Document:

exv4w272

Exhibit 4-272

 

 

THE DETROIT EDISON COMPANY

AND

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

TRUSTEE

 

THIRTY-SECOND SUPPLEMENTAL INDENTURE

DATED AS OF SEPTEMBER 1, 2010

 

SUPPLEMENTING THE COLLATERAL TRUST INDENTURE

DATED AS OF JUNE 30, 1993

PROVIDING FOR

2010 SERIES A 4.89% SENIOR NOTES DUE 2020

 

 

 

 

     SUPPLEMENTAL INDENTURE, dated as of the 1st day of September, 2010, between THE DETROIT EDISON
COMPANY, a corporation organized and existing under the laws of the State of Michigan (the
“Company”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association
organized under the laws of the United States of America, having a corporate trust office in the
City of Detroit, Michigan, as successor trustee (the “Trustee”);

     WHEREAS, the Company has heretofore executed and delivered to the Trustee a Collateral Trust
Indenture dated as of June 30, 1993 (the “Original Indenture”), as supplemented, providing for the
issuance by the Company from time to time of its debt securities; and

     WHEREAS, the Company now desires to provide for the issuance of an additional series of its
senior debt securities pursuant to the Original Indenture; and

     WHEREAS, the Company intends hereby to designate a series of debt securities which shall have
the benefit of the provisions of Article Four of the Original Indenture and the other related
provisions of the Original Indenture relating to the grant of security, subject to the release
provisions provided for herein, and which shall have the terms and variations from the provisions
of the Original Indenture as set forth herein; and

     WHEREAS, the Company, in the exercise of the power and authority conferred upon and reserved
to it under the provisions of the Original Indenture, including Section 1001 thereof, and pursuant
to appropriate resolutions of the Board of Directors, has duly determined to make, execute and
deliver to the Trustee this Thirty-Second Supplemental Indenture to the Original Indenture as
permitted by Sections 201 and 301 of the Original Indenture in order to establish the form or terms
of, and to provide for the creation and issue of, a series of its debt securities under the
Original Indenture, which shall be known as the 2010 Series A 4.89% Senior Notes due 2020; 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 Thirty-Second
Supplemental Indenture a valid, binding and legal agreement of the Company, have been done;

     NOW, THEREFORE, THIS THIRTY-SECOND 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 Thirty-Second 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:

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ARTICLE ONE

DEFINITIONS AND OTHER

PROVISIONS OF GENERAL APPLICATION

     SECTION 1.01. Definitions. Each capitalized term that is used herein and is defined in the
Original Indenture shall have the meaning specified in the Original Indenture unless such term is
otherwise defined herein. The following terms shall have the respective meanings set forth below:

     “Business Day” means any day except a Saturday, Sunday or other day on which banking
institutions in the State of New York or the State of Michigan are authorized or obligated pursuant
to law or executive order to close.

     “Capitalization” means the total of all the following items appearing on, or included in, the
consolidated balance sheet of the Company: (i) liabilities for indebtedness maturing more than 12
months from the date of determination; and (ii) common stock, common stock expense, accumulated
other comprehensive income or loss, preferred stock, preference stock, premium on capital stock and
retained earnings (however the foregoing may be designated), less, to the extent not otherwise
deducted, the cost of shares of capital stock of the Company held in its treasury, if any. Subject
to the foregoing, Capitalization shall be determined in accordance with generally accepted
accounting principles and practices applicable to the type of business in which the Company is
engaged and may be determined as of a date not more than 60 days prior to the happening of the
event for which the determination is being made. In connection with such determination, the
Company shall certify to the Trustee that it has, prior to making its final determination,
consulted with the independent accountants regularly retained by the Company.

     “Debt” means any outstanding debt for money borrowed evidenced by notes, debentures, bonds or
other securities, or guarantees of any debt.

     “Institutional Investor” has the meaning set forth in the Purchase Agreement.

     “Net Tangible Assets” means the amount shown as total assets on the consolidated balance sheet
of the Company, less (i) intangible assets including, but without limitation, such items as
goodwill, trademarks, trade names, patents, unamortized debt discount and expense and other
regulatory assets carried as an asset on the Company’s consolidated balance sheet, and (ii)
appropriate adjustments, if any, on account of minority interests. Net Tangible Assets shall be
determined in accordance with generally accepted accounting principles and practices applicable to
the type of business in which the Company is engaged and may be determined as of a date not more
than 60 days prior to the happening of the event for which such determination is being made. In
connection with such determination, the Company shall certify to the Trustee that it has, prior to
making its final determination, consulted with the independent accountants regularly retained by
the Company.

     “Original Issue Date” means September 15, 2010.

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     “Pledged Bonds” means the related series of Bonds (as hereafter defined) and any other
Mortgage Bonds issued to secure Securities subject to the release provisions provided herein or in
any other supplemental indenture to the Original Indenture.

     “Purchase Agreement” means the Note Purchase Agreement dated as of May 11, 2010, among the
Company and the several initial purchasers named therein.

     “Release Date” means the date as of which all Mortgage Bonds, (i) other than the Pledged
Bonds, including the related series of Bonds, and (ii) other than outstanding Mortgage Bonds
(exclusive of Pledged Bonds) which do not in aggregate principal amount exceed the greater of 5% of
the Net Tangible Assets of the Company or 5% of the Capitalization of the Company, have been
retired through payment, redemption or otherwise, provided that no default or Event of Default has
occurred and, at such time, is continuing under the Indenture.

     “Substitute Mortgage” means a mortgage indenture of the Company, other than the Mortgage,
designated by the Company to the Trustee as a Substitute Mortgage pursuant to Section 4.03 hereof.
The lien of the Substitute Mortgage shall have such priority, and be with respect to such property,
as shall be specified by the Company in its sole discretion, subject to the provisions of Section
4.03 hereof.

     “Substitute Mortgage Bonds” means any mortgage bonds issued by the Company under a Substitute
Mortgage and delivered to the Trustee pursuant to Section 4.03 hereof or pursuant to the comparable
provision of any other supplemental indenture relating to Securities subject to the release
provisions.

     SECTION 1.02. Section References. Each reference to a particular section set forth in this
Thirty-Second Supplemental Indenture shall, unless the context otherwise requires, refer to this
Thirty-Second Supplemental Indenture.

ARTICLE TWO

TITLE AND TERMS OF THE SECURITIES

     SECTION 2.01. Title of the Securities; Stated Maturity. This Thirty-Second Supplemental
Indenture hereby establishes a series of Securities, which shall be known as the Company’s “2010
Series A 4.89% Senior Notes due 2020” (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 September 15, 2020.

     The Securities issued on the Original Issue Date will be sold by the Company pursuant to the
Purchase Agreement.

     SECTION 2.02. Certain Variations from the Original Indenture.

     (a) The Notes shall have the benefit of the provisions of Article Four of the Original
Indenture and shall have the benefit of, or be subject to, the other related provisions of the
Original Indenture relating to the grant of security, including (for avoidance of doubt and not for
purposes of limitation) the Granting Clause, the definitions of “Deliverable Mortgage Bonds,”
“Deliverable

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Securities,” “Designated Mortgage Bonds,” “Grant,” “Mortgage,” “Mortgage Bonds,” “Mortgage
Trustee,” “Previously Delivered Mortgage Bonds,” and “Trust Estate,” Section 301(20), Sections
301(a)(v), (ix), (x) and (xi), Sections 301(b)(ii) and (iii), Section 301(d), and Sections 601(4)
and (8), subject, in each case, to the release provisions provided for in Section 4.02 herein.

     (b) Section 503 of the Original Indenture shall apply to the Notes. The following shall be an
additional condition to defeasance of the Notes under Section 503: the Company shall have delivered
to the Trustee an Opinion of Counsel stating that (i) the Company has received from the Internal
Revenue Service a letter ruling, or there has been published by the Internal Revenue Service a
Revenue Ruling, or (ii) since the date of execution of this Thirty-Second Supplemental Indenture,
there has been a change in the applicable U.S. Federal income tax law, in either case to the effect
that, the Holders of such Outstanding Notes appertaining thereto will not recognize income, gain or
loss for U.S. Federal income tax purposes as a result of such defeasance and will be subject to
U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred, and, also, to the effect that, after the
123rd day after the date of deposit, all money and other property as provided pursuant
to Section 503 of the Original Indenture (including the proceeds thereof) deposited or caused to be
deposited with the Trustee (or other qualifying trustee) pursuant to Section 503 of the Original
Indenture to be held in trust will not be subject to any case or proceeding (whether voluntary or
involuntary) in respect of the Company under any Federal or State bankruptcy, insolvency,
reorganization or other similar law, or any decree or order for relief in respect of the Company
issued in connection therewith.

     SECTION 2.03. Amount and Denominations.

     (a) The aggregate principal amount of Notes that may be issued under this Thirty-Second
Supplemental Indenture is limited to $300,000,000 (except as provided in Section 301(2) of the
Original Indenture). The Notes shall be issuable only as Registered Securities without coupons
and, as permitted by Section 301 and Section 302 of the Original Indenture, in denominations of
$1,000 and integral multiples thereof.

     SECTION 2.04. Transfer and Exchange.

     (a) Transfer and Exchange of Definitive Securities. When Registered Securities are presented
to the Security Registrar with a request:

     (i) to register the transfer of such Registered Securities; or

     (ii) to exchange such Registered Securities for Registered Securities of the same series of
any authorized denominations of the same aggregate principal amount and Stated Maturity, the
Security Registrar shall register the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met; provided, however, that the Registered
Securities surrendered for transfer or exchange:

     (A) shall be duly endorsed or be accompanied by a written instrument of transfer in
form reasonably satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing; and

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     (B) are accompanied by the following additional information and documents, as
applicable:

     (x) if such Registered Securities are being delivered to the Security Registrar by
a Holder for registration in the name of such Holder, without transfer, a certification
from such Holder to that effect (in the form set forth on the reverse side of the
Transfer Restricted Security); or

     (y) if such Registered Securities are being transferred to the Company, a
certification to that effect (in the form set forth on the reverse side of the Transfer
Restricted Security); or

     (C) if such Registered Securities are being transferred pursuant to an exemption from
registration in accordance with Rule 144 under the Securities Act or in reliance upon
another exemption from the registration requirements of the Securities Act, (i) a
certification to that effect (in the form set forth on the reverse side of the Transfer
Restricted Security) and (ii) if the Company so requests, other evidence reasonably
satisfactory to it as to the compliance with the restrictions set forth in the legend set
forth in Section 2.04(b).

     In case of redemption, the Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the opening of business 15
days before any selection of Securities of that series to be redeemed and ending at the close of
business on the day of the mailing of the relevant notice of redemption, or (ii) to register the
transfer of or exchange any Registered Security so selected for redemption, in whole or in part,
except the unredeemed portion of any Security being redeemed in part.

     (b) Legends for Securities. Each Security certificate evidencing the Notes (and all
Securities issued in exchange therefor or in substitution thereof) shall bear a legend in
substantially the following form (each defined term in the legend being defined as such for
purposes of the legend only):

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

     SECTION 2.05. Certain Terms of the Notes.

     (a) The Notes shall bear interest at the rate of 4.89% per annum on the principal amount
thereof from the date of original issue, or from the most recent Interest Payment Date to which

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interest has been paid or duly provided for, until the principal of the Notes becomes due and
payable, and on any overdue principal and Make-Whole Amount and (to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of interest at the same
rate per annum during such overdue period. Interest on the Notes will be payable semi-annually in
arrears on March 15 and September 15 of each year (each such date, an “Interest Payment Date”),
commencing March 15, 2011. The amount of interest payable for any period shall be computed on the
basis of a 360-day year and twelve 30-day months.

     (b) In the event that any Interest Payment Date, redemption date or other date of Maturity of
the Notes is not a Business Day, then payment of the amount payable on such date will be made on
the next succeeding day which is a Business Day (and without any interest or other payment in
respect of any such delay), in each case with the same force and effect as if made on such date.
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, as defined in the Original
Indenture) is registered at the close of business on the relevant record date for such interest
installment, which shall be the fifteenth calendar day (whether or not a Business Day) prior to the
relevant Interest Payment Date (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 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 Notes not less than ten days prior to such Special Record Date. The
principal of, and Make-Whole Amount, 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 that 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.
Notwithstanding the foregoing, so long as any Note is held by an Institutional Investor, payment on
the Notes held by such Holder shall be made in the manner specified in the Purchase Agreement.

     (c) The Notes are not subject to repayment at the option of the Holders thereof and are not
subject to any sinking fund. As provided in the Form of Note attached hereto as Exhibit A, the
Notes are subject to optional redemption, as a whole or in part, by the Company prior to Stated
Maturity of the principal thereof on the terms set forth therein. Except as modified in the form
of Note, redemptions shall be effected in accordance with Article Twelve of the Original Indenture.

     (d) 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
Thirty-Second Supplemental Indenture as if set forth in full at this place).

     SECTION 2.06. Form of Note. Attached hereto as Exhibit A is the Form of definitive Note. On
and after the Release Date, the terms of the Notes shall be amended to make appropriate reference
to the Substitute Mortgage and the Substitute Mortgage Bonds; provided, that the consent of Holders
shall not be required in connection with such amendment.

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ARTICLE THREE

RESERVED

ARTICLE FOUR

SECURITY AND RELEASE PROVISIONS

     SECTION 4.01. Security. Subject to Section 4.02 below, as provided in and pursuant to Article
Four of the Original Indenture, the Notes will be secured as to payments of principal, interest and
Make-Whole Amount, if any, by a series of Mortgage Bonds (the “General and Refunding Mortgage
Bonds, 2010 Series A,” the “Bonds,” the “Bonds of the related series” or the “related series of
Bonds”) of the Company to be issued concurrently with the issuance of the Notes under and secured
by a Mortgage and Deed of Trust, dated as of October 1, 1924, between the Company and The Bank of
New York Mellon Trust Company, N.A., as successor trustee (the “Mortgage Trustee”), as amended and
supplemented by various supplemental indentures, including the supplemental indenture, dated as of
September 1, 2010, creating the Bonds (collectively, the “Mortgage”), pledged by the Company for
the benefit of the Holders of the Notes to the Trustee under this Thirty-Second Supplemental
Indenture. The Bonds shall be issued in an aggregate principal amount equal to the aggregate
principal amount of the Notes.

     SECTION 4.02. Release. Until the Release Date and subject to Article Four of the Original
Indenture, the Bonds of the related series issued and delivered to the Trustee shall serve as
security for any and all obligations of the Company under all Notes from time to time Outstanding,
including, but not limited to (1) the full and prompt payment of the principal and Make-Whole
Amount, if any, on the Notes when and as the same shall become due and payable in accordance with
the terms and provisions of the Indenture or the Notes, either at the Stated Maturity thereof, upon
acceleration of the maturity thereof, upon redemption, or otherwise, and (2) the full and prompt
payment of any interest on the Notes when and as the same shall become due and payable in
accordance with the terms and provisions of this Indenture or the Notes including, if and to the
extent provided for in the Notes, interest on overdue installments of principal and (to the extent
permitted by law) interest on overdue installments of interest.

     Each supplemental indenture to the Mortgage pursuant to which any Bonds are issued shall
contain a provision to the effect that any payment by the Company hereunder of principal of or
premium or interest on Notes which shall have been authenticated and delivered in connection with
the issuance and delivery to the Trustee of such Bonds (other than by the application of the
proceeds of a payment in respect of such Bonds) shall to the extent thereof, be deemed to satisfy
and discharge the obligation of the Company, if any, to make a payment of principal, premium or
interest, as the case may be, in respect of such Bonds which is then due.

     Notwithstanding anything in the Original Indenture to the contrary, and provided that
Substitute Mortgage Bonds have been delivered in accordance with Section 4.03 hereof, from and
after the Release Date, the obligation of the Company to make payment with respect to the principal
of and Make-Whole Amount, if any, and interest on the Bonds shall be deemed satisfied and
discharged as provided in the supplemental indenture or indentures to the Mortgage creating such
Bonds and the Bonds shall cease to secure in any manner Notes theretofore or subsequently issued;
the Trustee shall thereupon surrender the Bonds to the Mortgage Trustee for cancellation

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and execute and deliver such proper instruments of release as may be required. From and after
the Release Date, all Notes, whether theretofore or subsequently issued, shall be secured by
Substitute Mortgage Bonds pursuant to Section 4.03 below, and any conditions to the issuance of
Notes that refer or relate to Bonds or the Mortgage shall be inapplicable (except as such
conditions shall be deemed to refer to Substitute Mortgage Bonds or a Substitute Mortgage pursuant
to Section 4.03 below). From and after the Release Date, the Company shall not issue any
additional Mortgage Bonds, including Pledged Bonds, under the Mortgage. Notice of the occurrence
of the Release Date shall be given by the Trustee to the Holders of the Notes in the manner
provided for in the Original Indenture not later than 30 days after the Company notifies the
Trustee of the occurrence of the Release Date.

     In connection with the establishment of the occurrence of the Release Date, the Trustee shall
be entitled to receive, may presume the correctness of, and shall be fully protected in relying
upon, an Officers’ Certificate designating the Release Date and stating that the conditions to the
occurrence of the Release Date have been satisfied.

     When the obligation of the Company to make payments with respect to the principal of, and
Make-Whole Amount, if any, and interest on all or any part of the Bonds shall be satisfied or
deemed satisfied pursuant to the Original Indenture or pursuant to this Thirty-Second Supplemental
Indenture, the Trustee shall, upon written request of the Company, deliver to the Company without
charge therefor all of the Bonds so satisfied or deemed satisfied, together with such appropriate
instruments of transfer or release as may be reasonably requested by the Company. All Bonds
delivered to the Company in accordance with this Section shall be delivered by the Company to the
Mortgage Trustee for cancellation.

     SECTION 4.03. Substitute Mortgage Bonds.

     (a) The Company shall notify the Trustee not less than 90 days prior to the Release Date (or
such shorter period as the Company and the Trustee may agree) that the Company will deliver to the
Trustee on the Release Date Substitute Mortgage Bonds in an aggregate principal amount equal to the
aggregate principal amount of Notes and any other Securities subject to the release provisions
Outstanding on the Release Date, in trust for the benefit of the Holders from time to time of the
Notes and any other Securities subject to the release provisions issued under the Original
Indenture, as supplemented, as security for any and all obligations of the Company under the Notes
and any other Securities subject to the release provisions, including but not limited to, (1) the
full and prompt payment of the principal of and Make-Whole Amount, if any, on the Notes and any
other Securities subject to the release provisions when and as the same shall become due and
payable in accordance with the terms and provisions of the Original Indenture, as supplemented, or
the Notes or such other Securities subject to the release provisions, either at the stated maturity
thereof, upon acceleration of the maturity thereof or upon redemption, and (2) the full and prompt
payment of any interest on the Notes and any other Securities subject to the release provisions
when and as the same shall become due and payable in accordance with the terms and provisions of
the Original Indenture, as supplemented, or the Notes or such other Securities subject to the
release provisions.

     (b) The Company shall deliver such Substitute Mortgage Bonds described in Section 4.03(a) in
separate series and issues corresponding to the series and issues of Notes and other Securities
subject to the release provisions Outstanding on or prior to the Release Date, each series or issue

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of Substitute Mortgage Bonds having the same stated rate or rates of interest (or interest
calculated in the same manner), Interest Payment Dates, stated maturity date and redemption
provisions, and in the same aggregate principal amount, as the related series or issue of Notes or
other Securities subject to the release provisions outstanding on the Release Date; it being
expressly understood that each such series of Substitute Mortgage Bonds shall be held by the
Trustee for the benefit of the Holders of the corresponding series of Securities from time to time
Outstanding subject to such terms and conditions relating to surrender to the Company, transfer
restrictions, voting, application of payments of principal and interest and other matters as shall
be set forth in an indenture supplemental hereto specifically providing for the delivery to the
Trustee of such Substitute Mortgage Bonds. Such Substitute Mortgage Bonds shall be issued under
and secured by a Substitute Mortgage (A) on which the Company shall be the obligor; and (B) which
shall be qualified, or shall meet the requirements for qualification, under the Trust Indenture Act
for the issuance of Substitute Mortgage Bonds.

     (c) On or prior to the Release Date the Company shall have delivered to the Trustee:

(A) a supplemental indenture to the Original Indenture that provides among other things,
that on the delivery of the Substitute Mortgage Bonds described in Section 4.03(b), the
Company shall deliver to the Trustee in trust for the benefit of the Holders as described
in Section 4.03(a) hereof, and the Trustee shall accept therefor, related series of
Substitute Mortgage Bonds registered in the name of the Trustee and conforming to the
requirements herein and therein specified;

(B) an Officer’s Certificate (1) stating that, to the knowledge of the signer, (a) no Event
of Default has occurred and is continuing and (b) no event has occurred and is continuing
which entitles the secured party under the Substitute Mortgage to accelerate the maturity
of the indebtedness outstanding thereunder and (2) stating the aggregate principal amount
of indebtedness issuable, and then proposed to be issued, under and secured by the lien of
the Substitute Mortgage; and

(C) an Opinion of Counsel to the effect that (1) such Substitute Mortgage Bonds have been
duly issued under such Substitute Mortgage and constitute valid obligations, entitled to
the benefit of the lien of the Substitute Mortgage equally and ratably with all other
indebtedness then outstanding secured by such lien and (2) such Substitute Mortgage is a
lien on substantially all of the Company’s tangible properties (including real property)
used in its electric utility business, and will constitute a lien on any such properties
thereafter acquired; and there is no other lien securing indebtedness on substantially all
of such properties prior to the lien of the Substitute Mortgage, except for the lien of the
Mortgage.

     (d) On or prior to the Release Date the Company shall provide an Officer’s Certificate stating
that the Company has been advised in writing, within not more than 30 days prior to such
substitution of the Substitute Mortgage Bonds for the Mortgage Bonds, by at least two credit rating
agencies qualifying as “nationally recognized statistical rating organizations” (as defined by the
Securities Exchange Act of 1934, as amended) then maintaining a securities rating on the Notes
that the substitution of such Substitute Mortgage Bonds for the Mortgage Bonds will not result in a
reduction of the securities rating assigned to the Notes by that credit rating agency immediately
prior to the substitution or the suspension or withdrawal of its rating and the

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Company shall have provided the Trustee with written evidence of such advice; provided that,
in the event the Notes are not rated by at least two such credit rating agencies as described above
immediately prior to any proposed substitution, the Company shall cause the Notes to be so rated
prior to such substitution (and without giving effect to any substitution) by at least two such
credit rating agencies described above.

     (e) In the event that the Company cannot obtain assurance of at least two credit rating
agencies as described in Section 4.03(d) above, the Company will take such actions as are necessary
to cause the Release Date not to occur.

     (f) Article Four and related provisions of the Original Indenture (except for any provisions
relating to discharge of Bonds or amounts owing on Bonds on or after the Release Date) shall apply
to Substitute Mortgage Bonds pledged to the Trustee hereunder and the provisions thereof shall be
deemed to refer to the Substitute Mortgage and the Substitute Mortgage Bonds. Article Four and
related provisions may be amended by the Company to have the Notes secured by Substitute Mortgage
Bonds on and after the Release Date and make appropriate reference to the Substitute Mortgage and
the Substitute Mortgage Bonds; provided, that the consent of Holders shall not be required in
connection with such amendment.

     SECTION 4.04. Events of Default.

     (a) For purposes of the Notes, Section 601(8) of the Original Indenture shall read, “the
occurrence of an “event of default” as such term is defined in the Mortgage; or”.

     On and after the Release Date, Section 601(8) of the Original Indenture shall no longer apply
to the Notes.

     (b) On and after the Release Date, the occurrence of a “default” (as defined in the Substitute
Mortgage) shall constitute an Event of Default under Section 601 of the Original Indenture with
respect to the Notes and the references in Section 601(4) of the Original Indenture and related
provisions to “Mortgage Bonds” shall be deemed to refer to “Substitute Mortgage Bonds.”

     (c) In addition, failure by the Company to deliver Substitute Mortgage Bonds in accordance
with the provisions of Section 4.03 of this Supplemental Indenture on or prior to the Release Date
shall be an “Event of Default” with respect to the Notes as contemplated by Section 601(9) of the
Original Indenture.

ARTICLE FIVE

MISCELLANEOUS PROVISIONS

     The Trustee makes no undertaking or representations in respect of, and shall not be
responsible in any manner whatsoever for and in respect of, the validity or sufficiency of this
Thirty-Second 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.

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     Except as expressly amended hereby and by the supplemental indenture appointing the Trustee as
successor trustee, 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 Thirty-Second 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 Thirty-Second Supplemental Indenture and the Notes shall be governed by, and construed in
accordance with, the laws of the State of New York.

     This Thirty-Second 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.

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     IN WITNESS WHEREOF, the parties hereto have caused this Thirty-Second Supplemental Indenture
to be duly executed and attested, all as of the day and year first above written.

	 	 	 	 	 
	 	THE DETROIT EDISON COMPANY

 	 
	 	By:  	/s/ Donald J. Goshorn
 	 
	 	 	Name:  	Donald J. Goshorn 	 
	 	 	Title:  	Assistant Treasurer 	 
	 

	 	 	 	 	 
	ATTEST:

 	 	 
	By:  	/s/ Lisa A. Muschong
 	 	 
	 	Name:  	Lisa A. Muschong 	 	 
	 	Title:  	Corporate Secretary 	 	 

12

 

	 	 	 	 	 
	 	THE BANK OF NEW YORK MELLON TRUST

COMPANY, N.A., as Trustee

 	 
	 	By:  	/s/ Alexis M. Johnson
 	 
	 	 	Name:  	Alexis M. Johnson 	 
	 	 	Title:  	Authorized Officer 	 
	 

	 	 	 	 	 
	ATTEST:

 	 	 
	By:  	/s/ J. Michael Banas
 	 	 
	 	Name:  	J. Michael Banas 	 	 
	 	Title:  	Vice President 	 	 

13

 

EXHIBIT A

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. IN CONNECTION WITH ANY TRANSFER,
THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.

			
	 	 
	No. R-     
	 	$                    

THE DETROIT EDISON COMPANY

2010 SERIES A 4.89% SENIOR NOTES DUE 2020

Principal Amount: $                                        

Authorized Denomination: $1,000

Regular Record Date: close of business on the 15th calendar day (whether or not a Business Day)
prior to the relevant Interest Payment Date

Original Issue Date: September 15, 2010

Stated Maturity: September 15, 2020

Interest Payment Dates: March 15 and September 15 of each year, commencing March 15, 2011

Interest Rate: 4.89% per annum

          THE DETROIT EDISON COMPANY, a corporation duly organized and existing under the laws of the
State of Michigan (the “Company,” which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to                                          , or registered assigns, at
the office or agency of the Company in the City of New York, New York, the principal sum of                                         
dollars ($                    ) on September 15, 2020 (the “Stated Maturity”), in the coin
or currency of the United States, and to pay interest thereon from the Original Issue Date shown
above, or from the most recent Interest Payment Date to which interest has been paid or duly
provided for, in arrears on each Interest Payment Date as specified above, commencing on March 15,
2011, and on the Stated Maturity at the rate per annum shown above (the “Interest Rate”) until the
principal hereof is due and payable, and on any overdue principal and Make-Whole Amount and on any
overdue installment of interest. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in
whose name this Note (or one or more Predecessor Securities) is registered on the Regular Record
Date as specified above next preceding such Interest Payment Date. Except as otherwise provided in
the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid to the Person in

A-1

 

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 Holders of Notes of this series not less than ten days
prior to such Special Record Date.

          Payments of interest on this Note will include interest accrued to but excluding the
respective Interest Payment Dates. Interest payments for this Note shall be computed and paid on
the basis of a 360-day year of twelve 30-day months. The Company shall pay interest on overdue
principal and Make-Whole Amount, if any, and, to the extent lawful, on overdue installments of
interest at the rate per annum borne by this Note. In the event that any Interest Payment Date,
Redemption Date or Maturity Date is not a Business Day, then the required payment of principal,
Make-Whole Amount, if any, and interest 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), in each case with the
same force and effect as if made on such date. “Business Day” means any day except a Saturday,
Sunday or other day on which banking institutions in the State of New York or the State of Michigan
are authorized or obligated pursuant to law or executive order to close.

          Payment of principal of, Make-Whole Amount, if any, and interest on the Notes shall be made in
such coin or currency of the United States of America as at the time of payment is legal tender for
payment of public and private debts. Payments of principal, Make-Whole Amount, if any, and
interest due at the Stated Maturity or earlier redemption of the Notes shall be made at the office
of the Paying Agent upon surrender of such Securities to the Trustee. Payments of interest shall
be made, at the option of the Company, subject to such surrender where applicable, by check mailed
to the address of the Person entitled thereto as such address shall appear in the Security
Register. Notwithstanding the foregoing, so long as any Note is held by an Institutional Investor,
payment of principal, Make-Whole Amount, if any, and interest on the Notes held by such Holder
shall be made in the manner specified in the Purchase Agreement.

          UNTIL THE RELEASE DATE (AS DEFINED BELOW), THIS NOTE SHALL BE SECURED BY GENERAL AND REFUNDING
MORTGAGE BONDS, 2010 SERIES A (THE “MORTGAGE BONDS”) ISSUED AND DELIVERED BY THE COMPANY TO THE
TRUSTEE (AS DEFINED BELOW) UNDER THE COMPANY’S SUPPLEMENTAL INDENTURE DATED AS OF SEPTEMBER 1,
2010, SUPPLEMENTING THE MORTGAGE AND DEED OF TRUST DATED AS OF OCTOBER 1, 1924 BETWEEN THE COMPANY
AND THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (THE “MORTGAGE TRUSTEE”), PLEDGED BY THE
COMPANY FOR THE BENEFIT OF THE HOLDERS OF THE NOTES TO THE TRUSTEE UNDER THE INDENTURE (THE
“MORTGAGE”). ON THE RELEASE DATE AND SUBJECT TO DELIVERY OF SUBSTITUTE MORTGAGE BONDS IN
ACCORDANCE WITH THE TERMS OF THE INDENTURE, THE NOTES SHALL CEASE TO BE SECURED BY SUCH MORTGAGE
BONDS AND SHALL BE SECURED BY SUBSTITUTE MORTGAGE BONDS UNDER A SUBSTITUTE MORTGAGE.

          Unless the Certificate of Authentication hereon has been executed by the Trustee or a duly
appointed Authentication Agent referred to herein, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.

          This Note is one of a duly authorized series of Securities of the Company (herein sometimes
referred to as the “Notes”), specified in the Indenture, all issued or to be issued in one or more
series under and pursuant to a Collateral Trust Indenture dated as of June 30, 1993 (the

A-2

 

“Original Indenture”) duly executed and delivered between the Company and The Bank of New York
Mellon Trust Company, N.A., as successor Trustee (herein referred to as the “Trustee”), as
supplemented through and including a Thirty-Second Supplemental Indenture dated as of September 1,
2010 (together with the Original Indenture, the “Indenture”) between the Company and the Trustee,
to which Indenture and all indentures supplemental thereto reference is hereby made for a
description of the respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the registered Holders of the Notes and of the terms
upon which the Notes are, and are to be, authenticated and delivered.

          This Note is not subject to repayment at the option of the Holder hereof and is not subject to
any sinking fund.

          This Note will be redeemable at the option of the Company, in whole at any time or in part
from time to time (any such date of optional redemption, an “Optional Redemption Date,” which shall
be a “Redemption Date” for purposes of the Indenture), at an optional redemption price (which shall
be a “Redemption Price” for purposes of the Indenture) equal to 100% of the principal amount of
this Note to be redeemed together with the Make-Whole Amount (as defined below), if any, plus, in
each case, accrued and unpaid interest thereon to the Redemption Date.

          Notwithstanding the foregoing, installments of interest on this Note that are due and payable
on Interest Payment Dates falling on or prior to a Redemption Date will be payable on the Interest
Payment Date to the registered Holders as of the close of business on the relevant Record Date.

          “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of
the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of
such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount, the following
terms have the following meanings:

          “Called Principal” means, with respect to a Note, the principal of the Note that is to be
redeemed on an Optional Redemption Date or has become or is declared to be immediately due and
payable pursuant to Section 602 of the Indenture, as the context requires.

          “Discounted Value” means, with respect to the Called Principal of a Note, the amount obtained
by discounting all Remaining Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor (applied on the same periodic
basis as that on which interest on the Note is payable) equal to the Reinvestment Yield with
respect to such Called Principal.

          “Reinvestment Yield” means, with respect to the Called Principal of a Note, 0.50% plus the
yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as “PX-1” on the Bloomberg Financial Market Screen (or such other display as may
replace “PX-1” on the Bloomberg Financial Market Screen) or, if Page PX1 (or its successor screen
on the Bloomberg Financial Market Screen) is unavailable, the Telerate Access Service screen which
corresponds most closely to Page PX1 for the most recently issued actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such

A-3

 

Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of
such time or the yields reported as of such time are not ascertainable (including by way of
interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities having a constant
maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly on a straight line basis between (1) the actively traded U.S. Treasury
security with the maturity closest to and greater than the Remaining Average Life and (2) the
actively traded U.S. Treasury security with the maturity closest to and less than the Remaining
Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears
in the interest rate of the applicable Note.

          “Remaining Average Life” means, with respect to any Called Principal, the number of years
(calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into
(ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such
Called Principal and the Stated Maturity of such Remaining Scheduled Payment.

          “Remaining Scheduled Payments” means, with respect to the Called Principal of a Note, all
payments of such Called Principal and interest thereon that would be due after the Settlement Date
with respect to such Called Principal if no payment of such Called Principal were made prior to its
Stated Maturity, provided that if such Settlement Date is not a date on which interest payments are
due to be made under the terms of the Note, then the amount of the next succeeding scheduled
interest payment will be reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date.

          “Settlement Date” means, with respect to the Called Principal of a Note, the Optional
Redemption Date on which such Called Principal is to be redeemed or has become or is declared to be
immediately due and payable pursuant to Section 602 of the Indenture as the context requires.

          Notice of any optional redemption will be mailed at least 30 days but not more than 60 days
before the Optional Redemption Date to the Holder hereof at its registered address. Each such
notice shall specify such Optional Redemption Date, the aggregate principal amount of the Notes to
be prepaid on such date, the principal amount of each Note held by such Holder to be redeemed, and
the interest to be paid on the Redemption Date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a senior financial officer of the Company as to the
estimated Make-Whole Amount due in connection with such redemption (calculated as if the date of
such notice were the date of the redemption), setting forth the details of such computation. The
Make-Whole Amount shall be determined by the Company two Business Days prior to the applicable
Redemption Date and the Company shall deliver to holder of the Notes and to the Trustee a
certificate of a senior financial officer specifying the calculation of such Make-Whole
Amount as of the Redemption Date.

A-4

 

          If notice has been provided in accordance with the Indenture and funds for the redemption of
this Note called for redemption have been made available on the Redemption Date, this Note will
cease to bear interest on the date fixed for redemption. Thereafter, the only right of the Holder
hereof will be to receive payment of the Redemption Price.

          The Company will notify the Trustee at least 60 days prior to giving notice of redemption (or
such shorter period as is satisfactory to the Trustee) of the aggregate principal amount of Notes
to be redeemed and the Redemption Date. If the Company elects to redeem all or a portion of the
Notes, the redemption will be conditional upon receipt by the Paying Agent or the Trustee of monies
sufficient to pay the Redemption Price. If the Notes are only partially redeemed by the Company,
the Trustee shall select which Notes are to be redeemed pro rata among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts
thereof and otherwise in accordance with the terms of the Indenture. Upon any such declaration,
the Company shall also pay to the Holders of the Notes the Make-Whole Amount on the Notes, if any,
determined as of the date the Notes shall have been declared due and payable.

          In the event of redemption of this Note in part only, a new Note or Notes of this series for
the unredeemed portion hereof will be issued in the name of the registered Holder hereof upon the
cancellation hereof.

          In case an Event of Default, as defined in the Indenture, shall have occurred and be
continuing, the principal of all of the Notes may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject to the conditions provided in
the Indenture. Upon any such declaration, the Company shall also pay to the Holders of the Notes
the Make-Whole Amount on the Notes, if any, determined as of the date the Notes shall have been
declared due and payable.

          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 contains provisions permitting the Company and the Trustee, with the consent of
the registered Holders of not less than a majority in aggregate principal amount of the outstanding
Securities of each series affected at the time, as defined in the Indenture, to execute
supplemental indentures for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying
in any manner the rights of the registered Holders of the Securities; provided, however, that no
such supplemental indenture shall (i) extend the fixed maturity of any Securities of any series, or
reduce the principal amount thereof, or reduce the rate of or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof, without the consent of
the registered Holder of each Security so affected or (ii) reduce the aforesaid percentage of
Securities, the registered Holders of which are required to consent to any such supplemental
indenture, without the consent of the registered Holders of each Security then outstanding and
affected thereby. The Indenture also contains provisions permitting (i) the registered Holders of
at least 66 2/3% in aggregate principal amount of the Securities of all 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 a majority in aggregate principal amount of the Securities of all series at the time
outstanding affected thereby, on behalf of the registered Holders of the Securities of such

A-5

 

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, Make-Whole Amount, if any, and interest on this Note at the time and place and at the
rate and in the coin or currency herein prescribed.

          Prior to the Release Date, the Notes of this series shall be secured by a series of Mortgage
Bonds (the “Related Series of Bonds”), delivered by the Company to the Trustee for the benefit of
the Holders of the Notes. Reference is made to the Mortgage and the Indenture for a description of
the rights of the Trustee as Holder of the Related Series of Bonds, the property mortgaged and
pledged under the Mortgage and the rights of the Company and of the Mortgage Trustee in respect
thereof, the duties and immunities of the Mortgage Trustee and the terms and conditions upon which
the Related Series of Bonds are secured and the circumstances under which additional Mortgage Bonds
may be issued.

          FROM AND AFTER SUCH TIME AS ALL BONDS, OTHER THAN (1) PLEDGED BONDS, INCLUDING THE RELATED
SERIES OF BONDS, AND (2) MORTGAGE BONDS (EXCLUSIVE OF PLEDGED BONDS) WHICH DO NOT IN AGGREGATE
PRINCIPAL AMOUNT EXCEED THE GREATER OF FIVE PERCENT (5%) OF NET TANGIBLE ASSETS OR FIVE PERCENT
(5%) OF CAPITALIZATION, HAVE BEEN RETIRED THROUGH PAYMENT, REDEMPTION OR OTHERWISE (INCLUDING THOSE
MORTGAGE BONDS THE PAYMENT FOR WHICH HAS BEEN PROVIDED FOR IN ACCORDANCE WITH THE MORTGAGE) AT,
BEFORE OR AFTER THE MATURITY THEREOF, PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND
IS CONTINUING (THE “RELEASE DATE”) AND SUBJECT TO DELIVERY OF SUBSTITUTE MORTGAGE BONDS IN
ACCORDANCE WITH THE TERMS OF THE INDENTURE, THE RELATED SERIES OF BONDS SHALL CEASE TO SECURE THE
NOTES IN ANY MANNER AND THE NOTES SHALL INSTEAD BE SECURED BY SUBSTITUTE MORTGAGE BONDS DELIVERED
TO THE TRUSTEE PURSUANT TO SECTION 4.03 OF THE THIRTY-SECOND SUPPLEMENTAL INDENTURE DATED AS OF
SEPTEMBER 1, 2010 TO THE INDENTURE DESCRIBED ABOVE.

          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

A-6

 

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 $1,000 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 Holder of any Note will
have any right to institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless (i) such Holder 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 Holders 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 Holders 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 Holder
hereof for the enforcement of payment of the principal of or any interest on this Note on or after
the respective due dates expressed herein.

          All terms used in this Note which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

A-7

 

          IN WITNESS WHEREOF, the parties hereto have caused this Note to be duly executed and attested,
all as of the day and year first above written.

	 	 	 	 	 
	 	THE DETROIT EDISON COMPANY

 	 
	[Corporate Seal]
 	 	  	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	ATTEST:

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 

A-8

 

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 MELLON TRUST COMPANY, N.A.

as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 

Date:                     

A-9

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

 
(Please insert Social Security or Other Identifying Number of Assignee)

 
(Please print or type name and address, including zip code of assignee)

the within Note and all rights thereunder, hereby irrevocably constituting and appointing such
person attorneys to transfer the within Note on the books of the Issuer, with full power of
substitution in the premises.

Dated:                     

          NOTICE: The signature of this assignment must correspond with the name as written upon the
face of the within Note in every particular, without alteration or enlargement or any change
whatever and NOTICE: Signature(s) must be guaranteed by a financial institution that is a member of
the Securities Transfer Agents Medallion Program (“STAMP”), the Stock Exchange, Inc. Medallion
Signature Program (“MSP”). When assignment is made by a guardian, trustee, executor or
administrator, an officer of a corporation, or anyone in a representative capacity, proof of his or
her authority to act must accompany this Note.

A-10

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

     This Certificate relates to $                      principal amount of Notes held in definitive form
by                                          (the “Transferor”). The Transferor has requested the Trustee by written
order to exchange or register the transfer of a Security or Securities.

     In connection with any transfer of any of the Securities evidenced by this certificate, the
undersigned confirms that such Securities are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

	 	(1)	o 	to the Company; or
	 
	 	(2)	o 	 inside the United States to a “qualified institutional buyer” (as defined in Rule
144A under the Securities Act of 1933) that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that such transfer is
being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule
144A under the Securities Act of 1933; or
	 
	 	(3)	o 	 pursuant to another available exemption from registration under the Securities Act
of 1933.

 
[INSERT NAME OF TRANSFEROR]

SIGNATURE GUARANTEE

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Security 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 Security Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

A-11Exhibit 10.1

	 	 	 	 	 

Exhibit 10.1

CHAMPIONS BIOTECHNOLOGY, INC.

October 25, 2010

Joel Ackerman

Dear Mr. Ackerman:

We are pleased to offer you employment as the Chief Executive Officer of Champions Biotechnology,
Inc. (the “Company”). For so long as you serve as an executive officer of the Company, the Company
will nominate you as a member of the board of directors of the Company. This offer is contingent
upon your signing our Business Protection Agreement, a copy of which is attached hereto, which
protects the Company’s intellectual property and good will, among other things. You will be
entitled to indemnification by the Company to the fullest extent permitted by law pursuant to the
Indemnification Agreement attached hereto.

You will not be entitled to receive any salary or compensation other than the Options described
below, will not be entitled to any severance payments and you have elected to waive any employee
benefits. Upon the Commencement Date (as defined) below, you will be entitled to receive options
to purchase 5,000,000 shares of common stock of the Company on the terms set forth in Schedule A attached hereto.

Upon the closing of the next round of financing of the Company in the aggregate amount of at least
$5,000,000, and on the same price and other terms thereof, you will invest in the Company between
$250,000 and $500,000 (the “Personal Investment”).

Our employment relationship will not be for any specified duration and it will be terminable at
will, which means that either you or the Company may terminate it at any time. To facilitate the
Company’s provision of quality service, we expect you to provide at least 30 days’ advance written
notice if you decide to resign. If you decide to resign, you agree to resign also from the board
of directors of the Company and any subsidiary thereof. Any dispute regarding your employment will
be governed solely by the laws of the State of Maryland. You and the Company agree that any
action arising out of your employment will be brought in and will be subject to the exclusive
jurisdiction and venue of the state courts located in Baltimore, Maryland or the Federal District
Court for the Northern District of Maryland.

This letter (including Schedule A attached hereto) contains the entire agreement between you and
the Company and supersedes any prior or agreement, understanding or commitment (oral or written) by
or on behalf of the Company, except for the Business Protection Agreement and the Indemnification
Agreement. The terms of your employment may be amended in the future, but only in writing and
signed by both you and by an authorized officer of the Company.
We expect that your engagement with us would start on October 26, 2010, or another mutually
satisfactory date (such start date, the “Commencement Date”). Within 30 days after the
Commencement Date, we will adopt a new stock option plan (the “ISO Plan”) and present it for
shareholder approval as soon as practicable thereafter to enable your stock options to be treated
as incentive stock options for purposes of U.S. federal tax law, to the fullest extent permitted
under applicable law.

We believe you will be a productive member of our team and we hope you will accept our offer. If
you wish to do so, please sign this letter and return it to the Company within 10 days after the
date of this letter. We look forward to your joining our Company.

	 	 	 	 	 
	 	Champions, Biotechnology, Inc.

 	 
	 	By:  	/s/ Mark Schonau, CFO
 	 
	 	 	 	 
	 

	 	 	 	 	 
	Agreed and accepted:

 	 	 
	/s/ Joel Ackerman
 	 	 
	Employee Signature 	 	 
	 	 	 

Date: October 25, 2010

 

 

Schedule A to Agreement with Joel Ackerman

Option Terms

	 	•	 	Number of Options Shares: 5,000,000.
	 
	 	•	 	Option Term: 10 years.
	 
	 	•	 	Exercise Price: The market price of the Company’s common stock, which is $0.875 per
share. Cashless exercise shall be permitted at your election starting two years after the
Commencement Date.
	 
	 	•	 	Vesting Schedule:

	 	•	 	2,500,000 options (the “Non-contingent Options”) shall vest monthly over
three years, in 36 equal installments, commencing from the Commencement Date.
	 
	 	•	 	2,500,000 options (the “Contingent Options”) shall vest monthly over
three years, in 36 equal installments, commencing from the Commencement Date but
subject also to satisfaction of the following conditions during the option term (the
“Conditions”):

	 	1)	 	Closing of one or more financings of the Company in the
aggregate amount of at least $5,000,000 (including your Personal Investment
and that of Dr. Ronnie Morris).
	 
	 	2)	 	Bringing in new Company management.
	 
	 	3)	 	Launching of personalized medicine (oncology) business.
	 
	 	4)	 	Commencing implementation of Business Plan.
	 
	 	•	 	Upon satisfaction of all of the Conditions, all Contingent Options that
would have vested had the vesting commenced from the Commencement Date shall
vest immediately. By way of illustration, if the conditions are satisfied
nine months following the Commencement Date, 9/36ths, or 25% of the
Contingent Options, shall vest.
	 
	 	•	 	So long as the Conditions are not satisfied, the Contingent Options shall
not be exercisable; if all of the Conditions are not satisfied within the
three year vesting period, the Contingent Options shall lapse and terminate.
	 
	 	•	 	At your request from time to time, the Company shall confirm whether any
of the Conditions has been satisfied, as determined in good faith by its
Board of Directors.

	 	•	 	Notwithstanding the foregoing, all options vest and become fully
exercisable upon a “Change of Control” (as defined below) or termination of
employment without “Cause” (as defined below).

	 	•	 	The Non-Contingent Options will expire 90 days following termination for Cause or
voluntary resignation; the Contingent Options will not be affected by such events, except
that vesting shall cease.
	 
	 	•	 	Grant Date: The options shall be granted upon adoption of the ISO Plan.
	 
	 	•	 	Tax Treatment: The options will be incentive stock options, to the fullest extent
permitted under applicable law.
	 
	 	•	 	Transferability: The options will be transferable by you to trusts of which you or your
family members are beneficiaries to the extent permitted by law.
	 
	 	•	 	It is understood that at the present time, in view of the Company’s plans for raising
capital, the Company may not have sufficient authorized but unissued shares of common stock
necessary upon the exercise of the Options. The Company will take such action as may be
reasonable and practical, as promptly as practicable and in any event within 90 days of the
Commencement Date, to increase the number of authorized but unissued shares of common stock
to provide for the shares needed to be issued upon the exercise of the Options (the
“Capital Increase”).
	 
	 	•	 	All shares underlying the options will be registered by the Company with the Securities
and Exchange Commission on Form S-8 within 15 days following the effective date of the
Capital Increase.

For purposes of this agreement, the following capitalized terms that have the following respective
meanings:

“Cause” shall mean any of the following: (i) willful misconduct in the performance of your material
duties; (ii) participation in any fraud against the Company; (iii) conviction of, or a plea of
“guilty” or “no contest” to, a felony or any crime involving dishonesty; or (iv) intentional damage
to any property of the Company of material value.

“Change of Control” shall mean the occurrence of any of the following:

 

ii

 

(a) any “person,” as such term is currently used in Section 13(d) of the Securities Exchange Act of
1934, as amended (the “1934 Act”) (a “person”), other than Dr. David Sidransky, becomes a
“beneficial owner” (as such term is currently used in
Rule 13d-3 promulgated under the 1934 Act (a “Beneficial Owner”) of 30% or more of the Voting Stock
(as defined below) of the Company;

(b) the Board of Directors of the Company adopts any plan of liquidation providing for the
distribution of all or substantially all of the Company’s assets;

(c) all or substantially all of the assets or business of the Company are disposed of in any one or
more transactions pursuant to a sale, merger, consolidation or other transaction (unless the
shareholders of the Company immediately prior to such sale, merger, consolidation or other
transaction beneficially own, directly or indirectly, in substantially the same proportion as they
owned the Voting Stock of the Company, more than fifty percent (50%) of the Voting Stock or other
ownership interests of the entity or entities, if any, that succeed to the business of the
Company);

(d) the Company combines with another company and is the surviving corporation but, immediately
after the combination, the shareholders of the Company immediately prior to the combination hold,
directly or indirectly, fifty percent (50%) or less of the Voting Stock of the combined company; or

(e) Continuing Directors cease to constitute at least a majority of the Board of Directors of the
Company.

“Voting Stock” of any entity shall mean the issued and outstanding share capital or other
securities of any class or classes having general voting power under ordinary circumstances, in the
absence of contingencies, to elect the members of the board of directors (or members of a similar
managerial body if such entity has no board of directors) of such entity.

“Continuing Director” means a director who either was a director of the Company on the Commencement
Date or who became a director of the Company subsequent thereto and whose election, or nomination
for election by the Company’s shareholders, was approved by a majority of the Continuing Directors
then on the Board of Directors of the Company.

 

iii

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