Goodwill and Other Intangible Assets, which addresses
the financial accounting and reporting standards for the acquisition of
intangible assets outside of a business combination and for goodwill and other
intangible assets subsequent to their acquisition. This accounting standard
requires that goodwill be separately disclosed from other intangible assets in
the balance sheet, and no longer be amortized, but requires that goodwill be
reviewed at least annually for impairment. The provisions of this accounting
standard also require the completion of a transitional impairment test within
six months of adoption, with any impairment treated as a cumulative effect of a
change in accounting principle. The Company has completed the transitional
goodwill impairment test and determined that no potential impairment existed at
January 1, 2002.
In accordance with SFAS No. 142, the Company discontinued the amortization of
goodwill effective January 1, 2002. A reconciliation of previously reported
net income and earnings per share to the amounts adjusted for the exclusion of
goodwill amortization follows:
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In connection with the adoption of SFAS No. 142, the Company also reassessed
the useful lives and the classification of identifiable intangible assets and
determined that they continue to be appropriate. The Companys intangible
assets consist primarily of software and are subject to amortization.
Intangible assets amortization expense was approximately $11 million and $23
million in the 2002 second quarter and six-month period, respectively, compared
with approximately $12 million and $23 million for the comparable 2001 periods.
There were no material acquisitions of intangible assets during the
six-month period of 2002. The gross carrying amount and accumulated
amortization of intangible assets at June 30, 2002 were $493 million and $291
million, respectively. Amortization expense of intangible assets is estimated
to be $46 million annually for 2002 through 2006.
Asset Retirement Obligations
- In June 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations. This statement requires that
the fair value of an asset retirement obligation be recognized in the period in
which it is incurred. The associated asset retirement costs would be
capitalized as part of the carrying amount of the long-lived asset. It would
apply to legal obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset. This statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The Company
will adopt the statement in January 2003 and has not yet determined the impact
of this statement on the consolidated financial statements.
Long-Lived Assets
- On January 1, 2002, the Company adopted SFAS No. 144,
Accounting for the Impairment or Disposal of Long- Lived Assets. SFAS No.
144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, but retains the
fundamental provisions for recognizing and measuring impairment of long-lived
assets to be held and used or disposed of by sale. The statement also
supersedes the accounting and reporting provisions for the disposal of a
segment of a business. SFAS No. 144 eliminates the conflict between accounting
models for treating the disposition of long-lived assets that existed between
SFAS No. 121 and the guidance for a segment of a business accounted for as a
discontinued operation by adopting the methodology established in SFAS No. 121,
and also resolves implementation issues related to SFAS No. 121. The adoption
of the statement did not have an impact on the consolidated financial
statements of the Company.
Energy Trading Contracts
- In June 2002, the FASBs Emerging Issues Task Force
(EITF) reached a partial consensus on Issue No. 02-03 Recognition and
Reporting of Gains and Losses on Energy Trading Contracts under EITF Issues
No. 98-10, Accounting for Contracts Involved in Energy Trading and Risk
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Management Activities, and No. 00-17, Measuring the Fair Value of
Energy-Related Contracts in Applying Issue No. 98-10. The EITF concluded
that, effective for periods ending after July 15, 2002, mark to market gains
and losses on energy trading contracts (including those to be physically
settled) must be presented on a net basis in earnings, with prior periods reclassified on a consistent basis. Also,
companies must disclose volumes of physically settled energy trading contracts.
The Company is evaluating the impact of this new consensus on the presentation
of its consolidated statement of operations. The consensus will have no impact on net
income, but could have a material impact on total revenues and expenses.
NOTE 10 SEGMENT INFORMATION
During 2002, DTE Energy realigned its financial reporting structure into
strategic business units that provide various regulated and non-regulated
energy services. The realignment resulted in nine reportable segments and the
financial data for such segments follows. Inter-segment revenues are not
material.
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 11 CONSOLIDATING FINANCIAL STATEMENTS
Debt securities issued by Enterprises are subject to a full and unconditional
guaranty between DTE Energy and Enterprises. The following DTE Energy
consolidating financial statements are presented and include separately
Corporate & Other, Enterprises and all other subsidiaries. Enterprises
includes MichCon and other non-regulated gas subsidiaries. The other
subsidiaries include Detroit Edison and other non-regulated electric
subsidiaries.
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY
31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY
34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY
36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY
37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
DTE ENERGY COMPANY
38
INDEPENDENT ACCOUNTANTS REPORT
To the Board of Directors and Shareholders of
We have reviewed the accompanying condensed consolidated statement of financial
position of DTE Energy Company and subsidiaries as of June 30, 2002, and the
related condensed consolidated statement of operations for the three-month and
six-month periods ended June 30, 2002 and 2001, and the condensed consolidated
statement of cash flows for the six-month periods ended June 30, 2002 and 2001,
and the condensed consolidated statement of changes in shareholders equity for
the six-month period ended June 30, 2002. These financial statements are the
responsibility of DTE Energy Companys management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States
of America, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States
of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated statement of
financial position of DTE Energy Company and subsidiaries as of December 31,
2001, and the related consolidated statements of operations, cash flows and
changes in shareholders equity for the year then ended (not presented herein);
and in our report dated February 26, 2002, we expressed an unqualified opinion
on those consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated statement of financial
position as of December 31, 2001 is fairly stated, in all material respects, in
relation to the consolidated statement of financial position from which it has
been derived.
/S/ DELOITTE & TOUCHE LLP
Detroit, Michigan
39
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
OTHER INFORMATION
Effective June 25, 2002, Bruce D. Peterson was
elected Senior Vice President and General Counsel. Prior to joining DTE Energy he was a partner in the
law firm of Hunton and Williams of Washington, D.C.
for 15 years.
40
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(b) Reports on Form 8-K.
41
SIGNATURE
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.
42
DTE Energy Company
Exhibit Index
Six Months
June 30
2002
2001
$
648
$
423
223
(276
)
(255
)
372
391
(531
)
(1,755
)
(27
)
1,642
$
(186
)
$
278
(1)
Includes $1.75 billion of securitization bonds issued in 2001.
Table of Contents
Table of Contents
Maturity
Maturity
Maturity
Maturity
Total
(in Millions)
Less Than
1-3
4-5
Exceeding
Fair
1 Year
Years
Years
5 Years
Value
$
6
$
(6
)
$
1
$
5
$
6
9
14
7
3
33
$
15
$
8
$
8
$
8
39
(302
)
$
(263
)
$
59
(46
)
26
$
39
Table of Contents
Table of Contents
Consolidated Statement of Operations (unaudited)
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
$
1,981
$
1,790
$
4,381
$
3,632
907
908
2,130
1,856
603
453
1,141
836
186
188
380
372
86
77
184
158
252
254
1,782
1,878
3,835
3,476
199
(88
)
546
156
137
104
274
195
6
2
13
2
(6
)
(7
)
(11
)
(10
)
(21
)
(27
)
(37
)
(53
)
19
29
42
57
135
101
281
191
64
(189
)
265
(35
)
(4
)
(102
)
(3
)
(83
)
68
(87
)
268
48
3
$
68
$
(87
)
$
268
$
51
$
.42
$
(.60
)
$
1.66
$
.34
.02
$
.42
$
(.60
)
$
1.66
$
.36
161
145
161
144
162
145
162
144
$
.515
$
.515
$
1.03
$
1.03
Table of Contents
Consolidated Statement of Financial Position
June 30
2002
December 31
(Unaudited)
2001
$
82
$
268
152
157
930
851
211
242
298
259
52
14
374
343
161
162
503
400
47
118
97
2,881
2,840
413
417
545
615
958
1,032
17,468
17,067
(7,805
)
(7,524
)
9,663
9,543
2,084
2,003
1,183
1,190
1,656
1,692
342
149
438
473
299
306
6,002
5,813
$
19,504
$
19,228
Table of Contents
Consolidated Statement of Financial Position
June 30
2002
December 31
(Unaudited)
2001
$
689
$
697
127
118
89
84
104
108
515
681
15
54
628
516
559
425
376
495
3,102
3,178
1,420
1,478
180
187
175
180
549
313
355
373
413
417
546
585
3,638
3,533
5,707
5,892
1,625
1,673
194
87
89
7,613
7,654
271
274
3,050
2,811
1,941
1,846
(111
)
(68
)
4,880
4,589
$
19,504
$
19,228
Table of Contents
Consolidated Statement of Cash Flows (unaudited)
Six Months Ended
June 30
2002
2001
$
268
$
51
380
372
223
(86
)
62
(38
)
(2
)
(30
)
(5
)
25
(21
)
(11
)
(27
)
(72
)
26
72
(16
)
(136
)
(272
)
372
391
(345
)
(292
)
(110
)
(224
)
9
53
(1,212
)
(85
)
(80
)
(531
)
(1,755
)
389
3,097
180
(180
)
(339
)
(658
)
(166
)
(368
)
(7
)
(11
)
265
(1
)
(271
)
(2
)
(166
)
(147
)
(27
)
1,642
(186
)
278
268
64
$
82
$
342
$
265
$
149
55
45
$
21
$
1,060
Table of Contents
Consolidated Statement of Changes in Shareholders Equity (unaudited)
Accumulated
Common Stock
Other
Retained
Comprehensive
Shares
Amount
Earnings
Loss
Total
161,134
$
2,811
$
1,846
$
(68
)
$
4,589
268
268
6,325
265
265
65
3
3
(169
)
(169
)
(57
)
(1
)
(1
)
(2
)
(26
)
(26
)
(2
)
(3
)
(5
)
(43
)
(43
)
167,467
$
3,050
$
1,941
$
(111
)
$
4,880
2002
2001
$
268
$
51
(42
)
(51
)
(47
)
8
7
(43
)
(82
)
$
225
$
(31
)
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Table of Contents
May 31, 2001
$
853
52
1,628
245
2,077
1,216
6,071
(1,472
)
(390
)
(721
)
(273
)
(940
)
(3,796
)
$
2,275
Table of Contents
Table of Contents
Table of Contents
$200 million of senior notes bearing interest at 6.65 % and
maturing in 2009. The proceeds were used to retire MCN Energy
Enterprises Remarketed Securities, which had an aggregate principal
amount of $100 million, and to reduce short-term borrowings.
$172.5 million of equity-linked debt securities (discussed below).
Table of Contents
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
$
67,513
$
(86,603
)
$
267,868
$
48,208
161,124
145,461
160,918
143,677
$
.42
$
(.60
)
$
1.66
$
.34
$
67,513
$
(86,603
)
$
267,868
$
48,208
161,124
145,461
160,918
143,677
948
794
493
162,072
145,461
161,712
144,170
$
.42
$
(.60
)
$
1.66
$
.34
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
2002
2001
2002
2001
$
68
$
(87
)
$
268
$
51
4
4
$
68
$
(83
)
$
268
$
55
$
.42
$
(.60
)
$
1.66
$
.36
.02
.02
$
.42
$
(.58
)
$
1.66
$
.38
Table of Contents
Year Ended December 31
2001
2000
1999
$
332
$
468
$
483
31
2
2
$
363
$
470
$
485
$
2.17
$
3.27
$
3.33
.20
.01
.01
$
2.37
$
3.28
$
3.34
$
2.16
$
3.27
$
3.33
.20
.01
.01
$
2.36
$
3.28
$
3.34
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
(in Millions)
2002
2001
2002
2001
$
654
$
704
$
1,271
$
1,407
134
100
266
208
609
619
1,312
1,291
39
38
75
77
782
757
1,653
1,576
1,436
1,461
2,924
2,983
312
288
627
609
10
5
14
7
322
293
641
616
251
44
841
44
12
10
45
10
263
54
886
54
9
9
(49
)
(18
)
(79
)
(21
)
1,217
1,036
2,739
2,060
764
754
1,642
1,572
$
1,981
$
1,790
$
4,381
$
3,632
Table of Contents
Three Months Ended
Six Months Ended
June 30
June 30
(in Millions)
2002
2001
2002
2001
$
57
$
12
$
128
$
88
25
26
53
55
(5
)
24
13
25
4
7
8
11
24
57
74
91
81
69
202
179
23
26
48
63
(4
)
(3
)
(7
)
(5
)
19
23
41
58
(1
)
1
53
1
8
1
14
1
7
2
67
2
(39
)
(13
)
(42
)
(19
)
79
39
229
152
(11
)
42
39
68
68
81
268
220
(164
)
(165
)
(4
)
(4
)
$
68
$
(87
)
$
268
$
51
Table of Contents
CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended June 30, 2002
DTE
DTE
Eliminations
Energy
Energy
Other
and
Consolidated
Company
Enterprises
Subsidiaries
Reclasses
Total
(in Millions)
370
1,666
(55
)
1,981
232
707
(32
)
907
(24
)
92
559
(24
)
603
31
155
186
12
74
86
(24
)
367
1,495
(56
)
1,782
24
3
171
1
199
43
22
85
(13
)
137
3
3
6
(8
)
(3
)
(7
)
12
(6
)
(100
)
(12
)
(14
)
105
(21
)
(1
)
5
18
(3
)
19
(66
)
15
85
101
135
90
(12
)
86
(100
)
64
22
(4
)
(22
)
(4
)
68
(8
)
108
(100
)
68
Table of Contents
CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended June 30, 2001
DTE
DTE
Eliminations
Energy
Energy
Other
and
Consolidated
Company
Enterprises
Subsidiaries
Reclasses
Total
(in Millions)
159
1,649
(18
)
1,790
79
839
(10
)
908
17
444
(8
)
453
15
173
188
3
74
77
79
173
252
193
1,703
(18
)
1,878
(34
)
(54
)
(88
)
17
7
85
(5
)
104
2
2
(9
)
(1
)
(2
)
5
(7
)
(3
)
(56
)
32
(27
)
74
1
32
(78
)
29
82
6
59
(46
)
101
(82
)
(40
)
(113
)
46
(189
)
5
(14
)
(93
)
(102
)
(87
)
(26
)
(20
)
46
(87
)
Table of Contents
CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
Six Months Ended June 30, 2002
DTE
DTE
Eliminations
Energy
Energy
Other
and
Consolidated
Company
Enterprises
Subsidiaries
Reclasses
Total
(in Millions)
$
$
1,159
$
3,315
$
(93
)
$
4,381
762
1,411
(43
)
2,130
(49
)
176
1,059
(45
)
1,141
61
319
380
31
153
184
(49
)
1,030
2,942
(88
)
3,835
49
129
373
(5
)
546
82
47
168
(23
)
274
7
6
13
(16
)
(7
)
(11
)
23
(11
)
(296
)
(18
)
(18
)
295
(37
)
2
6
37
(3
)
42
(228
)
35
182
292
281
277
94
191
(297
)
265
9
34
(46
)
(3
)
$
268
$
60
$
237
$
(297
)
$
268
Table of Contents
CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
Six Months Ended June 30, 2001
DTE
DTE
Eliminations
Energy
Energy
Other
and
Consolidated
Company
Enterprises
Subsidiaries
Reclasses
Total
(in Millions)
$
$
159
$
3,494
$
(21
)
$
3,632
79
1,790
(13
)
1,856
17
827
(8
)
836
15
357
372
3
155
158
79
175
254
193
3,304
(21
)
3,476
(34
)
190
156
44
7
166
(22
)
195
2
2
(26
)
(1
)
(5
)
22
(10
)
(138
)
(3
)
(42
)
130
(53
)
61
1
29
(34
)
57
(59
)
6
148
96
191
59
(40
)
42
(96
)
(35
)
11
(14
)
(80
)
(83
)
48
(26
)
122
(96
)
48
3
3
(3
)
3
$
51
$
(26
)
$
125
$
(99
)
$
51
Table of Contents
CONSOLIDATING STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
June 30, 2002
DTE
DTE
Eliminations
Energy
Energy
Other
and
Consolidated
(in
Millions, Except Shares)
Company
Enterprises
Subsidiaries
Reclasses
Total
12
16
54
82
152
152
231
699
930
33
178
211
271
235
133
(341
)
298
52
52
158
216
374
19
142
161
91
412
503
46
72
118
283
881
2,058
(341
)
2,881
413
413
7,161
416
642
(7,674
)
545
7,161
416
1,055
(7,674
)
958
3,618
13,853
(3
)
17,468
(1,994
)
(5,811
)
(7,805
)
1,624
8,042
(3
)
9,663
2,047
37
2,084
45
1,138
1,183
1,656
1,656
307
35
342
329
109
438
13
200
88
(2
)
299
13
2,928
3,063
(2
)
6,002
$
7,457
$
5,849
$
14,218
$
(8,020
)
$
19,504
123
350
617
(401
)
689
16
22
91
(2
)
127
86
1
76
(74
)
89
7
97
104
293
737
509
(1,024
)
515
76
(86
)
25
15
184
444
628
162
397
559
3
145
228
376
597
1,522
2,484
(1,501
)
3,102
(260
)
(227
)
1,907
1,420
143
37
180
23
152
175
506
43
549
355
355
413
413
(86
)
172
656
(196
)
546
(346
)
972
3,208
(196
)
3,638
2,326
816
2,751
(186
)
5,707
1,625
1,625
194
194
2
85
87
2,326
818
4,655
(186
)
7,613
97
174
271
3,050
2,708
2,640
(5,348
)
3,050
1,941
(266
)
1,031
(765
)
1,941
(111
)
(2
)
26
(24
)
(111
)
4,880
2,440
3,697
(6,137
)
4,880
$
7,457
$
5,849
$
14,218
$
(8,020
)
$
19,504
Table of Contents
CONSOLIDATING STATEMENTS OF FINANCIAL POSITION
December 31, 2001
DTE
DTE
Eliminations
Energy
Energy
Other
and
Consolidated
Company
Enterprises
Subsidiaries
Reclasses
Total
(in Millions, Except Shares)
8
9
251
268
157
157
246
605
851
112
130
242
358
184
413
(696
)
259
14
14
143
200
343
21
141
162
133
271
(4
)
400
47
47
61
36
97
366
970
2,204
(700
)
2,840
417
417
6,466
362
442
(6,655
)
615
6,466
362
859
(6,655
)
1,032
3,590
13,480
(3
)
17,067
(1,934
)
(5,590
)
(7,524
)
1,656
7,890
(3
)
9,543
1,968
35
2,003
48
1,142
1,190
1,692
1,692
139
10
149
473
473
11
209
191
(105
)
306
11
2,837
3,070
(105
)
5,813
$
6,843
$
5,825
$
14,023
$
(7,463
)
$
19,228
266
365
797
(731
)
697
11
22
85
118
83
1
74
(74
)
84
9
99
108
425
667
286
(697
)
681
(1
)
(69
)
124
54
211
305
516
134
291
425
1
150
348
(4
)
495
785
1,490
2,409
(1,506
)
3,178
(208
)
(224
)
1,910
1,478
144
43
187
24
156
180
302
11
313
373
373
417
417
(70
)
186
582
(113
)
585
(278
)
805
3,119
(113
)
3,533
1,747
1,000
3,145
5,892
1,673
1,673
2
87
89
1,747
1,002
4,905
7,654
274
274
2,811
2,534
2,620
(5,154
)
2,811
1,846
(282
)
994
(712
)
1,846
(68
)
2
(24
)
22
(68
)
4,589
2,254
3,590
(5,844
)
4,589
$
6,843
$
5,825
$
14,023
$
(7,463
)
$
19,228
Table of Contents
CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 2002
DTE
DTE
Eliminations
Energy
Energy
Other
and
Consolidated
Company
Enterprises
Subsidiaries
Reclasses
Total
(in Millions)
$
(340
)
$
375
$
153
$
184
$
372
(30
)
(315
)
(345
)
(13
)
(97
)
(110
)
9
9
(180
)
180
(10
)
(75
)
(85
)
(180
)
(44
)
(487
)
180
(531
)
558
17
(186
)
389
180
180
(180
)
(180
)
(211
)
(128
)
(339
)
(132
)
70
222
(326
)
(166
)
(1
)
(6
)
(7
)
265
265
(1
)
(1
)
(2
)
(2
)
(166
)
(148
)
148
(166
)
524
(324
)
137
(364
)
(27
)
4
7
(197
)
(186
)
8
9
251
268
$
12
$
16
$
54
$
$
82
Table of Contents
CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 2001
DTE
DTE
Eliminations
Energy
Energy
Other
and
Consolidated
Company
Enterprises
Subsidiaries
Reclasses
Total
(in Millions)
$
(60
)
$
(137
)
$
738
$
(150
)
$
391
(1
)
(291
)
(292
)
(1
)
(223
)
(224
)
(1,212
)
(1,212
)
53
53
848
(848
)
37
(117
)
(80
)
(364
)
35
(578
)
(848
)
(1,755
)
1,347
1,750
3,097
(1
)
(657
)
(658
)
(258
)
122
(232
)
(368
)
(11
)
(11
)
(271
)
(848
)
848
(271
)
(147
)
(159
)
159
(147
)
671
121
(157
)
1,007
1,642
247
19
3
9
278
14
9
50
(9
)
64
$
261
$
28
$
53
$
$
342
Table of Contents
DTE Energy Company:
July 30, 2002
Table of Contents
(a)
The annual meeting of the holders of Common Stock of the Company was held
on April 24, 2002. Proxies for the meeting were solicited pursuant to
Regulation 14(a).
(b)
There was no solicitation in opposition to the Board of Directors
nominees, as listed in the proxy statement, for directors to be elected at
the meeting and all such nominees were elected.
The terms of the previously elected nine directors listed below
continue until the annual meeting dates shown after each name:
Alfred R. Glancy III
April, 2003
John E. Lobbia
April, 2003
Eugene A. Miller
April, 2003
Charles W. Pryor, Jr.
April, 2003
Terence E. Adderley
April, 2004
Anthony F. Earley, Jr.
April, 2004
Allan D. Gilmour
April, 2004
Frank M. Hennessey
April, 2004
Theodore S. Leipprandt
April, 2004
(c)
At the annual meeting of the holders of Common Stock of the Company held
on April 24, 2002, the following three directors were elected to serve
until the annual meeting in the Year 2005 with the votes shown:
Total Vote
Total Vote
Withheld
For Each
from Each
Director
Director
126,297,319
3,078,897
126,092,362
3,283,854
126,866,796
2,509,422
Shareholders ratified the appointment of Deloitte &
Touche LLP as the Companys independent auditors for the
year 2002 with the votes shown:
For
Against
Abstain
3,444,686
1,412,985
There were no Shareholder proposals.
(d)
Not applicable.
Table of Contents
Exhibit
Number
Description
4-231
Pledge Agreement, dated as of June 25, 2002, between DTE and the Bank
of New York.
4-232
Purchase Contract Agreement, dated as of June 25, 2002 between DTE
and the Bank of New York.
4-233
Supplemental Indenture, dated as of June 25, 2002, between DTE and the
Bank of New York.
10-44
Supplemental Savings Plan.
10-45
Executive Deferred Compensation Plan.
10-46
Supplemental Retirement Plan.
10-47
Executive Life Insurance Plan.
10-48
Employment contract of Bruce D. Peterson.
15-10
Awareness Letter of Deloitte & Touche LLP.
99-3
Chief Executive Officer Certification of Periodic Report.
99-4
Chief Financial Officer Certification of Periodic Report.
None.
Table of Contents
DTE ENERGY COMPANY
Date: August 14, 2002
/s/ DANIEL G. BRUDZYNSKI
Daniel G. Brudzynski
Chief Accounting Officer,
Vice President and Controller
Table of Contents
Quarterly Report on Form 10-Q for Quarter Ended June 30, 2002
File No. 1-11607
Exhibit
Number
Description
4-231
Pledge Agreement, dated as of June 25, 2002, between DTE and the Bank
of New York
4-232
Purchase Contract Agreement, dated as of June 25, 2002 between DTE
and the Bank of New York
4-233
Supplemental Indenture, dated as of June 25, 2002, between DTE and the
Bank of New York
10-44
Supplemental Savings Plan
10-45
Executive Deferred Compensation Plan
10-46
Supplemental Retirement Plan
10-47
Executive Life Insurance Plan
10-48
Employment Agreement of Mr. Bruce D. Peterson
15-10
Awareness Letter of Deloitte & Touche LLP
99-3
Chief Executive Officer Certification of Periodic Report
99-4
Chief Financial Officer Certification of Periodic Report
EXHIBIT 4-231
DTE ENERGY COMPANY,
THE BANK OF NEW YORK,
AS COLLATERAL AGENT, CUSTODIAL AGENT
AND SECURITIES INTERMEDIARY
AND
THE BANK OF NEW YORK,
AS PURCHASE CONTRACT AGENT
PLEDGE AGREEMENT
DATED AS OF JUNE 25, 2002
TABLE OF CONTENTS
PAGE ARTICLE I DEFINITIONS SECTION 1.1 Definitions..................................................................................2 ARTICLE II PLEDGE; CONTROL AND PERFECTION SECTION 2.1 The Pledge...................................................................................4 SECTION 2.2 Control and Perfection.......................................................................5 ARTICLE III PAYMENTS ON PLEDGED COLLATERAL SECTION 3.1 Payments.....................................................................................7 SECTION 3.2 Application of Payments......................................................................8 ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES SECTION 4.1 Collateral Substitution and the Creation of Stripped Equity Security Units...................9 SECTION 4.2 Collateral Substitution and the Re-Creation of Equity Security Units.........................9 SECTION 4.3 Termination Event...........................................................................10 SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement..................................11 SECTION 4.5 Remarketing: Application of Proceeds: Settlement............................................11 ARTICLE V VOTING RIGHTS -- NOTES SECTION 5.1 Exercise by Purchase Contract Agent.........................................................13 |
TABLE OF CONTENTS
(CONTINUED)
PAGE ARTICLE VI RIGHTS AND REMEDIES; TAX EVENT REDEMPTION SECTION 6.1 Rights and Remedies of the Collateral Agent.................................................14 SECTION 6.2 Substitutions...............................................................................15 SECTION 6.3 Tax Event Redemption........................................................................15 ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS SECTION 7.1 Representations and Warranties..............................................................16 SECTION 7.2 Covenants...................................................................................16 ARTICLE VIII THE COLLATERAL AGENT SECTION 8.1 Appointment, Powers and Immunities..........................................................17 SECTION 8.2 Instructions of the Company.................................................................18 SECTION 8.3 Reliance....................................................................................19 SECTION 8.4 Rights in Other Capacities..................................................................19 SECTION 8.5 Non-Reliance on Collateral Agent............................................................19 SECTION 8.6 Compensation and Indemnity..................................................................20 SECTION 8.7 Failure to Act..............................................................................20 SECTION 8.8 Resignation and Removal.....................................................................21 SECTION 8.9 Right to Appoint Agent or Advisor...........................................................22 SECTION 8.10 Survival....................................................................................22 SECTION 8.11 Exculpation.................................................................................22 ARTICLE IX AMENDMENT SECTION 9.1 Amendment Without Consent of Holders........................................................22 SECTION 9.2 Amendment with Consent of Holders...........................................................23 SECTION 9.3 Execution of Amendments.....................................................................24 SECTION 9.4 Effect of Amendments........................................................................24 SECTION 9.5 Reference to Amendments.....................................................................24 ARTICLE X MISCELLANEOUS SECTION 10.1 No Waiver...................................................................................24 SECTION 10.2 Governing Law...............................................................................25 SECTION 10.3 Notices.....................................................................................25 SECTION 10.4 Successors and Assigns......................................................................25 |
TABLE OF CONTENTS
(CONTINUED)
PAGE SECTION 10.5 Counterparts................................................................................26 SECTION 10.6 Severability................................................................................26 SECTION 10.7 Expenses Etc................................................................................26 SECTION 10.8 Security Interest Absolute..................................................................26 SECTION 10.9 Waiver of Jury Trial........................................................................27 EXHIBIT A Instruction from Purchase Contract Agent to Collateral Agent EXHIBIT B Instruction to Purchase Contract Agent EXHIBIT C Instruction to Custodial Agent Regarding Remarketing EXHIBIT D Instruction to Custodial Agent Regarding Withdrawal from Remarketing |
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of June 25, 2002 (this "Agreement"), among DTE ENERGY COMPANY, a Michigan corporation (the "Company"), THE BANK OF NEW YORK, a New York banking corporation, not individually but solely as collateral agent (in such capacity, together with its successors in such capacity, the "Collateral Agent"), as custodial agent (in such capacity, together with its successors in such capacity, the "Custodial Agent") and as "securities intermediary" as defined in Section 8-102(a)(14) of the Code (as defined herein) (in such capacity, together with its successors in such capacity, the "Securities Intermediary"), and THE BANK OF NEW YORK, a New York banking corporation, not individually but solely as purchase contract agent and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Equity Security Units (in such capacity, together with its successors in such capacity, the "Purchase Contract Agent") under the Purchase Contract Agreement (as defined herein).
RECITALS
WHEREAS, the Company and the Purchase Contract Agent are parties to the Purchase Contract Agreement, dated as of the date hereof (as modified and supplemented and in effect from time to time, the "Purchase Contract Agreement"), pursuant to which there may be issued 6,000,000 Equity Security Units of the Company (or 6,900,000 Equity Security Units if the Underwriters exercise their over-allotment option in full) each having a Stated Amount of $25.
WHEREAS, each Equity Security Unit will be comprised of (a) a Purchase Contract and (b) either beneficial ownership of (i) a Note, (ii) following the successful remarketing of the Notes in accordance with the Purchase Contract Agreement and the Remarketing Agreement, the appropriate Applicable Ownership Interest in the Treasury Portfolio or (iii) following a Tax Event Redemption in accordance with the Purchase Contract Agreement, the appropriate Applicable Ownership Interest in the Tax Event Treasury Portfolio.
WHEREAS, in accordance with the terms of the Purchase Contract Agreement, a holder of Equity Security Units may separate the Notes from the related Purchase Contracts by substituting for such Notes Treasury Securities that will pay in the aggregate an amount equal to the aggregate principal amount of such Equity Security Units. Upon such separation, the Equity Security Units will become Stripped Equity Security Units. Each Stripped Equity Security Unit will be comprised of (a) a Purchase Contract and (b) a 1/40 undivided beneficial interest in a Treasury Security.
WHEREAS, pursuant to the terms of the Purchase Contract Agreement and the Purchase Contracts, the Holders, from time to time, of the Equity Security Units and Stripped Equity Security Units have irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such Holders, among other things, to execute and deliver this Agreement on behalf of such Holders and to grant the pledge provided hereby of the Notes, any Treasury Securities and any Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, delivered in exchange therefor to secure each Holder's obligations under the related Purchase Contract, as provided herein and subject to the terms hereof.
NOW, THEREFORE, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Collateral Agent, the Securities Intermediary, the Custodial Agent and the Purchase Contract Agent, on its own behalf and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Equity Security Units, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
For all purposes of this agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) capitalized terms used but not defined herein are used as defined in the Purchase Contract Agreement;
(b) the defined terms in this Agreement have the meanings assigned to them in this Article and include the plural as well as the singular; and
(c) the words "herein," ""hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.
"Agreement" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof.
"Code" has the meaning specified in Section 6.1(a) hereof.
"Collateral" has the meaning specified in Section 2.1(a) hereof.
"Collateral Account" means the securities account (number 016352) maintained at The Bank of New York in the name "The Bank of New York, a New York banking corporation, as Purchase Contract Agent on behalf of the holders of certain securities of DTE Energy Company, Collateral Account subject to the security interest of The Bank of New York, as Collateral Agent, for the benefit of DTE Energy Company, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of this Agreement
"Company" means the Person named as the "Company" in the first paragraph of this Agreement until a successor shall have become such pursuant to the applicable provisions of the Purchase Contract Agreement, and thereafter "Company" shall mean such successor.
"Custodial Agent" has the meaning specified in the first paragraph of this Agreement.
"Intermediary" means any entity that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Applicable Ownership Interest in the Treasury Portfolio" has the meaning specified in Section 2.1(c) hereof.
"Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio" has the meaning specified in Section 2.1(c) hereof.
"Pledged Notes" has the meaning specified in Section 2.1(c) hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1(c) hereof.
"Proceeds" means all interest, dividends, cash, instruments, securities, financial assets (as defined in Section 8-102(a)(9) of the Code) and other property from time to time received, receivable or otherwise distributed upon the sale, exchange, collection or disposition of the Collateral or any proceeds thereof.
"Purchase Contract Agent" has the meaning specified in the first paragraph of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the first paragraph of this Agreement.
"Security Entitlement" has the meaning set forth in Section 8-102(a)(17) of the Code.
"Separate Notes" means any Notes that are not Pledged Notes.
"Tax Event Redemption Date" means the date upon which a Tax Event Redemption is to occur.
"TRADES Regulations" means the regulations of the United States Department of the Treasury, published at 31 C.F.R. Part 357, as amended from time to time. Unless otherwise defined herein, all terms defined in the TRADES Regulations are used herein as therein defined.
"Transfer" means, with respect to the Collateral and in accordance with the instructions of the Collateral Agent, the Purchase Contract Agent or the Holder, as applicable:
(i) in the case of Collateral consisting of securities which cannot be delivered by book-entry or which the parties agree are to be delivered in physical form, delivery in appropriate physical form to the recipient accompanied by any duly executed instruments of transfer, assignments in blank, transfer tax stamps and any other documents necessary to constitute a legally valid transfer to the recipient;
(ii) in the case of Collateral consisting of securities maintained in book-entry form by causing a "securities intermediary" (as defined in Section 8-102(a)(14) of the Code) to (a) credit a "security entitlement" (as defined in Section 8-102(a)(17) of the Code) with respect to such securities to a "securities account" (as defined in Section 8-501(a) of the Code) maintained by or on behalf of the recipient and (b) to issue a confirmation to the recipient with respect to such credit. In the case of Collateral to be delivered to the Collateral Agent, the securities intermediary shall be the Securities Intermediary and the securities account shall be the Collateral Account. In addition, any Transfer of Treasury Securities and appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio hereunder shall be made in accordance with the TRADES Regulations and other applicable law.
ARTICLE II
PLEDGE; CONTROL AND PERFECTION
SECTION 2.1 The Pledge.
(a) The Holders from time to time acting through the Purchase Contract Agent, as their attorney-in-fact, and the Purchase Contract Agent, as such attorney-in-fact and as nominal owner of the Collateral, hereby pledge and grant to the Collateral Agent, for the benefit of the Company, as collateral security for the performance when due by such Holders of their respective obligations under the related Purchase Contracts, a security interest in all of the right, title and interest of the Purchase Contract Agent and such Holders in:
(i) (A) the Notes and any Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, constituting a part of the Equity Security Units, or the Treasury Securities constituting a part of the Stripped Equity Security Units, (B) any Treasury Securities delivered in exchange for any Notes in accordance with Section 4.1 hereof, and (C) any Notes delivered in exchange for any Treasury Securities in accordance with Section 4.2 hereof, in each case that have been Transferred to or otherwise received by the Collateral Agent and not released by the Collateral Agent to such Holders under the provisions of this Agreement;
(ii) the Collateral Account and all securities, financial assets, security entitlements, cash and other property credited thereto and all Security Entitlements related thereto; and
(iii) all Proceeds of the foregoing (all of the foregoing, collectively, the "Collateral").
(b) Prior to or concurrently with the execution and delivery of this Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the Equity Security Units, shall cause the Notes comprising a part of the Equity Security Units to be Transferred to the Securities Intermediary for credit to the Collateral Account.
(c) The pledge provided in this Section 2.1 is herein referred to as the "Pledge" and the Notes (or the Notes that are delivered pursuant to Section 6.2 hereof), Treasury Securities or Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, subject to the Pledge, excluding any Notes or Treasury Securities released from the Pledge as provided in Sections 4.1 and 4.2 hereof, respectively, are hereinafter referred to as "Pledged Notes," "Pledged Treasury Securities," "Pledged Applicable Ownership Interest in the Treasury Portfolio," or "Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio," respectively. Subject to the Pledge and the provisions of Section 2.2 hereof, the Holders from time to time shall have full beneficial ownership of the Collateral. For purposes of perfecting the Pledge under applicable law, including, to the extent applicable, the TRADES Regulations or the Uniform Commercial Code as adopted and in effect in any applicable jurisdiction, the Collateral Agent shall be the agent of the Company as provided herein. Whenever directed by the Collateral Agent acting on behalf of the Company, the Securities Intermediary shall have the right to re-register in its name the Notes or any other securities held in physical form.
(d) Except as may be required in order to release Notes in connection with a Tax Event Redemption or with a Holder's election to convert its investment from an Equity Security Unit to a Stripped Equity Security Unit, or except as otherwise required to release Notes as specified herein, neither the Collateral Agent, the Custodial Agent nor the Securities Intermediary shall relinquish physical possession of any certificate evidencing a Note prior to the termination of this Agreement. If it becomes necessary for the Securities Intermediary to relinquish physical possession of a certificate in order to release a portion of the Notes evidenced thereby from the Pledge, the Company or the Purchase Contract Agent shall use its best efforts to obtain physical possession of a replacement certificate evidencing any Notes remaining subject to the Pledge hereunder registered to the Securities Intermediary or endorsed in blank within fifteen days of the date the Securities Intermediary relinquished possession. The Securities Intermediary shall promptly notify the Company and the Collateral Agent of the Securities Intermediary's failure to obtain possession of any such replacement certificate as required hereby.
SECTION 2.2 Control and Perfection.
(a) In connection with the Pledge granted in Section 2.1, and subject to the other provisions of this Agreement, the Holders from time to time acting through the Purchase Contract Agent, as their attorney-in-fact, and the Purchase Contract Agent as nominal owner of the Collateral hereby authorize and direct the Securities Intermediary (without the necessity of obtaining the further consent of the Purchase Contract Agent or any of the Holders), and the Securities Intermediary agrees, to comply with and follow any instructions and entitlement orders (as defined in Section 8-102(a)(8) of the Code) that the Collateral Agent may deliver with respect to the Collateral Account, the Collateral credited thereto and any Security Entitlements with respect to any thereof. In the event the Securities Intermediary receives from the Holders or the Purchase Contract Agent entitlement orders which conflict with entitlement orders received from the Collateral Agent, the Securities Intermediary shall follow the entitlement orders received from the Collateral Agent. Such instructions and entitlement orders may, without limitation, direct the Securities Intermediary to transfer, redeem, assign, or otherwise deliver the Notes, the Treasury Securities, any Applicable Ownership Interest in the Treasury Portfolio or the Tax
Event Treasury Portfolio, as the case may be, and any Security Entitlements with respect thereto or sell, liquidate or dispose of such assets through a broker designated by the Company, and to pay and deliver any income, proceeds or other funds derived therefrom to the Company. The Holders from time to time acting through the Purchase Contract Agent hereby further authorize and direct the Collateral Agent, as agent of the Company, to itself issue instructions and entitlement orders, and to otherwise take action, with respect to the Collateral Account, the Collateral credited thereto and any Security Entitlements with respect thereto, pursuant to the terms and provisions hereof, all without the necessity of obtaining the further consent of the Purchase Contract Agent or any of the Holders. The Collateral Agent shall be the agent of the Company and shall act only in accordance with the terms hereof or as otherwise directed in writing by the Company. Without limiting the generality of the foregoing, the Collateral Agent shall issue entitlement orders to the Securities Intermediary as directed in writing by the Company.
(b) The Securities Intermediary hereby confirms and agrees that:
(i) all securities or other property underlying any financial assets credited to the Collateral Account shall be registered in the name of the Securities Intermediary, or its nominee, indorsed to the Securities Intermediary, or its nominee, or in blank or credited to another Collateral Account maintained in the name of the Securities Intermediary and in no case will any financial asset credited to the Collateral Account be registered in the name of the Purchase Contract Agent, the Collateral Agent, the Company or any Holder, or payable to the order of, or specially indorsed to, the Purchase Contract Agent, the Collateral Agent, the Company or any Holder except to the extent the foregoing have been specially indorsed to the Securities Intermediary or in blank;
(ii) all property delivered to the Securities Intermediary pursuant to this Pledge Agreement (including, without limitation, any Notes, Treasury Securities or any Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be) will be promptly credited to the Collateral Account;
(iii) the Collateral Account is an account to which financial assets are or may be credited, and the Securities Intermediary shall, subject to the terms of this Agreement, treat the Purchase Contract Agent as entitled to exercise the rights of any financial asset credited to the Collateral Account;
(iv) the Securities Intermediary has not entered into, and until the termination of this Agreement will not enter into, any agreement with any other Person relating to the Collateral Account and/or any financial assets credited thereto pursuant to which it has agreed to comply with entitlement orders (as defined in Section 8-102(a)(8) of the Code) of such other Person;
(v) the Securities Intermediary has not entered into, and until the termination of this Agreement will not enter into, any agreement with the Company, the Collateral Agent or the Purchase Contract Agent purporting to limit or condition the obligation of
the Securities Intermediary to comply with entitlement orders as set forth in this Section 2.2 hereof;
(vi) the Securities Intermediary hereby agrees that each item of property (whether investment property, financial asset, security, instrument or cash) credited to the Collateral Account shall be treated as a "financial asset" within the meaning of Section 8-102(a)(9) of the Code; and
(vii) in the event of any conflict between this Agreement (or any portion thereof) and any other agreement now existing or hereafter entered into, the terms of this Agreement shall prevail.
(c) The Purchase Contract Agent hereby irrevocably constitutes and appoints the Collateral Agent and the Company, with full power of substitution, as the Purchase Contract Agent's attorney-in-fact to take on behalf of, and in the name, place and stead of, the Purchase Contract Agent and the Holders, any action necessary or desirable to perfect and to keep perfected the security interest in the Collateral referred to in Section 2.1. The grant of such power-of-attorney shall not be deem ed to require of the Collateral Agent any specific duties or obligations not otherwise assumed by the Collateral Agent hereunder. Notwithstanding the foregoing, in no event shall the Collateral Agent or Securities Intermediary be responsible for the preparation or filing of any financing or continuation statements in the appropriate jurisdictions or responsible for maintenance or perfection of any security interest hereunder.
ARTICLE III
PAYMENTS ON PLEDGED COLLATERAL
SECTION 3.1 Payments.
So long as the Purchase Contract Agent is the registered owner of the Pledged Notes, Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Treasury Securities, it shall receive all payments thereon. If the Pledged Notes are reregistered, such that the Collateral Agent becomes the registered holder, all payments of the principal of, or interest on, the Pledged Notes and all payments of the principal of, or cash distributions on, any Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, Pledged Treasury Securities or any Pledged Applicable Ownership Interest in the Treasury Portfolio, that are received by the Collateral Agent and that are properly payable hereunder, shall be paid by the Collateral Agent by wire transfer in same day funds:
(i) in the case of (A) quarterly cash distributions on Equity Security Units that include Pledged Notes, any Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio or any Pledged Applicable Ownership Interest in the Treasury Portfolio, any interest payments with respect to the Pledged Notes or the appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio or the Tax Event Treasury Portfolio (in each case, as specified in clause (B) of the definition of Applicable
Ownership Interest), as the case may be, and (B) any payments of principal or, if applicable, the appropriate Applicable Ownership Interest in the Treasury Portfolio or the Tax Event Treasury Portfolio (in each case, as specified in clause (A) of the definition of such term), as the case may be, with respect to any Notes, or the appropriate Applicable Ownership Interest in the Treasury Portfolio or the Tax Event Treasury Portfolio, as the case may be, that have been released from the Pledge pursuant to Section 4.3 hereof, to the Purchase Contract Agent, for the benefit of the relevant Holders of the Equity Security Units, to the account designated by the Purchase Contract Agent for such purpose, no later than 11:00 a.m., New York City time, on the Business Day such payment is received by the Collateral Agent (provided that in the event such payment is received by the Collateral Agent on a day that is not a Business Day or after 9:00 a.m., New York City time, on a Business Day, then such payment shall be made no later than 11:00 a.m., New York City time, on the next succeeding Business Day);
(ii) in the case of any payments with respect to any Treasury Securities that have been released from the Pledge pursuant to Section 4.3 hereof, to the Holders of the Stripped Equity Security Units to the accounts designated by them in writing for such purpose no later than 2:00 p.m., New York City time, on the Business Day such payment is received by the Collateral Agent (provided that in the event such payment is received by the Collateral Agent on a day that is not a Business Day or after 10 a.m., New York City time, on a Business Day, then such payment shall be made no later than 11:00 a.m., New York City time, on the next succeeding Business Day); and
(iii) in the case of payments in respect of any Pledged Notes, Pledged Treasury Securities or the appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio (in each case, as specified in clause (A) of the definition of Applicable Ownership Interest), as the case may be, to be paid upon settlement of such Holder's obligations to purchase Common Stock under the Purchase Contract, to the Company on the Stock Purchase Date in accordance with the procedure set forth in Section 4.5(a) or 4.5(b) hereof, in full satisfaction of the respective obligations of the Holders under the related Purchase Contracts.
SECTION 3.2 Application of Payments.
All payments received by the Purchase Contract Agent as provided herein shall be applied by the Purchase Contract Agent pursuant to the provisions of the Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase Contract Agent shall receive any payments of principal on account of any Note or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio (in each case, as specified in clause (A) of the definition of Applicable Ownership Interest), as applicable, that, at the time of such payment, is a Pledged Note, appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio or appropriate Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio (in each case, as specified in clause (A) of the definition of Applicable Ownership Interest), as the case may be, or the Purchase Contract Agent shall receive any payments of principal on account of any Treasury Securities that, at the time of such payment, are Pledged Treasury Securities, the Purchase Contract Agent shall hold the same as trustee of an express trust for the benefit of the
Company (and promptly deliver the same over to the Company) for application to the obligations of the Holders under the related Purchase Contracts, and the Holders shall acquire no right, title or interest in any such payments of principal so received.
ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES
SECTION 4.1 Collateral Substitution and the Creation of Stripped Equity Security Units.
At any time prior to the earlier of a successful remarketing of the Notes in accordance with the provisions of Section 5.4 of the Purchase Contract Agreement or a Tax Event Redemption Date, a Holder of Equity Security Units shall have the right to substitute Treasury Securities for the Pledged Notes securing such Holder's obligations under the Purchase Contracts comprising a part of such Equity Security Units, in integral multiples of 40 Equity Security Units, by (a) Transferring to the Collateral Agent Treasury Securities having an aggregate principal amount at maturity equal to the aggregate Stated Amount of such Equity Security Units and (b) delivering such Equity Security Units to the Purchase Contract Agent, accompanied by a notice, substantially in the form of Exhibit B hereto, to the Purchase Contract Agent stating that such Holder has caused a Transfer of Treasury Securities to the Collateral Agent pursuant to clause (a) above (stating the principal amount and the CUSIP numbers of the Treasury Securities Transferred by such Holder) and requesting that the Purchase Contract Agent instruct the Collateral Agent to release from the Pledge the Pledged Notes related to such Equity Security Units, whereupon the Purchase Contract Agent shall promptly give such instruction in writing to the Collateral Agent in the form provided in Exhibit A hereto; provided that, notwithstanding the foregoing, such Holder may not substitute such Treasury Securities for such Pledged Notes pursuant to this Section 4.1 during any period beginning after 5:00 p.m., New York City time, on the fourth Business Day immediately preceding the first Business Day of a Remarketing Period and, if applicable, ending at 9:00 a.m., New York City time, on the fourth Business Day immediately succeeding the third Business Day of such Remarketing Period. Upon receipt of Treasury Securities from a Holder of Equity Security Units and the related written instruction from the Purchase Contract Agent, the Collateral Agent shall release the Pledged Notes and shall promptly Transfer such Pledged Notes, free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent. All items Transferred and/or substituted by any Holder pursuant to this Section 4.1, Section 4.2 or any other Section of this Agreement shall be Transferred and/or substituted free and clear of all liens, claims and encumbrances.
SECTION 4.2 Collateral Substitution and the Re-Creation of Equity Security Units.
At any time prior to the earlier of a successful remarketing of the Notes in accordance with the provisions of Section 5.4 of the Purchase Contract Agreement or a Tax Event Redemption Date, a Holder of Stripped Equity Security Units shall have the right to reestablish Equity Security Units consisting of the Purchase Contracts and Notes in integral multiples of 40
Stripped Equity Security Units by (x) Transferring to the Collateral Agent Notes
in an aggregate principal amount equal to the aggregate principal amount at
maturity of the Treasury Securities comprising part of such Stripped Equity
Security Units and (y) delivering such Stripped Equity Security Units to the
Purchase Contract Agent, accompanied by a notice, substantially in the form of
Exhibit B hereto, to the Purchase Contract Agent stating that such Holder has
Transferred Notes to the Collateral Agent and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release from the Pledge the
Pledged Treasury Securities related to such Stripped Equity Security Units,
whereupon the Purchase Contract Agent shall give such instruction to the
Collateral Agent in the form provided in Exhibit A hereto; provided that,
notwithstanding the foregoing, such Holder of Stripped Equity Security Units
shall not have the right to reestablish Equity Security Units pursuant to this
Section 4.2 during any period beginning after 5:00 p.m., New York City time, on
the fourth Business Day immediately preceding the first Business Day of a
Remarketing Period and, if applicable, ending at 9:00 a.m., New York City time,
on the fourth Business Day immediately succeeding the third Business Day such
Remarketing Period. Upon receipt of the Notes from such Holder and the
instruction from the Purchase Contract Agent, the Collateral Agent shall release
the Pledged Treasury Securities and shall promptly Transfer such Pledged
Treasury Securities, free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent.
SECTION 4.3 Termination Event.
(a) Upon receipt by the Collateral Agent of written notice from the Company or the Purchase Contract Agent that there has occurred a Termination Event, the Collateral Agent shall release all Collateral from the Pledge and shall promptly Transfer any Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, and Pledged Treasury Securities to the Purchase Contract Agent for the benefit of the Holders of the Equity Security Units and the Stripped Equity Security Units, respectively, free and clear of any lien, pledge or security interest or other interest created hereby.
(b) If such Termination Event shall result from the Company's becoming a debtor under the Bankruptcy Code, and if the Collateral Agent shall for any reason fail promptly to effectuate the release and Transfer of all Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio, Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, or Pledged Treasury Securities, as the case may be, as provided by this Section 4.3, the Purchase Contract Agent shall:
(i) use its best efforts to obtain at the expense of the
Company an opinion of counsel reasonably acceptable to the Collateral
Agent to the effect that, as a result of the Company's being the debtor
in such a bankruptcy case, the Collateral Agent will not be prohibited
from releasing or Transferring the Collateral as provided in this
Section 4.3, and shall deliver such opinion to the Collateral Agent
within ten days after the occurrence of such Termination Event, and if
(y) the Purchase Contract Agent shall be unable to obtain such opinion
within ten days after the occurrence of such Termination Event or (z)
the Collateral Agent shall continue, after delivery of such opinion, to
refuse to effectuate the release and Transfer of all Pledged Notes,
Pledged Applicable Ownership Interest in
the Treasury Portfolio, Pledged Applicable Ownership Interest in the
Tax Event Treasury Portfolio or Pledged Treasury Securities, as the
case may be, as provided in this Section 4.3, then the Purchase
Contract Agent shall, at the Company's expense and within fifteen days
after the occurrence of such Termination Event, commence an action or
proceeding in the court with jurisdiction of the Company's case under
the Bankruptcy Code seeking an order requiring the Collateral Agent to
effectuate the release and transfer of all Pledged Notes, Pledged
Applicable Ownership Interest in the Treasury Portfolio, Pledged
Applicable Ownership Interest in the Tax Event Treasury Portfolio or
Pledged Treasury Securities, as the case may be, as provided by this
Section 4.3 or
(ii) commence an action or proceeding like that described in subsection (i)(z) hereof within ten days after the occurrence of such Termination Event.
SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement.
Upon written notice to the Collateral Agent by the Purchase Contract
Agent that one or more Holders of Equity Security Units or Stripped Equity
Security Units have elected to effect Early Settlement or Merger Early
Settlement or that one or more Holders of Equity Security Units have elected to
effect Cash Settlement, in each case, of their respective obligations under the
Purchase Contracts forming a part of such Equity Security Units or Stripped
Equity Security Units in accordance with the terms of the Purchase Contracts and
the Purchase Contract Agreement (setting forth the number of such Purchase
Contracts as to which such Holders have elected to effect Early Settlement,
Merger Early Settlement or Cash Settlement), and that the Purchase Contract
Agent has received from such Holders, and paid to the Company, as confirmed to
the Collateral Agent in writing by the Company, the related Early Settlement
Amounts, Merger Early Settlement Amounts or the Purchase Prices in the case of
the Cash Settlement, as the case may be, pursuant to the terms of the Purchase
Contracts and the Purchase Contract Agreement and that all conditions to such
Early Settlement, Merger Early Settlement or Cash Settlement, as the case may
be, have been satisfied, then the Collateral Agent shall release from the Pledge
(a) Pledged Notes, the appropriate Pledged Applicable Ownership Interest in the
Tax Event Treasury Portfolio or the appropriate Pledged Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, in the case of a Holder
of Equity Security Units effecting Early Settlement or Merger Early Settlement
or (b) Pledged Treasury Securities, in the case of a Holder of Stripped Equity
Security Units effecting Early Settlement or Merger Early Settlement, relating
to such Purchase Contracts as to which such Holders have elected to effect Early
Settlement, Merger Early Settlement or Cash Settlement, and shall Transfer all
such Pledged Notes, Pledged Applicable Ownership Interests in the Treasury
Portfolio, Pledged Applicable Ownership Interest in the Tax Event Treasury
Portfolio or Pledged Treasury Securities, as the case may be, free and clear of
the Pledge created hereby, to the Purchase Contract Agent for the benefit of
such Holders.
SECTION 4.5 Remarketing: Application of Proceeds: Settlement.
(a) Pursuant to the Purchase Contract Agreement, the Purchase Contract Agent shall notify, by 10:00 a.m., New York City time, on the third Business Day immediately preceding the first Business Day of a Remarketing Period, the Remarketing Agent and the Collateral Agent of
the aggregate principal amount of Notes comprising Equity Security Units to be remarketed. The Collateral Agent shall, by 12:00 p.m., New York City time, on the third Business Day immediately preceding the first Business Day of a Remarketing Period, without any instruction from Holders of Equity Security Units, deliver the Pledged Notes to be remarketed to the Remarketing Agent for remarketing. After deducting as the remarketing fee an amount not exceeding 25 basis points (0.25%) of the total proceeds of such remarketing of Pledged Notes, the Remarketing Agent will deliver the Treasury Portfolio purchased from the proceeds of the remarketing to the Purchase Contract Agent, which shall thereupon deliver such Treasury Portfolio to the Collateral Agent. Upon receipt of the Treasury Portfolio from the Purchase Contract Agent following a successful remarketing, (i) the Collateral Agent, for the benefit of the Company, shall thereupon hold in the Collateral Account such Treasury Portfolio to secure the obligations under the Purchase Contracts of Holders of Equity Security Units and to fund the quarterly interest payment due to such Holders of Equity Security Units on the Stock Purchase Date, and (ii) the remaining portion, if any, of the proceeds of such successful remarketing shall be distributed by the Remarketing Agent to the Purchase Contract Agent for payment to such Holders of Equity Security Units. On the Stock Purchase Date, the Collateral Agent shall, at the direction of the Company, (i) apply that portion of the payments received in respect of the Pledged Applicable Ownership Interest in the Treasury Portfolio equal to the aggregate Stated Amount of the related Equity Security Units to satisfy in full the obligations of such Holders of Equity Security Units to pay the Purchase Price under the related Purchase Contracts and (ii) apply the remaining portion to pay the quarterly interest payment due to such Holders of Equity Security Units on such Stock Purchase Date, which such quarterly interest payment shall be paid on the Pledged Notes in an amount equal to the Coupon Rate for such quarterly interest payment.
(b) Within three Business Days following any Last Failed Remarketing,
the Pledged Notes delivered to the Remarketing Agent pursuant to Section 4.5(a)
hereof shall be returned to the Collateral Agent, together with written notice
from the Remarketing Agent of the Last Failed Remarketing. The Collateral Agent,
for the benefit of the Company, shall thereupon hold such Pledged Notes to
secure the obligations of Holders of Equity Security Units under the Purchase
Contracts. The Remarketing Agent shall make one or more attempts to remarket the
Notes in accordance with the procedures set forth in the Purchase Contract
Agreement and the Remarketing Agreement, provided that the requirements of
Section 5.4(b)(ii) of the Purchase Contract Agreement have been met. If by 4:00
p.m., New York City time, on the fifth Business Day immediately preceding the
Stock Purchase Date the Remarketing Agent has failed to remarket the Notes at
approximately, but not less than, 100.50% of the Remarketing Value (as described
in the Purchase Contract Agreement) resulting in an event of default under the
Purchase Contract Agreement, the Remarketing Agent shall advise the Collateral
Agent in writing that it has failed to remarket the related Pledged Notes of
such Holders of Equity Security Units on such date. The Collateral Agent, for
the benefit of the Company will, at the written direction of the Company,
exercise its rights as a secured party with respect to the Pledged Notes and use
commercially reasonable efforts to dispose of the Pledged Notes in accordance
with applicable law and apply the proceeds from such disposition in full
satisfaction of such Holders' obligations to pay the Purchase Price for the
Common Stock; provided, that if upon the occurrence of a Last Failed Remarketing
on the fifth Business Day immediately preceding the Stock Purchase Date, the
Collateral Agent exercises such rights for the benefit of the Company
with respect to such Pledged Notes, any accrued and unpaid interest on such Pledged Notes will become payable by the Company to the Purchase Contract Agent for payment to the Holder of the Equity Security Units to which such Pledged Notes relate in accordance with the Purchase Contract Agreement.
(c) In the event a Holder of Stripped Equity Security Units has not made an Early Settlement or Merger Early Settlement of the Purchase Contracts underlying its Stripped Equity Security Units, such Holder shall be deemed to have elected to pay for the shares of Common Stock to be issued under such Purchase Contracts from the payments received in respect of the related Pledged Treasury Securities. Without receiving any instruction from any such Holder, the Collateral Agent shall apply such payments to the settlement of such Purchase Contracts on the Stock Purchase Date. In the event the payments received in respect of the related Pledged Treasury Securities are in excess of the aggregate Purchase Price of the Purchase Contracts being settled thereby, the Collateral Agent shall distribute such excess, when received, to the Purchase Contract Agent for the benefit of such Holders of Stripped Equity Security Units.
(d) On or prior to 11:00 a.m., New York City time, on the fourth
Business Day preceding the first Business Day of any Remarketing Period, holders
of Separate Notes may elect to have their Separate Notes remarketed by
delivering their Separate Notes, together with a notice of such election,
substantially in the form of Exhibit C hereto, to the Custodial Agent. On the
third Business Day prior to the first Business Day of any Remarketing Period, by
10:00 a.m., New York City time, the Custodial Agent shall notify the Remarketing
Agent of the number of such Separate Notes to be remarketed. The Custodial Agent
will hold such Separate Notes in an account separate from the Collateral
Account. A holder of Separate Notes electing to have its Separate Notes
remarketed will also have the right to withdraw such election by written notice
to the Custodial Agent, substantially in the form of Exhibit D hereto, on or
prior to the fifth Business Day immediately preceding the first Business Day of
any Remarketing Period and any Subsequent Remarketing Period, upon which notice
the Custodial Agent will return such Separate Notes to such holder. By 12:00
p.m. New York City time on the third Business Day immediately preceding the
first Business Day of any Remarketing Period and any Subsequent Remarketing
Period, the Custodial Agent at the written direction of the Remarketing Agent
will deliver to the Remarketing Agent for remarketing all Separate Notes
delivered to the Custodial Agent pursuant to this Section 4.5(d) and not
withdrawn pursuant to the terms hereof prior to such date. The portion of the
proceeds from such remarketing equal to the amount calculated in respect of such
Separate Notes as set forth in Section 5.4(b) of the Purchase Contract Agreement
will automatically be remitted by the Remarketing Agent to the Custodial Agent
for the benefit of the holders of such Separate Notes In addition, after
deducting as the remarketing fee an amount not exceeding 25 basis points (0.25%)
of the total proceeds of such remarketing of such Separate Notes, the
Remarketing Agent will remit to the Custodial Agent the remaining portion of the
proceeds, if any, for the benefit of such holders of such Separate Notes. If,
despite using its reasonable best efforts, the Remarketing Agent advises the
Custodial Agent in writing that there has been a Last Failed Remarketing on the
last Business Day of a Remarketing Period, the Remarketing Agent shall, within
three Business Days of such Last Failed Remarketing, return such Separate Notes
to the Custodial Agent for redelivery to such holders of such Separate Notes.
ARTICLE V
VOTING RIGHTS -- NOTES
SECTION 5.1 Exercise by Purchase Contract Agent.
The Purchase Contract Agent may exercise, or refrain from exercising, any and all voting and other consensual rights pertaining to the Pledged Notes or any part thereof for any purpose not inconsistent with the terms of this Agreement and in accordance with the terms of the Purchase Contract Agreement; provided, that the Purchase Contract Agent shall not exercise or, as the case may be, shall not refrain from exercising such right if, in the judgment of the Company, such action would impair or otherwise have a material adverse effect on the value of all or any of the Pledged Notes; and provided, further, that the Purchase Contract Agent shall give the Company and the Collateral Agent at least five days prior written notice of the manner in which it intends to exercise, or its reasons for refraining from exercising, any such right. Upon receipt of any notices and other communications in respect of any Pledged Notes, including notice of any meeting at which holders of Notes are entitled to vote or solicitation of consents, waivers or proxies of holders of Notes, the Collateral Agent shall use reasonable efforts to send promptly to the Purchase Contract Agent such notice or communication, and as soon as reasonably practicable after receipt of a written request therefor from the Purchase Contract Agent, execute and deliver to the Purchase Contract Agent such proxies and other instruments in respect of such Pledged Notes (in form and substance satisfactory to the Collateral Agent) as are prepared by the Company with respect to the Pledged Notes.
ARTICLE VI
RIGHTS AND REMEDIES; TAX EVENT REDEMPTION
SECTION 6.1 Rights and Remedies of the Collateral Agent.
(a) In addition to the rights and remedies available at law or in
equity, after an event of default under the Purchase Contracts, the Collateral
Agent shall have all of the rights and remedies with respect to the Collateral
of a secured party under the Uniform Commercial Code (or any successor thereto)
as in effect in the State of New York from time to time (the "Code") (whether or
not the Code is in effect in the jurisdiction where the rights and remedies are
asserted) and the TRADES Regulations and such additional rights and remedies to
which a secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted. Wherever reference is
made in this Agreement to any section of the Code, such reference shall be
deemed to include a reference to any provision of the Code that is a successor
to, or amendment of, such section. Without limiting the generality of the
foregoing, such remedies may include, to the extent permitted by applicable law,
(i) retention of the Pledged Notes or other Collateral in full satisfaction of
the Holders' obligations under the Purchase Contracts or (ii) sale of the
Pledged Notes or other Collateral in one or more public or private sales, in
each case at the written direction of the Company.
(b) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, in the event the Collateral Agent is unable to make payments to the Company on account of any Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio, Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio or Pledged Treasury Securities as provided in Article III hereof in satisfaction of the obligations of the Holders of Equity Security Units or Stripped Equity Security Units of which such Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio, Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio or Pledged Treasury Securities, as applicable, is a part under the related Purchase Contracts, the inability to make such payments shall constitute an event of default under the Purchase Contracts and the Collateral Agent shall have and may exercise, with reference to such Pledged Notes, Pledged Treasury Securities, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as applicable, and such obligations of such Holder, any and all of the rights and remedies available to a secured party under the Code and the TRADES Regulations after default by a debtor, and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably authorized to receive and collect all payments of (i) the principal amount of, or interest on, the Pledged Notes, or (ii) the principal amount of, or interest (if any) on, the Pledged Applicable Ownership Interest in the Treasury Portfolio, Pledged Applicable Ownership Interest of the Tax Event Treasury Portfolio or Pledged Treasury Securities, subject, in each case, to the provisions of Article III, and as otherwise granted herein.
(d) The Purchase Contract Agent, individually and as attorney-in-fact for each Holder of Equity Security Units and Stripped Equity Security Units, agrees that, from time to time, upon the written request of the Company or the Collateral Agent (acting upon the written request of the Company), the Purchase Contract Agent or such Holder shall execute and deliver such further documents and do such other acts and things as the Company or the Collateral Agent (acting upon the written request of the Company) may reasonably request in order to maintain the Pledge, and the perfection and priority thereof, and to confirm the rights of the Collateral Agent hereunder. The Purchase Contract Agent shall have no liability to any Holder for executing any documents or taking any such acts requested by the Company or the Collateral Agent (acting upon the written request of the Company) hereunder, except for liability for its own negligent act, its own negligent failure to act, its bad faith or its own willful misconduct.
SECTION 6.2 Substitutions.
Whenever a Holder has the right to substitute Treasury Securities or Notes, as the case may be, for Collateral held by the Collateral Agent, such substitution shall not constitute a novation of the security interest created hereby.
SECTION 6.3 Tax Event Redemption.
Upon the occurrence of a Tax Event Redemption prior to a successful remarketing of the Pledged Notes, the aggregate Redemption Price payable on the Tax Event Redemption Date with
respect to such Pledged Notes shall be delivered to the Collateral Agent by the Trustee on or prior to 12:00 p.m., New York City time, on such date by wire transfer in immediately available funds at such place and at such account as may be designated by the Collateral Agent in exchange for the Pledged Notes. In the event the Collateral Agent receives such Redemption Price, the Collateral Agent will, at the written direction of the Company, apply an amount, out of such Redemption Price, equal to the aggregate Redemption Amount with respect to the Pledged Notes to purchase from the Quotation Agent the Tax Event Treasury Portfolio and promptly remit the remaining portion of such Redemption Price to the Purchase Contract Agent for payment to the Holders of Equity Security Units. The Collateral Agent shall Transfer the Tax Event Treasury Portfolio to the Collateral Account to secure the obligation of all Holders of Equity Security Units to purchase Common Stock of the Company under the Purchase Contracts constituting a part of such Equity Security Units, in substitution for the Pledged Notes. Thereafter the Collateral Agent shall have such security interests, rights and obligations with respect to the Tax Event Treasury Portfolio as it had in respect of the Pledged Notes as provided in Articles II, III, IV, V and VI, and any reference herein to the Notes shall be deemed to be a reference to such Tax Event Treasury Portfolio, and any reference herein to interest on the Notes shall be deemed to be a reference to distributions on such Tax Event Treasury Portfolio.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; COVENANTS
SECTION 7.1 Representations and Warranties.
The Holders from time to time, acting through the Purchase Contract Agent as their attorney-in-fact (it being understood that the Purchase Contract Agent shall not be liable for any representation or warranty made by or on behalf of a Holder), hereby represent and warrant to the Collateral Agent, which representations and warranties shall be deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security interest in and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral and, in the case of Collateral delivered in physical form, is the sole holder of such Collateral and is the sole beneficial owner of, or has the right to Transfer, the Collateral it Transfers to the Collateral Agent, free and clear of any security interest, lien, encumbrance, call, liability to pay money or other restriction other than the security interest and lien granted under Section 2.1 hereof;
(c) upon the Transfer of the Collateral to the Collateral Account, the Collateral Agent, for the benefit of the Company, will have a valid and perfected first priority security interest therein (assuming that any central clearing operation or any Intermediary or other entity not within the control of the Holder involved in the Transfer of the Collateral, including the Collateral Agent, gives the notices and takes the action required of it hereunder and under applicable law for perfection of that interest and assuming the establishment and exercise of control pursuant to Section 2.2 hereof); and
(d) the execution and performance by the Holder of its obligations under this Agreement will not result in the creation of any security interest, lien or other encumbrance on the Collateral other than the security interest and lien granted under Section 2.1 hereof or violate any provision of any existing law or regulation applicable to it or of any mortgage, charge, pledge, indenture, contract or undertaking to which it is a party or which is binding on it or any of its assets.
SECTION 7.2 Covenants.
The Holders from time to time, acting through the Purchase Contract Agent as their attorney-in-fact (it being understood that the Purchase Contract Agent shall not be liable for any covenant made by or on behalf of a Holder), hereby covenant to the Collateral Agent that for so long as the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will create or purport to create or allow to subsist any mortgage, charge, lien, pledge or any other security interest whatsoever over the Collateral or any part of it other than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell or otherwise dispose (or attempt to dispose) of the Collateral or any part of it except for the beneficial interest therein, subject to the pledge hereunder, transferred in connection with the Transfer of the Equity Security Units and Stripped Equity Security Units.
ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Appointment, Powers and Immunities.
(a) The Collateral Agent shall act as agent for the Company hereunder with such powers as are specifically vested in the Collateral Agent by the terms of this Agreement, together with such other powers as are reasonably incidental thereto. Each of the Collateral Agent, the Custodial Agent and the Securities Intermediary:
(i) shall have no duties or responsibilities except those expressly set forth in this Agreement and no implied covenants or obligations shall be inferred from this Agreement against any of them, nor shall any of them be bound by the provisions of any agreement by any party hereto beyond the specific terms hereof;
(ii) shall not be responsible for any recitals contained in this Agreement, or in any certificate or other document referred to or provided for in, or received by it under, this Agreement, the Equity Security Units or Stripped Equity Security Units or the Purchase Contract Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement (other than as against the Collateral Agent), the Equity Security Units or Stripped Equity Security Units or the Purchase Contract Agreement or any other document referred to or provided for herein or therein or for any failure by the Company or any other Person (except the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may be) to perform any of its obligations hereunder or thereunder or for the perfection, priority or, except as expressly required hereby, existence, validity, perfection or maintenance of any security interest created hereunder;
(iii) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder (except in the case of
the Collateral Agent, pursuant to written directions furnished under
Section 8.2 hereof, subject to Section 8.6 hereof);
(iv) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other document or instrument referred to or provided for herein or in connection herewith or therewith, except for its own gross negligence, bad faith or willful misconduct; and
(v) shall not be required to advise any party as to selling or retaining, or taking or refraining from taking any action with respect to, the Equity Security Units or Stripped Equity Security Units or other property deposited hereunder.
Subject to the foregoing, during the term of this Agreement, the Collateral Agent shall take all reasonable action in connection with the safekeeping and preservation of the Collateral hereunder.
(b) No provision of this Agreement shall require the Collateral Agent, the Custodial Agent or the Securities Intermediary to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. In no event shall the Collateral Agent, the Custodial Agent or the Securities Intermediary be liable for any amount in excess of the value of the Collateral or for any special, indirect, individual, consequential damages or lost profits or loss of business, arising in connection with this Agreement even if the Collateral Agent, the Custodial Agent or the Securities Intermediary has been advised of the likelihood of such loss or damage being incurred and regardless of the form of action. Notwithstanding the foregoing, the Collateral Agent, the Custodial Agent, the Purchase Contract Agent and Securities Intermediary, each in its individual capacity, hereby waive any right of setoff, bankers lien, liens or perfection rights as securities intermediary or any counterclaim with respect to any of the Collateral.
(c) The Collateral Agent, Custodial Agent and Securities Intermediary shall have no liability whatsoever for the action or inaction of any Clearing Agency or any book-entry system thereof. In no event shall any Clearing Agency or any book-entry system thereof be deemed an agent or subcustodian of the Collateral Agent, Custodial Agent and Securities Intermediary. The Collateral Agent, Custodial Agent and Securities Intermediary shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fires; floods; war (whether declared or undeclared); terrorism; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents;
labor disputes; acts of civil or military authority; governmental actions; or inability to obtain labor, material, equipment or transportation.
SECTION 8.2 Instructions of the Company.
The Company shall have the right, by one or more instruments in writing executed and delivered to the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, to direct the time, method and place of conducting any proceeding for the realization of any right or remedy available to the Collateral Agent, or of exercising any power conferred on the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, or to direct the taking or refraining from taking of any action authorized by this Agreement; provided, however, that (i) such direction shall not conflict with the provisions of any law or of this Agreement and (ii) the Collateral Agent, the Custodial Agent and the Securities Intermediary shall each receive indemnity reasonably satisfactory to it as provided herein. Nothing in this Section 8.2 shall impair the right of the Collateral Agent in its discretion to take any action or omit to take any action which it deems proper and which is not inconsistent with such direction.
SECTION 8.3 Reliance.
Each of the Securities Intermediary, the Custodial Agent and the Collateral Agent shall be entitled conclusively to rely upon any certification, order, judgment, opinion, notice or other communication (including, without limitation, any thereof by telephone or facsimile) reasonably believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons (without being required to determine the correctness of any fact stated therein), and upon advice of legal counsel and other experts selected by the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be. As to any matters not expressly provided for by this Agreement, the Collateral Agent, the Custodial Agent and the Securities Intermediary shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions given by the Company in accordance with this Agreement.
SECTION 8.4 Rights in Other Capacities.
The Collateral Agent, the Custodial Agent and the Securities Intermediary and their affiliates may (without having to account therefor to the Company) accept deposits from, lend money to, make their investments in and generally engage in any kind of banking, trust or other business with the Purchase Contract Agent, any Holder of Equity Security Units or Stripped Equity Security Units and any holder of Separate Notes (and any of their respective subsidiaries or affiliates) as if it were not acting as the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, and the Collateral Agent, the Custodial Agent and the Securities Intermediary and their affiliates may accept fees and other consideration from the Purchase Contract Agent, any Holder of Equity Security Units or Stripped Equity Security Units or any holder of Separate Notes without having to account for the same to the Company; provided that each of the Securities Intermediary, the Custodial Agent and the Collateral Agent covenants and agrees with the Company that, except as provided in this Agreement, it shall not accept, receive or permit there to be created in favor of itself (and waives any right of set-off or
banker's lien with respect to) and shall take no affirmative action to permit there to be created in favor of any other Person, any security interest, lien or other encumbrance of any kind in or upon the Collateral and the Collateral shall not be commingled with any other assets of any such Person.
SECTION 8.5 Non-Reliance on Collateral Agent.
None of the Securities Intermediary, the Custodial Agent or the Collateral Agent shall be required to keep itself informed as to the performance or observance by the Purchase Contract Agent or any Holder of Equity Security Units or Stripped Equity Security Units of this Agreement, the Purchase Contract Agreement, the Equity Security Units or Stripped Equity Security Units or any other document referred to or provided for herein or therein or to inspect the properties or books of the Purchase Contract Agent or any Holder of Equity Security Units or Stripped Equity Security Units. The Collateral Agent, the Custodial Agent and the Securities Intermediary shall not have any duty or responsibility to provide the Company or the Remarketing Agent with any credit or other information concerning the affairs, financial condition or business of the Purchase Contract Agent, any Holder of Equity Security Units or Stripped Equity Security Units or any holder of Separate Notes (or any of their respective subsidiaries or affiliates) that may come into the possession of the Collateral Agent, the Custodial Agent or the Securities Intermediary or any of their respective affiliates.
SECTION 8.6 Compensation and Indemnity.
The Company agrees:
(a) to pay each of the Collateral Agent, the Custodial Agent and the Securities Intermediary from time to time such compensation as shall be agreed in writing between the Company and the Collateral Agent, Custodial Agent or the Securities Intermediary, as the case may be, for all services rendered by each of them hereunder, and
(b) to fully indemnify the Collateral Agent, the Custodial Agent, the Securities Intermediary, the Purchase Contract Agent and their officers, directors and agents for, and to hold each of them harmless from and against, any and all loss, liability, claim, damage or reasonable out-of-pocket expense incurred without gross negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of its powers and duties under this Agreement, including the out-of-pocket costs and expenses (including fees and expenses of counsel) of defending itself against any claim or liability in connection with the exercise or performance of such powers and duties or collecting such amounts. The Collateral Agent, the Custodial Agent and the Securities Intermediary shall each promptly notify the Company of any third party claim that may give rise to the indemnity hereunder and give the Company the opportunity to participate in the defense of such claim with counsel reasonably satisfactory to the indemnified party, and no such claim shall be settled without the written consent of the Company, which consent shall not be unreasonably withheld. The provisions of this Section 8.6 shall survive the resignation or removal of the Collateral Agent, the Custodial Agent and the Securities Intermediary or the termination of this Agreement.
SECTION 8.7 Failure to Act.
In the event of any ambiguity in the provisions of this Agreement or
any dispute between or conflicting claims by or among the parties hereto or any
other Person with respect to any funds or property deposited hereunder, the
Collateral Agent, Custodial Agent and the Securities Intermediary shall be
entitled, after prompt notice to the Company and the Purchase Contract Agent, at
its sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and none of the Collateral Agent, Custodial Agent or
the Securities Intermediary shall be or become liable in any way to any of the
parties hereto for its failure or refusal to comply with such conflicting
claims, demands or instructions. The Collateral Agent, Custodial Agent and the
Securities Intermediary shall be entitled to refuse to act until either (i) such
conflicting or adverse claims or demands shall have been finally determined by a
court of competent jurisdiction or settled by agreement between the conflicting
parties as evidenced in a writing, reasonably satisfactory to the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be, or
(ii) the Collateral Agent, the Custodial Agent or the Securities Intermediary,
as the case may be, shall have received security or an indemnity reasonably
satisfactory to the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, sufficient to save the Collateral Agent,
Custodial Agent or the Securities Intermediary, as the case may be, harmless
from and against any and all loss, liability or reasonable out-of-pocket expense
that the Collateral Agent, Custodial Agent or the Securities Intermediary, as
the case may be, may incur by reason of its acting without willful misconduct or
gross negligence. The Collateral Agent, Custodial Agent or the Securities
Intermediary may in addition elect to commence an interpleader action or seek
other judicial relief or orders as the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, may deem necessary. Notwithstanding
anything contained herein to the contrary, none of the Collateral Agent,
Custodial Agent or the Securities Intermediary shall be required to take any
action that is in its opinion contrary to law or to the terms of this Agreement,
or which would in its opinion subject it or any of its officers, employees or
directors to liability.
SECTION 8.8 Resignation and Removal.
Subject to the appointment and acceptance of a successor Collateral Agent, Custodial Agent or Securities Intermediary, as provided below, (a) the Collateral Agent, Custodial Agent and the Securities Intermediary may resign at any time by giving notice thereof to the Company and the Purchase Contract Agent as attorney-in-fact for the Holders of Equity Security Units and Stripped Equity Security Units, (b) the Collateral Agent, Custodial Agent and the Securities Intermediary may be removed at any time by the Company, (c) if the Collateral Agent, Custodial Agent or the Securities Intermediary fails to perform any of its material obligations hereunder in any material respect for a period of not less than 20 days after receiving written notice of such failure by the Purchase Contract Agent and such failure shall be continuing, the Collateral Agent, Custodial Agent or the Securities Intermediary may be removed by the Purchase Contract Agent, and (d) if the Collateral Agent, the Custodial Agent or the Securities Intermediary is the same Person as the Purchase Contract Agent and an event of default occurs under the Purchase Contract Agreement or this Agreement, except an event of default as a result of a Last Failed Remarketing on the fifth Business Day immediately preceding the Stock Purchase Date, the Collateral Agent, the Custodial Agent or the Securities Intermediary shall resign immediately in
accordance with the provisions of Section 8.8 hereof. The Purchase Contract Agent shall promptly notify the Company of any removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary pursuant to clause (c) of the immediately preceding sentence. The Company shall promptly notify the Purchase Contract Agent of any removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary pursuant to clause (b) of the second preceding sentence. Upon any such resignation or removal, the Company shall have the right to appoint a successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be. If no successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's giving of notice of resignation or such removal, then the retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, may at the Company's expense petition any court of competent jurisdiction for the appointment of a successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be. Each of the Collateral Agent, Custodial Agent and the Securities Intermediary shall be a bank which has an office in New York, New York with a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, hereunder by a successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, such successor shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, and the retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, shall take all appropriate action to transfer any money and property held by it hereunder (including the Collateral) to such successor after the payment of any outstanding fees, expenses and indemnities due and owing to such remaining party, its counsel and its agents. The retiring Collateral Agent, Custodial Agent or Securities Intermediary shall, upon such succession, be discharged from its duties and obligations as Collateral Agent, Custodial Agent or Securities Intermediary hereunder. After any retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's resignation hereunder as Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of this Section 8.8, and Section 8.6 hereof, shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Collateral Agent, Custodial Agent or Securities Intermediary. Any resignation or removal of the Collateral Agent hereunder shall be deemed for all purposes of this Agreement as the simultaneous resignation or removal of the Custodial Agent and the Securities Intermediary hereunder.
SECTION 8.9 Right to Appoint Agent or Advisor.
The Collateral Agent shall have the right to appoint or consult with agents or advisors in connection with any of its duties hereunder, and the Collateral Agent shall not be liable for any action taken or omitted by, or in reliance upon the advice of, such agents or advisors selected in good faith. The appointment of agents (other than legal counsel) pursuant to this Section 8.9 shall be subject to prior consent of the Company, which consent shall not be unreasonably withheld.
SECTION 8.10 Survival.
The provisions of this Article VIII shall survive termination of this Agreement and the resignation or removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary.
SECTION 8.11 Exculpation.
Anything in this Agreement to the contrary notwithstanding, in no event shall any of the Collateral Agent, the Custodial Agent or the Securities Intermediary or their officers, employees or agents be liable under this Agreement to any third party for indirect, special, punitive or consequential loss or damage of any kind whatsoever, including lost profits, whether or not the likelihood of such loss or damage was known to the Collateral Agent, the Custodial Agent or the Securities Intermediary, or any of them.
ARTICLE IX
AMENDMENT
SECTION 9.1 Amendment Without Consent of Holders.
Without the consent of any Holders or the holders of any Separate Notes, the Company, when authorized by a Board Resolution, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, at any time and from time to time, may amend this Agreement, in form satisfactory to the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, for any of the following purposes:
(i) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company;
(ii) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company so long as such covenants or such surrender do not adversely affect the validity, perfection or priority of the security interests granted or created hereunder;
(iii) to evidence and provide for the acceptance of appointment hereunder by a successor Collateral Agent, Custodial Agent, Securities Intermediary or Purchase Contract Agent; or
(iv) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other such provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders.
SECTION 9.2 Amendment with Consent of Holders.
With the consent of the Holders of not less than a majority of the Purchase Contracts at the time outstanding, by Act of said Holders delivered to the Company, the Purchase Contract Agent or the Collateral Agent, as the case may be, the Company, when duly authorized by a Board Resolution, the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Securities Intermediary may amend this Agreement for the purpose of modifying in any manner the provisions of this Agreement or the rights of the Holders in respect of the Equity Security Units or Stripped Equity Security Units; provided, however, that no such supplemental agreement shall, without the consent of the Holder of each Outstanding Unit adversely affected thereby,
(i) change the amount or type of Collateral underlying an Equity Security Unit or Stripped Equity Security Unit (except for the rights of holders of Equity Security Units to substitute the Treasury Securities for the Pledged Notes or the rights of Holders of Stripped Equity Security Units to substitute Notes for the Pledged Treasury Securities), impair the right of the Holder of any Equity Security Unit or Stripped Equity Security Unit to receive distributions on the underlying Collateral or otherwise adversely affect the Holder's rights in or to such Collateral; or
(ii) otherwise effect any action that would require the consent of the Holder of each Outstanding Unit affected thereby pursuant to the Purchase Contract Agreement if such action were effected by an agreement supplemental thereto; or
(iii) reduce the percentage of Purchase Contracts the consent of whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.3 Execution of Amendments.
In executing any amendment permitted by this Section, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent shall receive and (subject to Section 8.1 hereof, with respect to the Collateral Agent, and Section 7.1 of the Purchase Contract Agreement, with respect to the Purchase Contract Agent) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent, if any, to the execution and delivery of such amendment have been satisfied and, in the case of an amendment pursuant to Section 9.1, that such amendment does not adversely affect the validity, perfection or priority of the security interests granted or created hereunder.
SECTION 9.4 Effect of Amendments.
Upon the execution of any amendment under this Article IX, this Agreement shall be modified in accordance therewith, and such amendment shall form a part of this Agreement for
all purposes; and every Holder of Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered under the Purchase Contract Agreement shall be bound thereby.
SECTION 9.5 Reference to Amendments.
Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any amendment pursuant to this Section may, and shall if required by the Collateral Agent or the Purchase Contract Agent, bear a notation in form approved by the Purchase Contract Agent and the Collateral Agent as to any matter provided for in such amendment. If the Company shall so determine, new Certificates so modified as to conform, in the opinion of the Collateral Agent, the Purchase Contract Agent and the Company, to any such amendment may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Purchase Contract Agent in accordance with the Purchase Contract Agreement and without charge or expense to the Holders in exchange for outstanding Certificates.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 No Waiver.
No failure on the part of any party hereto or any of its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by any party hereto or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein are cumulative and are not exclusive of any remedies provided by law.
SECTION 10.2 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. Without limiting the foregoing, the above choice of law is expressly agreed to by the Securities Intermediary, the Collateral Agent, the Custodial Agent and the Holders from time to time acting through the Purchase Contract Agent, as their attorney-in-fact, in connection with the establishment and maintenance of the Collateral Account, which law, for purposes of the Code, shall be deemed to be the law governing all Security Entitlements related thereto. In addition, such parties agree that, for purposes of the Code, New York shall be the Securities Intermediary's jurisdiction. The Company, the Collateral Agent and the Holders from time to time of the Equity Security Units and Stripped Equity Security Units, acting through the Purchase Contract Agent as their attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company, the Collateral Agent and the Holders from time to time of
the Equity Security Units and Stripped Equity Security Units, acting through the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.
SECTION 10.3 Notices.
Unless otherwise stated herein, all notices, requests, consents and other communications provided for herein (including, without limitation, any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof or, as to any party, at such other address as shall be designated by such party in a notice to the other parties. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when personally delivered or, in the case of a mailed notice or notice transmitted by telecopier, upon receipt, in each case given or addressed as aforesaid.
SECTION 10.4 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, and the Holders from time to time of the Equity Security Units or Stripped Equity Security Units, by their acceptance of the same, shall be deemed to have agreed to be bound by the provisions hereof and to have ratified the agreements of, and the grant of the Pledge hereunder by, the Purchase Contract Agent.
SECTION 10.5 Counterparts.
This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.
SECTION 10.6 Severability.
If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.
SECTION 10.7 Expenses Etc.
The Company agrees to reimburse the Collateral Agent, the Securities Intermediary and the Custodial Agent for:
(a) all reasonable costs and all reasonable expenses of the Collateral Agent, the Custodial Agent and the Securities Intermediary (including, without limitation, the reasonable fees and expenses of counsel to the Collateral Agent, the Custodial Agent and the Securities Intermediary and its agents), in connection with (i) the negotiation, preparation, execution and delivery or performance of this Agreement and (ii) any modification, supplement or waiver of any of the terms of this Agreement;
(b) all reasonable costs and expenses of the Collateral Agent (including, without limitation, reasonable fees and expenses of counsel) in connection with (i) any enforcement or proceedings resulting or incurred in connection with causing any Holder of Equity Security Units or Stripped Equity Security Units to satisfy its obligations under the Purchase Contracts forming a part of the Equity Security Units and Stripped Equity Security Units and (ii) the enforcement of this Section 10.7; and
(c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any other document referred to herein and all costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated hereby.
SECTION 10.8 Security Interest Absolute.
All rights of the Collateral Agent and security interests hereunder, and all obligations of the Holders from time to time hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of the Purchase Contracts or the Equity Security Units or Stripped Equity Security Units or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or any other term of, or any increase in the amount of, all or any of the obligations of Holders of Equity Security Units or Stripped Equity Security Units under the related Purchase Contracts, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Purchase Contract Agreement or any Purchase Contract or any other agreement or instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a defense available to, or discharge of, a borrower, a guarantor or a pledgor.
SECTION 10.9 Waiver of Jury Trial.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
DTE ENERGY COMPANY
By:__________________________________________
Name: D.R. Murphy
Title: Assistant Treasurer
Address for Notices:
2000 2nd Avenue, 850 WCB
Detroit, Michigan 48226-1279
Attention: Assistant Treasurer
Telecopy: (313) 235-6743
THE BANK OF NEW YORK, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Equity Security Units
By:__________________________________________
Name:
Title:
Address for Notices:
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: (212) 896-7298
THE BANK OF NEW YORK, as Collateral Agent,
Custodial Agent and Securities Intermediary
By:__________________________________________
Name:
Title:
Address for Notices:
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: (212) 896-7298
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT
AGENT TO COLLATERAL AGENT
THE BANK OF NEW YORK,
as Collateral Agent
101 Barclay Street
New York, New York 10286
Re: Equity Security Units of DTE ENERGY COMPANY (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of June 25, 2002 (the "Pledge Agreement") among the
Company, you, as Collateral Agent, Custodial Agent and Securities Intermediary
and us, as Purchase Contract Agent and as attorney-in-fact for the holders of
[Equity Security Units] [Stripped Equity Security Units] from time to time, that
the holder of Equity Security Units or Stripped Equity Security Units listed
below (the "Holder") has elected to substitute [$________ aggregate principal
amount of Treasury Securities (CUSIP No. 912803AG8)] [$________ aggregate
principal amount of Notes] in exchange for the related [Pledged Notes] [Pledged
Treasury Securities] held by you in accordance with the Pledge Agreement and has
delivered to us a notice stating that the Holder has Transferred [Treasury
Securities] [Notes] to you, as Collateral Agent. We hereby instruct you, upon
receipt of such [Pledged Treasury Securities] [Pledged Notes], and upon the
payment by such Holder of any applicable fees, to release the [Notes] [Treasury
Securities] related to such [Equity Security Units] [Stripped Equity Security
Units] to us in accordance with the Holder's instructions. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
Date:
THE BANK OF NEW YORK,
as Purchase Contract Agent
By:__________________________________________
Name:
Title:
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Notes] for the [Pledged Notes] [Pledged Treasury
Securities]:
Name:____________________________________
Social Security or other Taxpayer Identification Number, if any:__________________________
Address:_____________________________
DTC Account No.__________________
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
THE BANK OF NEW YORK,
as Purchase Contract Agent
101 Barclay Street
New York, New York 10286
Attn: Corporate Trust Administration
Telecopy: (212) 896-7298
Re: Equity Security Units of DTE ENERGY COMPANY (the "Company")
The undersigned Holder hereby notifies you that it has delivered to The Bank of New York, as Collateral Agent, Custodial Agent and Securities Intermediary [$________ aggregate principal amount of Treasury Securities (CUSIP No. 912803AG8)] [$_________ aggregate principal amount of Notes] in exchange for the related [Pledged Notes] [Pledged Treasury Securities] held by the Collateral Agent, in accordance with Section [4.1] [4.2] of the Pledge Agreement, dated June 25, 2002 (the "Pledge Agreement"), among you, the Company and the Collateral Agent. The undersigned Holder has paid the Collateral Agent all applicable fees relating to such exchange. The undersigned Holder hereby instructs you to instruct the Collateral Agent to release to you on behalf of the undersigned Holder the [Pledged Notes] [Pledged Treasury Securities] related to such [Equity Security Units] [Stripped Equity Security Units]. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement.
Date:______________________________ Signature:______________________________
Signature Guarantee:____________________
Please print name and address of Registered Holder:
Name:__________________________________________
Social Security or other Taxpayer Identification Number, if any:
Address:_______________________________________
DTC Participant No._____________
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
THE BANK OF NEW YORK,
as Custodial Agent
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Administration
Re: Notes of DTE ENERGY COMPANY (the "Company")
The undersigned hereby notifies you in accordance with Section 4.5(d) of the Pledge Agreement, dated as of June 25, 2002 (the "Pledge Agreement"), among the Company, yourselves, as Collateral Agent, Securities Intermediary and Custodial Agent, and The Bank of New York, as Purchase Contract Agent and as attorney-in-fact for the Holders of Equity Security Units and Stripped Equity Security Units from time to time, that the undersigned elects to deliver $________ aggregate principal amount of Notes for delivery to the Remarketing Agent on or prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding the first Business Day of any Remarketing Period or any Subsequent Remarketing Period for remarketing pursuant to Section 4.5(d) of the Pledge Agreement. The undersigned will, upon request of the Remarketing Agent, execute and deliver any additional documents deemed by the Remarketing Agent or by the Company to be necessary or desirable to complete the sale, assignment and transfer of the Notes tendered hereby.
The undersigned hereby instructs you, upon receipt of the proceeds of such remarketing from the Remarketing Agent, net of amounts payable to the Remarketing Agent in accordance with the Pledge Agreement, to deliver such proceeds to the undersigned in accordance with the instructions indicated herein under "A. Payment Instructions." The undersigned hereby instructs you, in the event of a Last Failed Remarketing in the Remarketing Period to which this notice relates, upon receipt of the Notes tendered herewith from the Remarketing Agent, to be delivered to the person(s) and the address(es) indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Notes tendered hereby and that the undersigned is the record owner of any Notes tendered herewith in physical form or a participant in The Depository Trust Company ("DTC") and the beneficial owner of any Notes tendered herewith by book-entry transfer to your account at DTC and (ii) agrees to be bound by the terms and conditions of Section 4.5(d) of the Pledge Agreement. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement.
Date:______________________________ Signature:_____________________________
Signature Guarantee:___________________
Name:
Social Security or other Taxpayer Identification Number, if any:
Address:
A. PAYMENT INSTRUCTIONS
Proceeds of the remarketing should be paid by check in the name of the person(s) set forth below and mailed to the address set forth below.
Name(s): ------------------------------------------------------ (Please Print) Address: ------------------------------------------------------ (Please Print) |
(Zip Code)
(Tax Identification or Social Security Number):
B. DELIVERY INSTRUCTIONS
In the event of a Last Failed Remarketing in a Remarketing Period to which this notice relates, Notes which are in physical form should be delivered to the person(s) set forth below and mailed to the address set forth below.
Name(s): ------------------------------------------------------ (Please Print) Address: ------------------------------------------------------ (Please Print) |
(Zip Code)
(Tax Identification or Social Security Number):
In the event of a Last Failed Remarketing in a Remarketing Period to which this notice relates, Notes which are in book-entry form should be credited to the account at The Depository Trust Company set forth below.
Name of Account Party: DTC Account Number:
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
THE BANK OF NEW YORK,
as Custodial Agent
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Administration
Re: Notes of DTE ENERGY COMPANY (the "Company")
The undersigned hereby notifies you in accordance with Section 4.5(d) of the Pledge Agreement, dated as of June 25, 2002 (the "Pledge Agreement"), among the Company, yourselves, as Collateral Agent, Securities Intermediary and Custodial Agent and The Bank of New York, as Purchase Contract Agent and as attorney-in-fact for the Holders of Equity Security Units and Stripped Equity Security Units from time to time, that the undersigned elects to withdraw the $_________ aggregate principal amount of Notes delivered to the Custodial Agent on ________, 2005 for remarketing pursuant to Section 4.5(d) of the Pledge Agreement. The undersigned hereby instructs you to return such Notes to the undersigned in accordance with the undersigned's instructions. With this notice, the Undersigned hereby agrees to be bound by the terms and conditions of Section 4.5(d) of the Pledge Agreement. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement.
Date:______________________________ Signature:_______________________________
Signature Guarantee:_____________________
Name:
Social Security or other Taxpayer Identification Number, if any:
Address:
In the event of a Last Failed Remarketing in a Remarketing Period to which this notice relates, Notes which are in book-entry form should be credited to the account at The Depository Trust Company set forth below.
Name of Account Party: DTC Account Number:
EXHIBIT 4-232
DTE ENERGY COMPANY
AND
THE BANK OF NEW YORK,
AS PURCHASE CONTRACT AGENT
PURCHASE CONTRACT AGREEMENT
Dated as of June 25, 2002
TABLE OF CONTENTS
PAGE ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1 Definitions............................................................................1 SECTION 1.2 Compliance Certificates And Opinions..................................................13 SECTION 1.3 Form Of Documents Delivered To Agent..................................................13 SECTION 1.4 Acts Of Holders; Record Dates.........................................................14 SECTION 1.5 Notices...............................................................................15 SECTION 1.6 Notice To Holders; Waiver.............................................................16 SECTION 1.7 Effect Of Headings And Table Of Contents..............................................17 SECTION 1.8 Successors And Assigns................................................................17 SECTION 1.9 Separability Clause...................................................................17 SECTION 1.10 Benefits Of Agreement.................................................................17 SECTION 1.11 Governing Law.........................................................................17 SECTION 1.12 Legal Holidays........................................................................17 SECTION 1.13 Counterparts..........................................................................18 SECTION 1.14 Inspection Of Agreement...............................................................18 ARTICLE II. CERTIFICATE FORMS SECTION 2.1 Forms Of Certificates Generally.......................................................18 SECTION 2.2 Form Of Agent's Certificate Of Authentication.........................................19 |
TABLE OF CONTENTS
(CONTINUED)
PAGE ARTICLE III. THE EQUITY SECURITY UNITS AND STRIPPED EQUITY SECURITY UNITS SECTION 3.1 Title And Terms; Denominations........................................................19 SECTION 3.2 Rights And Obligations Evidenced By The Certificates..................................20 SECTION 3.3 Execution, Authentication, Delivery And Dating........................................21 SECTION 3.4 Temporary Certificates................................................................21 SECTION 3.5 Registration; Registration Of Transfer And Exchange...................................22 SECTION 3.6 Book-Entry Interests..................................................................23 SECTION 3.7 Notices To Holders....................................................................24 SECTION 3.8 Appointment Of Successor Clearing Agency..............................................24 SECTION 3.9 Definitive Certificates...............................................................24 SECTION 3.10 Mutilated, Destroyed, Lost And Stolen Certificates....................................25 SECTION 3.11 Persons Deemed Owners.................................................................26 SECTION 3.12 Cancellation..........................................................................27 SECTION 3.13 Establishment Of Stripped Equity Security Units.......................................27 SECTION 3.14 Reestablishment Of Equity Security Units..............................................29 SECTION 3.15 Transfer Of Collateral Upon Occurrence Of Termination Event...........................30 SECTION 3.16 No Consent To Assumption..............................................................31 |
TABLE OF CONTENTS
(CONTINUED)
PAGE ARTICLE IV. THE NOTES SECTION 4.1 Payment Of Interest; Rights To Interest Payments Preserved; Notice....................31 SECTION 4.2 Notice And Voting.....................................................................32 SECTION 4.3 Tax Event Redemption..................................................................32 ARTICLE V. THE PURCHASE CONTRACTS; THE REMARKETING SECTION 5.1 Purchase Of Shares Of Common Stock....................................................33 SECTION 5.2 Contract Adjustment Payments..........................................................35 SECTION 5.3 Deferral Of Contract Adjustment Payments..............................................36 SECTION 5.4 Payment Of Purchase Price; Remarketing................................................38 SECTION 5.5 Issuance Of Shares Of Common Stock....................................................42 SECTION 5.6 Adjustment Of Settlement Rate.........................................................43 SECTION 5.7 Notice Of Adjustments And Certain Other Events........................................49 SECTION 5.8 Termination Event; Notice.............................................................50 SECTION 5.9 Early Settlement......................................................................50 SECTION 5.10 Early Settlement Upon Merger..........................................................52 SECTION 5.11 Charges And Taxes.....................................................................54 SECTION 5.12 No Fractional Shares..................................................................54 SECTION 5.13 Registration Statement and Prospectus.................................................55 ARTICLE VI. REMEDIES SECTION 6.1 Unconditional Right Of Holders To Purchase Common Stock...............................55 SECTION 6.2 Restoration Of Rights And Remedies....................................................56 SECTION 6.3 Rights And Remedies Cumulative........................................................56 |
TABLE OF CONTENTS
(CONTINUED)
PAGE SECTION 6.4 Delay or Omission Not Waiver..........................................................56 SECTION 6.5 Undertaking For Costs.................................................................56 SECTION 6.6 Waiver Of Stay Or Extension Laws......................................................56 ARTICLE VII. THE AGENT SECTION 7.1 Certain Duties, Rights And Immunities.................................................57 SECTION 7.2 Notice Of Default.....................................................................59 SECTION 7.3 Certain Rights Of Agent...............................................................59 SECTION 7.4 Not Responsible For Recitals, Etc.....................................................60 SECTION 7.5 May Hold Equity Security Units and Stripped Equity Security Units And Other Dealings..............................................................................60 SECTION 7.6 Money Held In Custody.................................................................60 SECTION 7.7 Compensation And Reimbursement........................................................60 SECTION 7.8 Corporate Agent Required; Eligibility.................................................61 SECTION 7.9 Resignation And Removal; Appointment Of Successor.....................................61 SECTION 7.10 Acceptance Of Appointment By Successor................................................62 SECTION 7.11 Merger, Conversion, Consolidation Or Succession To Business...........................63 SECTION 7.12 Preservation Of Information; Communications To Holders................................63 SECTION 7.13 Failure to Act........................................................................64 SECTION 7.14 No Obligations Of Agent...............................................................64 SECTION 7.15 Tax Compliance........................................................................64 |
TABLE OF CONTENTS
(CONTINUED)
. PAGE ARTICLE VIII. SUPPLEMENTAL AGREEMENTS SECTION 8.1 Supplemental Agreements Without Consent Of Holders....................................65 SECTION 8.2 Supplemental Agreements With Consent Of Holders.......................................65 SECTION 8.3 Execution Of Supplemental Agreements..................................................66 SECTION 8.4 Effect Of Supplemental Agreements.....................................................67 SECTION 8.5 Reference To Supplemental Agreements..................................................67 ARTICLE IX. CONSOLIDATION, MERGER, SALE OR CONVEYANCE SECTION 9.1 Covenant Not To Merge, Consolidate, Sell Or Convey Property Except Under Certain Conditions....................................................................67 SECTION 9.2 Rights And Duties Of Successor Corporation............................................67 SECTION 9.3 Opinion Of Counsel Given To Agent.....................................................68 ARTICLE X. COVENANTS SECTION 10.1 Performance Under Purchase Contracts..................................................68 SECTION 10.2 Maintenance Of Office Or Agency.......................................................68 SECTION 10.3 Company To Reserve Common Stock.......................................................69 SECTION 10.4 Covenants As To Common Stock..........................................................69 SECTION 10.5 Statements Of Officer Of The Company As To Default....................................69 Exhibit A -- Form of Equity Security Unit Certificate Exhibit B -- Form of Stripped Equity Security Unit Certificate |
TABLE OF CONTENTS
(CONTINUED)
. PAGE Exhibit C -- Instruction from Purchase Contract Agent to Collateral Agent (Collateral Substitution) Exhibit D -- Instruction to Purchase Contract Agent (Collateral Substitution) Exhibit E -- Notice to Settle by Separate Cash Exhibit F -- Form of Remarketing Agreement |
PURCHASE CONTRACT AGREEMENT (the "Agreement"), dated as of June 25, 2002, between DTE ENERGY COMPANY, a Michigan corporation (the "Company"), and The Bank of New York, a New York banking corporation, acting as purchase contract agent for the Holders of Equity Security Units and Stripped Equity Security Units from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this Agreement and the Certificates evidencing the Equity Security Units and Stripped Equity Security Units.
All things necessary to make the Purchase Contracts, when the Certificates are executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Agent, as provided in this Agreement, the valid and legally binding obligations of the Company, and to constitute this Agreement a valid agreement of the Company, in accordance with its terms, have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the Equity Security Units by the Holders thereof, it is mutually agreed as follows:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular, and nouns and pronouns of the masculine gender include the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States;
(c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and
(d) the following terms have the meanings given to them in this Section 1.1(d):
"Act" when used with respect to any Holder, has the meaning specified in Section 1.4.
"Affiliate" has the same meaning as given to that term in Rule 405 promulgated under the Securities Act or any successor rule thereunder.
"Agent" means the Person named as the "Agent" in the first paragraph of this instrument until a successor Agent shall have become such pursuant to the applicable provisions of this Agreement, and thereafter "Agent" shall mean such Person.
"Agreement" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 5.1(c).
"Applicable Ownership Interest" means, with respect to an Equity Security Unit and the Treasury Securities in the Treasury Portfolio or the Tax Event Treasury Portfolio, (A) a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal or interest amount of a principal or interest strip in a U.S. Treasury security included in such Treasury Portfolio or Tax Event Treasury Portfolio that matures on the Business Day immediately preceding the Stock Purchase Date and (B) for the scheduled interest Payment Date on the Notes that occurs on the Stock Purchase Date, in the case of the Treasury Portfolio, or for each scheduled interest Payment Date on the Notes that occurs after the Tax Event Redemption Date and on or before the Stock Purchase Date, in the case of the Tax Event Treasury Portfolio, a 0.02875% undivided beneficial ownership interest in a $1,000 principal or interest amount of a principal or interest strip in a U.S. Treasury security included in the Treasury Portfolio or the Tax Event Treasury Portfolio that matures on the Business Day immediately preceding the applicable interest Payment Date or Dates.
"Applicants" has the meaning specified in Section 7.12(b).
"Bankruptcy Code" means Title 11 of the United States Code, or any other law of the United States that from time to time provides a uniform system of bankruptcy laws.
"Beneficial Owner" means, with respect to a Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry Interest as reflected on the books of the Clearing Agency or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency).
"Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board.
"Board Resolution" means (i) a copy of a resolution certified by the Secretary or the 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, (ii) a copy of a unanimous written consent of the Board of Directors or (iii) a certificate signed by the authorized officer or officers to whom the Board of Directors has delegated its authority, and in each case, delivered to the Agent.
"Book-Entry Interest" means a beneficial interest in a Global Certificate, ownership and transfers of which shall be maintained and made through book entries by a Clearing Agency as described in Section 3.6.
"Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions and trust companies in The State of New York or at a place of payment are authorized or required by law, regulation or executive order to be closed.
"Capital Stock" means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated, whether voting or non-voting) corporate stock or similar interests in other types of entities.
"Cash Merger" has the meaning set forth in Section 5.10.
"Cash Settlement" has the meaning set forth in Section 5.4(a).
"Certificate" means an Equity Security Unit Certificate or a Stripped Equity Security Unit Certificate.
"Clearing Agency" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as a depositary for the Equity Security Units and Stripped Equity Security Units and in whose name, or in the name of a nominee of that organization, shall be registered a Global Certificate and which shall undertake to effect book-entry transfers and pledges of the Equity Security Units and Stripped Equity Security Units.
"Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1(c).
"Collateral" has the meaning specified in Section 2.1(a) of the Pledge Agreement.
"Collateral Agent" means The Bank of New York, a New York banking corporation, as Collateral Agent under the Pledge Agreement until a successor Collateral Agent shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter "Collateral Agent" shall mean the Person who is then the Collateral Agent thereunder.
"Collateral Substitution" has the meaning specified in Section 3.13(a).
"Common Stock" means the common stock, without par value, of the Company. At the date of this Agreement, each share of Common Stock has attached to it the right to purchase from the Company one one-hundreth of a share of Series A Junior Participating Preferred Stock, without par value, of the Company, at a price of $90.00 per one one-hundreth of a preferred share, subject to adjustment, as provided in the Rights Agreement, dated September 23, 1997, between the Company and The Detroit Edison Company, as rights agent.
"Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor shall have become such pursuant to the applicable provision of this Agreement, and thereafter "Company" shall mean such successor.
"Constituent Person" has the meaning specified in Section 5.6(b).
"Contract Adjustment Payments" means, in the case of Equity Security Units and Stripped Equity Security Units, the amount payable by the Company in respect of each Purchase Contract constituting a part of such Equity Security Units or Stripped Equity Security Units, equal to 4.15% per year of the Stated Amount, in each case computed (1) for any full quarterly period on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly period, on the basis of a 30-day month and for periods less than a month, on the basis of the actual number of days elapsed per 30-day month, plus any Deferred Contract Adjustment Payments accumulated pursuant to Section 5.3.
"Corporate Trust Office" means the office of the Agent at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at 101 Barclay Street, New York, New York 10286, Attention: Corporate Trust Administration.
"Corporation" includes corporations, limited liability companies, and except for purposes of Article IX, associations, companies and business trusts.
"Coupon Rate" means the percentage rate per annum at which each Note will bear interest initially.
"Current Market Price" has the meaning specified in Section 5.6(a)(8).
"Custodial Agent" means The Bank of New York, a New York banking corporation, as Custodial Agent under the Pledge Agreement until a successor Custodial Agent shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter "Custodial Agent" shall mean the Person who is then the Custodial Agent thereunder.
"Deferred Contract Adjustment Payments" has the meaning specified in
Section 5.3.
"Depositary" means, initially, DTC, until another Clearing Agency becomes its successor.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
"Equity Security Units" means the collective rights and obligations of a Holder of an Equity Security Unit Certificate in respect of a Note or the appropriate Applicable Ownership Interest in the Treasury Portfolio or the Tax Event Treasury Portfolio, as the case may be, subject in each case to the Pledge thereof, and the related Purchase Contract.
"Equity Security Unit Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Equity Security Units specified on such certificate, substantially in the form of Exhibit A hereto.
"Equity Security Unit Register" and "Equity Security Units Registrar" have the respective meanings specified in Section 3.5(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4(f).
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Failed Remarketing" has the meaning specified in Section 5.4(b)(ii).
"Fair Market Value" with respect to securities distributed in a Spin-Off means (a) in the case of any Spin-Off that is effected simultaneously with an initial public offering of such securities, the initial public offering price of those securities, and (b) in the case of any other Spin-Off, the average of the Sale Prices of those securities over the first 10 Trading Days after the effective date of such Spin-Off.
"Global Certificate" means a Certificate that evidences all or part of the Equity Security Units or Stripped Equity Security Units and is registered in the name of a Depositary or a nominee thereof.
"Holder" means the Person in whose name the Equity Security Units or Stripped Equity Security Units evidenced by an Equity Security Unit Certificate and/or a Stripped Equity Security Unit Certificate is registered in the related Equity Security Unit Register and/or the Stripped Equity Security Unit Register, as the case may be.
"Indenture" means the Amended and Restated Indenture, dated as of April 9, 2001, between the Company and the Trustee and as further supplemented by any officers' certificate or supplemental indenture.
"Issuer Order" or "Issuer Request" means a written order or request signed in the name of the Company by the 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 Agent.
"Last Failed Remarketing" has the meaning specified in Section 5.4(b)(ii).
"Merger Early Settlement" has the meaning specified in Section 5.10.
"Merger Early Settlement Amount" has the meaning specified in Section 5.10.
"Merger Early Settlement Date" has the meaning specified in Section 5.10.
"Non-electing Share" has the meaning specified in Section 5.6(b).
"Notes" means the series of senior debt securities of the Company designated the 4.60% Senior Notes due 2007, to be issued under the Indenture.
"NYSE" has the meaning specified in Section 5.1.
"Officer's Certificate" means a certificate signed by the Chairman of the Board, the President, a Vice-President, the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company or an Affiliate.
"Outstanding Units" means, as of the date of determination, all Equity Security Units and Stripped Equity Security Units evidenced by Certificates theretofore authenticated, executed and delivered under this Agreement, except:
(i) If a Termination Event has occurred, (A) Stripped Equity Security Units and (B) Equity Security Units for which the related Note or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, has been theretofore deposited with the Agent in trust for the Holders of such Equity Security Units;
(ii) Equity Security Units and Stripped Equity Security Units evidenced by Certificates theretofore cancelled by the Agent or delivered to the Agent for cancellation or deemed cancelled pursuant to the provisions of this Agreement; and
(iii) Equity Security Units and Stripped Equity Security Units evidenced by Certificates in exchange for or in lieu of which other Certificates have been authenticated, executed on behalf of the Holder and delivered pursuant to this Agreement, other than any such Certificate in respect of which there shall have been presented to the Agent proof satisfactory to it that such Certificate is held by a bona fide purchaser in whose hands the Equity Security Units or Stripped Equity Security Units evidenced by such Certificate are valid obligations of the Company;
provided, that in determining whether the Holders of the requisite number of the Equity Security Units or Stripped Equity Security Units have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Equity Security Units and Stripped Equity Security Units
owned by the Company or any Affiliate of the Company shall be disregarded and deemed not to be outstanding, except that, in determining whether the Agent shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Equity Security Units and Stripped Equity Security Units that a Responsible Officer of the Agent actually knows to be so owned shall be so disregarded. Equity Security Units or Stripped Equity Security Units so owned that have been pledged in good faith may be regarded as Outstanding Units if the pledgee establishes to the satisfaction of the Agent the pledgee's right so to act with respect to such Equity Security Units or Stripped Equity Security Units and that the pledgee is not the Company or any Affiliate of the Company.
"Payment Date" means each February 16, May 16, August 16 and November 16, commencing August 16, 2002.
"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
"Pledge" means the pledge under the Pledge Agreement of the Notes, the Treasury Securities or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio constituting a part of the Equity Security Units, or the Treasury Securities constituting a part of the Stripped Equity Security Units, property, cash, securities, financial assets and security entitlements of the Collateral Account (as defined in the Pledge Agreement) and any proceeds of any of the foregoing.
"Pledge Agreement" means the Pledge Agreement, dated as of the date hereof, by and among the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Agent, on its own behalf and as attorney-in-fact for the Holders from time to time of the Equity Security Units and Stripped Equity Security Units.
"Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio" has the meaning set forth in Section 2.1(c) of the Pledge Agreement.
"Pledged Applicable Ownership Interest in the Treasury Portfolio" has the meaning set forth in Section 2.1(c) of the Pledge Agreement.
"Pledged Notes" has the meaning set forth in Section 2.1(c) of the Pledge Agreement.
"Pledged Treasury Securities" has the meaning set forth in Section 2.1(c) of the Pledge Agreement.
"Predecessor Certificate" means a Predecessor Equity Security Unit Certificate or a Predecessor Stripped Equity Security Unit Certificate.
"Predecessor Equity Security Unit Certificate" of any particular Equity Security Unit Certificate means every previous Equity Security Unit Certificate evidencing all or a portion of the rights and obligations of the Company and the Holder under the Equity Security Units evidenced thereby; and, for the purposes of this definition, any Equity Security Unit Certificate
authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Equity Security Unit Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Equity Security Unit Certificate.
"Predecessor Stripped Equity Security Unit Certificate" of any
particular Stripped Equity Security Unit Certificate means every previous
Stripped Equity Security Unit Certificate evidencing all or a portion of the
rights and obligations of the Company and the Holder under the Stripped Equity
Security Units evidenced thereby; and, for the purposes of this definition, any
Stripped Equity Security Unit Certificate authenticated and delivered under
Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Stripped Equity Security Unit Certificate shall be deemed to evidence the
same rights and obligations of the Company and the Holder as the mutilated,
destroyed, lost or stolen Stripped Equity Security Unit Certificate.
"Purchase Contract," when used with respect to any Equity Security Units or Stripped Equity Security Units, means the contract forming a part of such Equity Security Units or Stripped Equity Security Units and obligating the Company to sell and the Holder of such Equity Security Units or Stripped Equity Security Units to purchase Common Stock on the terms and subject to the conditions set forth in Article Five.
"Purchase Contract Settlement Fund" has the meaning specified in
Section 5.5.
"Purchase Price" has the meaning specified in Section 5.1.
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
"Quotation Agent" means UBS Warburg LLC or Salomon Smith Barney Inc., or their respective successors or any other primary U.S. government securities dealer in New York City selected by the Company.
"Record Date" for the distribution payable on any Payment Date means, as to any Global Certificate, the Business Day immediately preceding such Payment Date, and as to any other Certificate, the 15th day preceding such Payment Date.
"Redemption Amount" means, (A) in the case of a Tax Event Redemption occurring prior to the earlier of a successful remarketing of the Notes and the Stock Purchase Date, for each Note the product of (i) the principal amount of such Note and (ii) a fraction whose numerator is the applicable Tax Event Treasury Portfolio Purchase Price and whose denominator is the aggregate principal amount of Notes outstanding on the Tax Event Redemption Date, and (B) in the case of a Tax Event Redemption occurring on or after the earlier of a successful remarketing of the Notes and the Stock Purchase Date, for each Note the principal amount of the Note.
"Redemption Price" means the redemption price per Note equal to the Redemption Amount plus any accrued and unpaid interest on such Note to the date of redemption.
"Reference Price" has the meaning specified in Section 5.1(a)(ii).
"Register" means the Equity Security Unit Register or the Stripped Equity Security Unit Register, as applicable.
"Registrar" means the Equity Security Unit Registrar or the Stripped Equity Security Unit Registrar, as applicable.
"Remarketing Agent" has the meaning specified in Section 5.4(b)(i).
"Remarketing Agreement" means the Remarketing Agreement entered into by and among the Company, the Remarketing Agent and the Agent.
"Remarketing Date" means the third Business Day immediately preceding May 16, 2005.
"Remarketing Fee" has the meaning specified in Section 5.4(b)(i).
"Remarketing Period" means any of the following three Business Day periods: (i) the Remarketing Date and each of the two immediately succeeding Business Days; (ii) the three Business Days immediately preceding July 1, 2005; or (iii) the seventh, sixth and fifth Business Days immediately preceding August 16, 2005.
"Remarketing Value" means the sum of
(i) the value at the Remarketing Date or any Subsequent Remarketing Date, as the case may be, of U.S. Treasury securities that will pay, on the Business Day immediately preceding the Payment Date falling on the Stock Purchase Date, an amount of cash equal to the aggregate interest payments that are scheduled to be payable on that Payment Date, on (a) the Notes which are included in Equity Security Units and (b) the Separate Notes that are to be remarketed pursuant to Section 4.5(d) of the Pledge Agreement, assuming for that purpose that the interest rate on the Notes is equal to the Coupon Rate, and
(ii) the value at the Remarketing Date or the Subsequent Remarketing Date, as the case may be, of U.S. Treasury securities that will pay, on the Business Day immediately preceding the Stock Purchase Date, an amount of cash equal to the principal amount (a) of such Notes that are included in Equity Security Units and (b) the Separate Notes which are to be remarketed pursuant to Section 4.5(d) of the Pledge Agreement,
provided that for purposes of clauses (i) and (ii) above, the Remarketing Value shall be calculated on the assumptions that (x) the U.S. Treasury securities are highly liquid and mature on or within 35 days prior to the Stock Purchase Date, as determined in good faith by the Remarketing Agent in a manner intended to minimize the cash value of the U.S. Treasury securities, and (y) the U.S. Treasury securities are valued based on the ask-side price of the U.S. Treasury securities at a time between 9:00 a.m. and 11:00 a.m., New York City time, selected by the Remarketing Agent, on the Remarketing Date or any Subsequent Remarketing Date, as the case may be, as determined on a third-day settlement basis by a reasonable and customary means selected in good faith by the Remarketing Agent, plus accrued interest to that date.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Reset Rate" has the meaning specified in Section 5.4(b)(i) and shall be established pursuant to Section 5.4(b)(i) or (ii), as appropriate.
"Responsible Officer" means, when used with respect to the Agent, any officer within the corporate trust department of the Agent (or any successor of the Agent), including any Vice President, any assistant Vice President, the treasurer, any assistant treasurer, any trust officer, any senior trust officer or any other officer of the Agent who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person's knowledge of and familiarity with the particular subject and who, in each of the above cases, shall have direct responsibility for the administration of this Agreement.
"Sale Price" of the Common Stock or any securities distributed in a Spin-Off, as the case may be, on any Trading Day means the closing sale price per share (or if no closing sale price is reported, the average of the per share bid and per share ask prices or, if more than one per share bid or per share ask price, the average of the average per share bid and the average per share asked prices) on such Trading Day as reported in composite transactions for the principal U.S. securities exchange on which the Common Stock or such securities are traded or, if the Common Stock or such securities are not listed on a U.S. national or regional securities exchange, as reported by Nasdaq.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Intermediary" means The Bank of New York, a New York banking corporation, in its capacity as Securities Intermediary under the Pledge Agreement, together with its successors in such capacity.
"Separate Notes" has the meaning set forth in the Pledge Agreement.
"Settlement Date" means any Early Settlement Date or Merger Early Settlement Date or the Stock Purchase Date.
"Settlement Rate" has the meaning specified in Section 5.1.
"Spin-Off" means a dividend or other distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit of the Company.
"Stated Amount" means, with respect to any one Equity Security Unit or Stripped Equity Security Unit, $25.
"Stock Purchase Date" means August 16, 2005.
"Stripped Equity Security Units" means the collective rights and obligations of a holder of a Stripped Equity Security Unit Certificate in respect of a 1/40 undivided beneficial interest in a Treasury Security, subject in each case to the Pledge thereof, and the related Purchase Contract.
"Stripped Equity Security Unit Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Stripped Equity Security Units specified on such certificate, substantially in the form of Exhibit B hereto.
"Stripped Equity Security Unit Register" and "Stripped Equity Security Unit Registrar" have the respective meanings specified in Section 3.5(a).
"Subsequent Remarketing Date" means, provided there has been one or more Failed Remarketings, the date on which the Remarketing Agent has consummated a successful remarketing in accordance with Section 5.4 hereof, such date to be no later than the fifth Business Day immediately preceding the Stock Purchase Date.
"Tax Event" means the receipt by the Company of an opinion of a nationally recognized tax counsel experienced in such matters to the effect that there is more than an insubstantial risk that interest payable by the Company on the Notes on the next Payment Date would not be deductible, in whole or in part, by the Company for United States federal income tax purposes, as a result of (a) any amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, (b) any amendment to or change in an official interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority or (c) any official interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the generally accepted position on June 19, 2002, which amendment, change or proposed change is effective or which interpretation or pronouncement is announced on or after June 19, 2002.
"Tax Event Redemption" means, if a Tax Event shall occur and be continuing, the redemption of the Notes, at the option of the Company, in whole but not in part, on not less than 30 days nor more than 60 days' written notice.
"Tax Event Redemption Date" means the date upon which a Tax Event Redemption is to occur.
"Tax Event Treasury Portfolio" means portfolio of principal or interest strips of U.S. Treasury Securities that mature on (1) the Business Day immediately preceding the Stock Purchase Date in an aggregate amount equal to the aggregate principal amount of the Notes included in the Equity Security Units on the Tax Event Redemption Date and (2) with respect to each scheduled interest Payment Date on the Notes that occurs after the Tax Event Redemption Date and on or before the Stock Purchase Date, interest or principal strips of U.S. Treasury Securities that mature on the Business Day immediately preceding such interest Payment Date in an aggregate amount equal to the aggregate interest payment that would be due on the aggregate principal amount of the Notes outstanding on the Tax Event Redemption Date.
"Tax Event Treasury Portfolio Purchase Price" means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the Quotation Agent on the third Business Day immediately preceding the Tax Event Redemption Date for the purchase of the Treasury Portfolio for settlement on the Tax Event Redemption Date.
"Termination Date" means the date, if any, on which a Termination Event occurs.
"Termination Event" means the occurrence of any of the following events:
(i) at any time on or prior to the Stock Purchase Date, a judgment, decree or court order shall have been entered granting relief under the Bankruptcy Code or any other similar Federal or state law, adjudicating the Company to be insolvent, or approving as properly filed a petition seeking reorganization or liquidation of the Company under the Bankruptcy Code or any other similar applicable federal or state law, and, unless such judgment, decree or order shall have been entered within 60 days prior to the Stock Purchase Date, such decree or order shall have continued undischarged and unstayed for a period of 60 days;
(ii) at any time on or prior to the Stock Purchase Date, a judgment, decree or court order for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the winding up or liquidation of its affairs, shall have been entered, and, unless such judgment, decree or order shall have been entered within 60 days prior to the Stock Purchase Date, such judgment, decree or order shall have continued undischarged and unstayed for a period of 60 days; or
(iii) at any time on or prior to the Stock Purchase Date, the Company shall file a petition for relief under the Bankruptcy Code or any other similar federal or state law, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization or liquidation under the Bankruptcy Code or any other similar federal or state law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in Section 5.1(a)(i).
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trading Day" has the meaning specified in Section 5.1(c).
"Transaction Documents" has the meaning specified in Section 7.1(a).
"Treasury Portfolio" has the meaning specified in Section 5.4(b)(i).
"Treasury Security" means a zero-coupon U.S. Treasury security (CUSIP Number 912803AG8) maturing on August 15, 2005 that will pay $1,000 on such maturity date.
"Trustee" means The Bank of New York, a New York banking corporation, as trustee under the Indenture, or any successor thereto.
"Underwriting Agreement" means the Underwriting Agreement relating to the Equity Security Units and Stripped Equity Security Units dated June 19, 2002 among the Company and the underwriters named therein.
"Vice-President" means any vice-president, whether or not designated by a number or a word or words added before or after the title "vice-president."
SECTION 1.2 Compliance Certificates And Opinions. Except as otherwise expressly provided by this Agreement, upon any application or request by the Company to the Agent to take any action under any provision of this Agreement, the Company shall furnish to the Agent an Officer's Certificate stating that all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and, if requested by the Agent, an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, 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 Agreement 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 Agreement (other than the Officer's Certificate provided for in Section 10.5) shall include:
(a) a statement that the Person signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable such individual to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.
SECTION 1.3 Form Of Documents Delivered To Agent.
(a) 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.
(b) 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.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Agreement, they may, but need not, be consolidated and form one instrument.
SECTION 1.4 Acts Of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement 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 agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Agent and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and (subject to Section 7.1) conclusive in favor of the Agent and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner which the Agent deems sufficient.
(c) The ownership of Equity Security Units or Stripped Equity Security Units shall be proved by the Equity Security Unit Register or the Stripped Equity Security Unit Register, as the case may be.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Certificate shall bind every future Holder of the same Certificate and the Holder of every Certificate 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 Agent or the Company in reliance thereon, whether or not notation of such action is made upon such Certificate.
(e) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Units entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Agreement to be given, made or taken by Holders of Equity Security Units and Stripped Equity Security Units. If any record date is set pursuant to this paragraph, the Holders of the Outstanding Units on such record date, and no other Holders, shall be entitled to take the relevant action with respect to the Equity Security Units or the Stripped Equity Security Units, as the case may be, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite number of Outstanding Units on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite number of Outstanding Units on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Agent in writing and to each Holder of Equity Security Units and Stripped Equity Security Units in the manner set forth in Section 1.6. Notwithstanding the foregoing, for purposes of distributions payable on any Payment Date, the Record Date shall be, as to any Global Certificate, the Business Day immediately preceding such Payment Date.
(f) With respect to any record date set pursuant to this Section, the Company may designate any date as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the Agent in writing, and to each Holder of Equity Security Units and Stripped Equity Security Units in the manner set forth in Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the Company shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date.
SECTION 1.5 Notices. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with:
(a) the Agent by any Holder or by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished
or filed in writing and personally delivered, mailed, first-class postage prepaid, telecopied or delivered by overnight air courier guaranteeing next day delivery, to the Agent at 101 Barclay Street, New York, New York 10286 , Attention: Corporate Trust Administration, telecopy: (212) 896-7298, or at any other address furnished in writing by the Agent to the Holders and the Company; or
(b) the Company by the Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered, mailed, first-class postage prepaid, telecopied
or delivered by overnight air courier guaranteeing next day delivery,
to the Company at DTE Energy Company, 2000 2nd Avenue, 850 WCB,
Detroit, Michigan 48226-1279, Attention: Assistant Treasurer, telecopy:
(313) 235-6743 or at any other address furnished in writing to the
Agent by the Company; or
(c) the Collateral Agent by the Agent, the Company or any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered, mailed, first-class postage prepaid, telecopied or delivered by overnight air courier guaranteeing next day delivery, addressed to the Collateral Agent at 101 Barclay Street, New York, New York 10286, Attention: Corporate Trust Administration, telecopy: (212) 896-7298, or at any other address furnished in writing by the Collateral Agent to the Agent, the Company and the Holders; or
(d) the Trustee by the Company shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing and personally delivered, mailed, first-class postage prepaid, telecopied or delivered by overnight air courier guaranteeing next day delivery, addressed to the Trustee at 101 Barclay Street, New York, New York 10286, Attention: Corporate Trust Administration, telecopy: (212) 896-7298 or at any other address furnished in writing by the Trustee to the Company.
SECTION 1.6 Notice To Holders; Waiver.
(a) Where this Agreement provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at its address as it appears in the applicable Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Agreement 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 shall be filed with the Agent, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
(b) 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 by mail, then such notification as shall be made with the approval of the Agent shall constitute a sufficient notification for every purpose hereunder.
SECTION 1.7 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 1.8 Successors And Assigns. All covenants and agreements in this Agreement by the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 1.9 Separability Clause. In case any provision in this Agreement or in the Equity Security Units or Stripped Equity Security Units shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof and thereof shall not in any way be affected or impaired thereby.
SECTION 1.10 Benefits Of Agreement. Nothing in this Agreement or in the Equity Security Units or Stripped Equity Security Units, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and, to the extent provided hereby, the Holders, any benefits or any legal or equitable right, remedy or claim under this Agreement. The Holders from time to time shall be beneficiaries of this Agreement and shall be bound by all of the terms and conditions hereof and of the Equity Security Units and Stripped Equity Security Units evidenced by their Certificates by their acceptance of delivery of such Certificates.
SECTION 1.11 Governing Law. This Agreement and the Equity Security Units and Stripped Equity Security Units shall be governed by and construed in accordance with the laws of the State of New York, without regard to its principles of conflicts of laws.
SECTION 1.12 Legal Holidays.
(a) In any case where any Payment Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement or the Equity Security Unit Certificates) payments on the Notes shall not be made on such date, but such payments shall be made on the next succeeding Business Day with the same force and effect as if made on such Payment Date, provided that no interest shall accrue or be payable by the Company for the period from and after any such Payment Date, except that if such next succeeding Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day with the same force and effect as if made on such Payment Date.
(b) If any date on which Contract Adjustment Payments are to be made on the Purchase Contracts is not a Business Day, then payment of the Contract Adjustment Payments payable on that date will be made on the next succeeding day which is a Business Day, and no interest or additional payment will be paid in respect of the delay. However, if that Business Day is in the next succeeding calendar year, the payment will
be made on the immediately preceding Business Day with the same force and effect as if made on that Payment Date.
(c) In any case where the Stock Purchase Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement or the Certificates), the Purchase Contracts shall not be performed on such date, but the Purchase Contracts shall be performed on the immediately following Business Day with the same force and effect as if performed on the Stock Purchase Date.
SECTION 1.13 Counterparts. This Agreement may be executed in any number of counterparts by the parties hereto, each of which, when so executed and delivered, shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.
SECTION 1.14 Inspection Of Agreement. A copy of this Agreement shall be available at all reasonable times during normal business hours at the Corporate Trust Office for inspection by any Holder.
ARTICLE II.
CERTIFICATE FORMS
SECTION 2.1 Forms Of Certificates Generally.
(a) The Equity Security Unit Certificates (including the form of Purchase Contract forming part of the Equity Security Units evidenced thereby) shall be in substantially the form set forth in Exhibit A hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange or quotation system on which the Equity Security Units are listed or quoted for trading or any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Equity Security Unit Certificates, as evidenced by their execution of the Equity Security Unit Certificates.
(b) The definitive Equity Security Unit Certificates shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Equity Security Unit Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof.
(c) The Stripped Equity Security Unit Certificates (including the form of Purchase Contracts forming part of the Stripped Equity Security Units evidenced thereby) shall be in substantially the form set forth in Exhibit B hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange or the quotation system on which the Stripped Equity Security Units may be
listed or quoted for trading or any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Stripped Equity Security Unit Certificates, as evidenced by their execution of the Stripped Equity Security Unit Certificates.
(d) The definitive Stripped Equity Security Unit Certificates shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Stripped Equity Security Unit Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof.
(e) Every Global Certificate authenticated, executed on behalf of the Holders and delivered hereunder shall bear a legend in substantially the following form:
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT."
SECTION 2.2 Form Of Agent's Certificate Of Authentication.
(a) The form of the Agent's certificate of authentication of the Equity Security Units shall be in substantially the form set forth on the form of the Equity Security Unit Certificates.
(b) The form of the Agent's certificate of authentication of the Stripped Equity Security Units shall be in substantially the form set forth on the form of the Stripped Equity Security Unit Certificates.
ARTICLE III.
THE EQUITY SECURITY UNITS AND STRIPPED EQUITY SECURITY UNITS
SECTION 3.1 Title And Terms; Denominations.
(a) The aggregate number of Equity Security Units and Stripped Equity Security Units, if any, evidenced by Certificates authenticated, executed on behalf of the Holders and delivered hereunder is limited to 6,000,000 (6,900,000 if the Underwriters' (as defined in the Underwriting Agreement) over-allotment option pursuant to the Underwriting Agreement is exercised in full), except for Certificates authenticated,
executed and delivered upon registration of transfer of, in exchange for, or in lieu of, other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9, 5.10 or 8.5.
(b) The Certificates shall be issuable only in registered form and only in denominations of a single Equity Security Unit or a single Stripped Equity Security Unit and any integral multiple thereof.
SECTION 3.2 Rights And Obligations Evidenced By The Certificates.
(a) Each Equity Security Unit Certificate shall evidence the number of Equity Security Units specified therein, with each such Equity Security Unit representing the ownership by the Holder thereof of a beneficial interest in a Note or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, subject to the Pledge of such Note or such Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder thereof and the Company under one Purchase Contract. The Agent as attorney-in-fact for, and on behalf of, the Holder of each Equity Security Unit shall pledge, pursuant to the Pledge Agreement, the Note or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, forming a part of such Equity Security Unit, to the Collateral Agent and grant to the Collateral Agent a security interest in the right, title, and interest of such Holder in such Note or such Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, for the benefit of the Company, to secure the obligation of the Holder under each Purchase Contract to purchase the Common Stock of the Company. Prior to the purchase of shares of Common Stock under each Purchase Contract, such Purchase Contracts shall not entitle the Holders of Equity Security Unit Certificates to any of the rights of a holder of shares of Common Stock, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as stockholders in respect of the meetings of stockholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as stockholders of the Company.
(b) Each Stripped Equity Security Unit Certificate shall evidence the number of Stripped Equity Security Units specified therein, with each such Stripped Equity Security Unit representing the ownership by the Holder thereof of a 1/40 undivided beneficial interest in a Treasury Security, subject to the Pledge of such interest in such Treasury Security by such Holder pursuant to the Pledge Agreement, and the rights and obligations of the Holder thereof and the Company under one Purchase Contract. Prior to the purchase of shares of Common Stock under each Purchase Contract, such Purchase Contracts shall not entitle the Holders of Stripped Equity Security Unit Certificates to any of the rights of a holder of shares of Common Stock, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as stockholders in respect of the meetings of stockholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as stockholders of the Company.
SECTION 3.3 Execution, Authentication, Delivery And Dating.
(a) Subject to the provisions of Sections 3.13 and 3.14, upon the execution and delivery of this Agreement, and at any time and from time to time thereafter, the Company may deliver Certificates executed by the Company to the Agent for authentication, execution on behalf of the Holders and delivery, together with its Issuer Order for authentication of such Certificates, and the Agent in accordance with such Issuer Order shall authenticate, execute on behalf of the Holders and deliver such Certificates.
(b) The Certificates shall be executed on behalf of the Company by the Chairman of the Board, its President, its Treasurer, any Assistant Treasurer or any of its Vice Presidents and delivered to the Agent. The signature of any of these officers on the Certificates may be manual or facsimile.
(c) Certificates 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 Certificates or did not hold such offices at the date of such Certificates.
(d) No Purchase Contract evidenced by a Certificate shall be valid until such Certificate has been executed on behalf of the Holder by the manual or facsimile signature of an authorized officer of the Agent, as such Holder's attorney-in-fact. Such signature by an authorized officer of the Agent shall be conclusive evidence that the Holder of such Certificate has entered into the Purchase Contracts evidenced by such Certificate.
(e) Each Certificate shall be dated the date of its authentication.
(f) No Certificate shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose unless there appears on such Certificate a certificate of authentication substantially in the form provided for herein executed by an authorized officer of the Agent by manual signature, and such certificate upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder.
SECTION 3.4 Temporary Certificates.
(a) Pending the preparation of definitive Certificates, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holders, and deliver, in lieu of such definitive Certificates, temporary Certificates which are in substantially the form set forth in Exhibit A or Exhibit B hereto, as the case may be, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Equity Security Units or
Stripped Equity Security Units, as the case may be, are listed, or as may, consistent herewith, be determined by the officers of the Company executing such Certificates, as evidenced by their execution of the Certificates.
(b) If temporary Certificates are issued, the Company will cause definitive Certificates to be prepared without unreasonable delay. After the preparation of definitive Certificates, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of the temporary Certificates at the Corporate Trust Office, at the expense of the Company and without charge to the Holder. Upon surrender for cancellation of any one or more temporary Certificates, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, one or more definitive Certificates of like tenor and denominations and evidencing a like number of Equity Security Units or Stripped Equity Security Units, as the case may be, as the temporary Certificate or Certificates so surrendered. Until so exchanged, the temporary Certificates shall in all respects evidence the same benefits and the same obligations with respect to the Equity Security Units or Stripped Equity Security Units, as the case may be, evidenced thereby as definitive Certificates.
SECTION 3.5 Registration; Registration Of Transfer And Exchange.
(a) The Agent shall keep at the Corporate Trust Office a register (the "Equity Security Unit Register") in which, subject to such reasonable regulations as it may prescribe, the Agent shall provide for the registration of Equity Security Unit Certificates and of transfers of Equity Security Unit Certificates (the Agent, in such capacity, the "Equity Security Units Registrar") and a register (the "Stripped Equity Security Unit Register") in which, subject to such reasonable regulations as it may prescribe, the Agent shall provide for the registration of the Stripped Equity Security Unit Certificates and transfers of Stripped Equity Security Unit Certificates (the Agent, in such capacity, the "Stripped Equity Security Unit Registrar").
(b) Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the designated transferee or transferees, and deliver, in the name of the designated transferee or transferees, one or more new Certificates of like tenor and denominations, and evidencing a like number of Equity Security Units or Stripped Equity Security Units, as the case may be.
(c) At the option of the Holder, Certificates may be exchanged for other Certificates, of like tenor and denominations and evidencing a like number of Equity Security Units or Stripped Equity Security Units, as the case may be, upon surrender of the Certificates to be exchanged at the Corporate Trust Office. Whenever any Certificates are so surrendered for exchange, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver the Certificates which the Holder making the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or exchange of a Certificate shall evidence the ownership of the same number of Equity Security Units or Stripped Equity Security Units, as the case may be, and be entitled to the same benefits and subject to the same obligations, under this Agreement as the Equity Security Units or Stripped Equity Security Units, as the case may be, evidenced by the Certificate surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of transfer or for exchange shall (if so required by the Agent) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Agent duly executed, by the Holder thereof or its attorney duly authorized in writing.
(f) No service charge shall be made for any registration of transfer or exchange of a Certificate, but the Company and the Agent may require payment from the Holder 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 Certificates, other than any exchanges pursuant to Sections 3.4, 3.9 and 8.5 not involving any transfer.
(g) Notwithstanding the foregoing, the Company shall not be obligated to execute and deliver to the Agent, and the Agent shall not be obligated to authenticate, execute on behalf of the Holder and deliver any Certificate presented or surrendered for registration of transfer or for exchange on or after the Business Day immediately preceding the earlier of the Stock Purchase Date or the Termination Date. In lieu of delivery of a new Certificate, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, the Agent shall,
(i) if the Stock Purchase Date has occurred, deliver the shares of Common Stock issuable in respect of the Purchase Contracts forming a part of the Equity Security Units or Stripped Equity Security Units, as the case may be, evidenced by such Certificate,
(ii) in the case of Equity Security Units, if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Notes or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as applicable, relating to such Equity Security Units or, in the case of Stripped Equity Security Units, if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Treasury Securities relating to such Stripped Equity Security Units,
in each case subject to the applicable conditions and in accordance with the applicable provisions of Article V.
SECTION 3.6 Book-Entry Interests. The Certificates, on original issuance, will be issued in the form of one or more fully registered Global Certificates, to be delivered to the Depositary or its custodian by, or on behalf of, the Company. Each such Global Certificate shall
initially be registered in the applicable Register in the name of the Depositary or its nominee, and no Beneficial Owner will receive a definitive Certificate representing such Beneficial Owner's interest in such Global Certificate, except as provided in Section 3.9. The Agent shall enter into agreements with the Depositary if so requested by the Company in order to effect the book-entry provisions of this Agreement. Unless and until definitive, fully registered Certificates have been issued to Beneficial Owners pursuant to Section 3.9:
(a) the provisions of this Section 3.6 shall be in full force and effect;
(b) the Company shall be entitled to deal with the Clearing Agency for all purposes of this Agreement (including receiving approvals, votes or consents hereunder) as the Holder of the Equity Security Units and Stripped Equity Security Units and the sole holder of the Global Certificate(s) and shall have no obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 3.6 conflict with any other provisions of this Agreement, the provisions of this Section 3.6 shall control; and
(d) the rights of the Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants. The Clearing Agency will make book-entry transfers among Clearing Agency Participants.
SECTION 3.7 Notices To Holders. Whenever a notice or other communication to the Holders is required to be given under this Agreement, the Company or the Company's agent shall give such notices and communications to the Holders and, with respect to any Equity Security Units or Stripped Equity Security Units registered in the name of a Clearing Agency or the nominee of a Clearing Agency, the Company or the Company's agent shall, except as set forth herein, have no obligations to the Beneficial Owners.
SECTION 3.8 Appointment Of Successor Clearing Agency. If any Clearing Agency elects to discontinue its services as securities depositary with respect to the Equity Security Units and Stripped Equity Security Units, the Company may, in its sole discretion, appoint a successor Clearing Agency with respect to the Equity Security Units and Stripped Equity Security Units.
SECTION 3.9 Definitive Certificates. If
(i) a Clearing Agency has notified the Company that it is unwilling or unable to continue as securities depositary and a successor Clearing Agency is not appointed within 90 days after such discontinuance pursuant to Section 3.8,
(ii) the Company determines not to have the Equity Security Units and Stripped Equity Security Units represented by Global Certificates or permit any of the Global Certificates to be exchangeable or there is a continuing default by the Company in respect of the Company's obligations under one or more Purchase Contracts, the Indenture, this Agreement, the Notes, the Equity Security Units, the Stripped Equity Security Units, the Pledge Agreement or any other principal
agreements or instruments executed in connection with the issuance of Equity Securities Units or Stripped Equity Security Units, or
(iii) a Clearing Agency has ceased to be qualified to act as securities depositary with respect to the Equity Securities Units and Stripped Equity Security Units and a successor Clearing Agency is not appointed with 90 days after the Company learns that such Clearing Agency is no longer qualified,
then upon surrender of the Global Certificates representing the Book-Entry Interests with respect to the Equity Security Units and Stripped Equity Security Units by the Clearing Agency, accompanied by registration instructions, the Company shall cause definitive Certificates to be delivered to Beneficial Owners in accordance with the instructions of the Clearing Agency. The Company and the Agent shall not be liable for any delay in delivery of such instructions and may conclusively rely on and shall be protected in relying on, such instructions.
SECTION 3.10 Mutilated, Destroyed, Lost And Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the Agent, the Company shall execute and deliver to the Agent, and the Agent shall authenticate, execute on behalf of the Holder, and deliver in exchange therefor, a new Certificate at the cost of the Holder, evidencing the same number of Equity Security Units or Stripped Equity Security Units, as the case may be, and bearing a Certificate number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Agent
(i) evidence to their satisfaction of the destruction, loss or theft of
any Certificate, and (ii) such security or indemnity at the cost of the
Holder as may be required by them to hold each of them and any agent of
any of them harmless, then, in the absence of notice to the Company or
the Agent that such Certificate has been acquired by a bona fide
purchaser, the Company shall execute and deliver to the Agent, and the
Agent shall authenticate, execute on behalf of the Holder, and deliver
to the Holder, in lieu of any such destroyed, lost or stolen
Certificate, a new Certificate, evidencing the same number of Equity
Security Units or Stripped Equity Security Units, as the case may be,
and bearing a Certificate number not contemporaneously outstanding.
(c) Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent shall not
be obligated to authenticate, execute on behalf of the Holder, and
deliver to the Holder, a Certificate on or after the Business Day
immediately preceding the earlier of the Stock Purchase Date or the
Termination Date. In lieu of delivery of a new Certificate, upon
satisfaction of the applicable conditions specified above in this
Section and receipt of appropriate registration or transfer
instructions from such Holder, the Agent shall (i) if the Stock
Purchase Date has occurred, deliver the shares of Common Stock issuable
in respect of the Purchase Contracts forming a part of the Equity
Security Units or Stripped Equity Security Units evidenced by such
Certificate, or (ii) if a Termination Event shall have occurred prior
to the Stock Purchase Date, transfer the Notes, the appropriate
Applicable Ownership Interest in the Treasury Portfolio or Tax Event
Treasury Portfolio, or the
Treasury Securities, as the case may be, evidenced thereby, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article V.
(d) Upon the issuance of any new Certificate under this Section, the Company and the Agent may require the payment by the Holder 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 Agent) connected therewith.
(e) Every new Certificate issued pursuant to this Section in lieu of any destroyed, lost or stolen Certificate shall constitute an original additional contractual obligation of the Company and of the Holder in respect of the Equity Security Units or Stripped Equity Security Units, as the case may be, evidenced thereby, whether or not the destroyed, lost or stolen Certificate (and the Equity Security Units and Stripped Equity Security Units evidenced thereby) shall be at any time enforceable by anyone, and shall be entitled to all the benefits and be subject to all the obligations of this Agreement equally and proportionately with any and all other Certificates delivered hereunder.
(f) 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 Certificates.
SECTION 3.11 Persons Deemed Owners.
(a) Prior to due presentment of a Certificate for registration of transfer, the Company and the Agent, and any agent of the Company or the Agent, may treat the Person in whose name such Certificate is registered as the owner of the Equity Security Units or Stripped Equity Security Units, as the case may be, evidenced thereby, for the purpose of receiving interest payments on the Notes, receiving payment of Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever (subject to Sections 4.1(a) and 5.2(a)), whether or not any such payments shall be overdue and notwithstanding any notice to the contrary, and neither the Company nor the Agent, nor any agent of the Company or the Agent, shall be affected by notice to the contrary.
(b) Notwithstanding the foregoing, with respect to any Global Certificate, nothing herein shall prevent the Company, the Agent or any agent of the Company or the Agent, from giving effect to any written certification, proxy or other authorization furnished by any Clearing Agency (or its nominee), as a Holder, with respect to such Global Certificate or impair, as between such Clearing Agency and owners of beneficial interests in such Global Certificate, the operation of customary practices governing the exercise of rights of such Clearing Agency (or its nominee) as Holder of such Global Certificate. None of the Company, the Agent, or any agent of the Company or the Agent, 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 Certificate or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
SECTION 3.12 Cancellation.
(a) All Certificates surrendered (i) for delivery of shares of Common Stock on or after any Settlement Date; (ii) upon the transfer of Notes, the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, or Treasury Securities, as the case may be, after the occurrence of a Termination Event; or (iii) upon the registration of a transfer or exchange of an Equity Security Unit or Stripped Equity Security Unit, as the case may be, shall, if surrendered to any Person other than the Agent, be delivered to the Agent and, if not already cancelled, shall be promptly cancelled by it. The Company may at any time deliver to the Agent for cancellation any Certificates previously authenticated, executed and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Certificates so delivered shall, upon Issuer Order, be promptly cancelled by the Agent. No Certificates shall be authenticated, executed on behalf of the Holder and delivered in lieu of or in exchange for any Certificates cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Agent shall be disposed of by the Agent in accordance with its customary procedures unless otherwise directed by Issuer Order.
(b) If the Company or any Affiliate of the Company shall acquire any Certificate, such acquisition shall not operate as a cancellation of such Certificate unless and until such Certificate is delivered to the Agent cancelled or for cancellation.
SECTION 3.13 Establishment Of Stripped Equity Security Units.
(a) Subject to the next succeeding sentence, a holder may separate the Pledged Notes from the related Purchase Contracts in respect of the Equity Security Units held by such Holder by substituting for such Pledged Notes Treasury Securities that will pay, on the Stock Purchase Date, an amount equal to the aggregate principal amount of such Notes (a "Collateral Substitution"), at any time from and after the date of this Agreement and prior to the earlier of a successful remarketing of the Notes in accordance with the provisions of Section 5.4 hereof or the date, if any, on which the Notes are called for redemption by the Company in connection with a Tax Event Redemption, by (i) depositing with the Collateral Agent Treasury Securities having an aggregate principal amount at maturity equal to the aggregate Stated Amount of such Equity Security Units, and (ii) transferring the related Equity Security Units to the Agent accompanied by a notice to the Agent, substantially in the form of Exhibit D hereto, stating that the Holder has transferred the relevant amount of Treasury Securities to the Collateral Agent and requesting that the Agent instruct the Collateral Agent to release the Pledged Notes underlying such Equity Security Units, whereupon the Agent shall promptly give such instruction to the Collateral Agent, substantially in the form of Exhibit C hereto. Notwithstanding the foregoing, Holders may not effect Collateral Substitution during any period beginning after 5:00 p.m., New York City time, on the fourth Business Day immediately preceding the first Business Day of a Remarketing Period and ending, if applicable, at 9:00 a.m., New York City time, on the fourth Business Day immediately succeeding the third Business Day of such Remarketing Period. Upon receipt of the
Treasury Securities described in clause (i) above and the instruction described in clause (ii) above, in accordance with the terms of the Pledge Agreement, the Collateral Agent will release to the Agent, on behalf of the Holder, such Pledged Notes from the Pledge, free and clear of the Company's security interest therein, and upon receipt thereof the Agent shall promptly:
(i) cancel the related Equity Security Units;
(ii) transfer the Pledged Notes to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver to such Holder a Stripped Equity Security Unit Certificate executed by the Company in accordance with Section 3.3 evidencing (x) the same number of Purchase Contracts as were evidenced by the cancelled Equity Security Units and (y) the amount of Treasury Securities deposited as provided above.
(b) Holders who elect to separate the Pledged Notes from the related Purchase Contract and to substitute Treasury Securities for such Pledged Notes shall be responsible for any fees or expenses payable to the Collateral Agent for its services as Collateral Agent in respect of the substitution, and the Company shall not be responsible for any such fees or expenses.
(c) Collateral Substitutions may be made only in integral multiples of 40 Equity Security Units.
(d) In the event a Holder making a Collateral Substitution pursuant to this Section 3.13 fails to effect a book-entry transfer of the Equity Security Units or fails to deliver an Equity Security Unit Certificate to the Agent after depositing Treasury Securities with the Collateral Agent, the Pledged Notes constituting a part of such Equity Security Unit and any distributions on such Pledged Notes shall be held in the name of the Agent or its nominee in trust for the benefit of such Holder, until such Equity Security Units are so transferred or the Equity Security Unit Certificate is so delivered, as the case may be, or, with respect to an Equity Security Unit Certificate, such Holder provides evidence satisfactory to the Company and the Agent that such Equity Security Unit Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Agent and the Company.
(e) Except as described in this Section 3.13, for so long as the Purchase Contract underlying an Equity Security Unit remains in effect, such Equity Security Units shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Equity Security Units in respect of the Note and the Purchase Contract comprising such Equity Security Units may be acquired, and may be transferred and exchanged, only as an Equity Security Unit.
SECTION 3.14 Reestablishment Of Equity Security Units.
(a) Subject to the next succeeding sentence, a Holder of Stripped Equity Security Units may reestablish Equity Security Units at any time from and after the date of this Agreement and prior to the earlier of a successful remarketing of the Notes in accordance with the provisions of Section 5.4 hereof or the date, if any, on which the Notes are called for redemption by the Company in connection with a Tax Event Redemption, by (i) depositing with the Collateral Agent Notes having an aggregate principal amount equal to the aggregate principal amount at maturity of the Treasury Securities comprising part of the Stripped Equity Security Units and (ii) transferring such Stripped Equity Security Units to the Agent accompanied by a notice to the Agent, substantially in the form of Exhibit D hereto, stating that the Holder has transferred the relevant amount of Notes to the Collateral Agent and requesting that the Agent instruct the Collateral Agent to release the Pledged Treasury Securities underlying such Stripped Equity Security Units, whereupon the Agent shall promptly give such instruction to the Collateral Agent, substantially in the form of Exhibit C hereto. Notwithstanding the foregoing, a Holder may not reestablish Equity Security Units during any period beginning after 5:00 p.m., New York City time, on the fourth Business Day immediately preceding the first Business Day of a Remarketing Period and, if applicable, ending at 9:00 a.m., New York City time, on the fourth business day immediately succeeding the third Business Day of such Remarketing Period. Upon receipt of the Notes described in clause (i) above and the instruction described in clause (ii) above, in accordance with the terms of the Pledge Agreement, the Collateral Agent will release to the Agent, on behalf of the Holder, such Pledged Treasury Securities from the Pledge, free and clear of the Company's security interest therein, and upon receipt thereof the Agent shall promptly:
(i) cancel the related Stripped Equity Security Units;
(ii) transfer the Pledged Treasury Securities to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver an Equity Security Unit Certificate executed by the Company in accordance with Section 3.3 evidencing (x) the same number of Purchase Contracts as were evidenced by the cancelled Stripped Equity Security Units and (y) the principal amount of Notes deposited as provided above.
(b) Equity Security Units may be reestablished only in integral multiples of 40 Stripped Equity Security Units for 40 Equity Security Units.
(c) Except as provided in this Section 3.14, for so long as the Purchase Contract underlying a Stripped Equity Security Unit remains in effect, such Stripped Equity Security Unit shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Stripped Equity Security Unit in respect of the Treasury Security and Purchase Contract comprising such Stripped Equity Security Unit may be acquired, and may be transferred and exchanged, only as a Stripped Equity Security Unit.
(d) Holders of Stripped Equity Security Units who reestablish Equity Security Units shall be responsible for any fees or expenses payable to the Collateral Agent for its services as Collateral Agent in respect of the substitution, and the Company shall not be responsible for any such fees or expenses.
(e) In the event a Holder who reestablishes Equity Security Units pursuant to this Section 3.14 fails to effect a book-entry transfer of the Stripped Equity Security Units or fails to deliver a Stripped Equity Security Unit Certificate to the Agent after depositing Pledged Notes with the Collateral Agent, the Treasury Securities constituting a part of such Stripped Equity Security Units, and any distributions on such Treasury Securities shall be held in the name of the Agent or its nominee in trust for the benefit of such Holder, until such Stripped Equity Security Units are so transferred or the Stripped Equity Security Unit Certificate is so delivered, as the case may be, or, with respect to a Stripped Equity Security Unit Certificate, such Holder provides evidence satisfactory to the Company and the Agent that such Stripped Equity Security Unit Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Agent and the Company.
SECTION 3.15 Transfer Of Collateral Upon Occurrence Of Termination Event. Upon the occurrence of a Termination Event and the transfer to the Agent of the Notes, the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio underlying the Equity Security Units, or the Treasury Securities underlying the Stripped Equity Security Units, as the case may be, pursuant to the terms of the Pledge Agreement, the Agent shall request transfer instructions with respect to such Notes or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, or Treasury Securities, as the case may be, from each Holder by written request mailed to such Holder at its address as it appears in the Equity Security Unit Register or the Stripped Equity Security Unit Register, as the case may be. Upon book-entry transfer of the Equity Security Units or Stripped Equity Security Units, as the case may be, or delivery of an Equity Security Unit Certificate or Stripped Equity Security Unit Certificate to the Agent with such transfer instructions, the Agent shall transfer the Notes, the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio underlying such Equity Security Units, or Treasury Securities underlying the Stripped Equity Security Unit, as the case may be, to such Holder by book-entry transfer, or other appropriate procedures, in accordance with such instructions. In the event a Holder of Equity Security Units or Stripped Equity Security Units fails to effect such transfer or delivery, the Notes, the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Exempt Treasury Portfolio, as the case may be, underlying such Equity Security Units, or Treasury Securities underlying such Stripped Equity Security Units, as the case may be, and any distributions thereon, shall be held in the name of the Agent or its nominee in trust for the benefit of such Holder, until such Equity Security Units or Stripped Equity Security Units, as the case may be, are transferred or the Equity Security Unit Certificate or Stripped Equity Security Unit Certificate is surrendered or such Holder provides satisfactory evidence that such Equity Security Unit Certificate or Stripped Equity Security Unit Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Agent and the Company. In the case of the Treasury Portfolio, Tax Event Treasury Portfolio or any Treasury Securities, the Agent may dispose of the subject securities for cash and pay the applicable portion of such cash to the
Holders in lieu of such Holders' Applicable Ownership Interest in such Treasury Portfolio or Tax Event Treasury Portfolio, or any Treasury Securities, where such Holder would otherwise have been entitled to receive less than $1,000 of any such security.
SECTION 3.16 No Consent To Assumption. Each Holder of Equity Security Units or Stripped Equity Security Units, as the case may be, by acceptance thereof, shall be deemed expressly to have withheld any consent to the assumption under Section 365 of the Bankruptcy Code or otherwise, of the Purchase Contract by the Company, any receiver, liquidator or person or entity performing similar functions or its trustee in the event that the Company becomes the debtor under the Bankruptcy Code or subject to other similar state or federal law providing for reorganization or liquidation.
ARTICLE IV.
THE NOTES
SECTION 4.1 Payment Of Interest; Rights To Interest Payments Preserved; Notice.
(a) A payment on any Note or Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, which is paid on any Payment Date other than a Payment Date with respect to the Stated Amount due on the Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio shall, subject to receipt thereof by the Agent from the Collateral Agent (if the Collateral Agent is the registered owner thereof) as provided by the terms of the Pledge Agreement, be paid to the Person in whose name the Equity Security Unit Certificate (or one or more Predecessor Equity Security Unit Certificates) of which such Note or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, is a part is registered at the close of business on the Record Date for such Payment Date.
(b) Each Equity Security Unit Certificate evidencing Notes or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of any other Equity Security Unit Certificate shall carry the rights to interest accrued and unpaid, which were carried by the Notes or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, underlying such other Equity Security Unit Certificate.
(c) In the case of any Equity Security Units with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date, Merger Early Settlement of the underlying Purchase Contract is effected on a Merger Early Settlement Date, Cash Settlement is effected on the eighth Business Day immediately preceding the Stock Purchase Date, or a Collateral Substitution is effected, in each case on a date that is after any Record Date and on or prior to the next succeeding Payment Date, payments on the Note or the appropriate or Applicable Ownership Interest in the Treasury Portfolio or Tax Event Portfolio, as the case may be, underlying such
Equity Security Units otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Early Settlement, Merger Early Settlement, Cash Settlement or Collateral Substitution, as the case may be, and such payments shall, subject to receipt thereof by the Agent, be payable to the Person in whose name the Equity Security Unit Certificate (or one or more Predecessor Equity Security Unit Certificates) was registered at the close of business on the Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Equity Security Units with respect to which Early Settlement, Merger Early Settlement or Cash Settlement of the underlying Purchase Contract is effected, or with respect to which a Collateral Substitution has been effected, payments on the related Notes or payments on the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, that would otherwise be payable after the applicable Settlement Date or after such Collateral Substitution, as the case may be, shall not be payable hereunder to the Holder of such Equity Security Units; provided, that to the extent that such Holder continues to hold the Separate Notes that formerly comprised a part of such Holder's Equity Security Units, such Holder shall be entitled to receive the payments on such Separate Notes.
(d) By purchasing and accepting the Equity Security Units or the Separate Notes, a Holder of the Equity Security Units or a holder of the Separate Notes, as the case may be, will be deemed to have agreed to treat for all U.S. federal income tax purposes the Notes forming a part of such Equity Security Units or the Separate Notes, as the case may be, as "contingent payment debt instrument" as the term is used in Treasury regulations section 1275-4.
SECTION 4.2 Notice And Voting. Under the terms of the Pledge Agreement, the Agent will be entitled to exercise the voting and any other consensual rights pertaining to the Pledged Notes but only to the extent instructed by the Holders as described below. Upon receipt of notice of any meeting at which holders of Notes are entitled to vote or upon any solicitation of consents, waivers or proxies of holders of Notes, the Agent shall, as soon as practicable thereafter, mail to the Holders of Equity Security Units a notice (a) containing such information as is contained in the notice or solicitation, (b) stating that each Holder on the record date set by the Agent therefor (which, to the extent possible, shall be the same date as the record date for determining the holders of Notes entitled to vote) shall be entitled to instruct the Agent as to the exercise of the voting rights pertaining to the Pledged Notes underlying their Equity Security Units and (c) stating the manner in which such instructions may be given. Upon the written request of the Holders of Equity Security Units on such record date, the Agent shall endeavor insofar as practicable to vote or cause to be voted, in accordance with the instructions set forth in such requests, the maximum number of Pledged Notes as to which any particular voting instructions are received. In the absence of specific instructions from the Holder of an Equity Security Unit, the Agent shall abstain from voting the Pledged Note underlying such Equity Security Units. The Company hereby agrees, if applicable, to solicit Holders of Equity Security Units to timely instruct the Agent in order to enable the Agent to vote such Pledged Notes.
SECTION 4.3 Tax Event Redemption. Upon the occurrence of a Tax Event Redemption prior to the earlier of a successful remarketing of the Notes or the Stock Purchase
Date, the Company shall instruct the Collateral Agent in writing to apply, and upon such written instruction the Collateral Agent shall apply, out of the aggregate Redemption Price for the Notes that are components of Equity Security Units, an amount equal to the aggregate Redemption Amount for the Notes that are components of Equity Security Units to purchase on behalf of the Holders of Equity Security Units the Tax Event Treasury Portfolio and promptly remit the remaining portion of such Redemption Price to the Agent for payment to the Holders of such Equity Security Units. The Tax Event Treasury Portfolio will be substituted for the Pledged Notes, and will be pledged to the Collateral Agent in accordance with the terms of the Pledge Agreement to secure the obligation of each Holder of an Equity Security Unit to purchase the Common Stock under the Purchase Contract constituting a part of such Equity Security Units. Following the occurrence of a Tax Event Redemption prior to the earlier of a successful remarketing of the Notes or the Stock Purchase Date, the Holders of Equity Security Units and the Collateral Agent shall have such security interests, rights and obligations with respect to the Tax Event Treasury Portfolio as the Holder of Equity Security Units and the Collateral Agent had in respect of the Notes, as the case may be, subject to the Pledge thereof as provided in Articles II, III, IV, V and VI of the Pledge Agreement, and any reference herein or in the Certificates to the Note shall be deemed to be a reference to such Tax Event Treasury Portfolio and any reference herein or in the Certificates to interest on the Notes shall be deemed to be a reference to corresponding distributions on the Tax Event Treasury Portfolio. The Company may cause to be made in any Equity Security Unit Certificates thereafter to be issued such change in phraseology and form (but not in substance) as may be appropriate to reflect the substitution of the Tax Event Treasury Portfolio for Notes as collateral.
The Company shall cause notice of any Tax Event Redemption to be mailed, at least 30 calendar days but not more than 60 calendar days before such Tax Event Redemption Date, to each Holder of Notes to be redeemed at its registered address.
Upon the occurrence of a Tax Event Redemption after the successful remarketing of the Notes, the Redemption Price will be payable in cash to the holders of the Notes.
ARTICLE V.
THE PURCHASE CONTRACTS; THE REMARKETING
SECTION 5.1 Purchase Of Shares Of Common Stock.
(a) Each Purchase Contract shall, unless an Early Settlement has occurred in accordance with Section 5.9, or a Merger Early Settlement has occurred in accordance with Section 5.10, obligate the Holder of the related Equity Security Units or Stripped Equity Security Units, as the case may be, to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of newly issued shares of Common Stock equal to the Settlement Rate unless, on or prior to the Stock Purchase Date, there shall have occurred a Termination Event with respect to the Equity Security Units or Stripped Equity Security Units, as the case may be, of which such Purchase Contract is a part. The "Settlement Rate" is equal to,
(i) if the Applicable Market Value (as defined below) is greater than or equal to $51.90 (the "Threshold Appreciation Price"), 0.4817 shares of Common Stock per Purchase Contract,
(ii) if the Applicable Market Value is less than the Threshold Appreciation Price, but is greater than $43.25 (the "Reference Price"), the number of shares of Common Stock per Purchase Contract equal to the Stated Amount of the related Equity Security Units or Stripped Equity Security Units, as the case may be, divided by the Applicable Market Value, and
(iii) if the Applicable Market Value is equal to or less than the Reference Price, 0.5780 shares of Common Stock per Purchase Contract,
in each case subject to adjustment as provided in Section 5.6 (and in each case rounded upward or downward to the nearest 1/10,000th of a share). As provided in Section 5.12, no fractional shares of Common Stock will be issued upon settlement of Purchase Contracts.
(b) No fractional shares of Common Stock will be issued by the
Company with respect to the payment of Contract Adjustment Payments on
the Stock Purchase Date. In lieu of fractional shares otherwise
issuable with respect to such payment of Contract Adjustment Payments,
the Holder will be entitled to receive an amount in cash as provided in
Section 5.12.
(c) The "Applicable Market Value" means the average of the Closing Prices per share of Common Stock on each of the 20 consecutive Trading Days ending on the third Trading Day immediately preceding the Stock Purchase Date. The "Closing Price" of the Common Stock on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is so listed, or if the Common Stock is not so listed on a United States national or regional securities exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock is not so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of the Common Stock on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company. A "Trading Day" means a day on which the Common Stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock.
(d) Each Holder of an Equity Security Unit or Stripped Equity Security Unit, as the case may be, by its acceptance thereof, irrevocably authorizes the Agent to enter
into and perform the related Purchase Contract on its behalf as its
attorney-in-fact (including the execution of Certificates on behalf of
such Holder), agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform its obligations under such Purchase
Contracts, and consents to the provisions hereof, irrevocably
authorizes the Agent as its attorney-in-fact to enter into and perform
the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Notes, the
appropriate Applicable Ownership Interest in the Treasury Portfolio or
Tax Event Treasury Portfolio, as the case may be, or the Treasury
Securities, pursuant to the Pledge Agreement; provided that upon a
Termination Event, the rights of the Holder of such Equity Security
Units or Stripped Equity Security Units, as the case may be, under the
Purchase Contract may be enforced without regard to any other rights or
obligations. Each Holder of an Equity Security Unit or Stripped Equity
Security Unit, as the case may be, by its acceptance thereof, further
covenants and agrees, that, to the extent and in the manner provided in
Section 5.4 and the Pledge Agreement, but subject to the terms thereof,
payments in respect of the Notes, the appropriate Applicable Ownership
Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as
the case may be, in the case of Holders of Equity Security Units, or
the Treasury Securities, in the case of Holders of Stripped Equity
Security Units, to be paid upon settlement of such Holder's obligations
to purchase Common Stock under the Purchase Contract, shall be paid on
the Stock Purchase Date by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract.
(e) Upon registration of transfer of a Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee) under the terms of this Agreement, the Purchase Contracts underlying such Certificate and the Pledge Agreement, and the transferor shall be released from the obligations under this Agreement, the Purchase Contracts underlying the Certificates so transferred and the Pledge Agreement. The Company covenants and agrees, and each Holder of a Certificate, by its acceptance thereof, likewise covenants and agrees, to be bound by the provisions of this paragraph.
SECTION 5.2 Contract Adjustment Payments.
(a) Contract Adjustment Payments shall accrue on each Purchase Contract constituting a part of an Equity Security Unit or Stripped Equity Security Unit at 4.15% per year of the Stated Amount of such Equity Security Units or Stripped Equity Security Units, from and including June 25, 2002 through but excluding the Stock Purchase Date, provided that no Contract Adjustment Payment shall accrue after an Early Settlement or Merger Early Settlement. Subject to Section 5.3 herein, the Company shall pay, on each Payment Date, the Contract Adjustment Payments, if any, payable in respect of each Purchase Contract to the Person in whose name a Certificate (or one or more Predecessor Certificates) is registered at the close of business on the Record Date immediately preceding such Payment Date in such coin or currency of the United States as at the time of payment shall be legal tender for payments. The Contract Adjustment Payments, if any, will be payable at the office in New York, New York, maintained for that purpose or, at the option of the Company, by check mailed to the address of the
Person entitled thereto at such Person's address as it appears on the Register or by wire transfer to the account designated to the Agent by a prior written notice by such Person delivered at least ten Business Days prior to the applicable Payment Date.
(b) Upon the occurrence of a Termination Event, the Company's obligation to pay Contract Adjustment Payments (including any accumulated Deferred Contract Adjustment Payments), if any, shall cease.
(c) Each Certificate delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of (including as a result of a Collateral Substitution or the re-establishment of an Equity Security Unit) any other Certificate shall carry the rights to Contract Adjustment Payments, if any, accumulated and unpaid, and to accumulate Contract Adjustment Payments, if any, which were carried by the Purchase Contracts underlying such other Certificates.
(d) Subject to Sections 5.9 and 5.10, in the case of any Equity Security Units or Stripped Equity Security Units, as the case may be, with respect to which Early Settlement or Merger Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date or a Merger Early Settlement Date, respectively, or in respect of which Cash Settlement of the underlying Purchase Contract is effected on the eighth Business Day immediately preceding the Stock Purchase Date, or with respect to which a Collateral Substitution or an establishment or re-establishment of an Equity Security Unit pursuant to Section 3.13 or Section 3.14 is effected, in each case on a date that is after any Record Date and on or prior to the next succeeding Payment Date, Contract Adjustment Payments on the Purchase Contract underlying such Equity Security Units or Stripped Equity Security Units, as the case may be, otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Cash Settlement, Early Settlement, Merger Early Settlement, Collateral Substitution or establishment or re-establishment of Equity Security Units, and such Contract Adjustment Payments shall be paid to the Person in whose name the Certificate evidencing such Equity Security Units or Stripped Equity Security Units (or one or more Predecessor Certificates) is registered at the close of business on such Record Date. Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Equity Security Units or Stripped Equity Security Units with respect to which Cash Settlement (in the case of Equity Security Units only), Early Settlement or Merger Early Settlement is effected or with respect to which a Collateral Substitution or an establishment or re-establishment of an Equity Security Unit has been effected, Contract Adjustment Payments, if any, that would otherwise be payable after the Early Settlement Date, Merger Early Settlement Date, Collateral Substitution or such establishment or re-establishment with respect to such Purchase Contract shall not be payable.
SECTION 5.3 Deferral Of Contract Adjustment Payments.
(a) The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the
Agent written notice of its election to defer each such deferred Contract Adjustment Payment (specifying the amount to be deferred) at least ten Business Days prior to the earlier of (i) the next succeeding Payment Date or (ii) the date the Company is required to give notice of the Record Date or Payment Date with respect to payment of such Contract Adjustment Payments to the NYSE or other applicable self-regulatory organization or to Holders of the Equity Security Units and Stripped Equity Security Units, but in any event not less than one Business Day prior to such Record Date. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, bear additional Contract Adjustment Payments thereon at the rate of 8.75% per year (computed on the basis of a 360-day year of twelve 30-day months), compounding on each succeeding Payment Date, until paid in full (such deferred installments of Contract Adjustment Payments, if any, together with the additional Contract Adjustment Payments accumulated thereon, being referred to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be due on the next succeeding Payment Date except to the extent that payment is deferred pursuant to this Section 5.3. No Contract Adjustment Payments may be deferred to a date that is after the Stock Purchase Date and no such deferral period may end other than on a Payment Date. If the Purchase Contracts are terminated upon the occurrence of a Termination Event, the Holder's right to receive Contract Adjustment Payments and Deferred Contract Adjustment Payments, if any, will terminate. In the event that the Company elects to defer Contract Adjustment Payments in part, such deferral shall be pro rata in respect of all outstanding Purchase Contracts.
(b) In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date.
(c) In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, the Company may elect to pay each Holder on the Stock Purchase Date, in lieu of a cash payment, a number of shares of Common Stock (in addition to a number of shares of Common Stock equal to the Settlement Rate) equal to (A) the aggregate amount of Deferred Contract Adjustment Payments payable to such Holder (net of any required tax withholding on such Deferred Contract Adjustment Payment, which shall be remitted to the appropriate taxing jurisdiction) divided by (B) the Applicable Market Value.
(d) No fractional shares of Common Stock will be issued by the Company with respect to the payment of Deferred Contract Adjustment Payments on the Stock Purchase Date. In lieu of fractional shares otherwise issuable with respect to such payment of Deferred Contract Adjustment Payments, the Holder will be entitled to receive an amount in cash as provided in Section 5.12.
(e) In the event the Company exercises its option to defer the payment of Contract Adjustment Payments then, until the Deferred Contract Adjustment Payments have been paid, the Company shall not, and shall not permit any subsidiary of the
Company to, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of the Company's Common Stock other than:
(i) purchases, redemptions or acquisitions of shares of Common Stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors or a stock purchase or dividend reinvestment plan, or the satisfaction by the Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its right to defer the Contract Adjustment Payments;
(ii) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one class or series of the Company's Capital Stock for another class or series of the Company's Capital Stock;
(iii) the purchase of fractional interests of the Common Stock pursuant to the conversion or exchange provisions of such Common Stock or the security being converted or exchanged;
(iv) dividends or distributions payable solely in the Company's Common Stock (or rights to acquire Common Stock) or repurchases, acquisitions or redemptions of Common Stock in connection with the issuance or exchange of the Common Stock (or securities convertible into or exchangeable for shares of the Company's Common Stock); or
(v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future.
SECTION 5.4 Payment Of Purchase Price; Remarketing.
(a) Unless a Tax Event Redemption, Termination Event, Merger Early Settlement or Early Settlement has occurred, or a remarketing has not been successful as of June 30, 2005, each Holder of an Equity Security Unit may pay in cash ("Cash Settlement") the Purchase Price for the shares of Common Stock to be purchased pursuant to a Purchase Contract if such Holder notifies the Agent by use of a notice in substantially the form of Exhibit E hereto of its intention to make a Cash Settlement. Such notice shall be made not earlier than 9:00 a.m., New York City time, on the tenth Business Day immediately preceding the Stock Purchase Date and no later than 5:00 p.m., New York City time, on the ninth Business Day immediately preceding the Stock Purchase Date. The Agent shall promptly notify the Collateral Agent of the receipt of such a notice from a Holder intending to make a Cash Settlement.
(i) A Holder of an Equity Security Unit who has so notified the Agent of its intention to make a Cash Settlement is required to pay the Purchase Price to the Collateral Agent prior to 11:00 a.m., New York City time, on the eighth
Business Day immediately preceding the Stock Purchase Date in lawful money of the United States by certified or cashiers' check or wire transfer, in each case payable to or upon the order of the Company. Any cash received by the Collateral Agent will be paid to the Company on the Stock Purchase Date in settlement of the Purchase Contract in accordance with the terms of this Agreement and the Pledge Agreement.
(ii) If a Holder of an Equity Security Unit fails to notify the Agent of its intention to make a Cash Settlement in accordance with paragraph (a) above, or does notify the Agent as provided in paragraph (a)(i) above of its intention to pay the Purchase Price in cash, but fails to make such payment as required by paragraph (a)(i) above, the Holder shall be deemed to have consented to the disposition of the Pledged Notes pursuant to the remarketing to occur in the Remarketing Period commencing the seventh Business Day immediately preceding the Stock Purchase Date as described in paragraph (b) below.
(b) (1) The Company shall engage a nationally recognized investment bank (the "Remarketing Agent") pursuant to the Remarketing Agreement to be mutually agreed on by the Company, the Agent and the Remarketing Agent, but substantially as set forth in Exhibit F hereto, to sell the Notes of Holders of Equity Security Units and holders of Separate Notes that have elected to participate in the remarketing pursuant to the procedures set forth in Section 4.5(d) of the Pledge Agreement. On the seventh Business Day immediately preceding the first Business Day of any Remarketing Period, the Remarketing Agent shall give holders of Separate Notes notice of the remarketing (the form of which notice to be provided by the Company) by release of such information by means of Bloomberg and Reuters newswire or any successor(s) to such service(s). The Agent shall notify, by 10:00 a.m., New York City time, on the third Business Day immediately preceding the first Business Day of any Remarketing Period, the Remarketing Agent and the Collateral Agent of the aggregate number of Notes of Equity Security Unit Holders to be remarketed. On the third Business Day immediately preceding the first Business Day of any Remarketing Period, no later than by 10:00 a.m. New York City time, pursuant to the terms of the Pledge Agreement, the Custodial Agent will notify the Remarketing Agent of the aggregate number of Separate Notes to be remarketed. On the third Business Day immediately preceding the first Business Day of any Remarketing Period, the Collateral Agent and the Custodial Agent, pursuant to the terms of the Pledge Agreement, will deliver for remarketing to the Remarketing Agent all Notes to be remarketed. Upon receipt of such notice from the Custodial Agent and such Notes from the Collateral Agent and the Custodial Agent, the Remarketing Agent will, on the Remarketing Date and on any Subsequent Remarketing Date in accordance with the provisions of Section 5.4(b)(ii) below, use its commercially reasonable best efforts to (i) establish a rate of interest that, in the opinion of the Remarketing Agent, will, when applied to the Notes included in the remarketing, enable the then current aggregate market value of the Notes to have a value equal to approximately, but not less than, 100.50% of the Remarketing Value as of the Remarketing Date or as of any Subsequent Remarketing Date, as the case may be (the "Reset Rate") and (ii) sell such Notes on such date at a price equal to approximately, but not less than, 100.50% of the Remarketing Value. The
Remarketing Agent will deduct as a remarketing fee an amount not exceeding 25 basis points (0.25%) of the total proceeds from the remarketing (the "Remarketing Fee"). The Remarketing Agent will use the remaining proceeds from the successful remarketing to purchase the appropriate U.S. Treasury securities (the "Treasury Portfolio") (with the CUSIP numbers, if any, selected by the Remarketing Agent) described in clauses (i) and (ii) of the definition of Remarketing Value related to the Notes of Holders of Equity Security Units that were remarketed. On or prior to the third Business Day following the Remarketing Date (or in the event that the Notes are not successfully remarketed on the Remarketing Date, on or prior to the third Business Day immediately following the applicable Subsequent Remarketing Date), the Remarketing Agent shall deliver such Treasury Portfolio to the Agent, which shall thereupon deliver such Treasury Portfolio to the Collateral Agent. The Collateral Agent, for the benefit of the Company, will thereupon apply such Treasury Portfolio, in accordance with the Pledge Agreement, to secure such Holders' obligations under the Purchase Contracts. The Remarketing Agent will remit (1) the portion of the proceeds from the remarketing attributable to the Separate Notes to the holders of Separate Notes that were remarketed and (2) the remaining portion of the proceeds, less those proceeds used to purchase the Treasury Portfolio, to the Holders of the Equity Security Units that were remarketed, all determined on a pro rata basis, in each case, net of the remarketing fee, on or prior to the third Business Day following the Remarketing Date (or in the event that the Notes are not successfully remarketed on the Remarketing Date, on or prior to the third Business Day immediately following the applicable Subsequent Remarketing Date for a successful remarketing). Holders whose Notes are so remarketed will not otherwise be responsible for the payment of any Remarketing Fee in connection therewith.
(i) If, in spite of using its commercially reasonable best efforts, the Remarketing Agent cannot establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on the Remarketing Date, the Remarketing Agent will attempt to again establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on each of the two immediately following Business Days. If the Remarketing Agent cannot remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on either of those days, it will attempt to establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on each of the three Business Days immediately preceding July 1, 2005. If the Remarketing Agent cannot establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on any of the three Business Days immediately preceding July 1, 2005, the Remarketing Agent will further attempt to establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on each of the seventh, sixth and fifth Business Days immediately preceding the Stock
Purchase Date. If the Remarketing Agent cannot establish the
Reset Rate and remarket the Notes included in the remarketing
at a price equal to approximately, but not less than, 100.50%
of the Remarketing Value on any of the Remarketing Date or the
two Business Days immediately following the Remarketing Date,
on any of the three Business Days immediately preceding July
1, 2005 or on the seventh or sixth or fifth Business Day
immediately preceding the Stock Purchase Date, the remarketing
on each such date will be deemed to have failed (each, a
"Failed Remarketing"). In addition, if, in spite of using its
commercially reasonable best efforts, the Remarketing Agent
fails to remarket the Notes included in the remarketing at
100.50% of the Remarketing Value in accordance with the terms
of the Pledge Agreement by 4:00 p.m., New York City time, on
the last Business Day in a Remarketing Period, a "Last Failed
Remarketing" will be deemed to have occurred for that
Remarketing Period. Within three Business Days following the
date of any Last Failed Remarketing, the Remarketing Agent
shall return any Notes delivered to it to the Collateral
Agent. In the event of a Last Failed Remarketing on the fifth
Business Day immediately preceding the Stock Purchase Date,
(1) the Reset Rate on the Notes will be determined as set
forth in the Notes and (2) an event of default shall be deemed
to have occurred under this Agreement and the Pledge Agreement
and in accordance with the terms of the Pledge Agreement, the
Collateral Agent, for the benefit of the Company, shall, in
respect of the Notes comprising components of Equity Security
Units, exercise its rights as a secured party with respect to
such Notes, including those actions specified in subsection
(b) (iii) below; provided, that if upon a Last Failed
Remarketing on the fifth Business Day immediately preceding
the Stock Purchase Date, the Collateral Agent delivers a Note
to the Company in full satisfaction of the Holder's obligation
under the related Purchase Contract, any accrued and unpaid
interest on such Note will become payable by the Company to
the Agent for payment to the Holder of the Equity Security
Units to which such Note relates. Such payment will be made by
the Company on or prior to 11:00 a.m., New York City time, on
the Stock Purchase Date in lawful money of the United States
by certified or cashier's check or wire transfer in
immediately available funds payable to or upon the order of
the Agent. The Company will cause a notice of any Last Failed
Remarketing to be released by means of Bloomberg and Reuters
newswire or any successor(s) to such service(s). In addition,
the Company will request, not later than seven nor more than
15 calendar days prior to any Remarketing Period, that the
Depositary notify its participants holding Notes, Equity
Security Units or Stripped Equity Security Units, as the case
may be, of the remarketing.
(ii) With respect to any Notes that constitute part
of Equity Security Units that are subject to a Last Failed
Remarketing on the fifth Business Day immediately preceding
the Stock Purchase Date, the Collateral Agent for the benefit
of the Company reserves all of its rights as a secured party
with respect thereto and, subject to applicable law and
Section 5.4 (e) below, may, among other things, permit the
Company to cause the Notes to be sold or to retain and
cancel such Notes, in either case, in full satisfaction of the Holders' obligations under the Purchase Contracts.
(c) Upon the maturity of the Pledged Treasury Securities underlying the Stripped Equity Security Units and the Pledged Applicable Ownership Interest in the Treasury Portfolio or the Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, underlying the Equity Security Units on the Stock Purchase Date, the Collateral Agent shall remit to the Company an amount equal to the aggregate Purchase Price applicable to such Equity Security Units and Stripped Equity Security Units, as payment for the Common Stock issuable upon settlement thereof without receiving any instructions from the Holders of such Equity Security Units and Stripped Equity Security Units. In the event the payments in respect of the Pledged Treasury Securities, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio underlying Equity Security Units or Stripped Equity Security Units, as the case may be, is in excess of the Purchase Price of the Purchase Contract being settled thereby, the Collateral Agent will distribute such excess to the Agent for the benefit of the Holder of such Equity Security Units or Stripped Equity Security Units, as the case may be, when received.
(d) Any distribution to Holders of excess funds and interest described in Section 5.4(b) and (c) above shall be payable at the office of the Agent in The City of New York maintained for that purpose or, at the option of the Holder or the holder of Separate Notes, as applicable, by check mailed to the address of the Person entitled thereto at such address as it appears on the Register or by wire transfer to an account specified by the Holder or the holder of Separate Notes, as applicable.
(e) The obligations of each Holder to pay the Purchase Price are non-recourse obligations and except to the extent paid by Cash Settlement, Early Settlement or Merger Early Settlement, are payable solely out of the proceeds of any Collateral pledged to secure the obligations of the Holders and in no event will Holders be liable for any deficiency between such payments and the Purchase Price.
(f) Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder of the related Equity Security Units or Stripped Equity Security Units, as the case may be, unless the Company shall have received payment in full for the shares of Common Stock to be purchased thereunder by such Holder in the manner herein set forth.
(g) In the event of a successful remarketing, the interest rate on all of the outstanding Notes (whether or not included in the remarketing) shall be adjusted to the Reset Rate.
SECTION 5.5 Issuance Of Shares Of Common Stock. Unless a Termination Event shall have occurred on or prior to the Stock Purchase Date or an Early Settlement or a Merger Early Settlement shall have occurred, on the Stock Purchase Date, upon its receipt of payment for
the shares of Common Stock purchased by the Holders pursuant to the foregoing provisions of this Article and subject to Section 5.6, the Company shall issue and deposit with the Agent, for the benefit of the Holders of the Outstanding Units, one or more certificates representing the newly issued shares of Common Stock registered in the name of the Agent (or its nominee) as custodian for the Holders (such certificates for shares of Common Stock, together with any dividends or distributions for which a record date and payment date for such dividend or distribution has occurred after the Stock Purchase Date, being hereinafter referred to as the "Purchase Contract Settlement Fund") to which the Holders are entitled hereunder. Subject to the foregoing, upon surrender of a Certificate to the Agent on or after the Stock Purchase Date, together with settlement instructions thereon duly completed and executed, the Holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Common Stock which such Holder is entitled to receive pursuant to the provisions of this Article V (after taking into account all Equity Security Units and Stripped Equity Security Units then held by such Holder) together with cash in lieu of fractional shares as provided in Section 5.12 and any dividends or distributions with respect to such shares constituting part of the Purchase Contract Settlement Fund, but without any interest thereon, and the Certificate so surrendered shall forthwith be cancelled. Such shares shall be registered in the name of the Holder or the Holder's designee as specified in the settlement instructions provided by the Holder to the Agent. If any shares of Common Stock issued in respect of a Purchase Contract are to be registered to a Person other than the Person in whose name the Certificate evidencing such Purchase Contract is registered, no such registration shall be made unless the Person requesting such registration has paid any transfer and other taxes required by reason of such registration in a name other than that of the registered Holder of such Certificate or has established to the satisfaction of the Company that such tax either has been paid or is not payable.
SECTION 5.6 Adjustment Of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) Stock Dividends. In case the Company shall pay or make a dividend or other distribution on the Common Stock in Common Stock, the Settlement Rate, as in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by dividing such Settlement Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (1), the number of shares of Common Stock at the time outstanding shall not include shares held in the treasury of the Company but shall include any shares issuable in respect of any scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company.
(2) Stock Purchase Rights. In case the Company shall issue rights, options or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of the Common Stock on the date fixed for the determination of stockholders entitled to receive such rights, options or warrants (other than pursuant to a dividend reinvestment, share purchase or similar plan), the Settlement Rate in effect at the opening of business on the day following the date fixed for such determination shall be increased by dividing such Settlement Rate by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such Current Market Price and the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (2), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include any shares issuable in respect of any scrip certificates issued in lieu of fractions of shares of Common Stock.
(3) Stock Splits; Reverse Splits. In case outstanding shares of Common Stock shall be subdivided or split into a greater number of shares of Common Stock, the Settlement Rate in effect at the opening of business on the day following the day upon which such subdivision or split becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Settlement Rate in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increase or reduction, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision, split or combination becomes effective.
(4) Debt or Asset Distributions. (i) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of Capital Stock of the Company, securities, cash or other assets (excluding any dividend or distribution covered by clause (1) above or (2) above and any dividend or distribution paid exclusively in cash and any dividend, shares of capital stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit in the case of a Spin-Off referred to in the next paragraph), the Settlement Rate shall be adjusted so that the same shall equal the rate determined by dividing the Settlement Rate in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by a fraction, the numerator of
which shall be the Current Market Price per share of the
Common Stock on the date fixed for such determination less the
then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and
described in a Board Resolution filed with the Agent) of the
portion of the evidences of indebtedness, shares of Capital
Stock of the Company, securities, cash or other assets so
distributed applicable to one share of Common Stock and the
denominator of which shall be such Current Market Price per
share of the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders
entitled to receive such distribution. In any case in which
this paragraph (4) is applicable, paragraph (2) of this
Section shall not be applicable.
(ii) In the case of a Spin-Off, the Settlement Rate in effect immediately before the close of business on the record date fixed for determination of stockholders entitled to receive that distribution will be increased by multiplying the Settlement Rate by a fraction, the numerator of which is the Current Market Price per share of the Common Stock plus the Fair Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Common Stock and the denominator of which is the Current Market Price per share of the Common Stock. Any adjustment to the settlement rate under this paragraph 4(ii) will occur at the earlier of (1) the tenth Trading Day from, and including, the effective date of the Spin-Off and (2) the date of the securities being offered in the "Initial Public Offering" of the Spin-Off, if that Initial Public Offering is effected simultaneously with the Spin-Off. For purposes of this Section 5.6(a)(4)(ii), the term "Initial Public Offering" means the first time securities of the same class or type as the securities being distributed in the spin-off are offered to the public for cash in a bona fide offering.
(5) Cash Distributions. In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding any cash that is distributed in a Reorganization Event to which Section 5.6(b) applies or as part of a distribution referred to in paragraph (4) of this Section) (i) in an aggregate amount that, combined together with (ii) the aggregate amount of any other distributions to all holders of its Common Stock made exclusively in cash within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this paragraph (5) or paragraph (6) of this Section has been made and (iii) the aggregate of any cash plus the fair market value as of the date of the expiration of the tender or exchange offer referred to below (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of consideration payable in respect of any tender or exchange offer by the Company or any of its subsidiaries for all or any portion of the Common Stock concluded within the 12 months preceding the date of payment of the distribution described in clause (i) above and in respect of which no adjustment pursuant to this paragraph (5) or paragraph (6)
of this Section has been made, exceeds 15% of the product of the Current Market Price per share of the Common Stock on the date for the determination of holders of shares of Common Stock entitled to receive such distribution times the number of shares of Common Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date for determination, the Settlement Rate shall be increased so that the same shall equal the rate determined by dividing the Settlement Rate in effect immediately prior to the close of business on the date fixed for determination of the stockholders entitled to receive such distribution by a fraction (A) the numerator of which shall be equal to the Current Market Price per share of the Common Stock on the date fixed for such determination less an amount equal to the quotient of (x) the combined amount distributed or payable in the transactions described in clauses (i), (ii) and (iii) above and (y) the number of shares of Common Stock outstanding on such date for determination and (B) the denominator of which shall be equal to the Current Market Price per share of the Common Stock on such date for determination.
(6) Tender Offers. In case (i) a tender or exchange offer made by the Company or any subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of Purchased Shares) of an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) that combined together with (ii) the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution), as of the expiration of such tender or exchange offer, of consideration payable in respect of any other tender or exchange offer, by the Company or any subsidiary of the Company for all or any portion of the Common Stock expiring within the 12 months preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to paragraph (5) of this Section or this paragraph (6) has been made and (iii) the aggregate amount of any distributions to all holders of the Company's Common Stock made exclusively in cash within the 12 months preceding the expiration of such tender or exchange offer and in respect of which no adjustment pursuant to paragraph (5) of this Section or this paragraph (6) has been made, exceeds 15% of the product of the Current Market Price per share of the Common Stock as of the last time (the "Expiration Time") tenders could have been made pursuant to such tender or exchange offer (as it may be amended) times the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Settlement Rate shall be adjusted so that the same shall equal the rate determined by dividing the Settlement Rate immediately prior to the close of business on the date of the Expiration Time by a fraction (A) the numerator of which shall be equal to (x) the product of (I) the
Current Market Price per share of the Common Stock on the date
of the Expiration Time and (II) the number of shares of Common
Stock outstanding (including any tendered shares) on the
Expiration Time less (y) the amount of cash plus the fair
market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the
transactions described in clauses (i), (ii) and (iii) above
(assuming in the case of clause (i) the acceptance, up to any
maximum specified in the terms of the tender or exchange
offer, of Purchased Shares), and (B) the denominator of which
shall be equal to the product of (x) the Current Market Price
per share of the Common Stock as of the Expiration Time and
(y) the number of shares of Common Stock outstanding
(including any tendered shares) as of the Expiration Time less
the number of all shares validly tendered and not withdrawn as
of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the "Purchased
Shares").
(7) Reclassification. The reclassification of Common Stock into securities including securities other than Common Stock (other than any reclassification upon a Reorganization Event to which Section 5.6(b) applies) shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of stockholders entitled to receive such distribution" and the "date fixed for such determination" within the meaning of paragraph (4) of this Section), and (ii) a subdivision, split or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the day upon which such subdivision or split becomes effective" or "the day upon which such combination becomes effective," as the case may be, and "the day upon which such subdivision, split or combination becomes effective" within the meaning of paragraph (3) of this Section).
(8) "Current Market Price". The "Current Market Price" of the Common Stock means (a) on any day the average of the Sales Prices for the 5 consecutive Trading Days preceding the earlier of the day preceding the day in question and the day before the "ex date" with respect to the issuance or distribution requiring computation, (b) in the case of any Spin-Off that is effected simultaneously with an Initial Public Offering of the securities being distributed in the Spin-Off, the Sale Price of the Common Stock on the Trading Day on which the initial public offering price of the securities being distributed in the Spin-Off is determined, and (c) in the case of any other Spin-Off, the average of the Sale Prices of the Common Stock over the first 10 Trading Days after the effective date of such Spin-Off. For purposes of this paragraph, the term "ex date," when used with respect to any issuance or distribution, shall mean the first date on which the Common Stock trades regular way on such exchange or in such market without the right to receive such issuance or distribution.
(9) Calculation of Adjustments. All adjustments to
the Settlement Rate shall be calculated to the nearest
1/10,000th of a share of Common Stock (or if there is not a
nearest 1/10,000th of a share to the next lower 1/10,000th of
a share). No adjustment in the Settlement Rate shall be
required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, that any
adjustments which by reason of this subparagraph are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. If an adjustment is made
to the Settlement Rate pursuant to paragraph (1), (2), (3),
(4), (5), (6), (7) or (10) of this Section 5.6(a), an
adjustment shall also be made to the Applicable Market Value
solely to determine which of clauses (i), (ii) or (iii) of the
definition of Settlement Rate in Section 5.1(a) will apply on
the Stock Purchase Date. Such adjustment shall be made by
multiplying the Applicable Market Value by a fraction, the
numerator of which shall be the Settlement Rate immediately
after such adjustment pursuant to paragraph (1), (2), (3),
(4), (5), (6), (7) or (10) of this Section 5.6(a) and the
denominator of which shall be the Settlement Rate immediately
before such adjustment; provided, that if such adjustment to
the Settlement Rate is required to be made pursuant to the
occurrence of any of the events contemplated by paragraph (1),
(2), (3), (4), (5), (7) or (10) of this Section 5.6(a) during
the period taken into consideration for determining the
Applicable Market Value, appropriate and customary adjustments
shall be made to the Settlement Rate.
(10) Increase of Settlement Rate. The Company may make such increases in the Settlement Rate, in addition to those required by this Section, as it considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Common Stock resulting from any dividend or distribution of stock or issuance of rights or warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event. In the event of
(1) any consolidation or merger of the Company with or into another Person (other than a merger or consolidation in which the Company is the continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation is not exchanged for cash, securities or other property of the Company or another corporation),
(2) any sale, transfer, lease or conveyance to another Person of the property of the Company as an entirety or substantially as an entirety,
(3) any statutory exchange of securities of the Company with another Person (other than in connection with a merger or acquisition), or
(4) any liquidation, dissolution or winding up of the Company other than as a result of or after the occurrence of a Termination Event
(any such event, a "Reorganization Event"), each share of Common Stock covered by each Purchase Contract forming a part of an Equity Security Unit or Stripped Equity Security Unit, as the case may be, immediately prior to such Reorganization Event shall, after such Reorganization Event, be converted for purposes of the Purchase Contract into the kind and amount of securities, cash and other property receivable in such Reorganization Event (without any interest thereon, and without any right to dividends or distribution thereon which have a record date that is prior to the Stock Purchase Date) per share of Common Stock by a holder of Common Stock that (i) is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be (any such Person, a "Constituent Person"), or an Affiliate of a Constituent Person to the extent such Reorganization Event provides for different treatment of Common Stock held by Affiliates of the Company and non-Affiliates, and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash and other property receivable upon such Reorganization Event (provided that if the kind or amount of securities, cash and other property receivable upon such Reorganization Event is not the same for each share of Common Stock held immediately prior to such Reorganization Event by other than a Constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("Non-electing Share"), then for the purpose of this Section the kind and amount of securities, cash and other property receivable upon such Reorganization Event by each Non-electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-electing Shares). On the Stock Purchase Date, the Settlement Rate then in effect will be applied to the value on the Stock Purchase Date of such securities, cash or other property.
In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of the
Company or, in the event of a liquidation or dissolution of the Company, the
Company or a liquidating trust created in connection therewith, shall execute
and deliver to the Agent an agreement supplemental hereto providing that the
Holder of each Outstanding Unit shall have the rights provided by this Section
5.6. Such supplemental agreement shall provide for adjustments which, for events
subsequent to the effective date of such supplemental agreement, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section. The above provisions of this Section shall similarly apply to
successive Reorganization Events.
SECTION 5.7 Notice Of Adjustments And Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the Company shall:
(i) forthwith compute the Settlement Rate and the Applicable Market Value in accordance with Section 5.6 and prepare and transmit to the Agent an Officer's Certificate setting forth the Settlement Rate and the Applicable Market Value, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based; and
(ii) as soon as practicable following the occurrence of an event that requires an adjustment to the Settlement Rate pursuant to Section 5.6 (or if the
Company is not aware of such occurrence, as soon as practicable after becoming so aware), provide a written notice to the Holders of the Equity Security Units and Stripped Equity Security Units of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the Settlement Rate and the Applicable Market Value was determined and setting forth the adjusted Settlement Rate and the Applicable Market Value.
(b) The Agent shall not at any time be under any duty or responsibility to any Holder of Equity Security Units or Stripped Equity Security Units to determine whether any facts exist which may require any adjustment of the Settlement Rate and the Applicable Market Value, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at the time be issued or delivered with respect to any Purchase Contract; and the Agent makes no representation with respect thereto. The Agent shall not be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock pursuant to a Purchase Contract or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article.
SECTION 5.8 Termination Event; Notice. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including the rights and obligations of Holders to purchase Common Stock, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Stock Purchase Date, a Termination Event shall have occurred. Upon and after the occurrence of a Termination Event, the Equity Security Units shall thereafter represent the right to receive the Notes or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Tax Event Treasury Portfolio, as the case may be, forming a part of such Equity Security Units, and the Stripped Equity Security Units shall thereafter represent the right to receive the Treasury Securities forming a part of such Stripped Equity Security Units, in each case in accordance with the provisions of Section 4.3 of the Pledge Agreement. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two Business Days thereafter give written notice to the Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Register.
SECTION 5.9 Early Settlement.
(a) Subject to and upon compliance with the provisions of this
Section 5.9, Purchase Contracts underlying Equity Security Units or
Stripped Equity Security Units having an aggregate Stated Amount equal
to $1,000 or an integral multiple thereof, may, at the option of the
Holder thereof, be settled early ("Early Settlement") not later than
11:00 a.m., New York City time, on the eleventh Business Day
immediately preceding the Stock Purchase Date; provided, however, that
no Holder may effect an Early Settlement during the period starting at
5:00 p.m., New York City time, on the fourth Business Day immediately
preceding the first Business Day of any Remarketing Period and ending
9:00 a.m., New York City time, on the fourth Business Day immediately
succeeding the third Business Day in such Remarketing Period. In order to exercise the right to effect Early Settlement with respect to any Purchase Contracts, the Holder of the Certificate evidencing the related Equity Security Units or Stripped Equity Security Units, as the case may be, shall deliver such Certificate to the Agent at the Corporate Trust Office duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early on the reverse thereof duly completed and accompanied by payment payable to the Company in immediately available funds in an amount (the "Early Settlement Amount") equal to (A) the product of (i) the Stated Amount of such Equity Security Units or Stripped Equity Security Units, as the case may be, multiplied by (ii) the number of Purchase Contracts with respect to which the Holder has elected to effect Early Settlement, plus (B) if such delivery is made with respect to any Purchase Contracts during the period from the close of business on any Record Date next preceding any Payment Date to the opening of business on such Payment Date, an amount equal to the Contract Adjustment Payments, if any, payable on such Payment Date with respect to such Purchase Contracts; provided that no payment shall be required pursuant to clause (B) of this sentence if the Company shall have elected to defer the Contract Adjustment Payments that would otherwise be payable on such Payment Date. Except as provided in the immediately preceding sentence and subject to Section 5.2(d), no payment or adjustment shall be made upon Early Settlement of any Purchase Contract on any Contract Adjustment Payments accumulated on such Purchase Contract or on account of any dividends on the Common Stock issued upon such Early Settlement. If the foregoing requirements are first satisfied with respect to Purchase Contracts underlying any Equity Security Units or Stripped Equity Security Units, as the case may be, at or prior to 5:00 p.m., New York City time, on a Business Day, such day shall be the "Early Settlement Date" with respect to such Equity Security Units or Stripped Equity Security Units, as the case may be, and if such requirements are first satisfied after 5:00 p.m., New York City time, on a Business Day or on a day that is not a Business Day, the "Early Settlement Date" with respect to such Equity Security Units or Stripped Equity Security Units, as the case may be, shall be the next succeeding Business Day.
If the Treasury Portfolio or the Tax Event Treasury Portfolio has replaced the Notes as a component of the Equity Security Units following the occurrence of a successful remarketing of the Notes or a Tax Event Redemption Date, respectively, holders of Equity Security Units may effect Early Settlement only in multiples of 80,000 Equity Security Units.
(b) Upon Early Settlement of any Purchase Contract by the Holder of the related Equity Security Units or Stripped Equity Security Units, as the case may be, the Company shall issue, and the Holder shall be entitled to receive, 0.4817 shares of Common Stock on account of such Purchase Contract (the "Early Settlement Rate"). The Early Settlement Rate shall be adjusted in the same manner and at the same time as the Settlement Rate is adjusted. As promptly as practicable after Early Settlement of Purchase Contracts in accordance with the provisions of this Section 5.9, the Company shall issue and shall deliver to the Agent at the Corporate Trust Office a certificate or certificates for the full number of shares of Common Stock issuable upon such Early
Settlement together with payment in lieu of any fraction of a share, as provided in Section 5.12.
(c) No later than the third Business Day after the applicable Early Settlement Date the Company shall cause (i) the shares of Common Stock issuable upon Early Settlement of Purchase Contracts to be issued and delivered, and (ii) the related Pledged Notes or Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, in the case of Equity Security Units, or the related Pledged Treasury Securities, in the case of Stripped Equity Security Units, to be released from the Pledge by the Collateral Agent and transferred, in each case, to the Agent for delivery to the Holder thereof or the Holder's designee.
(d) Upon Early Settlement of any Purchase Contracts, and subject to receipt of shares of Common Stock from the Company and the Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio, Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio or Pledged Treasury Securities, as the case may be, from the Collateral Agent, as applicable, the Agent shall, in accordance with the instructions provided by the Holder thereof on the applicable form of Election to Settle Early on the reverse of the Certificate evidencing the related Equity Security Units or Stripped Equity Security Units, as the case may be, (i) transfer to the Holder the Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio, Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio or Pledged Treasury Securities, as the case may be, forming a part of such Equity Security Units or Stripped Equity Security Units, as the case may be, and (ii) deliver to the Holder a certificate or certificates for the full number of shares of Common Stock issuable upon such Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 5.12.
(e) In the event that Early Settlement is effected with respect to Purchase Contracts underlying less than all the Equity Security Units or Stripped Equity Security Units, as the case may be, evidenced by a Certificate, upon such Early Settlement the Company shall execute and the Agent shall authenticate, execute and deliver to the Holder thereof, at the expense of the Company, a Certificate evidencing the Equity Security Units or Stripped Equity Security Units, as the case may be, as to which Early Settlement was not effected.
SECTION 5.10 Early Settlement Upon Merger.
(a) In the event of a merger or consolidation of the Company of the type described in clause (1) of Section 5.6(b) in which the Common Stock outstanding immediately prior to such merger or consolidation is exchanged for consideration consisting of at least 30% cash or cash equivalents (any such event a "Cash Merger"), then the Company (or the successor to the Company hereunder) shall be required to offer the Holder of each Equity Security Unit or Stripped Equity Security Unit, as the case may be, the right to settle the Purchase Contract underlying such Equity Security Units or Stripped Equity Security Units, as the case may be, prior to the Stock Purchase Date ("Merger Early Settlement") as provided herein. On or before the fifth Business Day
after the consummation of a Cash Merger, the Company or, at the request and expense of the Company, the Agent, shall give all Holders notice of the occurrence of the Cash Merger and of the right of Merger Early Settlement arising as a result thereof. The Company shall also deliver a copy of such notice to the Agent and the Collateral Agent.
Each such notice shall contain:
(i) the date, which shall be not less than 20 nor more than 30 calendar days after the date of such notice, on which the Merger Early Settlement will be effected (the "Merger Early Settlement Date");
(ii) the date, which shall be on or one Business Day prior to the Merger Early Settlement Date, by which the Merger Early Settlement right must be exercised;
(iii) the Settlement Rate in effect as a result of such Cash Merger and the kind and amount of securities, cash and other property receivable by the Holder upon settlement of each Purchase Contract pursuant to Section 5.6(b); and
(iv) the instructions a Holder must follow to exercise the Merger Early Settlement right.
(b) To exercise a Merger Early Settlement right, a Holder shall deliver to the Agent at the Corporate Trust Office on or before 5:00 p.m., New York City time, on the date specified in the notice (which date shall be no later than 5:00 p.m., New York City time, on the Business Day immediately preceding the Merger Early Settlement Date) the Certificate(s) evidencing the Equity Security Units or Stripped Equity Security Units, as the case may be, with respect to which the Merger Early Settlement right is being exercised duly endorsed for transfer to the Company or in blank with the form of Election to Settle Early on the reverse thereof duly completed and accompanied by payment payable to the Company in the form of a wire transfer of immediately available funds or a certified or cashier's check in an amount equal to the Early Settlement Amount (the "Merger Early Settlement Amount").
(c) On the Merger Early Settlement Date, the Company shall deliver or cause to be delivered (i) the cash, securities and other property to be received by such exercising Holder, equal to the Settlement Rate as adjusted pursuant to Section 5.6, in respect of the number of Purchase Contracts for which such Merger Early Settlement right was exercised, and (ii) the related Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, in the case of Equity Security Units, or Pledged Treasury Securities, in the case of Stripped Equity Security Units, to be released from the Pledge by the Collateral Agent and transferred, in each case, to the Agent for delivery to the Holder thereof or the Holder's designee. In the event a Merger Early Settlement right shall be exercised by a Holder in accordance with the terms hereof, all references herein to Stock Purchase Date shall be deemed to refer to such Merger Early Settlement Date.
(d) Upon Merger Early Settlement of any Purchase Contracts, and subject to receipt of such net cash, securities or other property from the Company and the Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio, Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio or Pledged Treasury Securities, as the case may be, from the Collateral Agent, as applicable, the Agent shall, in accordance with the instructions provided by the Holder thereof on the applicable form of Election to Settle Early on the reverse of the Certificate evidencing the related Equity Security Units or Stripped Equity Security Units, as the case may be, (i) transfer to the Holder the Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio, Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, or Pledged Treasury Securities, as the case may be, forming a part of such Equity Security Units or Stripped Equity Security Units, as the case may be, and (ii) deliver to the Holder such cash, securities or other property issuable upon such Merger Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 5.12.
(e) In the event that Merger Early Settlement is effected with respect to Purchase Contracts underlying less than all the Equity Security Units or Stripped Equity Security Units, as the case may be, evidenced by a Certificate, upon such Merger Early Settlement the Company (or the successor to the Company hereunder) shall execute and the Agent shall authenticate, execute and deliver to the Holder thereof, at the expense of the Company, a Certificate evidencing the Equity Security Units or Stripped Equity Security Units, as the case may be, as to which Merger Early Settlement was not effected.
If the Treasury Portfolio or the Tax Event Treasury Portfolio has replaced the Notes as a component of the Equity Security Units following the occurrence of a successful remarketing of the Notes or a Tax Event Redemption Date, respectively, holders of Equity Security Units may effect Merger Early Settlement only in multiples of 80,000 Equity Security Units.
SECTION 5.11 Charges And Taxes. The Company will pay all stock transfer and similar taxes attributable to the initial issuance and delivery of the shares of Common Stock pursuant to the Purchase Contracts and in payment of any Deferred Contract Adjustment Payments; provided, that the Company shall not be required to pay any such tax or taxes which may be payable in respect of any exchange of or substitution for a Certificate evidencing an Equity Security Unit or Stripped Equity Security Unit, as the case may be, or any issuance of a share of Common Stock in a name other than that of the registered Holder of a Certificate surrendered in respect of the Equity Security Units and Stripped Equity Security Units evidenced thereby, other than in the name of the Agent, as custodian for such Holder, and the Company shall not be required to issue or deliver such share certificates or Certificates unless and until the Person or Persons requesting the transfer or issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid or that no such tax is due.
SECTION 5.12 No Fractional Shares. No fractional shares or scrip representing fractional shares of Common Stock shall be issued or delivered upon settlement on the Stock Purchase Date or upon Early Settlement or Merger Early Settlement of any Purchase Contracts.
If Certificates evidencing more than one Purchase Contract shall be surrendered for settlement at one time by the same Holder, the number of full shares of Common Stock which shall be delivered upon settlement shall be computed on the basis of the aggregate number of Purchase Contracts evidenced by the Certificates so surrendered. Instead of any fractional share of Common Stock which would otherwise be deliverable upon settlement of any Purchase Contracts on the applicable Settlement Date or upon Early Settlement or Merger Early Settlement, the Company, through the Agent, shall make a cash payment in respect of such fractional shares in an amount equal to the value of such fractional shares times the Applicable Market Value. The Company shall provide the Agent from time to time with sufficient funds to permit the Agent to make all cash payments required by this Section 5.12 in a timely manner.
SECTION 5.13 Registration Statement and Prospectus. To permit and
enable the Holders to exercise their rights of Cash Settlement, Early Settlement
or Merger Early Settlement under Section 5.4(a), 5.9 or 5.10, as the case may
be, if and to the extent required by applicable law, regulations or
interpretations in effect at the time in the view of counsel to the Company, the
Company shall use commercially reasonable efforts, (i) to have a registration
statement relating to the Common Stock effective under the Securities Act and
(ii) to furnish a current final prospectus and, if applicable, a final
prospectus supplement, in each case in a form that may be used in connection
with the settlement and delivery of the Common Stock pursuant to such Cash
Settlement, Early Settlement or Merger Early Settlement under Section 5.4(a),
5.9 or 5.10, as applicable. The Company shall also take all such actions as may
(upon advice of counsel to the Company) be necessary or desirable under state
securities or blue sky laws in connection with any such Cash Settlement, Early
Settlement or Merger Early Settlement under Section 5.4(a), 5.9 or 5.10, as
applicable. The Company shall pay all expenses relating thereto.
ARTICLE VI.
REMEDIES
SECTION 6.1 Unconditional Right Of Holders To Purchase Common Stock. The Holder of any Equity Security Units or Stripped Equity Security Units, as the case may be, shall have the right, which is absolute and unconditional,
(a) subject to the right of the Company to defer payment thereof pursuant to Section 5.3, and to the forfeiture of any Deferred Contract Adjustment Payments upon Early Settlement pursuant to Section 5.9(a) or upon Merger Early Settlement pursuant to Section 5.10 or upon the occurrence of a Termination Event, to receive payment of each installment of the Contract Adjustment Payments, if any, with respect to the Purchase Contract constituting a part of such Equity Security Units or Stripped Equity Security Units, as the case may be, on the respective Payment Date for such Equity Security Units or Stripped Equity Security Units, as the case may be, and
(b) to purchase Common Stock pursuant to the Purchase Contract constituting a part of such Equity Security Units or Stripped Equity Security Units and to institute suit for the enforcement of any such right to purchase Common Stock, and such rights shall not be impaired without the consent of such Holder.
SECTION 6.2 Restoration Of Rights And Remedies. If any Holder has instituted any proceeding to enforce any right or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder, then and in every such case, subject to any determination in such proceeding, the Company and such Holder shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of such Holder shall continue as though no such proceeding had been instituted.
SECTION 6.3 Rights And Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Certificates in the last paragraph of Section 3.10, no right or remedy herein conferred upon or reserved to the Holders 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.
SECTION 6.4 Delay or Omission Not Waiver. No delay or omission of any Holder to exercise any right or remedy upon a default shall impair any such right or remedy or constitute a waiver of any such right. Every right and remedy given by this Article or by law to the Holders may be exercised from time to time, and as often as may be deemed expedient, by such Holders.
SECTION 6.5 Undertaking For Costs. All parties to this Agreement agree, and each Holder of an Equity Security Unit or Stripped Equity Security Unit, as the case may be, by its acceptance of such Equity Security Units or Stripped Equity Security Units, as the case may be, 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 Agreement, or in any suit against the Agent for any action taken, suffered or omitted by it as Agent, 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; provided that the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Agent, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the Outstanding Units, or to any suit instituted by any Holder for the enforcement of distributions on any Notes on any Purchase Contract on or after the respective Payment Date therefor in respect of any Equity Security Units or Stripped Equity Security Units, as the case may be, held by such Holder, or for enforcement of the right to purchase shares of Common Stock under the Purchase Contract constituting part of any Equity Security Units or Stripped Equity Security Units, as the case may be, held by such Holder.
SECTION 6.6 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 Agreement; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE VII.
THE AGENT
SECTION 7.1 Certain Duties, Rights And Immunities.
(a) The Agent shall act as agent for the Holders of the Equity Security Units and Stripped Equity Security Units hereunder with such powers as are specifically vested in the Agent by the terms of this Agreement, the Pledge Agreement, the Remarketing Agreement, the Notes and the Equity Security Units and Stripped Equity Security Units, and any documents evidencing thereof or related thereto (the "Transaction Documents"), together with such other powers as are reasonably incidental thereto. The Agent:
(1) shall have no duties or responsibilities except those expressly set forth in the Transaction Documents and no implied covenants or obligations shall be inferred from any Transaction Documents against the Agent, nor shall the Agent be bound by the provisions of any agreement by any party hereto beyond the specific terms hereof;
(2) shall be entitled conclusively to rely upon (x) any certification, order, judgment, opinion, notice or other communication (including, without limitation, any thereof by telephone or facsimile) reasonably believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons (without being required to determine the correctness of any fact stated therein), (y) the truth of the statements and the correctness of the opinions expressed therein and (z) advice and statements of legal counsel and other experts selected by the Agent;
(3) as to any matters not expressly provided for by any Transaction Document, shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Company or the Holders in accordance with the Transaction Documents;
(4) shall not be responsible for any recitals contained in any Transaction Document, or in any certificate or other document referred to or provided for in, or received by it under, any Transaction Document or the Equity Security Units or Stripped Equity Security Units, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Transaction Document (other than as against the Agent) or the Equity Security Units or Stripped Equity Security Units or any other document referred to or provided for herein or therein or for any failure by the Company, any Holder or any other Person (except the Agent) to perform any of its obligations hereunder or thereunder or for the perfection, priority or, except as expressly required hereby,
existence, validity, perfection or maintenance of any security interest created under the Pledge Agreement, or for the use or application by the Company of the proceeds in respect of the Purchase Contracts;
(5) shall not be required to initiate or conduct any litigation or collection proceedings hereunder;
(6) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other document or instrument referred to or provided for herein or in connection herewith or therewith, except for its own gross negligence, bad faith or willful misconduct; and
(7) shall not be required to advise any party as to selling or retaining, or taking or refraining from taking any action with respect to, the Equity Security Units or Stripped Equity Security Units or other rights under any Transaction Document.
(b) No provision of any Transaction Document shall be construed to relieve the Agent from liability for its own negligent action, its own negligent failure to act, its own bad faith, or its own willful misconduct, except that:
(1) this paragraph (b) shall not be construed to limit the effect of paragraph (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Agent was grossly negligent in ascertaining the pertinent facts; and
(3) in no event shall the Agent be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder.
(c) In no event shall the Agent or its officers, employees or agents be liable for any special, indirect, individual, punitive or consequential loss or damages, lost profits or loss of business, arising in connection with any Transaction Document, whether or not the likelihood of such loss or damage was known to the Agent, and regardless of the form of action.
(d) Whether or not therein expressly so provided, every provision of every Transaction Document relating to the conduct or affecting the liability of or affording protection to the Agent shall be subject to the provisions of this Section.
(e) The Agent is authorized to execute and deliver the Pledge Agreement and the Remarketing Agreement and any supplement thereto in its capacity as Agent.
(f) The Agent shall have no liability whatsoever for the action or inaction of any Clearing Agency or any book-entry system thereof. In no event shall any Clearing
Agency or any book-entry system thereof be deemed an agent or subcustodian of the Agent.
(g) The Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under any Transaction Document arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; acts of terrorism; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority; governmental actions; or inability to obtain labor, material, equipment or transportation.
SECTION 7.2 Notice Of Default. Within 30 days after the occurrence of any default by the Company hereunder of which a Responsible Officer of the Agent has actual knowledge, the Agent shall transmit by mail to the Company and the Holders of Equity Security Units and Stripped Equity Security Units, as their names and addresses appear in the Register, notice of such default hereunder, unless such default shall have been cured or waived.
SECTION 7.3 Certain Rights Of Agent. Subject to the provisions of
Section 7.1:
(a) request or direction of the Company mentioned herein shall be sufficiently evidenced by an Officer's Certificate, Issuer Order or Issuer Request, and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution;
(b) whenever in the administration of this Agreement the Agent shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Agent (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate of the Company;
(c) the Agent 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;
(d) the Agent 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, other evidence of indebtedness or other paper or document, but the Agent, in its discretion, may make reasonable further inquiry or investigation into such facts or matters related to the execution, delivery and performance of the Purchase Contracts as it may see fit, and, if the Agent shall determine to make such further inquiry or investigation, it shall be given a reasonable opportunity to examine the books, records and premises of the Company, personally or by agent or attorney; and
(e) the Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or an Affiliate of the Agent and the Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney or an Affiliate appointed with due care by it hereunder.
SECTION 7.4 Not Responsible For Recitals, Etc. The recitals contained herein and in the Certificates shall be taken as the statements of the Company.
SECTION 7.5 May Hold Equity Security Units and Stripped Equity Security Units And Other Dealings. Any Registrar or any other agent of the Company, or the Agent and its Affiliates, in their individual or any other capacity, may become the owner or pledgee of Equity Security Units or Stripped Equity Security Units, as the case may be, and may otherwise deal with the Company, the Collateral Agent or any other Person with the same rights it would have if it were not Registrar or such other agent, or the Agent. The Agent and its Affiliates may (without having to account therefor to the Company or any Holder of Equity Security Units or Stripped Equity Security Units or holder of Separate Notes) accept deposits from, lend money to, make their investments in and generally engage in any kind of banking, trust or other business with the Company, any Holder of Equity Security Units or Stripped Equity Security Units and any holder of Separate Notes (and any of their respective subsidiaries or Affiliates) as if it were not acting as the Agent and the Agent and their Affiliates may accept fees and other consideration from the Company, any Holder of Equity Security Units or Stripped Equity Security Units or any holder of Separate Notes without having to account for the same to any such Person.
SECTION 7.6 Money Held In Custody. Money held by the Agent in custody hereunder need not be segregated from the Agent's other funds except to the extent required by law or provided herein. The Agent shall be under no obligation to invest or pay interest on any money received by it hereunder except as otherwise agreed in writing with the Company.
SECTION 7.7 Compensation And Reimbursement. The Company agrees:
(a) to pay to the Agent from time to time compensation for all services rendered by it hereunder or under the Transaction Documents as shall be agreed in writing from time to time between the Company and the Agent;
(b) to reimburse the Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Agent in accordance with any provision of this Agreement or the Transaction Documents (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as shall have been caused by its own negligence, willful misconduct or bad faith; and
(c) to fully indemnify the Agent and any predecessor Agent for, and to hold it harmless against, any and all loss, liability, claim, damage or reasonable out-of-pocket expense incurred without gross negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of its duties under the Transaction Documents, including the costs and expenses (including reasonable fees
and expenses of counsel) of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under the Transaction Documents. The Agent shall promptly notify the Company of any third party claim which may give rise to the indemnity hereunder and give the Company the opportunity to participate in the defense of such claim with counsel reasonably satisfactory to the indemnified party, and no such claim shall be settled without the written consent of the Company, which consent shall not be unreasonably withheld, provided that any failure to give any such notice shall not affect the obligation of the Company under this Section.
The provisions of this Section 7.7 shall survive the termination of this Agreement or the resignation or removal of the Agent.
SECTION 7.8 Corporate Agent Required; Eligibility. There shall at all times be an Agent hereunder which shall be a Corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having (or being a member of a bank holding company having) a combined capital and surplus of at least $50,000,000, subject to supervision or examination by federal or state authority and having a Corporate Trust Office in the Borough of Manhattan, The City of New York, if there be such a Corporation, qualified and eligible under this Article and willing to act on reasonable terms. If such Corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Agent 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.
SECTION 7.9 Resignation And Removal; Appointment Of Successor.
(a) No resignation or removal of the Agent and no appointment of a successor Agent pursuant to this Article shall become effective until the acceptance of appointment by the successor Agent in accordance with the applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof to the Company 60 days prior to the effective date of such resignation. If the instrument of acceptance by a successor Agent required by Section 7.10 shall not have been delivered to the Agent within 30 days after the giving of such notice of resignation, the resigning Agent may petition at the expense of the Company any court of competent jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a majority in number of the Outstanding Units delivered to the Agent and the Company. If the instrument of acceptance by a successor Agent required by Section 7.10 shall not have been delivered to the Agent within 30 days after the giving of such notice of resignation,
the Holders or the resigning Agent may petition any court of competent jurisdiction for the appointment of a successor Agent.
(d) If at any time:
(1) the Agent fails to comply with Section 310(b) of the TIA, as if the Agent were a trustee under an indenture qualified under the TIA, after written request therefor by the Company or by any Holder who has been a bona fide Holder of an Equity Security Unit or Stripped Equity Security Unit for at least six months; or
(2) the Agent shall cease to be eligible under
Section 7.8 and shall fail to resign after written request
therefor by the Company or by any such Holder; or
(3) the Agent shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Agent or of its property shall be appointed or any public officer shall take charge or control of the Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;
then, in any such case, (x) the Company by a Board Resolution may remove the Agent, or (y) any Holder who has been a bona fide Holder of an Equity Security Unit or Stripped Equity Security Unit for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Agent and the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Agent for any
cause, the Company, by a Board Resolution, shall promptly appoint a
successor Agent and shall comply with the applicable requirements of
Section 7.10. If no successor Agent shall have been so appointed by the
Company and accepted appointment in the manner required by Section
7.10, any Holder who has been a bona fide Holder of an Equity Security
Unit or Stripped Equity Security Unit for at least six months may, on
behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Agent.
(f) Company shall give, or shall cause such successor Agent to give, notice of each resignation and each removal of the Agent and each appointment of a successor Agent by mailing written notice of such event by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the applicable Register. Each notice shall include the name of the successor Agent and the address of its Corporate Trust Office.
SECTION 7.10 Acceptance Of Appointment By Successor.
(a) In case of the appointment hereunder of a successor Agent, every such successor Agent so appointed shall execute, acknowledge and deliver to the Company and to the retiring Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Agent shall become effective and such successor
Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, agencies and duties of the retiring Agent; but, on the request of the Company or the successor Agent, such retiring Agent shall, upon payment of its charges pursuant to Section 7.7, execute and deliver an instrument transferring to such successor Agent all the rights, powers and trusts of the retiring Agent and duly assign, transfer and deliver to such successor Agent all property and money held by such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Agent all such rights, powers and agencies referred to in paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time of such acceptance such successor Agent shall be qualified and eligible under this Article.
SECTION 7.11 Merger, Conversion, Consolidation Or Succession To Business. Any Corporation into which the 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 the Agent shall be a party, or any Corporation succeeding to all or substantially all the corporate trust business of the Agent, shall be the successor of the Agent 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 Certificates shall have been authenticated and executed on behalf of the Holders, but not delivered, by the Agent then in office, any successor by merger, conversion or consolidation to such Agent shall adopt such authentication and execution and deliver the Certificates so authenticated and executed with the same effect as if such successor Agent had itself authenticated and executed such Equity Security Units and Stripped Equity Security Units.
SECTION 7.12 Preservation Of Information; Communications To Holders.
(a) The Agent shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders received by the Agent in its capacity as Registrar.
(b) If three or more Holders (herein referred to as "Applicants") apply in writing to the Agent, and furnish to the Agent reasonable proof that each such applicant has owned an Equity Security Unit or Stripped Equity Security Unit, as the case may be, for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Agreement or under the Equity Security Units or Stripped Equity Security Units, as the case may be, and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Agent shall mail to all the Holders copies of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Agent of the materials to be mailed and of payment, or provision, in the absence of bad faith, satisfactory to the Agent for the payment, of the reasonable expenses of such mailing.
SECTION 7.13 Failure to Act. In the event of any ambiguity in the provisions of any Transaction Document or any dispute between or conflicting claims by or among the parties hereto or any other Person, the Agent shall be entitled, after prompt notice to the Company and the Holders of Equity Security Units and Stripped Equity Security Units, at its sole option, to refuse to comply with any and all such claims, demands or instructions so long as such dispute or conflict shall continue, and the Agent shall not be or become liable in any way to any of the parties hereto for its failure or refusal to comply with such conflicting claims, demands or instructions. The Agent shall be entitled to refuse to act until either (i) such conflicting or adverse claims or demands shall have been finally determined by a court of competent jurisdiction or settled by agreement between the conflicting parties as evidenced in a writing, reasonably satisfactory to the Agent, or (ii) the Agent shall have received security or an indemnity reasonably satisfactory to the Agent sufficient to save the Agent harmless from and against any and all loss, liability or reasonable out-of-pocket expense which the Agent may incur by reason of its acting without bad faith, willful misconduct or gross negligence. The Agent may in addition elect to commence an interpleader action or seek other judicial relief or orders as the Agent may deem necessary. Notwithstanding anything contained herein to the contrary, the Agent shall not be required to take any action that is in its opinion contrary to law or to the terms of any Transaction Document, or which would in its opinion subject it or any of its officers, employees or directors to liability.
SECTION 7.14 No Obligations Of Agent. Except to the extent otherwise provided in this Agreement, the Agent assumes no obligation and shall not be subject to any liability under this Agreement, the Pledge Agreement or any Purchase Contract in respect of the obligations of the Holder of any Equity Security Units or Stripped Equity Security Units thereunder. The Company agrees, and each Holder of a Certificate, by such Holder's acceptance thereof, shall be deemed to have agreed, that the Agent's execution of the Certificates on behalf of the Holders shall be solely as agent and attorney-in-fact for the Holders, and that the Agent shall have no obligation to perform such Purchase Contracts on behalf of the Holders, except to the extent expressly provided in Article V.
SECTION 7.15 Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the Company, will comply with all applicable certification, information reporting and withholding (including "backup" withholding) requirements imposed on it as a paying agent by applicable tax laws, regulations or administrative practice with respect to any payments made with respect to the Equity Security Units and Stripped Equity Security Units.
(b) The Agent shall comply with any reasonable written direction timely received from the Company with respect to the application of such requirements to particular payments or Holders or in other particular circumstances, and may for purposes of this Agreement rely on any such direction in accordance with the provisions of Section 7.1(a)(2).
(c) The Agent shall maintain all appropriate records documenting compliance with such requirements, and shall make such records available, on written request, to the Company or its authorized representative within a reasonable period of time after receipt of such request.
ARTICLE VIII.
SUPPLEMENTAL AGREEMENTS
SECTION 8.1 Supplemental Agreements Without Consent Of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Agent, at any time and from time to time, may enter into one or more agreements supplemental hereto, in form satisfactory to the Company and the Agent, for any of the following purposes:
(a) 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 Certificates; or
(b) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or
(c) to evidence and provide for the acceptance of appointment hereunder by a successor Agent; or
(d) to make provision with respect to the rights of Holders pursuant to the requirements of Section 5.6(b) or 5.10; or
(e) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provisions herein, or to make any other provisions with respect to such matters or questions arising under this Agreement, provided such action shall not adversely affect the interests of the Holders.
SECTION 8.2 Supplemental Agreements With Consent Of Holders.
(a) With the consent of the Holders of not less than a majority of the outstanding Equity Security Units and Stripped Equity Security Units voting together as one class, by Act of said Holders delivered to the Company and the Agent, the Company, when authorized by a Board Resolution, and the Agent may enter into an agreement or agreements supplemental hereto, in form satisfactory to the Company and the Agent, for the purpose of modifying in any manner the terms of the Purchase Contracts, or the provisions of this Agreement or the rights of the Holders in respect of the Equity Security Units and Stripped Equity Security Units; provided, that, except as contemplated herein, no such supplemental agreement shall, without the consent of the Holder of each Outstanding Unit affected thereby:
(1) change any Payment Date;
(2) change the amount or the type of Collateral required to be Pledged to secure a Holder's Obligations under the Purchase Contract, impair the right of the Holder of any Purchase Contract to receive distributions on the related Collateral (except for the rights of Holders of Equity Security Units to substitute the Treasury Securities for the Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, or the rights of holders of Stripped Equity Security Units to substitute Notes for the Pledged Treasury Securities) or otherwise adversely affect the Holder's rights in or to such Collateral or materially adversely alter the rights in or to such Collateral;
(3) reduce any Contract Adjustment Payments, if any, or any Deferred Contract Adjustment Payment, or change any place where, or the coin or currency in which, any Contract Adjustment Payment is payable;
(4) impair the right to institute suit for the enforcement of any Purchase Contract, any Contract Adjustment Payment, if any, or any Deferred Contract Adjustment Payment, if any;
(5) reduce the number of shares of Common Stock to be purchased pursuant to any Purchase Contract, increase the price to purchase shares of Common Stock upon settlement of any Purchase Contract, change the Stock Purchase Date or otherwise materially adversely affect the Holder's rights under any Purchase Contract; or
(6) reduce the percentage of the outstanding Purchase Contracts the consent of whose Holders is required for any such supplemental agreement;
provided, that if any amendment or proposal referred to above would
adversely affect only the Equity Security Units or the Stripped Equity
Security Units, then only the affected class of Holder as of the record
date for the Holders entitled to vote thereon will be entitled to vote
on such amendment or proposal, and such amendment or proposal shall not
be effective except with the consent of Holders of not less than a
majority or, in the case of proposals specified in clauses (1) through
(6) above, 100% of such class.
(b) It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 8.3 Execution Of Supplemental Agreements. In executing, or accepting the additional agencies created by, any supplemental agreement permitted by this Article or the modifications thereby of the agencies created by this Agreement, the Agent shall be provided and (subject to Section 7.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. The Agent may, but shall not be obligated to, enter into any such supplemental agreement which affects the Agent's own rights, duties or immunities under this Agreement or otherwise.
SECTION 8.4 Effect Of Supplemental Agreements. Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Holder of Certificates theretofore or thereafter authenticated, executed on behalf of the Holders and delivered hereunder shall be bound thereby.
SECTION 8.5 Reference To Supplemental Agreements. Certificates authenticated, executed on behalf of the Holders and delivered after the execution of any supplemental agreement pursuant to this Article may, and shall if required by the Agent, bear a notation in form approved by the Agent as to any matter provided for in such supplemental agreement. If the Company shall so determine, new Certificates so modified as to conform, in the opinion of the Agent and the Company, to any such supplemental agreement may be prepared and executed by the Company and authenticated, executed on behalf of the Holders and delivered by the Agent in exchange for outstanding Certificates.
ARTICLE IX.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Covenant Not To Merge, Consolidate, Sell Or Convey Property Except Under Certain Conditions. The Company covenants that it will not (a) merge or consolidate with any other Person or (b) sell, assign, transfer, lease or convey all or substantially all of its properties and assets to any Person or group of affiliated Persons in one transaction or a series of related transactions other than, with respect to clause (b), a direct or indirect wholly-owned subsidiary of the Company, unless (i) either the Company shall be the continuing Corporation, or the successor (if other than the Company) shall be a Corporation organized and existing under the laws of the United States of America or a State thereof or the District of Columbia and such Corporation shall expressly assume all the obligations of the Company under the Purchase Contracts, the Notes, this Agreement, the Remarketing Agreement and the Pledge Agreement by one or more supplemental agreements in form reasonably satisfactory to the Agent and the Collateral Agent, executed and delivered to the Agent and the Collateral Agent by such Corporation, and (ii) the Company or such successor Corporation, as the case may be, shall not, immediately after such merger or consolidation, or such sale, assignment, transfer, lease or conveyance, be in default in the performance of any covenant or condition hereunder, under any of the Purchase Contracts, under the Remarketing Agreement, or under the Pledge Agreement. Notwithstanding anything herein to the contrary, a wholly-owned subsidiary of the Company to whom the Company has sold, assigned, transferred, leased or conveyed all or substantially all of its properties and assets shall be required to expressly assume by a supplemental agreement, executed and delivered to the Agent, in form satisfactory to the Agent, all the obligations of the Company under Section 7.7.
SECTION 9.2 Rights And Duties Of Successor Corporation.
(a) In case of any such consolidation, merger, sale, assignment, transfer, lease or conveyance and upon any such assumption by a successor Corporation in accordance with Section 9.1, such successor Corporation shall succeed to and be substituted for the
Company with the same effect as if it had been named herein as the Company and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under the Purchase Contracts, the Notes, this Agreement, the Remarketing Agreement and the Pledge Agreement. Such successor Corporation thereupon may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Certificates evidencing Equity Security Units and Stripped Equity Security Units issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Agent; and, upon the order of such successor Corporation, instead of the Company, and subject to all the terms, conditions and limitations in this Agreement prescribed, the Agent shall authenticate and execute on behalf of the Holders and deliver any Certificates which previously shall have been signed and delivered by the officers of the Company to the Agent for authentication and execution, and any Certificate evidencing Equity Security Units or Stripped Equity Security Units which such successor Corporation thereafter shall cause to be signed and delivered to the Agent for that purpose. All the Certificates so issued shall in all respects have the same legal rank and benefit under this Agreement as the Certificates theretofore or thereafter issued in accordance with the terms of this Agreement as though all of such Certificates had been issued at the date of the execution hereof.
(b) In case of any such consolidation, merger, sale, assignment, transfer, lease or conveyance such change in phraseology and form (but not in substance) may be made in the Certificates evidencing Equity Security Units and Stripped Equity Security Units thereafter to be issued as may be appropriate.
SECTION 9.3 Opinion Of Counsel Given To Agent. The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, assignment, transfer, lease or conveyance, and any such assumption, complies with the provisions of this Article and that all conditions precedent to the consummation of any such consolidation, merger, sale, assignment, transfer, lease or conveyance have been met.
ARTICLE X.
COVENANTS
SECTION 10.1 Performance Under Purchase Contracts. The Company covenants and agrees for the benefit of the Holders from time to time of the Equity Security Units and Stripped Equity Security Units that it will duly and punctually perform its obligations under the Purchase Contracts in accordance with the terms of the Purchase Contracts and this Agreement.
SECTION 10.2 Maintenance Of Office Or Agency.
(a) The Company will maintain in the Borough of Manhattan, The City of New York an office or agency where Certificates may be presented or surrendered for payment of Contract Adjustment Payments, acquisition of shares of Common Stock upon settlement of the Purchase Contracts on any Settlement Date and for transfer of Collateral
upon occurrence of a Termination Event, where Certificates may be surrendered for registration of transfer or exchange, for a Collateral Substitution or reestablishment of Equity Security Units and where notices and demands to or upon the Company in respect of the Equity Security Units and Stripped Equity Security Units and this Agreement may be served. The Company will give prompt written notice to the Agent of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Agent with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Company hereby appoints the Agent as its agent to receive all such presentations, surrenders, notices and demands.
(b) The Company may also from time to time designate one or more other offices or agencies where Certificates may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Agent of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates as the place of payment for the Equity Security Units and Stripped Equity Security Units the Corporate Trust Office and appoints the Agent at its Corporate Trust Office as paying agent in such city.
SECTION 10.3 Company To Reserve Common Stock. The Company shall at all times prior to the Stock Purchase Date reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock or treasury Common Stock the full number of shares of Common Stock issuable against tender of payment in respect of all Purchase Contracts constituting a part of the Equity Security Units and Stripped Equity Security Units evidenced by outstanding Certificates.
SECTION 10.4 Covenants As To Common Stock. The Company covenants that all shares of Common Stock which may be issued against tender of payment in respect of any Purchase Contract constituting a part of the Outstanding Units will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable.
SECTION 10.5 Statements Of Officer Of The Company As To Default. The Company will deliver to the Agent, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officer's Certificate, stating whether or not to the best knowledge of the signer thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which such Officer may have knowledge. The Company shall deliver to the Agent, as soon as possible and in any event within five days after the Company becomes aware of the occurrence of any default under this Agreement or an event which, with notice or the lapse of time or both, would constitute a default under this Agreement, an Officers' Certificate setting forth the details of such default and the action which the Company proposes to take with respect thereto.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.
DTE ENERGY COMPANY
THE BANK OF NEW YORK,
as Purchase Contract Agent
Title:
EXHIBIT A
FORM OF EQUITY SECURITY UNIT CERTIFICATE
[FOR INCLUSION IN GLOBAL CERTIFICATES ONLY - THIS CERTIFICATE IS A
GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) 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 such other name as requested by an authorized representative of The Depository Trust Company, and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
(Form of Face of Equity Security Unit Certificate)
No. ______________ CUSIP No. 233331 20 6
Number of Equity Security Units____________
This Equity Security Unit Certificate certifies that [For inclusion in Global Certificates only --Cede & Co.] is the registered Holder of the number of Equity Security Units set forth above [For inclusion in Global Certificates only -- or such other number of Equity Security Units reflected in the Schedule of Increases or Decreases in Global Certificates attached hereto]. Each Equity Security Unit represents (i) either (a) beneficial ownership by the Holder of one 4.60% Senior Note due 2007 (the "Note") of DTE ENERGY COMPANY, a Michigan corporation (the "Company"), having a principal amount of $25, subject to the Pledge of such Note by such Holder pursuant to the Pledge Agreement, or (b) if the Note has been remarketed by the Remarketing Agent, the appropriate Applicable Ownership Interest in the Treasury Portfolio, subject to the Pledge of such Applicable Ownership Interest in the Treasury Portfolio by such Holder pursuant to the Pledge Agreement, or (c) if a Tax Event Redemption has occurred, the appropriate Applicable Ownership Interest in the Tax Event Treasury Portfolio subject to the Pledge of such Applicable Ownership Interest in the Tax Event Treasury Portfolio pursuant to the Pledge Agreement, and (ii) the rights and obligations of the Holder under one Purchase Contract with the Company. All capitalized terms used herein which are defined in the Purchase Contract Agreement have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Note or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, constituting part of each Equity Security Unit evidenced hereby has
been pledged to the Collateral Agent, for the benefit of the Company, to secure the obligations of the Holder under the Purchase Contract comprising a part of such Equity Security Unit.
The Pledge Agreement provides that all payments in respect of the Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio received by the Collateral Agent shall be paid by the Collateral Agent by wire transfer in same day funds (i) in the case of (A) quarterly cash distributions on Equity Security Units which include Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio and (B) any payments in respect of the Notes, Applicable Ownership Interest in the Treasury Portfolio or Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, that have been released from the Pledge pursuant to the Pledge Agreement, to the Agent to the account designated by the Agent, no later than 11:00 a.m., New York City time, on the Business Day such payment is received by the Collateral Agent (provided that in the event such payment is received by the Collateral Agent on a day that is not a Business Day or after 9:00 a.m., New York City time, on a Business Day, then such payment shall be made no later than 9:30 a.m., New York City time, on the next succeeding Business Day) and (ii) in the case of payments in respect of any Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, to be paid upon settlement of such Holder's obligations to purchase Common Stock under the Purchase Contract, to the Company on the Stock Purchase Date (as defined herein) in accordance with the terms of the Pledge Agreement, in full satisfaction of the respective obligations of the Holders of the Equity Security Units of which such Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, are a part under the Purchase Contracts forming a part of such Equity Security Units. Quarterly distributions on Equity Security Units that include Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, which are payable quarterly in arrears on February 16, May 16, August 16 and November 16 each year commencing August 16, 2002 (a "Payment Date"), shall, subject to receipt thereof by the Agent from the Collateral Agent (if the Collateral Agent is the registered owner thereof), be paid to the Person in whose name this Equity Security Unit Certificate (or a Predecessor Equity Security Unit Certificate) is registered at the close of business on the Record Date for such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this Equity Security Unit Certificate to purchase, and the Company to sell, on August 16, 2005 (the "Stock Purchase Date"), at a price equal to $25 (the "Stated Amount"), a number of newly issued shares of Common Stock, without par value ("Common Stock"), of the Company, equal to the Settlement Rate, unless on or prior to the Stock Purchase Date there shall have occurred a Termination Event or a Cash Settlement, Early Settlement or Merger Early Settlement with respect to the Equity Security Units of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The Purchase Price (as defined herein) for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the Stock Purchase Date by application of payments received in respect of the Pledged Notes pursuant to a successful remarketing, Pledged
Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio (as specified in clause (A) of the definition of "Applicable Ownership Interest"), as the case may be, pledged to secure the obligations of the Holder under such Purchase Contract.
Payments on the Notes or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto as such address appears on the Equity Security Unit Register or by wire transfer to an account specified by such Person at least ten Business Days prior to the applicable Payment Date.
The Company shall pay on each Payment Date in respect of each Purchase Contract forming part of an Equity Security Unit evidenced hereby an amount (the "Contract Adjustment Payment") equal to 4.15% per year of the Stated Amount, computed (1) for any full quarterly period, on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly period, on the basis of a 30-day month and for periods less than a month, on the basis of the actual number of days elapsed per 30-day month, subject to deferral at the option of the Company as provided in the Purchase Contract Agreement and more fully described on the reverse hereof (provided that if any date on which a Contract Adjustment Payment is to be made on the Purchase Contracts is not a Business Day, then payment of such Contract Adjustment Payment payable on such date will be made on the next succeeding day which is a Business Day, and no interest or payment will be paid in respect of such delay, except that if such next succeeding Business Day is in the next succeeding calendar year, then such payment will be made on the immediately preceding Business Day with the same force and effect as it made on such Payment Date). Such Contract Adjustment Payments shall be payable to the Person in whose name this Equity Security Unit Certificate (or a Predecessor Equity Security Unit Certificate) is registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto as such address appears on the Equity Security Unit Register or by wire transfer to the account designated to the Agent by a prior written notice by such Person delivered at least ten Business Days prior to the applicable Payment Date.
Reference is hereby made to the further provisions set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Agent by manual signature, this Equity Security Unit Certificate shall not be entitled to any benefit under the Pledge Agreement or the Purchase Contract Agreement or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
DTE ENERGY COMPANY
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: THE BANK OF NEW YORK, not
individually but solely as
Attorney-in-Fact of such Holder
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Equity Security Unit Certificates referred to in the within-mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK,
as Purchase Contract Agent
(Form of Reverse of Equity Security Unit Certificate)
Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of June 25, 2002 (as may be supplemented from time to time, the "Purchase Contract Agreement"), between the Company and The Bank of New York, as Purchase Contract Agent (including its successors thereunder, herein called the "Agent"), to which Purchase Contract Agreement and supplemental agreements thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Agent, the Company, and the Holders and of the terms upon which the Equity Security Unit Certificates are, and are to be, executed and delivered. In the case of any inconsistency between this Certificate and the Purchase Contract Agreement, the terms of the Purchase Contract Agreement shall prevail.
Each Purchase Contract evidenced hereby obligates the Holder of this Equity Security Unit Certificate to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of shares of Common Stock of the Company equal to the Settlement Rate, unless, on or prior to the Stock Purchase Date, there shall have occurred a Termination Event or an Early Settlement, Merger Early Settlement or Cash Settlement with respect to the Equity Security Units of which such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is greater than or equal to $51.90 (the "Threshold Appreciation Price"), 0.4817 shares of Common Stock per Purchase Contract, (b) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $43.25 (the "Reference Price"), the number of shares of Common Stock per Purchase Contract equal to the Stated Amount divided by the Applicable Market Value and (c) if the Applicable Market Value is less than or equal to the Reference Price, 0.5780 shares of Common Stock per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract Agreement. No fractional shares of Common Stock will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing Price per share of Common Stock on each of the 20 consecutive Trading Days ending on the third Trading Day immediately preceding the Stock Purchase Date.
The "Closing Price" of the Common Stock on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is so listed, or if the Common Stock is not so listed on a United States national or regional securities exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock is not so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of the Common Stock on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company.
A "Trading Day" means a day on which the Common Stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the- counter market that is the primary market for the trading of the Common Stock.
Each Purchase Contract evidenced hereby may be settled prior to the Stock Purchase Date through Early Settlement, Merger Early Settlement or Cash Settlement, in accordance with the terms of the Purchase Contract Agreement.
In accordance with the terms of the Purchase Contract Agreement, the Holder of this Equity Security Unit Certificate shall pay the Purchase Price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby (i) by effecting a Cash Settlement, Early Settlement or Merger Early Settlement, (ii) by application of payments received in respect of the Pledged Applicable Ownership Interest in the Treasury Portfolio acquired from the proceeds of a remarketing of the related Pledged Notes underlying the Equity Security Units represented by this Equity Security Unit Certificate, or (iii) if a Tax Event Redemption Date has occurred prior to the successful remarketing of the Notes by application of payments received in respect of the Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio purchased by the Collateral Agent on behalf of the Holder of this Equity Security Unit Certificate. If, as provided in the Purchase Contract Agreement, upon the occurrence of a Last Failed Remarketing on the fifth Business Day immediately proceeding the Stock Purchase Date the Collateral Agent, for the benefit of the Company, exercises its rights as a secured creditor with respect to the Pledged Notes related to this Equity Security Unit Certificate, any accrued and unpaid interest on such Pledged Notes will become payable by the Company to the Holder of this Equity Security Unit Certificate in the manner provided for in the Purchase Contract Agreement.
The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment in full of the aggregate Purchase Price for the shares of Common Stock to be purchased thereunder in the manner herein set forth.
Under the terms of the Pledge Agreement, the Agent will be entitled to exercise the voting and any other consensual rights pertaining to the Pledged Notes. Upon receipt of notice of any meeting at which holders of Notes are entitled to vote or upon the solicitation of consents, waivers or proxies of holders of Notes, the Agent shall, as soon as practicable thereafter, mail to the Holders of Equity Security Units a notice (a) containing such information as is contained in the notice or solicitation, (b) stating that each such Holder on the record date set by the Agent therefor (which, to the extent possible, shall be the same date as the record date for determining the holders of Notes entitled to vote) shall be entitled to instruct the Agent as to the exercise of the voting rights pertaining to the Pledged Notes constituting a part of such Holder's Equity Security Units and (c) stating the manner in which such instructions may be given. Upon the written request of the Holders of Equity Security Units on such record date, the Agent shall endeavor insofar as practicable to vote or cause to be voted, in accordance with the instructions set forth in such requests, the maximum number of Pledged Notes as to which any particular voting instructions are received. In the absence of specific instructions from the Holder of an
Equity Security Unit, the Agent shall abstain from voting the Pledged Note evidenced by such Equity Security Units.
The Equity Security Unit Certificates are issuable only in registered form and only in denominations of a single Equity Security Unit and any integral multiple thereof. The transfer of any Equity Security Unit Certificate will be registered and Equity Security Unit Certificates may be exchanged as provided in the Purchase Contract Agreement. The Equity Security Unit Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents permitted by the Purchase Contract Agreement. No service charge shall be required for any such registration of transfer or exchange, but the Company and the Agent may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Holder of an Equity Security Unit may substitute for the Pledged Notes, securing its obligations under the related Purchase Contract Treasury Securities in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. From and after such Collateral Substitution, the Equity Security Units for which such Pledged Treasury Securities secures the Holder's obligation under the Purchase Contract shall be referred to as a "Stripped Equity Security Unit." A Holder that elects to substitute a Treasury Security for Pledged Notes, thereby creating Stripped Equity Security Units, shall be responsible for any fees or expenses payable in connection therewith. Except as provided in the Purchase Contract Agreement, for so long as the Purchase Contract underlying an Equity Security Unit remains in effect, such Equity Security Unit shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Equity Security Unit in respect of the Pledged Note, and Purchase Contract constituting such Equity Security Unit may be transferred and exchanged only as an Equity Security Unit.
A Holder of Stripped Equity Security Units may reestablish Equity Security Units by delivering to the Collateral Agent Notes in exchange for the release of the Pledged Treasury Securities in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement.
Subject to the next succeeding paragraph, the Company shall pay, on each Payment Date, the Contract Adjustment Payments, if any, payable in respect of each Purchase Contract to the Person in whose name the Equity Security Unit Certificate evidencing such Purchase Contract is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments, if any, will be payable at the office of the Agent in The City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Equity Security Unit Register or by wire transfer to the account designated by such Person in writing at least ten Business Days prior to the applicable Payment Date.
The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Agent written notice of its election to defer Contract Adjustment Payments as provided in the Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, bear additional Contract Adjustment Payments thereon at the rate of 4.15% per year
(computed on the basis of a 360-day year of twelve 30-day months), compounding on each succeeding Payment Date, until paid in full (such deferred installments of Contract Adjustment Payments, if any, together with the additional Contract Adjustment Payments, if any, accumulated thereon, are referred to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be due on the next succeeding Payment Date except to the extent that payment is deferred pursuant to the Purchase Contract Agreement. No Contract Adjustment Payments may be deferred to a date that is after the Stock Purchase Date and no such deferral period may end other than on a Payment Date.
In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date.
In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, the Holder of this Equity Security Unit Certificate will receive on the Stock Purchase Date, if the Company so elects, in lieu of a cash payment, a number of shares of Common Stock (in addition to the number of shares of Common Stock equal to the Settlement Rate) equal to (i) the aggregate amount of Deferred Contract Adjustment Payments payable to the Holder of this Equity Security Unit Certificate divided by (ii) the Applicable Market Value.
In the event the Company exercises its option to defer the payment of Contract Adjustment Payments, then, until the Deferred Contract Adjustment Payments have been paid, the Company shall not, and shall not permit any subsidiary of the Company to, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of its Common Stock other than (i) purchases, redemptions or acquisitions of shares of Common Stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors or a stock purchase or dividend reinvestment plan, or the satisfaction by the Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its rights to defer the Contract Adjustment Payments; (ii) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one class or series of for another class or series of the Company's Capital Stock; (iii) the purchase of fractional interests in shares of the Company's Common Stock pursuant to the conversion or exchange provisions of such Common Stock or the security being converted or exchanged; (iv) dividends or distributions payable solely in the Company's Common Stock (or rights to acquire Common Stock) or repurchases, acquisitions or redemptions of Common Stock in connection with the issuance or exchange of the Common Stock (or securities convertible into or exchangeable for shares of the Company's Common Stock); or (v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future.
The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay Contract Adjustment Payments, if any, or any Deferred Contract
Adjustment Payments, and the rights of the Holders to purchase Common Stock, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Stock Purchase Date, a Termination Event shall have occurred. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two Business Days thereafter give written notice to the Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Equity Security Unit Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, from the Pledge in accordance with the provisions of the Pledge Agreement.
Upon registration of transfer of this Equity Security Unit Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee, except as may be required by the Agent pursuant to the Purchase Contract Agreement), under the terms of the Purchase Contract Agreement and the Purchase Contracts evidenced hereby and the transferor shall be released from the obligations under the Purchase Contracts evidenced by this Equity Security Unit Certificate. The Company covenants and agrees, and the Holder, by its acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Equity Security Unit Certificate, by its acceptance hereof, authorizes the Agent to enter into and perform the related Purchase Contracts forming part of the Equity Security Units evidenced hereby on his behalf as his attorney-in-fact, expressly withholds any consent to the assumption (i.e., affirmance) of the Purchase Contracts by the Company or its trustee in the event that the Company becomes the subject of a case under the Bankruptcy Code, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform such Holder's obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, authorizes the Agent to enter into and perform the Pledge Agreement on such Holder's behalf as attorney-in-fact, and consents to the Pledge of the Notes or the appropriate Applicable Ownership Interest in the Treasury Portfolio or Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, underlying this Equity Security Unit Certificate pursuant to the Pledge Agreement. The Holder further covenants and agrees, that, to the extent and in the manner provided in the Purchase Contract Agreement and the Pledge Agreement, but subject to the terms thereof, payments in respect of the Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, to be paid upon settlement of such Holder's obligations to purchase Common Stock under the Purchase Contract, shall be paid on the Stock Purchase Date by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments.
Each Holder of any Equity Security Units or Stripped Equity Security Units, and each Beneficial Owner thereof, by its acceptance thereof or of its interest therein, further agrees to treat (i) itself as the owner of the related Notes, Applicable Ownership Interest in the Treasury Portfolio, Applicable Ownership Interest in the Tax Event Treasury Portfolio or Treasury Securities, as the case may be, (ii) the Notes as indebtedness of the Company, and (iii) the Purchase Contract and the Notes, the Treasury Portfolio, the Tax Event Treasury Portfolio of
Treasury Securities, as the case may be, as separate financial instruments, in each case, for all tax purposes.
Subject to certain exceptions, the provisions of the Purchase Contract Agreement may be amended with the consent of the Holders of a majority of the Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York, without regard to its principles of conflicts of laws.
The Company, the Agent and its Affiliates and any agent of the Company or the Agent may treat the Person in whose name this Equity Security Unit Certificate is registered as the owner of the Equity Security Units evidenced hereby for the purpose of receiving quarterly payments on the Notes, the Applicable Ownership Interest in the Treasury Portfolio or the Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, receiving payments of Contract Adjustment Payments, if any, and any Deferred Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever (subject to the Record Date provisions hereof), whether or not any payments in respect thereof be overdue and notwithstanding any notice to the contrary, and neither the Company, the Agent, such Affiliates nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at the offices of the Agent.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
Under Uniform Gifts to Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto____________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee)_______________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Equity Security Unit Certificates and all rights thereunder, hereby irrevocably constituting and appointing ____________________________ attorney to transfer said Equity Security Unit Certificates on the books of DTE ENERGY COMPANY with full power of substitution in the premises.
Dated: _______________________ Signature: ______________________________________
NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Equity Security Unit Certificates in every particular, without alteration or enlargement or any change whatsoever.
Signature Guarantee: ___________________________________________________________
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon settlement on or after the Stock Purchase Date of the Purchase Contracts underlying the number of Equity Security Units evidenced by this Equity Security Unit Certificate be registered in the name of, and delivered, together with a check in payment for any fractional share, to the undersigned at the address indicated below unless a different name and address have been indicated below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated: ___________________ Signature:______________________________ Signature Guarantee:____________________ (if assigned to another person) If shares are to be registered in the REGISTERED HOLDER Please print |
name of and delivered to a Person other name and address of Registered Holder:
than the Holder, please (i) print such
Person's name and address and (ii)
provide a guarantee of your signature:
___________________________________ ________________________________________ Name Name ___________________________________ ________________________________________ Address Address Social Security or other Taxpayer Identification Number, if any |
ELECTION TO SETTLE EARLY
The undersigned Holder of this Equity Security Unit Certificate hereby irrevocably exercises the option to effect Early Settlement in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Equity Security Units evidenced by this Equity Security Unit Certificate specified below. The option to effect Early Settlement may be exercised only with respect to Purchase Contracts underlying Equity Security Units with an aggregate Stated Amount equal to $1,000 or an integral multiple thereof, subject to the provisions of the within-mentioned Purchase Contract Agreement relating to Early Settlement following a successful remarketing or a Tax Event Redemption Date. The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon such Early Settlement be registered in the name of, and delivered, together with a check in payment for any fractional share and any Equity Security Unit Certificate representing any Equity Security Units evidenced hereby as to which Early Settlement of the related Purchase Contracts is not effected, to the undersigned at the address indicated below unless a different name and address have been indicated below. Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or the Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, deliverable upon such Early Settlement will be transferred in accordance with the transfer instructions set forth below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated: ___________________ Signature: _____________________________ Signature Guarantee: ___________________
Number of Equity Security Units evidenced hereby as to which Early Settlement of the related Purchase Contracts is being elected:
If shares of Common Stock are to be REGISTERED HOLDER registered in the name of and delivered to and Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or Pledged Applicable Ownership Interest in the Please print name and address of Tax Event Treasury Portfolio, as the Registered Holder: case may be, are to be transferred to a Person other than the Holder, please print such Person's name and address: ___________________________________ ________________________________________ Name Name ___________________________________ ________________________________________ Address Address Social Security or other Taxpayer Identification Number, if any |
Transfer instructions for Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio or the Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case may be, transferable upon Early Settlement or a Termination Event:
(TO BE ATTACHED TO GLOBAL CERTIFICATES)
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
Amount of Decrease Stated Amount of the in Stated Amount of Amount of Increase in Global Certificate the Global Stated Amount of the Following Such Signature of Date Certificate Global Certificate Decrease or Increase Authorizing Officer --------------------- --------------------- ----------------------- ---------------------- ---------------------- |
EXHIBIT B
FORM OF STRIPPED EQUITY SECURITY UNIT CERTIFICATE
[FOR INCLUSION IN GLOBAL CERTIFICATES ONLY -- THIS CERTIFICATE IS A GLOBAL
CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT (AS
HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME OF A CLEARING AGENCY OR A
NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART
MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR
A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE
CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) 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 such other name as requested by an authorized representative of The Depository Trust Company, and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
[Form of Face of Stripped Equity Security Unit Certificate]
No. ___________________ CUSIP No. 233331 30 5
Number of Stripped Equity Security Units _______________
This Stripped Equity Security Unit Certificate certifies that [For inclusion in Global Certificates only -- Cede & Co.] is the registered Holder of the number of Stripped Equity Security Units set forth above [For inclusion in Global Certificates only -- or such other number of Stripped Equity Security Units reflected in the Schedule of Increases or Decreases in Global Certificate attached hereto]. Each Stripped Equity Security Unit represents (i) a 1/40 undivided beneficial ownership interest in a Treasury Security, subject to the Pledge of such interest in such Treasury Security by such Holder pursuant to the Pledge Agreement, and (ii) the rights and obligations of the Holder under one Purchase Contract with DTE ENERGY COMPANY, a Michigan corporation (the "Company"). All capitalized terms used herein which are defined in the Purchase Contract Agreement have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Treasury Security constituting part of each Stripped Equity Security Unit evidenced hereby has been pledged to the Collateral Agent, for the benefit of the Company, to secure the obligations of the Holder under the Purchase Contract comprising a part of such Stripped Equity Security Unit.
Each Purchase Contract evidenced hereby obligates the Holder of this Stripped Equity Security Unit Certificate to purchase, and the Company to sell, on August 16, 2005 (the "Stock Purchase Date"), at a price equal to $25 (the "Stated Amount"), a number of shares of Common
Stock, without par value ("Common Stock"), of the Company, equal to the Settlement Rate, unless on or prior to the Stock Purchase Date there shall have occurred a Termination Event or an Early Settlement or Merger Early Settlement with respect to the Stripped Equity Security Units of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The Purchase Price (as defined herein) for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the Stock Purchase Date by application of payments received in respect of the Pledged Treasury Securities pledged to secure the obligations under such Purchase Contract in accordance with the terms of the Pledge Agreement.
The Company shall pay on each Payment Date in respect of each Purchase Contract forming part of a Stripped Equity Security Unit evidenced hereby an amount (the "Contract Adjustment Payments") equal to 4.15% per year of the Stated Amount, computed (1) for any full quarterly period, on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly period on the basis of a 30-day month and for periods less than a month, on the basis of the actual number of days elapsed per 30-day month, subject to deferral at the option of the Company as provided in the Purchase Contract Agreement and more fully described on the reverse hereof (provided that if any date on which Contract Adjustment Payments are to be made on the Purchase Contracts is not a Business Day, then payment of the Contract Adjustment Payments payable on that date will be made on the next succeeding day which is a Business Day, and no interest or payment will be paid in respect of the delay, except that if such next succeeding Business Day is in the next succeeding calendar year, such payment will be made on the immediately preceding Business Day with the same force and effect as if made on such Payment Date). Such Contract Adjustment Payments shall be payable to the Person in whose name this Stripped Equity Security Unit Certificate (or a Predecessor Stripped Equity Security Unit Certificate) is registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments, if any, will be payable at the office of the Agent in the City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Stripped Equity Security Unit Register or by wire transfer to the account designated by such Person in writing at least ten Business Days prior to the applicable Payment Date.
Reference is hereby made to the further provisions set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Agent by manual signature, this Stripped Equity Security Unit Certificate shall not be entitled to any benefit under the Pledge Agreement or the Purchase Contract Agreement or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
DTE ENERGY COMPANY
By:______________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations
of such Holder under the
Purchase Contracts)
By: THE BANK OF NEW YORK, not individually but
solely as Attorney-in-Fact of such Holder
By:___________________________________
Authorized Signatory
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Stripped Equity Security Units referred to in the within-mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK, as Purchase Contract Agent Dated: By:_______________________________ Authorized Signatory |
(Reverse of Stripped Equity Security Unit Certificate)
Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of June 25, 2002 (as may be supplemented from time to time, the "Purchase Contract Agreement"), between the Company and The Bank of New York, as Purchase Contract Agent (including its successors thereunder, herein called the "Agent"), to which the Purchase Contract Agreement and supplemental agreements thereto reference is hereby made for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Agent, the Company and the Holders and of the terms upon which the Stripped Equity Security Unit Certificates are, and are to be, executed and delivered. In the case of any inconsistency between this Certificate and the Purchase Contract Agreement, the terms of the Purchase Contract Agreement shall prevail.
Each Purchase Contract evidenced hereby obligates the Holder of this Stripped Equity Security Unit Certificate to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of shares of Common Stock of the Company equal to the Settlement Rate, unless, on or prior to the Stock Purchase Date, there shall have occurred a Termination Event or an Early Settlement or Merger Early Settlement respect to the Stripped Equity Security Units of which such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as defined below) is greater than or equal to $51.90 (the "Threshold Appreciation Price"), 0.4817 shares of Common Stock per Purchase Contract, (b) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $43.25, the number of shares of Common Stock per Purchase Contract equal to the Stated Amount divided by the Applicable Market Value and (c) if the Applicable Market Value is less than or equal to $43.25, 0.5780 shares of Common Stock per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract Agreement. No fractional shares of Common Stock will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing Price per share of Common Stock on each of the 20 consecutive Trading Days ending on the third Trading Day immediately preceding the Stock Purchase Date.
The "Closing Price" of the Common Stock on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed for trading on the NYSE on any such date, as reported in the composite transactions for the principal United States securities exchange on which the Common Stock is so listed, or if the Common Stock is not so listed on a United States national or regional securities exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock is not so reported, the last quoted bid price for the Common Stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization, or, if such bid price is not available, the market value of the Common Stock on such date as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company.
A "Trading Day" means a day on which the Common Stock (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock.
Each Purchase Contract evidenced hereby may be settled prior to the Stock Purchase Date through Early Settlement or Merger Early Settlement, in accordance with the terms of the Purchase Contract Agreement.
In accordance with the terms of the Purchase Contract Agreement, the Holder of this Stripped Equity Security Unit Certificate shall pay the Purchase Price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby (i) by effecting an Early Settlement or Merger Early Settlement or (ii) by application of payments received in respect of the Pledged Treasury Securities underlying the Stripped Equity Security Units represented by this Stripped Equity Security Unit Certificate.
The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder unless it shall have received payment in full of the aggregate Purchase Price for the shares of Common Stock to be purchased thereunder in the manner herein set forth.
The Stripped Equity Security Unit Certificates are issuable only in registered form and only in denominations of a single Stripped Equity Security Unit and any integral multiple thereof. The transfer of any Stripped Equity Security Unit Certificate will be registered and Stripped Equity Security Unit Certificates may be exchanged as provided in the Purchase Contract Agreement. The Stripped Equity Security Unit Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents permitted by the Purchase Contract Agreement. No service charge shall be required for any such registration of transfer or exchange, but the Company and the Agent may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Holder of a Stripped Equity Security Unit may substitute for the Pledged Treasury Securities securing its obligations under the related Purchase Contract in accordance with the terms of the Purchase Contract Agreement and the Pledge Agreement. From and after such substitution, the Stripped Equity Security Unit for which such Pledged Notes secures the Holder's obligation under the Purchase Contract shall be referred to as an "Equity Security Unit." A Holder that elects to substitute Notes for Pledged Treasury Securities, thereby reestablishing Equity Security Units, shall be responsible for any fees or expenses payable in connection therewith. Except as provided in the Purchase Contract Agreement, for so long as the Purchase Contract underlying a Stripped Equity Security Unit remains in effect, such Stripped Equity Security Unit shall not be separable into its constituent parts, and the rights and obligations of the Holder of such Stripped Equity Security Units in respect of the Pledged Treasury Security and the Purchase Contract constituting such Stripped Equity Security Units may be transferred and exchanged only as a Stripped Equity Security Unit.
Subject to the next succeeding paragraph, the Company shall pay, on each Payment Date, the Contract Adjustment Payments, payable in respect of each Purchase Contract to the Person in whose name the Stripped Equity Security Unit Certificate evidencing such Purchase Contract is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments, if any, will be payable at the office of the Agent in the City of New York or, at the option of the Company, by check mailed to the address of the Person entitled thereto at such address as it appears on the Stripped Equity Security Unit Register or by wire transfer to the account designated by such Person in writing at least ten Business Days prior to the applicable Payment Date.
The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Agent written notice of its election to defer Contract Adjustment Payments as provided in the Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, bear additional Contract Adjustment Payments thereon at the rate of 4.15% per year (computed on the basis of a 360-day year of twelve 30-day months), compounding on each succeeding Payment Date, until paid in full (such deferred installments of Contract Adjustment Payments, if any, together with the additional Contract Adjustment Payments accumulated thereon, are referred to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract Adjustment Payments, if any, shall be due on the next succeeding Payment Date except to the extent that payment is deferred pursuant to the Purchase Contract Agreement. No Contract Adjustment Payments may be deferred to a date that is after the Stock Purchase Date and no such deferral period may end other than on a Payment Date.
In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date.
In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, the Holder of this Stripped Equity Security Unit Certificate will receive on the Stock Purchase Date, if the Company so elects, in lieu of a cash payment, a number of shares of Common Stock (in addition to the number of shares of Common Stock equal to the Settlement Rate) equal to (i) the aggregate amount of Deferred Contract Adjustment Payments payable to the Holder of this Stripped Equity Security Unit Certificate divided by (ii) the Applicable Market Value.
In the event the Company exercises its option to defer the payment of Contract Adjustment Payments, then, until the Deferred Contract Adjustment Payments have been paid, the Company shall not, and shall not permit any subsidiary of the Company to, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of its Common Stock other than (i) purchases, redemptions or acquisitions of shares of Common Stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors or a stock purchase or dividend reinvestment plan, or the satisfaction by the
Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its rights to defer the Contract Adjustment Payments; (ii) as a result of a reclassification of the Company's Capital Stock or the exchange or conversion of one class or series of the Company's Capital Stock for another class or series of the Company's Capital Stock; (iii) the purchase of fractional interests in shares of the Company's Common Stock pursuant to the conversion or exchange provisions of such Common Stock or the security being converted or exchanged; (iv) dividends or distributions payable solely in Common Stock (or rights to acquire Common Stock) or repurchases, acquisitions or redemptions of Common Stock in connection with the issuance or exchange of the Common Stock (or securities convertible into or exchangeable for shares of the Company's Common Stock); or (v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future.
The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights of the Holders to receive and the obligation of the Company to pay Contract Adjustment Payments, if any, or any Deferred Contract Adjustment Payments, and the rights and obligations of Holders to purchase Common Stock, shall immediately and automatically terminate, without the necessity of any notice or action by any Holder, the Agent or the Company, if, on or prior to the Stock Purchase Date, a Termination Event shall have occurred. Upon the occurrence of a Termination Event, the Company shall promptly but in no event later than two Business Days thereafter give written notice to the Agent, the Collateral Agent and to the Holders, at their addresses as they appear in the Stripped Equity Security Unit Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Pledged Treasury Securities from the Pledge in accordance with the provisions of the Pledge Agreement.
Upon registration of transfer of this Stripped Equity Security Unit Certificate, the transferee shall be bound (without the necessity of any other action on the part of such transferee, except as may be required by the Agent pursuant to the Purchase Contract Agreement), under the terms of the Purchase Contract Agreement and the Purchase Contracts evidenced hereby and the transferor shall be released from the obligations under the Purchase Contracts evidenced by this Stripped Equity Security Unit Certificate. The Company covenants and agrees, and the Holder, by his acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Stripped Equity Security Unit Certificate, by his acceptance hereof, authorizes the Agent to enter into and perform the related Purchase Contracts forming part of the Stripped Equity Security Units evidenced hereby on his behalf as its attorney-in-fact, expressly withholds any consent to the assumption (i.e., affirmance) of the Purchase Contracts by the Company or its trustee in the event that the Company becomes the subject of a case under the Bankruptcy Code, agrees to be bound by the terms and provisions thereof, covenants and agrees to perform such Holder's obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, authorizes the Agent to enter into and perform the Pledge Agreement on such Holder's behalf as attorney-in-fact, and consents to the Pledge of the Treasury Securities underlying this Stripped Equity Security Unit Certificate pursuant to the Pledge Agreement. The Holder further covenants and agrees, that, to the extent and in the
manner provided in the Purchase Contract Agreement and the Pledge Agreement, but subject to the terms thereof, payments in respect of the Pledged Treasury Securities, to be paid upon settlement of such Holder's obligations to purchase Common Stock under the Purchase Contract, shall be paid on the Stock Purchase Date by the Collateral Agent to the Company in satisfaction of such Holder's obligations under such Purchase Contract and such Holder shall acquire no right, title or interest in such payments.
Each Holder of any Equity Security Units or Stripped Equity Security Units, and each Beneficial Owner thereof, by its acceptance thereof or of its interest therein, further agrees to treat (i) itself as the owner of the related Notes, Applicable Ownership Interest in the Treasury Portfolio, Applicable Ownership Interest in the Tax Event Treasury Portfolio or Treasury Securities, as the case may be, (ii) the Notes as indebtedness of the Company, and (iii) the Purchase Contract and the Notes, the Treasury Portfolio, the Tax Event Treasury Portfolio of Treasury Securities, as the case may be, as separate financial instruments, in each case, for all tax purposes.
Subject to certain exceptions, the provisions of the Purchase Contract Agreement may be amended with the consent of the Holders of a majority of the Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York, without regard to its principles of conflicts of laws.
The Company, the Agent and its Affiliates and any agent of the Company or the Agent may treat the Person in whose name this Stripped Equity Security Unit Certificate is registered as the owner of the Stripped Equity Security Units evidenced hereby for the purpose of receiving any Contract Adjustment Payments and any Deferred Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever (subject to the Record Date provisions hereof), whether or not any payments in respect thereof be overdue and notwithstanding any notice to the contrary, and neither the Company, the Agent, such Affiliate, nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at the offices of the Agent.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
Under Uniform Gifts to Minors Act
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of Assignee)
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Stripped Equity Security Unit Certificates and all rights thereunder, hereby irrevocably constituting and appointing ____________________________ attorney to transfer said Equity Security Unit Certificates on the books of DTE ENERGY COMPANY with full power of substitution in the premises.
Dated: _______________________ Signature:_______________________________
NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Stripped Equity Security Unit Certificates in every particular, without alteration or enlargement or any change whatsoever.
Signature Guarantee:_____________________________________________________
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon settlement on or after the Stock Purchase Date of the Purchase Contracts underlying the number of Stripped Equity Security Units evidenced by this Stripped Equity Security Unit Certificate be registered in the name of, and delivered, together with a check in payment for any fractional share, to the undersigned at the address indicated below unless a different name and address have been indicated below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated:___________________________ Signature:________________________________ Signature Guarantee:______________________ (if assigned to another person) If shares are to be registered in REGISTERED HOLDER Please print name and the name of and delivered to a address Registered Holder: Person other than the Holder, please (i) print such Person's name and address and (ii) provide |
a guarantee of your signature:
________________________________ ___________________________________ Name Name ________________________________ ___________________________________ Address Address Social Security or other Taxpayer Identification Number, if any |
ELECTION TO SETTLE EARLY
The undersigned Holder of this Stripped Equity Security Unit Certificate hereby irrevocably exercises the option to effect Early Settlement in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Stripped Equity Security Units evidenced by this Stripped Equity Security Unit Certificate specified below. The option to effect Early Settlement may be exercised only with respect to Purchase Contracts underlying Stripped Equity Security Units with an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The undersigned Holder directs that a certificate for shares of Common Stock deliverable upon such Early Settlement be registered in the name of, and delivered, together with a check in payment for any fractional share and any Stripped Equity Security Unit Certificate representing any Stripped Equity Security Units evidenced hereby as to which Early Settlement of the related Purchase Contracts is not effected, to the undersigned at the address indicated below unless a different name and address have been indicated below. Pledged Notes deliverable upon such Early Settlement will be transferred in accordance with the transfer instructions set forth below. If shares are to be registered in the name of a Person other than the undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated:__________________________ Signature:________________________________
Signature Guarantee:______________________
Number of Stripped Equity Security Units evidenced hereby as to which Early Settlement of the related Purchase Contracts is being elected:
If shares of Common Stock are to be REGISTERED HOLDER registered in the name of and delivered to and Pledged Notes are to be transferred to a Person other than the Holder, please Please print name and address of print such Person's name and address: Registered Holder: ______________________________________ __________________________________ Name Name ______________________________________ __________________________________ Address Address |
Social Security or other Taxpayer Identification Number, if any
Transfer instructions for Pledged Treasury Securities transferable upon Early Settlement or a Termination Event:
(TO BE ATTACHED TO GLOBAL CERTIFICATES)
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
Amount of Decrease Stated Amount of the in Stated Amount of Amount of Increase in Global Certificate the Global Stated Amount of the Following Such Signature of Date Certificate Global Certificate Decrease or Increase Authorizing Officer ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- |
EXHIBIT C
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT
THE BANK OF NEW YORK,
as Collateral Agent
101 Barclay Street
New York, New York 10286
Attn: Corporate Trust Administration
Re: Equity Security Units of DTE ENERGY COMPANY (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge
Agreement, dated as of June 25, 2002 (the "Pledge Agreement") among the Company,
you, as Collateral Agent, Custodial Agent and Securities Intermediary and us, as
Purchase Contract Agent and as attorney-in-fact for the holders of [Equity
Security Units] [Stripped Equity Security Units] from time to time, that the
holder of Equity Security Units and Stripped Equity Security Units listed below
(the "Holder") has elected to substitute [$_____ aggregate principal amount of
Treasury Securities (CUSIP No. 912803AG8)] [$_______ aggregate principal amount
of Notes, the Applicable Ownership Interest of the Treasury Portfolio or the
Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case
may be,] in exchange for the related [Pledged Notes, the appropriate Pledged
Applicable Ownership Interest of the Treasury Portfolio or the appropriate
Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio, as
the case may be,] [Pledged Treasury Securities] held by you in accordance with
the Pledge Agreement and has delivered to us a notice stating that the Holder
has Transferred [Treasury Securities] [Notes, the appropriate Applicable
Ownership Interest of the Treasury Portfolio or the appropriate Applicable
Ownership Interest in the Tax Event Treasury Portfolio, as the case may be,] to
you, as Collateral Agent. We hereby instruct you, upon receipt of such [Pledged
Treasury Securities] [Pledged Notes, the appropriate Pledged Applicable
Ownership Interest of the Treasury Portfolio or the appropriate Pledged
Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case
may be,], and upon the payment by such Holder of any applicable fees, to release
the [Notes, the appropriate Applicable Ownership Interest of the Treasury
Portfolio or the appropriate Applicable Ownership Interest in the Tax Event
Treasury Portfolio, as the case may be,] [Treasury Securities] related to such
[Equity Security Units] [Stripped Equity Security Units] to us in accordance
with the Holder's instructions. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.
Date: _____________________
THE BANK OF NEW YORK,
as Purchase Contract Agent
By:____________________________
Name:
Title:
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Notes, the appropriate Applicable Ownership Interest in
the Treasury Portfolio or the appropriate Applicable Ownership Interest in the
Tax Event Treasury Portfolio] for the [Pledged Notes, the appropriate Pledged
Applicable Ownership Interest in the Treasury Portfolio or the appropriate
Pledged Applicable Ownership Interest in the Tax Event Treasury Portfolio]
[Pledged Treasury Securities]:
Name:__________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:_______________
Address:_______________________________________________________________________
DTC Account No._______________________________
EXHIBIT D
INSTRUCTION TO PURCHASE CONTRACT AGENT
THE BANK OF NEW YORK,
as Purchase Contract Agent
101 Barclay Street
New York, New York 10286
Attn: Corporate Trust Administration
Telecopy: (212) 896-7298
Re: Equity Security Units of DTE ENERGY COMPANY (the "Company")
The undersigned Holder hereby notifies you that it has delivered to The Bank of
New York, as Collateral Agent, Custodial Agent and Securities Intermediary
[$_______ aggregate principal amount of Treasury Securities (CUSIP No.
912803AG8)] [$_______ aggregate principal amount of Notes, the appropriate
Applicable Ownership Interest in the Treasury Portfolio or the appropriate
Applicable Ownership Interest in the Tax Event Treasury Portfolio, as the case
may be] in exchange for the related [Pledged Notes, Pledged Applicable Ownership
Interest in the Treasury Portfolio or the appropriate Pledged Applicable
Ownership Interest in the Tax Event Treasury Portfolio, as the case may be]
[Pledged Treasury Securities] held by the Collateral Agent, in accordance with
Section [4.1] [4.2] of the Pledge Agreement, dated June 25, 2002 (the "Pledge
Agreement"), among you, the Company and the Collateral Agent. The undersigned
Holder has paid the Collateral Agent all applicable fees relating to such
exchange. The undersigned Holder hereby instructs you to instruct the Collateral
Agent to release to you on behalf of the undersigned Holder the [Pledged Notes,
the appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio
or the appropriate Pledged Applicable Ownership Interest in the Tax Event
Treasury Portfolio, as the case may be] [Pledged Treasury Securities] related to
such [Equity Security Units] [Stripped Equity Security Units]. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
Date: ____________________ Signature:___________________________________
Signature Guarantee:_________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
Please print name and address of Registered Holder:___________________________
Name:_________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any:______________
Address:______________________________________________________________________
DTC Participant No. _______________________
EXHIBIT E
NOTICE TO SETTLE BY SEPARATE CASH
THE BANK OF NEW YORK,
as Purchase Contract Agent
101 Barclay Street
New York, New York 10286
Attn: Corporate Trust Administration
Telecopy: (212) 896-7298
Re: Equity Security Units of DTE ENERGY COMPANY (the "Company")
The undersigned Holder hereby irrevocably notifies you in accordance with
Section 5.4 of the Purchase Contract Agreement dated as of June 25, 2002 among
the Company and yourselves, as Purchase Contract Agent and as Attorney-in-Fact
for the Holders of the Purchase Contracts, that such Holder has elected to pay
to the Collateral Agent, on or prior to 11:00 a.m., New York City time, on the
eighth Business Day immediately preceding the Stock Purchase Date, (in lawful
money of the United States by [certified or cashiers check or] wire transfer, in
each case in immediately available funds), $_________ as the Purchase Price for
the shares of Common Stock issuable to such Holder by the Company under the
related Purchase Contract on the Stock Purchase Date. The undersigned Holder
hereby instructs you to notify promptly the Collateral Agent of the undersigned
Holder's election to make such cash settlement with respect to the Purchase
Contracts related to such Holder's Equity Security Units.
Dated: ____________________ Signature: _________________________________
Signature Guarantee: _______________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
Please print name and address of Registered Holder:____________________________
Social Security or other Taxpayer Identification Number, if any:_______________
DTC Participant No._____________________
EXHIBIT F
FORM OF REMARKETING AGREEMENT
DTE ENERGY COMPANY
AND
THE BANK OF NEW YORK
TRUSTEE
SIXTH SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 25, 2002
SUPPLEMENTING THE AMENDED AND RESTATED INDENTURE
DATED AS OF APRIL 9, 2001
PROVIDING FOR
4.60% SENIOR NOTES DUE 2007
SIXTH SUPPLEMENTAL INDENTURE, dated as of the 25th day of June, 2002 (the "Supplemental Indenture"), between DTE ENERGY COMPANY, 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 Amended and Restated Indenture, dated as of April 9, 2001 (the "Original Indenture"), as amended, supplemented or modified (as so amended, supplemented or modified, and as supplemented by this Supplemental Indenture, the "Indenture") 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 a series of its unsecured, senior debt securities pursuant to the Original Indenture; 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 Supplemental Indenture to the Original Indenture as permitted by Section 201 and Section 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 "4.60% Senior Notes due 2007"; 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 Supplemental Indenture a valid, binding and legal agreement of the Company, have been done;
NOW, THEREFORE, THIS 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 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. Unless the context otherwise requires:
(a) a term defined in the Original Indenture has the same meaning when used in this Supplemental Indenture, unless otherwise defined herein;
(b) a term defined anywhere in this Supplemental Indenture has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) headings are for convenience of reference only and do not affect interpretation;
(e) the following terms have the meanings given to them in the Purchase Contract Agreement, a copy of which is attached hereto as Exhibit C: (i) Clearing Agency Participant; (ii) Collateral Agent; (iii) Custodial Agent; (iv) Equity Security Units; (v) Pledged Notes; (vi) Purchase Contract; (vii) Purchase Contract Agent; (viii) Securities Intermediary; (ix) Stock Purchase Date; (x) Stripped Equity Security Units; and (xi) Underwriting Agreement; and
(f) the following terms have the meanings given to them in this Section 101(f):
"Business Day" means any day other than a Saturday or Sunday or any other day on which banking institutions and trust companies in the State of New York or at a Place of Payment are authorized or required by law; regulation or executive order to be closed.
"Contingent Payment Regulations" has the meaning specified in Section 210(b).
"Coupon Rate" has the meaning specified in Section 206(a).
"Failed Remarketing" has the meaning specified in Section 207(b).
"Global Note" has the meaning specified in Section 205.
"Interest Payment Date" has the meaning set forth in Section 206(a).
"Note" or "Notes" has the meaning specified in Section 201.
"Pledge Agreement" means the Pledge Agreement, dated as of June 25, 2002, among the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary, and the Purchase Contract Agent, for itself and as attorney-in-fact of the holders from time to time of the Equity Security Units and Stripped Equity Security Units issued pursuant to the Purchase Contract Agreement, a copy of which is attached hereto as Exhibit B.
"Purchase Contract Agreement" means the Purchase Contract Agreement, dated as of June 25, 2002, between the Company and the Purchase Contract Agent.
"Quotation Agent" means UBS Warburg LLC or Salomon Smith Barney Inc. or their respective successors or any other primary U.S. government securities dealer in New York City selected by the Company.
"Redemption Amount" means, (A) in the case of a Tax Event Redemption occurring prior to the earlier of a successful remarketing of the Notes and the Stock Purchase Date, for each Note the product of (i) the principal amount of such Note and (ii) a fraction whose numerator is the applicable Tax Event Treasury Portfolio Purchase Price and whose denominator is the aggregate
principal amount of Notes outstanding on the Tax Event Redemption Date (immediately prior to redemption), and (B) in the case of a Tax Event Redemption Date occurring on or after the earlier of a successful remarketing of the Notes and the Stock Purchase Date, for each Note, the principal amount of the Note (immediately prior to redemption).
"Redemption Price" means the redemption price per Note equal to the Redemption Amount plus any accrued and unpaid interest on such Note to the date of redemption.
"Regular Record Date" has the meaning specified in Section 206(e).
"Remarketing Agent" has the meaning specified in Section 207(b).
"Remarketing Date" means the third Business Day immediately preceding May 16, 2005.
"Remarketing Fee" has the meaning specified in Section 207(b).
"Remarketing Period" means any of the following three Business Day periods: (i) the Remarketing Date and each of the two immediately succeeding Business Days; (ii) the three Business Days immediately preceding July 1, 2005; or (iii) the seventh, sixth and fifth Business Days immediately preceding August 16, 2005.
"Remarketing Value" means the sum of
(i) the value at the Remarketing Date or any Subsequent Remarketing Date, as the case may be, of U.S. Treasury securities that will pay, on the Business Day immediately preceding the Interest Payment Date falling on the Stock Purchase Date, an amount of cash equal to the aggregate interest payments that are scheduled to be payable on that Interest Payment Date, on (a) the Notes which are included in Equity Security Units and (b) the Separate Notes that are to be remarketed pursuant to Section 4.5(d) of the Pledge Agreement and this Supplemental Indenture, assuming for that purpose that the interest rate on the Notes is equal to the Coupon Rate, and
(ii) the value at the Remarketing Date or the Subsequent Remarketing Date, as the case may be, of U.S. Treasury securities that will pay, on the Business Day immediately preceding the Stock Purchase Date, an amount of cash equal to the principal amount (a) of such Notes that are included in Equity Security Units and (b) the Separate Notes which are to be remarketed pursuant to Section 4.5(d) of the Pledge Agreement and this Supplemental Indenture,
provided that for purposes of clauses (i) and (ii) above, the Remarketing Value shall be calculated on the assumptions that (x) the U.S. Treasury securities are highly liquid and mature on or within 35 days prior to the Stock Purchase Date, as determined in good faith by the Remarketing Agent in a manner intended to minimize the cash value of the U.S. Treasury securities, and (y) the U.S. Treasury securities are valued based on the ask-side price of the U.S. Treasury securities at a time between 9:00 a.m. and 11:00 a.m., New York City time, selected by
the Remarketing Agent, on the Remarketing Date or any Subsequent Remarketing Date, as the case may be, as determined on a third-day settlement basis by a reasonable and customary means selected in good faith by the Remarketing Agent, plus accrued interest to that date.
"Reset Effective Date" means (i) May 16, 2005, in case the Notes are successfully remarketed on the third Business Day immediately preceding May 16, 2005, (ii) the third Business Day following a Subsequent Remarketing Date in the event that the Notes are successfully remarketed on a Subsequent Remarketing Date or (iii) in the event that there is a Last Failed Remarketing on the fifth Business Day immediately preceding the Stock Purchase Date, August 16, 2005.
"Reset Rate" has the meaning set forth in Section 207(b); provided that, in the event of a last Failed Remarketing on the fifth Business Day immediately preceding the Stock Purchase Date the Reset Rate shall be the rate determined pursuant to the provisions of Section 207(e).
"Separate Notes" has the meaning specified in Section 207(a).
"Subsequent Remarketing Date" means, provided there has been one or more Failed Remarketings, the date on which the Remarketing Agent has consummated a successful remarketing in accordance with Section 5.4 of the Purchase Contract Agreement, such date to be no later than the fifth Business Day immediately preceding the Stock Purchase Date.
"Tax Event" means the receipt by the Company of an opinion of
nationally recognized tax counsel experienced in such matters to the effect that
there is more than an insubstantial risk that interest payable by the Company on
the Notes on the next Interest Payment Date would not be deductible, in whole or
in part, by the Company for United States federal income tax purposes, as a
result of (i) any amendment to, or change (including any announced proposed
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein affecting taxation,
(ii) any amendment to or change in an official interpretation or application of
such laws or regulations by any legislative body, court, governmental agency or
regulatory authority or (iii) any official interpretation or pronouncement that
provides for a position with respect to any such laws or regulations that
differs from the generally accepted position on June 19, 2002, which amendment,
change, or proposed change is effective or which interpretation or pronouncement
is announced on or after June 19, 2002.
"Tax Event Treasury Portfolio" means a portfolio of principal or
interest strips of U.S. Treasury Securities that mature on (i) the Business Day
immediately preceding the Stock Purchase Date in an aggregate amount equal to
the aggregate principal amount of the Notes included in the Equity Security
Units on the Tax Event Redemption Date (immediately prior to redemption) and
(ii) with respect to each scheduled Interest Payment Date on the Notes that
occurs after the Tax Event Redemption Date and on or before the Stock Purchase
Date, interest or principal strips of U.S. Treasury Securities that mature on
the Business Day immediately preceding such Interest Payment Date in an
aggregate amount equal to the aggregate interest payment that would be due on
the aggregate principal amount of the Notes outstanding on the Tax Event
Redemption Date (immediately prior to the redemption).
"Tax Event Treasury Portfolio Purchase Price" means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the Quotation Agent on the third Business Day immediately preceding the Tax Event Redemption Date for the purchase of the Treasury Portfolio for settlement on the Tax Event Redemption Date.
"Tax Event Redemption" means, if a Tax Event shall occur and be continuing, the redemption of the Notes, at the option of the Company, in whole but not in part, on not less than 30 days nor more than 60 days' written notice.
"Tax Event Redemption Date" means the date upon which a Tax Event Redemption is to occur.
"Treasury Portfolio" has the meaning specified in Section 207(b).
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 Supplemental Indenture.
ARTICLE TWO
TITLE AND TERMS OF THE SECURITIES
SECTION 201 Title of the Securities; Stated Maturity. This Supplemental Indenture hereby establishes a separate series of Securities, which shall be known as the Company's "4.60% Senior Notes due 2007" (the "Notes"). For purposes of the Original Indenture, the Notes shall constitute a single series of Securities. The Stated Maturity on which the principal of the Notes shall be due and payable will be August 16, 2007.
SECTION 202 Rank. The Notes shall rank equally with all other unsecured and unsubordinated indebtedness of the Company from time to time outstanding.
SECTION 203 Variations from the Original Indenture. Section 1009 of the Original Indenture shall be applicable to the Notes. Section 403(2) and Section 403(3) of the Original Indenture shall be applicable to the Notes; the Company's obligations under Section 1009 of the Original Indenture, without limitation, shall be subject to defeasance in accordance with Section 403(3) of the Original Indenture.
SECTION 204 Amount.
(a) The aggregate principal amount of Notes that may be issued under
this Supplemental Indenture is limited (except as provided in Section 301(2) of
the Original Indenture) initially to $150,000,000 (or, $172,500,000, if the
underwriters' over-allotment option pursuant to the Underwriting Agreement is
exercised in full); provided, that the Company may, without the consent of the
Holders of the Outstanding Notes, "reopen" the Notes so as to increase the
aggregate principal amount of such Notes Outstanding in compliance with the
procedures set forth in the Original Indenture, including Section 301 and
Section 303 thereof, so long as any such additional Notes have the same tenor
and terms (including, without limitation, rights to
receive accrued and unpaid interest) as the Notes then Outstanding. No additional Notes may be issued if an Event of Default has occurred with respect to the series of Notes.
SECTION 205 Form and Denominations of Securities.
(a) Except as provided in Section 205(b), the Notes shall be issuable
only in certificated, fully registered form and, as permitted by Section 301 and
Section 302 of the Original Indenture, in denominations of $25 and integral
multiples thereof. The entire principal amount of the Notes shall initially be
evidenced by one or more certificates issued to The Bank of New York, as
Purchase Contract Agent pursuant to the Purchase Contract Agreement.
(b) Separate Notes shall be issued in the form of one or more global certificates (the "Global Notes") under a book-entry system, registered in the name of The Depository Trust Company, as depositary ("DTC"), or its nominee, which is hereby designated as "U.S. Depositary" and "Depositary" under the Indenture for the Global Notes. Each such certificated Note and Global Note shall represent such aggregate principal amount of the Outstanding Notes as shall be from time to time endorsed thereon, which principal amounts may be increased or decreased, as applicable, to reflect, in connection with the creation of Stripped Equity Security Units and the recreation of Equity Security Units, transfers between Pledged Notes and Separate Notes. Any such increase or decrease in the aggregate principal amount of (i) certificated Notes shall be made by the Collateral Agent and (ii) Global Notes shall be made by the Trustee, as custodian of the Global Notes, in each case upon the instructions of the Collateral Agent given pursuant to Article IV of the Pledge Agreement.
(c) Further to Section 305 of the Original Indenture, any Global Note
shall be exchangeable for certificated Notes without coupons registered in the
name of, and a transfer of a Global Note may be registered to, any Person other
than the Depositary for such Note or its nominee only (x) as provided in Section
205(b) or if (y) (i) such Depositary notifies the Company that it is unwilling
or unable to continue as Depositary for such Global Note and no successor
Depositary has been appointed within 90 days after this notice, (ii) the
Depositary at any time ceases to be a Depositary registered under the Exchange
Act at which time the Depositary is required to be so registered to act as the
Depositary and no successor Depositary has been appointed within 90 days after
the Company learns that the Depositary has ceased to be so registered, (iii) the
Company determines in its sole discretion that it will no longer have the Notes
represented by Global Notes or permit any of the Global Note certificates to be
so exchangeable or (iv) an Event of Default with respect to the Notes under the
Indenture has occurred and is continuing. Upon the occurrence in respect of any
Global Note of any or more of the conditions specified in clause (y) (i), (ii),
(iii) or (iv) of the preceding sentence, the Company will execute, and subject
to Article Three of the Original Indenture, the Trustee, upon written notice
from the Company, will authenticate and deliver the Notes in definitive
registered form without coupons, in authorized denominations in exchange for
such Global Note or applicable portion thereof. Upon exchange of a Global Note
as a whole for Notes in definitive registered form without coupons, in
authorized denominations, the Global Note shall be cancelled by the Trustee.
Such Notes in definitive registered form issued in exchange for the Global Note
shall be registered in such names and in such authorized denominations and
delivered as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
SECTION 206 Interest.
(a) Each Note will bear interest initially at the rate of 4.60% per year (the "Coupon Rate") from and including June 25, 2002 through and including the day immediately preceding the Reset Effective Date and at the Reset Rate thereafter until the principal thereof is paid or duly made available for payment and shall bear interest, to the extent permitted by law, compounded quarterly, on any overdue principal and premium, if any, and on any overdue installment of interest at the Coupon Rate through and including the day immediately preceding the Reset Effective Date and at the Reset Rate thereafter, payable quarterly in arrears on February 16, May 16, August 16 and November 16 of each year (each, an "Interest Payment Date") commencing on August 16, 2002. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date with respect to any Note will, as provided in the Original Indenture, be paid to the person in whose name the Note (or one or more Predecessor Securities) is registered at the close of business on the relevant record date for such interest installment, which shall be the close of business on the first day of the month (whether or not a Business Day) in which such Interest Payment Date falls (the "Regular Record Date"). Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holders on such Regular Record Date, and may either be paid to the person in whose name the Note (or one or more Predecessor Securities) 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 the applicable series of Notes not less than ten 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 Original Indenture.
(b) The amount of interest payable for any period will be computed (i) for any full quarterly period on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly period, on the basis of a 30-day month and, for periods of less than a month, on the basis of the actual number of days elapsed per 30-day month. If any Interest Payment Date, redemption date or other date of Maturity of the Notes is not a Business Day, the payment of the interest payable on that date will be made on the next day that is a Business Day, without any interest or other payment in respect of the delay, except that if the next Business Day is in the next calendar year, then the payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the scheduled payment date.
(c) The principal of, and premium, if any, and the interest on the Notes 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 Regular Record Date at such address as shall appear in the Security Register or by wire transfer to the account designated to the Trustee by a prior written notice by such Holder delivered at least ten Business Days prior to the applicable Interest Payment Date.
SECTION 207 Remarketing and Reset Rate.
(a) The interest rate on the Notes will be reset on the Remarketing Date to the applicable Reset Rate. In the event of a failed remarketing on the Remarketing Date, the interest rate on the Notes will be reset on a Subsequent Remarketing Date. In the event that there is a Last Failed Remarketing on the fifth Business Day immediately preceding August 16, 2005, the interest rate on the Notes will be reset in accordance with the provisions of Section 207(e).
(b) The Company shall engage a nationally recognized investment bank
(the "Remarketing Agent") pursuant to the Remarketing Agreement to be mutually
agreed on by the Company, the Agent and the Remarketing Agent, but substantially
as set forth in Exhibit D hereto, to sell the Notes of holders of Equity
Security Units and of Holders of Notes that are not held as part of the Equity
Security Units ("Separate Notes") that have elected to participate in the
remarketing pursuant to the procedures set forth in Section 207(c). On the
seventh Business Day immediately preceding the first Business Day of any
Remarketing Period, the Remarketing Agent shall give Holders of Separate Notes
notice of the remarketing by means of a release on Bloomberg and Reuters
newswire or any successor(s) to such service(s). Pursuant to the terms of the
Purchase Contract Agreement, the Purchase Contract Agent shall notify, by 10:00
a.m., New York City time, on the third Business Day preceding the first Business
Day of any Remarketing Period, the Remarketing Agent and the Collateral Agent of
the aggregate number of Notes of Equity Security Unit holders to be remarketed.
Pursuant to the terms of the Purchase Contract Agreement, on the third Business
Day immediately preceding the first Business Day of any Remarketing Period, no
later than by 10:00 a.m. New York City time, pursuant to the terms of the Pledge
Agreement, the Custodial Agent will notify the Remarketing Agent of the
aggregate number of Separate Notes to be remarketed. On the third Business Day
immediately preceding the first Business Day of any Remarketing Period, the
Collateral Agent and the Custodial Agent, pursuant to the terms of the Pledge
Agreement, will deliver for remarketing to the Remarketing Agent all Notes to be
remarketed. Pursuant to the terms of the Remarketing Agreement, upon receipt of
such notice from the Custodial Agent and such Notes from the Collateral Agent
and the Custodial Agent, the Remarketing Agent will, on the Remarketing Date and
on any Subsequent Remarketing Date in accordance with the provisions of Section
207(b)(ii), use its commercially reasonable best efforts to (x) establish a rate
of interest that, in the opinion of the Remarketing Agent, will, when applied to
the Notes included in the remarketing, enable the then current aggregate market
value of the Notes to have a value equal to approximately, but not less than,
100.50% of the Remarketing Value as of the Remarketing Date or as of any
Subsequent Remarketing Date, as the case may be (the "Reset Rate") and (y) sell
such Notes on such date at a price equal to approximately, but not less than,
100.50% of the Remarketing Value. Pursuant to the terms of the Remarketing
Agreement, the Remarketing Agent will deduct as a remarketing fee an amount not
exceeding 25 basis points (0.25%) of the total proceeds from the remarketing
(the "Remarketing Fee"). Pursuant to the terms of the Remarketing Agreement, the
Remarketing Agent will use the remaining proceeds from the successful
remarketing to purchase the appropriate U.S. Treasury securities (the "Treasury
Portfolio") (with the CUSIP numbers, if any, selected by the Remarketing Agent)
described in clauses (i) and (ii) of the definition of Remarketing Value related
to the Notes of holders of Equity Security Units that were remarketed. Pursuant
to the terms of the Purchase Contract Agreement, on or prior to the third
Business Day following the Remarketing Date (or in the event
that the Notes are not successfully remarketed on the Remarketing Date, on or prior to the third Business Day immediately following the applicable Subsequent Remarketing Date), the Remarketing Agent shall deliver such Treasury Portfolio to the Purchase Contract Agent, which shall thereupon deliver such Treasury Portfolio to the Collateral Agent. The Collateral Agent, for the benefit of the Company, will thereupon apply such Treasury Portfolio, in accordance with the Pledge Agreement, to secure such holders' obligations under the Purchase Contracts. Pursuant to the terms of the Purchase Contract Agreement, the Remarketing Agent will remit (1) the portion of the proceeds from the remarketing attributable to the Separate Notes to the Holders of Separate Notes that were remarketed and (2) the remaining portion of the proceeds, less those proceeds used to purchase the Treasury Portfolio, to the holders of the Equity Security Units that were remarketed, all determined on a pro rata basis, in each case, net of the remarketing fee, on or prior to the third Business Day following the Remarketing Date (or in the event that the Notes are not successfully remarketed on the Remarketing Date, on or prior to the third Business Day immediately following the applicable Subsequent Remarketing Date for a successful remarketing). Holders whose Notes are so remarketed will not otherwise be responsible for the payment of any Remarketing Fee in connection therewith.
Pursuant to the terms of the Remarketing Agreement, if, in spite of using its commercially reasonable best efforts, the Remarketing Agent cannot establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on the Remarketing Date, the Remarketing Agent will attempt to again establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on each of the two immediately following Business Days. Pursuant to the terms of the Remarketing Agreement, if the Remarketing Agent cannot remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on either of those days, it will attempt to establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on each of the three Business Days immediately preceding July 1, 2005. Pursuant to the terms of the Remarketing Agreement, if the Remarketing Agent cannot establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on any of the three Business Days immediately preceding July 1, 2005, the Remarketing Agent will further attempt to establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on each of the seventh, sixth and fifth Business Days immediately preceding the Stock Purchase Date. If the Remarketing Agent cannot establish the Reset Rate and remarket the Notes included in the remarketing at a price equal to approximately, but not less than, 100.50% of the Remarketing Value on any of the Remarketing Date or the two Business Days immediately following the Remarketing Date, on any of the three Business Days immediately preceding July 1, 2005 or on the seventh or sixth or fifth Business Day immediately preceding the Stock Purchase Date, the remarketing on each such date will be deemed to have failed (each, a "Failed Remarketing"). In addition, if, in spite of using its commercially reasonable best efforts, the Remarketing Agent fails to remarket the Notes included in the remarketing at 100.50% of the Remarketing Value in accordance with the terms of the Pledge Agreement by 4:00 p.m., New York City time, on the last Business Day in a Remarketing Period,
a "Last Failed Remarketing" will be deemed to have occurred for that Remarketing Period. Pursuant to the terms of the Remarketing Agreement, within three Business Days following the date of any Last Failed Remarketing, the Remarketing Agent shall return any Notes delivered to it to the Collateral Agent, whether in its role as such or as Custodial Agent. In the event of a Last Failed Remarketing on the fifth Business Day immediately preceding the Stock Purchase Date, (1) the Reset Rate on the Notes will be determined as set forth in Section 207(e) and (2) an event of default shall be deemed to have occurred under the Purchase Contract Agreement and the Pledge Agreement and in accordance with the terms of the Pledge Agreement, the Collateral Agent, for the benefit of the Company, shall, in respect of the Notes comprising components of Equity Security Units, exercise its rights as a secured party with respect to such Notes, including those actions specified in Section 207(b)(iii); provided, that if upon a Last Failed Remarketing on the fifth Business Day immediately preceding the Stock Purchase Date, the Collateral Agent delivers a Note to the Company in full satisfaction of the Equity Security Unit holder's obligation under the related Purchase Contract, any accrued and unpaid interest on such Note will become payable by the Company to the Purchase Contract Agent for payment to the holder of the Equity Security Units to which such Note relates. Such payment will be made by the Company on or prior to 11:00 a.m., New York City time, on the Stock Purchase Date in lawful money of the United States of America by certified or cashier's check or wire transfer in immediately available funds payable to or upon the order of the Purchase Contract Agent. Pursuant to the terms of the Purchase Contract Agreement, the Company will cause a notice of any Last Failed Remarketing to be released by means of Bloomberg and Reuters newswire or any successor(s) to such service(s). In addition, the Company will request, not later than seven nor more than 15 calendar days prior to any Remarketing Period, that the Depositary notify its participants holding Notes of the remarketing.
With respect to any Notes that constitute part of Equity Security Units that are subject to a Last Failed Remarketing on the fifth Business Day immediately preceding the Stock Purchase Date, the Collateral Agent for the benefit of the Company reserves all of its rights as a secured party with respect thereto and, subject to applicable law and Section 5.4(e) of the Purchase Contract Agreement, may, among other things, permit the Company to cause the Notes to be sold or to retain and cancel such Notes, in either case, in full satisfaction of the Equity Security Unit holders' obligations under the Purchase Contracts.
The right of each Holder of Pledged Notes or Separate Notes to have Notes included in any remarketing shall be limited to the extent that (i) the Remarketing Agent conducts a remarketing on the Remarketing Date or on any Subsequent Remarketing Date, as the case may be, pursuant to the terms of the Remarketing Agreement, (ii) the Notes included in a remarketing have not been called for redemption, (iii) the Remarketing Agent is able to find a purchaser or purchasers for the Notes included in a remarketing at a Reset Rate such that the then current aggregate market value of the Notes is equal to approximately, but not less than, 100.50% of the Remarketing Value, and (iv) such purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent as and when required.
In accordance with the Depositary's normal procedures, the transactions described above with respect to each Note tendered for purchase and sold in any successful remarketing shall be executed through the Depositary, and the accounts of the respective Clearing Agency Participants
shall be debited and credited and such Notes delivered by book entry as necessary to effect purchases and sales of such Notes. The Depositary shall make payment in accordance with its normal procedures.
If any Holder selling Notes in any successful remarketing fails to deliver such Notes, the Clearing Agency Participant of such selling Holder and of any other Person that was to have purchased Notes in such successful remarketing may deliver to any such other Person an aggregate principal amount of Notes that is less than the aggregate principal amount of Notes that otherwise was to be purchased by such Person. In such event, the aggregate principal amount of Notes to be so delivered shall be determined by such Clearing Agency Participant, and delivery of such lesser aggregate principal amount of Notes shall constitute good delivery.
The Remarketing Agent is not obligated to purchase any Notes in any remarketing or otherwise. Neither the Trustee, the Company nor the Remarketing Agent shall be obligated in any case to provide funds to make payment upon tender of Notes for remarketing.
The tender and settlement procedures set forth in this Section 207(b), including provisions for payment by purchasers of Notes in any successful remarketing, shall be subject to modification, notwithstanding any provision to the contrary set forth herein, to the extent required by the Depositary or if the book-entry system is no longer available for the Notes at the time of any successful remarketing, to facilitate the tendering and remarketing of Notes in certificated form. In addition, the Remarketing Agent may, notwithstanding any provision to the contrary set forth herein, modify the settlement procedures set forth herein in order to facilitate the settlement process.
(c) Prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding the first Business Day of a remarketing period, Holders of Separate Notes may elect to have their Notes participate in the remarketing by delivering their Notes along with a notice of such election (substantially in the form of Exhibit C to the Pledge Agreement) to the Collateral Agent (in its capacity as Custodial Agent). The Collateral Agent (in its capacity as Custodial Agent) will hold these Notes separately from the collateral account in which the securities pledged to secure the Holders' obligations under the Purchase Contracts will be held. Holders of Separate Notes electing to have their Notes remarketed will also have the right to withdraw that election on or prior to the fifth Business Day immediately preceding the first day of the relevant remarketing period by delivering a notice of such election (substantially in the form of Exhibit D to the Pledge Agreement) to the Collateral Agent (in its capacity as Custodial Agent).
(d) In the event that the Reset Rate is established on a Remarketing
Date or a Subsequent Remarketing Date, the Remarketing Agent will advise the
Depositary, the Trustee and the Company of the Reset Rate by approximately 4:30
p.m., New York City time, on such date. The Company will, on the second Business
Day immediately preceding the Reset Effective Date or as soon as is practicable
thereafter, cause a notice of the Reset Rate applicable to the Notes to be
released by such date by means of Bloomberg and Reuters newswire or any
successor(s) to such service(s). In addition, the Company shall request that the
Depositary notify its participants holding Notes of the Reset Rate.
(e) In the event of a Last Failed Remarketing on the fifth Business Day immediately preceding the Stock Purchase Date, the Reset Rate shall be determined as follows. In accordance with the provisions of the Remarketing Agreement, the Remarketing Agent shall establish the Reset Rate by taking the average of the interest rates quoted to it by three nationally recognized investment banks selected by the Company, which are underwriters or dealers in debt securities similar to the Notes, that in its judgment reflect an accurate market rate of interest applicable to the Notes at that time. Following receipt of these quotes, the Remarketing Agent will have the right, in its sole judgment, to either recalculate the average based on only two of the quoted interest rates if one of the three quotes, in the Remarketing Agent's sole discretion, does not reflect market conditions or, alternatively, determine a consensus among the investment banks rather than a strict mathematical average by taking into account relevant qualitative and quantitative factors. These factors may include, but shall not be limited to, maturity of the Notes, the Company's credit rating and the Company's credit risk and the credit rating and credit risk of companies in similar industries, the then yield to maturity of the Notes and the state of the market for primary and secondary sales of similar debt securities. If for whatever reason the Remarketing Agent is unable to establish the Reset Rate in accordance with the foregoing procedures, the Reset Rate shall be rate of interest payable on the Notes on their original date of issue.
In accordance with the provisions of the Remarketing Agreement, the Remarketing Agent will advise the Depositary, the Trustee and the Company of the Reset Rate by approximately 4:30 p.m., New York City time, on August 16, 2005. The Company shall, on the following Business Day or as soon as is practicable thereafter, cause a notice of the Reset Rate to be released by such date by means of Bloomberg and Reuters newswire or any successor(s) to such service(s). In addition, the Company shall request that the Depositary notify its participants holding Notes of the Reset Rate.
(f) The Reset Rate established pursuant to the terms of this Section 207 shall be effective as of the Reset Effective Date.
SECTION 208 Redemption.
The Notes are not subject to repayment at the option of the Holders thereof. If a Tax Event shall occur and be continuing, the Company may, at its option, redeem the Notes, in whole but not in part, at any time at a price per Note equal to the Redemption Price. Installments of interest on Notes which are due and payable on or prior to the Tax Event Redemption Date will be payable to Holders of the Notes registered as such at the close of business on the relevant Regular Record Dates. If, following the occurrence of a Tax Event prior to the earlier of (i) a successful remarketing of the Notes pursuant to the Remarketing Agreement or (ii) the Stock Purchase Date, the Company exercises its option to redeem the Notes, the Company shall appoint the Quotation Agent to assemble the Tax Event Treasury Portfolio.
Notice of any redemption will be mailed at least 30 days but not more than 60 days before the Tax Event Redemption Date to each registered Holder of Notes to be redeemed at its registered address. Payment of the Redemption Price to each Holder of Notes shall be made by the Company no later than 10:00 a.m., New York City time, on the Tax Event Redemption Date,
by check or wire transfer in immediately available funds at such place and to such account as may be designated by each such Holder of Notes, including the Custodial Agent or the Collateral Agent, as the case may be. Unless the Company defaults in payment of the Redemption Price, on and after the Tax Event Redemption Date interest shall cease to accrue on the Notes. In the event any Notes are called for a Tax Event Redemption, on and after the date notice is given or deemed given in accordance with the Original Indenture, neither the Company nor the Trustee will be required to register the transfer of or exchange the Notes to be redeemed.
Except as modified hereby or in the form of the Notes, redemptions shall be effected in accordance with Article Eleven of the Original Indenture.
SECTION 209 Sinking Fund. The Notes are not subject to any sinking fund.
SECTION 210 Other Provisions.
(a) Each Note will initially be pledged to secure the Holder's obligations under the Purchase Contract, pursuant to the terms and conditions set forth in the Pledge Agreement.
(b) The Company agrees, and by acceptance of a beneficial ownership interest in the Notes, each beneficial owner of Notes will be deemed to have agreed (1) to treat the acquisition of an Equity Security Unit as the acquisition of the Note and the Purchase Contract constituting the Equity Security Unit and to allocate the purchase price of the Equity Security Unit between the Note and the Purchase Contract in an amount equal to $25 and $0, respectively, (2) to treat the Notes as indebtedness of the Company for all tax purposes, (3) to treat the Notes as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the "Contingent Payment Regulations") for United States federal income tax purposes, (4) to be bound by the Company's determination of the "comparable yield" and "projected payment schedule," within the meaning of the Contingent Payment Regulations, with respect to the Notes for United States federal income tax purposes and (5) to treat each Note and each Purchase Contract constituting the Equity Security Unit as separate financial instruments for all tax purposes. A Holder of Notes may obtain the amount of original issue discount, issue date, yield to maturity, comparable yield and projected payment schedule by submitting a written request for it to the Company at the following address: DTE Energy Company, 2000 2nd Avenue, 850 WCB, Detroit, Michigan 48226-1279, Attn: Assistant Treasurer.
(c) The Notes shall have such other terms and provisions as are set forth in the form of Note attached hereto as Exhibit A (which is incorporated by reference in and made a part of this Supplemental Indenture as if set forth in full at this place).
SECTION 211 Form of Notes. Attached hereto as Exhibit A is the form of the Notes.
ARTICLE THREE
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
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 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 Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
This 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.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the day and year first above written.
DTE ENERGY COMPANY
By: ____________________________
Name: D.R. Murphy
Title: Assistant Treasurer
THE BANK OF NEW YORK
By: __________________________
Name:
Title:
EXHIBIT A
FORM OF NOTE
[Include in Global Notes only: THIS NOTE 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 OF A DEPOSITARY. 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.]
DTE ENERGY COMPANY
4.60% SENIOR NOTES DUE 2007
CUSIP NO.: 233331404 $- Number: R-
DTE Energy Company, a Michigan corporation (the "Company", which term includes any successor corporation under the Indenture hereafter referred to), for value received, hereby promises to pay to [For inclusion in Global Notes only -- Cede & Co.] [For inclusion in Pledged Note -- The Bank of New York, as Purchase Contract Agent pursuant to the Purchase Contract Agreement (as defined below)] or registered assigns, the principal sum of $_______ or such other principal sum as is reflected in the Schedule of Increases or Decreases attached hereto on August 16, 2007, and to pay interest thereon from June 25, 2002, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on February 16, May 16, August 16 and November 16 of each year (each, an "Interest Payment Date"), commencing August 16, 2002; initially at the rate of 4.60% per annum through and including the day immediately preceding the Reset Effective Date and at the Reset Rate thereafter until the principal hereof shall have been paid or duly made available for payment and, to the extent permitted by law, to pay interest, compounded quarterly, on any overdue principal and premium, if any, and on any overdue installment of interest at the rate per year of 4.60% through and including the day immediately preceding the Reset Effective Date and at the Reset Rate thereafter. The amount of interest payable for any period will be computed (1) for any full quarterly period on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly period, on the basis of a 30-day month and (3) for periods of less than a month, on the basis of the actual number of days elapsed per 30-day month.
In the event that any date on which interest or principal is payable on this Note is not a Business Day, then payment of interest or principal payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if the Business Day is in the next succeeding calendar year, then the payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such payment date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date with respect to this Note will, as provided in the Indenture (as defined below), be paid to the person in whose name this Note (or one or more Predecessor Securities, as defined in the Indenture) is registered at the close of business on the Regular Record Date for such interest installment which shall be the close of business on the first day of the month (whether or not a Business Day) in which such Interest Payment Date falls (the "Regular Record Date").
Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holders on such Regular Record Date, and may either be paid to the person in whose name this Note (or one or more Predecessor Securities) 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 the Notes not less than ten 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 premium, if any, and the interest on the Notes 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 Regular Record Date at such address as shall appear in the Security Register or by wire transfer to the account designated to the Trustee by a prior written notice by such Holder delivered at least ten Business Days prior to the applicable Interest Payment Date. Notwithstanding anything else contained herein, if this Note is a Global Note and is held in book-entry form through the facilities of the Depositary, payments on this Note will be made to the Depositary or its nominee in accordance with arrangements then in effect between the Trustee and the Depositary.
Notwithstanding anything herein or in the Indenture to the contrary, the Reset Rate shall in no event exceed the maximum rate, if any, permitted by applicable law.
This Note is one of a duly authorized series of Securities of the Company, designated as the "4.60% Senior Notes due 2007" (the "Notes"), initially limited to an aggregate principal amount of $150,000,000 (or $172,500,000 if the underwriters' over-allotment option pursuant to the Underwriting Agreement is exercised in full) (except for Notes authenticated and delivered upon transfer of, or in exchange for, or in lieu of other Notes, and except as further provided in the Indenture), all issued or to be issued under and pursuant to an Amended and Restated Indenture, dated as of April 9, 2001, as supplemented by the Sixth Supplemental Indenture dated as of June 25, 2002 (together, as amended, supplemented or modified, the "Indenture"), duly executed and delivered between the Company and The Bank of New York, a New York banking
corporation, as Trustee (herein referred to as the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture 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.
This Note is not subject to repayment at the option of the Holder hereof. Except as provided below, this Note is not redeemable by the Company prior to maturity and is not subject to any sinking fund.
The Notes shall be redeemable in whole, but not in part, at any time at the option of the Company if a Tax Event occurs and is continuing at a price per Note equal to the Redemption Price. Subject to the terms of the Purchase Contract Agreement and the Pledge Agreement with respect to Notes comprising part of the Equity Security Units, the Redemption Price shall be paid to or on behalf of each Holder of the Notes by the Company, no later than 10:00 a.m., New York City time, on the Tax Event Redemption Date, by check or wire transfer in immediately available funds, at such place and to such account as may be designated by each such Holder, including the Custodial Agent or the Collateral Agent.
Notice of any redemption must be given at least 30 days but not more than 60 days before the Tax Event Redemption Date to each Holder of Notes to be redeemed at its registered address. If money sufficient to pay the Redemption Price of the Notes to be redeemed on the Tax Event Redemption Date is deposited on or before the Tax Event Redemption Date and the other conditions set forth in the Indenture are satisfied, then on and after such date, interest will cease to accrue on the Notes called for redemption.
In case an Event of Default with respect to the Notes shall have occurred and be continuing, the principal hereof and accrued interest hereon 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.
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 Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority of the aggregate principal amount of all Notes issued under the Indenture at the time outstanding and affected thereby; provided, however, that no such amendment shall without the consent of the Holder of each Note so affected, among other things (i) change the stated maturity of the principal of, or any installment of principal of or interest on any Notes of any series, or reduce the principal amount thereof, or reduce the rate of interest thereon, or reduce any premium payable upon the redemption thereof or (ii) reduce the percentage of Notes, the Holders of which are required to consent to any amendment or waiver or for certain other matters as set forth in the Indenture. The Indenture also contains provisions permitting (i) the registered Holders of 662/3% in aggregate principal amount of the Securities of
each series at the time outstanding affected thereby, on behalf of the registered Holders of the Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and (ii) the registered Holders of not less than a majority in aggregate principal amount of the Securities of any series at the time outstanding affected thereby, on behalf of the registered Holders of the Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the registered Holder 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 premium, if any, and interest on this Note in the manner, at the respective times, at the rate and in the coin or currency herein prescribed.
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 Security 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 Security 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 Security 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.
[insert in the case of Global Notes - 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 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 premium, if any, or any interest on this Note on or after the respective due dates expressed herein.
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 the Indenture or any certificate or other writing delivered in connection therewith.
By acceptance of a beneficial ownership interest in this Note, each beneficial owner of this Note will be deemed to have agreed (1) to treat the acquisition of an Equity Security Unit as the acquisition of this Note and the Purchase Contract constituting the Equity Security Unit and to allocate the purchase price of the Equity Security Unit between this Note and the Purchase Contract in amount equal to $25 and $0, respectively, (2) to treat this Note as indebtedness of the Company for all tax purposes, (3) to treat this Note as indebtedness that is subject to the Contingent Payment Regulations for United States federal income tax purposes, (4) to be bound by the Company's determination of the "comparable yield" and "projected payment schedule," within the meaning of the Contingent Payment Regulations, with respect to this Note for United States federal income tax purposes and (5) to treat this Note and the Purchase Contract constituting the Equity Security Unit as separate financial instruments for all tax purposes. A Holder of this Note may obtain the amount of original issue discount, issue date, yield to maturity, comparable yield and projected payment schedule by submitting a written request for it to the Company at the following address: DTE Energy Company, 2000 2nd Avenue, 850 WCB, Detroit, Michigan 48226-1279, Attn: Assistant Treasurer.
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 defined in the Indenture shall have the meanings assigned to them in the Indenture.
Unless the Certificate of Authentication hereon has been manually 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.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly executed.
DTE ENERGY COMPANY
By_____________________________
Date:
Attest:
By_______________________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the series of Notes described in the within mentioned Indenture.
THE BANK OF NEW YORK
as Trustee
By__________________________
Authorized Signatory
Date:
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
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 Company, 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.
[TO BE ATTACHED TO GLOBAL NOTES AND PLEDGED NOTES]
SCHEDULE OF INCREASES OR DECREASES
The following increases or decreases in this [Global Note] [Pledged Note] have been made:
AMOUNT OF INCREASE AMOUNT OF DECREASE PRINCIPAL AMOUNT OF IN PRINCIPAL IN PRINCIPAL NOTE EVIDENCED BY AMOUNT OF NOTE AMOUNT OF NOTE THE [GLOBAL NOTE] SIGNATURE OF EVIDENCED BY THE EVIDENCED BY THE [PLEDGED NOTE] AUTHORIZED OFFICER [GLOBAL NOTE] [GLOBAL NOTE] FOLLOWING SUCH OF TRUSTEE OR DATE [PLEDGED NOTE] [PLEDGED NOTE] DECREASE OR INCREASE SECURITIES CUSTODIAN ----------- ------------------ ------------------ ---------------------- -------------------- |
EXHIBIT B
PLEDGE AGREEMENT
EXHIBIT C
PURCHASE CONTRACT AGREEMENT
EXHIBIT D
REMARKETING AGREEMENT
Exhibit 10-44
DTE ENERGY COMPANY
SUPPLEMENTAL SAVINGS PLAN
EFFECTIVE DECEMBER 6, 2001
TABLE OF CONTENTS
PREAMBLE .......................................................................................1 SECTION 1. TITLE, PURPOSE AND EFFECTIVE DATE...............................................................1 1.1. Title........................................................................................1 1.2. Purpose......................................................................................1 1.3. Effective Date...............................................................................2 SECTION 2. DEFINITIONS.....................................................................................2 SECTION 3. ELIGIBILITY AND PARTICIPATION...................................................................2 3.1. Eligibility to Participate...................................................................2 3.2. Election to Participate......................................................................3 SECTION 4. PARTICIPANTS' ACCOUNTS..........................................................................3 4.1. Establishment of Accounts....................................................................3 4.2. Credits and Debits to Participants' Accounts.................................................3 4.3. Election of Accounts.........................................................................4 4.4. Change of Election for Accounts..............................................................4 4.5. Transfer Between Accounts....................................................................4 SECTION 5. HARDSHIP WITHDRAWALS............................................................................5 SECTION 6. PAYMENT OF BENEFITS.............................................................................5 6.1. Form and Timing of Payment...................................................................5 6.2. Change in Payment Option.....................................................................6 6.3. Revocation of Designation as Executive.......................................................6 6.4. Payments Subject to Golden Parachute Provisions..............................................6 6.5. Transfer to an Affiliated Company............................................................6 SECTION 7. SELECTION OF AND PAYMENTS TO A BENEFICIARY......................................................6 7.1. Beneficiary Designation......................................................................6 7.2. Change in Beneficiary........................................................................7 7.03. Survivor Benefit.............................................................................7 SECTION 8. ADMINISTRATION..................................................................................7 SECTION 9. ADDITIONAL PROVISIONS AFFECTING BENEFITS........................................................7 SECTION 10. AMENDMENT, SUSPENSION, AND TERMINATION.........................................................7 10.1. Right to Amend or Terminate..................................................................7 10.2. Right to Suspend.............................................................................7 10.3. Partial ERISA Exemption......................................................................7 SECTION 11. MISCELLANEOUS..................................................................................8 11.1. Unfunded Plan................................................................................8 11.2. No Right to Continued Employment.............................................................8 11.3. Prohibition Against Alienation...............................................................8 11.4. Savings Clause...............................................................................8 11.5. Payment of Benefit of Incompetent............................................................8 |
11.6. Spouse's Interest............................................................................9 11.7. Successors...................................................................................9 11.8. Gender, Number and Heading...................................................................9 11.9. Legal Fees and Expenses......................................................................9 11.10. Choice of Law................................................................................9 11.11. Affiliated Employees.........................................................................9 11.12. Plan Document................................................................................9 SECTION 12. ARBITRATION...................................................................................10 12.1. Arbitration Process.........................................................................10 12.2. Effect of Plan Termination..................................................................10 SECTION 13. CHANGE IN CONTROL PROVISIONS..................................................................10 13.1. General.....................................................................................11 13.2. Transfer to Rabbi Trust.....................................................................11 13.3. Lump Sum Payments...........................................................................11 13.4. Joint and Several Liability.................................................................11 13.5. Dispute Procedures..........................................................................11 13.6. Definition of Change in Control.............................................................11 |
DTE ENERGY COMPANY
SUPPLEMENTAL SAVINGS PLAN
Effective December 6, 2001
PREAMBLE
Effective May 22, 1989 (and as amended periodically), Detroit Edison
established The Detroit Edison Company Savings Reparation Plan and effective May
31, 1988 (and as amended periodically), MCN Energy Group established the MCN
Energy Group Supplemental Savings Plan to offer a retirement savings alternative
for those eligible Executives whose permissible contributions to the companies'
401(k) plan were limited by the Internal Revenue Code (Detroit Edison plan:
401(a)(17); MCN plan: 401(a)(17), 402(g), 415 limitation on benefits and
contributions). Effective December 6, 2001, DTE Energy Company ("DTE") hereby
terminates The Detroit Edison Company Savings Reparation Plan and effective
January 1, 2002 hereby terminates the MCN Energy Group Supplemental Savings Plan
and replaces them with the DTE Energy Company Supplemental Savings Plan (the
"Plan"), as described herein. Effective December 6, 2001, all benefits under The
Detroit Edison Company Savings Reparation Plan and effective January 1, 2002 all
benefits under the MCN Energy Group Supplemental Savings Plan are transferred to
the Plan. Benefits under the Plan are available to eligible Executives and key
management employees of DTE Energy Company and its Affiliated Companies. DTE
Energy Company has established this Plan to benefit Executives of DTE Energy
Company and its Affiliated Companies in a manner that will be in the best
interest of DTE Energy Company and its shareholders.
SECTION 1. TITLE, PURPOSE AND EFFECTIVE DATE
1.1. Title. The title of this Plan shall be the "DTE Energy Company Supplemental Savings Plan" and shall be referred to in this document as the "Plan."
1.2. Purpose. The purpose of the Plan is to promote the success of DTE Energy Company (hereinafter referred to as "DTE") by:
(a) providing selected Executives with the ability to defer compensation on a pre-tax basis to permit supplemental retirement savings; and
(b) providing a mechanism for selected Executives to receive benefits that they otherwise would have received under the Qualified Plan but for Internal Revenue Code ("Code") Sections 401(a)17, 402(g), 415 or any other provision of the Code or other law that the Committee hereafter designates.
The principal purpose of the Plan is to provide deferred compensation for a select group of management or highly compensated Employees of DTE and any other employer that has adopted the Plan with the consent of DTE (a "Participating Employer"), and who has been
specifically designated by the Chief Executive Officer of a Participating Employer to be eligible for Plan participation (an "Executive"). Such an employee shall remain an Executive as long as this designation is not revoked by the Committee.
It is intended that this Plan provide benefits for "a select group of management or highly compensated employees" within the meaning of sections 201, 301 and 401 of the Employee Retirement Income Security Act of 1974, as amended (hereinafter referred to as "ERISA") and, therefore, to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
1.3. Effective Date. The Plan shall be effective December 6, 2001.
SECTION 2. DEFINITIONS
The words and phrases used in the Plan shall have the same meanings as provided under the DTE Energy Company Savings and Stock Ownership Plan (the "Qualified Plan"), effective January 1, 2002 and as amended from time to time, unless otherwise defined in the Plan or the context clearly requires otherwise.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1. Eligibility to Participate. Only the following individuals shall
be eligible to participate in the Plan: (a) any Executive whose contributions
under the Qualified Plan are limited because of the limitation on compensation
under Section 401(a)17 of the Code, the limitation on elective deferrals under
Section 402(g) of the Code, the limitation on benefits and contributions under
Section 415 of the Code, or any other provision of the Code or other law that
the Committee hereafter designates; and (b) such other management or highly
compensated Employees as shall be approved by the Chief Executive Officer of an
Employer that has adopted the Plan.
(a) Effective Date for Participation. Each employee of the Company and Participating Affiliated Companies who is employed at the level of Director or above (or equivalent) and who is designated as an Executive shall be eligible to participate in the Plan effective as of the later of (i) the date determined by the Vice President, Human Resources, or (ii) the date on which the employee is formally notified of his or her eligibility to participate.
(b) Determination of Executive Status. The Vice President, Human Resources shall designate employees as Executives. The Vice President, Human Resources may revoke such designation prior to any Plan Year with respect to the Executive's ability to defer future compensation payable by the Company or Participating Affiliated Company; provided, however, that no such revocation shall adversely affect any amounts previously deferred by such Executive under the Plan. Employees who were employed at the level of Director at MCN Energy Group Inc. or one of its subsidiaries prior to June 1, 2001, but were not appointed to a level of Director
or above in the Leader Staffing and Selection process during the second quarter of 2001, shall be considered Executives for the 2002 Plan year only; unless or until they are otherwise designated as Executives.
(d) Mid-Year Participation. To the extent an employee is designated as an Executive, and formally notified of his or her eligibility to participate in the Plan during a Plan Year, the Executive may elect to participate any time thereafter.
3.2. Election to Participate. An executive who is eligible to participate may become a participant in the Plan (a "Participant") by filing a written election with the Committee on a form approved by the Committee. The Executive's election shall authorize the Employer to defer the amount of such Executive's Compensation pursuant to Sections 4.2(a) and (c) hereof and shall evidence the Executive's acceptance of and agreement to all the provisions of the Plan.
The Executive's election must be made no later than December 31 of the year that immediately precedes the year for which it applies. However, the first election by any Executive to participate in this Plan shall be effective for any Compensation earned after the election is received by the Committee and after contributions to the Qualified Plan are limited in accordance with Section 3. 1 above. An election shall be irrevocable for the current calendar year. An election shall be irrevocable for future calendar years unless a written revocation is filed with the Committee prior to the first day of the calendar year for which the revocation is desired.
SECTION 4. PARTICIPANTS' ACCOUNTS
4.1. Establishment of Accounts. The Employer shall establish accounts for each of its Executives who is a Participant in the Plan. Effective January 1, 2002, all benefits under The Detroit Edison Company Savings Reparation Plan and the MCN Energy Group Supplemental Savings Plan are transferred to this Plan. Separate hypothetical bookkeeping accounts corresponding in name to the separate funds under the Qualified Plan shall be maintained for each Participant. Credits under Sections 4.2(a) and (c) hereof shall also be maintained in separate accounts. The hypothetical bookkeeping accounts shall be maintained as unfunded general bookkeeping accounts and all amounts represented by the accounts shall remain a part of the general funds of the Employer of such Participant, subject to the claims of its general creditors. Nothing in the Plan and no action taken pursuant to the provisions of the Plan shall be deemed to create a trust or fund of any kind or to create any fiduciary relationship. The obligation to make payments under this Plan shall be and remain an unsecured, unfunded general obligation of the Employer of the particular Participant. Each Executive who is a Participant in the Plan shall be provided a quarterly statement of the unfunded accounts maintained for the Participant.
4.2. Credits and Debits to Participants' Accounts. As of the end of a pay period, total credits shall be made to the hypothetical bookkeeping accounts maintained for a Participant as set forth below:
(a) An amount equal to the difference between (1) and (2) below:
(1) the amount that such Participant would have contributed to the Qualified Plan for such pay period, assuming (x) the Participant satisfied the eligibility requirements set forth in the Qualified Plan and (y) the allotments of such Participant under the Qualified Plan were not limited by the application of any restriction set forth in Section 3.1(a) above, or any provision of the Qualified Plan relating to the limitations described in Section 5.1(a) above;
(2) the amount that such Participant actually contributed to the Qualified Plan for such pay period.
(b) An amount equal to the difference between (1) and (2) below:
(1) the amount that the Employer of such Participant would have contributed to the Qualified Plan on behalf of such Participant for such pay period if the Participant had contributed the amount set forth in (a)(1) above to the Qualified Plan during such pay period;
(2) the amount that the Employer actually contributed to the Qualified Plan on behalf of such participant for such pay period.
The total credits under (a) and (b) of this Section shall be allocated to the specific accounts elected by the Participant as provided under Section 4.3 hereof. Each hypothetical bookkeeping account shall be credited with an amount representing earnings or debited with an amount representing losses on a daily basis. Earnings or losses shall be calculated using the daily valuation methodology employed by the recordkeeper for each corresponding fund under the Qualified Plan.
4.3. Election of Accounts. Subject to the sole discretion of the Committee, each Participant shall, by filing an election with the Committee in a form approved by the Committee, elect the accounts which are to be used for recording credits under Sections 4.2(a) and (b) hereof.
A Participant may direct that credits under Sections 6.2(a) and (b) be made to any account corresponding in name to the funds under the Qualified Plan that are available to accept contributions or allotments, provided, however, that the Committee may change available investment funds or override a Participant's investment selection at any time.
4.4. Change of Election for Accounts. Any election of accounts given by a Participant under the preceding Section shall be deemed to be a continuing election until changed by the Participant. A Participant may change any such election as of any normal business day of any month by giving prior notice of such change to the Plan recordkeeper in the form prescribed by the Committee.
4.5. Transfer Between Accounts. Transfers between accounts shall be effected on any normal business day of any month upon directions to the Plan recordkeeper in the form prescribed by the Committee.
SECTION 5. HARDSHIP WITHDRAWALS
A Participant may request, upon written notice to the Committee, a withdrawal from his or her accounts, if the withdrawal is on account of financial hardship as defined in the Qualified Plan. A financial hardship shall first be satisfied from the DTE Energy Company Executive Deferred Compensation Plan to the extent possible; then from the Plan; and finally from the Qualified Plan. The amount of such withdrawal shall be limited to the amounts deferred under Section 4.2(a) hereof and any corresponding amounts transferred from The Detroit Edison Company Savings Reparation Plan and the MCN Energy Group Supplemental Savings Plan, or the total value of the aggregate accounts maintained under Section 4.2(a) hereof and any corresponding amounts transferred from The Detroit Edison Company Savings Reparation Plan and the MCN Energy Group Supplemental Savings Plan as of the end of the prior month, whichever is smaller.
The determination of the existence of financial hardship and the amount required to be distributed to meet the need created by the hardship shall be made by the Committee. No other withdrawals or loans are permitted under this Plan.
SECTION 6. PAYMENT OF BENEFITS
6.1. Form and Timing of Payment. On the date that a Participant becomes entitled to a distribution of his or her account in the Qualified Plan (the "Termination Date"), such Participant shall be entitled to receive the amount credited to his or her accounts in the Plan. All amounts under this Plan are 100% vested, subject to adjustment for hypothetical earnings and losses. All distributions shall be paid out at in cash as of March 1 of the year following the year in which Participant's Termination Date occurs.
Payment of a Participant's accounts shall be made in accordance with the Participant's selection on his or her Deferral Election Form either in annual payments over a period not less than one year and not more than 15 years, or in one lump sum by the Participating Employer maintaining the accounts. If no payment election has been made, the Participant's account shall be paid in one lump sum. In addition, if a Participant's account is less than or equal to $10,000 as of his or her Termination Date, the Participant's account shall be paid in one lump sum.
The amount of the annual payments shall be calculated to be paid out over the specified period, based on the entire balance in the Participant's hypothetical bookkeeping account as of his or her Termination Date. Earnings and losses based on the hypothetical bookkeeping account investments shall be credited to the Participant's hypothetical bookkeeping account through December 31 of each Plan Year in which the Participant has a balance in such
hypothetical bookkeeping account. The distribution to a Participant shall be paid in cash. The initial distribution shall be determined by dividing the value of the Participant's account determined as of December 31 of the Plan Year in which the Participant's employment terminated, by the number of installment payments to be made. The amount distributed to the Participant thereafter shall be recalculated each year to reflect changes in the hypothetical bookkeeping account balance through December 31 of such subsequent calendar year and the remaining number of installment payments to be made.
6.2. Change In Payment Option. The payment option selected by the Participant may be changed at any time while her or she is actively employed by the Company or a Participating Employer by the Participant submitting a new payment selection to the Committee.
6.3. Revocation of Designation as Executive. Except as provided in
Section 3.1(b) hereof, a Participant whose designation as an Executive is
revoked prior to the Participant's retirement, death, termination or disability
shall not be permitted to make deferrals under the Plan subsequent to the date
of such revocation.
6.4. Payments Subject to Golden Parachute Provisions. Notwithstanding
the above, if payment at the time specified in the first sentence of this
Section would subject the Participant to the excise tax under Section 4999 of
the Code, at the discretion of the applicable Employer, payment of the
Participant's account shall be deferred until the earlier of (a) the date that
would have been the Participant's Normal Retirement Date, Early Retirement Date
or Disability Retirement Date, (b) death of the Participant, or (c) total and
permanent disability or legally established mental incompetence of the
Participant.
6.5. Transfer to an Affiliated Company. Benefits for a Participant who transfers employment from one Employer to an Affiliated Company shall be subject to the provisions of the Qualified Plan. Such a transfer of employment shall cause a transfer of the accounts maintained by an Employer for a Participant, if the new Employer has adopted the Plan and the former Employer transfers cash to the new Employer equal to the amount of the accounts transferred. In all other events, a transfer of employment shall not cause a transfer of the accounts maintained by an Employer for a Participant.
SECTION 7.
SELECTION OF AND PAYMENTS TO A BENEFICIARY
7.1. Beneficiary Designation. A Participant shall designate, on a form provided by the Committee, a beneficiary or beneficiaries to receive any distribution to made under Section 6 hereof upon the death of the such Participant, or, in the case of a Participant who dies subsequent to termination of his or her employment put prior to distribution of the entire amount to which the Participant is entitled under the Plan, any undistributed balance to which such Participant would have been entitled. If a Participant has not designated a beneficiary, or if a designated beneficiary is not living or in existence at the time of a Participant's death, any death benefits payable under the Plan shall be paid to the Participant's Spouse, if then living, and if the Participant's Spouse is not then living, to the Participant's estate.
7.2. Change in Beneficiary. A Participant may change the designated beneficiary from time to time by filing a new written designation with the Committee. Such designation shall be effective upon receipt by the Committee.
7.3. Survivor Benefit. If a Participant dies with an account balance under this Plan, his or her beneficiary shall be entitled to receive a distribution of the Participant's account. The distribution shall be paid in a lump sum within ninety (90) days following the Participant's death.
SECTION 8. ADMINISTRATION
The Plan shall be administered by the Committee appointed pursuant to the provisions of the Qualified Plan. The Committee shall have the same powers and duties, and shall be subject to the same limitations, as are described in the Qualified Plan. However, unlike the limitation on the Committee's power to amend or modify the Qualified Plan, the Committee shall have full power to amend or modify the Plan in all respects.
SECTION 9.
ADDITIONAL PROVISIONS AFFECTING BENEFITS
Deferrals hereunder shall be subject to applicable FICA withholding laws. Benefit payments hereunder shall be subject to applicable federal, state and local tax withholding laws.
SECTION 10.
AMENDMENT, SUSPENSION, AND TERMINATION
10.1. Right to Amend or Terminate. The Company may amend or terminate the Plan at any time and for any reason. The power to amend or modify the Plan shall rest solely with the Committee. Such amendment, modification or termination may modify or eliminate any benefit hereunder except that such amendment, modification or termination shall not affect the rights of Participants or beneficiaries to the Participant's account as of the date of such amendment or termination.
10.2. Right to Suspend. If the Board of Directors determines that payments under the Plan would have a material adverse affect on the Company's ability to carry on its business, the Board of Directors may suspend such payments temporarily for such time as in its sole discretion it deems advisable, but in no event for a period in excess of one year. The Company shall pay such suspended payments in a lump sum immediately upon the expiration of the period of suspension.
10.3. Partial ERISA Exemption. The Plan is intended to provide benefits for "a select group of management or highly compensated employees" within the meaning of sections 201, 301 and 401 of ERISA, and therefore to be exempt from sections 2, 3 and 4 of Title I of ERISA. Accordingly, the Plan shall terminate and existing Account balances shall be paid in a single
lump-sum and no further benefits shall be paid hereunder in the event it is determined by a court of competent jurisdiction or by an opinion of counsel that the Plan constitutes an employee pension benefit plan within the meaning of section 3(2) of ERISA which is not so exempt.
SECTION 11. MISCELLANEOUS
11.1. Unfunded Plan. The Plan shall be unfunded within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) ERISA. All benefits payable under the Plan shall be paid from the Company's general assets. The Company shall not be required to set aside or hold in trust any funds for the benefit of a Participant or Beneficiary, each of whom shall have the status of a general unsecured creditor with respect to the Company's obligation to make benefit payments pursuant to the Plan. Any assets of the Company available to pay Plan benefits shall be subject to the claims of the Company's general creditors and may be used by the Company in its sole discretion for any purpose.
11.2. No Right to Continued Employment. Nothing in the Plan shall create or be construed as a contract between the Company or an Affiliated Company and employees for any matter including giving any person employed by the Company or an Affiliated Company the right to be retained in the Company's or an Affiliated Company's employ. The Company and each Affiliated Company expressly reserve the right to dismiss any person at any time, with or without cause, without liability for the effect that such dismissal might have upon him as a Participant in the Plan or for any other purpose.
11.3. Prohibition Against Alienation. Except as otherwise provided in the Plan, no right or benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. No such right or benefit shall be liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such right or benefit.
11.4. Savings Clause. If any provision of this Plan is held by a court of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision and the remaining provisions hereof shall continue to be construed and enforced as if the invalid or unenforceable provision had not been included.
11.5. Payment of Benefit of Incompetent. In the event the Committee finds that a Participant, former Participant or beneficiary is unable to care for his affairs because of his minority, illness, accident, or other reason, any benefits payable hereunder may, unless other claim has been made therefore by a duly appointed guardian, committee or other legal representative, be paid to a spouse, child, parent, or other blood relative or dependent or to any person found by the Committee to have incurred expenses for the support and maintenance of such Participant, former Participant, or Beneficiary; and any such payments so made shall be a complete discharge of all liability therefore.
11.6. Spouse's Interest. The interest in the benefits hereunder of a Spouse who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such Spouse in any manner including, but not limited to, such Spouse's will, nor shall such interest pass under the laws of intestate succession.
11.7. Successors. In the event of any consolidation, merger, acquisition or reorganization of the Company, the obligations of the Company and Participating Affiliated Companies under this Plan shall continue and be binding upon the Company, Participating Affiliated Companies and its successors.
11.8. Gender, Number and Heading. Whenever any words are used herein in the masculine gender, they shall be construed as though they were also used in the feminine gender in all cases where they would so apply. Whenever any words used herein are in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. Headings of sections and subsections as used herein are inserted solely for convenience and reference and constitute no part of the Plan.
11.9. Legal Fees and Expenses. The Company shall pay all reasonable legal fees and expenses that a Participant may incur as a result of the Company contesting the validity, enforceability, or the Participant's interpretation of, or determinations under this Plan, other than hardship withdrawals under Section 5 and tax withholding under Section 9.
11.10. Choice of Law. This Plan shall be governed by and construed in accordance with the laws of the State of Michigan, other than its choice-of-law rules, to the extent not superseded by applicable federal statues or regulations.
11.11. Affiliated Employees. Transfers of employment between Affiliated Companies and the Company or other Affiliated Companies will be treated as continuous and uninterrupted service under the Plan.
11.12. Plan Document. This Plan document provides the final and exclusive statement of the terms of the Plan. Unless otherwise authorized by the Board or its delegate, no amendment or modification to this Plan shall be effective until reduced to writing and adopted pursuant to Section 8. This document legally governs the operation of the Plan, and any claim of right or entitlement under the Plan shall be determined solely in accordance with its provisions. To the extent that there are any inconsistencies between the terms of any related materials and the terms of this document, the terms of this document shall control and govern the operation of the Plan. No other evidence, whether written or oral, shall be taken into account in determining the right of an Executive, a Participant, or beneficiary, as applicable, to any benefit of any type provided under the Plan.
SECTION 12. ARBITRATION
12.1 Arbitration Process. Notwithstanding Section 8 hereof, in the event of any dispute, claim, or controversy (hereinafter referred to as a "Grievance") between an Executive (or beneficiary) who is eligible to elect to receive the benefits provided under this Plan and the Company with respect to the payment of benefits to such Executive under this Plan, the computation of benefits under this Plan, or any of the terms and conditions of this Plan, such Grievance shall be resolved by arbitration in accordance with this Section 12.
(a) Arbitration shall be the sole and exclusive remedy to redress any Grievance.
(b) The arbitration decision shall be final and binding, and a judgment on the arbitration award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms.
(c) The arbitration shall be conducted by the American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association and reasonable expenses of the arbitrators and the American Arbitration Association shall be borne by the Company.
(d) The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit, Michigan Metropolitan area.
(e) The arbitrator(s) shall not have the jurisdiction or authority to change any of the provisions of this Plan by alteration of, addition to, or subtraction from the terms hereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Because arbitration is the exclusive remedy with respect to any Grievance, no Executive eligible to receive benefits provided under this Plan has the right to resort to any federal court, state court, local court, or administrative agency concerning breaches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court, or administrative agency by such Executive or the Company with respect to any Grievance which is arbitrable as herein set forth.
12.2 Effect of Plan Termination. The arbitration provisions shall, with respect to any Grievance, survive the termination of this Plan.
SECTION 13. CHANGE IN CONTROL PROVISIONS
13.1. General. In the event of a Change in Control, as defined in
Section 13.6, then, notwithstanding any other provision of the Plan, the
provisions of this Section 13 shall be applicable and shall supersede any
conflicting provisions of the Plan.
13.2. Transfer to Rabbi Trust The Company shall establish a trust (the "Rabbi Trust") that is intended to be an unfunded arrangement which shall not affect the status of the Plan as an unfunded arrangement for purposes of Title I of ERISA. The terms of the Rabbi Trust shall provide that, within seven (7) days of a Change in Control, assets shall be transferred to the Rabbi Trust in (i) an amount equal to each Participant's hypothetical account balance as of the date of the Change in Control, plus (ii) an amount deemed necessary to pay estimated Rabbi Trust administrative expenses for the following five (5) years, as determined by the Company's Accountants. Assets transferred in accordance with the preceding sentence shall be in cash. The Company and/or an Affiliated Company shall make all transfers of assets required by the Rabbi Trust in a timely manner and shall otherwise abide by the terms of the Rabbi Trust.
13.3. Lump Sum Payments. In connection with a Change in Control or consummation of a transaction constituting a Change in Control, the Chairman of DTE Energy Company shall have the absolute discretion to direct that a lump sum payment be made to a Participant up to the total value of such Participant's accounts if such payment will reduce the amount of any potential excise tax imposed by Code section 4999.
13.4. Joint and Several Liability. Upon and at all times after a Change in Control, the liability under the Plan of the Company and each Affiliated Employer that has adopted the Plan shall be joint and several so that the Company and each such Affiliated Employer shall each be liable for all obligations under the Plan to each employee covered by the Plan, regardless of the corporation by which such employee is employed.
13.5. Dispute Procedures. In the event that, upon or at any time subsequent to a Change in Control, a disputed claim for benefits under the Plan is brought by a Participant or beneficiary, the following additional procedures shall be applicable:
(a) Any amount that is not in dispute shall be paid to the Participant or beneficiary at the time or times provided herein.
(b) The Participating Employer shall advance to such claimant from time to time such amounts as shall be required to reimburse the claimant for reasonable legal fees, costs and expenses incurred by such claimant in seeking a resolution of his or her claim, including reasonable fees, costs and expenses relating to arbitration.
13.6. Definition of Change in Control. "Change in Control" means the occurrence of any one of the following events:
(a) individuals who, on January 1, 2002, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to January 1, 2002, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or
nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies [or consents] by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(b) any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board (the "Company Voting Securities"); provided, however, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (c)), or (E) a transaction (other than one described in (c) below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution providing expressly that the acquisition pursuant to this clause (E) does not constitute a Change in Control under this paragraph (b);
(c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries (a "Business Combination") or sale or other disposition of all or substantially all of the Company's assets to an entity that is not an affiliate of the Company (a "Sale"), unless immediately following such Business Combination or Sale: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or
(d) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.
IN WITNESS WHEREOF, DTE Energy Company has caused this Plan to be executed as of this 1st day of December 2001.
DTE Energy Company
Exhibit 10-45
DTE ENERGY COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective January 1, 2002
TABLE OF CONTENTS
Page SECTION PREAMBLE.....................................................................................1 -------- SECTION 1. TITLE, PURPOSE AND EFFECTIVE DATE............................................................1 1.01. Title........................................................................................1 1.02. Purpose......................................................................................1 1.03. Effective Date...............................................................................1 SECTION 2. DEFINITIONS..................................................................................2 2.01. Account......................................................................................2 2.02. Affiliated Company...........................................................................2 2.03. Annual Cash Bonus............................................................................2 2.04. Base Salary..................................................................................2 2.05. Beneficiary..................................................................................2 2.06. Board........................................................................................2 2.07. Cash Balance Plan............................................................................2 2.08. Cash Compensation............................................................................2 2.09. Code.........................................................................................3 2.10. Committee....................................................................................3 2.11. Company......................................................................................3 2.12. Company's Accountants........................................................................3 2.13. Company's Actuaries..........................................................................3 2.14. Contribution Subaccount......................................................................3 2.15. Deferral Election............................................................................3 2.16. Deferral Period..............................................................................3 2.17. Deferral Year................................................................................3 2.18. Deferral Year Subaccount.....................................................................4 2.19. DTE..........................................................................................4 2.20. DTE Stock....................................................................................4 2.21. Eligible Employee............................................................................4 2.22. ERISA........................................................................................4 2.23. Fair Market Value............................................................................4 2.24. FICA.........................................................................................4 2.25. Participant..................................................................................4 2.26 Participating Affiliated Employer............................................................4 2.27. Pension Plan.................................................................................4 2.28. Performance Share Award......................................................................4 2.29. Plan.........................................................................................4 2.30. Plan Year....................................................................................5 2.31. Prior Plan...................................................................................5 2.32. Qualified Plan...............................................................................5 2.33. Savings Plan.................................................................................5 2.34. SIP..........................................................................................5 2.35. Spouse.......................................................................................5 2.36. Subsidiary...................................................................................5 |
SECTION 3. ELIGIBILITY AND PARTICIPATION................................................................5 3.01. Voluntary Participation by Eligible Employees................................................5 3.02. Mandatory Participation by Covered Employees.................................................6 SECTION 4. DEFERRALS AND CONTRIBUTIONS..................................................................6 4.01. Deferral of Performance Share Awards.........................................................6 4.02. Deferral of Base Salary......................................................................7 4.03. Deferral of Annual Cash Bonus................................................................7 4.04. Restoration of Qualified Plan Benefits.......................................................7 4.05. Mandatory Deferral...........................................................................8 4.06. Deferral of Prior Plan Balances..............................................................8 SECTION 5. ACCOUNTS AND EARNINGS........................................................................8 5.01. Establishment of Accounts....................................................................8 5.02. Contribution Subaccounts.....................................................................9 5.03. Election of Investment Options..............................................................10 5.04. No Requirement to Fund......................................................................10 SECTION 6. FORM AND TIMING OF PAYMENT..................................................................10 6.01. Distribution of Contribution Subaccount.....................................................10 6.02. Form of Distributions.......................................................................11 6.03. Change In Distribution Option...............................................................11 6.04. Hardship Withdrawals........................................................................11 6.05. Unscheduled Withdrawals.....................................................................12 6.06. Revocation of Designation as an Eligible Employee...........................................12 6.07. Distribution of Performance-Based Compensation..............................................12 SECTION 7. SELECTION OF AND PAYMENTS TO A BENEFICIARY..................................................13 7.01. Beneficiary Designation.....................................................................13 7.02. Change in Beneficiary.......................................................................13 7.03. Survivor Benefit............................................................................13 SECTION 8. VESTING OF BENEFITS.........................................................................13 SECTION 9. TAX WITHHOLDING.............................................................................13 SECTION 10. ADMINISTRATION OF THE PLAN..................................................................13 10.01. Duties and Power............................................................................13 10.02. Benefit Statements..........................................................................14 10.03. Right to Accelerate.........................................................................14 |
SECTION 11. AMENDMENT, SUSPENSION, AND TERMINATION......................................................14 11.01. Right to Amend or Terminate.................................................................14 11.02. Right to Suspend............................................................................14 11.03. Partial ERISA Exemption.....................................................................14 SECTION 12. MISCELLANEOUS...............................................................................15 12.01. Unfunded Plan...............................................................................15 12.02. No Right to Continued Employment............................................................15 12.03. Prohibition Against Alienation..............................................................15 12.04. Savings Clause..............................................................................15 12.05. Payment of Benefit of Incompetent...........................................................15 12.06. Spouse's Interest...........................................................................16 12.07. Successors..................................................................................16 12.08. Gender, Number and Heading..................................................................16 12.09. Legal Fees and Expenses.....................................................................16 12.10. Choice of Law...............................................................................16 12.11. Affiliated Employees........................................................................16 12.12. Plan Document...............................................................................16 SECTION 13. ARBITRATION.................................................................................17 SECTION 14. CHANGE IN CONTROL PROVISIONS................................................................18 14.01. General.....................................................................................18 14.02. Transfer to Rabbi Trust.....................................................................18 14.03. Lump Sum Payments...........................................................................18 14.04. Joint and Several Liability.................................................................18 14.05. Dispute Procedures..........................................................................19 14.06. Definition of Change in Control.............................................................19 |
DTE ENERGY COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective January 1, 2002
PREAMBLE
Benefits under the Plan are available to eligible executives and key management employees of DTE Energy Company and its Affiliated Companies. DTE Energy Company has established this Plan to benefit executives of DTE Energy Company and its Affiliated Companies in a manner that will be in the best interest of DTE Energy Company and its shareholders.
SECTION 1. TITLE, PURPOSE AND EFFECTIVE DATE
1.01. Title. The title of this Plan shall be the "DTE Energy Company Executive Deferred Compensation Plan" and shall be referred to in this document as the "Plan."
1.02. Purpose. The purpose of the Plan is to promote the success of DTE Energy Company (hereinafter referred to as "DTE") by:
(a) providing selected executives with the ability to defer compensation on a pre-tax basis to provide supplemental retirement savings;
(b) providing a mechanism for selected executives to receive benefits that they otherwise would have received under certain qualified retirement plans but for their deferral elections;
(c) providing executives participating in the DTE Energy Company 2001 Stock Incentive Plan ("SIP") with a mechanism for deferring receipt of Performance Share Awards otherwise payable in cash under the SIP; and
(d) permitting the Organization and Compensation Committee of the Board, or its designee, to require deferrals of compensation to the extent desirable to satisfy the deduction limitations of Code section 162(m).
It is intended that this Plan provide deferred compensation for "a select group of management or highly compensated employees" within the meaning of sections 201, 301 and 401 of the Employee Retirement Income Security Act of 1974, as amended (hereinafter referred to as "ERISA") and, therefore, to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
1.03. Effective Date. The Plan shall be effective January 1, 2002.
SECTION 2. DEFINITIONS
The following words and terms, as used in this Plan, shall have the meanings set forth below, unless a clearly different meaning is required by the context in which the word or phrase is used.
2.01. Account. "Account" means the hypothetical record or bookkeeping entry maintained by the Company reflecting each Participant's deferrals, credited earnings and losses, Company contributions, transfers from a Prior Plan and distributions under the Plan. The term "Account" should not be construed as an actual segregation of assets for the benefit of any particular Participant.
2.02. Affiliated Company. "Affiliated Company" means any corporation
while such corporation is a member of the same controlled group of corporations
(within the meaning of Code section 414(b)) as DTE or any other employing entity
while such entity is under common control (within the meaning of Code section
414(c)) with DTE.
2.03. Annual Cash Bonus. "Annual Cash Bonus" means the cash compensation payable in the Plan Year under the DTE Energy Company Annual Incentive Plan, or any successor plan thereto, after reduction for (i) any pre-tax deferrals under Code section 401(k), and (ii) any payroll deduction for taxes or any other purpose.
2.04. Base Salary. "Base Salary" means base salary payable after reduction for any pre-tax deferrals under Code sections 125, 129 or 401(k) but prior to reduction for any payroll deduction for taxes or any other purpose. "Base Salary" shall exclude any bonus, fringe benefit or other form of remuneration.
2.05. Beneficiary. "Beneficiary" means the person, persons or entity designated in writing by the Participant, on forms provided by the Company, to receive distribution of certain death benefits payable under the Plan in the event of the Participant's death.
2.06. Board. "Board" means the Board of Directors of DTE.
2.07. Cash Balance Plan. "Cash Balance Plan" means any cash balance defined benefit plan maintained by the Company or an Affiliated Company which is intended to be qualified under Code section 401(a); provided, however, that the Traditional Option of the MCN Energy Group Retirement Plan shall be included in the definition of "Pension Plan," and not in the definition of "Cash Balance Plan".
2.08. Cash Compensation. "Cash Compensation" means the Base Salary, Annual Cash Bonus, or other cash payments (other than Performance Share Awards payable in cash) payable to a Participant.
2.09. Code. "Code" means the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder. References to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.
2.10. Committee. "Committee" means the Organization and Compensation Committee of the Board. The Committee is responsible for the administration of the Plan and may delegate such administrative responsibilities under this Plan.
2.11. Company. "Company" means DTE Energy Company or its successors and assigns.
2.12. Company's Accountants. "Company's Accountants" means the independent accountant or accountants engaged by the Company and, if selected or changed following a Change in Control, approved by the trustee of the trust established in accordance with Section 14.
2.13. Company's Actuaries. "Company's Actuaries" means the independent actuary or actuaries engaged by the Company and, if selected or changed following a Change in Control, approved by the trustee of the trust established in accordance with Section 14.
2.14. Contribution Subaccount. "Contribution Subaccount" means the hypothetical bookkeeping record maintained by the Company to track the various allocations to the Participant's Account. For purposes of this Plan, the balance in each Account shall be allocated among the Annual Cash Bonus Subaccount, the Base Salary Subaccount, the Prior Plans Subaccount, the Qualified Plan Make-up Subaccount, and the Mandatory Deferral Subaccount (collectively, known as the Contribution Subaccounts) as defined in Section 5 herein.
2.15. Deferral Election. "Deferral Election" means the deferral agreement described in 3.01(c) of the Plan.
2.16. Deferral Period. "Deferral Period" means, with respect to each Deferral Year Subaccount, the period beginning with the first day of the Deferral Year and ending upon the date the Participant elected to receive or begin receiving a distribution of his such entire Deferral Year Subaccount under the Plan. The minimum length of time for a Deferral Period shall be two (2) years or the period from the first day of the Deferral Year through the date of the Participant's termination for any reason, whichever is earlier. The Deferral Period for the Mandatory Deferral Subaccount shall be through the date on which the Participant ceases to be a "covered employee" as that term is defined in Code section 162(m)(3).
2.17. Deferral Year. "Deferral Year" means the period during which compensation subject to a Participant's Deferral Election would have been paid in the absence of the Deferral Election. Generally, the Deferral Year will be the Plan Year. Where a Participant first becomes eligible to participate during a Plan Year, however, the Deferral Year begins upon the effective date of the Participant's initial Deferral Election.
2.18. Deferral Year Subaccount. "Deferral Year Subaccount" means the bookkeeping record maintained by the Company to separately track the allocations for each Deferral Year to each of the Participant's Contribution Subaccounts.
2.19. DTE. "DTE" means DTE Energy Company or its successors and assigns.
2.20. DTE Stock. "DTE Stock" means the common stock of DTE.
2.21. Eligible Employee. "Eligible Employee" means any employee of the Company who satisfies the eligibility requirements of Section 3 of the Plan.
2.22. ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any regulations issued thereunder. References to any section or subsection of ERISA includes references to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.
2.23. Fair Market Value. "Fair Market Value" on a given date means the average of the high and low sale price for DTE Stock on that date (or, if there were no such sales on that date, on the next most recent prior date on which there were such sales) as reported on the Composite Tape if the DTE Stock is listed on the New York Stock Exchange ("NYSE").
2.24. FICA. "FICA" means the tax applied under the Federal Insurance Contributions Act as set forth in Chapter 21, Subtitle C, of the Code, and any regulations issued thereunder.
2.25. Participant. "Participant" means an Eligible Employee who has made a written election on a properly executed Deferral Election to participate in the Plan.
2.26. Participating Affiliated Company. "Participating Affiliated Company" means any Affiliated Company as defined in Section 2.02 who has elected to participate in the Plan.
2.27 Pension Plan. "Pension Plan" means any defined benefit plan maintained by the Company or an Affiliated Company, which is intended to be qualified under Code section 401(a). "Pension Plan" includes the Traditional Option of the MCN Energy Group Retirement Plan, but cash balance defined benefit plans shall otherwise be included in the definition of "Cash Balance Plan," and not in the definition of "Pension Plan."
2.28 Performance Share Award. "Performance Share Award" means the award under the SIP, which before the beginning of the Deferral Period is determined to be otherwise payable in cash.
2.29. Plan. "Plan" means the DTE Energy Company Executive Deferred Compensation Plan, as described herein and as amended.
2.30. Plan Year. "Plan Year" means, for the first year, the period beginning January 1, 2002, and ending December 31, 2002, and thereafter, the period beginning January 1 and ending December 31 of each year.
2.31. Prior Plan. "Prior Plan" means the MCN Energy Group Executive Deferred Compensation Plan and/or the DTE Deferred Bonus Plan.
2.32. Qualified Plan. "Qualified Plan" means any plan maintained by the Company or an Affiliated Company, which is intended to be qualified under Code section 401(a).
2.33. Savings Plan. "Savings Plan" means any defined contribution plan maintained by the Company or an Affiliated Company, which is intended to be qualified under Code section 401(a).
2.34. SIP. "SIP" means the DTE Energy 2001 Stock Incentive Plan as amended from time to time.
2.35. Spouse. "Spouse" means an individual who is legally married to a Participant under the laws of the State in which the Participant resides, on the day immediately preceding the Participant's date of death.
2.36. Subsidiary. "Subsidiary" means a corporation, partnership, joint venture, limited liability company, unincorporated association or other entity in which the Company has a direct or indirect ownership or other equity interest.
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.01. Voluntary Participation by Eligible Employees. Each employee of the Company and Participating Affiliated Companies who is included within a "select group of management or highly compensated employees," within the meaning of Title I of ERISA, may be eligible to participate in accordance with the terms of the Plan.
(a) Effective Date for Participation. Each employee of the Company and Participating Affiliated Companies who is employed at the level of Director or above (or equivalent) and who is designated as an Eligible Employee shall be eligible to participate in the Plan and make voluntary elections to defer receipt of Cash Compensation and/or Performance Share Awards, effective as of the later of (i) the date determined by the Vice President, Human Resources, or (ii) the date on which the employee is formally notified of his eligibility to participate.
(b) Determination of Eligible Employee Status. The Vice President, Human Resources shall designate employees as Eligible Employees. The Vice President, Human Resources may revoke such designation prior to any Plan Year with respect to the Eligible
Employee's ability to defer future compensation payable by the Company or Participating Affiliated Company, provided, however, that no such revocation shall adversely affect any amounts previously deferred by such Eligible Employee under the Plan. Employees who were employed at the level of Director at MCN Energy Group Inc. or one of its subsidiaries prior to June 1, 2001, but were not appointed to a level of Director or above in the Staffing and Selection process during the second quarter of 2001 shall be eligible to participate for the 2002 Plan year only; unless or until they are otherwise designated as Eligible Employees.
(c) Deferral Election. The Company shall provide a Deferral Election to each Eligible Employee for each Plan Year in which deferrals are to be made, which shall set forth the Eligible Employee's election to defer a portion of his compensation, his agreement to be bound by the terms of the Plan, and such other matters as are set forth in this Plan or deemed advisable by the Committee. For each Deferral Year Subaccount, including such subaccounts, if any, under the Qualified Plan Make-up Subaccount, the Participant shall specify in the Deferral Election a Deferral Period of at least two (2) years and the method and timing of payment as described in Section 6. Failure to submit an election for any Plan Year will preclude such Eligible Employee from deferring any Cash Compensation or Performance Share Awards until the following Plan Year.
(d) Mid-Year Participation. To the extent an employee is designated as an Eligible Employee, and formally notified of his eligibility to participate in the Plan during a Plan Year, the Eligible Employee must elect to participate within 30 days after the Participant is notified of his eligibility for the Plan. Failure to submit an election during such 30-day period will preclude such Eligible Employee from deferring any compensation or Performance Share Awards until the following Plan Year.
3.02. Mandatory Participation by Covered Employees. The Organization and Compensation Committee of the Board, or its designee, may require the deferral of compensation of any Eligible Employee who is a "covered employee" as defined in Code section 162(m)(3) and the regulations thereunder, to the extent that such compensation would not have been deductible in the year in which such compensation would have been paid.
SECTION 4. DEFERRALS AND CONTRIBUTIONS
4.01. Deferral of Performance Share Awards.
(a) Election To Defer. Each Eligible Employee may elect, no later than October 331 of the year preceding the Plan Year in which Performance Shares would otherwise be payable, to defer receipt of all or a portion of a Performance Share Award otherwise payable in cash by filing with the Vice President, Human Resources the Deferral Election provided by the Company.
(b) Deferral Amount. Each Eligible Employee may file a written election to defer the receipt of a portion of a Performance Share Award in an amount not (i) less than one percent (1%), nor (ii) in excess of one hundred percent (100%), less the applicable FICA on such amount, in one percent (1%) increments, of the Performance Share Award otherwise payable in cash.
4.02. Deferral of Base Salary.
(a) Election To Defer. Each Eligible Employee may file a written election with the Vice President, Human Resources, no later than October 31 of the year preceding the Plan Year in which Base Salary would otherwise be payable, to defer receipt of a portion of his Base Salary.
(b) Deferral Amount. Each Eligible Employee may file a written election to defer the receipt of Base Salary in an amount not (i) less than one percent (1%), nor (ii) in excess of one hundred percent (100%), in one percent (1%) increments, less the applicable FICA on such amount, of the amounts payable during the Plan Year to which the election pertains.
4.03. Deferral of Annual Cash Bonus.
(a) Election To Defer. Each Eligible Employee may file a written election with the Vice President, Human Resources, no later than October 31 of the year preceding the Plan Year in which his Annual Cash Bonus otherwise would be payable, to defer receipt of all or a portion of his Annual Cash Bonus.
(b) Deferral Amount. Each Eligible Employee may file a written election to defer the receipt of his Annual Cash Bonus in an amount not (i) less than one percent (1%), nor (ii) in excess of one hundred percent (100%), in one percent (1%) increments, less the applicable FICA on such amount, of the amounts payable during the Plan Year to which the election pertains.
4.04. Restoration of Qualified Plan Benefits. The Company shall credit, as set forth in Sections 4.04(a) through (e), each Participant's Qualified Plan Make-up Subaccount with amounts intended to replace Qualified Plan benefits (but not earnings) which are reduced as a result of any deferrals under Sections 4.01, 4.02, or 4.03 of this Plan.
(a) Savings Plan Make-up. The Company shall credit to the Participant's Qualified Plan Make-up Subaccount, on the last business day of each month, an additional benefit equal to the amount of any Company matching contributions that would have been otherwise credited to the Participant's account under the terms of a Savings Plan but for the Participant's election to defer any amount under the Plan.
(b) Pension Plan Make-Up. The Company shall credit to the Participant's Qualified Plan Make-up Subaccount, as of the date of the Participant's termination of employment, an amount equal to the difference between (i) the present value, determined under
each applicable Pension Plan, of the benefit that the Participant would have been entitled to receive under each such Pension Plan but for his election to defer any amount under the Plan, and (ii) the present value, determined under each such Pension Plan, of the benefit that the Participant is entitled to receive under such Pension Plan. Such contribution shall be determined and credited as of the date of termination of employment.
(c) Cash Balance Plan Make-Up. The Company shall credit to the Participant's Qualified Plan Make-up Subaccount, as of the last business day of each calendar year, an amount equal to the additional increment that would have been added to the Participant's account under a Cash Balance Plan but for his having elected to defer any amount under the Plan. Such contribution shall be determined and credited as of the last day of the calendar year.
4.05. Mandatory Deferral. The Company shall credit to the Participant's Mandatory Deferral Subaccount, on the date on which such compensation would otherwise have been payable, amounts which would have been nondeductible under Code section 162(m) on the date on which such compensation would otherwise be payable. The Deferral Period for the Mandatory Deferral Subaccount shall be through the date on which the Participant ceases to be a "covered employee" as that term is defined in Code section 162(m)(3). Any amounts in the Mandatory Deferral Subaccount shall be paid in the form of a lump sum.
4.06. Deferral of Prior Plan Balances.
(a) Automatic Transfer. The Company shall credit to each Eligible Employee's Prior Plan Subaccount as of January 1, 2002 the amount credited to the Eligible Employee under the Prior Plan as of December 31, 2001.
(b) Election of Deferral Period. Each Eligible Employee whose balance in a Prior Plan is transferred to this Plan pursuant to subsection (a) shall file a written election with the Vice President, Human Resources, no later than October 31, 2001, specifying a Deferral Period of at least two (2) years and the method and timing of payment as described in Section 6. If such Eligible Employee fails to submit an election on or before October 31, 2001, the Prior Plan Account shall be paid in a lump sum upon termination of employment. Amounts in pay status under the MCN Energy Group Executive Deferred Compensation Play as of December 31, 2001, shall be payable on an annual basis, in arrears, rather than on a monthly basis, effective January 1, 2002.
SECTION 5. ACCOUNTS AND EARNINGS
5.01. Establishment of Accounts. The Committee shall establish a hypothetical bookkeeping Account for each Participant. Each Participant's Account shall be divided into one or more Contribution Subaccounts:
(a) For Participants deferring Base Salary, a "Base Salary Subaccount,"
(b) For Participants deferring Annual Cash Bonus, an "Annual Cash Bonus Subaccount,"
(c) For Participants whose Qualified Plan benefits are reduced because of their participation in this Plan, a "Qualified Plan Make-up Subaccount,"
(d) For Participants deferring Performance Share Awards payable in cash, a "Performance Share Subaccount,"
(e) For Participants whose compensation would otherwise be nondeductible under Code section 162(m), a "Mandatory Deferral Subaccount," and
(f) For Participants whose balance from a Prior Plan has been transferred to this Plan, a "Prior Plan Subaccount."
In addition, each Contribution Subaccount shall be divided into one or more Deferral Year Subaccounts, based on the Deferral Year of the contributions allocated to such Contribution Subaccount. The Qualified Plan Make-up Subaccount shall be divided into one or more Deferral Year Subaccounts, based on the Deferral Year in which contributions were allocated to such Contribution Subaccounts. The Prior Plan Subaccount shall be deemed to consist of one Deferral Year only.
5.02. Contribution Subaccounts.
(a) Establishment of Contribution Subaccounts. A Participant's Contribution Subaccount shall be denominated on a monetary basis. The Committee shall cause each separate Contribution Subaccount to be maintained in the name of each Participant with respect to whom all or a portion of Base Salary or Annual Cash Bonus, Performance Share Awards has been deferred, whose Qualified Plan benefits have been reduced because of his participation in this Plan, whose compensation has been mandatorily deferred because of Code section 162(m), or whose Prior Plan Balance has been transferred to this Plan.
(b) Subsequent Credits. Each Participant's Contribution
Subaccount shall be credited with amounts of Cash Compensation deferred by the
Participant and by the Company contributions specified in Section 4.04, 4.05 and
4.06. Cash Compensation deferrals shall be credited on the date such amounts
would have otherwise been paid to the Participant. Company contributions shall
be credited on the dates specified in Section 4.04, 4.05 or 4.06.
(c) Contribution Subaccounts Adjustments. Each Contribution Subaccount for any Participant shall be credited with earnings and debited for losses as if such amounts were invested in specific investment funds that reflect, as of a given date, the funds established under The Detroit Edison Savings and Investment Plan (the "Deemed Investments") in which the Participant's new contributions are invested by percentage, taking into account changes among such Deemed Investments made by the Participant, during the Deferral Period. Notwithstanding
the foregoing, the Committee may change available investment funds or override a Participant's investment election at any time.
5.03. Election of Investment Options. Each Participant shall, by filing an election with the Committee, in a format approved by the Committee, elect the investment options in which each deferral amount is to be invested. Investment options available under the Plan and the ability to change such investment election shall mirror those available under the Qualified Plan, however, may be changed at the discretion of the Committee.
5.04. No Requirement to Fund. The Company shall have sole discretion whether or not to invest any of the Company's funds (whether or not in trust) in a manner that reflects the Deemed Investments or in any other manner. If and to the extent the Company chooses to invest in any Deemed Investment, assets acquired by the Company shall remain the sole property of the Company, subject to the claims of its general creditors, and shall not be deemed to form part of the Participant's Account. Nothing herein, however, shall preclude the Company from segregating assets that are intended to be a source of payment of benefits from the Plan. The Company shall not be required to fund its obligations in any manner and shall not be required to invest in any particular investment, including any Deemed Investment fund. The Company may, without limitation, purchase life insurance or any security or other property with respect to any or all of its obligations under the Plan. Participants shall have no right, title or interest in any assets held by the Company (or any trust) by reason of a Participant's participation in this Plan.
SECTION 6. FORM AND TIMING OF PAYMENT
6.01. Distribution of Contribution Subaccount. The Company shall distribute each Participant's Contribution Subaccount in accordance with the Participant's Deferral Election unless the Plan provides otherwise. The distribution election with respect to each Deferral Year Subaccount under the Participant's Contribution Subaccount shall be made in accordance with the following provisions.
(a) Payment Election. Such Deferral Election shall provide for payment in either (i) annual installments over a period not less than one year and not more than 15 years, in one-year increments, or (ii) a lump sum distribution. If no Deferral Election is on file with respect to the Deferral Year Subaccount or no distribution option is indicated on the Deferral Election, the Participant's Deferral Year Subaccount shall be distributed in a single lump sum.
(b) Timing of Distributions. A lump sum distribution shall be made as of March 1 following the end of the Deferral Period or, if earlier, March 1 following the end of the Plan Year in which the Participant's employment terminated for any reason other than death. If a Participant has elected to receive his distribution in annual installments, the first installment shall be made as of March 1 following the end of the Deferral Period or, if earlier, March 1 following the end of the Plan Year in which the Participant's employment terminated for any reason other
than death. All subsequent annual installments shall be made on approximately the same date each calendar year thereafter for the remainder of the distribution period. If no Deferral Election is on file with respect to the Deferral Year Subaccount or no distribution option is indicated on the Deferral Election, the Participant's Deferral Year Subaccount shall be distributed as of March 1 following the end of the Plan Year in which the Participant's employment is terminated for any reason other than death. Timing of a distribution due to a Participant's death shall be governed by Section 7.02.
6.02. Form of Distributions.
(a) Contribution Subaccounts. Earnings and losses based on the Deemed Investments shall be credited to each Deferral Year Subaccount under the Participant's Contribution Subaccount through December 31 of each Plan Year in which the Participant has a balance in such Deferral Year Subaccount. The distribution to a Participant shall be paid in cash. The initial distribution shall be determined by dividing the value of the Participant's Contribution Subaccount, determined as of (i) December 31 of the last Plan Year ending with or within the Deferral Period or, if earlier, on (ii) December 31 of the Plan Year in which the Participant's employment terminated, by the number of installment payments to be made. The amount distributed to the Participant thereafter shall be recalculated each year to reflect changes in the Deferral Year Subaccount balance through December 31 of such subsequent calendar year and the remaining number of installment payments to be made.
(b) Distribution of Small Amounts. Notwithstanding a Participant's payment option, if a Participant's Contribution Subaccount is less than or equal to $10,000 as of any March 1 payment date, the Participant's Contribution Subaccount balance shall be paid in a single lump sum.
6.03. Change In Distribution Option. A Participant may change the distribution option previously selected for a particular Deferral Year Subaccount at any time by submitting a revised Deferral Election applicable to such Deferral Year Subaccount to the Committee. A change in time or manner of any distribution, however, shall be effective only if the Vice President, Human Resources receives the revised Deferral Election at least 12 full months before distributions under the Plan related to that Deferral Year Subaccount commence under either Deferral Election and approves such election. Any change received by the Vice President, Human Resources less than 12 months prior to the date the distribution would otherwise commence shall post-pone any distribution from the Plan until the next March 1 which is 12 months or more after the change in election option is received by the Vice President, Human Resources.
6.04. Hardship Withdrawals. At any time prior to the complete distribution of a Participant's Account, a Participant may request that the Vice President, Human Resources make a distribution to him of all or part of his remaining Account within 120 days. Such distribution shall be made only if the Vice President, Human Resources determines that the Participant has an unforeseen emergency that constitutes a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Code section 152(a)) of the Participant, loss of the Participant's property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Payment may not be made to the extent that such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship or by cessation of deferrals under the Plan. The distribution shall be limited to the amount required to meet the financial hardship. In making these determinations, the Vice President, Human Resources shall utilize the regulations proposed or adopted under Code section 457. Hardship distributions shall be deducted from Contribution Subaccounts in the following order (i) the Annual Cash Bonus Subaccount; (ii) the Base Salary Subaccount; and (iii) the Qualified Plan Make-up Subaccount. Within each Contribution Subaccount, oldest Deferral Year Subaccounts will be depleted first. If a Participant elects a hardship withdrawal, any on-going deferral will cease, and the Participant may not again be designated as an Eligible Employee eligible to make additional deferrals under the Plan until the enrollment period occurring at the end of the Plan Year following the Plan Year in which the withdrawal was made.
6.05. Unscheduled Withdrawals. The Participant shall be permitted to make certain unscheduled withdrawals as described below:
(a) Election. A Participant may request in writing to the Vice President, Human Resources an unscheduled withdrawal of the entire amount credited to the Participant's Account, including earnings, which will be paid within 30 days in a single lump sum.
(b) Withdrawal Penalty. There will be a penalty deducted from the Account prior to an Unscheduled Withdrawal equal to 10 percent of the Participant's Account. If a Participant elects such a withdrawal, any on-going deferral will cease, and the Participant may not again be designated as an Eligible Employee eligible to make additional deferrals under the Plan until the enrollment period occurring at the end of the Plan Year following the Plan Year in which the withdrawal was made.
6.06. Revocation of Designation as an Eligible Employee. A Participant whose designation as an Eligible Employee is revoked prior to the Participant's retirement, death, termination or disability shall not be permitted to continue to make Deferrals under the Plan subsequent to the date of such revocation. However, all monies that are in the Participant's subaccounts as of the date of revocation shall continue to be deferred in such subaccounts until the Participant's retirement, death, termination or disability.
6.07. Distribution of Performance-Based Compensation. It is intended that deferrals of amounts that would have constituted "qualified performance-based compensation," within the meaning of Code Section 162(m) and the regulations thereunder, if paid when earned shall continue to constitute "qualified performance-based compensation" when distributed under this Plan. Amounts deferred that would not have constituted "qualified performance-based compensation" if paid when earned shall not constitute "qualified performance-based compensation" when distributed under this Plan.
SECTION 7.
SELECTION OF AND PAYMENTS TO A BENEFICIARY
7.01. Beneficiary Designation. A Participant shall designate a Beneficiary on a form provided by the Vice President, Human Resources, or his or her designee, for the purpose of designating a Beneficiary. If a Participant has not designated a Beneficiary, or if a designated Beneficiary is not living or in existence at the time of a Participant's death, any death benefits payable under the Plan shall be paid to the Participant's Spouse, if then living, and if the Participant's Spouse is not then living, to the Participant's estate.
7.02. Change in Beneficiary. A Participant may change the designated Beneficiary from time to time by filing a new written designation with the Vice President, Human Resources, or his or her designee. Such designation shall be effective upon receipt by the Vice President, Human Resources, or his or her designee.
7.03. Survivor Benefit. If a Participant dies with an Account balance under this Plan, his Beneficiary shall be entitled to receive a distribution of the Participant's Account. The distribution shall be paid in a lump sum within ninety (90) days following the Participant's death.
SECTION 8. VESTING OF BENEFITS
A Participant shall be 100 percent vested in his benefits under the
Plan at all times, except as set forth in Sections 9.02 (relating to fractional
share adjustments), 10.03 (relating to the right to accelerate payments) and
11.02 (relating to failure of the Plan to maintain the designated ERISA
exemptions). A Participant shall be treated as an unsecured creditor of the
Company for all benefits under the Plan.
SECTION 9. TAX WITHHOLDING
Deferrals hereunder shall be subject to applicable FICA withholding laws. Benefit payments hereunder shall be subject to applicable federal, state and local tax withholding laws. A Participant shall be responsible for making payment to DTE or a participating Affiliated Company, as appropriate, in an amount equal to the FICA tax or income payroll tax withholdings on the Fair Market Value of deferrals of or payments made in DTE Stock.
SECTION 10. ADMINISTRATION OF THE PLAN
10.01. Duties and Power. The Committee shall be the "named fiduciary" for the Plan responsible for the general operation and administration of the Plan and the proper execution of
its provisions. It shall have full discretionary authority to interpret the Plan and to determine the response to all questions arising from its provisions. It shall maintain all necessary books of accounts and records. It shall have the full discretionary power and authority to establish, interpret, enforce, amend, and revoke, from time to time, such rules and regulations for the administration of the Plan and the conduct of its business as it deems appropriate, including the right to remedy ambiguities, inconsistencies and omissions. Any action that the Committee is required or authorized to take shall be final and binding upon each and every person who is or may become a Plan Participant or Beneficiary. The Committee may delegate its authority to administer the Plan.
10.02. Benefit Statements. The Committee, or its designee, will provide each Participant with a quarterly statement setting forth the Participant's Account balance, and the amount allocated to each Contribution Subaccount.
10.03. Right to Accelerate. The Board in its sole discretion may accelerate all vested benefits upon termination of the Plan, and pay such benefits in a single lump sum. If the Internal Revenue Service or the Committee determines that any amounts in Participants' Accounts are currently taxable, the Committee may direct immediate payment of all or some Plan benefits in a single lump sum or to take any other action it deems appropriate. In addition, Participant's terminating employment with an Account balance of less than $10,000 shall receive such benefits in a single lump sum regardless of the distribution elections stated in their Deferral Election(s).
SECTION 11.
AMENDMENT, SUSPENSION, AND TERMINATION
11.01. Right to Amend or Terminate. The Plan may be amended, modified or terminated by the Board at any time. Such amendment, modification or termination may modify or eliminate any benefit hereunder except that such amendment, modification or termination shall not affect the rights of Participants or Beneficiaries to the vested portion of a Participant's Account as of the date of such amendment or termination.
11.02. Right to Suspend. If the Board of Directors determines that payments under the Plan would have a material adverse affect on the Company's ability to carry on its business, the Board of Directors may suspend such payments temporarily for such time as in its sole discretion it deems advisable, but in no event for a period in excess of one year. The Company shall pay such suspended payments in a lump sum immediately upon the expiration of the period of suspension.
11.03. Partial ERISA Exemption. The Plan is intended to provide benefits for "a select group of management or highly compensated employees" within the meaning of sections 201, 301 and 401 of ERISA, and therefore to be exempt from sections 2, 3 and 4 of Title I of ERISA. Accordingly, the Plan shall terminate and existing Account balances shall be paid in a single lump-sum and no further benefits, vested or non-vested, shall be paid hereunder in the event it is
determined by a court of competent jurisdiction or by an opinion of counsel that the Plan constitutes an employee pension benefit plan within the meaning of section 3(2) of ERISA which is not so exempt.
SECTION 12. MISCELLANEOUS
12.01. Unfunded Plan. The Plan shall be unfunded within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) ERISA. All benefits payable under the Plan shall be paid from the Company's general assets. The Company shall not be required to set aside or hold in trust any funds for the benefit of a Participant or Beneficiary, each of whom shall have the status of a general unsecured creditor with respect to the Company's obligation to make benefit payments pursuant to the Plan. Any assets of the Company available to pay Plan benefits shall be subject to the claims of the Company's general creditors and may be used by the Company in its sole discretion for any purpose.
12.02. No Right to Continued Employment. Nothing in the Plan shall create or be construed as a contract between the Company or an Affiliated Company and employees for any matter including giving any person employed by the Company or an Affiliated Company the right to be retained in the Company's or an Affiliated Company's employ. The Company and each Affiliated Company expressly reserve the right to dismiss any person at any time, with or without cause, without liability for the effect that such dismissal might have upon him as a Participant in the Plan or for any other purpose.
12.03. Prohibition Against Alienation. Except as otherwise provided in the Plan, no right or benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. No such right or benefit shall be liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such right or benefit.
12.04. Savings Clause. If any provision of this Plan is held by a court of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision and the remaining provisions hereof shall continue to be construed and enforced as if the invalid or unenforceable provision had not been included.
12.05. Payment of Benefit of Incompetent. In the event the Committee finds that a Participant, former Participant or Beneficiary is unable to care for his affairs because of his minority, illness, accident, or other reason, any benefits payable hereunder may, unless other claim has been made therefor by a duly appointed guardian, committee or other legal representative, be paid to a spouse, child, parent, or other blood relative or dependent or to any person found by the Committee to have incurred expenses for the support and maintenance of
such Participant, former Participant, or Beneficiary; and any such payments so made shall be a complete discharge of all liability therefor.
12.06. Spouse's Interest. The interest in the benefits hereunder of a Spouse who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such Spouse in any manner including, but not limited to, such Spouse's will, nor shall such interest pass under the laws of intestate succession.
12.07. Successors. In the event of any consolidation, merger, acquisition or reorganization of the Company, the obligations of the Company and Participating Affiliated Companies under this Plan shall continue and be binding upon the Company, Participating Affiliated Companies and its successors.
12.08. Gender, Number and Heading. Whenever any words are used herein in the masculine gender, they shall be construed as though they were also used in the feminine gender in all cases where they would so apply. Whenever any words used herein are in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. Headings of sections and subsections as used herein are inserted solely for convenience and reference and constitute no part of the Plan.
12.09. Legal Fees and Expenses. The Company shall pay all reasonable
legal fees and expenses that a Participant may incur as a result of the Company
contesting the validity, enforceability, or the Participant's interpretation of,
or determinations under this Plan, other than Hardship Withdrawals under Section
6.04, Unscheduled Withdrawals under Section 6.05, and tax withholding under
Section 9.01.
12.10. Choice of Law. This Plan shall be governed by and construed in accordance with the laws of the State of Michigan, other than its choice-of-law rules, to the extent not superseded by applicable federal statues or regulations.
12.11. Affiliated Employees. Transfers of employment between Affiliated Companies and the Company or other Affiliated Companies will be treated as continuous and uninterrupted service under the Plan.
12.12. Plan Document. This Plan document provides the final and exclusive statement of the terms of the Plan. Unless otherwise authorized by the Board or its delegate, no amendment or modification to this Plan shall be effective until reduced to writing and adopted pursuant to Section 11.01. This document legally governs the operation of the Plan, and any claim of right or entitlement under the Plan shall be determined solely in accordance with its provisions. To the extent that there are any inconsistencies between the terms of any related materials and the terms of this document, the terms of this document shall control and govern the operation of the Plan. No other evidence, whether written or oral, shall be taken into account in determining the right of an Eligible Employee, a Participant, or Beneficiary, as applicable, to any benefit of any type provided under the Plan.
SECTION 13. ARBITRATION
In the event of any dispute, claim, or controversy (hereinafter referred to as a "Grievance") between a Participant who is eligible to elect to receive the benefits provided under this Plan and the Company with respect to the payment of benefits to such Participant under this Plan, the computation of benefits under this Plan, or any of the terms and conditions of this Plan, such Grievance shall be resolved by arbitration in accordance with this Section 13.
(a) Arbitration shall be the sole and exclusive remedy to redress any Grievance.
(b) The arbitration decision shall be final and binding, and a judgment on the arbitration award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms.
(c) The arbitration shall be conducted by the American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association and reasonable expenses of the arbitrators and the American Arbitration Association shall be borne by the Company.
(d) The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit, Michigan Metropolitan area.
(e) The arbitrator(s) shall not have the jurisdiction or authority to change any of the provisions of this Plan by alteration of, addition to, or subtraction from the terms thereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Since arbitration is the exclusive remedy with respect to any Grievance, no Participant eligible to receive benefits provided under this Plan has the right to resort to any federal court, state court, local court, or administrative agency concerning breaches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court, or administrative agency by such employee or the Company with respect to any Grievance which is arbitrable as herein set forth.
(f) The arbitration provisions shall, with respect to any Grievance, survive the termination of this Plan.
SECTION 14. CHANGE IN CONTROL PROVISIONS
14.01. General. In the event of a Change in Control, as defined in
Section 14.06, then, notwithstanding any other provision of the Plan, the
provisions of this Section 14 shall be applicable and shall supersede any
conflicting provisions of the Plan.
14.02. Transfer to Rabbi Trust. The Company shall establish a trust (the "Rabbi Trust") that is intended to be an unfunded arrangement and not affect the status of the Plan as an unfunded arrangement for purposes of Title I of ERISA. The terms of the Rabbi Trust shall provide that, within seven (7) days of a Change in Control assets shall be transferred to the Rabbi Trust in (i) an amount equal to each Participant's Account balance as of the date of the Change in Control, plus (ii) in the case of each Participant for whom no Pension Plan Make-Up described in Section 4.04(b) has been credited to his or her Qualified Plan Make-Up Subaccount on or before the date of the Change in Control, an amount equal to the Pension Plan Make-Up to which each such Participant would be entitled on his or her Normal Retirement Date under each applicable Pension Plan, assuming service through his or her Normal Retirement Date under the applicable Pension Plan and assuming annual Base Salary increases for the Participant of 5%, all as determined by the Company's Actuaries; plus (iii) an amount deemed necessary to pay estimated Rabbi Trust administrative expenses for the following five (5) years, as determined by the Company's Accountants. Assets transferred in accordance with the preceding sentence shall either be (i) in the form of shares of the Deemed Investments and/or DTE Stock equal to the number of shares of each such Deemed Investment and DTE Stock in which the Participant's Contribution Subaccount is deemed to be invested for bookkeeping purposes on the date of the Change in Control or (ii) in the form of in cash, in which case an additional cash transfer shall be made, prior to the initial investment of cash by the trustee of the Rabbi Trustee in DTE Stock or any Deemed Investment, in an amount sufficient to permit the trustee of the Rabbi Trust to invest in the number of shares of each Deemed Investment and DTE Stock in which the Participant's Contribution Subaccount was deemed to be invested for bookkeeping purposes on the date of the Change in Control (as adjusted for any subsequent share splits, consolidations, etc.). The Company and/or an Affiliated Company shall make all transfers of assets required by the Rabbi Trust in a timely manner and shall otherwise abide by the terms of the Rabbi Trust.
14.03. Lump Sum Payments. In connection with a Change in Control or consummation of a transaction constituting a Change in Control, the Chairman of DTE Energy Company shall have the absolute discretion to direct that a lump sum payment be made to a Participant up to the total value of such Participant's Contribution Subaccounts if such payment will reduce the amount of any potential excise tax imposed by Code section 4999.
14.04. Joint and Several Liability. Upon and at all times after a Change in Control, the liability under the Plan of the Company and each Affiliated Employer that has adopted the Plan shall be joint and several so that the Company and each such Affiliated Employer shall each be liable for all obligations under the Plan to each employee covered by the Plan, regardless of the corporation by which such employee is employed.
14.05. Dispute Procedures. In the event that, upon or at any time subsequent to a Change in Control, a disputed claim for benefits under the Plan is brought by a Participant or beneficiary, the following additional procedures shall be applicable:
(a) Any amount that is not in dispute shall be paid to the Participant or beneficiary at the time or times provided herein.
(b) The Company shall advance to such claimant from time to time such amounts as shall be required to reimburse the claimant for reasonable legal fees, costs and expenses incurred by such claimant in seeking a judicial resolution of his or her claim, including reasonable fees, costs and expenses relating to arbitration.
14.06. Definition of Change in Control. A "Change in Control" means the occurrence of any one of the following events:
(a) individuals who, on December 31, 2001, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to December 31, 2001, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) with respect to directors or as a result of any other actual or threatened solicitation of proxies [or consents] by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(b) any "person" (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board (the "Company Voting Securities"); provided, however, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (c)), or (E) a transaction (other than one described in (c) below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution providing expressly that the acquisition pursuant to this clause (E) does not constitute a Change in Control under this paragraph (b);
(c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries (a "Business Combination") or sale or other disposition of all or substantially all of the Company's assets to an entity that is not an affiliate of the Company (a "Sale"), unless immediately following such Business Combination or Sale: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by Company Voting Securities that were outstanding immediately
prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or
(d) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.
IN WITNESS WHEREOF, DTE Energy Company has caused this Plan to be executed as of this 1st day of January 2002.
DTE Energy Company
By: ________________________________
Larry E. Steward
Vice President, Human Resources
Exhibit 10-46
DTE ENERGY COMPANY
SUPPLEMENTAL RETIREMENT PLAN
EFFECTIVE JANUARY 1, 2002
TABLE OF CONTENTS
Section Page ------- ---- ARTICLE 1 - TITLE............................................................................................... 1 ARTICLE 2 - DEFINITIONS......................................................................................... 1 ARTICLE 3 - PURPOSE............................................................................................. 2 ARTICLE 4 - EFFECTIVE DATE...................................................................................... 2 ARTICLE 5 - ELIGIBILITY......................................................................................... 2 ARTICLE 6 - EMPLOYERS' OBLIGATION............................................................................... 3 Section 6.1. General ................................................................................. 3 Section 6.2. Prior Plan Payment ...................................................................... 3 ARTICLE 7 - PAYMENT OF BENEFITS................................................................................. 3 Section 7.1. Form and Timing of Payment .............................................................. 3 Section 7.2. Increase in Section 415 Limit ........................................................... 5 Section 7.3. Recomputation of Plan Benefits Upon Reemployment ........................................ 5 Section 7.4. Change in Payment Option ................................................................ 5 Section 7.5. Payments Subject to Golden Parachute Provisions ......................................... 5 Section 7.6. Transfer to an Affiliated Company ....................................................... 6 ARTICLE 8 - BENEFICIARY IN THE EVENT OF DEATH................................................................... 6 ARTICLE 9 - UNFUNDED PLAN....................................................................................... 7 ARTICLE 10 - ARBITRATION........................................................................................ 7 ARTICLE 11 - AMENDMENT AND TERMINATION.......................................................................... 8 ARTICLE 12 - MISCELLANEOUS...................................................................................... 9 Section 12.1 Benefits Non-Assignable.......................................................... 9 Section 12.2 No Employment Rights............................................................. 9 Section 12.3 Law Applicable................................................................... 9 Section 12.4 Legal Fees and Expenses.......................................................... 10 Section 12.5 Successors....................................................................... 10 Section 12.6 Savings Clause................................................................... 10 Section 12.7 Headings, Gender and Number...................................................... 10 |
Section Page ------- ---- ARTICLE 13 - CHANGE IN CONTROL PROVISIONS....................................................................... 10 Section 13.1 General.......................................................................... 10 Section 13.2 Transfer to Rabbi Trust.......................................................... 10 Section 13.3 Joint and Several Liability...................................................... 11 Section 13.4 Dispute Procedures............................................................... 11 Section 13.5 Definition of Change in Control.................................................. 11 |
DTE ENERGY COMPANY
SUPPLEMENTAL RETIREMENT PLAN
EFFECTIVE JANUARY 1, 2002
WHEREAS, Detroit Edison Company ("Edison") previously adopted the
Detroit Edison Retirement Reparation Plan and the Detroit Edison Benefit
Equalization Plan, and MCN Energy Group Inc. ("MCN") previously adopted the MCN
Energy Group Supplemental Retirement Plan and the MCN Energy Group Excess
Benefit Plan, which were adopted by DTE Enterprises, Inc. as of June 1, 2001
(the effective date of the merger), and DTE Energy Company (the "Company")
desires to replace these four plans (collectively, the "Prior Plans").
NOW, THEREFORE, effective December 31, 2001, the Prior Plans are hereby terminated and replaced with this plan as of January 1, 2002 as described herein:
ARTICLE 1
TITLE
The title of this plan shall be the "DTE Energy Company Supplemental Retirement Plan" and shall be referred to in this document as the "Plan".
ARTICLE 2
DEFINITIONS
The words and phrases used in the Plan shall have the same meanings as provided under the DTE Energy Retirement Plan (the "Qualified Plan"), unless otherwise defined in the Plan or the context clearly requires otherwise.
ARTICLE 3
PURPOSE
The principal purpose of the Plan is to provide for the payment of certain benefits that would not otherwise be payable under the Qualified Plan. Such benefits shall be payable to a "select group of management or highly compensated employees" of the Company and any other corporation which is a Participating Employer under the Qualified Plan (a "Participant") and also elects to participate in this Plan.
It is intended that this Plan provide benefits for a "select group of management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of ERISA and, therefore, to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
ARTICLE 4
EFFECTIVE DATE
The effective date of the Plan for the Company shall be January 1, 2002 and for any Participating Employer shall be the date established by resolution of the Board of Directors of the particular Participating Employer at the time of adoption of the Plan.
ARTICLE 5
ELIGIBILITY
A Participant of a Participating Employer whose benefits under the
Qualified Plan are limited because of the limitation on compensation under
Section 401(a)(17) of the Code, the limitation on benefits and contributions
under Section 415 of the Code, or any other provision of the Code or other law
that the Committee hereafter designates, shall be eligible for the benefits
provided by this Plan. Also, all employees of Participating Employers who are
participating in the DTE Energy Supplemental Savings Plan may be eligible for
benefits provided by this Plan. Notwithstanding the foregoing, no employee shall
be eligible for benefits provided by this Plan until such employee has satisfied
the eligibility requirements of the Qualified Plan.
ARTICLE 6
EMPLOYERS' OBLIGATION
SECTION 6.1. GENERAL. The Participating Employers shall pay under this
Plan any amount that any eligible employee would have been entitled to receive
under the Qualified Plan but for the limitation on compensation under Section
401(a)(17) of the Code, the limitation on benefits and contributions under
Section 415 of the Code, and any other provision of the Code or other law that
the Committee hereafter designates. Also, the Participating Employers shall pay
under this Plan any amount that any eligible employee would have been entitled
to receive under the Qualified Plan but for the exclusion of deferrals under the
DTE Energy Supplemental Savings Plan from the definition of compensation under
the option of the Qualified Plan applicable to such Participant. The particular
Participating Employer who last employed the Participant with respect to whom
the payment is to be made shall be responsible for making the payments under
this Plan.
SECTION 6.2. PRIOR PLAN PAYMENTS. If a Participant is in pay status as of December 31, 2001 under one of the Prior Plans, or has terminated employment from a Participating Employer prior to January 1, 2002, the amount and method of payment to such Participant shall continue under the provisions of the applicable Prior Plan. Such payments shall be made by the particular Participating Employer who last employed the Participant.
ARTICLE 7
PAYMENT OF BENEFITS
SECTION 7.1. FORM AND TIMING OF PAYMENT. On the date that a Participant becomes entitled to a distribution of his or her vested accrued benefit under the provisions of the Qualified Plan applicable to the Participant ("Termination Date"), such Participant shall be entitled to receive the vested benefit provided under the Plan.
(a) Form of Payment. As of the end of the quarter in which his or her Termination Date occurs, the Participant's Plan benefit shall be present-valued in accordance with the methodology set forth in the Qualified Plan for a Cash Balance Plan Participant or non-Cash Balance Plan
Participant, as applicable, using an interest rate equal to the average interest rate of ten-year U.S. Treasury Notes for the September of the calendar year prior to the Participant's Termination Date, or such other rate as set by the Committee (the "Plan Interest Rate"). Payment of a Participant's Plan benefit shall be made in cash in accordance with the Participant's selection on his or her Distribution Election Form either (1) as a joint and 100% survivor annuity for Participants who are married as of the Participant's Termination Date, (2) as a single life annuity for Participants who are single as of the Participant's Termination Date, or (3) in annual payments over a period not less than one year and not more than 15 years by the Employer in Article 6. If a Participant has not elected a payment option while he or she is actively employed by the Company or a Participating Employer, distribution shall be made as a joint and 100% survivor annuity for Participants who are married as of the Participant's Termination Date and as a single life annuity for Participants who are single as of the Participant's Termination Date.
(b) Timing of Payment. A lump sum distribution shall be made as of March 1 following the Termination Date or, if earlier, March 1 following the end of the Plan Year in which the Participant's employment terminated for any reason other than death. If a Participant has elected to receive his or her distribution in annual installments, the first installment shall be made as of March 1 following the Participant's Termination Date or, if earlier, March 1 following the end of the Plan Year in which the Participant's employment terminated for any reason other than death. All subsequent annual installments shall be made on approximately the same date each calendar year thereafter for the remainder of the distribution period. The amount of any annual payments shall be calculated to pay out over the specified period the Participant's Plan benefit as of his or her Termination Date with interest credited annually on the declining balance at the Plan Interest Rate. The amount of the annual payments to the Participant shall be adjusted at the end of the quarter in which the anniversary of the Participant's Termination Date occurs to reflect changes in the Plan Interest Rate.
(c) Distribution of Small Amounts. Notwithstanding a Participant's payment option, if a Participant's Plan benefit is less than or equal to $10,000 as of any March 1 payment date, the Participant's Plan benefit balance shall be paid in a single lump sum.
SECTION 7.2. INCREASE IN SECTION 415 LIMIT. If a Participant has elected to receive an Annuity under the Qualified Plan and such Annuity is increased subsequent to the Participant's Termination Date due to an increase in the Code Section 415 limit, the Participant's Plan Benefit shall be adjusted accordingly on a prospective basis.
SECTION 7.3. RECOMPUTATION OF PLAN BENEFITS UPON REEMPLOYMENT. If a Participant entitled to a distribution under the Qualified Plan receives all or part of his or her Plan benefit and is thereafter reemployed, such Participant's Plan benefit shall be recalculated upon the Participant's subsequent termination of employment. Plan payments shall cease upon reemployment. If a Participant's recalculated Plan benefit results in an additional payment to the Participant, such additional payment shall be made in accordance with Section 7.1. If such Participant's recalculated Plan benefit shows that the Participant's Plan benefit has been overpaid, the Participant shall be required to make restitution to the Company, within a period of twelve months of such rehire, in an amount equal to such overpayment, plus interest at the Plan Interest Rate.
SECTION 7.4. CHANGE IN PAYMENT OPTION. The payment option selected by a Participant may be changed at any time while he or she is actively employed by the Company or a Participating Employer by the Participant submitting a new payment selection to the Committee.
SECTION 7.5. PAYMENTS SUBJECT TO GOLDEN PARACHUTE PROVISIONS. Notwithstanding the above, if payment at the time specified in the first sentence of this Article 7, Section 7.1 would subject the Participant to the excise tax under Section 4999 of the Code, at the discretion of the Company or Participating Employer, as applicable, payment of the Participant's Plan benefit shall be deferred until the earlier of (a) the date that would have been the Participant's Normal Retirement Date, Early Retirement Date or Disability Retirement Date, (b) death of the Participant, or (c) total and permanent disability or legally established mental incompetency of the Participant.
SECTION 7.6. TRANSFER TO AN AFFILIATED COMPANY. Benefits for a Participant who transfers employment from one Employer to an Affiliated Company shall be subject to the transfer
provisions of the Qualified Plan. Such a transfer of employment shall cause a transfer of the Plan benefit maintained by a Participating Employer for a Participant, if the new Employer has adopted the Plan, and the former Employer transfers cash to the new Employer equal to the amount of the benefit transferred. In all other events, a transfer of employment shall not cause a transfer of the benefit maintained by an Employer for a Participant.
ARTICLE 8
BENEFICIARY IN THE EVENT OF DEATH
Each Participant shall have the right to designate a beneficiary or beneficiaries to receive any distribution to be made under Article 7 upon the death of such Participant, or, in the case of a Participant who dies subsequent to termination of his or her employment but prior to the distribution of the entire amount to which the Participant is entitled under the Plan, any undistributed balance to which such Participant would have been entitled. Each Participant shall also have the right to designate a contingent beneficiary in the event any of the primary beneficiaries predecease the Participant or die prior to complete disbursement of the Participant's account.
If no beneficiary has been named by a Participant at the time of the Participant's death, or if the beneficiary designated by the Participant has predeceased the Participant, or such designated beneficiary has died prior to complete disbursement of the Participant's benefit, and the Participant has failed to name a contingent beneficiary, the value of the Participant's benefit, or the undistributed portion thereof, shall be paid by the Employer to the Participant's spouse, if then living, and if the Participant's spouse is not then living, to the Participant's estate in a lump sum as soon as practicable, but in no event later than one year following the Participant's death.
ARTICLE 9
UNFUNDED PLAN
The Plan shall be unfunded within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) ERISA. All benefits payable under the Plan shall be paid from the general assets of the Company or a Participating Employer, as applicable. The Company and any Participating Employer shall not
be required to set aside or hold in trust any funds for the benefit of a Participant or beneficiary, each of whom shall have the status of a general unsecured creditor with respect to the Company's or Participating Employer's obligation to make benefit payments pursuant to the Plan. Any assets of the Company or a Participating Employer available to pay Plan benefits shall be subject to the claims of the general creditors of the Company and the Participating Employer and may be used by the Company and Participating Employer in their sole discretion for any purpose.
ARTICLE 10
ARBITRATION
In the event of any dispute, claim, or controversy (hereinafter referred to as a "Grievance") between a Participant (or beneficiary) and the Company with respect to the payment of benefits to such Participant or beneficiary under this Plan, the computation of benefits under this Plan, or any of the terms and conditions of this Plan, such Grievance shall be resolved by arbitration in accordance with this Section 10.2.
(a) Arbitration shall be the sole and exclusive remedy to redress any Grievance.
(b) The arbitration decision shall be final and binding, and a
judgment on the arbitration award may be entered in any court of
competent jurisdiction and enforcement may be had according to its
terms.
(c) The arbitration shall be conducted by the American
Arbitration Association in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and reasonable expenses
of the arbitrators and the American Arbitration Association shall be
borne by the Company.
(d) The place of the arbitration shall be the offices of the American Arbitration Association in the Detroit, Michigan Metropolitan area.
(e) The arbitrator(s) shall not have the jurisdiction or authority to change any of the provisions of this Plan by alteration of, addition to, or subtraction from the terms thereof. The arbitrator(s)' sole authority shall be to apply any terms and conditions of this Plan. Because arbitration is the exclusive remedy with respect to any Grievance, no Participant eligible to receive benefits provided under this Plan has the right to resort to any federal court, state court, local court, or administrative agency concerning breaches of any terms and provisions hereunder, and the decision of the arbitrator(s) shall be a complete defense to any suit, action, or proceeding instituted in any federal court, state court, local court, or administrative agency by such Participant or the Company with respect to any Grievance which is arbitrable as herein set forth.
(f) The arbitration provisions shall, with respect to any Grievance, survive the termination of this Plan.
ARTICLE 11
AMENDMENT AND TERMINATION
The Plan shall be administered by the Committee appointed pursuant to the provisions of the Qualified Plan. The Committee shall have the same powers and duties, and shall be subject to the same limitations, as are described in the Qualified Plan.
The Company may amend or terminate the Plan at any time and for any reason. The power to amend or modify the Plan shall rest solely with the Committee. No such amendment or termination shall affect the rights of Participants or beneficiaries to the vested portion of amounts credited to Participants' benefits as of the date of such amendment or termination. In the event of a termination of the Plan, each Participant's benefit shall be fully vested.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. BENEFITS NON-ASSIGNABLE. Except as otherwise provided in the Plan, no right or benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. No such right or benefit shall be liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such right or benefit.
SECTION 12.2. NO EMPLOYMENT RIGHTS. Nothing contained in the Plan and no action taken pursuant to the provisions of the Plan shall be construed as a contract of employment between a Participant and the Company or a Participating Employer, or as a right of any Participant to be continued in the employment of the Company or a Participating Employer, or as a limitation of the right of the Company or a Participating Employer to discharge any Participant at any time, with or without cause, or as a limitation of the right of the Participant to terminate employment at any time.
SECTION 12.3. LAW APPLICABLE. To the extent not preempted by federal law, this Plan and all actions hereunder shall be governed by and construed according to the laws of the State of Michigan.
SECTION 12.4. LEGAL FEES AND EXPENSES. The Company shall pay all reasonable legal fees and expenses that any Participant may incur as a result of the Company contesting the validity, enforceability, or such Participant's interpretation of, or determinations under this Plan.
SECTION 12.5. SUCCESSORS. In the event of any consolidation, merger, acquisition or reorganization of the Company, the obligations of the Company under this Plan shall continue and be binding upon the Company and its successors.
SECTION 12.6. SAVINGS CLAUSE. If any provision of this Plan is held by a court of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision and the remaining provisions hereof shall continue to be construed and enforced as if the invalid or unenforceable provision had not been included.
SECTION 12.7. GENDER, NUMBER AND HEADING. Whenever any words are used herein in the masculine gender, they shall be construed as though they were also used in the feminine gender in all cases where they would so apply. Whenever any words used herein are in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. Headings of sections and subsections as used herein are inserted solely for convenience and reference and constitute no part of the Plan.
ARTICLE 13
CHANGE IN CONTROL PROVISIONS
SECTION 13.1. GENERAL. In the event of a Change in Control, as defined in Section 13.5, notwithstanding any other provision of the Plan, the provisions of this Article 13 shall be applicable and shall supersede any conflicting provisions of the Plan.
SECTION 13.2. TRANSFER TO RABBI TRUST. The Company shall establish a trust (the "Rabbi Trust") that is intended to be an unfunded arrangement which shall not affect the status of the Plan as an unfunded arrangement for purposes of Title I of ERISA. The terms of the Rabbi Trust shall provide that, within seven (7) days of a Change in Control, assets shall be transferred to the Rabbi Trust in (i) an amount as of the date of the Change in Control equal to each Participant's assumed benefit under the Plan as of the Participant's Normal Retirement Date, assuming annual Base Salary increases for the Participant of 5%, all as determined by the Company Actuaries; plus (ii) an amount deemed necessary to pay estimated Rabbi Trust administrative expenses for the following five (5) years, as determined by the Company's Accountants. Assets transferred in accordance with the preceding sentence shall be in the form of cash. The Company and/or a Participating Employer shall make all transfers of assets required by the Rabbi Trust in a timely manner and shall otherwise abide by the terms of the Rabbi Trust.
SECTION 13.3. JOINT AND SEVERAL LIABILITY. Upon and at all times after a Change in Control, the liability under the Plan of the Company and each Participating Employer that has adopted the Plan shall be joint and several, so that the Company and each such Participating Employer shall each be liable for all obligations under the Plan to each Participant covered by the Plan, regardless of the corporation by which such Participant is employed.
SECTION 13.4. DISPUTE PROCEDURES. In the event that, upon or at any time subsequent to a Change in Control, a disputed claim for benefits under the Plan is brought by a Participant or beneficiary, the following additional procedures shall be applicable:
(a) Any amount that is not in dispute shall be paid to the Participant or beneficiary at the time or times provided herein.
(b) The Company shall advance to such claimant from time to time such amounts as shall be required to reimburse the claimant for reasonable legal fees, costs and expenses incurred by such claimant in seeking a resolution of his or her claim,including reasonable fees, costs and expenses relating to arbitration.
SECTION 13.5. DEFINITION OF CHANGE IN CONTROL. A "Change in Control" means the occurrence of any one of the following events:
(a) individuals who, on December 31, 2001, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to December 31, 2001, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) with respect to directors or
as a result of any other actual or threatened solicitation of proxies [or consents] by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(b) any "person" (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board (the "Company Voting Securities"); provided, however, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (c)), or (E) a transaction (other than one described in (c) below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution providing expressly that the acquisition pursuant to this clause (E) does not constitute a Change in Control under this paragraph (b);
(c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries (a "Business Combination") or sale or other disposition of all or substantially all of the Company's assets to an entity that is not an affiliate of the Company (a "Sale"), unless immediately following such Business Combination or Sale: (A) more than 50% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting
power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or
(d) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.
IN WITNESS WHEREOF, the undersigned official of the Company has executed this Plan as of this 1st day of January 2002.
DTE ENERGY COMPANY
By: ________________________________
Larry E. Steward
Vice President, Human Resources
DTE ENERGY COMPANY
SUPPLEMENTAL RETIREMENT PLAN
DISTRIBUTION ELECTION FORM
==================================================================================================================================== Employee Name (Print) Social Security No. I. D. Number ------------------------------------------------------------------------------------------------------------------------------------ Address (Number/Street) City State Zip Code =================================================================================================================================== In accordance with the terms of the DTE Energy Company Supplemental Retirement Plan ("Plan"), which is hereby incorporated by reference, I hereby accept and agree to all the provisions of the Plan. Benefit Distribution Election I hereby elect to have my benefit under the Plan distributed to me in the manner specified below: [ ] A joint and 100% survivor annuity if I am married as of my Termination Date, or as a single life annuity if I am single as my Termination Date. [ ] Payment in annual installments over _____ years (in one-year increments, not to exceed 15 years). Such payments shall begin as of the March 1 following my termination date. Any annual payments will be made as of the March 1 of such subsequent years. I understand that if I have not made a benefit distribution election while I am actively employed by the Company or a Participating Employer, that my distribution under this Plan will be made as a joint and 100% survivor annuity if I am married as of my Termination Date, or as a single life annuity if I am single as my Termination Date. ==================================================================================================================================== Employee Signature Date ------------------------------------------------------------------------------------------------------------------------------------ Receipt Acknowledged By Title Date ==================================================================================================================================== |
DTE ENERGY
SUPPLEMENTAL RETIREMENT PLAN
Frequently Asked Questions
The principal purpose of the DTE Energy Supplemental Retirement Plan (the "Plan") is to provide an additional retirement benefit for a select group of management or highly compensated Employees of DTE Energy Company (the "Company") and Participating Employers. To be eligible to participate in the Plan, an Employee must meet the eligibility requirements under the Qualified Plan and have his or her benefit under the Qualified Plan limited by the Internal Revenue Code of 1986, as amended (the "Code").
1. HOW AND WHEN DOES AN EMPLOYEE BECOME A PARTICIPANT?
An Employee who is eligible to participate becomes a participant in the Plan (a "Participant") automatically when his or her Qualified Plan benefit is limited by the Code. These Code limitations include a limit on the amount of compensation that may be used in calculating a benefit under a qualified plan ($200,000 in 2002) and a limit on the amount of annual benefit that may be paid from a qualified plan ($160,000 in 2002).
2. HOW IS A PARTICIPANT'S BENEFIT UNDER THE PLAN DETERMINED?
For a Participant whose benefit is calculated under the traditional provisions of the Qualified Plan, the benefit under the Plan is computed when the Participant leaves the Company. The benefit under the Plan is generally not definitely determinable until that time due to the use of final average pay and years of service in the benefit computation under the Qualified Plan. The Plan benefit will be calculated as the difference between what a Participant would have received from the Qualified Plan if there were no Code limitations and the benefit the Participant actually will receive from the Qualified Plan.
Example: Upon termination, it is determined that a Participant's Qualified Plan annual benefit would be $185,000 if there were no Code limitations. Because of the Code limitations, only $160,000 can be paid from the Qualified Plan and $25,000 ($185,000 - $160,000) must be paid from the Plan. However, this calculation will not be made or known until the Participant terminates employment and all of the information necessary to calculate the benefit under the Qualified Plan is known.
For a Participant whose benefit is calculated under the cash balance provisions of the Qualified Plan, the benefit under the Plan is computed annually when the employer contribution credit is calculated. The benefit under the Plan is generally determinable at the end of each year.
Example: A Participant has compensation of $225,000 for a plan year. The employer contribution credit under the cash balance provisions of the Qualified Plan for that year may only be calculated on $200,000. Therefore, an employer contribution credit is calculated on $25,000 ($225,000 - $200,000) and credited under the Plan at the end of the year.
3. HOW MUCH MAY A PARTICIPANT CONTRIBUTE TO THE PLAN?
The Plan does not permit Participant contributions.
4. HOW MUCH DOES THE COMPANY CONTRIBUTE TO THE PLAN?
The Company pays the full benefit calculated under the Plan. The Plan benefit is equal to the difference between the benefit a Participant would have received under the Qualified Plan if the Participant had not been limited by certain provisions of the Code, and the amount that the Participant actually receives from the Qualified Plan.
5. WHAT ARE THE VESTING PROVISIONS OF THE PLAN?
The vesting provisions follow the schedule in the Qualified Plan. Therefore, a Participant will be fully vested in his or her Plan benefit after 5 years of service.
6. MAY A PARTICIPANT TAKE A WITHDRAWAL FROM THE PLAN?
Withdrawals prior to normal distribution of the Plan benefit are not permitted.
7. IF A PARTICIPANT RETIRES OR OTHERWISE TERMINATES EMPLOYMENT, WILL THE PARTICIPANT'S BENEFIT UNDER THE PLAN BE DISTRIBUTED?
A Participant will become entitled to receive a full distribution of his or her vested benefit under the Plan upon termination of employment.
In the event of death, the distribution will be paid to the Participant's spouse or other designated beneficiary. In the event of legally established mental incompetency, a distribution, on behalf of the Participant, will be made to the legal representative of the Participant.
8. IN WHAT FORM WILL DISTRIBUTIONS FROM THE PLAN BE MADE TO THE PARTICIPANT?
Distributions from the Plan will be paid in cash.
9. WHEN WILL I RECEIVE A DISTRIBUTION FROM THE PLAN?
You will be entitled to a distribution when you are entitled to receive a distribution from the Qualified Plan. You may choose to take your distribution as a joint and 100% survivor annuity (if you are married), a single life annuity (if you are single), or in annual payments from one to 15 years. The payments will be made on March 1 following the date you are entitled to receive a distribution from the Qualified Plan (whether you take such distribution or not). All subsequent payments will be on each March 1 thereafter.
10. WHAT HAPPENS IF I DON'T MAKE A DISTRIBUTION ELECTION?
If you do not make a distribution election, payments from the Plan will be made as a joint and 100% survivor annuity for Participants who are married as of the Participant's Termination Date and as a single life annuity for Participants who are single as of the Participant's Termination Date.
11. WHO PAYS THE COST OF ADMINISTERING THE PLAN?
The Employers pay 100% of the recordkeeping and Trustee expenses.
12. HOW IS A PARTICIPANT TAXED ON PLAN BENEFITS?
If you are a Participant whose benefit is calculated under the traditional provisions of the Qualified Plan, when you terminate or retire, your total benefit under the Plan will be present valued and the total present value will be taxable for FICA purposes. You will not be taxed on your Plan benefits for income tax purposes until you receive a distribution from the Plan. When a distribution is paid, it will be subject to reporting on a Form W-2 and federal, state and local income tax will be withheld.
If you are a Participant whose benefit is calculated under the cash balance provisions of the Qualified Plan, you will be taxed on the amount of the employer contribution credit to the Plan in the year credited to your account for FICA purposes only. You will not be taxed on your Plan benefits for income tax purposes until you receive a distribution from the Plan. When the distribution is paid, it will be subject to reporting on a Form W-2 and federal, state and local income tax will be withheld.
13. MAY A PARTICIPANT ASSIGN RIGHTS AND INTEREST UNDER THE PLAN?
Except in the case of death or legally established mental incompetency, benefits payable under the Plan may not be assigned, sold, transferred, pledged or encumbered and any such attempts shall not be recognized.
14. CAN THE PLAN BE AMENDED, TERMINATED OR DISCONTINUED?
The Company may amend or terminate the Plan at any time and for any reason. No such amendment or termination shall affect the rights of Participants or beneficiaries to the vested portion of amounts credited to Participants' accounts as of the date of such amendment or termination.
15. IF I HAVE ANY QUESTIONS, WHO CAN I CALL?
Please call Bill Eisengruber, Compensation and Benefits, at 313-235-7339 with any questions.
EXHIBIT 10.47
Description of Executive Life Insurance Plan
This Plan is available to certain former executives of Michigan Consolidated Gas Company and MCN Energy Group, Inc. An eligible executive is provided with universal life insurance coverage equal to two times his/her annual salary, up to a maximum of $700,000. Eligible executives may elect to purchase up to two times their annual salary in additional coverage. The policies include the accumulation of a cash surrender value which may be accessed upon retirement.
Exhibit 10.48
[DTE ENERGY LOGO]
May 22, 2002
Mr. Bruce D. Peterson
7824 Stable Way
Potomac, Maryland 20854
Dear Bruce:
I am pleased to offer you the position of Senior Vice President and General Counsel with DTE Energy Company at an annual salary of $354,000.
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:
- A signing bonus of $50,000.
- An immediate annual benefit of two weeks (10 days) vacation for 2002. An additional week may be granted at the direction of Mr. Earley. In subsequent years you will receive four weeks (20 days) of vacation.
- An amount to cover the premium for three (3) months coverage for you and your dependents under your current health plan (considered imputed income to be grossed up for taxes). After that you will be eligible for normal participation in the Company's health care plan.
Subject to the approval of the Special Committee on Compensation of the Board of Directors, you will be granted the following shares of stock under the DTE Stock Incentive Plan:
- 6,000 shares of restricted stock with a vesting period of four (4) years from the date of grant. At the current price, this grant has an approximate value of $270,000. In addition, these shares will pay current dividends in accordance with the Company's dividend policy. At the current rate this equals $12,360 annually.
- 10,000 shares of nonqualified stock options (vesting annually over four years from the date of grant). These shares have an estimated value of $63,800 using a modified Black-Scholes valuation.
You will also be eligible to participate in the following programs:
- The DTE Energy Company Annual Incentive Plan. The plan currently provides for a target annual bonus of 45 percent of salary, with a potential award range of 0 to 112.5 percent of salary when adjusted for performance. For the year 2002, you will be eligible for a pro-rata share of the applicable incentive.
Mr. Bruce D. Peterson
May 22, 2002
- Annual grants under the Company's Long-Term Incentive Plan commencing in 2003 that provide for a target award in the aggregate of 50 percent of salary. The plan currently utilizes grants of stock options, performance shares, and restricted stock.
- The DTE Energy Company Retirement Plan, a defined benefit cash balance pension plan, which includes annual contribution credits of 7 percent of base pay and annual incentive bonus plus interest. In addition, you will participate in the DTE Energy Company Executive Supplemental Retirement Plan, a non-qualified plan which provides 9 percent of your base pay plus annual incentive pay in a deferred account subject to vesting at 20 percent per year.
- DTE Energy Company's Savings and Stock Ownership Plan, a defined contribution 401(k) plan. This plan provides tax-deferred opportunities of up to 18 percent of base pay, with a Company match of 100 percent on the first 4 percent of participant contributions and $0.50 on the dollar on the next 4 percent of participant contributions.
- The Company executive leased vehicle program. This program will provide you with a leased vehicle of your choice subject to program parameters, renewable every three years.
You will be eligible for relocation assistance that will include interim living for ninety (90) days, moving your household goods and assistance in selling your home. See the enclosed relocation guide for further details.
As a Senior Vice President, you will receive a change-in-control severance arrangement.
This offer is subject to successful completion of a pre-employment physical examination, a review of references, and approval by the Board of Directors.
Bruce, I look forward to welcoming you to the DTE Energy organization. Please let me know if you have any questions on the content of this offer. I can be reached at (313) 235-8867.
Sincerely,
/s/ Larry E. Steward Attachments |
Accepted:
/s/ Bruce D. Peterson May 30, 2002 -------------------------------------- Bruce D. Peterson Date |
EXHIBIT 15-10
August 14, 2002
DTE Energy Company
Detroit, Michigan
We have made a review, 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 for the three-month and six-month periods ended June 30, 2002 and 2001, as indicated in our report dated July 30, 2002; 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, 2002, is incorporated by reference in the following Registration Statements:
FORM REGISTRATION NUMBER Form S-3 33-57545 Form S-8 333-00023 Form S-4 333-89175 Form S-8 333-61992 Form S-8 333-62192 Form S-3 333-74338 |
We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statements 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.
/S/ DELOITTE & TOUCHE LLP Detroit, Michigan |
Exhibit 99-3
CERTIFICATION OF PERIODIC REPORT
I, Anthony F. Earley, Jr., Chairman, President, Chief Executive and Chief Operating Officer of DTE Energy Company (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge and belief:
(1) | the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2002 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: August 14, 2002 | /s/ ANTHONY F. EARLEY, JR. | |
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Anthony F. Earley, Jr.
Chairman, President, Chief Executive and Chief Operating Officer of DTE Energy Company |
Exhibit 99-4
CERTIFICATION OF PERIODIC REPORT
I, David E. Meador, Senior Vice President and Chief Financial Officer of DTE Energy Company (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge and belief:
(1) | the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2002 (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: August 14, 2002 | /s/ DAVID E. MEADOR | |
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David E. Meador
Senior Vice President and Chief Financial Officer of DTE Energy Company |