Exhibit 10.1
The Detroit Edison Company
2000 2nd Avenue
Detroit, Michigan 48226

         
 
  Re:   $100,000,000 2005 Series C 5.19% Senior Notes
 
     
Due October 1, 2023

Dated as of July 22, 2005
To the Purchasers listed in
      the attached Schedule A:
Ladies and Gentlemen:
     The Detroit Edison Company, a Michigan corporation (the “Company”), agrees
with the institutional investors listed in the attached Schedule A (the
“Purchasers”) to this Note Purchase Agreement (this “Agreement”) as follows:
Section 1. Authorization of Notes.
     Section 1.1. Authorization of the Notes. The Company will authorize the
issue and sale of $100,000,000 aggregate principal amount of its 2005 Series C
5.19% Senior Notes due October 1, 2023 (the “Notes”). The term “Notes” shall
include any such notes issued in substitution therefor pursuant to the terms and
provisions of the Seventeenth Supplemental Indenture (as hereinafter defined)
and the Collateral Trust Indenture (as hereinafter defined). The Notes shall be
substantially in the form set out in Exhibit A to the Seventeenth Supplemental
Indenture, with such changes therefrom, if any, as may be approved by the
Purchasers and the Company. Certain capitalized terms used herein shall have the
meaning ascribed to such terms in the Collateral Trust Indenture and the
Seventeenth Supplemental Indenture unless otherwise defined in Schedule B to
this Agreement or the context hereof shall otherwise require; and references to
a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or
an Exhibit attached to this Agreement.
     Section 1.2. Description of the Notes. The Notes shall be dated the date of
issue, shall bear interest (computed on the basis of a 360-day year of twelve
30-day months) on the unpaid principal balance thereof from the date of issuance
at the rate of 5.19% per annum, payable on each Interest Payment Date,
commencing with the first Interest Payment Date occurring after the date hereof,
until such principal sum shall have become due and payable (whether at maturity,
upon notice of redemption or otherwise) and interest (so computed) on any
overdue principal and premium (as provided herein and in the Seventeenth
Supplemental Indenture) and, to the extent permitted by applicable law, on any
overdue interest, from the due date thereof (whether by acceleration or
otherwise) at the rate of 5.19% per annum until paid, and shall have such other
characteristics as set forth in the Seventeenth Supplemental Indenture.

 

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Section 2. Sale and Purchase of Notes.
     Section 2.1. Sale and Purchase of the Notes. (a) Subject to the terms and
conditions of this Agreement, the Company will issue and sell to each Purchaser
and each Purchaser will purchase from the Company, at the Closing provided for
in Section 3, Notes in the principal amount specified opposite such Purchaser’s
name in Schedule A to this Agreement at the purchase price of 100% of the
principal amount thereof. The obligations of each Purchaser hereunder are
several and not joint obligations and each Purchaser shall have no obligation
and no liability to any Person for the performance or nonperformance by any
other Purchaser hereunder.
     Section 2.2. Security for the Notes. The Notes are to be issued under and
in accordance with a Seventeenth Supplemental Indenture dated on or about
September 15, 2005 (the “Seventeenth Supplemental Indenture”) between the
Company and J.P. Morgan Trust Company, National Association, a trust company
organized and existing under the laws of the United States, in its capacity as
trustee (together with any successors and assigns in such capacity, the
“Trustee”), which shall be substantially in the form attached hereto as
Exhibit A. The Seventeenth Supplemental Indenture is a supplement to the
Collateral Trust Indenture dated as of June 30, 1993 between the Company and the
Trustee, as the successor trustee thereunder, as amended and supplemented from
time to time (the “Collateral Trust Indenture”). Prior to the Release Date (as
defined in the Seventeenth Supplemental Indenture), the payment of all amounts
due with respect to the Notes will be secured by the Pledged Bonds to be issued
under and in accordance with the terms of the Indenture Supplemental to Mortgage
and Deed of Trust dated on or about September 15, 2005 (the “Supplement to
Mortgage Indenture”) between the Company and the Trustee, which Supplement to
Mortgage Indenture shall be substantially in the form attached hereto as
Exhibit B. The Supplement to Mortgage Indenture is a supplement to a Mortgage
and Deed of Trust dated as of October 1, 1924 between the Company and the
Trustee, as the successor trustee thereunder, as amended and supplemented from
time to time (the “Mortgage Indenture”).
Section 3. Closing.
     The sale and purchase of the Notes to be purchased by each Purchaser shall
occur at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago,
Illinois 60603, at 10:00 a.m., Central time, at a closing (the “Closing”) on
September 29, 2005 or on such other Business Day thereafter on or prior to
September 30, 2005 as may be agreed upon by the Company and the Purchasers. At
the Closing, the Company shall cause to be duly executed, authenticated and
delivered to each Purchaser the Notes to be purchased by such Purchaser in the
form of a single Note (or such greater number of Notes in denominations of at
least $100,000 as such Purchaser may request) dated the date of the Closing and
registered in such Purchaser’s name (or in the name of such Purchaser’s
nominee), against delivery by such Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to the
bank account of the Company specified in the funding instructions letter
provided pursuant to Section 4.14 of this Agreement. If at the Closing the
Company shall fail to tender such Notes to any Purchaser as provided above in
this Section 3, or any of the conditions specified in Section 4

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shall not have been fulfilled to any Purchaser’s satisfaction, such Purchaser
shall, at such Purchaser’s election, be relieved of all further obligations
under this Agreement, without thereby waiving any rights such Purchaser may have
by reason of such failure or such nonfulfillment.
Section 4. Conditions to Closing.
          The obligation of each Purchaser to purchase and pay for the Notes to
be sold to such Purchaser at the Closing is subject to the fulfillment to such
Purchaser’s satisfaction, prior to or at the Closing, of the following
conditions:
     Section 4.1. Representations and Warranties. The representations and
warranties of the Company in this Agreement and the other Note Documents to
which the Company is party shall be correct when made and at the time of the
Closing.
     Section 4.2. Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement and each
other Note Document to which it is party required to be performed or complied
with by it prior to or at the Closing and after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Section 5.14), no Default or Event of Default shall have occurred and be
continuing.
     Section 4.3. Compliance Certificates.
          (a) Officer’s Certificate. The Company shall have delivered to such
Purchaser an Officer’s Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
          (b) Secretary’s Certificate. The Company shall have delivered to such
Purchaser a certificate certifying as to the resolutions attached thereto and
other corporate proceedings relating to the authorization, execution and
delivery of the Notes, this Agreement and the other Note Documents to which it
is party.
     Section 4.4. Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the date of
the Closing (a) from Thomas A. Hughes, Esq., General Counsel for the Company,
covering the matters set forth in Exhibit 4.4(a) and covering such other matters
incident to the transactions contemplated hereby as such Purchaser or such
Purchaser’s counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to such Purchaser) and (b) from Chapman and
Cutler LLP, special counsel for the Purchasers in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as such Purchaser may
reasonably request.
     Section 4.5. Purchase Permitted By Applicable Law, Etc. On the date of the
Closing each purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which each Purchaser is subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without

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restriction as to the character of the particular investment, (ii) not violate
any applicable law or regulation (including, without limitation, Regulation T, U
or X of the Board of Governors of the Federal Reserve System) and (iii) not
subject any Purchaser to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on the
date hereof (excluding any of the foregoing which are of general application to
the business of a Purchaser). If requested by any Purchaser, such Purchaser
shall have received an Officer’s Certificate certifying as to such matters of
fact as such Purchaser may reasonably specify to enable such Purchaser to
determine whether such purchase is so permitted.
     Section 4.6. Related Transactions. The Company shall have consummated the
sale of the entire principal amount of the Notes scheduled to be sold on the
date of Closing to the Purchasers, pursuant to this Agreement and the
Seventeenth Supplemental Indenture; provided that if the condition set forth in
this Section 4.6 is not satisfied as a result of the failure of any Purchaser to
purchase any Notes that it is obligated to purchase under this Agreement, then
another Institutional Investor approved by the Company may purchase the Notes
scheduled to be purchased by the defaulting Purchaser on the date of Closing and
any such purchase shall be deemed to satisfy the requirement of this
Section 4.6.
     Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 12.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of Purchasers’ special counsel referred to
in Section 4.4(b) to the extent reflected in a statement of such counsel
rendered to the Company at least one Business Day prior to the Closing.
     Section 4.8. Private Placement Number. A Private Placement Number issued by
Standard & Poor’s CUSIP Service Bureau (in cooperation with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
     Section 4.9. Changes in Corporate Structure. The Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5 (other than the merger
of a wholly-owned Subsidiary of the Company into the Company).
     Section 4.10. Seventeenth Supplemental Indenture. The Seventeenth
Supplemental Indenture shall have been duly authorized, executed and delivered
by the Company and the Trustee and shall constitute the legal, valid and binding
contract and agreement of each such Person.
     Section 4.11. Supplement to Mortgage Indenture. The Supplement to Mortgage
Indenture shall have been duly authorized, executed and delivered by the Company
and the Trustee and shall constitute the legal, valid and binding contract and
agreement of each such Person.

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     Section 4.12. Execution, Authentication and Delivery of Notes. The Note or
Notes to be purchased by such Purchaser shall have been duly authorized,
executed and delivered by the Company and duly authenticated and delivered by
the Trustee to such Purchaser.
     Section 4.13. Execution, Authentication and Delivery of Pledged Bonds. The
Pledged Bond or Pledged Bonds shall have been duly authorized, executed and
delivered by the Company and duly authenticated and delivered by the Trustee and
shall have been pledged to the Trustee under the Collateral Trust Indenture and
shall constitute the legal, valid and binding contract and agreement of the
Company.
     Section 4.14. Recording and Filing. The Supplement to Mortgage Indenture
and the Mortgage Indenture, as the case may be, shall have been duly recorded
(or delivered for recordation) as an indenture on real property and duly filed
or recorded (or delivered for filing or recordation) as a security interest in
personal property, as the case may be, so as to constitute a valid, perfected
first lien on all of the Company’s property covered by such Note Documents, all
in accordance with applicable law, and the Company shall have caused
satisfactory evidence thereof to be furnished to the Purchasers and their
special counsel.
     Section 4.15. Approvals. The Company shall have furnished to such Purchaser
and such Purchaser’s special counsel true and correct copies of all
certificates, approvals, authorizations and consents necessary for the
execution, delivery or performance by the Company of this Agreement, the Notes,
the Seventeenth Supplemental Indenture and the other Note Documents including,
without limitation, the consents and approvals referred to in Section 5.7 of
this Agreement and in the Collateral Trust Indenture, if any.
     Section 4.16. Funding Instructions. At least three Business Days prior to
the date of the Closing, the Purchasers shall have received written instructions
executed by a Responsible Officer of the Company directing the manner of the
payment of the purchase price of the Notes and setting forth (a) the name and
address of the transferee bank, (ii) such transferee bank’s ABA number,
(iii) the account name and number into which the purchase price for the Notes is
to be deposited, and (iv) the name and telephone number of the account
representative responsible for verifying receipt of such funds.
     Section 4.17. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to such Purchaser and such Purchaser’s special counsel, and such
Purchaser and such Purchaser’s special counsel shall have received all such
counterpart originals or certified or other copies of such documents, and any
such certificate of a Responsible Officer of the Company as to the matters
contemplated herein, as such Purchaser or such Purchaser’s special counsel may
reasonably request.

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Section 5. Representations and Warranties of the Company.
          The Company represents and warrants to each Purchaser as of the date
hereof that:
     Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized and validly existing under the laws of the State of
Michigan, and is duly qualified as a foreign corporation and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company has the corporate power and
authority to own or hold under lease the properties it purports to own or hold
under lease, to transact the business it transacts and proposes to transact, to
execute and deliver this Agreement, the Notes and any other Note Document and to
perform the provisions hereof and thereof.
     Section 5.2. Authorization, Etc. This Agreement, the Notes and any other
Note Document to which the Company is party have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement and
each such other Note Document to which the Company is party constitutes, and
upon execution and delivery thereof each Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
     Section 5.3. Disclosure. The documents, certificates or other writings
delivered to such Purchaser by or on behalf of the Company in connection with
the transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Since December 31, 2004, there has been no change in the financial
condition, operations, business, properties or prospects of the Company except
changes that individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect. There is no fact known to the Company that
could reasonably be expected to have a Material Adverse Effect that has not been
set forth herein or in the other documents, certificates and other writings
delivered to such Purchaser by or on behalf of the Company specifically for use
in connection with the transactions contemplated hereby.
     Section 5.4. Subsidiaries. The Company does not have any Subsidiary which
if combined with all other Subsidiaries of the Company would constitute a
Significant Subsidiary.
     Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with

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GAAP consistently applied throughout the periods involved except as set forth in
the notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).
     Section 5.6. Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement, the Notes and any
other Note Document to which the Company is party will not (i) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien (other than the Lien of the Mortgage Indenture and the
Collateral Trust Indenture and supplements thereto) in respect of any property
of the Company under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company is bound or by which the Company or any of its
properties may be bound or affected, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company.
     Section 5.7. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority (other than those obtained by the Company on or prior to the date
hereof) is required in connection with the execution, delivery or performance by
the Company of this Agreement, the Notes or any other Note Document to which the
Company is party other than the order of the Federal Energy Regulatory
Commission dated May 12, 2005 in Docket No. ES05-24-000 which is final and not
subject to appeal, a Report of Securities Issued filed pursuant thereto, and
such other consents, approvals, authorizations, registrations, filings or
declarations as to which the failure to obtain the same has not resulted in and
could not reasonably be expected to result in a Material Adverse Effect.
     Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against or affecting the Company or any property of the
Company in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
          (b) The Company is not in default under any term of any agreement or
instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or
in violation of any applicable law, ordinance, rule or regulation (including
without limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
     Section 5.9. Taxes. The Company has filed all state and Federal tax returns
that are required to have been filed in any jurisdiction, and has paid all taxes
shown to be due and payable on such returns and all other taxes and assessments
levied upon it or its properties, assets, income or franchises, to the extent
such taxes and assessments have become due and payable and before they have
become delinquent, except for any taxes and assessments (i) the amount of which
is not individually or in the aggregate Material or (ii) the amount,
applicability

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or validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company has established reserves in
accordance with GAAP. The Company knows of no basis for any other tax or
assessment that could reasonably be expected to have a Material Adverse Effect.
All necessary charges, accruals and reserves have been established in accordance
with GAAP on the books of the Company in respect of Federal and state taxes. The
Federal income tax liability of the Company has been determined by the Internal
Revenue Service and paid for all fiscal years up to and including the fiscal
year ended December 31, 2001.
     Section 5.10. Title to Property; Leases. The Company has good and
marketable title to all properties standing of record in its name (which
includes, without limitation, all of those properties, except pollution control
facilities standing in the names of certain municipalities which are being
purchased by the Company pursuant to installment sales contracts and the
undivided ownership interest of Michigan Public Power Agency in a portion of the
Belle River Power Plant, which constitute or on which there are erected its
principal plants, generating stations and substations and on which its general
office and service buildings are constructed and all other important parcels of
real estate) and improvements thereon, subject to the lien of the Mortgage
Indenture and to minor exceptions and minor defects, irregularities and
deficiencies which, in the opinion of the Company, do not materially impair the
use of such property for the purpose for which it is held by the Company, and
the Company has adequate rights to maintain and operate such of its distribution
facilities as are located on public or other property not owned by the Company.
All leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.
     Section 5.11. Licenses, Permits, Etc. Except as disclosed in Schedule 5.11,
          (a) the Company owns or possesses all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others;
          (b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person; and
          (c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company with respect to any patent,
copyright, service mark, trademark, trade name or other right owned or used by
the Company.
     Section 5.12. Compliance with ERISA. (a) To the best knowledge of the
Company, the Company and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to their Plans, and no event,
transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on

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any of the rights, properties or assets of the Company or any ERISA Affiliate,
in either case pursuant to Title I or IV of ERISA or to such penalty or excise
tax provisions or to Section 401(a)(29) or Section 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.
          (b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan’s most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan’s most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term “benefit liabilities” has the
meaning specified in Section 4001 of ERISA and the terms “current value” and
“present value” have the meanings specified in Section 3 of ERISA.
          (c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
          (d) The expected postretirement benefit obligation (determined as of
the last day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Company and its Subsidiaries will not have a Material Adverse
Effect on the Company.
          (e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a tax could
be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of each Purchaser’s representation in
Section 6.2 as to the sources of the funds to be used to pay the purchase price
of the Notes to be purchased by such Purchaser.
     Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar unregistered
securities (other than $400,000,000 aggregate principal amount of senior secured
notes issued in February, 2005) for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any person other than the Purchasers and not more than thirty-three (33) other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
     Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Notes to repay existing Indebtedness and for
general corporate purposes. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the

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purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more
than 2% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 2% of the value of such assets. As used in this
Section, the terms “margin stock” and “purpose of buying or carrying” shall have
the meanings assigned to them in said Regulation U.
     Section 5.15. Existing Indebtedness; Future Liens. (a) The Company’s Form
10-K for the fiscal year ended December 31, 2004 sets forth a complete and
correct list of all outstanding Indebtedness of the Company as of December 31,
2004, since which date there has been no Material increase in the amount of the
Indebtedness of the Company (excluding Indebtedness issued for the purpose of
refunding obligations of the Company outstanding on December 31, 2004). The
Company is not in default and no waiver of default is currently in effect in the
payment of any principal or interest on any Indebtedness of the Company and no
event or condition exists with respect to any Indebtedness of the Company that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.
          (b) Except as disclosed in Schedule 5.15, the Company has not agreed
or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by the Seventeenth Supplemental
Indenture and the Collateral Trust Indenture.
     Section 5.16. Foreign Assets Control Regulations, Etc. Neither the sale of
the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto. Without limiting the foregoing, neither the Company nor any
Subsidiary (a) is or will become a person whose property or interests in
property are blocked pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 (Blocking Property and Prohibiting Transactions with Persons
Who Commit, Threaten to Commit, or Support Terrorism) (66 Fed. Reg. 49079
(2001) or (b) engages or will engage in any dealings or transactions, or be
otherwise associated, with any such person. The Company and its Subsidiaries are
in compliance, in all material respects, with Title III of Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds from the
sale of the Notes hereunder and the Seventeenth Supplemental Indenture will be
used, directly or indirectly, for any payment to any governmental official or
employee, political party, official of a political party, candidate for
political office or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

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     Section 5.17. Status under Certain Statutes. (a) The Company is not an
“investment company” registered or required to registered under the Investment
Company Act of 1940, as amended.
          (b) The Company is not a “holding company” but is an “affiliate” of a
“holding company” (within the meaning of the Public Utility Holding Company Act
of 1935, as amended (the “1935 Act”)), which holding company is exempt from the
provisions of the 1935 Act, other than Section 9(a)(2) thereof, pursuant to
Section 3(a)(1) thereof.
     Section 5.18. Environmental Matters. The Company (i) is in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) has received (or has pending) all permits, licenses
or other approvals required of it under applicable Environmental Laws to conduct
its business and (iii) is in compliance with all terms and conditions of any
such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a Material
Adverse Effect on the Company.
     Section 5.19. Lien of Mortgage. The Mortgage Indenture is a first lien
(subject to no prior liens, charges, encumbrances or security interests, except
current taxes and assessments not yet due and minor encumbrances which do not
materially impair the use of such property for the purpose for which it is held
by the Company) duly filed and recorded, on substantially all of the Company’s
tangible properties and franchises (other than items purchased for resale in the
ordinary course of business) and (subject to the necessity for particular
filings and recordings in the case of certain personal property such as railroad
rolling stock) will constitute a like lien on any such properties hereafter
acquired by the Company except that any such after-acquired property will be
subject to prior liens and encumbrances, if any, existing when acquired by the
Company, except that the Mortgage Indenture will not become a lien upon
after-acquired real property in a new county until it has been duly filed and
recorded and except that the Mortgage Indenture may not be effective as to
property acquired subsequent to the filing of a case with respect to the Company
under the Bankruptcy Code (defined as Title 11, United States Code, Section 1 et
seq., as amended).
     Section 5.20. Pledged Bonds. The Pledged Bonds have been duly authorized
and established in conformity with the provisions of the Mortgage Indenture and,
when the Pledged Bonds have been executed and authenticated in accordance with
the provisions of the Mortgage Indenture and pledged to the Trustee as
contemplated by the Collateral Trust Indenture, the Pledged Bonds will be
entitled to the benefits of the Mortgage Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their respective
terms except as the enforceability thereof may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The payments of the principal of, premium, if
any, and interest on the Notes are secured by the related Pledged Bonds;
assuming that the

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Trustee holds the Pledged Bonds as provided in the Collateral Trust Indenture,
the Collateral Trust Indenture creates a valid and perfected first priority
security interest in the Pledged Bonds.
Section 6. Representations of the Purchaser.
     Section 6.1. Purchase for Investment. Each Purchaser represents that it is
purchasing the Notes for its own account or for one or more separate accounts
maintained by it or for the account of one or more pension or trust funds and
not with a view to the distribution thereof, provided that the disposition of
such Purchaser’s or such pension or trust fund’s property shall at all times be
within such Purchaser’s or such pension and trust fund’s control. Each Purchaser
understands that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.
     Section 6.2. Source of Funds. Each Purchaser severally represents that at
least one of the following statements is an accurate representation as to each
source of funds (a “Source”) to be used by such Purchaser to pay the purchase
price of the Notes to be purchased by such Purchaser hereunder:
     (a) the Source is an “insurance company general account” (as the term is
defined in the United States Department of Labor’s Prohibited Transaction
Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as
defined by the annual statement for life insurance companies approved by the
National Association of Insurance Commissioners (the “NAIC Annual Statement”))
for the general account contract(s) held by or on behalf of any employee benefit
plan together with the amount of the reserves and liabilities for the general
account contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer (or affiliate thereof as defined in PTE 95-60)
or by the same employee organization in the general account do not exceed 10% of
the total reserves and liabilities of the general account (exclusive of separate
account liabilities) plus surplus as set forth in the NAIC Annual Statement
filed with such Purchaser’s state of domicile; or
     (b) the Source is a separate account that is maintained solely in
connection with such Purchaser’s fixed contractual obligations under which the
amounts payable, or credited, to any employee benefit plan (or its related
trust) that has any interest in such separate account (or to any participant or
beneficiary of such plan (including any annuitant)) are not affected in any
manner by the investment performance of the separate account; or
     (c) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within
the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the
Company in writing pursuant to this clause (c), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or

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     (d) the Source constitutes assets of an “investment fund” (within the
meaning of Part V(b) of PTE 84-14 (the “QPAM Exemption”)) managed by a
“qualified professional asset manager” or “QPAM” (within the meaning of
Part V(a) of the QPAM Exemption), no employee benefit plan’s assets that are
included in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Part V(c)(1) of the QPAM Exemption) of such
employer or by the same employee organization and managed by such QPAM, exceed
20% of the total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM (applying the definition of “control” in
Part V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and
(i) the identity of such QPAM and (ii) the names of all employee benefit plans
whose assets are included in such investment fund have been disclosed to the
Company in writing pursuant to this clause (d); or
     (e) the Source constitutes assets of a “plan(s)” (within the meaning of
Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset
manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption),
the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Part IV(d) of the INHAM Exemption) owns a 5% or
more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e); or
     (f) the Source is a governmental plan; or
     (g) the Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this clause (g); or
     (h) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.
     If any Purchaser or any subsequent transferee of the Notes indicates that
such Purchaser or such transferee is relying on any representation contained in
paragraph (c), (d) or (g) above, the Company shall deliver on the date of
Closing and on the date of any applicable transfer a certificate, which shall
either state that (i) it is neither a party in interest nor a “disqualified
person” (as defined in Section 4975(e)(2) of the Internal Revenue Code of 1986,
as amended), with respect to any plan identified pursuant to paragraphs (c) or
(g) above, or (ii) with respect to any plan identified pursuant to paragraph
(d) above, neither it nor any “affiliate” (as defined in Part V(c) of the QPAM
Exemption) has at such time, and during the immediately preceding one year,
exercised the authority to appoint or terminate said QPAM as manager of any plan
identified in writing pursuant to paragraph (d) above or to negotiate the terms
of said QPAM’s management agreement on behalf of any such identified plan. As
used in this Section 6.2, the

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terms “employee benefit plan”, “governmental plan”, “party in interest” and
“separate account” shall have the respective meanings assigned to such terms in
Section 3 of ERISA.
Section 7. Information as to Company.
          The Company will comply with the reporting provisions of the
Collateral Trust Indenture, including without limitation Section 804 (financial
reports) and Section 1108 (annual no default certificate).
Section 8. Payments on Notes.
     Section 8.1. Place of Payment. Subject to Section 8.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in accordance with the terms and provisions of the
Seventeenth Supplemental Indenture and the Collateral Trust Indenture.
     Section 8.2. Home Office Payment. So long as any Purchaser or its nominee
shall be the holder of any Note, and notwithstanding anything contained in
Section 8.1 or in such Note to the contrary, the Company or the Paying Agent, as
the case may be, will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose for such Purchaser in Schedule A to this Agreement,
or by such other method or at such other address as such Purchaser shall have
from time to time specified to the Company or the Paying Agent in writing for
such purpose, without the presentation or surrender of such Note or the making
of any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or redemption in full of
any Note, such Purchaser shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or to the Trustee at its principal corporate trust office. Prior to any
sale or other disposition of any Note held by any Purchaser or its nominee such
Purchaser will, at its election, either endorse thereon the amount of principal
paid thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company or the Trustee in exchange for a new Note or
Notes pursuant to Section 3.07 of the Collateral Trust Indenture. The Company
will afford the benefits of this Section 8.2 to any Institutional Investor that
is the direct or indirect transferee of any Note purchased by a Purchaser under
the Seventeenth Supplemental Indenture and this Agreement and has made the same
agreement relating to such Note as such Purchaser has made in this Section 8.2.
Section 9. Expenses, Etc.
     Section 9.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay (and indemnify the
Purchasers against) all reasonable costs and expenses (including reasonable
attorneys’ fees of a single special counsel for all of the Purchasers and, if
reasonably required and disclosed to the Company, a single local counsel in any
relevant jurisdiction hired for all of the Purchasers) incurred by the
Purchasers, in connection with such transactions (including in connection with
the filing or recordation of all

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financing statements and instruments as may be required by the Purchasers or the
Trustee in connection with this Agreement or any Note Document, including,
without limitation, all documentary stamps, recordation and transfer taxes and
other costs and taxes incident to recordation of any document or instrument in
connection herewith). The Company will pay, and will save each Purchaser
harmless from, all claims in respect of any fees, costs or expenses, if any, of
brokers and finders (other than those retained by the Purchasers). The Company
agrees to save harmless and indemnify each Purchaser from and against any
liability resulting from the failure to reimburse such Purchaser for any
required documentary stamps, recordation and transfer taxes, recording costs, or
any other expenses incurred by such Purchaser in connection with this Agreement
which are required by the terms of this Agreement to be paid or reimbursed by
the Company.
     Section 9.2. Survival. The obligations of the Company under this Section 9
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement, the Notes or any other Note Document,
and the termination of this Agreement.
Section 10. Survival of Representations and Warranties; Entire Agreement.
          All representations and warranties contained herein shall survive the
execution and delivery of this Agreement, the Notes and the other Note
Documents, the purchase or transfer by any Purchaser of any Note or portion
thereof or interest therein and the payment of any Note, and may be relied upon
by any subsequent holder of a Note, regardless of any investigation made at any
time by or on behalf of such Purchaser or any other holder of a Note. All
statements contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant to this Agreement or the other Note Documents
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement, the Notes and the
other Note Documents embody the entire agreement and understanding between the
Purchasers and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
Section 11. Amendment and Waiver.
     Section 11.1. Requirements. In addition to and not in limitation of any
rights of a Holder of a Security to amend or waive any provision of the
Collateral Trust Indenture, or consent to an amendment or waiver thereof, this
Agreement may be amended, and the observance of any term hereof may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5 or 6 hereof, or any
defined term (as it is used therein), will be effective as to any Purchaser
unless consented to by such Purchaser in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby amend any of Sections 11 or 14.
     Section 11.2. Solicitation of Holders of Notes.
          (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of

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the date a decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Note Documents. The Company
will deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 11 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.
          (b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
     Section 11.3. Binding Effect, Etc. Any amendment or waiver consented to as
provided in this Section 11 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term “this Agreement” and references thereto shall
mean this Agreement as it may from time to time be amended or supplemented.
     Section 11.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.
Section 12. Notices.
          All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
          (i) if to a Purchaser or its nominee, to such Purchaser or its nominee
at the address specified for such communications in Schedule A to this
Agreement, or at such other address as such Purchaser or its nominee shall have
specified to the Company in writing,

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     (ii) if to any other holder of any Note, to such holder at such address as
such other holder shall have specified to the Company in writing, or
     (iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of General Counsel (Fax No. (313) 235-8500),
or at such other address as the Company shall have specified to the holder of
each Note in writing.
Notices under this Section 12 will be deemed given only when actually received.
Section 13. Reproduction of Documents.
     This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at the Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser, may be
reproduced by any Person who is a party to or recipient of any such document by
any photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and such Person may destroy any original document so
reproduced. The Company and each Purchaser agrees and stipulates that, to the
extent permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Person in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 13 shall not prohibit the
Company, a Purchaser or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
Section 14. Confidential Information.
     For the purposes of this Section 14, “Confidential Information” means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by such
Purchaser or any person acting on such Purchaser’s behalf, (c) otherwise becomes
known to such Purchaser other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to such Purchaser
that are otherwise publicly available. Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser, provided that such Purchaser may
deliver or disclose Confidential Information to (i) such Purchaser’s directors,
trustees, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by such Purchaser’s Notes), (ii) such Purchaser’s financial advisors
and other professional advisors who

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agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 14, (iii) any other holder of any
Note, (iv) any Institutional Investor to which such Purchaser sells or offers to
sell such Note or any part thereof or any participation therein (if such Person
has agreed in writing prior to its receipt of such Confidential Information to
be bound by the provisions of this Section 14), (v) any Person from which such
Purchaser offers to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 14), (vi) any federal or state
regulatory authority having jurisdiction over such Purchaser, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
such Purchaser’s investment portfolio or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser’s Notes and this Agreement. Each holder of a Note, by its acceptance
of a Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 14 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery to any holder
of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with
the Company embodying the provisions of this Section 14.
Section 15. Miscellaneous.
     Section 15.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.
     Section 15.2. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
     Section 15.3. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
     Section 15.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one

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instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
     Section 15.5. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.

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     The execution hereof by the Purchasers shall constitute a contract among
the Company and the Purchasers for the uses and purposes hereinabove set forth.

              Very truly yours,
 
            The Detroit Edison Company
 
       
 
  By   /s/ Paul A. Stadnikia
 
       
 
      Name: Paul A. Stadnikia
 
      Title:   Assistant Treasurer

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The foregoing is hereby agreed to as of the date thereof.
[Purchaser Signature Blocks]

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Information Relating to Purchasers
[Information Relating to Purchasers]
Schedule A
(to Note Purchase Agreement)

 

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Defined Terms
     As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
     “Affiliate” means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of such
first Person or any corporation of which such first Person beneficially owns or
holds, in the aggregate, directly or indirectly, 10% or more of any class of
voting or equity interests. As used in this definition, “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an “Affiliate” is a reference to an
Affiliate of the Company.
     “Business Day” means any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York or Detroit, Michigan are required
or authorized to be closed.
     “Closing” is defined in Section 3.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
     “Collateral Trust Indenture” is defined in Section 2.2 hereto.
     “Company” means The Detroit Edison Company, a Michigan corporation.
     “Confidential Information” is defined in Section 14.
     “Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
     “Environmental Laws” is defined in Section 5.18.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under section 414
of the Code.
     “Event of Default” shall have the meaning set forth in the Collateral Trust
Indenture.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
Schedule B
(to Note Purchase Agreement)

 

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     “GAAP” or “Generally Accepted Accounting Principles” shall mean the
convention, rules and procedures which define accepted accounting practices
applicable to businesses similar to that of the Company.
     “Governmental Authority” means
          (a) the government of
          (i) the United States of America or any State or other political
subdivision thereof, or
          (ii) any jurisdiction in which the Company conducts all or any part of
its business, or which asserts jurisdiction over any properties of the Company,
or
     (b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
     “Holder” has the meaning set forth in the Collateral Trust Indenture.
     “Indebtedness” means all indebtedness of the Company which is required to
be included on the consolidated balance sheet of the Company prepared in
accordance with GAAP.
     “Institutional Investor” means (a) any original Purchaser of a Note,
(b) any holder of a Note holding more than $1,000,000 in aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.
     “Lien” means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or capital lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
     “Make-Whole Amount” is defined in Exhibit A to the Seventeenth Supplemental
Indenture.
     “Material” means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
     “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement, the Seventeenth Supplemental
Indenture, the Collateral Trust Indenture, the Supplement to Mortgage Indenture,
the Mortgage Indenture, the Pledged Bonds and the Notes, or (c) the validity or
enforceability of this Agreement, the Seventeenth Supplemental Indenture,

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the Collateral Trust Indenture, the Supplement to Mortgage Indenture, the
Mortgage Indenture, the Pledged Bonds and the Notes.
     “Mortgage Indenture” is defined in Section 2.2 hereto.
     “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such
term is defined in section 4001(a)(3) of ERISA).
     “Note Documents” shall mean this Agreement, the Notes, the Seventeenth
Supplemental Indenture, the Collateral Trust Indenture, the Security Documents
and all other instruments, certificates, documents and other writings now or
hereafter executed and delivered by the Company pursuant to or in connection
with any of the foregoing.
     “Notes” is defined in Section 1.
     “Officer’s Certificate” means a certificate of a Senior Financial Officer
or of any other officer of the Company whose responsibilities extend to the
subject matter of such certificate.
     “Paying Agent” has the meaning set forth in the Collateral Trust Indenture.
     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
     “Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
     “Plan” means an “employee benefit plan” (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
     “Pledged Bonds” means the bonds of the Company being issued under and
pursuant to the Supplement to Mortgage Indenture to the Trustee for the equal
and ratable benefit of the Purchasers and the other holders of Notes, as
security for the payment and performance of all of the Company’s obligations in
respect of the Notes, as more particularly described in the Seventeenth
Supplemental Indenture.
     “property” or “properties” means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
     “Purchasers” means the Purchasers named in Schedule A hereto.
     “QPAM Exemption” means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.

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     “Required Holders” means, at any time, the Holders of more than 50% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
     “Responsible Officer” means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
     “Securities” has the meaning set forth in the Collateral Trust Indenture.
     “Securities Act” means the Securities Act of 1933, as amended from time to
time.
     “Security Documents” shall mean, collectively, the Mortgage Indenture, the
Supplement to Mortgage Indenture, the Pledged Bonds and any and all additional
security documents and all financing statements, assignments, pledges, lien
entry forms, notices, documents and other writings executed and delivered from
time to time in favor of the Trustee, for the equal and ratable benefit of the
holders of the Notes and the other Holders of the outstanding Securities, in
order to secure the obligations of the Company under and in respect of such
outstanding Securities and any and all amendments, supplements and other
modifications thereto.
     “Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
     “Seventeenth Supplemental Indenture” is defined in Section 2.2 hereto.
     “Significant Subsidiary” means any Subsidiary of the Company which
constitutes a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X
of the rules and regulations of the Securities Act.
     “Subsidiary” means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership or joint venture can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a “Subsidiary” is a reference to a Subsidiary of the Company.
     “Supplement to Mortgage Indenture” is defined in Section 2.2 hereto.

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Financial Statements
     Form 10-K of the Company for the fiscal year ended December 31, 2004 and
Form 10-Q for the quarter ended March 31, 2005
Schedule 5.5.
(to Note Purchase Agreement)

 

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Licenses, Permits, Etc.
None
Schedule 5.11
(to Note Purchase Agreement)

 

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Liens
None
Schedule 5.15
(to Note Purchase Agreement)