10-K405

TABLE OF CONTENTS

DEFINITIONS
	Item 1 — Business.
	Item 2 — Properties.
	Item 3 — Legal Proceedings.
	Item 4 — Submission of Matters to a Vote of Security Holders.
	Item 5 — Market for Registrant’s Common Equity and Related Stockholder Matters.
	Item 6 — Selected Financial Data.
	Item 8 — Financial Statements and Supplementary Data.
	Item 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
PART III
	Items 10, 11, 12 and 13
Annual Report on Form 10-K for The Detroit Edison Company PART I
	Item 1 — Business.
	Item 2 — Properties.
	Item 3 — Legal Proceedings.
	Item 4 — Submission of Matters to a Vote of Security Holders.
PART II
	Item 5 — Market for Registrant’s Common Equity and Related Stockholder Matters.
	Item 6 — Selected Financial Data.
	Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	Item 8 — Financial Statements and Supplementary Data.
	Item 9 -Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
PART III
	Items 10, 11, 12 and 13
Annual Reports on Form 10-K for DTE Energy Company and The Detroit Edison Company
PART IV
	Item 14 — Exhibits, Financial Statement Schedules and Reports on Form 8-K.

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999

Commission	Registrants; State of Incorporation;	I.R.S. Employer
File Number	Address; and Telephone Number	Identification No.
1-11607	DTE Energy Company (a Michigan corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-4000	38-3217752
1-2198	The Detroit Edison Company (a Michigan corporation) 2000 2nd Avenue Detroit, Michigan 48226-1279 313-235-8000	38-0478650

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
DTE Energy Company
Common Stock, without par value, with contingent preferred stock purchase rights	New York and Chicago Stock Exchanges
The Detroit Edison Company
Quarterly Income Debt Securities (QUIDS) (Junior Subordinated Deferrable Interest Debentures - - 7.625%, 7.54% and 7.375% Series)	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No __

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]

At January 31, 2000, 145,036,824 shares of DTE Energy’s Common Stock, substantially all held by non-affiliates, were outstanding, with an aggregate market value of approximately $5.04 billion based upon the closing price on the New York Stock Exchange.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information in DTE Energy Company’s definitive Proxy Statement for its 2000 Annual Meeting of Common Shareholders to be held April 14, 2000, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the Registrants’ fiscal year covered by this report on Form 10-K, is incorporated herein by reference to Part III (Items 10, 11, 12 and 13) of this Form 10-K.

DTE Energy Company
and
The Detroit Edison Company
FORM 10-K
Year Ended December 31, 1999

      This document contains the Annual Reports on Form 10-K for the fiscal year ended December 31, 1999 for each of DTE Energy Company and The Detroit Edison Company. Information contained herein relating to an individual registrant is filed by such registrant on its own behalf. Accordingly, except for its subsidiaries, The Detroit Edison Company makes no representation as to information relating to DTE Energy Company or any other companies affiliated with DTE Energy Company.

INDEX

			Page
Definitions				4
Annual Report on Form 10-K for DTE Energy Company:
	Part I — Item 1 - Business			5
		Item 2 - Properties		13
		Item 3 - Legal Proceedings		14
		Item 4 - Submission of Matters to a Vote of Security Holders		16
	Part II — Item 5 - Market for Registrant’s Common Equity and Related Stockholder Matters			16
		Item 6 - Selected Financial Data		17
		Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
		Item 7A-Quantitative and Qualitative Disclosures About Market Risk (Included in Item 7)		18
		Item 8 - Financial Statements and Supplementary Data		30
		Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		71
	Part III — Items 10, 11, 12 and 13 - (Incorporated by reference from DTE Energy Company’s definitive Proxy Statement which will be filed with the Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year)			71
Annual Report on Form 10-K for The Detroit Edison Company:
	Part I — Item 1 - Business			72
		Item 2 - Properties		73
		Item 3 - Legal Proceedings		73
		Item 4 - Submission of Matters to a Vote of Security Holders		73

2

	Part II — Item 5 - Market for Registrant’s Common Equity and Related Stockholder Matters		73
		Item 6 - Selected Financial Data	74
		Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	74
		Item 8 - Financial Statements and Supplementary Data	74
		Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	77
	Part III — Item 10 - Directors and Executive Officers of the Registrant		77
		Item 11 - Executive Compensation	77
		Item 12 - Security Ownership of Certain Beneficial Owners and Management	77
		Item 13 - Certain Relationships and Related Transactions	77
Annual Reports on Form 10-K for DTE Energy Company and The Detroit Edison Company:
	Part IV — Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K		78
Signature Page to DTE Energy Company Annual Report on Form 10-K			91
Signature Page to The Detroit Edison Company Annual Report on Form 10-K			92

3

DEFINITIONS

Company	DTE Energy Company and Subsidiary Companies
Consumers	Consumers Energy Company (a wholly owned subsidiary of CMS Energy Corporation)
Detroit Edison	The Detroit Edison Company (a wholly owned subsidiary of DTE Energy Company) and Subsidiary Companies
DTE Capital	DTE Capital Corporation (a wholly owned subsidiary of DTE Energy Company)
Electric Choice	Gives all retail customers equal opportunity to utilize the transmission system which results in access to competitive generation resources
EPA	United States Environmental Protection Agency
FERC	Federal Energy Regulatory Commission
kWh	Kilowatthour
Ludington	Ludington Hydroelectric Pumped Storage Plant (owned jointly with Consumers)
MCN	MCN Energy Group Inc.
MDEQ	Michigan Department of Environmental Quality
MPSC	Michigan Public Service Commission
MW	Megawatt
MWh	Megawatt hour
Note(s)	Note(s) to Consolidated Financial Statements of the Company and Detroit Edison
NRC	Nuclear Regulatory Commission
PSCR	Power Supply Cost Recovery
Registrant	Company or Detroit Edison, as the case may be
SALP	Systematic Assessment of Licensee Performance
SEC	Securities and Exchange Commission
SFAS	Statement of Financial Accounting Standards

4

Annual Report on Form 10-K for DTE Energy Company
PART I

Item 1 — Business.

General

      The Company, a Michigan corporation incorporated in 1995, is an exempt holding company under the Public Utility Holding Company Act. The Company has no operations of its own, holding instead directly or indirectly, the stock of Detroit Edison and other subsidiaries engaged in energy-related businesses. Detroit Edison is the Company’s principal operating subsidiary, representing approximately 90% and 86% of the Company’s assets and revenues, respectively, at December 31, 1999. The Company has no employees. Detroit Edison has 8,523 employees and other Company affiliates have 363 employees.

      See Note 2 for information regarding the Company’s pending merger with MCN.

Non-Regulated Operations

      Affiliates of the Company are engaged in non-regulated businesses, including energy-related services and products. Such services and products include the operation of a pulverized coal facility and coke oven batteries, coal sourcing, blending and transportation, landfill gas-to-energy facilities, providing expertise in the application of new energy technologies, real estate development, power marketing and trading, specialty engineering services and retail marketing of energy and other convenience products. Another affiliate, DTE Capital Corporation, has approximately $400 million of outstanding debt; the Company has decided to merge DTE Capital's operations into its own; DTE Capital will transfer all of its assets and liabilities to the Company.

      Non-regulated operating revenues of $681 million for 1999 were earned primarily from projects related to the steel industry and from energy trading activities.

Utility Operations

      Detroit Edison, incorporated in Michigan since 1967, is a public utility subject to regulation by the MPSC and FERC and is engaged in the generation, purchase, transmission, distribution and sale of electric energy in a 7,600 square mile area in Southeastern Michigan. Detroit Edison’s service area includes about 13% of Michigan’s total land area and about half of its population (approximately five million people). Detroit Edison’s residential customers reside in urban and rural areas, including an extensive shoreline along the Great Lakes and connecting waters. 3,887 of Detroit Edison’s 8,523 employees are represented by unions under two collective bargaining agreements. One agreement expires in June 2004 for 3,307 employees and the other agreement expires in August 2000 for 580 employees.

5

      Operating revenues, sales and customer data by rate class are as follows:

					1999		1998		1997
				Operating Revenues (Millions)
Electric
	Residential				$	1,300	$	1,253	$	1,179
	Commercial					1,629		1,553		1,501
	Industrial					809		753		726
	Other					309		343		251
			Total		$	4,047	$	3,902	$	3,657
				Sales (Millions of kWh)
Electric
	Residential					14,064		13,752		12,898
	Commercial					19,546		18,897		17,997
	Industrial					15,647		14,700		14,345
	Other					2,595		2,357		1,855
			Total System			51,852		49,706		47,095
	Interconnection					3,672		5,207		3,547
			Total			55,524		54,913		50,642
		Electric Customers at Year-End (Thousands)
Electric
	Residential					1,904		1,884		1,870
	Commercial					182		181		178
	Industrial					1		1		1
	Other					2		2		2
			Total			2,089		2,068		2,051

      Detroit Edison generally experiences its peak load and highest total system sales during the third quarter of the year as a result of air conditioning and cooling-related loads.

      During 1999, sales to automotive and automotive-related customers accounted for approximately 9% of total Detroit Edison operating revenues. Detroit Edison’s 30 largest industrial customers accounted for approximately 17% of total operating revenues in 1999, 1998 and 1997, and no one customer accounted for more than 4% of total operating revenues.

      Detroit Edison’s generating capability is primarily dependent upon coal. Detroit Edison expects to obtain the majority of its coal requirements through long-term contracts and the balance through short-term agreements and spot purchases. Detroit Edison has contracts with four coal suppliers for a total purchase of up to 38 million tons of low-sulfur western coal to be delivered during the period from 2000 through 2005. It also has four contracts for the purchase of approximately 3.5 million tons of Appalachian coal to be delivered during the period from 2000 through 2001. These existing long-term coal contracts include provisions for price escalation as well as de-escalation.

6

Certain Factors Affecting Public Utilities

      The electric utility industry is changing as the transition to competition occurs. MPSC orders issued in 1997 through 1999 form the beginning of the restructuring of the Michigan electric public utility industry. The implementation of restructuring creates uncertainty as Electric Choice and the unbundling of utility products and services continues. While Detroit Edison is implementing MPSC orders pertaining to competition, Federal and Michigan legislation regarding competition is under discussion and pending.

      Restructuring presents serious issues, such as planning for peak sales and defining the scope of the public utility obligation. The introduction of Electric Choice has created uncertainty regarding the timing and level of customer load that may move to other suppliers.

      Detroit Edison is subject to extensive environmental regulation. Additional costs may result as the effects of various chemicals on the environment (including nuclear waste) are studied and governmental regulations are developed and implemented. The costs of future nuclear decommissioning activities are the subject of increased regulatory attention, and recovery of environmental costs through traditional ratemaking is the subject of considerable uncertainty.

Regulation and Rates

      Michigan Public Service Commission. Detroit Edison is subject to the general regulatory jurisdiction of the MPSC, which, from time to time, issues its orders pertaining to Detroit Edison’s conditions of service, rates and recovery of certain costs, accounting and various other matters.

      As discussed in Notes 1 and 3, MPSC orders issued in 1997 through 1999 have provided the beginning of the restructuring of the Michigan electric utility industry. Other restructuring and regulatory matters are discussed below.

      In July 1998, Detroit Edison filed a required review of its current depreciation expense with the MPSC. The application requested an effective increase in annual depreciation expenses of $66 million; an adjustment in rates was not requested. An order from the MPSC is expected in 2000.

      In an order issued December 28, 1998 related to the 1988 Settlement Agreement regarding Fermi 2, the MPSC requested parties to file briefs discussing whether the past MPSC orders surrounding Fermi 2 (including the June 1995 order regarding the retail wheeling experiment, the November 1997 order that reflected the net effect of the $53 million reduction associated with the Fermi 2 phase in for 1998 and a two-year amortization of incremental storm damage costs, and the December 1998 order regarding the accelerated amortization of Fermi 2) have fully accounted for the reductions in the Fermi 2 cost of service and, if not, what additional actions should be taken, as well as what actions are needed to revert to non-phase-in ratemaking in 2000. In March 1999, the MPSC ruled that no further action needed to be taken at this time.

7

      In March 1999, Detroit Edison filed for reconciliation of its MPSC jurisdictional PSCR revenues and expenses. Detroit Edison indicated that an underrecovery of $42.6 million, including interest, existed, and when offset by a Fermi 2 performance standard credit of $34 million, a net amount of $8.6 million remains to be collected from PSCR customers. An order could be issued by the MPSC in the first quarter 2000. In September 1999, Detroit Edison filed its 2000 PSCR plan case. Fuel and purchased power costs for 2000 are projected to increase by up to 6 percent, on average, over the corresponding forecast for 1999. Detroit Edison is seeking a corresponding increase in its PSCR Factor for 2000. An order is expected in the third quarter of 2000.

      In March 1999, the MPSC initiated new dockets to 1) evaluate the need to expedite the supplier licensing program as an alternative for suppliers to obtain local franchises and Certificates of Public Convenience and Necessity from the MPSC, and 2) to establish guidelines for transactions between affiliates. The MPSC has not yet issued orders on these issues.

      In September 1999, the MPSC approved an interim code of conduct filed by Detroit Edison. The interim code allows DTE Energy affiliated companies to participate in the Electric Choice program. The MPSC also opened a proceeding to develop a permanent code of conduct. An order from the MPSC is expected in the third quarter of 2000.

      Detroit Edison is under an obligation to solicit capacity from external suppliers, whenever it determines that additional capacity is required. In October 1999, Detroit Edison filed to use an alternative capacity solicitation process. Detroit Edison is proposing that if it decides to meet its capacity requirements by executing contracts with a term longer than one year, it will utilize a Request for Proposal (RFP) to solicit offers. Otherwise, as long as Detroit Edison has a need to procure summer capacity to serve native load customers, Detroit Edison will file an annual report with the MPSC outlining its expected summer generating needs and the method by which it expects to meet those needs. In December 1999, the MPSC asked interested parties to file comments on the revised capacity solicitation process in January 2000. Comments opposing the proposal, including the demand for a contested case hearing process, have been filed.

      Proceedings are pending before the MPSC concerning claims that Detroit Edison’s service is lacking in reliability in certain aspects. Detroit Edison must file with the MPSC its plan to address reliability concerns. The MPSC Staff will meet with Detroit Edison, other utilities, customer groups and other relevant parties to formulate recommendations to improve reliability. The MPSC Staff must file a report with the MPSC by March 31, 2000.

      On January 19, 2000, the MPSC ordered Detroit Edison to file a plan assessing its generation and transmission capacity for the upcoming summer and identifying their plans for meeting the electric demand of all electric customers. In addition, the MPSC asked Detroit Edison to include an assessment of the impact of the actions of their affiliates on its plan. The plan is to be filed with the Commission by February 8, 2000.

      On February 3, 2000, the MPSC approved Detroit Edison’s request to transfer River Rouge 1 assets to its affiliate, DTE River Rouge. The transfer price is set at $6.6

8

million, or two times the book value of the assets. The MPSC also found that 1) the transfer will benefit consumers, 2) is in the public interest and, 3) does not violate state law. The FERC requires that state commissions make these findings before it will accept an application for determination of Exempt Wholesale Generator (EWG) status. EWG status will allow the unit to sell power into the wholesale market. The MPSC conditioned its approval by requiring Detroit Edison to apply any proceeds above the current book balance to stranded costs, to offer the plant output first to retail marketers participating in Electric Choice, and to file reports with the MPSC detailing the prices, terms and conditions of its offers.

      Nuclear Regulatory Commission. The NRC has regulatory jurisdiction over all phases of the operation, construction (including plant modifications), licensing and decommissioning of Fermi 2.

      Federal Energy Regulatory Commission. In 1996, the FERC issued Order 888, which requires public utilities to file open access transmission tariffs for wholesale transmission services in accordance with non-discriminatory terms and conditions, and Order 889, which requires public utilities and others to obtain transmission information for wholesale transactions through a system on the Internet. In addition, Order 889 requires public utilities to separate transmission operations from wholesale marketing functions.

      In July 1996, Detroit Edison filed its Pro Forma Open Access Transmission Tariff in compliance with FERC Order 888. During 1997, Detroit Edison negotiated a partial settlement regarding the price and terms and conditions of certain services provided as part of the tariff. Several issues were litigated and an Order was issued in July 1999. Detroit Edison’s request for rehearing was denied by the FERC. Detroit Edison has filed a claim of appeal with the Federal Court of Appeals for the Sixth Circuit.

      Detroit Edison has a power pooling agreement with Consumers. In March 1997, a joint transmission tariff, filed by Detroit Edison and Consumers, became effective. In compliance with FERC Order 888, the tariff modified the pooling agreement to permit third-party access to transmission facilities utilized for pooled operations under non-discriminatory terms and conditions. As Detroit Edison and Consumers were unable to agree on other modifications to the pooling agreement, Detroit Edison has requested that the FERC approve its termination. Consumers has requested that the pooling agreement be continued. The FERC has not ruled on either of these requests.

      In February 1999, Detroit Edison submitted a request to the FERC for authorization to use certain plant accounts to recognize the impairment loss of Detroit Edison’s Fermi 2 plant and associated assets in accordance with generally accepted accounting principles. In March 1999, the Michigan Attorney General filed a protest with the FERC and requested that the FERC set the issue for hearing. In April 1999, Detroit Edison filed its response with the FERC, requesting that the FERC reject the Michigan Attorney General’s protest as an improper collateral attack on MPSC orders. The FERC has not made a ruling on these matters.

9

Environmental Matters

Detroit Edison

      Detroit Edison, in common with other electric utilities, is subject to applicable permit and associated record keeping requirements, and to increasingly stringent federal, state and local standards covering, among other things, particulate and gaseous stack emission limitations, the discharge of effluents (including heated cooling water) into lakes and streams and the handling and disposal of waste material.

      Air. During 1997 and 1998, the EPA issued ozone transport regulations and final new air quality standards relating to ozone and particulate air pollution. The new rules will lead to additional controls on fossil-fueled power plants to reduce nitrogen oxides, sulfur dioxide, carbon dioxide and particulate emissions. See “Item 7 — Environmental Matters” for further discussion.

      Water. Detroit Edison is required to demonstrate that the cooling water intake structures at all of its facilities reflect the “best technology available for minimizing adverse environmental impact.” Detroit Edison filed such demonstrations and the MDEQ Staff accepted all of them except those relating to the St. Clair and Monroe Power Plants for which it requested further information. Detroit Edison subsequently submitted the information. In the event of a final adverse decision, Detroit Edison may be required to install additional control technologies to further minimize the impact.

      Wastes and Toxic Substances. The Michigan Solid Waste and Hazardous Waste Management Acts, the Michigan Environmental Response Act, the Federal Resource Conservation and Recovery Act, Toxic Substances Control Act, and the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 regulate Detroit Edison’s handling, storage and disposal of its waste materials.

      The EPA and the MDEQ have aggressive programs regarding the clean-up of contaminated property. Detroit Edison has extensive land holdings and, from time to time, must investigate claims of improperly disposed of contaminants. Detroit Edison anticipates that it will be periodically included in these types of environmental proceedings.

      Conners Creek. The Conners Creek Power Plant was in reserve status from 1988 to 1998. In April, 1998 the MPSC issued an order granting Detroit Edison’s request to waive competitive bidding for Conners Creek and restart the plant. Although Detroit Edison believed that the plant complied with all applicable environmental requirements, the Michigan Department of Natural Resources and the Wayne County Air Quality Management Division issued notices of violation contending that Detroit Edison was required to obtain a series of new permits prior to plant operation. Subsequently the EPA issued a similar notice of violation.

      In August 1998, Detroit Edison filed suit seeking a review of determinations asserted by the state and local agencies that Detroit Edison’s activities in reactivating the Conners Creek power plant were in violation of certain environmental regulations.

10

      In January 1999, the Department of Justice (DOJ) on behalf of the EPA sent Detroit Edison a Demand Letter requiring the payment of $2.3 million in civil penalties and an unconditional commitment to abandon the use of the facility as a coal plant. Detroit Edison rejected the DOJ/EPA demand and the DOJ/EPA filed suit. In March 1999, the United States District Court for the Eastern District of Michigan issued an Interim Remedial Order which allowed the company to convert the plant and operate it as a gas-fired facility. This was accomplished in time for the Conners Creek Power Plant to help meet record electricity demand in the summer of 1999. Detroit Edison is presently trying to resolve the remaining outstanding issues through settlement discussions. It is impossible to predict what impact, if any, the outcome of this will have upon Detroit Edison.

Non-Regulated

      The Company’s non-regulated affiliates are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants. These non-regulated affiliates are in substantial compliance with all environmental requirements.

Executive Officers of the Registrant

				Present
				Position
Name	Age(a)		Present Position	Held Since
Anthony F. Earley, Jr.		50	Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, and Member of the Office of the President	8-1-98
Larry G. Garberding		61	Executive Vice President and Chief Financial Officer Member of the Office of the President since December 1998	1-26-95
Gerard M. Anderson		41	President and Chief Operating Officer – DTE Energy Resources, and Member of the Office of the President	8-1-98
Robert J. Buckler		50	President and Chief Operating Officer – DTE Energy Distribution, and Member of the Office of the President	8-1-98
Michael E. Champley		51	Senior Vice President	4-1-97
S. Martin Taylor		59	Senior Vice President	4-28-99
Susan M. Beale		51	Vice President and Corporate Secretary	12-11-95
Leslie L. Loomans		56	Vice President and Treasurer	1-26-95
David E. Meador		42	Vice President	4-28-99
Christopher C. Nern		55	Vice President and General Counsel	1-26-95

      (a) As of December 31, 1999

      Under the Company’s By-Laws, the officers of the Company are elected annually by the Board of Directors at a meeting held for such purpose, each to serve until the next annual meeting of directors or until their respective successors are chosen and qualified.

11

      Pursuant to Article VI of the Company’s Articles of Incorporation, directors of the Company will not be personally liable to the Company or its shareholders in the performance of their duties to the full extent permitted by law.

      Article VII of the Company’s Articles of Incorporation provides that each person who is or was or had agreed to become a director or officer of the Company, or each such person who is or was serving or who had agreed to serve at the request of the Board of Directors as an employee or agent of the Company or as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Company to the full extent permitted by the Michigan Business Corporation Act or any other applicable laws as presently or hereafter in effect. In addition, the Company has entered into indemnification agreements with all of its officers and directors, which agreements set forth procedures for claims for indemnification as well as contractually obligating the Company to provide indemnification to the maximum extent permissible by law.

      The Company and its directors and officers in their capacities as such are insured against liability for alleged wrongful acts (to the extent defined) under three insurance policies providing aggregate coverage in the amount of $100 million.

      Other Information. Pursuant to the provisions of the Company’s By-Laws, the Board of Directors has by resolution set the number of directors comprising the full Board at 12.

      The MCN merger agreement provides that at the completion of the merger, the Company will promptly increase the size of its board of directors or exercise its best efforts to secure the resignation of its present directors in order to cause Mr. Alfred R. Glancy III and two additional persons selected by MCN after consultation with the Company from among MCN’s directors as of the date of the merger agreement to be appointed to the Company’s board of directors.

      After the merger, Stephen E. Ewing, currently President and Chief Operating Officer of MCN, is expected to be added as a Member of the Office of the President.

12

Item 2 — Properties.

      Detroit Edison

      The summer net rated capability of Detroit Edison’s generating units is as follows:

	Location By
	Michigan	Summer Net				Year
Plant Name	County	Rated Capability (1) (2)				in Service
		(MW)
Fossil-fueled Steam-Electric
Belle River (3)	St. Clair		1,026	9.3	%	1984 and 1985
Conners Creek	Wayne		167	1.5		1999
Greenwood	St. Clair		785	7.1		1979
Harbor Beach	Huron		103	0.9		1968
Marysville	St. Clair		167	1.5		1930, 1943 and 1947
Monroe (4)	Monroe		3,000	27.3		1971, 1973 and 1974
River Rouge	Wayne		510	4.6		1957 and 1958
St. Clair	St. Clair		1,402	12.8		1953, 1954, 1961 and 1969
Trenton Channel	Wayne		725	6.6		1949, 1950 and 1968
			7,885	71.6	%
Oil or Gas-fueled Peaking     Units	Various		1,102	10.0		1966-1971, 1981 and 1999
Nuclear-fueled Steam-Electric     Fermi 2 (5)	Monroe		1,101	10.0		1988
Hydroelectric Pumped Storage     Ludington (6)	Mason		917	8.4		1973
			11,005	100.0	%

(1)	Summer net rated capabilities of generating units in service are based on periodic load tests and are changed depending on operating experience, the physical condition of units, environmental control limitations and customer requirements for steam, which otherwise would be used for electric generation.
(2)	Excludes two oil-fueled units, River Rouge Unit No. 1 (206 MW) and St. Clair Unit No. 5 (250 MW), in economy reserve status.
(3)	The Belle River capability represents Detroit Edison’s entitlement to 81.39% of the capacity and energy of the plant. See Note 5.
(4)	The Monroe Power Plant provided 33.7% of Detroit Edison’s total 1999 power plant generation.
(5)	Fermi 2 has a design electrical rating (net) of 1,150 MW.
(6)	Represents Detroit Edison’s 49% interest in Ludington with a total capability of 1,872 MW. Detroit Edison is leasing 306 MW to First Energy for the six-year period June 1, 1996 through May 31, 2002.

      Detroit Edison and Consumers are parties to an Electric Coordination Agreement providing for emergency assistance, coordination of operations and planning for bulk power supply, with energy interchanged at nine interconnections. Detroit Edison and Consumers also have interchange agreements to exchange electric energy through 12 interconnections with FirstEnergy, Indiana Michigan Power Company, Northern Indiana Public Service Company and Ontario Hydro. In addition, Detroit Edison has interchange

13

agreements for the exchange of electric energy with Michigan South Central Power Agency, Rouge Steel Company and the City of Wyandotte.

      Detroit Edison also purchases energy from cogeneration facilities and other small power producers. Energy purchased from cogeneration facilities and small power producers amounted to $34 million, $31 million and $31 million for 1999, 1998 and 1997, respectively, and is currently estimated at $43 million for 2000.

      Detroit Edison’s electric generating plants are interconnected by a transmission system operating at up to 345 kilovolts through 37 transmission stations. As of December 31, 1999, electric energy was being distributed in Detroit Edison’s service area through 616 substations over 3,682 distribution circuits.

      Because Detroit Edison must currently import power to meet peak loads in the summer, transmission capacity is a necessary requirement to serve customers reliably during peak load periods. As a result of certain transmission procedures, there continues to be uncertainty surrounding the ability of Detroit Edison to import power reliably into Michigan. To relieve this uncertainty, additional efforts to secure firm transmission rights continue to be necessary, as well as additional in-state generating capability.

      Detroit Edison acquired significant additional commitments in 1999 from other utilities, and modified operating practices to provide flexibility to respond to increasing uncertainties of load and market conditions. Detroit Edison also added 550 MW of gas-fired combustion turbine peakers, and completed the conversion of the Conners Creek Plant to natural gas fuel.

Non-Regulated

      Non-regulated property primarily consists of a coke oven battery facility and a coal processing facility located in River Rouge, Michigan, and a coke oven battery facility in Burns Harbor, Indiana, along with 22 landfill gas projects located throughout the United States.

Item 3 — Legal Proceedings.

      Detroit Edison, in the ordinary course of its business, is involved in a number of suits and controversies including claims for personal injuries and property damage and matters involving zoning ordinances and other regulatory matters. As of December 31, 1999, Detroit Edison was named as defendant in 164 lawsuits involving claims for personal injuries and property damage and had been advised of 29 other potential claims not evidenced by lawsuits.

      From time to time, Detroit Edison has paid nominal penalties which were administratively assessed by the United States Coast Guard, United States Department of Transportation under the Federal Water Pollution Control Act, as amended, with respect to minor accidental oil spills at Detroit Edison’s power plants into navigable waters

14

of the United States. Payment of such penalties represents full disposition of these matters.

      See “Note 12 — Commitments and Contingencies” and “Environmental Matters, Detroit Edison, Conners Creek” herein for additional information.

15

Item 4 — Submission of Matters to a Vote of Security Holders.

      (a) At a special meeting of the holders of Common Stock of the Company held on December 20, 1999, a proposal to approve the issuance of shares of common stock, without par value, of the Company pursuant to the Agreement and Plan of Merger, dated as of October 4, 1999, as amended, among the Company, MCN, and DTE Enterprises, Inc., a wholly owned subsidiary of the Company, pursuant to which MCN will be merged with and into DTE Enterprises and will become a wholly owned subsidiary of the Company was ratified with the votes shown:

For	Against		Abstain
99,767,427		4,621,731		1,671,678

PART II

Item 5 — Market for Registrant’s Common Equity and Related Stockholder Matters.

      The Company’s Common Stock is listed on the New York Stock Exchange, which is the principal market for such stock, and the Chicago Stock Exchange. The following table indicates the reported high and low sales prices of the Company’s Common Stock on the Composite Tape of the New York Stock Exchange and dividends paid per share for each quarterly period during the past two years:

				Dividends
		Price Range		Paid
Calendar Quarter		High	Low	Per Share
1998	First Second Third Fourth	39-5/8 42 45-5/16 49-1/4	33-1/2 37-11/16 39-3/16 41-7/16	$	0.515 0.515 0.515 0.515
1999	First Second Third Fourth	43-3/4 44-11/16 41-7/8 37-5/16	37-15/16 38-1/4 35-3/16 31-1/16	$	0.515 0.515 0.515 0.515

      At December 31, 1999, there were 145,041,324 shares of the Company’s Common Stock outstanding. These shares were held by a total of 103,858 shareholders of record.

      The Company’s By-Laws provide that Chapter 7B of the Michigan Business Corporation Act (“Act”) does not apply to the Company. The Act regulates shareholder rights when an individual’s stock ownership reaches at least 20 percent of a Michigan corporation’s outstanding shares. A shareholder seeking control of the Company cannot require the Company’s Board of Directors to call a meeting to vote on issues related to

16

corporate control within 10 days, as stipulated by the Act. See “Note 7 — Shareholders’ Equity” for additional information, including information concerning the Rights Agreement, dated as of September 23, 1997.

      The amount of future dividends will depend on the Company’s earnings, financial condition and other factors, including the effects of utility restructuring and the transition to competition, each of which is periodically reviewed by the Company’s Board of Directors and the successful completion of the pending merger with MCN.

      Pursuant to Article I, Section 8. (c) and Article II, Section 3.(c) of the Company’s By-laws, as amended through May 1, 1999, notice is given that the 2001 Annual Meeting of the Company’s Common Shareholders will be held on Wednesday, April 25, 2001.

Item 6 — Selected Financial Data.

				Year Ended December 31
		1999		1998		1997		1996		1995
				(Millions, except per share amounts)
Operating Revenues		$	4,728	$	4,221	$	3,764	$	3,645	$	3,636
Net Income		$	483	$	443	$	417	$	309	$	406
Earnings Per Common Share — Basic and Diluted		$	3.33	$	3.05	$	2.88	$	2.13	$	2.80
Dividends Declared Per Share of Common Stock		$	2.06	$	2.06	$	2.06	$	2.06	$	2.06
At year end:
	Total Assets	$	12,316	$	12,088	$	11,223	$	11,015	$	11,131
	Long-Term Debt Obligations (including capital leases) and Redeemable Preferred and Preference Stock Outstanding	$	4,052	$	4,323	$	4,058	$	4,038	$	4,004

17

Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

GROWTH

To sustain long-term earnings growth of 6% annually, DTE Energy Company (Company) has developed a business strategy focused on its core competencies, consisting of expertise in developing, managing and operating energy assets, including coal sourcing, blending and transportation skills. As part of this strategy, it was expected that one new line of business would be developed in 1999 through acquisition or start-up.

As discussed in Note 2, the Company and MCN Energy Group Inc. (MCN) have entered into a merger agreement. Subject to the receipt of all regulatory approvals, and the satisfaction of other agreed upon conditions, the merger is expected to be completed in the first half of 2000. The Company expects that completion of the merger will result in the issuance of approximately 30 million additional shares of its common stock and approximately $1.4 billion in external financing. The merger is expected to create a fully integrated electric and natural gas company that would be able to achieve an average of $60 million in after-tax cost savings per year during the first 10 years of the merger due to anticipated cost reductions. This business combination is also expected to be accretive by $0.05 to the Company’s earnings per share for the year 2001, and is expected to strongly support the Company’s commitment to a long-term earnings growth rate of 6%. The merger is expected to permit the Company to be responsive to competitive pressures. The external financing needs of the merger may create a sensitivity to interest rate changes; and the Company will need to successfully integrate the two operations in order to be able to service the expected debt requirements and achieve aggregate operating cost reductions.

The Company is building a portfolio of growth businesses that leverage its skills and build upon key customer relationships. These growth businesses include on-site energy projects and services, coal transportation and processing, and energy marketing and trading. These businesses contributed $69 million to Company earnings in 1999; the earnings contribution is expected to increase in the future.

The Company’s long-term growth strategy recognizes the fact that competition, new technologies and environmental concerns will have a significant impact on reshaping the electric utility industry. As a result, the Company is investing in new energy-related technologies such as distributed generation, including fuel cells, and renewable sources of energy.

The Company believes that its financial and technological resources, experience in the energy field and strategic growth plan position it well to compete in the changing energy markets, as competition is introduced in Michigan and across the United States.

18

ELECTRIC INDUSTRY RESTRUCTURING

The Detroit Edison Company (Detroit Edison), the principal operating subsidiary of the Company, is subject to regulation by the Michigan Public Service Commission (MPSC) and the Federal Energy Regulatory Commission (FERC). Michigan legislators and regulators have focused on competition and Electric Choice in the Michigan electric public utility industry. Electric Choice would give all retail customers the opportunity to access competitive generation resources. The MPSC is committed to opening the electric generation market in Michigan to competition and as a result has issued several Orders relating to restructuring and competition.

Various bills have been introduced and proposed for introduction at the federal level and in the Michigan Legislature addressing competition in the electric markets. The Company and Detroit Edison are reviewing these bills and continue to work with the parties involved to develop proposals that are fair for the Company and its shareholders. While the impacts of the adoption and implementation of one or more of these legislative proposals are unknown, they may include generation divestiture, securitization, and possible reductions in earnings. In the meantime, Detroit Edison is voluntarily proceeding with the implementation of Electric Choice as provided for in MPSC Orders and pursuing the recovery of stranded costs.

Michigan Public Service Commission

Background

Details on restructuring the electric generation market began to emerge in 1996 with the issuance of a MPSC Staff Report on Electric Industry Restructuring. MPSC Orders issued since that time have stated that Michigan utilities should recover stranded costs during a transition period ending December 31, 2007.

Restructuring Orders

MPSC Orders issued in 1997 facilitated restructuring, but left several issues unresolved. Due to the uncertainty regarding the future price of electricity, the MPSC indicated a true-up mechanism should be established to ensure that Detroit Edison did not over-recover its stranded costs. The MPSC also established that during the transition period, affiliates of out-of-state utilities could not be alternative suppliers without reciprocal arrangements, but unaffiliated marketers could be an alternative supplier without providing reciprocal service in another service territory.

MPSC Orders issued in 1998 identified a phased-in approach to restructuring, whereby Detroit Edison would implement Electric Choice in 225 megawatt (MW) blocks of power through the transition period, with 1,125 MW, or approximately 12.5% of total load, made available at the end of the transition period, with all remaining load available for direct access on January 1, 2002. Detroit Edison has received MPSC approval of accelerated amortization of the Fermi 2 nuclear plant. As discussed in Note 3, the December 28, 1998 MPSC Order, while granting Detroit Edison’s request, imposed several conditions for the recovery of Fermi 2 costs.

19

In March 1999, Detroit Edison filed an application with the MPSC for a review of its stranded costs, including Electric Choice implementation costs. MPSC staff and intervenors have made filings in opposition to certain of Detroit Edison’s proposals for the recovery of stranded costs. A final order is not expected before the end of the first quarter of 2000. While uncertainties exist regarding the ultimate amount of costs to be recovered, including potential disallowances for the recovery of recorded regulatory assets, recovery of costs to be incurred to implement Electric Choice, and recovery of other stranded costs, the MPSC has ruled that stranded costs are recoverable.

In July 1999, the Association of Businesses Advocating Tariff Equity (ABATE) made a filing with the MPSC indicating that Detroit Edison’s retail rates produce approximately $333 million of excess revenues. Of this amount, approximately $202 million is related to ABATE’s proposed reversal of the December 28, 1998 MPSC Order authorizing the accelerated amortization of Fermi 2. Detroit Edison supports a revenue deficiency of $33 million. The MPSC staff concluded that no revenue sufficiency exists when Detroit Edison’s pending required review of its depreciation rates is taken into account. Detroit Edison requested an increase of $66 million in annual depreciation expense with no corresponding increase in rates. The Michigan Attorney General proposes the reversal of the December 28, 1998 Fermi 2 Amortization Order. A final MPSC order is not expected until the end of the first quarter of 2000. Detroit Edison is unable to predict the outcome of this proceeding.

Electric Choice

On June 29, 1999, the Michigan Supreme Court, on a 4-3 vote, issued an opinion determining that the MPSC lacked authority to order experimental retail wheeling in the context of an Electric Choice program. The court reversed an earlier Michigan Court of Appeals opinion finding such authority and vacated two MPSC orders directing implementation of the experimental program. The court held that the MPSC possesses no common law powers and may only exercise authority clearly conferred upon it by the Legislature. It stated that retail wheeling issues involve many policy concerns and stated that the Legislature, not the court, is the body that must consider and weigh the economic and social costs, and benefits of electric restructuring.

In September 1999, Detroit Edison filed a letter with the MPSC reaffirming the decision to expeditiously move ahead with the voluntary implementation of Electric Choice. In September 1999, the bidding on 225 MW was fully subscribed. The second and third bid periods that ended in November 1999 and January 2000, respectively, were also fully subscribed. Two additional bidding phases are contemplated, with 225 MW each closing in March and November 2000.

The Electric Choice Program began in December 1999, when Detroit Edison delivered energy from an alternate supplier in the 90 MW portion of the program. However, several technical issues still remain to be resolved before Electric Choice can be fully implemented. Detroit Edison has spent approximately $29 million through December 31, 1999 and estimates that expenditures of up to $120 million may be required through 2001 to fully implement the program, and is currently deferring the costs as a regulatory asset.

20

Detroit Edison anticipates that Electric Choice will result in a decrease in annual sales as well as a decrease in peak demand over the next five years. These decreases are not expected to have a significant impact on the Company’s net income due to the opportunity for non-regulated sales outside of Detroit Edison’s service territory.

Federal Energy Regulatory Commission

Detroit Edison is regulated at the federal level by the FERC with respect to accounting, sales for resale in interstate commerce, certain transmission services, issuances of securities, licensing of hydro and pumping stations and other matters. The FERC, as a policy matter, believes that transmission should be made available on a non-discriminatory basis.

In a Final Rule issued in December 1999, the FERC required that all public utilities that own, operate or control interstate transmission file by October 15, 2000, a proposal for a Regional Transmission Organization (RTO) or, alternatively, a description of any efforts made by the utility to participate in an existing RTO or the reasons for not participating and any obstacles to such participation, and any plans for further work toward participation. Any proposed RTO is to be operational by December 15, 2001. The FERC said it wants RTOs in place nationwide to facilitate the development of an open and more competitive market in bulk power sales of electricity. A public utility that is a member of an existing transmission entity that conforms to Independent System Operator (ISO) principles identified by the FERC would have until January 15, 2001 to explain the extent to which the organization meets the minimum standards for a RTO.

In June 1999, Detroit Edison, along with Consumers Energy Co., the American Electric Power Service Corp., FirstEnergy Corp., and Virginia Electric and Power Co., filed applications with FERC requesting approval of the Alliance RTO (Alliance). If approved by the FERC, the Alliance would operate over 43,000 miles of transmission lines in nine states. The Alliance companies hope to have the RTO begin operations in about 12 to 18 months after FERC approval.

The Alliance indicated it will ensure independent and nondiscriminatory operation of the regional grid, and provide flexibility to current and potential future members to allow them to divest their transmission assets if they so desire. The Alliance indicated that a separate for-profit transmission company, or transco, is a possible end-state and could be an attractive business model for independent management of transmission assets.

On December 20, 1999, the FERC issued an order conditionally approving the Alliance proposal, but indicated that certain elements needed modification or further development. The FERC also indicated that it would address the proposed tariff in a future order, but indicated in this order that the existing tariff included inappropriate multiple rates unacceptable to the FERC. It also indicated concerns with the governance structure and the regional configuration, believing that it may have created a potential barrier to east-west power transactions.

21

The FERC directed the Alliance to make a compliance filing, but did not include a deadline for this filing.

LIQUIDITY AND CAPITAL RESOURCES

Cash From Operating Activities

Net cash from operating activities, which is the Company’s primary source of liquidity, was $1,097 million in 1999, $834 million in 1998 and $905 million in 1997. Net cash from operating activities increased in 1999 due primarily to higher net income and non-cash items and lower cash used for current assets and liabilities. Net cash from operating activities decreased in 1998 compared to 1997 due primarily to increased accounts receivable and other non-cash items.

Cash Used for Investing Activities

Net cash used for investing activities was lower in 1999 due to lower investments in non-regulated businesses partially offset by increased plant and equipment expenditures by Detroit Edison. Net cash used for investing activities was higher in 1998 due to increased plant and equipment expenditures and non-regulated investments in coke oven batteries.

Cash requirements for 1999 Detroit Edison capital expenditures were $638 million. Detroit Edison’s cash requirements for capital expenditures are expected to be approximately $2.5 billion for the period 2000 through 2004, and are expected to be financed from operating cash flows.

Cash requirements for 1999 non-regulated investments and capital expenditures were $130 million. Excluding the effects of the planned merger with MCN, cash requirements for non-regulated investments and capital expenditures are expected to be approximately $1.1 billion for the period 2000 through 2004. Significant non-regulated investments are expected to be externally financed.

In February 2000, the Company’s board of directors authorized the repurchase of up to 10 million common shares. Stock purchases will be made from time to time on the open market or through negotiated transactions. The current program’s timeframe will depend on market conditions and is tentatively set to not exceed $100 million. Consistent with prior Company commitments to repurchase shares when funds were available, the Company has reduced its 2000 capital commitment by $100 million.

Cash (Used for) From Financing Activities

Net cash used for Company financing activities was $426 million in 1999 due to higher redemptions and reduced issuances of long-term debt.

Net cash from Company financing activities was higher in 1998 due to increases in long- and short-term borrowings, partially offset by redemptions of preferred stock and long-term debt.

22

The following securities were issued and redeemed in 1999:

Securities Issued			(Millions)
Mortgage Bonds
		1999 Series A 5.55% issued in September	$	118
		1999 Series B 4.7% (variable) issued in August		40
		1999 Series C 4.73% issued in September		67
		1999 Series D floating rate issued in August		40
Total Issued			$	265
Securities Redeemed
Mandatory Redemptions
	Mortgage Bonds
		1990 Series A, B, C 7.9%-8.4% redeemed in March	$	19
		1993 Series D 6.45% redeemed in April		100
		1993 Series B 6.83% redeemed in December		50
		1993 Series E 6.83% redeemed in December		50
	Non-Recourse Debt			80
Early Redemptions
	Mortgage Bonds
		Series KKP 7.3% - 7.5% redeemed in September		40
		1992 Series D 8.3% redeemed in November		24
		1989 Series CC 7.5% redeemed in December		67
	Unsecured Installment Sales Contracts
		Series A 1989 7.75% redeemed in December		100
		Series A 1989B 7.875% redeemed in December		18
Total Redeemed			$	548

YEAR 2000

The Company spent approximately $85 million on the Year 2000 program through December 31, 1999. Year 2000 modification costs had no material impact on operating results or cash flows. No significant additional spending is anticipated since the Company and Detroit Edison experienced no Year 2000 related failures of mission critical systems during the rollover to the new millennium. Though there can be no assurances that Year 2000 issues can be totally eliminated, the Company and Detroit Edison anticipate no further impact on financial position, liquidity or results of operations resulting from Year 2000 issues. In addition, no assurances can be given that the systems of vendors, interconnected utilities and customers will not result in Year 2000 problems.

23

ENVIRONMENTAL MATTERS

Protecting the environment from damage, as well as correcting past environmental damage, continues to be a focus of state and federal regulators. Legislation and/or rulemaking could further impact the electric utility industry including Detroit Edison. The U.S. Environmental Protection Agency (EPA) and the Michigan Department of Environmental Quality have aggressive programs regarding the clean-up of contaminated property. Detroit Edison anticipates that it will be periodically included in these types of environmental proceedings.

The EPA has issued ozone transport regulations and final new air quality standards relating to ozone and particulate air pollution. In September 1998, the EPA issued a State Implementation Plan (SIP) call, giving states a year to develop new regulations to limit nitrogen oxide emissions because of their contribution to ozone formation. The EPA draft proposal suggests most emission reductions should come from utilities. If Michigan follows the EPA’s recommendations, it is estimated that Detroit Edison will incur $300 million of capital expenditures to comply. Both the ozone transport regulations and the new air quality standards have been upheld in legal challenges in the U.S. Court of Appeals. Michigan has proposed regulations to address the ozone transport issue that would result in capital expenditures of approximately $100 million less than the EPA’s recommendations. Until the legal issues are resolved and the state issues its regulations, it is impossible to predict the full impact of the SIP call. Detroit Edison is unable to predict what effect, if any, restructuring of the electric utility industry would have on recoverability of such environmental costs.

MARKET RISK

Detroit Edison had investments valued at market of $361 million and $309 million in three nuclear decommissioning trust funds at December 31, 1999 and 1998, respectively. At December 31, 1999, these investments consisted of approximately 37% in fixed debt instruments, 59% in publicly traded equity securities and 4% in cash equivalents. At December 31, 1998, these investments consisted of approximately 33% in fixed debt instruments, 63% in publicly traded equity securities and 4% in cash equivalents. A hypothetical 10% increase in interest rates and a 10% decrease in equity prices quoted by stock exchanges would result in an $11 million and $9 million reduction in the fair value of debt and a $21 million and $20 million reduction in the fair value of equity securities held by the trusts at December 31, 1999 and 1998, respectively.

A hypothetical 10% decrease in interest rates would increase the fair value of long-term debt from $4 billion to $4.5 billion at December 31, 1999 and from $4.8 billion to $5.3 billion at December 31, 1998.

DTE Energy Trading, Inc. (DTE ET), an indirect wholly owned subsidiary of the Company, provides price risk management services utilizing energy commodity derivative instruments. The Company measures the risk inherent in DTE ET’s portfolio utilizing Value at Risk (VaR) analysis and other methodologies, which simulate forward price curves in electric power markets to quantify estimates of the magnitude and probability of

24

potential future losses related to open contract positions. The Company reports VaR as a percentage of its earnings, based on a 95% confidence interval, utilizing 10-day holding periods. At December 31, 1999 and 1998, DTE ET’s VaR from its power marketing and trading activities was less than 1% of the Company’s consolidated “Income Before Income Taxes” for the years ended December 31, 1999 and 1998. The VaR model uses the variance-covariance statistical modeling technique, and implied and historical volatilities and correlations over the past 20-day period. The estimated market prices used to value these transactions for VaR purposes reflect the use of established pricing models and various factors including quotations from exchanges and over-the-counter markets, price volatility factors, the time value of money, and location differentials. For further information, see Notes 1 and 11.

RESULTS OF OPERATIONS

Net income for 1999 was up $40 million over 1998 earnings due primarily to lower income taxes resulting from tax credits generated by non-regulated businesses and the effects of the end of the Fermi 2 phase-in plan in 1998.

Net income for 1998 was up $26 million over 1997 earnings due to lower income taxes resulting from tax credits generated by non-regulated businesses.

Operating Revenues

Operating revenue was $4.7 billion, up 12% from 1998 operating revenue of $4.2 billion. Operating revenues increased (decreased) due to the following:

			1999			1998
			(Millions)
Detroit Edison Rate change			$	(25	)	$	(8	)
	System sales volume and mix			151			220
	Wholesale sales			(19	)		51
	Fermi 2 performance disallowances			34			(11	)
	Other — net			4			(7	)
		Total Detroit Edison		145			245
Non-regulated DTE Energy Resources				147			163
	DTE Energy Trading			209			43
	Other — net			6			6
		Total Non-Regulated		362			212
Total			$	507		$	457

25

Detroit Edison kilowatt-hour (kWh) sales for 1999 and the percentage change by year were as follows:

		1999		1999			1998
		(Billions of kWh)
		Sales
Residential			14.1		2.3	%		6.6	%
Commercial			19.5		3.4			5.0
Industrial			15.6		6.4			2.5
Other (primarily sales for resale)			2.6		10.1			27.1
	Total System		51.8		4.3			5.5
Wholesale sales			3.7		(29.5	)		46.8
	Total		55.5		1.1			8.4

In 1999, residential sales increased due to more heating demand, increased usage, and growth in the customer base. Commercial and industrial sales increased due to favorable economic conditions. In addition, industrial sales increased due to sales of replacement energy to the Ford Rouge plant. Wholesale sales decreased due to lower demand for energy and decreased availability of energy for sale over native load.

In 1998, residential sales increased due to more cooling demand and growth in the customer base. Commercial sales increased due to more cooling demand and favorable economic conditions. Industrial sales increased due to higher usage. Wholesale sales increased due to greater demand for energy and increased availability of energy for sale.

Non-regulated revenues were higher due to an increased level of operations, primarily DTE Energy Trading, and the addition of new businesses.

26

Operating Expenses

Fuel and Purchased Power

Net system output and average fuel and purchased power unit costs per megawatthour (MWh) for Detroit Edison were as follows:

		1999		1998		1997
		(Thousands of MWh)
Power plant generation
	Fossil		43,016		44,091		42,162
	Nuclear		9,484		7,130		5,523
Purchased power			6,959		7,216		6,146
Net system output			59,459		58,437		53,831
Average unit cost ($/MWh) Generation		$	12.51	$	12.76	$	12.94
	Purchased Power	$	54.80	$	42.26	$	26.98

In 1999, fuel and purchased power expense increased due to higher purchased power unit costs and a 1.7% increase in net system output. The increase was partially offset by lower fuel unit costs primarily resulting from increased usage of low-cost nuclear fuel.

In 1998, fuel and purchased power expense increased for Detroit Edison due to higher purchased power unit costs as a result of price volatility during periods of unseasonably warm summer weather and an 8.6% increase in system output. These increases were partially offset by lower unit costs as a result of increased usage of low-cost nuclear fuel.

In 1999 and 1998, non-regulated purchased power expense increased due to the operations of DTE Energy Trading.

Operation and Maintenance

In 1999, operation and maintenance expenses increased $192 million. Higher non-regulated expenses of $162 million were due to an increased level of operations and the addition of new businesses. Higher Detroit Edison expenses of $30 million were due to increased system and customer enhancements ($22 million), higher Year 2000 expenses ($10 million), higher employee benefit costs ($9 million), and generation reliability and maintenance work to address unplanned outages ($8 million), partially offset by lower storm expense ($19 million).

In 1998, operation and maintenance expenses increased $287 million. Higher non-regulated subsidiary expenses of $184 million were due to the increased level of non-regulated operations and the addition of new businesses. Higher Detroit Edison expenses of $103 million were due to higher Year 2000 expenses ($32 million), the 1997 storm

27

expense deferral ($30 million), 1998 storm expense ($21 million), a 1997 insurance recovery ($15 million), 1997 storm amortization ($14 million), and the Conners Creek Power Plant restart ($13 million), partially offset by cost reductions ($22 million).

Depreciation and Amortization

In 1999, depreciation and amortization expense was higher due to higher levels of plant in service, the accelerated amortization of unamortized nuclear costs, the adjustment recording one-half of utility earnings in excess of the allowed 11.6% return on equity sharing threshold as additional nuclear cost amortization, and increased Fermi 2 decommissioning funding due to higher revenues.

In 1998, depreciation and amortization expense increased due primarily to increases in property, plant and equipment. These increases were almost entirely offset by lower Detroit Edison amortization of regulatory assets.

Interest Expense

In 1999, interest expense increased due to the write-off of unamortized bond issuance expense for early redemption of securities and higher short-term borrowing costs.

Interest expense increased in 1998 due primarily to the issuance of debt to finance asset acquisitions of non-regulated subsidiaries and the issuance of debt to redeem Detroit Edison’s preferred stock.

Income Taxes

Income tax expense for the Company decreased in 1999 and 1998 due primarily to increased utilization of alternate fuel credits generated from non-regulated businesses. The majority of alternate fuel credits are available through 2002, while others have been extended through 2007. The end of the Fermi 2 phase-in plan also contributed to the decrease in income tax expense for 1999.

FORWARD-LOOKING STATEMENTS

Certain information presented herein is based on the expectations of the Company and Detroit Edison, and, as such, is forward-looking. The Private Securities Litigation Reform Act of 1995 encourages reporting companies to provide analyses and estimates of future prospects and also permits reporting companies to point out that actual results may differ from those anticipated.

Actual results for the Company and Detroit Edison may differ from those expected due to a number of variables including, but not limited to, interest rates, the level of borrowings, weather, actual sales, the effects of competition and the phased-in implementation of Electric Choice, the implementation of utility restructuring in Michigan (which involves pending and proposed regulatory and legislative proceedings, the recovery of stranded costs, and possible reductions in earnings), environmental and nuclear requirements, the impact of FERC proceedings and regulations, and the success of non-regulated lines of business. In addition, expected results will be affected by the Company’s pending merger with MCN.

28

While the Company and Detroit Edison believe that estimates given accurately measure the expected outcome, actual results could vary materially due to the variables mentioned, as well as others.

29

Item 8 — Financial Statements and Supplementary Data.

      The following consolidated financial statements and schedules are included herein.

	Page
Independent Auditors’ Report	31
DTE Energy Company:
Consolidated Statement of Income	32
Consolidated Statement of Cash Flows	33
Consolidated Balance Sheet	34
Consolidated Statement of Changes in Shareholders’ Equity	36
The Detroit Edison Company:
Consolidated Statement of Income	38
Consolidated Statement of Cash Flows	39
Consolidated Balance Sheet	40
Consolidated Statement of Changes in Shareholders’ Equity	42
Notes to Consolidated Financial Statements	43
Schedule II — Valuation and Qualifying Accounts	89

Note: Detroit Edison’s financial statements are presented here for ease of reference and are not considered to be part of Part II — Item 8 of the Company’s report.

30

INDEPENDENT AUDITORS’ REPORT

To the Boards of Directors and Shareholders of
DTE Energy Company and
The Detroit Edison Company

We have audited the consolidated balance sheets of DTE Energy Company and subsidiaries and of The Detroit Edison Company and subsidiaries (together, the “Companies”) as of December 31, 1999 and 1998, and the related consolidated statements of income, cash flows, and changes in shareholders’ equity for each of the three years in the period ended December 31, 1999. Our audits also included the financial statement schedules listed in the Index at Item 8. These financial statements and financial statement schedules are the responsibility of the Companies’ management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements referred to above present fairly, in all material respects, the financial position of DTE Energy Company and subsidiaries and of The Detroit Edison Company and subsidiaries at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements of the Companies taken as a whole, present fairly in all material respects the information set forth therein.

DELOITTE & TOUCHE LLP

Detroit, Michigan
January 26, 2000

31

DTE Energy Company
Consolidated Statement of Income
(Millions, Except Per Share Amounts)

			Year Ended December 31
			1999		1998		1997
Operating Revenues			$	4,728	$	4,221	$	3,764
Operating Expenses
	Fuel and purchased power			1,335		1,063		837
	Operation and maintenance			1,480		1,288		1,001
	Depreciation and amortization			735		661		660
	Taxes other than income			277		272		265
		Total Operating Expenses		3,827		3,284		2,763
Operating Income				901		937		1,001
Interest Expense and Other
	Interest expense			340		319		297
	Preferred stock dividends of subsidiary			—		6		12
	Other — net			18		15		18
		Total Interest Expense and Other		358		340		327
Income Before Income Taxes				543		597		674
Income Taxes				60		154		257
Net Income			$	483	$	443	$	417
Average Common Shares Outstanding				145		145		145
Earnings per Common Share — Basic and Diluted			$	3.33	$	3.05	$	2.88

(See Notes to Consolidated Financial Statements.)

32

DTE Energy Company
Consolidated Statement of Cash Flows
(Millions)

				Year Ended December 31
				1999			1998			1997
Operating Activities
	Net Income			$	483		$	443		$	417
	Adjustments to reconcile net income to net cash from operating activities:
		Depreciation and amortization			735			661			660
		Other			(90	)		(146	)		(75	)
		Changes in current assets and liabilities:
			Restricted cash		(10	)		(67	)		(54	)
			Accounts receivable		(94	)		(84	)		(36	)
			Inventories		(5	)		(35	)		(39	)
			Payables		30			99			(3	)
			Other		48			(37	)		35
		Net cash from operating activities			1,097			834			905
Investing Activities
	Plant and equipment expenditures				(739	)		(589	)		(484	)
	Investment in non-regulated businesses				(29	)		(408	)		(216	)
		Net cash used for investing activities			(768	)		(997	)		(700	)
Financing Activities
	Issuance of long-term debt				265			763			250
	Increase in short-term borrowings				156			189			32
	Redemption of long-term debt				(548	)		(255	)		(196	)
	Redemption of preferred stock				—			(150	)		—
	Dividends on common stock				(299	)		(299	)		(299	)
		Net cash (used for) from financing activities			(426	)		248			(213	)
Net (Decrease) Increase in Cash and Cash Equivalents					(97	)		85			(8	)
Cash and Cash Equivalents at Beginning of the Year					130			45			53
Cash and Cash Equivalents at End of the Year				$	33		$	130		$	45
Supplementary Cash Flow Information
	Interest paid (excluding interest capitalized)			$	340		$	309		$	290
	Income taxes paid				152			160			243
	New capital lease obligations				3			52			34

(See Notes to Consolidated Financial Statements.)

33

DTE Energy Company
Consolidated Balance Sheet
(Millions, Except Per Share Amounts and Shares)

			December 31
			1999		1998
ASSETS
Current Assets
	Cash and cash equivalents		$	33	$	130
	Restricted cash			131		121
	Accounts receivable
		Customer (less allowance for doubtful accounts of $21 and $20, respectively)		388		320
		Accrued unbilled revenues		166		153
		Other		144		131
	Inventories (at average cost)
		Fuel		175		171
		Materials and supplies		168		167
	Other			105		39
				1,310		1,232
Investments
	Nuclear decommissioning trust funds			361		309
	Other			274		261
				635		570
Property
	Property, plant and equipment			11,755		11,121
	Property under capital leases			222		242
	Nuclear fuel under capital lease			663		659
	Construction work in progress			106		156
				12,746		12,178
Less accumulated depreciation and amortization				5,598		5,235
				7,148		6,943
Regulatory Assets				2,935		3,091
Other Assets				288		252
Total Assets			$	12,316	$	12,088

(See Notes to Consolidated Financial Statements.)

34

		December 31
		1999		1998
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
	Accounts payable	$	273	$	239
	Accrued interest		57		57
	Dividends payable		75		75
	Accrued payroll		97		101
	Short-term borrowings		387		231
	Income taxes		61		69
	Current portion long-term debt		270		294
	Current portion capital leases		75		118
	Other		309		208
			1,604		1,392
Other Liabilities
	Deferred income taxes		1,925		1,888
	Capital leases		114		126
	Regulatory liabilities		262		294
	Other		564		493
			2,865		2,801
Long-Term Debt			3,938		4,197
Shareholders’ Equity
	Common stock, without par value, 400,000,000 shares authorized, 145,041,324 and 145,071,317 issued and outstanding, respectively		1,950		1,951
	Retained earnings		1,959		1,747
			3,909		3,698
Commitments and Contingencies (Notes 1, 2, 3, 4, 10, 11, 12 and 13)
Total Liabilities and Shareholders’ Equity		$	12,316	$	12,088

(See Notes to Consolidated Financial Statements.)

35

DTE Energy Company
Consolidated Statement of Changes in Shareholders’ Equity
(Millions, Except Per Share Amounts; Shares in Thousands)

		1999						1998						1997
		Shares			Amount			Shares			Amount			Shares			Amount
Detroit Edison Cumulative Preferred Stock
	Balance at beginning of year		—		$	—			1,501		$	144			1,501		$	144
	Redemption of Cumulative Preferred Stock		—			—			(1,501	)		(150	)		—			—
	Preferred stock expense		—			—			—			6			—			—
	Balance at end of year		—		$	—			—		$	—			1,501		$	144
Common Stock
	Balance at beginning of year		145,071		$	1,951			145,098		$	1,951			145,120		$	1,951
	Repurchase and retirement of common stock		(30	)		(1	)		(27	)		—			(22	)		—
	Balance at end of year		145,041		$	1,950			145,071		$	1,951			145,098		$	1,951
Retained Earnings
	Balance at beginning of year				$	1,747					$	1,611					$	1,493
	Net income					483						443						417
	Dividends declared on common stock ($2.06 per share)					(299	)					(299	)					(299	)
	Preferred stock expense					—						(6	)					—
	Other					28						(2	)					—
	Balance at end of year				$	1,959					$	1,747					$	1,611
Total Shareholders’ Equity					$	3,909					$	3,698					$	3,706

(See Notes to Consolidated Financial Statements.)

36

[This page intentionally left blank.]

37

The Detroit Edison Company
Consolidated Statement of Income
(Millions)

			Year Ended December 31
			1999		1998		1997
Operating Revenues			$	4,047	$	3,902	$	3,657
Operating Expenses
	Fuel and purchased power			1,106		1,021		837
	Operation and maintenance			1,028		998		895
	Depreciation and amortization			703		643		658
	Taxes other than income			275		270		264
		Total Operating Expenses		3,112		2,932		2,654
Operating Income				935		970		1,003
Interest Expense and Other
	Interest expense			284		277		282
	Other — net			6		15		16
		Total Interest Expense and Other		290		292		298
Income Before Income Taxes				645		678		705
Income Taxes				211		260		288
Net Income				434		418		417
Preferred Stock Dividends				—		6		12
Net Income Available for Common Stock			$	434	$	412	$	405

(See Notes to Consolidated Financial Statements.)

38

The Detroit Edison Company
Consolidated Statement of Cash Flows
(Millions)

				Year Ended December 31
				1999			1998			1997
Operating Activities
	Net Income			$	434		$	418		$	417
	Adjustments to reconcile net income to net cash from operating activities:
		Depreciation and amortization			703			643			658
		Other			2			(217	)		(62	)
		Changes in current assets and liabilities:
			Accounts receivable		(70	)		(51	)		(18	)
			Inventories		(6	)		(28	)		(16	)
			Payables		17			64			(14	)
			Other		(52	)		(25	)		41
		Net cash from operating activities			1,028			804			1,006
Investing Activities
	Plant and equipment expenditures				(638	)		(548	)		(467	)
		Net cash used for investing activities			(638	)		(548	)		(467	)
Financing Activities
	Issuance of long-term debt				265			200			—
	Increase (decrease) in short-term borrowings				131			231			(10	)
	Redemption of long-term debt				(468	)		(219	)		(185	)
	Redemption of preferred stock				—			(150	)		—
	Dividends on common and preferred stock				(319	)		(328	)		(331	)
		Net cash used for financing activities			(391	)		(266	)		(526	)
Net (Decrease) Increase in Cash and Cash Equivalents					(1	)		(10	)		13
Cash and Cash Equivalents at Beginning of the Period					5			15			2
Cash and Cash Equivalents at End of the Period				$	4		$	5		$	15
Supplementary Cash Flow Information
	Interest paid (excluding interest capitalized)			$	284		$	269		$	277
	Income taxes paid				276			292			277
	New capital lease obligations				3			52			34

(See Notes to Consolidated Financial Statements.)

39

The Detroit Edison Company
Consolidated Balance Sheet
(Millions, Except Per Share Amounts and Shares)

			December 31
			1999		1998
ASSETS
Current Assets
	Cash and cash equivalents		$	4	$	5
	Accounts receivable
		Customer (less allowance for doubtful accounts of $20 for 1999 and 1998)		316		307
		Accrued unbilled revenues		166		153
		Other		138		90
	Inventories (at average cost)
		Fuel		175		171
		Materials and supplies		140		138
	Other			29		21
				968		885
Investments
	Nuclear decommissioning trust funds			361		309
	Other			34		74
				395		383
Property
	Property, plant and equipment			11,204		10,610
	Property under capital leases			221		242
	Nuclear fuel under capital lease			663		659
	Construction work in progress			4		118
				12,092		11,629
Less accumulated depreciation and amortization				5,526		5,201
				6,566		6,428
Regulatory Assets				2,935		3,091
Other Assets				187		200
Total Assets			$	11,051	$	10,987

(See Notes to Consolidated Financial Statements.)

40

	December 31
	1999			1998
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	224		$	211
Accrued interest		54			54
Dividends payable		80			80
Accrued payroll		90			86
Short-term borrowings		362			231
Income taxes		84			60
Current portion long-term debt		194			219
Current portion capital leases		75			118
Other		159			203
		1,322			1,262
Other Liabilities
Deferred income taxes		1,879			1,846
Capital leases		114			126
Regulatory liabilities		262			294
Other		562			484
		2,817			2,750
Long-Term Debt		3,284			3,462
Shareholders’ Equity
Common stock, $10 par value, 400,000,000 shares                authorized, 145,119,875 issued and outstanding		1,451			1,451
Premium on common stock		548			548
Common stock expense		(48	)		(48	)
Retained earnings		1,677			1,562
		3,628			3,513
Commitments and Contingencies (Notes 1, 2, 3, 9, 10, 11 and 12)
Total Liabilities and Shareholders’ Equity	$	11,051		$	10,987

(See Notes to Consolidated Financial Statements.)

41

The Detroit Edison Company
Consolidated Statement of Changes in Shareholders’ Equity
(Millions, Except Per Share Amounts; Shares in Thousands)

			1999					1998						1997
			Shares		Amount			Shares			Amount			Shares		Amount
Cumulative Preferred Stock
	Balance at beginning of year			—	$	—			1,501		$	144			1,501	$	144
	Redemption of Cumulative Preferred Stock			—		—			(1,501	)		(150	)		—		—
	Preferred stock expense			—		—			—			6			—		—
	Balance at end of year			—	$	—			—		$	—			1,501	$	144
Common Stock				145,120	$	1,451			145,120		$	1,451			145,120	$	1,451
Premium on Common Stock					$	548					$	548				$	548
Common Stock Expense					$	(48	)				$	(48	)			$	(48	)
Retained Earnings
	Balance at beginning of year				$	1,562					$	1,478				$	1,392
	Net income					434						418					417
	Dividends declared
		Common stock ($2.20 per share)				(319	)					(319	)				(319	)
		Cumulative Preferred Stock*				—						(6	)				(12	)
	Preferred stock expense					—						(6	)				—
	Other					—						(3	)				—
	Balance at end of year				$	1,677					$	1,562				$	1,478
Total Shareholders’ Equity					$	3,628					$	3,513				$	3,573

* At established rate for each series.

(See Notes to Consolidated Financial Statements.)

42

DTE Energy Company and The Detroit Edison Company
Notes to Consolidated Financial Statements

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

Corporate Structure and Principles of Consolidation

DTE Energy Company (Company), a Michigan corporation incorporated in 1995, is an exempt holding company under the Public Utility Holding Company Act. The Company has no significant operations of its own, holding instead the stock of its principal operating subsidiary, The Detroit Edison Company (Detroit Edison), an electric public utility regulated by the Michigan Public Service Commission (MPSC) and the Federal Energy Regulatory Commission (FERC), and other energy-related businesses.

All majority owned subsidiaries are consolidated. Non-majority owned investments, including investments in limited liability companies, partnerships and joint ventures are accounted for using the equity method. All significant inter-company balances and transactions have been eliminated.

In October 1999, the Company’s investee, Plug Power Inc., completed its initial public offering (IPO) of shares of common stock at $15 per share. After the IPO, the Company owned approximately 32% of Plug Power’s outstanding common stock. As a result of Plug Power’s IPO, the Company recognized its proportionate share of Plug Power’s net assets immediately after the IPO and recorded an increase of $44 million in its investment and an after-tax increase of $28 million to retained earnings with no earnings impact in 1999.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Regulation and Regulatory Assets and Liabilities

Detroit Edison’s transmission and distribution business meets the criteria of Statement of Financial Accounting Standards (SFAS) No. 71, “Accounting for the Effects of Certain Types of Regulation.” This accounting standard recognizes the cost based ratemaking process which results in differences in the application of generally accepted accounting principles between regulated and non-regulated businesses. SFAS No. 71 requires the recording of regulatory assets and liabilities for certain transactions that would have been treated as revenue and expense in non-regulated businesses. Detroit Edison’s regulatory assets and liabilities are being amortized to revenue and expense as they are included in rates. Continued applicability of SFAS No. 71 requires that rates be designed to recover specific costs of providing regulated services and products, and that it be reasonable to

43

assume that rates are set at levels that will recover a utility’s costs and can be charged to and collected from customers.

MPSC Orders issued in 1997 and 1998 altered the regulatory process in Michigan and provided a plan for transition to competition for the generation business of Detroit Edison. Therefore, effective December 31, 1998, Detroit Edison’s generation business no longer met the criteria of SFAS No. 71. Detroit Edison did not write off any regulatory assets as a result of the discontinuation of SFAS No. 71 for its generation business, since accounting guidance issued by the Financial Accounting Standards Board and its Emerging Issues Task Force permits the recording of regulatory assets which are expected to be recovered through regulated rates. A December 1998 MPSC Order authorized the recovery of an additional regulatory asset equal to the net book value of Fermi 2 at December 31, 1998, which includes recoverable income taxes, deferred tax credits and deferred amortization. See the following table of regulatory assets and liabilities, and Note 3 for further details.

Detroit Edison has recorded the following regulatory assets and liabilities at December 31:

		1999		1998
		(Millions)
Assets
	Unamortized nuclear costs	$	2,570	$	2,808
	Unamortized loss on reacquired debt		85		94
	Recoverable income taxes		201		107
	Power supply cost recovery		39		49
	1997 storm damage costs		—		15
	Electric Choice implementation costs		29		7
	Other		11		11
	Total Assets	$	2,935	$	3,091
Liabilities
	Unamortized deferred investment tax credits	$	177	$	188
	Fermi 2 capacity factor performance standard		63		86
	Other		22		20
	Total Liabilities	$	262	$	294

Unamoritized nuclear costs — See Note 3.

44

Unamortized loss on reacquired debt

In accordance with MPSC regulations applicable to Detroit Edison, the discount, premium and expense related to debt redeemed with a refinancing are amortized over the life of the replacement issue, or if related to the generation business, beginning in 2002 they will be amortized through 2007. See Note 3. Discount, premium and expense on early redemptions of debt subsequent to December 31, 1998 are charged to earnings if they relate to the generation business of Detroit Edison.

Recoverable income taxes

In 1993, the Company was required to adopt SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires that deferred income taxes be recorded at the current income tax rate for all temporary differences between the book and tax basis of assets and liabilities. Prior to 1993, only those deferred taxes that were authorized by the MPSC were recorded. Upon adoption of SFAS No. 109, the MPSC authorized the Company to record a regulatory asset providing assurance of future revenue recovery from customers for all deferred income taxes.

Power supply cost recovery (PSCR)

State legislation provides Detroit Edison a mechanism for recovery of changes in power supply costs for purchased power and generation based on a reconciliation of actual costs and usage which is subject to MPSC approval.

1997 storm damage costs

The costs of major storms in 1997 were deferred, as authorized by the MPSC, and were amortized into expense in 1998 and 1999 as they were recovered through rates.

Electric Choice implementation costs

Costs incurred to implement the Electric Choice Program are being deferred, with amortization planned to begin coincident with full implementation of the program.

Unamortized deferred investment tax credits

Investment tax credits utilized, which relate to utility property, were deferred and are amortized over the estimated composite service life of the related property.

Fermi 2 capacity factor performance standard

The MPSC has established a mechanism which provides for the disallowance of net incremental replacement power cost if Fermi 2 does not perform to certain operating criteria. A disallowance is imposed for the amount by which the Fermi 2 three-year rolling average capacity factor is less than the greater of either the average of the top 50% of U.S. boiling water reactors or 50%. An estimate of the incremental cost of replacement

45

power is required in computing the reserve for amounts due customers under this performance standard.

Cash Equivalents

For purposes of the Consolidated Statement of Cash Flows, the Company considers investments purchased with a maturity of three months or less to be cash equivalents.

Restricted Cash

Cash maintained for debt service requirements and other contractual obligations is classified as restricted cash.

Revenues

Detroit Edison records unbilled revenues for electric and steam heating services provided after cycle billings through month-end.

Property, Retirement and Maintenance, Depreciation and Amortization

A summary of property by classification at December 31 is as follows:

		1999			1998
		(Millions)
Transmission and distribution
	Property	$	5,598		$	5,354
	Construction work in progress		1			3
	Property under capital leases		4			5
	Less accumulated depreciation		(2,180	)		(2,063	)
			3,423			3,299
Generation
	Property		5,606			5,256
	Construction work in progress		3			115
	Property under capital leases		217			237
	Less accumulated depreciation		(2,747	)		(2,587	)
			3,079			3,021
	Nuclear fuel under capital lease		663			659
	Less accumulated amortization		(599	)		(551	)
			64			108

46

Non-utility
		Property		551			511
		Construction work in progress		102			38
		Property under capital leases		1			—
		Less accumulated depreciation		(72	)		(34	)
				582			515
	Total property		$	7,148		$	6,943

Utility properties are stated at original cost less regulatory disallowances and impairment losses. In general, the cost of properties retired in the normal course of business is charged to accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred, and the cost of new property installed, which replaces property retired, is charged to property accounts. Detroit Edison recognizes a provision for incremental costs of Fermi 2 refueling outages, including maintenance activities, anticipated to be incurred during the next scheduled Fermi 2 refueling outage. The annual provision for utility property depreciation is calculated on the straight-line remaining life method by applying annual rates approved by the MPSC to the average of year-beginning and year-ending balances of depreciable property by primary plant accounts. Provision for depreciation of utility plant, as a percent of average depreciable property, was 3.33%, 3.32% and 3.29% for 1999, 1998 and 1997, respectively.

Non-utility property is stated at original cost. Depreciation is computed over the estimated useful lives using straight-line and declining-balance methods.

Long-Lived Assets

Long-lived assets held and used by the Company are reviewed based on market factors and operational considerations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Software Costs

The Company capitalizes the cost of software developed for internal use. These costs are amortized on a straight-line basis over a five-year period beginning with the project’s completion.

Debt Issue Costs

The costs related to the issuance of long-term debt are amortized over the life of each issue.

47

Stock-Based Compensation

The Company accounts for stock-based compensation using the intrinsic value method. Compensation expense is not recorded for stock options granted with an exercise price equal to the fair market value at the date of grant. For grants of restricted stock, compensation equal to the market value of the shares at the date of grant is deferred and amortized to expense over the vesting period.

Accounting for Risk Management Activities

Trading activities of DTE Energy Trading, Inc. (DTE ET), an indirect wholly owned subsidiary of the Company, are accounted for using the mark-to-market method of accounting. Under such method, DTE ET’s energy trading contracts, including both transactions for physical delivery and financial instruments, are recorded at market value. The resulting unrealized gains and losses from changes in market value of open positions are recorded as other current assets or liabilities. Current period changes in the trading assets or liabilities are recognized as net gains or losses in operating revenues. The market prices used to value these transactions reflect management’s best estimate considering various factors, including closing exchange and over-the-counter quotations, time value and volatility factors underlying the commitments. Realized gains and losses from transactions settled with cash are also recognized in operating revenues. Transactions settled by physical delivery of power are recorded gross in operating revenues and fuel and purchased power expense.

Detroit Edison continues to account for its forward purchase and sale commitments and over-the-counter options on a settlement basis.

New Accounting Standard

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This statement requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. In June 1999, SFAS No. 137, “Accounting for Derivative Instruments and Hedging Activities – Deferral of the Effective Date of FASB Statement No. 133” was issued. SFAS No. 137 amends the effective date of SFAS No. 133 to fiscal years beginning after June 15, 2000, with earlier adoption encouraged. The Company will adopt this accounting standard as required by January 1, 2001, but has not yet determined the impact of this new pronouncement on the consolidated financial statements.

Reclassifications

Certain prior year balances have been reclassified to conform to the 1999 presentation.

48

NOTE 2 — MERGER AGREEMENT

On October 4, 1999, the Company entered into a definitive merger agreement with MCN Energy Group Inc. (MCN). MCN, a Michigan corporation, is primarily involved in natural gas production, gathering, processing, transmission, storage and distribution, electric power generation and energy marketing. MCN’s largest subsidiary is Michigan Consolidated Gas Company, a natural gas utility serving 1.2 million customers in more than 500 communities throughout Michigan. Shareholders of the Company have approved the issuance of the necessary shares of common stock to complete the merger and shareholders of MCN have approved the Agreement and Plan of Merger. The merger, which is also subject to a number of regulatory approvals and other agreed upon conditions, is expected to be completed in the first half of 2000. The merger agreement provides that the Company will acquire all outstanding shares of MCN for $28.50 per share in cash or 0.775 shares of Company common stock for each share of MCN common stock, subject to certain allocation procedures requiring that the aggregate number of shares of MCN common stock that will be converted into cash and the Company’s common stock will be equal to 55% and 45%, respectively, of the total number of shares of MCN common stock outstanding immediately prior to the merger. The transaction was preliminarily valued at $4.6 billion, which includes the assumption of approximately $2 billion of MCN’s debt. The Company expects to continue as an exempt public utility holding company after the completion of the merger.

NOTE 3 — REGULATORY MATTERS

Detroit Edison is subject to the primary regulatory jurisdiction of the MPSC, which, from time to time, issues its Orders pertaining to Detroit Edison’s conditions of service, rates and recovery of certain costs including the costs of generating facilities. MPSC Orders issued December 1988, January 1994, November 1997, December 1998 and March 1999, are currently in effect with respect to Detroit Edison’s rates and certain other revenue, accounting and operating-related matters.

Electric Industry Restructuring

There are ongoing proceedings for the restructuring of the Michigan electric public utility industry and the implementation of Electric Choice. During the period from 1997 through 1999, the MPSC issued several Orders relating to Electric Choice and competition.

In a December 28, 1998 Order, as clarified March 8, 1999, the MPSC authorized the accelerated amortization of the remaining net book balances (as of December 31, 1998) of Fermi 2 and its associated regulatory assets in a manner that will provide an opportunity for full recovery under current rates from bundled customers and through transition surcharges from future retail access customers, taking into account the related tax consequences of those assets, by December 31, 2007.

The December 28, 1998 Order, as clarified March 8, 1999, imposed conditions for the recovery by Detroit Edison of accelerated amortization of Fermi 2 and on March 8,

49

1999, the MPSC issued Orders clarifying several issues related to Electric Choice. As a result of the Order, as clarified, Detroit Edison:

• Reduced its base rates by approximately $94 million annually , effective January 1, 1999 and effective January 1, 2000, by an additional $15 million to reflect the expiration of the two-year extraordinary storm damage surcharge;

• Indicated it will reduce its jurisdictional retail rates by removing the Fermi 2 regulatory asset, referred to in Note 1 as unamortized nuclear costs, from rate base on a pro rata jurisdictional rate basis when such asset reaches zero, which is currently anticipated to occur January 1, 2008;

• Indicated that while it has no plans to sell Fermi 2, should such a sale occur, it will return to customers the difference between Fermi 2’s net book value (currently recorded as a regulatory asset) at the time of sale and the actual sale price; and the MPSC will be advised of a purchase of Detroit Edison during the accelerated amortization period so that the MPSC may determine whether the proposed transaction is in the public interest and properly balances the interests of investors and customers;

• Agreed that should Detroit Edison seek to abandon Fermi 2 (which Detroit Edison has no plans to do) during the accelerated amortization period, and only if electric generation has not been deregulated by either Michigan state or federal action, Detroit Edison will initiate a contested case proceeding before the MPSC seeking approval of the abandonment;

• Indicated that if its earned rate of return exceeds its authorized rate of return during the period of time that amortization of Fermi 2 is being accelerated, it will apply 50% of the excess earnings to reduce its stranded investment in Fermi 2;

• Indicated it will implement a 90 megawatt (MW) Electric Choice pilot program and will also begin the phase-in of full Electric Choice commencing in 1999, with full Electric Choice effective January 1, 2002; and

• Indicated it will use its “best efforts” to provide standby service to Electric Choice customers. Best efforts means that Detroit Edison must make the service available to Electric Choice customers who request it, but Detroit Edison does not have to build or purchase new capacity or interrupt firm customers to provide the service. Standby service is to be priced at Detroit Edison’s top incremental cost plus 1 cent.

Several parties have filed petitions for rehearing or clarification; the MPSC has not ruled on these petitions. The Association of Businesses Advocating Tariff Equity in Michigan (ABATE) has also filed an appeal with the Michigan Court of Appeals. Detroit Edison is unable to determine the timing or outcome of these proceedings.

Accounting Implications

Detroit Edison accounts for its transmission and distribution business in accordance with SFAS No. 71. Continued application of SFAS No. 71 by Detroit Edison requires: 1) third party regulation of rates, 2) cost-based rates, and 3) a reasonable assumption that all costs will be recoverable from customers through rates.

Due to the restructuring orders which provided sufficient details regarding the transition to competition for its electric generation business, effective December 31, 1998, Detroit

50

Edison adopted the provisions of SFAS No. 101, “Regulated Enterprises-Accounting for the Discontinuation of Application of FASB Statement No. 71,” for its electric generation business. SFAS No. 101 requires an evaluation to be performed to determine whether or not indications of impairment exist for plant assets under SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the elimination of certain effects of rate regulation that have been recognized as assets or liabilities pursuant to SFAS No. 71.

At December 31, 1998, Detroit Edison performed an impairment test of its Fermi 2 nuclear generation plant and related regulatory assets pursuant to SFAS No. 121. The impairment test for Fermi 2 indicated that it was fully impaired. Therefore, the Fermi 2 plant asset and its related regulatory assets were written off. At December 31, 1998, the accumulation of future regulatory recovery for Fermi 2 assets from bundled customers and transition surcharges from future retail access customers was calculated. Since the December 28, 1998 MPSC Order provides for full recovery of Fermi 2 through the regulated transmission and distribution business, a regulatory asset was established which will be amortized through December 31, 2007. There was no impact on income from the write off of the Fermi 2 plant assets and subsequent recording of the regulatory asset for unamortized nuclear costs.

1988 Settlement Agreement

The December 1988 MPSC Order established for the period January 1989 through December 2003: 1) a cap on Fermi 2 capital additions of $25 million per year, in 1988 dollars adjusted by the Consumers Price Index (CPI), cumulative, 2) a cap on Fermi 2 non-fuel operation and maintenance expenses adjusted by the CPI, and 3) a capacity factor performance standard based on a three-year rolling average commencing in 1991. For a capital investment of $200 million or more (in 1988 dollars adjusted by the CPI), Detroit Edison must obtain prior MPSC approval to include the investment in rate base. Under the cap on Fermi 2 capital expenditures, the cumulative amount available totals $76 million (in 1999 dollars) at December 31, 1999. In a 1999 filing on the true-up of stranded costs, Detroit Edison requested continued recovery of Fermi 2 capital additions through 2007, which is the end of the transition period for stranded cost recovery as ordered by the MPSC. The 1999 Fermi 2 capital additions of $27 million are recorded as a regulatory asset. Under the cap on Fermi 2 non-fuel operation and maintenance expenses, the cumulative amount available totals $143 million (in 1999 dollars) at December 31, 1999.

Under the December 1988 Order, if nuclear operations at Fermi 2 permanently cease, amortization in rates of a $513 million investment in Fermi 2 would continue and the remaining net rate base investment amount would be removed from rate base and amortized in rates, without return, over 10 years with such amortization not to exceed $290 million per year. The December 1988 and January 1994 Orders do not address the costs of decommissioning if the operations at Fermi 2 prematurely cease.

In accordance with a November 1997 MPSC Order, Detroit Edison reduced revenues by $53 million to reflect the scheduled reduction in the revenue requirement for Fermi 2, in accordance with the 1988 settlement agreement. The $53 million decrease is

51

included in the $94 million decrease effective January 1, 1999. In addition, the November 1997 MPSC Order authorized the deferral of $30 million of 1997 storm damage costs and amortization and recovery of the costs over a 24-month period commencing January 1998. In December 1997, ABATE and the Residential Ratepayer Consortium filed a lawsuit in Ingham County Circuit Court contending that Detroit Edison and the MPSC breached the December 1988 MPSC Order but the lawsuit was subsequently dismissed. The Michigan Attorney General has filed an appeal of the November 1997 Order in the Michigan Court of Appeals. In June 1999, in an unpublished opinion, the Michigan Court of Appeals remanded back to the MPSC for hearing the November 1997 Order. Detroit Edison filed a motion for rehearing with the Michigan Court of Appeals in July 1999, but the motion was subsequently dismissed. Detroit Edison is unable to determine the timing or the outcome of the remand.

NOTE 4 — FERMI 2

General

Fermi 2, a nuclear generating unit, began commercial operation in January 1988. The Nuclear Regulatory Commission (NRC) maintains jurisdiction over the licensing and operation of Fermi 2. Fermi 2 has a design electrical rating (net) of 1,150 MW. This unit represents approximately 11% of total operation and maintenance expenses and 10% of summer net rated capability. The net book balance of the Fermi 2 plant was written off at December 31, 1998 and an equivalent regulatory asset was established.

Ownership of an operating nuclear generating unit subjects Detroit Edison to significant additional risks. Fermi 2 is regulated by a number of different governmental agencies concerned with public health, safety and environmental protection. Consequently, Fermi 2 is subjected to greater scrutiny than a conventional fossil-fueled plant. See Note 3.

Insurance

Detroit Edison insures Fermi 2 with property damage insurance provided by Nuclear Electric Insurance Limited (NEIL). The NEIL insurance policies provide $500 million of composite primary coverage (with a $1 million deductible) and $2.25 billion of excess coverage, respectively, for stabilization, decontamination and debris removal costs, repair and/or replacement of property and decommissioning. Accordingly, the combined limits provide total property damage insurance of $2.75 billion.

Detroit Edison maintains insurance policies with NEIL providing for extra expenses, including certain replacement power costs necessitated by Fermi 2’s unavailability due to an insured event. These policies have a 12-week waiting period and provide for three years of coverage.

Under the NEIL policies, Detroit Edison could be liable for maximum retrospective assessments of up to approximately $20 million per loss if any one loss should exceed the accumulated funds available to NEIL.

52

As required by federal law, Detroit Edison maintains $200 million of public liability insurance for a nuclear incident. Further, under the Price-Anderson Amendments Act of 1988, deferred premium charges of $84 million could be levied against each licensed nuclear facility, but not more than $10 million per year per facility. On December 31, 1999, there were 106 licensed nuclear facilities in the United States. Thus, deferred premium charges in the aggregate amount of approximately $8.89 billion could be levied against all owners of licensed nuclear facilities in the event of a nuclear incident at any of these facilities.

Decommissioning

The NRC has jurisdiction over the decommissioning of nuclear power plants and requires decommissioning funding based upon a formula. The MPSC and FERC regulate the recovery of costs of decommissioning nuclear power plants and both require the use of external trust funds to finance the decommissioning of Fermi 2. Base rates approved by the MPSC provide for the decommissioning costs of Fermi 2. Detroit Edison is continuing to fund FERC jurisdictional amounts for decommissioning even though explicit provisions are not included in FERC rates. Detroit Edison believes that the MPSC and FERC collections will be adequate to fund the estimated cost of decommissioning using the NRC formula.

Detroit Edison has established external trust funds to hold decommissioning and low-level radioactive waste disposal funds collected from customers. During 1999, 1998 and 1997 Detroit Edison collected $38 million, $36 million and $36 million, respectively, from customers for decommissioning and low-level radioactive waste disposal. Such amounts were recorded as components of depreciation and amortization expense and in other liabilities. Net unrealized gains of $4 million and $37 million in 1999 and 1998, respectively, were recorded as increases to the nuclear decommissioning trust funds and other liabilities. Investments in debt and equity securities held within the external trust funds are classified as “available for sale.”

At December 31, 1999, Detroit Edison had a reserve of $314 million for the future decommissioning of Fermi 2, $12 million for low-level radioactive waste disposal costs, and $35 million for the future decommissioning of Fermi 1, an experimental nuclear unit on the Fermi 2 site that has been shut down since 1972. These reserves are included in other liabilities, with a like amount deposited in external trust funds. It is estimated that the cost of decommissioning Fermi 2 when its license expires in the year 2025 will be $688 million in 1999 dollars and $3 billion in 2025 dollars using a 6% inflation rate, and the cost of decommissioning Fermi 1 in 2025 is $34 million in 1999 dollars and $161 million in 2025 dollars using a 6% inflation rate.

Fermi 2 Phase-In Plan

SFAS No. 92, “Regulated Enterprises — Accounting for Phase-in Plans,” permits the capitalization of costs deferred for future recovery under a phase-in plan. Based on a MPSC-authorized phase-in plan, Detroit Edison recorded a receivable totaling $506.5 million from 1988 through 1992. Beginning in 1993 and ending in 1998, these amounts

53

were amortized to operating expense as they were included in rates. Amortization of these amounts totaled $84 million and $112 million in 1998 and 1997, respectively.

Capacity Factor Performance Standard

The capacity factor disallowances for 1998 and 1999 have not yet been determined by the MPSC. At December 31, 1999 and 1998, Detroit Edison had accruals of $63 million and $86 million, respectively, for the Fermi 2 capacity factor performance standard disallowances that are expected to be imposed by the MPSC for 1998 and 1999, and for the estimated impact on the 2000 capacity factor disallowance resulting from Fermi 2’s lower than expected capacity utilization in 1998.

Nuclear Fuel Disposal Costs

In accordance with the Federal Nuclear Waste Policy Act of 1982, Detroit Edison has a contract with the United States Department of Energy (DOE) for the future storage and disposal of spent nuclear fuel from Fermi 2. Detroit Edison is obligated to pay DOE a fee of one mill per net kilowatthour of Fermi 2 electricity generated and sold. The fee is a component of nuclear fuel expense. Delays have occurred in the DOE’s program for the acceptance and disposal of spent nuclear fuel at a permanent repository. Until the DOE is able to fulfill its obligation under the contract, Detroit Edison is responsible for the spent nuclear fuel storage and estimates that existing storage capacity will be sufficient until 2001, or until 2015 with expansion of such storage capacity. Plans are currently under way to complete the expansion project by 2001.

NOTE 5 — JOINTLY-OWNED UTILITY PLANT

Detroit Edison’s portion of jointly-owned utility plant is as follows:

	Belle River		Ludington Pumped Storage
In-service date		1984-1985		1973
Ownership interest		*		49	%
Investment (millions)	$	1,031	$	190
Accumulated depreciation (millions)	$	417	$	90

* Detroit Edison’s ownership interest is 62.78% in Unit No. 1, 81.39% of the portion of the facilities applicable to Belle River used jointly by the Belle River and St. Clair Power Plants, 49.59% in certain transmission lines and, at December 31, 1999, 75% in facilities used in common with Unit No. 2.

Belle River

The Michigan Public Power Agency (MPPA) has an ownership interest in Belle River Unit No. 1 and certain other related facilities. MPPA is entitled to 18.61% of the capacity and energy of the entire plant and is responsible for the same percentage of the plant’s operation and maintenance expenses and capital improvements.

54

Ludington Pumped Storage

Operation, maintenance and other expenses of the Ludington Pumped Storage Plant are shared by Detroit Edison and Consumers Energy Company in proportion to their respective ownership interests in the plant.

NOTE 6 — INCOME TAXES

Total income tax expense as a percent of income before tax varied from the statutory federal income tax rate for the following reasons:

	1999			1998			1997
Statutory income tax rate		35.0	%		35.0	%		35.0	%
Deferred Fermi 2 depreciation and return		—			3.9			4.6
Investment tax credit		(1.9	)		(2.5	)		(2.1	)
Depreciation		1.5			5.1			4.6
Removal costs		(2.3	)		(1.9	)		(1.5	)
Alternate fuels credit		(21.3	)		(13.1	)		(3.5	)
Other-net		0.1			(1.0	)		0.4
Effective income tax rate		11.1	%		25.5	%		37.5	%

Components of income tax expense were as follows:

		1999			1998			1997
		(Millions)
Current federal income tax expense		$	144		$	143		$	267
Deferred federal income tax (benefit) expense — net			(73	)		26			5
Investment tax credit			(11	)		(15	)		(15	)
	Total	$	60		$	154		$	257

Internal Revenue Code Section 29 provides a tax credit (alternate fuels credit) for qualified fuels produced and sold by a taxpayer to an unrelated person during the taxable year. The alternate fuels credit reduced current federal income tax expense $116 million, $79 million and $24 million for 1999, 1998 and 1997 respectively.

55

Deferred income tax assets (liabilities) were comprised of the following at December 31:

	1999			1998
	(Millions)
Property	$	(1,209	)	$	(1,139	)
Unamortized nuclear costs		(899	)		(983	)
Property taxes		(66	)		(66	)
Investment tax credit		96			154
Reacquired debt losses		(30	)		(32	)
Contributions in aid of construction		73			63
Other		51			55
	$	(1,984	)	$	(1,948	)
Deferred income tax liabilities	$	(2,463	)	$	(2,447	)
Deferred income tax assets		479			499
	$	(1,984	)	$	(1,948	)

The federal income tax returns of the Company are settled through the year 1992. The Company believes that adequate provisions for federal income taxes have been made through December 31, 1999.

NOTE 7 — SHAREHOLDERS’ EQUITY

At December 31, 1999, the Company had 5 million shares of Cumulative Preferred Stock, without par value, authorized with no shares issued. At December 31, 1999, 1.5 million shares of preferred stock are reserved for issuance in accordance with the Shareholders Rights Agreement.

At December 31, 1999, Detroit Edison had 30 million shares of Cumulative Preference Stock of $1 par value and 6.75 million shares of Cumulative Preferred Stock of $100 par value authorized, with no shares issued. All of Detroit Edison’s 7.75% Series and 7.74% Series Cumulative Preferred Stock were redeemed in 1998.

In September 1997, the Board of Directors of the Company declared a dividend distribution of one right (Right) for each share of Company common stock outstanding. Under certain circumstances, each Right entitles the shareholder to purchase one one-hundredth of a share of Company Series A Junior Participating Preferred Stock at a price of $90. If the acquiring person or group acquires 10% or more of the Company common stock, and the Company survives, each Right (other than those held by the acquirer) will entitle its holder to buy Company common stock having a value of $180 for $90. If the acquiring person or group acquires 10% or more of the Company common stock, and the Company does not survive, each Right (other than those held by the surviving or acquiring company) will entitle its holder to buy shares of common stock of the surviving or acquiring company having a value of $180 for $90. The Rights will expire on October 6, 2007, unless redeemed by the Company at $0.01 per Right at any time prior to an event which would permit the Rights to be exercised. The Company may amend the

56

Rights agreement without the approval of the holders of the Rights Certificates, except that the redemption price may not be less than $0.01 per Right.

NOTE 8 — LONG-TERM DEBT

The Company’s long-term debt outstanding at December 31 was:

				1999			1998
				(Millions)
Mortgage Bonds
		5.6% to 8.4% due 2000 to 2023		$	1,539		$	1,742
Remarketed Notes
		6.0% to 6.4% due 2028 to 2034 (a)			410			410
		6.2% and 7.1% due 2038			400			400
Tax Exempt Revenue Bonds
	Secured by Mortgage Bonds
			Installment Sales Contracts 6.9% due 2004 to 2024 (b)		176			282
			Loan Agreements 6.3% due 2008 to 2029 (b)		831			607
	Unsecured
			Installment Sales Contracts 6.4% due 2004		24			142
			Loan Agreements 3.6% due 2024 to 2030 (a)		113			113
QUIDS
		7.4% to 7.6% due 2026 to 2028			385			385
Non-Recourse Debt
		7.5% due 2000 to 2009 (b)			330			410
Less amount due within one year					(270	)		(294	)
Total Long-Term Debt				$	3,938		$	4,197

(a) Variable rate at December 31, 1999.

(b) Weighted average interest rate at December 31, 1999.

In the years 2000 — 2004, the Company’s long-term debt maturities are $270 million, $234 million, $275 million, $238 million and $64 million, respectively.

Detroit Edison’s 1924 Mortgage and Deed of Trust (Mortgage), the lien of which covers substantially all of Detroit Edison’s properties, provides for the issuance of additional General and Refunding Mortgage Bonds (Mortgage Bonds). At December 31, 1999, approximately $4.1 billion principal amount of Mortgage Bonds could have been issued on the basis of property additions, combined with an earnings test provision, assuming an interest rate of 8% on any such additional Mortgage Bonds. An additional $1.9 billion principal amount of Mortgage Bonds could have been issued on the basis of bond retirements.

57

Unless an event of default has occurred, and is continuing, each series of Quarterly Income Debt Securities (QUIDS) provides that interest will be paid quarterly. However, Detroit Edison also has the right to extend the interest payment period on the QUIDS for up to 20 consecutive interest payment periods. Interest would continue to accrue during the deferral period. If this right is exercised, Detroit Edison may not declare or pay dividends on, or redeem, purchase or acquire, any of its capital stock during the deferral period. Detroit Edison may redeem any series of capital stock pursuant to the terms of any sinking fund provisions during the deferral period. Additionally, during any deferral period, Detroit Edison may not enter into any inter-company transactions with any affiliate of Detroit Edison, including the Company, to enable the payment of dividends on any equity securities of the Company.

At December 31, 1999, $273 million of notes and bonds were subject to periodic remarketings within one year. Remarketing agents remarket these securities at the lowest interest rate necessary to produce a par bid. In the event that a remarketing fails, Standby Note Purchase Agreements and/or Letters of Credit provide that banks will purchase the securities and, after the conclusion of all necessary proceedings, remarket the bonds. In the event the banks’ obligations under the Standby Note Purchase Agreements and/or Letters of Credit are not honored, then Detroit Edison would be required to purchase any securities subject to a failed remarketing.

NOTE 9 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

At December 31, 1999, Detroit Edison had total short-term credit arrangements of approximately $524 million, under which $162 million was outstanding. At December 31, 1998, $231 million was outstanding. The weighted average interest rates for short-term borrowings at December 31, 1999 and 1998 were 6.9% and 6.2%, respectively.

Detroit Edison had bank lines of credit of $201 million, all of which had commitment fees in lieu of compensating balances. Detroit Edison uses bank lines of credit and other credit facilities to support the issuance of commercial paper and bank loans. Detroit Edison had $162 million and $231 million of commercial paper outstanding at December 31, 1999 and 1998, respectively.

Detroit Edison had a nuclear fuel financing arrangement with Renaissance Energy Company (Renaissance), an unaffiliated company. Renaissance may issue commercial paper or borrow from participating banks on the basis of promissory notes. To the extent the maximum amount of funds available to Renaissance (currently $400 million) is not needed by Renaissance to purchase nuclear fuel, such funds may be loaned to Detroit Edison for general corporate purposes pursuant to a separate Loan Agreement. At December 31, 1999, approximately $323 million was available to Detroit Edison under such Loan Agreement.

Detroit Edison had a $200 million short-term financing agreement secured by its customer accounts receivable and unbilled revenues portfolio under which $200 million was outstanding at December 31, 1999 at a weighted average interest rate of 6.1%. At December 31, 1998, there were no amounts outstanding.

58

At December 31, 1999, DTE Capital Corporation (DTE Capital), a Company subsidiary, had short-term credit arrangements of $400 million backed by a Support Agreement from the Company, under which $25 million was outstanding. The credit agreement provides support for DTE Capital’s commercial paper. At December 31, 1998, there was no commercial paper outstanding. In addition, the Company has entered into a total of $550 million of Support Agreements with DTE Capital for the purpose of DTE Capital’s credit enhancing activities on behalf of DTE Energy non-regulated affiliates.

NOTE 10 — LEASES

Future minimum lease payments under capital leases, consisting of nuclear fuel ($72 million computed on a projected units of production basis), lake vessels ($19 million), locomotives and coal cars ($157 million), office space ($11 million), and computers, vehicles and other equipment ($2 million) at December 31, 1999 are as follows:

(Millions)

									Remaining
2000	2001		2002		2003		2004		Years		Total
$48	$	42	$	35	$	21	$	14	$	101	$	261

Future minimum lease payments for an operating lease for railcars are as follows:

(Millions)

									Remaining
2000	2001		2002		2003		2004		Years		Total
$9	$	9	$	9	$	8	$	8	$	40	$	83

Rental expenses for both capital and operating leases were $107 million (including $52 million for nuclear fuel), $96 million (including $49 million for nuclear fuel) and $72 million (including $42 million for nuclear fuel) for 1999, 1998 and 1997, respectively.

Detroit Edison has a contract with Renaissance which provides for the purchase by Renaissance for Detroit Edison of up to $400 million of nuclear fuel, subject to the continued availability of funds to Renaissance to purchase such fuel. Title to the nuclear fuel is held by Renaissance. Detroit Edison makes quarterly payments under the contract based on the consumption of nuclear fuel for the generation of electricity.

NOTE 11 — FINANCIAL INSTRUMENTS

Trading Activities

DTE ET markets and trades electricity and natural gas physical products and financial instruments, and provides risk management services utilizing energy commodity derivative instruments which include futures, exchange traded and over-the-counter options, and forward purchase and sale commitments. The notional amounts and

59

terms of DTE ET’s outstanding energy trading financial instruments and the fair values of DTE ET’s energy commodity derivative instruments were not material at December 31, 1999.

Market Risk

DTE ET manages, on a portfolio basis, the market risks inherent in its activities subject to parameters established by the Company’s Risk Management Committee (RMC), which is authorized by its Board of Directors. Market risks are monitored by the RMC to ensure compliance with the Company’s stated risk management policies. DTE ET marks its portfolio to market and measures its risk on a daily basis in accordance with Value at Risk (VaR) and other risk methodologies. The quantification of market risk using VaR provides a consistent measure of risk across diverse energy markets and products.

Credit Risk

DTE ET is exposed to credit risk in the event of nonperformance by customers or counterparties of its contractual obligations. The concentration of customers and/or counterparties may impact overall exposure to credit risk, either positively or negatively, in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. However, DTE ET maintains credit policies with regard to its customers and counterparties that management believes significantly minimize overall credit risk. These policies include an evaluation of potential customers’ and counterparties’ financial condition and credit rating, collateral requirements or other credit enhancements such as letters of credit or guarantees, and the use of standardized agreements which allow for the netting or offsetting of positive and negative exposures associated with a single counterparty. Based on these policies, the Company does not anticipate a materially adverse effect on financial position or results of operations as a result of customer or counterparty nonperformance. Those futures and option contracts which are traded on the New York Mercantile Exchange are financially guaranteed by the Exchange and have nominal credit risk.

Non-Trading Activities

Interest Rate Swaps

In October 1996, Detroit Edison entered into a three-year interest rate swap agreement based on a notional amount of $25 million, which was nominally linked to the Detroit Edison 1993 Series B Remarketed Notes. In 1999 and 1998, the average rate received was 5.12% and 5.68%, respectively, and the average rate paid was 4.71% and 5.02%, respectively. The net of interest received and interest paid on the swap was accrued as a component of interest expense in the current period.

PCI Enterprises Company (PCI), a coal pulverizing subsidiary, entered into a seven-year interest rate swap agreement beginning June 30, 1997, with the intent of reducing the impact of changes in interest rates on its variable rate non-recourse debt. The initial notional amount was $30 million which was based on 60% of its term loan of $50 million.

60

The notional amount outstanding at December 31, 1999 and 1998, was $24 million and $27 million, respectively, and will decline throughout the term of the loan based on amortization of principal amounts. PCI pays a fixed interest rate of 6.96% on the notional amount and receives a variable interest rate based on LIBOR. In 1999 and 1998, the average rate received was 5.28% and 5.65%, respectively. The net of interest received and interest paid on the swap is accrued as a component of interest expense in the current period.

Fair Value of Financial Instruments

The fair value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. The carrying amount of financial instruments, except for long-term debt, approximates fair value. The estimated fair value of total long-term debt at December 31, 1999 and 1998 was $4 billion and $4.8 billion, respectively, compared to the carrying amount of $4.2 billion and $4.5 billion, respectively.

NOTE 12 — COMMITMENTS AND CONTINGENCIES

Commitments

Detroit Edison has outstanding purchase commitments of approximately $850 million at December 31, 1999, which includes, among other things, line construction and clearance costs and equipment purchases. The Company and Detroit Edison have also entered into long-term fuel supply commitments of approximately $621 million.

Detroit Edison has an Energy Purchase Agreement (Agreement) for the purchase of steam and electricity from the Detroit Resource Recovery Facility. Under the Agreement, Detroit Edison will purchase steam through 2008 and electricity through June 2024. In 1996, a special charge to net income of $149 million ($97 million after-tax) or $0.67 cents per share was recorded. The special charge included a reserve for steam purchase commitments from 1997 through 2008 and expenditures for closure of a portion of the steam heating system. The reserve for steam purchase commitments was recorded at its present value, therefore Detroit Edison will record non-cash accretion expense through 2008. In addition, amortization of the reserve for steam purchase commitments is netted against losses on steam heating purchases recorded in fuel and purchased power expense. Purchases of steam and electricity were $35 million, $31 million and $34 million for 1999, 1998 and 1997, respectively. Annual steam purchase commitments are approximately $38 million, $39 million, $40 million, $42 million and $43 million for 2000, 2001, 2002, 2003 and 2004, respectively.

In October 1995, the MPSC issued an Order approving Detroit Edison’s six-year capacity and energy purchase agreement with Ontario Hydro. Ontario Hydro agreed to sell Detroit Edison 300 MW of capacity from mid-May through mid-September. This purchase will offset a concurrent agreement to lease approximately a third of Detroit Edison’s Ludington 917 MW capacity to FirstEnergy for the same time period. The net economic effect of Ludington lease and the Ontario Hydro purchase is an estimated reduction in PSCR expense of $74 million.

61

Contingencies

Legal Proceedings

Detroit Edison and plaintiffs in a class action pending in the Circuit Court for Wayne County, Michigan (Gilford, et al v. Detroit Edison), as well as plaintiffs in two other pending actions which make class claims (Sanchez, et al v. Detroit Edison, Circuit Court for Wayne County, Michigan; and Frazier v. Detroit Edison, United States District Court, Eastern District of Michigan), agreed to binding arbitration to settle these matters. A Consent Judgment received preliminary Court approval. On October 28, 1999, a panel of arbitrators awarded the plaintiffs $45.15 million. As a result of sufficient prior accruals and anticipated insurance coverage, Detroit Edison did not incur a material 1999 earnings impact due to this award. Detroit Edison anticipates that the insurance claims process will conclude favorably. While Detroit Edison can give no assurances as to the final resolution of the claims process, it does not believe that an unfavorable earnings impact will result.

Other

In addition to the matters reported herein, the Company and its subsidiaries are involved in litigation and environmental matters dealing with the numerous aspects of their business operations. The Company believes that such litigation and the matters discussed above will not have a material effect on its financial position, results of operations and cash flows.

See Notes 3 and 4 for a discussion of contingencies related to Regulatory Matters and Fermi 2.

NOTE 13 — EMPLOYEE BENEFITS

Retirement Plan

Detroit Edison has a trusteed and non-contributory defined benefit retirement plan (Plan) covering all eligible employees who have completed six months of service. The Plan provides retirement benefits based on the employees’ years of benefit service, average final compensation and age at retirement. Detroit Edison’s policy is to fund pension cost calculated under the projected unit credit actuarial cost method.

62

Net pension cost included the following components:

	1999			1998			1997
	(Millions)
Service cost – benefits earned during period	$	35		$	31		$	27
Interest cost on projected benefit obligation		92			88			86
Expected return on Plan assets		(124	)		(118	)		(104	)
Amortization of unrecognized prior service cost		5			5			5
Amortization of unrecognized net asset resulting from initial application		(4	)		(4	)		(4	)
Net pension cost	$	4		$	2		$	10

The following reconciles the funded status of the Plan to the amount recorded in the Consolidated Balance Sheet at December 31:

		1999			1998
		(Millions)
Projected benefit obligation at beginning of year		$	1,400		$	1,294
	Service cost – benefits earned during period		35			31
	Interest cost on projected benefit obligation		92			88
	Net (gain) loss		(49	)		61
	Benefits paid to participants		(77	)		(74	)
	Plan amendments		56			—
Projected benefit obligation at end of year			1,457			1,400
Fair value of Plan assets (primarily equity and debt securities) at beginning of year			1,416			1,347
	Actual return on Plan assets		246			143
	Benefits paid to participants		(77	)		(74	)
Fair value of Plan assets at end of year			1,585			1,416
Plan assets in excess of projected benefit obligation			128			16
Unrecognized net (asset) resulting from initial application			(11	)		(15	)
Unrecognized net (gain) loss			(136	)		31
Unrecognized prior service cost			94			47
Asset recorded in the Consolidated Balance Sheet		$	75		$	79

63

Assumptions used in determining the projected benefit obligation at December 31 were as follows:

	1999			1998
Discount rate		7.5	%		6.5	%
Annual increase in future compensation levels		4.0			4.0
Expected long-term rate of return on Plan assets		9.5			9.0

The unrecognized net asset at date of initial application is being amortized over approximately 15.4 years, which was the average remaining service period of employees at January 1, 1987.

In addition to the Plan, there are several supplemental non-qualified, non-contributory, retirement benefit plans for certain management employees.

Savings and Investment Plans

Detroit Edison has voluntary defined contribution plans qualified under Section 401 (a) and (k) of the Internal Revenue Code for all eligible employees. Detroit Edison contributes up to 6% of base compensation for non-represented employees and up to 4% for represented employees. Matching contributions were $21 million, $21 million and $20 million for 1999, 1998 and 1997, respectively.

Other Postretirement Benefits

Detroit Edison provides certain postretirement health care and life insurance benefits for retired employees. Substantially all of Detroit Edison’s employees will become eligible for such benefits if they reach retirement age while working for Detroit Edison. These benefits are provided principally through insurance companies and other organizations.

Net other postretirement benefits cost included the following components:

	1999			1998			1997
	(Millions)
Service cost – benefits earned during period	$	23		$	19		$	19
Interest cost on accumulated benefit obligation		41			38			39
Expected return on assets		(39	)		(30	)		(20	)
Amortization of unrecognized transition obligation		21			21			21
Net other postretirement benefits cost	$	46		$	48		$	59

64

The following reconciles the funded status to the amount recorded in the Consolidated Balance Sheet at December 31:

			1999			1998
			(Millions)
Postretirement benefit obligation at beginning of year			$	625		$	580
	Service cost – benefits earned during period			23			19
	Interest cost on accumulated benefit obligation			43			38
	Benefit payments			(29	)		(27	)
	Net (gain) loss			(55	)		15
Postretirement benefit obligation at end of year				607			625
Fair value of assets (primarily equity and debt securities) at beginning of year				422			309
		Detroit Edison contributions		26			57
		Benefit payments		(8	)		—
		Actual return on assets		61			56
Fair value of assets at end of year				501			422
Postretirement benefit obligation in (excess) of assets				(106	)		(203	)
Unrecognized transition obligation				267			287
Unrecognized net (gain)				(105	)		(28	)
Asset recorded in the Consolidated
		Balance Sheet	$	56		$	56

Assumptions used in determining the postretirement benefit obligation at December 31 were as follows:

	1999			1998
Discount rate		7.5	%		6.5	%
Annual increase in future compensation levels		4.0			4.0
Expected long-term rate of return on assets		9.0			8.5

Benefit costs were calculated assuming health care cost trend rates beginning at 8% for 2000 and decreasing to 5% in 2007 and thereafter for persons under age 65 and decreasing from 5.8% to 5% for persons age 65 and over. A one-percentage-point increase in health care cost trend rates would increase the aggregate of the service cost and interest cost components of benefit costs by $11 million for 1999 and increase the accumulated benefit obligation by $86 million at December 31, 1999. A one-percentage-point decrease in the health care cost trend rates would decrease the aggregate of the service cost and interest cost components of benefit costs by $9 million for 1999 and decrease the accumulated benefit obligation by $70 million at December 31, 1999.

65

NOTE 14 — STOCK-BASED COMPENSATION

The Company adopted a Long-Term Incentive Plan (LTIP) in 1995. Under the LTIP, certain key employees may be granted restricted common stock, stock options, stock appreciation rights, performance shares and performance units. Common stock granted under the LTIP may not exceed 7.2 million shares. Performance units (which have a face amount of $1) granted under the LTIP may not exceed 25 million in the aggregate. As of December 31, 1999, no stock appreciation rights, performance shares or performance units have been granted under the LTIP.

Under the LTIP, shares of restricted common stock were awarded and are restricted for a period not exceeding four years. All shares are subject to forfeiture if specified performance measures are not met. During the applicable restriction period, the recipient has all the voting, dividend and other rights of a record holder except that the shares are nontransferable, and non-cash distributions paid upon the shares would be subject to transfer restrictions and risk of forfeiture to the same extent as the shares themselves. The shares were recorded at the market value on the date of grant and amortized to expense based on the award that was expected to vest and the period during which the related employee services were to be rendered. Restricted common stock activity for the year ended December 31 was:

	1999		1998		1997
Restricted common shares awarded		99,500		74,000		68,500
Weighted average market price of shares awarded	$	40.99	$	38.77	$	28.38
Compensation cost charged against income (thousands)	$	945	$	976	$	222

Stock options were also issued under the LTIP. Options are exercisable at a rate of 25% per year during the four years following the date of grant. The options will expire 10 years after the date of the grant. The option exercise price equals the fair market value of the stock on the date that the option was granted. Stock option activity was as follows:

66

						Weighted
			Number			Average
			of Options			Exercise Price
Outstanding at January 1, 1997				—			—
		Granted		310,500		$	28.38
Outstanding at December 31, 1997 (none exercisable)				310,500			28.38
		Granted		319,500			38.38
		Exercised		(22,625	)		28.50
Outstanding at December 31, 1998 (58,750 exercisable)				607,375			33.70
		Granted		428,000			41.30
		Exercised		(11,675	)		30.99
		Canceled		(24,625	)		31.96
Outstanding at December 31, 1999
	(194,371 exercisable at a weighted average exercise price of $32.35)			999,075			37.03

The range of exercise prices for options outstanding at December 31, 1999 was $28.50 to $43.85. The number, weighted average exercise price and weighted average remaining contractual life of options outstanding was as follows:

					Weighted Average
Range of Exercise			Weighted Average		Remaining
Prices	Number of Options		Exercise Price		Contractual Life
$28.50 - $34.75		282,825	$	28.68		7.2  years
$38.04 - $43.85		716,250	$	40.32		8.9  years
		999,075	$	37.03		8.4  years

The Company applies APB Opinion 25, “Accounting for Stock Issued to Employees.” Accordingly, no compensation expense has been recorded for options granted. As required by SFAS No. 123, “Accounting for Stock-Based Compensation,” the Company has determined the pro forma information as if the Company had accounted for its employee stock options under the fair value method. The fair value for these options was estimated at the date of grant using a modified Black/Scholes option pricing model — American style and the following weighted average assumptions:

67

	1999			1998			1997
Risk-free interest rate		5.64	%		5.84	%		6.83	%
Dividend yield		4.95	%		5.39	%		7.26	%
Expected volatility		17.28	%		17.48	%		18.31	%
Expected life		10  years			10  years			10  years
Fair value per option	$	7.18		$	6.43		$	4.15

The pro forma effect of these options would be to reduce net income by $1,289,000, $695,000 and $244,000 for the years ended December 31, 1999, 1998 and 1997, respectively, and to reduce earnings per share by $0.01 for the year-ended December 31, 1999. There was no pro forma effect on earnings per share for the years ended December 31, 1998 and 1997.

NOTE 15 — SEGMENT AND RELATED INFORMATION

The Company’s reportable business segment is its regulated electric utility, Detroit Edison, which is engaged in the generation, purchase, transmission, distribution and sale of electric energy in a 7,600 square mile area in Southeastern Michigan. All other includes non-regulated energy-related businesses and services, which develop and manage electricity and other energy-related projects, and engage in domestic energy trading and marketing. Inter-segment revenues are not material. Income taxes are allocated based on intercompany tax sharing agreements, which generally allocate the tax benefit of alternative fuels tax credits and accelerated depreciation to the respective subsidiary, without regard to the subsidiary’s own net income or whether such tax benefits are realized by the Company. Financial data for business segments are as follows:

68

	Regulated					Reconciliations
	Electric		All			and
	Utility		Other			Eliminations			Consolidated
1999	(Millions)
Operating revenues	$	4,047	$	681		$	—		$	4,728
Depreciation and amortization		703		32			—			735
Interest expense		284		26			30			340
Income tax expense (benefit)		211		(140	)		(11	)		60
Net income		434		69			(20	)		483
Total assets		11,051		1,160			105			12,316
Capital expenditures		638		130			—			768
1998	(Millions)
Operating revenues	$	3,902	$	319		$	—		$	4,221
Depreciation and amortization		643		18			—			661
Interest expense		277		34			8			319
Income tax expense (benefit)		260		(100	)		(6	)		154
Net income		412		42			(11	)		443
Total assets		10,987		937			164			12,088
Capital expenditures		548		449			—			997
1997	(Millions)
Operating revenues	$	3,657	$	107		$	—		$	3,764
Depreciation and amortization		658		2			—			660
Interest expense		282		16			(1	)		297
Income tax expense (benefit)		288		(30	)		(1	)		257
Net income		405		14			(2	)		417
Total assets		10,745		448			30			11,223
Capital expenditures		467		233			—			700

NOTE 16 — SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	1999 Quarter Ended
	Mar. 31		Jun. 30		Sep. 30		Dec. 31
	(Millions, except per share amounts)
Operating Revenues	$	1,024	$	1,150	$	1,440	$	1,114
Operating Income		215		211		281		194
Net Income		115		110		161		97
Earnings Per Common Share		0.79		0.76		1.11		0.67

69

	1998 Quarter Ended
	Mar. 31		Jun. 30		Sep. 30		Dec. 31
	(Millions, except per share amounts)
Operating Revenues	$	945	$	1,064	$	1,199	$	1,013
Operating Income		233		248		266		190
Net Income		104		101		132		106
Earnings Per Common Share		0.72		0.69		0.91		0.73

70

Item 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

      None.

PART III

Items 10, 11, 12 and 13

      Information required by Part III (Items 10, 11, 12 and 13) of this Form 10-K is incorporated by reference from the Company’s definitive Proxy Statement for its 2000 Annual Meeting of Common Shareholders to be held April 14, 2000, which will be filed with the Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after the end of the Company’s fiscal year covered by this report on Form 10-K, all of which information is hereby incorporated by reference in, and made part of, this Form 10-K, except that the information required by Item 10 with respect to executive officers of the Registrant is included in Part I of this report.

71

Annual Report on Form 10-K for The Detroit Edison Company
PART I

Item 1 — Business.

      See the Company’s “Item 1 — Business” which is incorporated herein by this reference.

Executive Officers of the Registrant

				Present
				Position
Name	Age(a)		Present Position	Held Since
Anthony F. Earley, Jr.		50	Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, and Member of the Office of the President	8-1-98
Larry G. Garberding		61	Executive Vice President and Chief Financial Officer Member of the Office of the President since December 1998	8-1-90
Gerard M. Anderson		41	President and Chief Operating Officer — DTE Energy Resources, and Member of the Office of the President	8-1-98
Robert J. Buckler		50	President and Chief Operating Officer — DTE Energy Distribution, and Member of the Office of the President	8-1-98
Daniel G. Brudzynski		39	Controller	4-28-99
Michael E. Champley		51	Senior Vice President	4-1-97
Douglas R. Gipson		52	Senior Vice President	4-1-93
S. Martin Taylor		59	Senior Vice President	4-28-99
Susan M. Beale		51	Vice President and Corporate Secretary	3-27-95
Leslie L. Loomans		56	Vice President and Treasurer	10-1-89
Ron A. May		48	Vice President	8-1-98
David E. Meador		42	Vice President	4-28-99
Sandra J. Miller		56	Vice President	3-30-98
Christopher C. Nern		55	Vice President and General Counsel	6-1-93
Michael C. Porter		46	Vice President	9-22-97
William R. Roller		54	Vice President	4-22-96

            (a) As of December 31, 1999

      Under Detroit Edison By-Laws, the officers of Detroit Edison are elected annually by the Board of Directors at a meeting held for such purpose, each to serve until the next annual meeting of directors or until their respective successors are chosen and qualified. With the exception of Messrs. Brudzynski, Meador and Porter, all of the above officers have been employed by Detroit Edison in one or more management capacities during the past five years.

      Daniel G. Brudzynski was Manager, Product Development Finance and Manager, Forecasting Redesign and Implementation at Chrysler Corporation, an international automotive manufacturer, from 1995 until 1997. He joined Detroit Edison in 1997 as Assistant Controller and effective April 28, 1999 he was elected Controller and appointed Assistant Vice President.

72

      David E. Meador was Controller, Mopar Parts Division, at Chrysler Corporation, an international automotive manufacturer, from November 1996 until February 1997. From 1986 to 1996, he held a variety of executive financial positions at Chrysler. Effective February 28, 1997, he was elected Vice President and effective March 29, 1997, he assumed the duties of Controller. Effective April 28, 1999, he was elected Vice President – Finance and Accounting.

      Michael C. Porter was Senior Vice President and Managing Director at McCann-Erickson in Detroit from 1994 to September 1997 and Vice President of Marketing for The Stroh Brewery Company in Detroit from 1990 to 1994. Effective September 22, 1997, he was elected Vice President — Corporate Communications.

Item 2 — Properties.

      See the Company’s “Item 2 — Properties — Detroit Edison,” which is incorporated herein by this reference.

Item 3 — Legal Proceedings.

      See the Company’s “Item 3 — Legal Proceedings,” which is incorporated herein by this reference.

      In a lawsuit filed in January 1999 in the Circuit Court for Wayne County Michigan (Cook, et al v. Detroit Edison), a number of individual plaintiffs have claimed employment-related sex, gender and race discrimination, as well as harassment. A hearing on plaintiffs’ request for class action has not yet been held. Detroit Edison believes the claims are without merit and class action certification is not appropriate.

Item 4 — Submission of Matters to a Vote of Security Holders.

      Not applicable.

PART II

Item 5 — Market for Registrant’s Common Equity and Related Stockholder Matters.

      See the Company’s “Item 5 — Market for Registrant’s Common Equity and Related Stockholder Matters,” the third paragraph of which is incorporated herein by this reference. Detroit Edison’s By-Laws contain this same provision with respect to the Michigan Business Corporation Act. All of Detroit Edison’s Common Stock is held by the Company.

      The amount of future dividends paid by Detroit Edison to the Company will depend on Detroit Edison’s earnings, financial condition and other factors, including the effects of utility restructuring and a transition to competition, each of which is periodically reviewed by Detroit Edison’s Board of Directors.

73

Item 6 — Selected Financial Data.

		Year Ended December 31
		1999		1998		1997		1996		1995
		(Millions)
Operating Revenues		$	4,047	$	3,902	$	3,657	$	3,642	$	3,636
Net Income		$	434	$	418	$	417	$	328	$	434
Net Income Available for Common Stock		$	434	$	412	$	405	$	312	$	406
At year end:
	Total Assets	$	11,051	$	10,987	$	10,745	$	10,874	$	11,131
Long-Term Debt
	Obligations (including capital leases) and Redeemable Preferred and Preference Stock Outstanding	$	3,398	$	3,588	$	3,812	$	4,000	$	4,004

Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.

      See the Company’s and Detroit Edison’s “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is incorporated herein by this reference.

Item 8 — Financial Statements and Supplementary Data.

      See pages 30 through 70 (except for Notes 6, 8 and 16 below).

NOTE 6 — INCOME TAXES

Total income tax expense as a percent of income before tax varies from the statutory federal income tax rate for the following reasons:

	1999			1998			1997
Statutory income tax rate		35.0	%		35.0	%		35.0	%
Deferred Fermi 2 depreciation and return		—			3.5			4.5
Investment tax credit		(1.6	)		(2.1	)		(2.0	)
Depreciation		1.2			4.5			4.5
Removal costs		(1.9	)		(1.7	)		(1.5	)
Other-net		—			(0.9	)		0.4
Effective income tax rate		32.7	%		38.3	%		40.9	%

74

Components of income tax expense are as follows:

		1999			1998			1997
					(Millions)
Current federal tax expense		$	282		$	280		$	308
Deferred federal tax benefit — net			(60	)		(5	)		(6	)
Investment tax credits			(11	)		(15	)		(14	)
	Total	$	211		$	260		$	288

Deferred income tax assets (liabilities) are comprised of the following at December 31:

	1999			1998
	(Millions)
Property	$	(1,197	)	$	(1,139	)
Unamortized nuclear costs		(899	)		(983	)
Property taxes		(66	)		(65	)
Investment tax credit		96			154
Reacquired debt losses		(30	)		(32	)
Contributions in aid of construction		73			63
Other		83			96
	$	(1,940	)	$	(1,906	)
Deferred income tax liabilities	$	(2,372	)	$	(2,403	)
Deferred income tax assets		432			497
	$	(1,940	)	$	(1,906	)

NOTE 8 — LONG-TERM DEBT

Long-term debt outstanding at December 31 was:

			1999		1998
			(Millions)
Mortgage Bonds
	5.6% to 8.4% due 2000 to 2023		$	1,539	$	1,742
Remarketed Notes
	6.0% to 6.4% due 2028 to 2034 (a)			410		410
Tax Exempt Revenue Bonds
	Secured by Mortgage Bonds
		Installment Sales Contracts 6.9% due 2004 to 2024 (b)		176		282
		Loan Agreements 6.3% due 2008 to 2029 (b)		831		607

75

	Unsecured
		Installment Sales Contracts 6.4% due 2004		24			142
		Loan Agreements 3.6% due 2024 to 2030 (a)		113			113
QUIDS
	7.4% to 7.6% due 2026 to 2028			385			385
Less amount due within one year				(194	)		(219	)
	Total Long-Term Debt		$	3,284		$	3,462

(a) Variable rate at December 31, 1999.
(b) Weighted average interest rate at December 31, 1999.

In the years 2000 – 2004, Detroit Edison’s long-term debt maturities are $194, $159, $198, $199 and $49 million, respectively.

Detroit Edison’s 1924 Mortgage and Deed of Trust (Mortgage), the lien of which covers substantially all of Detroit Edison’s properties, provides for the issuance of additional General and Refunding Mortgage Bonds (Mortgage Bonds). At December 31, 1999, approximately $4.1 billion principal amount of Mortgage Bonds could have been issued on the basis of property additions, combined with an earnings test provision, assuming an interest rate of 8% on any such additional Mortgage Bonds. An additional $1.9 billion principal amount of Mortgage Bonds could have been issued on the basis of bond retirements.

Unless an event of default has occurred, and is continuing, each series of Quarterly Income Debt Securities (QUIDS) provides that interest will be paid quarterly. However, Detroit Edison also has the right to extend the interest payment period on the QUIDS for up to 20 consecutive interest payment periods. Interest would continue to accrue during the deferral period. If this right is exercised, Detroit Edison may not declare or pay dividends on, or redeem, purchase or acquire, any of its capital stock during the deferral period. Detroit Edison may redeem any series of capital stock pursuant to the terms of any sinking fund provisions during the deferral period. Additionally, during any deferral period, Detroit Edison may not enter into any inter-company transactions with any affiliate of Detroit Edison, including the Company, to enable the payment of dividends on any equity securities of the Company.

At December 31, 1999, $113 million of notes and bonds were subject to periodic remarketings within one year. Remarketing agents remarket these securities at the lowest interest rate necessary to produce a par bid. In the event that a remarketing fails, Standby Note Purchase Agreements and/or Letters of Credit provide that banks will purchase the securities and, after the conclusion of all necessary proceedings, remarket the bonds. In the event the banks’ obligations under the Standby Note Purchase Agreements and/or Letters of Credit are not honored, then, Detroit Edison would be required to purchase any bonds subject to a failed remarketing.

76

NOTE 16 — SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	1999 Quarter Ended
	Mar. 31		June 30		Sept. 30		Dec. 31
	(Millions)
Operating Revenues	$	911	$	1,006	$	1,211	$	919
Operating Income		224		225		286		200
Net Income		104		107		138		85

	1998 Quarter Ended
	Mar. 31		June 30		Sept. 30		Dec. 31
			(Millions)
Operating Revenues	$	901	$	992	$	1,105	$	904
Operating Income		237		248		284		201
Net Income		98		95		125		100

Item 9 -Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

      None.

PART III

Items 10, 11, 12 and 13

      See the Company’s “Items 10, 11, 12 and 13” which is incorporated herein by this reference, except for the information required by Item 10 with respect to executive officers of the Registrant which is included in Part 1 of this report. All of Detroit Edison’s directors are the same as the Company’s directors.

77

Annual Reports on Form 10-K for DTE Energy Company
and The Detroit Edison Company

PART IV

Item 14 — Exhibits, Financial Statement Schedules and Reports on Form 8-K.

      (a) The following documents are filed as a part of this Annual Report on Form 10-K.

      (1) Consolidated financial statements. See “Item 8 - Financial Statements and Supplementary Data” on page 30.

      (2) Financial statement schedules. See “Item 8 — Financial Statements and Supplementary Data” on page 30.

      (3) Exhibits (*Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 14 (c) of this report).

      (i) Exhibits filed herewith.

Exhibit
Number
2-1-	Agreement and Plan of Merger, among DTE Energy, MCN Energy Group Inc. and DTE Enterprises, Inc., dated as of October 4, 1999 and amended as of November 12, 1999.
4-205-	Supplemental Indenture, dated as of January 1, 2000, creating the General and Refunding Mortgage Bonds of 2000 Series A.
11-8 -	DTE Energy Company Basic and Diluted Earnings Per Share of Common Stock.
12-21-	DTE Energy Company Computation of Ratio of Earnings to Fixed Charges.
12-22-	The Detroit Edison Company Computation of Ratio of Earnings to Fixed Charges.
12-23-	The Detroit Edison Company Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
21-4 -	Subsidiaries of the Company and Detroit Edison.
23-13-	Consent of Deloitte & Touche LLP.
27-31-	Financial Data Schedule for the period ended December 31, 1999 for DTE Energy Company.
27-32-	Financial Data Schedule for the period ended December 31, 1999 for The Detroit Edison Company.

78

99-32- Third Amended and Restated Credit Agreement, Dated as of January 18, 2000 among DTE Capital Corporation, the Initial Lenders, Citibank, N.A., as Agent, and ABN AMRO Bank N.V., Bank One N.A., Barclays Bank PLC, Bayerische Landesbank Girozertrale, Cayman Islands Branch, Comerica Bank and Den Daske Bank Aktieselskab, as Co-Agents.

      (ii) Exhibits incorporated herein by reference.

3(a) -	Amended and Restated Articles of Incorporation of DTE Energy Company, dated December 13, 1995. (Exhibit 3-5 to Form 10-Q for quarter ended September 30, 1997)
3(b) -	Certificate of Designation of Series A Junior Participating Preferred Stock of DTE Energy Company. Exhibit 3-6 to Form 10-Q for quarter ended September 30, 1997.)
3(c) -	Restated Articles of Incorporation of Detroit Edison, as filed December 10, 1991 with the State of Michigan, Department of Commerce — Corporation and Securities Bureau (Exhibit 3-13 to Form 10-Q for quarter ended June 30, 1999.)
3(d) -	Articles of Incorporation of DTE Enterprises, Inc. (Exhibit 3.5 to Registration No. 333-89175.)
3(e) -	Rights Agreement, dated as of September 23, 1997, by and between DTE Energy Company and The Detroit Edison Company, as Rights Agent (Exhibit 4-1 to DTE Energy Company Current Report on Form 8-K, dated September 23, 1997.)
3(f) -	Agreement and Plan of Exchange (Exhibit 1(2) to DTE Energy Form 8-B filed January 2, 1996, File No. 1-11607.)
3(g) -	Bylaws of DTE Energy Company, as amended through September 22, 1999. (Exhibit 3-3 to Registration No. 333-89175.)
3(h) -	Bylaws of The Detroit Edison Company, as amended through September 22, 1999. (Exhibit 3-14 to Form 10-Q for quarter ended September 30, 1999.)
3(i) -	Bylaws of DTE Enterprises, Inc. (Exhibit 3.6 to Registration No. 333-89175.)
4(a) -	Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison (File No. 1-2198) and Bankers Trust Company as Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings as set forth below:

79

September 1, 1947	Exhibit B-20 to Registration No. 2-7136
November 15, 1971	Exhibit 2-B-38 to Registration No. 2-42160
January 15, 1973	Exhibit 2-B-39 to Registration No. 2-46595
June 1, 1978	Exhibit 2-B-51 to Registration No. 2-61643
June 30, 1982	Exhibit 4-30 to Registration No. 2-78941
August 15, 1982	Exhibit 4-32 to Registration No. 2-79674
October 15, 1985	Exhibit 4-170 to Form 10-K for year ended December 31, 1994
November 30, 1987	Exhibit 4-139 to Form 10-K for
July 15, 1989	year ended December 31, 1992 Exhibit 4-171 to Form 10-K for year ended December 31, 1994
December 1, 1989	Exhibit 4-172 to Form 10-K for year ended December 31, 1994
February 15, 1990	Exhibit 4-173 to Form 10-K for year ended December 31, 1994
April 1, 1991	Exhibit 4-15 to Form 10-K for year ended December 31, 1996
November 1, 1991	Exhibit 4-181 to Form 10-K for year ended December 31, 1996
January 15, 1992	Exhibit 4-182 to Form 10-K for year ended December 31, 1996
February 29, 1992	Exhibit 4-187 to Form 10-Q for quarter ended March 31, 1998
April 15, 1992	Exhibit 4-188 to Form 10-Q for quarter ended March 31, 1998
July 15, 1992	Exhibit 4-189 to Form 10-Q for quarter ended March 31, 1998
July 31, 1992	Exhibit 4-190 to Form 10-Q for quarter ended September 30, 1992
January 1, 1993	Exhibit 4-131 to Registration No. 33-56496
March 1, 1993	Exhibit 4-191 to Form 10-Q for quarter ended March 31, 1998
March 15, 1993	Exhibit 4-192 to Form 10-Q for quarter ended March 31, 1998
April 1, 1993	Exhibit 4-143 to Form 10-Q for quarter ended March 31, 1993
April 26, 1993	Exhibit 4-144 to Form 10-Q for quarter ended March 31, 1993
May 31, 1993	Exhibit 4-148 to Registration No. 33-64296
June 30, 1993	Exhibit 4-149 to Form 10-Q for quarter ended June 30, 1993 (1993 Series AP)
June 30, 1993	Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993 Series H)
September 15, 1993	Exhibit 4-158 to Form 10-Q for quarter ended September 30, 1993
March 1, 1994	Exhibit 4-163 to Registration No. 33-53207
June 15, 1994	Exhibit 4-166 to Form 10-Q for quarter ended June 30, 1994

80

August 15, 1994	Exhibit 4-168 to Form 10-Q for quarter ended September 30, 1994
December 1, 1994	Exhibit 4-169 to Form 10-K for year ended December 31, 1994
August 1, 1995	Exhibit 4-174 to Form 10-Q for quarter ended September 30, 1995
August 1, 1999	Exhibit 4-204 to Form 10-Q for quarter ended September 30, 1999
August 15, 1999	Exhibit 4-205 to Form 10-Q for quarter ended September 30, 1999

4(b) -	Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325).
4(c) -	First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration No. 33-50325).
4(d) -	Second Supplemental Note Indenture, dated as of September 15, 1993 (Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993).
4(e) -	First Amendment, dated as of August 15, 1996, to Second Supplemental Note Indenture (Exhibit 4-17 to Form 10-Q for quarter ended September 30, 1996).
4(f) -	Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994).
4(g) -	First Amendment, dated as of December 12, 1995, to Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-12 to Registration No. 333-00023).
4(h) -	Sixth Supplemental Note Indenture, dated as of May 1, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.54% Quarterly Income Debt Securities (“QUIDS”), including form of QUIDS. (Exhibit 4-193 to Form 10-Q for quarter ended June 30, 1998.)
4(i)-	Seventh Supplemental Note Indenture, dated as of October 15, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.375% QUIDS, including form of QUIDS. (Exhibit 4-198 to Form 10-K for year ended December 31, 1998.)
4(j) -	Standby Note Purchase Credit Facility, dated as of August 17, 1994, among The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative Agent, Bank of America, The Bank of new York, The Fuji Bank Limited, the Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents (Exhibit 99-18 to Form 10-Q for quarter ended September 30, 1994.)

81

4(k)-	$60,000,000 Support Agreement dated as of January 21, 1998 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-183 to Form 10-K for year ended December 31, 1997.)
4(l) -	$100,000,000 Support Agreement, dated as of June 16, 1998, between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-194 to Form 10-Q for quarter ended June 30, 1998.)
4(m)-	$300,000,000 Support Agreement, dated as of November 18, 1998, between DTE Energy and DTE Capital Corporation. (Exhibit 4-199 to Form 10-K for year ended December 31, 1998.)
4(n) -	$400,000,000 Support Agreement, dated as of January 19, 1999, between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-201 to Form 10-K for year ended December 31, 1998.)
4(o) -	$40,000,000 Support Agreement, dated as of February 24, 1999 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-202 to Form 10-Q for quarter ended March 31, 1999.)
4(p) -	$50,000,000 Support Agreement, dated as of June 10, 1999 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-203 to Form 10-Q for quarter ended June 30, 1999.)
4(q) -	Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee. (Exhibit 4-196 to Form 10-Q for quarter ended June 30, 1998.)
4(r) -	First Supplemental Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee, creating the $100,000,000 Remarketed Notes, Series A due 2038, including form of Note. (Exhibit 4-197 to Form 10-Q for quarter ended June 30, 1998.)
4(s)-	Second Supplemental Indenture, dated as of November 1, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee, creating the $300,000,000 Remarketed Notes, 1998 Series B, including form of Note. (Exhibit 4-200 to Form 10-K for year ended December 31, 1998.)
*10(a)-	Certain arrangements pertaining to the employment of Michael C. Porter. (Exhibit 10-8* to Form 10-Q for Quarter ended September 30, 1997.)
*10(b) -	Form of Change-in-Control Severance Agreement, dated as of October 1, 1997, between DTE Energy Company and Gerard M. Anderson, Susan M. Beale, Robert J. Buckler, Michael C. Champley, Anthony F. Earley, Jr., Larry G. Garberding, Douglas R. Gipson, John E. Lobbia, Leslie L. Loomans, David E. Meador, Christopher C. Nern, Michael C. Porter, William R. Roller and S.

82

	Martin Taylor. (Exhibit 10-9* to Form 10-Q for quarter ended September 30, 1997.)
*10(c) -	Form of 1995 Indemnification Agreement between the Company and its directors and officers (Exhibit 3L (10-1) to DTE Energy Company Form 8-B dated January 2, 1996).
*10(d) -	Form of Indemnification Agreement between Detroit Edison and its officers other than those identified in *10(b) (Exhibit 10-41 to Detroit Edison’s Form 10-Q for quarter ended June 30, 1993.)
*10(e) -	Certain arrangements pertaining to the employment of S. Martin Taylor (Exhibit 10-38 to Detroit Edison’s Form 10-Q for quarter ended March 31, 1998.)
*10(f) -	Amended and Restated Post-Employment Income Agreement dated March 23, 1998, between Detroit Edison and Anthony F. Earley, Jr. (Exhibit 10-20 to Form 10-Q for quarter ended March 31, 1998.)
*10(g) -	Restricted Stock Agreement, dated March 23, 1998, between Detroit Edison and Anthony F. Earley, Jr. (Exhibit 10-20 to Form 10-Q for quarter ended March 31, 1998.)
*10(h) -	Amended and Restated Detroit Edison Savings Reparation Plan (February 23, 1998). Exhibit 10-19* for quarter ended March 31, 1998.)
*10(i) -	Certain arrangements pertaining to the employment of Larry G. Garberding (Exhibit 10-23* to Form 10-Q for quarter ended March 31, 1998).
*10(j) -	Form of Indemnification Agreement, between Detroit Edison and (1) John E. Lobbia, (2) Larry G. Garberding and (3) Anthony F. Earley, Jr. (Exhibit 10-24* to Form 10-Q for quarter ended March 3, 1998).
*10(k) -	Form of Indemnification Agreement between Detroit Edison and its directors (Exhibit 10-25* to Form 10-Q for quarter ended March 31, 1998).
*10(l) -	Executive Vehicle Program, dated October 1, 1993 (Exhibit 10-47 to Detroit Edison’s Form 10-Q for quarter ended September 30, 1993).
*10(m) -	Amendment No. 1 to Executive Vehicle Plan, November 1993 (Exhibit 10-58 to Detroit Edison’s Form 10-K for year ended December 31, 1993).
*10(n) -	Certain arrangements pertaining to the employment of Gerard M. Anderson (Exhibit 10-40 to Detroit Edison’s Form 10-K for year ended December 31, 1993).
*10(o) -	Long-Term Incentive Plan (Exhibit 10-3 to Form 10-K for year ended December 31, 1996).

83

*10(p) -	Amendment No. 1 to The Detroit Edison Company Long-Term Incentive Plan, effective December 31, 1998. (Exhibit 10-28* to Form 10-K for year ended December 31, 1998.)
*10(q) -	1999 Executive Incentive Plan Measures (Exhibit 10-33* to Form 10-Q for quarter ended March 31, 1999.)
*10(r) -	1999 Shareholder Value Improvement Plans-A Measures (Exhibit 10-32* to Form 10-Q for quarter ended March 31, 1999.)
*10(s) -	Fourth Restatement of The Benefit Equalization Plan for Certain Employees of The Detroit Edison Company (October 1997). (Exhibit 10-11* to Form 10-K for year ended December 31, 1997.)
*10(t) -	The Detroit Edison Company Key Employee Deferred Compensation Plan (October 1997). (Exhibit 10-12* to Form 10-K for year ended December 31, 1997.)
*10(u) -	The Detroit Edison Company Executive Incentive Plan (October 1997). (Exhibit 10-13* to Form 10-K for the year ended December 31, 1997.)
*10(v) -	Detroit Edison Company Shareholder Value Improvement Plan (October 1997). (Exhibit 10-15* to Form 10-K for year ended December 31, 1997.)
*10(w) -	Trust Agreement for DTE Energy Company Change-In-Control Severance Agreements between DTE Energy Company and Wachovia Bank, N.A. (Exhibit 10-16* to Form 10-K for year ended December 31, 1997.)
*10(x) -	Certain arrangements pertaining to the employment of David E. Meador (Exhibit 10-5 to Form 10-K for year ended December 31, 1997.)
*10(y) -	Amended and Restated Supplemental Long-Term Disability Plan, dated January 27, 1997. (Exhibit *10-4 to form 10-K for year ended December 31, 1996.)
*10(z) -	Fourth Restatement of the Retirement Reparation Plan for Certain Employees of The Detroit Edison Company (October 1997). Exhibit *10-10 to Form 10-K for year ended December 31, 1997.)
*10(aa) -	Sixth Restatement of The Detroit Edison Company Management Supplemental Benefit Plan (1998). (Exhibit 10-27* to Form 10-K for year ended December 31, 1998.)
*10(bb) -	DTE Energy Company Plan for Deferring the Payment of Directors’ Fees (As Amended and Restated Effective As of January 1, 1999). (Exhibit 10-29* to Form 10-K for year ended December 31, 1998.)

84

*10(cc) -	DTE Energy Company Deferred stock Compensation Plan for Non-Employee Directors, effective as of January 1, 1999. (Exhibit 10-30* to Form 10-K for year ended December 31, 1998.)
*10(dd) -	DTE Energy Company Retirement Plan for Non-Employee Directors (As Amended and Restated Effective As Of December 31, 1998). (Exhibit 10-31 to Form 10-K for year ended December 31, 1998.)
99(a) -	Belle River Participation Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-5 to Registration No. 2-81501).
99(b) -	Belle River Transmission Ownership and Operating Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501).
99(c) -	1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance Energy Company (an unaffiliated company) (“Renaissance”) and Detroit Edison (Exhibit 99-6 to Registration No. 33-50325).
99(d) -	First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between Detroit Edison and Renaissance (Exhibit 99-7 to Registration No. 33-50325).
99(e) -	Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between Detroit Edison and Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) -	Third Amendment, dated as of August 28, 1997, to 1988 Amended and Restated Loan Agreement between Detroit Edison and Renaissance. (Exhibit 99-22 to Form 10-Q for quarter ended September 30, 1997.)
99(g) -	$200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-12 to Registration No. 33-50325).
99(h) -	First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for quarter ended September 30, 1994).
99(i) -	Third Amendment, dated as of March 8, 1996, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-11 to Form 10-Q for quarter ended March 31, 1996).

85

99(j) -	Fourth Amendment, dated as of August 29, 1996, to $200,000,000 364-Day Credit Agreement as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-13 to Form 10-Q for quarter ended September 30, 1996).
99(k) -	Fifth Amendment, dated as of September 1, 1997, to $200,000,000 Multi-Year Credit Agreement, dated as of September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks Party thereto and Barclays Bank PLC, New York Branch, as Agent. (Exhibit 99-24 to Form 10-Q for quarter ended September 30, 1997.)
99(l) -	Seventh Amendment, dated as of August 26, 1999, to $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, as amended among The Detroit Edison Company, Renaissance Energy Company, the Banks parties thereto and Barclays Bank PLC, New York branch as Agent. (Exhibit 99-30 to Form 10-Q for quarter ended September 30, 1999.)
99(m) -	$200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325).
99(n) -	First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q for quarter ended September 30, 1994).
99(o) -	Third Amendment, dated as of March 8, 1996, to $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-12 to Form 10-Q for quarter ended March 31, 1996).
99(p) -	Fourth Amendment, dated as of September 1, 1996, to $200,000,000 Multi-Year (formerly Three-Year) Credit Agreement, dated as of September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-14 to Form 10-Q for quarter ended September 30, 1996).
99(q) -	Fifth Amendment, dated as of August 28, 1997, to $200,000,000 364-Day Credit Agreement, dated as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks Party thereto and Barclays Bank PLC, New York Branch, as Agent. (Exhibit 99-25 to Form 10-Q for quarter ended September 30, 1997.)

86

99(r) -	Sixth Amendment, dated as of August 27, 1998, to $200,000,000 364-Day Credit Agreement dated as
	of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank PLC, New York Branch, as agent. (Exhibit 99-32 to Registration No. 333-65765.)
99(s) -	1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance (Exhibit 99-9 to Registration No. 33-50325).
99(t) -	First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between Detroit Edison and Renaissance (Exhibit 99-10 to Registration No. 33-50325).
99(u) -	Eighth Amendment, dated as of August 26, 1999 to 1988 Amended and Restated Nuclear Fuel heat Purchase Contract between Detroit Edison and Renaissance Energy Company. (Exhibit 99-31 to Form 10-Q for quarter ended September 30, 1999.)
99(v) -	U.S. $160,000,000 Standby Note Purchase Credit Facility, dated as of October 26, 1999, among Detroit Edison, the Bank’s signatory thereto, Barclays Bank PLC, as Administrative Agent and Barclays Capital Inc., Lehman Brothers Inc. and Banc One Capital Markets, Inc., as Remarketing Agents. (Exhibit 99-29 to Form 10-Q for quarter ended September 30, 1999.)
99(w) -	Standby Note Purchase Credit Facility, dated as of September 12, 1997, among The Detroit Edison Company and the Bank’s Signatory thereto and The Chase Manhattan Bank, as Administrative Agent, and Citicorp Securities, Inc., Lehman Brokers, Inc., as Remarketing Agents and Chase Securities, Inc. as Arranger. (Exhibit 999-26 to Form 10-Q for quarter ended September 30, 1997.)
99(x) -	Master Trust Agreement (“Master Trust”), dated as of June 30, 1994, between Detroit Edison and Fidelity Management Trust Company relating to the Savings & Investment Plans (Exhibit 4-167 to Form 10-Q for quarter ended June 30, 1994).
99(y) -	First Amendment, effective as of February 1, 1995, to Master Trust (Exhibit 4-10 to Registration No. 333-00023).
99(z) -	Second Amendment, effective as of February 1, 1995 to Master Trust (Exhibit 4-11 to Registration No. 333-00023).
99(aa) -	Third Amendment, effective January 1, 1996, to Master Trust (Exhibit 4-12 to Registration No. 333-00023).

87

99(bb) -	Fourth Amendment to Trust Agreement Between Fidelity Management Trust Company and The Detroit Edison Company (July 1996). Exhibit 4-185 to Form 10-K for year ended December 31, 1997.)
99(cc) -	Fifth Amendment to Trust Agreement Between Fidelity Management Trust Company and The Detroit Edison Company (December 1997). Exhibit 4-186 to Form 10-K for the year ended December 31, 1997.)
99(dd) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Savings Reparation Plan (Exhibit 99-1 to Form 10-K for year ended December 31, 1996).
99(ee) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Retirement Reparation Plan (Exhibit 99-2 to Form 10-K for year ended December 31,1996).
99(ff) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Management Supplemental Benefit Plan (Exhibit 99-3 to Form 10-K for year ended December 31, 1996).
99(gg) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Benefit Equalization Plan (Exhibit 99-4 to Form 10-K for year ended December 31, 1996).
99(hh) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Plan for Deferring the Payment of Directors’ Fees (Exhibit 99-5 to Form 10-K for year ended December 31, 1996.
99 (ii) -	The Detroit Edison Company Irrevocable Grantor Trust for The DTE Energy Company Retirement Plan for Non-Employee Directors (Exhibit 99-6 to Form 10-K for year ended December 31, 1996).
99 (jj) -	DTE Energy Company Irrevocable Grantor Trust for The DTE Energy Company Plan for Deferring the Payment of Directors’ Fees (Exhibit 99-7 to Form 10-K for year ended December 31, 1996).

(b)	DTE Energy filed a report on Form 8-K, dated October 5, 1999, discussing the proposed merger with MCN. DTE Energy filed a report on Form 8-K, dated February 16, 2000, discussing its Common Share buyback program.
(c)	*Denotes management contract or compensatory plan or arrangement required to be entered as an exhibit to this report.

88

DTE ENERGY COMPANY

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

			Additions
	Balance									Balance
	at Beginning		Charged to		Charged to					at End
	of		Costs and		Other					of
Description	Period		Expenses		Accounts(a)		Deductions(b)			Period
	(Thousands)
YEAR 1999
Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet)	$	20,000	$	21,363	$	3,357	$	(23,720	)	$	21,000
YEAR 1998
Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet)	$	20,000	$	23,216	$	2,789	$	(26,005	)	$	20,000
YEAR 1997
Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet)	$	20,000	$	18,738	$	2,657	$	(21,395	)	$	20,000

(a) Collection of accounts previously written off.

(b) Uncollectible accounts written off.

89

THE DETROIT EDISON COMPANY

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

			Additions
	Balance									Balance
	at Beginning		Charged to		Charged to					at End
	of		Costs and		Other					of
Description	Period		Expenses		Accounts(a)		Deductions(b)			Period
	(Thousands)
YEAR 1999
Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet)	$	20,000	$	20,363	$	3,357	$	(23,720	)	$	20,000
YEAR 1998
Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet)	$	20,000	$	23,216	$	2,789	$	(26,005	)	$	20,000
YEAR 1997
Allowance for uncollectible accounts (shown as deduction from accounts receivable in balance sheet)	$	20,000	$	18,738	$	2,657	$	(21,395	)	$	20,000

(a) Collection of accounts previously written off.

(b) Uncollectible accounts written off.

90

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DTE ENERGY COMPANY
	(Registrant)
By /s/ ANTHONY F. EARLEY, JR	By /s/ LARRY G. GARBERDING
Anthony F. Earley, Jr. Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer	Larry G. Garberding Executive Vice President, Chief Financial Officer and Director
By /s/ DAVID E. MEADOR	By /s/ TERENCE E. ADDERLEY
David E. Meador Vice President	Terence E. Adderley, Director
By /s/ LILLIAN BAUDER	By /s/ DAVID BING
Lillian Bauder, Director	David Bing, Director
By /s/ WILLIAM C. BROOKS	By /s/ ALLAN D. GILMOUR
William C. Brooks, Director	Allan D. Gilmour, Director
By /s/ THEODORE S. LEIPPRANDT	By /s/JOHN E. LOBBIA
Theodore S. Leipprandt, Director	John E. Lobbia, Director
By /s/ EUGENE A. MILLER	By /s/ DEAN E. RICHARDSON
Eugene A. Miller, Director	Dean E. Richardson, Director
By /s/ CHARLES W. PRYOR, JR
Charles W. Pryor, Jr., Director

Date: February 23, 2000

91

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		THE DETROIT EDISON COMPANY
		(Registrant)
By /s/ ANTHONY F. EARLEY, JR	By	/s/ LARRY G. GARBERDING
Anthony F. Earley, Jr. Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer		Larry G. Garberding Executive Vice President, Chief Financial Officer and Director
By /s/ DANIEL G. BRUDZYNSKI	By	/s/ TERENCE E. ADDERLEY
Daniel G. Brudzynski Controller		Terence E. Adderley, Director
By /s/ LILLIAN BAUDER	By	/s/ DAVID BING
Lillian Bauder, Director		David Bing, Director
By /s/ WILLIAM C. BROOKS	By	/s/ ALLAN D. GILMOUR
William C. Brooks, Director		Allan D. Gilmour, Director
By /s/ THEODORE S. LEIPPRANDT	By	/s/JOHN E. LOBBIA
Theodore S. Leipprandt, Director		John E. Lobbia, Director
By /s/ EUGENE A. MILLER	By	/s/ DEAN E. RICHARDSON
Eugene A. Miller, Director		Dean E. Richardson, Director
By /s/CHARLES W. PRYOR, JR
Charles W. Pryor, Jr., Director

Date: February 23, 2000

92

Annual Reports on Form 10-K for DTE Energy Company
and The Detroit Edison Company

Exhibit Index

Exhibit			Page
Number			Number
2-1	- -	Agreement and Plan of Merger, among DTE Energy, MCN Energy Group Inc. and DTE Enterprises, Inc., dated as of October 4, 1999 and amended as of November 12, 1999.
4-205	- -	Supplemental Indenture, dated as of January 1, 2000, creating the General and Refunding Mortgage Bonds of 2000 Series A.
11-8	- -	DTE Energy Company Basic and Diluted Earnings Per Share of Common Stock.
12-21	- -	DTE Energy Company Computation of Ratio of Earnings to Fixed Charges.
12-22	- -	The Detroit Edison Company Computation of Ratio of Earnings to Fixed Charges.
12-23	- -	The Detroit Edison Company Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
21-4	- -	Subsidiaries of the Company and Detroit Edison.
23-13	- -	Consent of Deloitte & Touche LLP.
27-31	- -	Financial Data Schedule for the period ended December 31, 1999 for DTE Energy Company.
27-32	- -	Financial Data Schedule for the period ended December 31, 1999 for The Detroit Edison Company.
99-32	- -	Third Amended and Restated Credit Agreement, Dated as of January 18, 2000 among DTE Capital Corporation, the Initial Lenders, Citibank, N.A., as Agent, and ABN AMRO Bank N.V., Bank One N.A., Barclays Bank PLC, Bayerische Landesbank Girozertrale, Cayman Islands Branch, Comerica Bank and Den Daske Bank Aktieselskab, as Co-Agents.

(ii) Exhibits incorporated herein by reference.

3(a) - - Amended and Restated Articles of Incorporation of DTE Energy Company, dated December 13, 1995. (Exhibit 3-5 to Form 10-Q for quarter ended September 30, 1997)

3(b)	- -	Certificate of Designation of Series A Junior Participating Preferred Stock of DTE Energy Company. Exhibit 3-6 to Form 10-Q for quarter ended September 30, 1997.)
3(c)	- -	Restated Articles of Incorporation of Detroit Edison, as filed December 10, 1991 with the State of Michigan, Department of Commerce — Corporation and Securities Bureau (Exhibit 3-13 to Form 10-Q for quarter ended June 30, 1999.)
3(d)	- -	Articles of Incorporation of DTE Enterprises, Inc. (Exhibit 3.5 to Registration No. 333-89175.)
3(e)	- -	Rights Agreement, dated as of September 23, 1997, by and between DTE Energy Company and The Detroit Edison Company, as Rights Agent (Exhibit 4-1 to DTE Energy Company Current Report on Form 8-K, dated September 23, 1997.)
3(f)	- -	Agreement and Plan of Exchange (Exhibit 1(2) to DTE Energy Form 8-B filed January 2, 1996, File No. 1-11607.)
3(g)	- -	Bylaws of DTE Energy Company, as amended through September 22, 1999. (Exhibit 3-3 to Registration No. 333-89175.)
3(h)	- -	Bylaws of The Detroit Edison Company, as amended through September 22, 1999. (Exhibit 3-14 to Form 10-Q for quarter ended September 30, 1999.)
3(i)	- -	Bylaws of DTE Enterprises, Inc. (Exhibit 3.6 to Registration No. 333-89175.)
4(a)	- -	Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison (File No. 1-2198) and Bankers Trust Company as Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings as set forth below:

September 1, 1947	Exhibit B-20 to Registration No. 2-7136
November 15, 1971	Exhibit 2-B-38 to Registration No. 2-42160
January 15, 1973	Exhibit 2-B-39 to Registration No. 2-46595
June 1, 1978	Exhibit 2-B-51 to Registration No. 2-61643
June 30, 1982	Exhibit 4-30 to Registration No. 2-78941
August 15, 1982	Exhibit 4-32 to Registration No. 2-79674
October 15, 1985	Exhibit 4-170 to Form 10-K for year ended December 31, 1994
November 30, 1987	Exhibit 4-139 to Form 10-K for year ended December 31, 1992
July 15, 1989	Exhibit 4-171 to Form 10-K for year ended December 31, 1994

December 1, 1989	Exhibit 4-172 to Form 10-K for year ended December 31, 1994
February 15, 1990	Exhibit 4-173 to Form 10-K for year ended December 31, 1994
April 1, 1991	Exhibit 4-15 to Form 10-K for year ended December 31, 1996
November 1, 1991	Exhibit 4-181 to Form 10-K for year ended December 31, 1996
January 15, 1992	Exhibit 4-182 to Form 10-K for year ended December 31, 1996
February 29, 1992	Exhibit 4-187 to Form 10-Q for quarter ended March 31, 1998
April 15, 1992	Exhibit 4-188 to Form 10-Q for quarter ended March 31, 1998
July 15, 1992	Exhibit 4-189 to Form 10-Q for quarter ended March 31, 1998
July 31, 1992	Exhibit 4-190 to Form 10-Q for quarter ended September 30, 1992
January 1, 1993	Exhibit 4-131 to Registration No. 33-56496
March 1, 1993	Exhibit 4-191 to Form 10-Q for quarter ended March 31, 1998
March 15, 1993	Exhibit 4-192 to Form 10-Q for quarter ended March 31, 1998
April 1, 1993	Exhibit 4-143 to Form 10-Q for quarter ended March 31, 1993
April 26, 1993	Exhibit 4-144 to Form 10-Q for quarter ended March 31, 1993
May 31, 1993	Exhibit 4-148 to Registration No. 33-64296
June 30, 1993	Exhibit 4-149 to Form 10-Q for quarter ended June 30, 1993 (1993 Series AP)
June 30, 1993	Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993 Series H)
September 15, 1993	Exhibit 4-158 to Form 10-Q for quarter ended September 30, 1993
March 1, 1994	Exhibit 4-163 to Registration No. 33-53207
June 15, 1994	Exhibit 4-166 to Form 10-Q for quarter ended June 30, 1994
August 15, 1994	Exhibit 4-168 to Form 10-Q for quarter ended September 30, 1994
December 1, 1994	Exhibit 4-169 to Form 10-K for year ended December 31, 1994
August 1, 1995	Exhibit 4-174 to Form 10-Q for quarter ended September 30, 1995
August 1, 1999	Exhibit 4-204 to Form 10-Q for quarter ended September 30, 1999
August 15, 1999	Exhibit 4-205 to Form 10-Q for quarter ended September 30, 1999

4(b) -	Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration No. 33-50325).
4(c) -	First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration No. 33-50325).
4(d) -	Second Supplemental Note Indenture, dated as of September 15, 1993 (Exhibit 4-159 to Form 10-Q for quarter ended September 30, 1993).
4(e) -	First Amendment, dated as of August 15, 1996, to Second Supplemental Note Indenture (Exhibit 4-17 to Form 10-Q for quarter ended September 30, 1996).
4(f) -	Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-169 to Form 10-Q for quarter ended September 30, 1994).
4(g) -	First Amendment, dated as of December 12, 1995, to Third Supplemental Note Indenture, dated as of August 15, 1994 (Exhibit 4-12 to Registration No. 333-00023).
4(h) -	Sixth Supplemental Note Indenture, dated as of May 1, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.54% Quarterly Income Debt Securities (“QUIDS”), including form of QUIDS. (Exhibit 4-193 to Form 10-Q for quarter ended June 30, 1998.)
4(i) -	Seventh Supplemental Note Indenture, dated as of October 15, 1998, between Detroit Edison and Bankers Trust Company, as Trustee, creating the 7.375% QUIDS, including form of QUIDS. (Exhibit 4-198 to Form 10-K for year ended December 31, 1998.)
4(j) -	Standby Note Purchase Credit Facility, dated as of August 17, 1994, among The Detroit Edison Company, Barclays Bank PLC, as Bank and Administrative Agent, Bank of America, The Bank of new York, The Fuji Bank Limited, the Long-Term Credit Bank of Japan, LTD, Union Bank and Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. as Remarketing Agents (Exhibit 99-18 to Form 10-Q for quarter ended September 30, 1994.)
4(k) -	$60,000,000 Support Agreement dated as of January 21, 1998 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-183 to Form 10-K for year ended December 31, 1997.)
4(l) -	$100,000,000 Support Agreement, dated as of June 16, 1998, between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-194 to Form 10-Q for quarter ended June 30, 1998.)

4(m) -	$300,000,000 Support Agreement, dated as of November 18, 1998, between DTE Energy and DTE Capital Corporation. (Exhibit 4-199 to Form 10-K for year ended December 31, 1998.)
4(n) -	$400,000,000 Support Agreement, dated as of January 19, 1999, between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-201 to Form 10-K for year ended December 31, 1998.)
4(o) -	$40,000,000 Support Agreement, dated as of February 24, 1999 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-202 to Form 10-Q for quarter ended March 31, 1999.)
4(p) -	$50,000,000 Support Agreement, dated as of June 10, 1999 between DTE Energy Company and DTE Capital Corporation. (Exhibit 4-203 to Form 10-Q for quarter ended June 30, 1999.)
4(q) -	Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee. (Exhibit 4-196 to Form 10-Q for quarter ended June 30, 1998.)
4(r) -	First Supplemental Indenture, dated as of June 15, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee, creating the $100,000,000 Remarketed Notes, Series A due 2038, including form of Note. (Exhibit 4-197 to Form 10-Q for quarter ended June 30, 1998.)
4(s) -	Second Supplemental Indenture, dated as of November 1, 1998, between DTE Capital Corporation and The Bank of New York, as Trustee, creating the $300,000,000 Remarketed Notes, 1998 Series B, including form of Note. (Exhibit 4-200 to Form 10-K for year ended December 31, 1998.)
*10(a)	Certain arrangements pertaining to the employment of Michael C. Porter. (Exhibit 10-8* to Form 10-Q for Quarter ended September 30, 1997.)
*10(b)	Form of Change-in-Control Severance Agreement, dated as of October 1, 1997, between DTE Energy Company and Gerard M. Anderson, Susan M. Beale, Robert J. Buckler, Michael C. Champley, Anthony F. Earley, Jr., Larry G. Garberding, Douglas R. Gipson, John E. Lobbia, Leslie L. Loomans, David E. Meador, Christopher C. Nern, Michael C. Porter, William R. Roller and S. Martin Taylor. (Exhibit 10-9* to Form 10-Q for quarter ended September 30, 1997.)
*10(c) -	Form of 1995 Indemnification Agreement between the Company and its directors and officers (Exhibit 3L (10-1) to DTE Energy Company Form 8-B dated January 2, 1996).

*10(d) -	Form of Indemnification Agreement between Detroit Edison and its officers other than those identified in *10(b) (Exhibit 10-41 to Detroit Edison’s Form 10-Q for quarter ended June 30, 1993.)
*10(e) -	Certain arrangements pertaining to the employment of S. Martin Taylor (Exhibit 10-38 to Detroit Edison’s Form 10-Q for quarter ended March 31, 1998.)
*10(f) -	Amended and Restated Post-Employment Income Agreement dated March 23, 1998, between Detroit Edison and Anthony F. Earley, Jr. (Exhibit 10-20 to Form 10-Q for quarter ended March 31, 1998.)
*10(g) -	Restricted Stock Agreement, dated March 23, 1998, between Detroit Edison and Anthony F. Earley, Jr. (Exhibit 10-20 to Form 10-Q for quarter ended March 31, 1998.)
*10(h) -	Amended and Restated Detroit Edison Savings Reparation Plan (February 23, 1998). Exhibit 10-19* for quarter ended March 31, 1998.)
*10(i) -	Certain arrangements pertaining to the employment of Larry G. Garberding (Exhibit 10-23* to Form 10-Q for quarter ended March 31, 1998).
*10(j) -	Form of Indemnification Agreement, between Detroit Edison and (1) John E. Lobbia, (2) Larry G. Garberding and (3) Anthony F. Earley, Jr. (Exhibit 10-24* to Form 10-Q for quarter ended March 3, 1998).
*10(k) -	Form of Indemnification Agreement between Detroit Edison and its directors (Exhibit 10-25* to Form 10-Q for quarter ended March 31, 1998).
*10(l) -	Executive Vehicle Program, dated October 1, 1993 (Exhibit 10-47 to Detroit Edison’s Form 10-Q for quarter ended September 30, 1993).
*10(m) -	Amendment No. 1 to Executive Vehicle Plan, November 1993 (Exhibit 10-58 to Detroit Edison’s Form 10-K for year ended December 31, 1993).
*10(n) -	Certain arrangements pertaining to the employment of Gerard M. Anderson (Exhibit 10-40 to Detroit Edison’s Form 10-K for year ended December 31, 1993).
*10(o) -	Long-Term Incentive Plan (Exhibit 10-3 to Form 10-K for year ended December 31, 1996).
*10(p) -	Amendment No. 1 to The Detroit Edison Company Long-Term Incentive Plan, effective December 31, 1998. (Exhibit 10-28* to Form 10-K for year ended December 31, 1998.)

*10(q) -	1999 Executive Incentive Plan Measures (Exhibit 10-33* to Form 10-Q for quarter ended March 31, 1999.)
*10(r) -	1999 Shareholder Value Improvement Plans-A Measures (Exhibit 10-32* to Form 10-Q for quarter ended March 31, 1999.)
*10(s) -	Fourth Restatement of The Benefit Equalization Plan for Certain Employees of The Detroit Edison Company (October 1997). (Exhibit 10-11* to Form 10-K for year ended December 31, 1997.)
*10(t) -	The Detroit Edison Company Key Employee Deferred Compensation Plan (October 1997). (Exhibit 10-12* to Form 10-K for year ended December 31, 1997.)
*10(u) -	The Detroit Edison Company Executive Incentive Plan (October 1997). (Exhibit 10-13* to Form 10-K for the year ended December 31, 1997.)
*10(v) -	Detroit Edison Company Shareholder Value Improvement Plan (October 1997). (Exhibit 10-15* to Form 10-K for year ended December 31, 1997.)
*10(w) -	Trust Agreement for DTE Energy Company Change-In-Control Severance Agreements between DTE Energy Company and Wachovia Bank, N.A. (Exhibit 10-16* to Form 10-K for year ended December 31, 1997.)
*10(x) -	Certain arrangements pertaining to the employment of David E. Meador (Exhibit 10-5 to Form 10-K for year ended December 31, 1997.)
*10(y) -	Amended and Restated Supplemental Long-Term Disability Plan, dated January 27, 1997. (Exhibit *10-4 to form 10-K for year ended December 31, 1996.)
*10(z) -	Fourth Restatement of the Retirement Reparation Plan for Certain Employees of The Detroit Edison Company (October 1997). Exhibit *10-10 to Form 10-K for year ended December 31, 1997.)
*10(aa) -	Sixth Restatement of The Detroit Edison Company Management Supplemental Benefit Plan (1998). (Exhibit 10-27* to Form 10-K for year ended December 31, 1998.)
*10(bb) -	DTE Energy Company Plan for Deferring the Payment of Directors’ Fees (As Amended and Restated Effective As of January 1, 1999). (Exhibit 10-29* to Form 10-K for year ended December 31, 1998.)

*10(cc) -	DTE Energy Company Deferred stock Compensation Plan for Non-Employee Directors, effective as of January 1, 1999. (Exhibit 10-30* to Form 10-K for year ended December 31, 1998.)
*10(dd) -	DTE Energy Company Retirement Plan for Non-Employee Directors (As Amended and Restated Effective As Of December 31, 1998). (Exhibit 10-31 to Form 10-K for year ended December 31, 1998.)
99(a) -	Belle River Participation Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-5 to Registration No. 2-81501).
99(b) -	Belle River Transmission Ownership and Operating Agreement between Detroit Edison and Michigan Public Power Agency, dated as of December 1, 1982 (Exhibit 28-6 to Registration No. 2-81501).
99(c) -	1988 Amended and Restated Loan Agreement, dated as of October 4, 1988, between Renaissance Energy Company (an unaffiliated company) (“Renaissance”) and Detroit Edison (Exhibit 99-6 to Registration No. 33-50325).
99(d) -	First Amendment to 1988 Amended and Restated Loan Agreement, dated as of February 1, 1990, between Detroit Edison and Renaissance (Exhibit 99-7 to Registration No. 33-50325).
99(e) -	Second Amendment to 1988 Amended and Restated Loan Agreement, dated as of September 1, 1993, between Detroit Edison and Renaissance (Exhibit 99-8 to Registration No. 33-50325).
99(f) -	Third Amendment, dated as of August 28, 1997, to 1988 Amended and Restated Loan Agreement between Detroit Edison and Renaissance. (Exhibit 99-22 to Form 10-Q for quarter ended September 30, 1997.)
99(g) -	$200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank PLC, New York Branch, as Agent (Exhibit 99-12 to Registration No. 33-50325).
99(h) -	First Amendment, dated as of August 31, 1994, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-19 to Form 10-Q for quarter ended September 30, 1994).
99(i) -	Third Amendment, dated as of March 8, 1996, to $200,000,000 364-Day Credit Agreement, dated September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays

	Bank, PLC, New York Branch, as Agent (Exhibit 99-11 to Form 10-Q for quarter ended March 31, 1996).
99(j) -	Fourth Amendment, dated as of August 29, 1996, to $200,000,000 364-Day Credit Agreement as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-13 to Form 10-Q for quarter ended September 30, 1996).
99(k) -	Fifth Amendment, dated as of September 1, 1997, to $200,000,000 Multi-Year Credit Agreement, dated as of September 1, 1993, as amended, among Detroit Edison, Renaissance, the Banks Party thereto and Barclays Bank PLC, New York Branch, as Agent. (Exhibit 99-24 to Form 10-Q for quarter ended September 30, 1997.)
99(l) -	Seventh Amendment, dated as of August 26, 1999, to $200,000,000 364-Day Credit Agreement, dated as of September 1, 1993, as amended among The Detroit Edison Company, Renaissance Energy Company, the Banks parties thereto and Barclays Bank PLC, New York branch as Agent. (Exhibit 99-30 to Form 10-Q for quarter ended September 30, 1999.)
99(m) -	$200,000,000 Three-Year Credit Agreement, dated September 1, 1993, among Detroit Edison, Renaissance and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-13 to Registration No. 33-50325).
99(n) -	First Amendment, dated as of September 1, 1994, to $200,000,000 Three-Year Credit Agreement, dated as of September 1, 1993, among The Detroit Edison Company, Renaissance Energy Company, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-20 to Form 10-Q for quarter ended September 30, 1994).
99(o) -	Third Amendment, dated as of March 8, 1996, to $200,000,000 Three-Year Credit Agreement, dated September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-12 to Form 10-Q for quarter ended March 31, 1996).
99(p) -	Fourth Amendment, dated as of September 1, 1996, to $200,000,000 Multi-Year (formerly Three-Year) Credit Agreement, dated as of September 1, 1993, as amended among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank, PLC, New York Branch, as Agent (Exhibit 99-14 to Form 10-Q for quarter ended September 30, 1996).
99(q) -	Fifth Amendment, dated as of August 28, 1997, to $200,000,000 364-Day Credit Agreement, dated as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks Party thereto and

	Barclays Bank PLC, New York Branch, as Agent. (Exhibit 99-25 to Form 10-Q for quarter ended September 30, 1997.)
99(r) -	Sixth Amendment, dated as of August 27, 1998, to $200,000,000 364-Day Credit Agreement dated as of September 1, 1990, as amended, among Detroit Edison, Renaissance, the Banks party thereto and Barclays Bank PLC, New York Branch, as agent. (Exhibit 99-32 to Registration No. 333-65765.)
99(s) -	1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated October 4, 1988, between Detroit Edison and Renaissance (Exhibit 99-9 to Registration No. 33-50325).
99(t) -	First Amendment to 1988 Amended and Restated Nuclear Fuel Heat Purchase Contract, dated as of February 1, 1990, between Detroit Edison and Renaissance (Exhibit 99-10 to Registration No. 33-50325).
99(u) -	Eighth Amendment, dated as of August 26, 1999 to 1988 Amended and Restated Nuclear Fuel heat Purchase Contract between Detroit Edison and Renaissance Energy Company. (Exhibit 99-31 to Form 10-Q for quarter ended September 30, 1999.)
99(v) -	U.S. $160,000,000 Standby Note Purchase Credit Facility, dated as of October 26, 1999, among Detroit Edison, the Bank’s signatory thereto, Barclays Bank PLC, as Administrative Agent and Barclays Capital Inc., Lehman Brothers Inc. and Banc One Capital Markets, Inc., as Remarketing Agents. (Exhibit 99-29 to Form 10-Q for quarter ended September 30, 1999.)
99(w) -	Standby Note Purchase Credit Facility, dated as of September 12, 1997, among The Detroit Edison Company and the Bank’s Signatory thereto and The Chase Manhattan Bank, as Administrative Agent, and Citicorp Securities, Inc., Lehman Brokers, Inc., as Remarketing Agents and Chase Securities, Inc. as Arranger. (Exhibit 999-26 to Form 10-Q for quarter ended September 30, 1997.)
99(x) -	Master Trust Agreement (“Master Trust”), dated as of June 30, 1994, between Detroit Edison and Fidelity Management Trust Company relating to the Savings & Investment Plans (Exhibit 4-167 to Form 10-Q for quarter ended June 30, 1994).
99(y) -	First Amendment, effective as of February 1, 1995, to Master Trust (Exhibit 4-10 to Registration No. 333-00023).
99(z) -	Second Amendment, effective as of February 1, 1995 to Master Trust (Exhibit 4-11 to Registration No. 333-00023).
99(aa) -	Third Amendment, effective January 1, 1996, to Master Trust (Exhibit 4-12 to Registration No. 333-00023).

99(bb) -	Fourth Amendment to Trust Agreement Between Fidelity Management Trust Company and The Detroit Edison Company (July 1996). Exhibit 4-185 to Form 10-K for year ended December 31, 1997.)
99(cc) -	Fifth Amendment to Trust Agreement Between Fidelity Management Trust Company and The Detroit Edison Company (December 1997). Exhibit 4-186 to Form 10-K for the year ended December 31, 1997.)
99(dd) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Savings Reparation Plan (Exhibit 99-1 to Form 10-K for year ended December 31, 1996).
99(ee) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Retirement Reparation Plan (Exhibit 99-2 to Form 10-K for year ended December 31,1996).
99(ff) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Management Supplemental Benefit Plan (Exhibit 99-3 to Form 10-K for year ended December 31, 1996).
99(gg) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Benefit Equalization Plan (Exhibit 99-4 to Form 10-K for year ended December 31, 1996).
99(hh) -	The Detroit Edison Company Irrevocable Grantor Trust for The Detroit Edison Company Plan for Deferring the Payment of Directors’ Fees (Exhibit 99-5 to Form 10-K for year ended December 31, 1996.
99(ii) -	The Detroit Edison Company Irrevocable Grantor Trust for The DTE DTE Energy Company Retirement Plan for Non-Employee Directors (Exhibit 99-6 to Form 10-K for year ended December 31, 1996).
99 (jj) -	DTE Energy Company Irrevocable Grantor Trust for The DTE Energy Company Plan for Deferring the Payment of Directors’ Fees (Exhibit 99-7 to Form 10-K for year ended December 31, 1996).

* Denotes management contract or compensatory plan or arrangement required to be entered as an exhibit to this report.

  EX-2.1 2 AGREEMENT AND PLAN OF MERGER 1 EXHIBIT 2-1 AGREEMENT AND PLAN OF MERGER AMONG DTE ENERGY COMPANY MCN ENERGY GROUP INC. AND DTE ENTERPRISES, INC. DATED AS OF OCTOBER 4, 1999 AS AMENDED AS OF NOVEMBER 12, 1999 2 TABLE OF CONTENTS

PAGE ---- RECITALS............................................................. 1 ARTICLE I The Merger; Closing; Effective Time................................ 1 1.1. The Merger.................................................. 1 1.2. Closing..................................................... 1 1.3. Effective Time.............................................. 1 ARTICLE II Articles of Incorporation and By-Laws of the Surviving Corporation..................................................... 1 2.1. The Articles of Incorporation............................... 1 2.2. The By-Laws................................................. 2 ARTICLE III Officers and Directors of the Surviving Corporation................ 2 3.1. Directors................................................... 2 3.2. Officers.................................................... 2 ARTICLE IV Effect of the Merger on Capital Stock; Election Procedures......... 2 4.1. Effect on Capital Stock..................................... 2 (a) Merger Consideration.................................... 2 (b) Cancellation of Shares.................................. 2 (c) Merger Sub.............................................. 2 4.2. Allocation of Merger Consideration; Election Procedures; Exchange Procedures......................................... 3 (a) Allocation.............................................. 3 (b) Election Procedures..................................... 3 (c) Exchange and Payment Procedures......................... 5 (d) Distributions with Respect to Unexchanged Shares; Voting.................................................. 5 (e) Transfers............................................... 5 (f) Fractional Shares....................................... 5 (g) Termination of Exchange Fund............................ 6 (h) Lost, Stolen or Destroyed Certificates.................. 6 (i) Affiliates.............................................. 6 4.3. Dissenters' Rights.......................................... 6 4.4. Adjustments to Prevent Dilution............................. 6 4.5. Tax Opinion Adjustment...................................... 7 4.6. Uncertificated Shares of Parent Common Stock................ 7 ARTICLE V Representations and Warranties..................................... 7 5.1. Representations and Warranties of the Company, Parent and Merger Sub.................................................. 7 (a) Organization, Good Standing and Qualification........... 7 (b) Capital Structure....................................... 8 (c) Corporate Authority; Approval and Fairness.............. 9 (d) Governmental Filings; No Violations..................... 10 (e) Reports; Financial Statements........................... 11 (f) Absence of Certain Changes.............................. 11 (g) Litigation and Liabilities.............................. 11 (h) Employee Benefits....................................... 12 (i) Compliance with Laws; Permits........................... 13 (j) Takeover Statutes....................................... 13

A-i 3

PAGE ---- (k) Environmental Matters................................... 13 (l) Taxes................................................... 14 (m) Labor Matters........................................... 15 (n) Intellectual Property................................... 15 (o) Insurance............................................... 15 (p) Rights Plan............................................. 15 (q) Brokers and Finders..................................... 16 (r) Year 2000............................................... 16 (s) Regulatory Proceedings.................................. 16 (t) FERC Jurisdiction....................................... 16 (u) Regulation as a Utility................................. 16 (v) Ownership of Shares..................................... 16 ARTICLE VI Covenants.......................................................... 17 6.1. Interim Operations.......................................... 17 6.2. Acquisition Proposals....................................... 19 6.3. Information Supplied........................................ 21 6.4. Shareholders Meetings....................................... 21 6.5. Filings; Other Actions; Notification........................ 21 6.6. Access...................................................... 22 6.7. Affiliates.................................................. 23 6.8. Stock Exchange Listing and De-listing....................... 23 6.9. Publicity................................................... 23 6.10. Benefits.................................................... 23 (a) Stock Options........................................... 23 (b) Employee Benefits....................................... 24 (c) Election to Parent's Board of Directors; Management Executive Committee..................................... 25 (d) Employees............................................... 25 6.11. Expenses.................................................... 25 6.12. Indemnification; Directors' and Officers' Insurance......... 25 6.13. Takeover Statutes........................................... 26 6.14. Dividends................................................... 26 6.15. Rate Matters................................................ 26 6.16. Taxation.................................................... 26 6.17. Transition Matters.......................................... 26 6.18. Community Involvement....................................... 27 6.19. 1935 Act and Power Act...................................... 27 6.20. Feline Prides............................................... 27 ARTICLE VII Conditions......................................................... 28 7.1. Conditions to Each Party's Obligation to Effect the Merger...................................................... 28 (a) Shareholder Approval.................................... 28 (b) NYSE Listing............................................ 28 (c) Regulatory Consents..................................... 28 (d) Litigation.............................................. 28 (e) S-4..................................................... 28 (f) Blue Sky Approvals...................................... 28 (g) Certain Transactions.................................... 28 7.2. Conditions to Obligations of Parent and Merger Sub.......... 28 (a) Representations and Warranties.......................... 28

A-ii 4

PAGE ---- (b) Performance of Obligations of the Company............... 29 (c) Consents Under Agreements............................... 29 (d) Accountants Letter...................................... 29 (e) Affiliates Letters...................................... 29 (f) Material Adverse Effect................................. 29 (g) Tax Opinion............................................. 29 (h) Governmental Consents................................... 29 7.3. Conditions to Obligation of the Company..................... 29 (a) Representations and Warranties.......................... 29 (b) Performance of Obligations of Parent and Merger Sub..... 30 (c) Consents Under Agreements............................... 30 (d) Accountants Letter...................................... 30 (e) Material Adverse Effect................................. 30 (f) Tax Opinion............................................. 30 ARTICLE VIII Termination........................................................ 30 8.1. Termination by Mutual Consent............................... 30 8.2. Termination by Either Parent or the Company................. 30 8.3. Termination by the Company.................................. 31 8.4. Termination by Parent....................................... 31 8.5. Effect of Termination and Abandonment....................... 32 ARTICLE IX Miscellaneous and General.......................................... 33 9.1. Survival.................................................... 33 9.2. Modification or Amendment................................... 33 9.3. Waiver of Conditions........................................ 33 9.4. Counterparts................................................ 33 9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL............... 33 9.6. Notices..................................................... 34 9.7. Entire Agreement............................................ 34 9.8. No Third Party Beneficiaries................................ 34 9.9. Obligations of Parent and of the Company.................... 35 9.10. Severability................................................ 35 9.11. Interpretation.............................................. 35 9.12. Assignment.................................................. 35

A-iii 5 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated as of October 4, 1999 and as amended as of November 12, 1999, among DTE Energy Company, a Michigan corporation ("Parent"), MCN Energy Group Inc., a Michigan corporation (the "Company"), and DTE Enterprises, Inc., a Michigan corporation and wholly owned subsidiary of Parent ("Merger Sub," the Company and Merger Sub sometimes being hereinafter collectively referred to as the "Constituent Corporations"). RECITALS WHEREAS, the respective boards of directors of each of Parent, Merger Sub and the Company have approved the merger of the Company with and into Merger Sub (the "Merger") and approved the Merger upon the terms and subject to the conditions set forth in this Agreement; WHEREAS, it is intended that, for federal income tax purposes, the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the "Code"); WHEREAS, the Company, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement. NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME 1.1. The Merger. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined in Section 1.3) the Company shall be merged with and into Merger Sub and the separate corporate existence of the Company shall thereupon cease. Merger Sub shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation"), and the separate corporate existence of Merger Sub with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger, except as set forth in Article III. The Merger shall have the effects specified in the Michigan Business Corporation Act, as amended (the "MBCA"). 1.2. Closing. The closing of the Merger (the "Closing") shall take place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York at 9:00 A.M. on the fifth business day after the last to be fulfilled or waived of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions) shall be satisfied or waived in accordance with this Agreement or (ii) at such other place and time and/or on such other date as the Company and Parent may agree in writing (the "Closing Date"). 1.3. Effective Time. As soon as practicable following the Closing, the Company and Parent will cause a Certificate of Merger (the "Michigan Certificate of Merger") to be executed and filed with the Department of Commerce of the State of Michigan as provided in Section 450.1707 of the MBCA. The Merger shall become effective at the time when the Michigan Certificate of Merger has been duly endorsed by the Department of Commerce of the State of Michigan (the "Effective Time"). ARTICLE II ARTICLES OF INCORPORATION AND BY-LAWS OF THE SURVIVING CORPORATION 2.1. The Articles of Incorporation. The articles of incorporation of the Surviving Corporation shall be the articles of incorporation of Merger Sub as in effect immediately prior to the Effective Time (the "Articles"), until duly amended as provided therein or by applicable law. A-1 6 2.2. The By-Laws. The by-laws of Merger Sub in effect at the Effective Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until thereafter amended as provided therein or by applicable law. ARTICLE III OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION 3.1. Directors. The directors of Merger Sub at the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles and the By-Laws. 3.2. Officers. The officers of the Company at the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Articles and the By-Laws. ARTICLE IV EFFECT OF THE MERGER ON CAPITAL STOCK; ELECTION PROCEDURES 4.1. Effect on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of the holder of any capital stock of the Company: (a) Merger Consideration. Subject to the allocation and election procedures in Section 4.2 and subject to Section 4.5, each share of the common stock, par value $0.01 per share, of the Company (the "Common Stock"), including the associated right to purchase Series A Junior Participating Preferred Stock (each a "Right" and together with the Common Stock, a "Share" and, collectively, the "Shares") issued pursuant to the Rights Agreement, dated as of December 20, 1989, as amended by an amendment dated as of July 23, 1997, by and between the Company and First Chicago Trust Company of New York, as Rights Agent, (the "Rights Agreement"), issued and outstanding immediately prior to the Effective Time (other than Shares owned by Parent or Shares that are owned by the Company or any direct or indirect Subsidiary of the Company and in each case not held on behalf of third parties (each, an "Excluded Share" and collectively, "Excluded Shares")) shall be converted into the right to receive either (i) $28.50 in cash (the "Cash Consideration") or (ii) .775 shares of common stock, without par value, of Parent (the "Parent Common Stock") (the "Stock Consideration" and, together with the Cash Consideration, the "Merger Consideration"). All references in this agreement to Parent Common Stock to be issued pursuant to the Merger shall be deemed to include the corresponding rights ("Parent Rights") to purchase Series A Junior Participating Preferred Stock of Parent pursuant to the Parent Rights Agreement (as defined in Section 5.1(b)(ii)), except where the context otherwise requires. At the Effective Time, all Shares shall no longer be outstanding and shall be canceled and retired and shall cease to exist, and each certificate (a "Certificate") representing any of such Shares (other than Excluded Shares) shall thereafter represent only the right to receive the Merger Consideration and the right, if any, to receive pursuant to Section 4.2(f) cash in lieu of fractional shares into which such Shares have been converted pursuant to this Section 4.1(a) and any dividends or other distributions pursuant to Section 4.2(d). (b) Cancellation of Shares. Each Excluded Share shall, by virtue of the Merger and without any action on the part of the holder thereof, cease to be outstanding, shall be canceled and retired without payment of any consideration therefor and shall cease to exist. (c) Merger Sub. At the Effective Time, each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain outstanding and each certificate therefor shall continue to evidence one share of common stock of the Surviving Corporation. A-2 7 4.2. Allocation of Merger Consideration; Election Procedures; Exchange Procedures. (a) Allocation. Subject to Section 4.5, notwithstanding anything in this Agreement to the contrary, the number of Shares (the "Cash Election Number") to be converted into the right to receive Cash Consideration in the Merger shall be equal to 55 percent of the number of Shares issued and outstanding immediately prior to the Effective Time of the Merger (not including any Excluded Shares). Subject to Section 4.5, the number of Shares to be converted into the right to receive Stock Consideration in the Merger (the "Stock Election Number") shall be equal to the number of Shares issued and outstanding immediately prior to the Effective Time of the Merger (not including any Excluded Shares) less the Cash Election Number. (b) Election Procedures. (i) As of the Effective Time, Parent shall deposit, or shall cause to be deposited, with an exchange agent selected by Parent, with the Company's prior approval, which shall not be unreasonably withheld (the "Exchange Agent"), for the benefit of the holders of Shares, (A) certificates representing the shares of Parent Common Stock, (B) cash and (C) any dividends or other distributions with respect to the Parent Common Stock to be issued or paid pursuant to Sections 4.1 and 4.2(d) in exchange for outstanding Shares upon due surrender of the Certificates pursuant to the provisions of this Article IV (such cash and certificates for shares of Parent Common Stock, together with the amount of any dividends or other distributions payable with respect thereto, being hereinafter referred to as the "Exchange Fund"). (ii) Subject to allocation and proration in accordance with the provisions of this Section 4.2 and Section 4.5, if appropriate, each record holder of Shares (other than Excluded Shares) issued and outstanding immediately prior to the Election Deadline (as defined below) shall be entitled (A) to elect to receive in respect of each such Share (x) Cash Consideration (a "Cash Election") or (y) Stock Consideration (a "Stock Election") or (B) to indicate that such record holder has no preference as to the receipt of Cash Consideration or Stock Consideration for such Shares (a "Non-Election"). Shares in respect of which a Non-Election is made (including shares in respect of which such an election is deemed to have been made pursuant to this Section 4.2 and Section 4.3 (collectively, "Non-Election Shares")) shall be deemed by Parent, in its sole and absolute discretion, subject to Section 4.2(a), to be, in whole or in part, Shares in respect of which Cash Elections or Stock Elections have been made. (iii) Elections pursuant to Section 4.2(b)(ii) shall be made on a form with such other provisions to be reasonably agreed upon by the Company and Parent (a "Form of Election") to be provided by the Exchange Agent for that purpose to holders of record of Shares (other than holders of Excluded Shares), together with appropriate transmittal materials, at a time approximately one month prior to the anticipated Closing Date (as defined in Section 1.2) or on such other date as the Company and Parent shall mutually agree. Elections shall be made by mailing to the Exchange Agent a duly completed Form of Election. To be effective, a Form of Election must be (x) properly completed, signed and submitted to the Exchange Agent at its designated office, by 9:00 a.m., on the Closing Date (which date shall be publicly announced by Parent as soon as practicable but in no event less than five trading days prior to the Closing Date) (the "Election Deadline") and (y) accompanied by the Certificate(s) representing the Shares as to which the election is being made (or by an appropriate guarantee of delivery of such Certificate(s) by a commercial bank or trust company in the United States or a member of a registered national security exchange or of the National Association of Securities Dealers, Inc., provided that such Certificates are in fact delivered to the Exchange Agent within three trading days after the date of execution of such guarantee of delivery). A holder of record of Shares who holds such shares as nominee, trustee or in another representative capacity (a "Holder Representative") may submit multiple Forms of Election, provided that such Holder Representative certifies that each such Form of Election delivered to the Exchange Agent covers all the Shares held by such Holder Representative on behalf of a particular beneficial owner. The Company shall use its best efforts to make a Form of Election available to all Persons (as defined below) who become holders of record of Shares (other than Excluded Shares) between the date of mailing described in the first sentence of this Section 4.2(b)(iii) and the Election Deadline. Parent shall determine, in its sole and absolute discretion, which authority it may delegate in whole or in part to the Exchange Agent, whether Forms of Election have been properly completed, signed and submitted or revoked. The decision of Parent (or the Exchange Agent, as the case may be) in such matters A-3 8 shall be conclusive and binding. Neither Parent nor the Exchange Agent will be under any obligation to notify any Person of any defect in a Form of Election submitted to the Exchange Agent. A holder of Shares that does not submit an effective Form of Election prior to the Election Deadline shall be deemed to have made a Non-Election. For the purposes of this Agreement, the term "Person" shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity (as defined in Section 5.1(d)) or other entity of any kind or nature organized or existing under the laws of any jurisdiction. (iv) An election may be revoked, but only by written notice received by the Exchange Agent prior to the Election Deadline. Any Certificate(s) representing Shares that have been submitted to the Exchange Agent in connection with an election shall be returned without charge to the holder thereof in the event such election is revoked as aforesaid and such holder requests in writing the return of such Certificate(s). Upon any such revocation, unless a duly completed Form of Election is thereafter submitted in accordance with paragraph (b)(ii), such Shares shall be Non-Election Shares. In the event that this Agreement is terminated pursuant to the provisions hereof, any Shares that have been transmitted to the Exchange Agent pursuant to the provisions hereof shall promptly be returned without charge to the Person submitting the same. (v) If the aggregate number of Shares covered by Cash Elections (the "Cash Election Shares") exceeds the Cash Election Number, all Non-Election Shares shall be deemed to be Shares in respect of which Stock Elections have been made and (x) each Cash Election Share shall be converted into (i) the right to receive an amount in cash, without interest, equal to the product of (A) the Cash Consideration and (B) a fraction (the "Cash Fraction"), the numerator of which shall be the Cash Election Number and the denominator of which shall be the total number of Cash Election Shares, and (ii) a number of shares of Parent Common Stock equal to the product of (A) the Exchange Ratio and (B) a fraction equal to one minus the Cash Fraction and (y) each Stock Election Share (including those deemed to be Stock Election Shares (as defined below) pursuant to this Section 4.2(b)(v)) shall be converted into the right to receive the Stock Consideration. (vi) If the aggregate number of Shares covered by Stock Elections (the "Stock Election Shares") exceeds the Stock Election Number, all Non-Election Shares shall be deemed to be Shares in respect of which Cash Elections have been made and (x) each Stock Election Share shall be converted into (i) the right to receive a number of shares of Parent Common Stock, equal to the product of (A) the Exchange Ratio and (B) a fraction (the "Stock Fraction"), the numerator of which shall be the Stock Election Number and the denominator of which shall be the total number of Stock Election Shares, and (ii) an amount in cash, without interest, equal to the product of (A) the Cash Consideration and (B) a fraction equal to one minus the Stock Fraction and (y) each Cash Election Share (including those deemed to be Cash Election Shares) shall be converted into the right to receive the Cash Consideration. (vii) In the event that neither clause (v) nor clause (vi) of this Section 4.2(b) is applicable, a number of Non-Election Shares shall be deemed Stock Election Shares such that the total Stock Election Shares equals the Stock Election Number and any remaining Non-Election Shares shall be deemed Cash Election Shares and (x) all Cash Election Shares and all Non-Election Shares in respect of which Cash Elections are deemed to have been made shall be converted into the right to receive Cash Consideration, and (y) all Stock Election Shares and all Non-Election Shares in respect of which Stock Elections are deemed to have been made shall be converted into the right to receive Stock Consideration (and cash in lieu of fractional interests). (viii) Each record holder of Shares immediately prior to the Effective Time shall be entitled to elect to receive the Stock Consideration for part of such holder's Shares and the Cash Consideration for the remaining part of such holder's Shares (a "Mixed Election" and, collectively with a Stock Election and a Cash Election, an "Election"). Mixed Elections shall be made on a Form of Election. With respect to each holder of Shares who makes a Mixed Election, the Shares such holder elects to be converted into the right to receive Cash Consideration shall be treated as Cash Election Shares for purposes of this Section 4.2 and Section 4.5, and the Shares such holder elects to be converted into the right to receive shares of Parent Common Stock shall be treated as Stock Election Shares for purposes of this Section 4.2 and Section 4.5. (ix) The Exchange Agent, in consultation with Parent and the Company, shall make all computations to give effect to this Section 4.2. A-4 9 (c) Exchange and Payment Procedures. As soon as practicable after the Election Deadline, Parent shall cause the Exchange Agent to mail to each record holder of Shares who did not submit a Form of Election or who did not submit a Certificate or Certificates to the Exchange Agent with such holder's properly submitted Form of Election: (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon actual delivery of the Certificates to the Exchange Agent) and (ii) instructions for effecting the surrender of the Certificates and receiving the Merger Consideration to which such holder shall be entitled therefor pursuant to this Article IV. Upon surrender of a Certificate (or affidavits of loss in lieu thereof) to the Exchange Agent for cancellation, together with a duly executed letter of transmittal or Form of Election, as the case may be, and such other documents as the Exchange Agent may require, the holder of such Certificate shall be entitled to receive in exchange therefor (i) a certificate representing that number of shares of Parent Common Stock into which the Shares previously represented by such Certificate are converted in accordance with this Article IV, (ii) the cash to which such holder is entitled in accordance with this Article IV, (iii) cash in lieu of fractional shares, if any, which such holder has the right to receive pursuant to Section 4.2(f) and (iv) any dividends or other distributions pursuant to Section 4.2(d). In the event the Merger Consideration and cash in lieu of fractional shares, if any, which such holder has the right to receive pursuant to Section 4.2(f), and any dividend or other distributions pursuant to Section 4.2(d), is to be delivered to any person who is not the person in whose name the Certificate surrendered in exchange therefor is registered in the transfer records of the Company, the Merger Consideration, and cash in lieu of fractional shares which such holder has the right to receive pursuant to Section 4.2(f), and any dividends or other distributions pursuant to Section 4.2(d) may be delivered to a transferee if the Certificate is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and by evidence satisfactory to the Exchange Agent that any applicable stock transfer taxes have been paid or are not payable. (d) Distributions with Respect to Unexchanged Shares; Voting. All Shares of Parent Common Stock to be issued pursuant to the Merger shall be deemed issued and outstanding as of the Effective Time and whenever a dividend or other distribution is declared by Parent in respect of the Parent Common Stock, the record date for which is at or after the Effective Time, that declaration shall include dividends or other distributions in respect of all shares issuable pursuant to this Agreement. No dividends or other distributions in respect of the Parent Common Stock shall be paid to any holder of any unsurrendered Certificate until such Certificate is surrendered for exchange in accordance with this Article IV. Subject to the effect of applicable laws, following surrender of any such Certificate, there shall be issued and/or paid to the holder of the certificates representing Parent Common Stock issued in exchange therefor, without interest, (A) at the time of such surrender, the dividends or other distributions with a record date after the Effective Time theretofore payable with respect to such Parent Common Stock and not paid and (B) at the appropriate payment date, the dividends or other distributions payable with respect to such Parent Common Stock with a record date after the Effective Time but with a payment date subsequent to surrender. (e) Transfers. After the Effective Time, there shall be no transfers on the stock transfer books of the Company of the Shares that were outstanding immediately prior to the Effective Time. (f) Fractional Shares. Notwithstanding any other provision of this Agreement, no fractional shares of Parent Common Stock will be issued to holders of Shares and in lieu of any such fractional shares, each holder of Shares who would otherwise have been entitled to receive a fractional share of Parent Common Stock upon surrender of Certificates for exchange pursuant to this Article IV will be paid an amount in cash (without interest) equal to such holder's proportionate interest in the net proceeds from the sale or sales in the open market by the Exchange Agent, on behalf of all such holders, of the aggregate fractional shares of Parent Common Stock issued to the Exchange Agent on behalf of such holders pursuant to this Article IV. As soon as practicable following the Effective Time, the Exchange Agent shall determine the excess of (i) the number of full shares of Parent Common Stock delivered to the Exchange Agent by Parent over (ii) the aggregate number of full shares of Parent Common Stock to be distributed to holders of Shares (such excess being herein called the "Excess Parent Common Shares"). The Exchange Agent, as agent for the former holders of Shares, shall sell the Excess Parent Common Shares at the prevailing prices on the New York Stock Exchange, Inc. (the "NYSE"). The sales of the Excess Parent Common Shares by the Exchange Agent shall A-5 10 be executed on the NYSE through one or more member firms of the NYSE and shall be executed in round lots to the extent practicable. Parent shall pay all commissions, transfer taxes and other out-of-pocket transaction costs, if any, including the expenses and compensation of the Exchange Agent, incurred in connection with such sale of Excess Parent Common Shares. Until the net proceeds of such sale have been distributed to the former holders of Shares, the Exchange Agent will hold such proceeds in trust for such former holders. (g) Termination of Exchange Fund. Any portion of the Exchange Fund (including the proceeds of any investments thereof and any Parent Common Stock) that remains unclaimed by the shareholders of the Company for 180 days after the Effective Time shall be returned to Parent. Any shareholders of the Company who have not theretofore complied with this Article IV shall thereafter look only to Parent for payment of the Cash Consideration, their shares of Parent Common Stock and any cash, dividends and other distributions in respect thereof payable and/or issuable pursuant to Section 4.1 and Section 4.2(c) upon due surrender of their Certificates (or affidavits of loss in lieu thereof), in each case, without any interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the Exchange Agent or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws. (h) Lost, Stolen or Destroyed Certificates. In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate and subject to compliance with the terms of Section 4.2, shares of Parent Common Stock and any cash payable and any unpaid dividends or other distributions in respect thereof pursuant to Section 4.1 and Section 4.2(d) upon due surrender of, and deliverable in respect of, the Shares represented by such Certificate pursuant to this Agreement. (i) Affiliates. Notwithstanding anything herein to the contrary, Certificates surrendered for exchange by any "affiliate" (as determined pursuant to Section 6.7) of the Company shall not be exchanged until Parent has received a written agreement from such Person as provided in Section 6.7 hereof. 4.3. Dissenters' Rights. In accordance with Section 450.1762 of the MBCA, no dissenters' rights shall be available to holders of Shares in connection with the Merger. 4.4. Adjustments to Prevent Dilution. (a) In the event that the Company changes the number of Shares issued and outstanding prior to the Effective Time as a result of a reclassification, stock split (including a reverse split), stock dividend or distribution, recapitalization, merger, subdivision, issuer tender or exchange offer, or other similar transaction, the Merger Consideration shall be equitably adjusted to reflect such change. (b) In the event Parent (i) changes or establishes a record date for changing the number of shares of Parent Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, stock combination, recapitalization, reclassification, reorganization or similar transaction with respect to the outstanding Parent Common Stock or (ii) pays or makes an extraordinary dividend or distribution in respect of Parent Common Stock (other than a distribution referred to in clause (i) of this sentence) and, in either case, the record date therefor shall be prior to the Effective Time, the Stock Consideration shall be proportionately adjusted. Regular quarterly cash dividends and increases thereon shall not be considered extraordinary for purposes of the preceding sentence. If, between the date hereof and the Effective Time, Parent shall merge or consolidate with or into any other corporation (a "Business Combination")and the terms thereof shall provide that Parent Common Stock shall be converted into or exchanged for the shares of any other corporation or entity, then provision shall be made so that shareholders of the Company who would be entitled to receive shares of Parent Common Stock pursuant to this Agreement shall be entitled to receive, in lieu of each share of Parent Common Stock issuable to such shareholders as provided herein, the same kind and amount of securities or assets as shall be distributable upon such Business Combination with respect to one share of Parent Common Stock and, if necessary or advisable, the parties hereto shall agree on an appropriate restructuring of the transactions contemplated herein. A-6 11 4.5. Tax Opinion Adjustment. In the event that either the condition set forth in Section 7.2(g) or the condition set forth in Section 7.3(f) is not satisfied but would be capable of being satisfied if the number of Shares being converted into Parent Common Stock were increased, and all other conditions set forth in Article VII have been satisfied (or, with respect to conditions to be satisfied at the Effective Time, will in fact be satisfied), then the number of Shares being converted into Parent Common Stock shall be increased (and the number of Shares converted into cash shall be decreased) to the extent necessary to permit the satisfaction of the conditions set forth in each of Sections 7.2(g) and 7.3(f), provided, that, each additional Share that is converted into the right to receive shares of Parent Common Stock solely as a result of the operation of this Section 4.5, to the extent that the conversion is necessary so that the value of the Parent Common Stock paid as consideration for Shares is not less than 41% of the value of the total consideration for Shares, shall be converted into the right to receive a number of shares of Parent Common Stock having a value of $28.50 (it being understood that value, in each case, shall be calculated consistent with the methods used in connection with the provision of the tax opinions contemplated by Section 7.2(g) and 7.3(f)). For purposes of Section 4.2(b), such additional Shares shall continue to be treated as part of the Cash Election Number and the shares of Parent Common Stock issued in respect thereof shall be treated as Cash Consideration. If required by law or the rules of the NYSE, Parent will use its best reasonable efforts to obtain the requisite approval of its shareholders for the issuance of a number of shares of Parent Common Stock sufficient to take into account the revised number of shares of Parent Common Stock to be issued. On the Closing Date, Parent and the Company each shall obtain from its respective counsel a determination whether the conditions set forth in Section 7.2(g) or 7.3(f), as the case may be, can be satisfied without making any adjustment set forth in this Section 4.5 and, if such condition cannot be satisfied without such an adjustment, a determination as to the minimum percentage of the Merger Consideration that the Stock Consideration must constitute in order for such counsel to render such opinion. Parent and the Company shall jointly inform the Exchange Agent whether any adjustment pursuant to this Section 4.5 is required; and, if so, the extent of any such adjustment. 4.6. Uncertificated Shares of Parent Common Stock. The Company agrees that if Parent establishes procedures for book-entry transfer of shares of Parent Common Stock (or other similar system for uncertificated shares of Parent Common Stock) prior to the Effective Time, issuance of Parent Common Stock pursuant to this Agreement may be made pursuant to such book-entry or similar procedures. ARTICLE V REPRESENTATIONS AND WARRANTIES 5.1. Representations and Warranties of the Company, Parent and Merger Sub. Except as set forth in the corresponding sections or subsections of the disclosure letter, dated the date hereof, delivered by the Company to Parent or by Parent to the Company (each, a "Disclosure Letter", and the "Company Disclosure Letter" and the "Parent Disclosure Letter", respectively), as the case may be, the Company (except for subparagraphs (b)(ii), (b)(iii), (c)(ii), (q)(ii) and (v)(ii) below and references in paragraphs (a), (e) and (l) below to documents made available by Parent to the Company) hereby represents and warrants to Parent and Merger Sub, and Parent (except for subparagraphs (b)(i), (c)(i), (j), (p), (q)(i), (s), (t) and (v)(i) below and references in paragraphs (a), (e) and (l) below to documents made available by the Company to Parent), on behalf of itself and Merger Sub, hereby represents and warrants to the Company, that: (a) Organization, Good Standing and Qualification. Each of it and its Subsidiaries is a corporation or other entity duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in good standing, or to have given power or authority when taken together with all other such failures, is not reasonably likely to have a Material Adverse Effect (as defined below). It has made available to Parent, in the case of the Company, and to the Company, in the case of Parent, a complete and correct copy of its Subsidiaries' articles of incorporation and by-laws or comparable governing documents for non-corporate A-7 12 entities ("Organizational Documents"), each as amended to date. Such Organizational Documents as so made available are in full force and effect. Section 5.1(a) of the Disclosure Letters contains a correct and complete list of each jurisdiction where the Company, in the case of the Company Disclosure Letter, and Parent, in the case of the Parent Disclosure Letter, and in each case, each of its Subsidiaries is organized. As used in this Agreement, the term (i) "Subsidiary" means, with respect to the Company, Parent or Merger Sub, as the case may be, any entity, whether incorporated or unincorporated, of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other persons performing similar functions is directly or indirectly owned or controlled by such party or by one or more of its respective Subsidiaries or by such party and any one or more of its respective Subsidiaries and (ii) "Material Adverse Effect" means, with respect to the Company or Parent, as the case may be, a material adverse effect on the condition (financial or otherwise), properties, business, operations, results of operations or prospects of the Company or Parent, as the case may be, and its respective Subsidiaries taken as a whole (other than any change or effect arising out of (i) any transaction taken to comply with Section 6.17(c), (ii) the Company's recognition of a write-down of its gas and oil properties under the full cost method of accounting as prescribed by Rule 4-10 of Regulation S-X under the Securities Act and Exchange Act, (iii) general economic conditions or (iv) conditions generally affecting the electric or gas utility industries). (b) Capital Structure. (i) The authorized capital stock of the Company consists of 250,000,000 Shares (which are entitled to vote as a class), of which 85,655,381 Shares were outstanding as of the close of business on the date hereof, and 25,000,000 shares of preferred stock, without par value (the "Preferred Shares"), none of which were outstanding as of the date hereof. All of the outstanding Shares have been duly authorized and are validly issued, fully paid and nonassessable. Other than up to 4,560,345 shares subject to issuance related to the 2,645,000 outstanding Preferred Redeemable Increased Dividend Equity Securities (the "Feline Prides") and 250,000 shares of Series A Junior Participating Preferred Stock subject to issuance pursuant to the Rights Agreement, none of which were outstanding as of the close of business on the date hereof, the Company has no Shares or Preferred Shares subject to issuance, except that, as of the date hereof, there were 2,515,914 Shares subject to issuance pursuant to the Company's Stock Incentive Plan, Long Term Incentive Performance Share Plan, Mandatory Deferred Compensation Plan and Non-employee Directors Compensation Plan (the "Stock Plans"). Section 5.1(b) of the Company Disclosure Letter contains a correct and complete list of each outstanding option to purchase Shares under the Stock Plans (each a "Company Option"), date of grant, exercise price, expiration date and number of Shares subject thereto. Each of the outstanding shares of capital stock or other securities of each of the Company's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned by a direct or indirect wholly owned Subsidiary of the Company, free and clear of any lien, pledge, security interest, claim or other encumbrance. Except as set forth in this Section 5.1(b), there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate the Company or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of the Company or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of the Company or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. After the Effective Time, the Feline Prides will be convertible only into, with respect to each Purchase Contract (as defined in the Purchase Contract Agreement dated March 25, 1997, between the Company and First National Bank of Chicago (the "Purchase Contract Agreement")), for each Share issuable on account of such Purchase Contract the right to receive on the Purchase Contract Settlement Date (as defined in the Purchase Contract Agreement) the Merger Consideration and cash in lieu of fractional shares, if any, pursuant to Section 4.2(f) into which a Share would be converted pursuant to Section 4.2 if such Share were a Non-Election Share, assuming for purposes of such conversion that the Purchase Contract Settlement Date had occurred immediately prior to the Effective Time. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the shareholders of the Company on any matter ("Voting Debt"). Section 5.1(b) of the Company Disclosure Letter sets forth a true and complete list of each Person in which the Company owns, directly or A-8 13 indirectly, any voting interest that may require a filing by Parent under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act"). (ii) The authorized capital stock of Parent consists of 400,000,000 shares of Parent Common Stock (which are entitled to vote as a class), of which 145,045,159 shares were outstanding as of the close of business on September 30, 1999, 5,000,000 shares of preferred stock, without par value (the "Parent Preferred Shares"), none of which were outstanding as of the date hereof. All of the outstanding shares of Parent Common Stock have been duly authorized and are validly issued, fully paid and nonassessable. Other than 1,500,000 shares of Series A Junior Participating Preferred Stock reserved for issuance pursuant to the Rights Agreement, dated as of September 23, 1997, between Parent and The Detroit Edison Company, as Rights Agent (the "Parent Rights Agreement"), none of which were outstanding as of the date hereof, Parent has no shares of Parent Common Stock or Parent Preferred Shares subject to issuance, except that, as of September 30, 1999, there were 997,575 shares of Parent Common Stock subject to issuance pursuant to Parent's Long-Term Incentive Plan (the "Parent Stock Plan"). Section 5.1(b) of the Parent Disclosure Letter contains a correct and complete list of each outstanding option to purchase shares of Parent Common Stock under the Parent Stock Plan, including the date of grant, exercise price, expiration date and number of shares of Parent Common Stock subject thereto. Each of the out standing shares of capital stock or other securities of each of Parent's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned by a direct or indirect wholly owned Subsidiary of Parent, free and clear of any lien, pledge, security interest, claim or other encumbrance. Except as set forth above, there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate Parent or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of it or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of Parent or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. Parent does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the shareholders of Parent on any matter ("Parent Voting Debt"). As of the date hereof, Parent has not granted registration rights to any person or entity which rights are currently exercisable or will become exercisable between the date hereof and the Effective Time. (iii) The authorized capital stock of Merger Sub consists of 60,000 shares of common stock (entitled to vote as a class), 1,000 of which are validly issued, fully paid, nonassessable and outstanding as of the date hereof. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, owned by Parent, and there are (A) no other voting securities of Merger Sub, (B) no securities of Merger Sub convertible into or exchangeable for shares of capital stock or voting securities of Merger Sub and (C) no options or other rights to acquire from Merger Sub, and no obligations of Merger Sub to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated in this Agreement and has not conducted any business prior to the date hereof and has no, and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the Merger and the other transactions contemplated by this Agreement. (c) Corporate Authority; Approval and Fairness. (i) The Company has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform (in the case of consummation of the Merger, subject to obtaining requisite shareholder approval) its obligations under this Agreement and to consummate, subject only to approval of this Agreement by the holders of a majority of the outstanding Shares (the "Company Requisite Vote"), the Merger. Assuming the due authorization, execution and delivery of this Agreement by Parent and Merger Sub, this Agreement is a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles (the "Bankruptcy and Equity Exception"). The board of directors of the Company (A) has unanimously adopted this Agreement and (B) has received the A-9 14 opinion of its financial advisor, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), to the effect that the consideration to be received by the holders of the Shares in the Merger is fair to such holders from a financial point of view, a copy of which opinion has been delivered to Parent. (ii) Each of the Parent and Merger Sub has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform (in the case of consummation of the Merger, subject to obtaining requisite shareholder approval) its obligations under this Agreement and to consummate, subject only to any shareholder approval necessary to permit the issuance of the shares of Parent Common Stock required to be issued pursuant to Article IV (the "Parent Requisite Vote"), the Merger. Assuming the due authorization, execution and delivery of this Agreement by the Company, this Agreement is a valid and binding agreement of Parent enforceable against Parent in accordance with its terms, subject to the Bankruptcy and Equity Exception. Assuming the due authorization, execution and delivery of this Agreement by the Company, this Agreement is a valid and binding agreement of Merger Sub enforceable against Merger Sub in accordance with its terms. The Boards of Directors of Parent and Merger Sub (A) have adopted this Agreement and (B) have received the opinion of Parent's financial advisor, Warburg Dillon Read LLC, to the effect that the consideration to be paid by Parent to the holders of Shares in the Merger is fair to Parent from a financial point of view. Prior to the Effective Time, Parent will have taken all necessary action to permit it to issue the number of shares of Parent Common Stock required to be issued pursuant to Article IV. The Parent Common Stock, when issued, will be validly issued, fully paid and nonassessable, and no shareholder of Parent will have any preemptive right of subscription or purchase in respect thereof. The Parent Common Stock, when issued, will be registered under the Securities Act and the Securities Exchange Act of 1934, as amended (together with the rules and regulations thereunder, the "Exchange Act") and registered or exempt from registration under any applicable state securities or "blue sky" laws. (d) Governmental Filings; No Violations. (i) Other than the reports, filings and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act, the Exchange Act and the Securities Act, (C) required to be made with the NYSE or the Chicago Stock Exchange, (D) to comply with state securities or "blue sky" laws, (E) with, to or of the Federal Energy Regulatory Commission (the "FERC") pursuant to the Federal Power Act, as amended (the "Power Act"), if required, (F) under the Public Utility Holding Company Act of 1935, as amended (the "1935 Act"), (G) with, to or of federal or state regulatory bodies pursuant to Environmental Laws (as defined in Section 5.1(k)) and (H) identified in Section 5.1(d) of the respective Disclosure Letter, no notices, reports or other filings are required to be made by it or any of its Subsidiaries with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by it or any of its Subsidiaries from, any governmental or regulatory authority, agency, commission, body or other governmental entity ("Governmental Entity"), in connection with the execution and delivery of this Agreement by it and the consummation by it of the Merger and the other transactions contemplated hereby, except those that the failure to make or obtain are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect or prevent, materially delay or materially impair the ability of it to consummate the transactions contemplated by this Agreement. (ii) The execution, delivery and performance of this Agreement by it do not, and the consummation by it of the Merger and the other transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, its articles of incorporation or by-laws or the Organizational Documents of any of its Subsidiaries, (B) a breach or violation of, a default under, or the acceleration of any obligations or the creation of a lien, pledge, security interest or other encumbrance on the assets of it or any of its Subsidiaries (with or without notice, lapse of time or both) pursuant to, any agreement, lease, license, contract, note, mortgage, indenture, arrangement or other obligation ("Contracts") binding upon it or any of its Subsidiaries or any Law (as defined in Section 5.1(i)) or governmental or non-governmental permit or license to which it or any of its Subsidiaries is subject or (C) any change in the rights or obligations of any party under any of the Contracts, except, in the case of clause (B) or (C) above, for any breach, violation, default, acceleration, creation or change that, individually or in the aggregate, is not reasonably likely to have a Material Adverse Effect or prevent, materially delay or materially impair the ability of it to consummate the transactions contemplated by this Agreement. Section 5.1(d) of the Company Disclosure Letter, with respect to the Company, and the Parent Disclosure Letter, with respect to Parent, sets forth a correct and complete list of A-10 15 material Contracts of the Company, in the case of the Company Disclosure Letter, and of Parent, in the case of the Parent Disclosure Letter, and any of its respective Subsidiaries pursuant to which consents or waivers are or may be required prior to consummation of the transactions contemplated by this Agreement (whether or not subject to the exception set forth with respect to clauses (B) and (C) above). (e) Reports; Financial Statements. All material filings required to be made by it and its Subsidiaries since December 31, 1995 under the Securities Act, the Exchange Act, the 1935 Act, the Power Act and state law applicable to public utilities, and under regulations applicable to public utilities in the United States, have been made in accordance with the requirements of the relevant Governmental Entities, except for such failures to make filings that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect, and it has complied as of their respective dates, in all material respects with all applicable requirements of appropriate statutes and rules and regulations. It has delivered to the other party each registration statement, report, proxy statement or information statement prepared by it since December 31, 1998 (the "Audit Date"), including (i) its Annual Report on Form 10-K for the year ended December 31, 1998, and (ii) its Quarterly Reports on Form 10-Q for the periods ended March 31, 1999, and June 30, 1999, each in the form (including exhibits, annexes and any amendments thereto) filed with the Securities and Exchange Commission (the "SEC") (collectively, including any such reports filed subsequent to the date hereof and as amended, the "Reports"). As of their respective dates, (or, if amended, as of the date of such amendment) the Reports did not, and any Reports filed with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. Each of the consolidated balance sheets included in or incorporated by reference into the Reports (including the related notes and schedules) presents fairly, or will present fairly, in all material respects, the consolidated financial position of it and its Subsidiaries as of its date and each of the consolidated statements of income, cash flows and changes in shareholders' equity included in or incorporated by reference into the Reports (including any related notes and schedules) presents fairly, or will present fairly, the results of operations, cash flows and changes in shareholders' equity, as the case may be, of it and its Subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that will not be material in amount or effect), in each case in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") consistently applied during the periods involved, except as may be noted therein. (f) Absence of Certain Changes. Except as disclosed in its Reports filed prior to the date hereof, since the Audit Date it and its Subsidiaries have conducted their respective businesses only in, and have not engaged in any material transaction other than according to, the ordinary and usual course of such businesses and there has not been (i) any change in the condition (financial or otherwise), properties, business, operations, results of operations or prospects of it and its Subsidiaries or any development or combination of developments of which its officers have actual knowledge that, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect; (ii) any declaration, setting aside or payment of any dividend, or other distribution in cash, stock or property in respect of its capital stock, except for dividends or other distributions on its capital stock publicly announced prior to the date hereof and except as expressly permitted hereby; (iii) any split in its capital stock, combination, subdivision or reclassification of any of its capital stock or issuance or authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except as expressly contemplated hereby; or (iv) any change by it in accounting principles, or material change in its accounting practices or methods. Since the Audit Date, except as provided for herein or as disclosed in the Reports filed prior to the date hereof, there has not been any increase in the compensation payable or that could become payable by it or any of its Subsidiaries to officers or key employees or any amendment of any of the Compensation and Benefit Plans (as defined in Section 5.1(h)(i)) other than increases or amendments in the ordinary and usual course. (g) Litigation and Liabilities. Except as disclosed in the Reports filed prior to the date hereof, there are no (i) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the actual knowledge of its officers, threatened against it or any of its Affiliates (as defined below), (ii) obligations or liabilities, whether or not accrued, contingent or otherwise and whether or not required to be A-11 16 disclosed, or any facts or circumstances of which its officers have actual knowledge that could reasonably be expected to result in any claims against, or obligations or liabilities of, it or any of its Affiliates or (iii) developments since the date of such Reports with respect to such disclosed actions, suits, claims, hearings, investigations or proceedings, except, in each case, for those that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect or prevent or materially burden or materially impair the ability of it to consummate the transactions contemplated by this Agreement. As used herein, the term "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 under the Exchange Act. (h) Employee Benefits. (i) A copy (or, if not in writing, a summary) of each bonus, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, employment, termination, severance, compensation, medical, health or other plan, agreement, policy or arrangement that covers employees, directors, former employees or former directors of it and its Subsidiaries (the "Compensation and Benefit Plans") (other than immaterial policies and arrangements not related to severance) and any trust agreement or insurance contract forming a part of such Compensation and Benefit Plans has been provided or made available to the other party prior to the date hereof. The Compensation and Benefit Plans are listed in Section 5.1(h) of its Disclosure Letter and those containing any "change of control" or similar provisions are specifically identified in Section 5.1(h) of its Disclosure Letter. (ii) All Compensation and Benefit Plans are in substantial compliance with all applicable law, including the Code and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Each Compensation and Benefit Plan that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service (the "IRS"), nor are there any existing circumstances likely to result in revocation of any such favorable determination letter. No actions, suits, or claims (other than routine claims for benefits) have been filed or, to the actual knowledge of its officers, are contemplated or threatened against any Compensation and Benefits Plan or against the assets of any Compensation and Benefits Plan; and, to the actual knowledge of its officers, there is no basis for such action, suit or claim. Neither it nor any of its Subsidiaries has engaged in a transaction with respect to any Compensation and Benefit Plan that, assuming the taxable period of such transaction expired as of the date hereof, would subject it or any of its Subsidiaries to a material tax or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA that has not previously been satisfied. (iii) No liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by it or any Subsidiary with respect to any ongoing, frozen or terminated "single-employer plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of any entity which is considered one employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"). It and its Subsidiaries have not incurred and do not expect to incur any withdrawal liability with respect to a multiemployer plan under Subtitle E to Title IV of ERISA regardless of whether based on contributions of an ERISA Affiliate. No notice of a "reportable event", within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the 12-month period ending on the date hereof or will be required to be filed in connection with the transactions contemplated by this Agreement. (iv) All contributions required to be made under the terms of any Compensation and Benefit Plan as of the date hereof have been timely made or have been reflected on the most recent consolidated balance sheet filed or incorporated by reference in the Company Reports prior to the date hereof. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither it nor its Subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code. (v) Under each Pension Plan which is a single-employer plan, as of the last day of the most recent plan year ended prior to the date hereof, the actuarially determined present value of all "benefit liabilities", within A-12 17 the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the Pension Plan's most recent actuarial valuation), did not exceed the then current value of the assets of such Pension Plan, and there has been no material change in the financial condition of such Pension Plan since the last day of the most recent plan year. (vi) Neither it nor its Subsidiaries have any obligations for retiree health and life benefits under any Compensation and Benefit Plan, except as set forth in the SEC filings or Section 5.1(h) of the Company Disclosure Letter; the terms of each such plan provide that such retiree health and life benefits may be amended or terminated at any time, except to the extent limited by any collective bargaining agreement. (vii) The consummation of the Merger and the other transactions contemplated by this Agreement will not (x) entitle any employees of it or its Subsidiaries to severance pay or any increase in severance pay upon any termination of employment prior to or after the date hereof, (y) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Compensation and Benefit Plans, or (z) result in any breach or violation of, or a default under, any of the Compensation and Benefit Plans. (viii) The Company has amended the terms of any and all Compensation and Benefit Plans, as applicable, to eliminate the automatic funding of accrued benefits under such plans via the Rabbi Trust established effective January 3, 1991, in connection with the consummation of the Merger and the other transactions contemplated by this Agreement. (ix) No Compensation and Benefit Plan is maintained outside the United States. (i) Compliance with Laws; Permits. Except as set forth in the Reports filed prior to the date hereof, the businesses of each of it and its Subsidiaries have not been, and are not being, conducted in violation of any federal, state, local or foreign law, statute, ordinance, rule, regulation, judgment, order, injunction, decree, arbitration award, agency requirement, license or permit of any Governmental Entity (collectively, "Laws"), except for violations that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect or prevent or materially burden or materially impair the ability of it to consummate the transactions contemplated by this Agreement. Except as set forth in the Reports filed prior to the date hereof, no investigation or review by any Governmental Entity with respect to it or any of its Subsidiaries is pending or, to the actual knowledge of its officers, threatened, nor has any Governmental Entity indicated an intention to conduct the same, except for those the outcome of which, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect or prevent or materially burden or materially impair its ability to consummate the transactions contemplated by this Agreement. Each of it and its Subsidiaries has all permits, licenses, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals necessary to conduct its business as presently conducted, except those the absence of which, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect or prevent or materially burden or materially impair its ability to consummate the Merger and the other transactions contemplated by this Agreement. (j) Takeover Statutes. No "fair price," "moratorium," "control share acquisition" or other similar anti-takeover statute or regulation (each a "Takeover Statute") or any anti-takeover provision in the Company's articles of incorporation or by-laws is, or at the Effective Time will be, applicable to the Company, the Shares, the Merger or the other transactions contemplated by this Agreement. (k) Environmental Matters. Except as disclosed in the Reports prior to the date hereof and except as has not had and is not reasonably likely to have a Material Adverse Effect: (i) each of it and its Subsidiaries is in compliance with all applicable Environmental Laws; (ii) no property (including soils, groundwater, surface water, buildings or other structures) currently owned or operated by it or any of its Subsidiaries is contaminated with any Hazardous Substance which could reasonably be expected to result in liability relating to or require remediation under any Environmental Law; (iii) no property formerly owned or operated by it or any of its Subsidiaries has been contaminated with any Hazardous Substance during or prior to such period of ownership or operation which could reasonably be expected to result in liability relating to or require A-13 18 remediation under any Environmental Law; (iv) neither it nor any of its Subsidiaries is subject to liability for any Hazardous Substance disposal or contamination on any third party property; (v) neither it nor any of its Subsidiaries has been associated with any release or threat of release of any Hazardous Substance which could reasonably be expected to result in liability relating to or require remediation under any Environmental Law; (vi) neither it nor any of its Subsidiaries has received any notice, demand, letter, claim or request for information alleging that it or any of its Subsidiaries may be in violation of or subject to liability under any Environmental Law; (vii) neither it nor any of its Subsidiaries is subject to any order, decree, injunction or other arrangement with any Governmental Entity or any indemnity or other agreement with any third party relating to liability under any Environmental Law or relating to Hazardous Substances; (viii) there are no other circumstances or conditions involving it or any of its Subsidiaries or the transactions contemplated in this Agreement that could reasonably be expected to result in any claim, liability, investigation, cost or restriction on the ownership, use, or transfer of any property pursuant to any Environmental Law; and (ix) the Company has delivered to Parent, and Parent has made available to the Company, copies of all environmental reports, studies, assessments, sampling data and other environmental information in its possession relating to it or its Subsidiaries or their respective current and former properties or operations. As used herein, the term "Environmental Law" means any federal, state, local or foreign statute, law, regulation, order, decree, permit, authorization, opinion, common law or agency requirement relating to: (A) the protection, investigation or restoration of the environment, health, safety, or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (C) noise, odor, indoor air, employee exposure, wetlands, pollution, contamination or any injury or threat of injury to persons or property relating to any Hazardous Substance. As used herein, the term "Hazardous Substance" means any substance that is: (A) listed, classified or regulated pursuant to any Environmental Law; (B) any petroleum or coal product or by-product, any waste, ash or sludge, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive material or radon; and (C) any other substance which may be the subject of regulatory action by any Government Entity in connection with any Environmental Law. (l) Taxes. Except for failures and inaccuracies that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect, each of it and its Subsidiaries (i) have prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all Tax Returns (as defined below) required to be filed by any of them and all such filed Tax Returns are complete and accurate; (ii) has paid all Taxes (as defined below) that are shown as due on such filed Tax Returns or that it or any of its Subsidiaries are obligated to withhold from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith; and (iii) has not waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. Except as set forth in the Company Disclosure Letter, (i) neither it nor any of its Subsidiaries is a party to any Tax allocation, indemnity or sharing agreement (other than such an agreement between it and any of its Subsidiaries) and (ii) neither it nor any of its Subsidiaries has any liability for Taxes as a result of its or any of its Subsidiaries inclusion in any group's consolidated or combined Tax returns other than a group of which it is a common parent, except, in the case of clause (ii), as is not reasonably likely to have a Material Adverse Effect. As of the date hereof, there are not pending or, to the actual knowledge of its officers threatened in writing, any audits, examinations, investigations or other proceedings in respect of Taxes or Tax matters that, individually or in the aggregate are reasonably likely to have a Material Adverse Effect. There are not, to the actual knowledge of its officers, any unresolved questions or claims concerning its or any of its Subsidiaries' Tax liability that, individually or in the aggregate, are reasonably likely to have a Material Adverse Effect. Neither it nor any of its Subsidiaries has any liability with respect to Taxes in excess of the amounts accrued with respect thereto that are reflected in the financial statements included in the Reports filed on or prior to the date hereof, except as is not, individually or in the aggregate reasonably likely to have a Material Adverse Effect. As used in this Agreement, (i) the term "Tax" (including, with correlative meaning, the terms "Taxes", and "Taxable") includes all federal, state, local and foreign income, profits, alternative minimum tax, franchise, gross receipts, environmental, customs duty, capital stock, severances, stamp, payroll, sales, A-14 19 employment, unemployment, disability, use, property, withholding, excise, add-on, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions, and (ii) the term "Tax Return" includes all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax authority relating to Taxes. (m) Labor Matters. Except as set forth in Section 5.1(m) of its Disclosure Letter, neither it nor any of its Subsidiaries is a party to or otherwise bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is it or any of its Subsidiaries the subject of any material proceeding asserting that it or any of its Subsidiaries has committed an unfair labor practice or is seeking to compel it to bargain with any labor union or labor organization nor is there pending or, to the actual knowledge of its officers, threatened, nor has there been for the past five years, any labor strike, dispute, walkout, work stoppage, slow-down or lockout involving it or any of its Subsidiaries. Each party has previously made available to the other correct and complete copies of all labor and collective bargaining agreements, Contracts or other agreements or understandings with a labor union or labor organization to which it or any of its Subsidiaries is party or by which any of them are otherwise bound (collectively, the "Labor Agreements"). The consummation of the Merger and the other transactions contemplated by this Agreement will not entitle any third party (including any labor union or labor organization) to any payments under any of the Labor Agreements. (n) Intellectual Property. (i) It or its Subsidiaries own (free and clear of any and all liens, claims or encumbrances), or is licensed or otherwise possesses sufficient legally enforceable rights to use, all patents, trademarks, trade names, service marks, brand marks, brand names, copyrights, and any applications therefor, technology, know-how, computer software programs or applications, databases, industrial designs and tangible or intangible proprietary information or materials that are currently used (or, with respect to trademarks, trade names, brand marks, brand names and service marks, have been used within the last five years) in its and its Subsidiaries' businesses (collectively, "Intellectual Property Rights"), except for any such failures to own, be licensed or possess that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect. (ii) Except as disclosed in the Reports filed prior to the date hereof, and except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect, (i) the use of the Intellectual Property Rights by it or its Subsidiaries does not conflict with, infringe upon, violate or interfere with or constitute an appropriation of any right, title, interest or goodwill including, without limitation, any intellectual property right, patent, trademark, trade name, service mark, brand mark, brand name, copyright, technology, know-how, computer software program or application, database or industrial design of any other Person and (ii) there have been no claims made and neither it nor any of its Subsidiaries has received notice of any claim or otherwise knows that any Intellectual Property Right is invalid, conflicts with the asserted right of any other Person, has not been used or enforced or has been failed to be used or enforced in a manner that would result in the abandonment, cancellation or unenforceability of any Intellectual Property Right of it or any of its Subsidiaries. (o) Insurance. All material fire and casualty, general liability, business interruption, product liability, and sprinkler and water damage insurance policies maintained by it or any of its Subsidiaries are with reputable insurance carriers, provide full and adequate coverage for all normal risks incident to the business of it and its Subsidiaries and their respective properties and assets, and are in character and amount at least equivalent to that carried by persons engaged in similar businesses and subject to the same or similar perils or hazards, except for any such failures to maintain insurance policies that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect. (p) Rights Plan. (i) The Company has amended the Rights Agreement to provide that (x) Parent shall not be deemed an Acquiring Person (as defined in the Rights Agreement), (y) the Distribution Date (as defined in the Rights Agreement) shall not be deemed to occur and (z) the Rights will not separate from the A-15 20 Shares, in each case, as a result of entering into this Agreement or consummating the Merger and/or the other transactions contemplated hereby. (ii) The Company has taken all necessary action with respect to all of the outstanding Rights (as defined in the Rights Agreement) so that, as of immediately prior to the Effective Time, the Rights Agreement will expire without any payment by the Company in respect of the Rights. (q) Brokers and Finders. Neither it nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders fees in connection with the Merger or the other transactions contemplated in this Agreement except that (i) the Company has employed Merrill Lynch as its financial advisor, the arrangements with which have been disclosed to Parent prior to the date hereof and (ii) Parent has employed Warburg Dillon Read LLC as it financial advisor, the arrangements with which have been disclosed to the Company prior to the date hereof. (r) Year 2000. Except as disclosed in the Reports filed prior to the date hereof, all computer systems and computer software used by it or any of its Subsidiaries, and the material computer systems and computer software of its material commercial counterparties, recognize or are being adapted so that, prior to December 31, 1999, they shall recognize the advent of the year A.D. 2000 and can correctly recognize or are being adapted so that they can correctly recognize and manipulate date information relating to dates on or after January 1, 2000 and the operation and functionality of such computer systems and such computer software will not be adversely affected by the advent of the year A.D. 2000 or any manipulation of data featuring information relating to dates before, on or after January 1, 2000 ("Millennium Functionality"), except in each case for such computer systems and computer software, the failure of which to achieve Millennium Functionality, individually or in the aggregate, has not had and is not reasonably likely to have a Material Adverse Effect. Except as disclosed in the Reports filed prior to the date hereof, the costs of the adaptions necessary to achieve Millennium Functionality are not reasonably likely to have a Material Adverse Effect. (s) Regulatory Proceedings. Except as set forth in the Reports, neither the Company nor any of its Subsidiaries, all or part of whose rates or services are regulated by a Governmental Entity, (i) has rates which have been or are being collected subject to refund, pending final resolution of any proceeding pending before a Governmental Entity or on appeal to the courts or (ii) is a party to any proceeding before a Governmental Entity or on appeal from orders of a Governmental Entity which have had or are reasonably likely to result in orders having a Material Adverse Effect. (t) FERC Jurisdiction. To the actual knowledge of its officers, neither the Company nor any of its Subsidiaries, nor any other entity in which the Company, directly or indirectly owns or expects to retain any interest, owns or operates any FERC jurisdictional facilities giving rise to a requirement for approval of the Merger by the FERC. (u) Regulation as a Utility. (i) It is not regulated as a public utility or public service company by any state. Other than as set forth in Section 5.1(u) of its Disclosure Letter, none of its Subsidiaries or Affiliates is subject to regulation as a public utility or public service company (or similar designation) by any state in the United States or in any foreign country. (ii) Each of Parent and the Company is a holding company exempt from registration pursuant to Section 3(a)(1) of the 1935 Act, as amended. (v) Ownership of Shares. (i) Neither the Company nor any of its Subsidiaries "Beneficially Owns" (as such term is defined in the Parent Rights Agreement) any shares of Parent Common Stock. (ii) Neither Parent nor any of its Subsidiaries "Beneficially Owns" (as such term is defined in the Rights Agreement) any Shares. A-16 21 ARTICLE VI COVENANTS 6.1. Interim Operations. (a) The Company covenants and agrees as to itself and its Subsidiaries that after the date hereof and prior to the Effective Time (unless Parent shall otherwise approve, which approval shall not be unreasonably withheld or delayed, and except as otherwise expressly contemplated by this Agreement): (i) the business of the Company and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective best reasonable efforts to (A) preserve its business organization intact and maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates and (B) maintain and keep material properties and assets in as good repair and condition as such are in as of the date hereof, subject to ordinary wear and tear; (ii) the Company shall not (A) issue, sell, pledge, dispose of or encumber any capital stock owned by it in any of its Subsidiaries; (B) amend its articles of incorporation or by-laws or amend, modify or terminate the Rights Agreement; (C) split, combine, subdivide or reclassify its outstanding shares of capital stock; (D) declare, set aside or pay any dividend payable in cash, stock or property in respect of any capital stock (other than dividends from its direct or indirect wholly owned Subsidiaries and other than regular quarterly cash dividends not in excess of $0.255 per Share and regular quarterly cash dividends on the preferred and preference stock of its Subsidiaries); or (E) repurchase, redeem or otherwise acquire (except for (I) mandatory sinking funds obligations existing on the date hereof and (II) open market repurchases pursuant to the terms of the Company's Direct Stock Purchase Plan and Dividend Reinvestment Plan), or permit any of its Subsidiaries to purchase or otherwise acquire, any shares of its capital stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock; (iii) neither the Company nor any of its Subsidiaries shall (A) issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class or any other property or assets (other than (I) Shares issuable pursuant to options and other rights outstanding on the date hereof under the Stock Plans, issuances of additional options or rights to acquire Shares granted pursuant to the terms of the Stock Plans as in effect on the date hereof in the ordinary and usual course of the operation of such Stock Plans and issuances of Shares pursuant to options granted after the date hereof pursuant to the Stock Plans and (II) Shares issuable pursuant to the terms of the outstanding Feline Prides); (B) (I) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any of its coal fines property or assets, or, (II) except as identified on Section 6.1(a)(iii) of the Company Disclosure Letter, other than in the ordinary and usual course of business and other than sales not in excess of $100,000,000 in the aggregate or $30,000,000 in respect of any transaction or series of related transactions, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any other property or assets; (C) make or authorize or commit for any capital expenditures or operation and maintenance expenditures in excess of 110% of those contemplated to be spent pursuant to the year 1999, 2000 or 2001 capital appropriations/spending budgets set forth in Section 6.1(a) of the Company Disclosure Letter; or (D) by any means, make any acquisition of, or investment in, assets or stock of, or other interest in, any other Person or entity in excess of $100,000,000 in the aggregate or $30,000,000 in respect of any transaction or series of related transactions; (iv) except as set forth in Section 6.1(a)(iv) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries shall (A) incur, assume or prepay any long-term debt or incur or assume any short-term debt other than in the ordinary and usual course of business in amounts and for purposes consistent with past practice under existing lines of credit, and except for the incurrence of long-term indebtedness in connection with the refinancing of existing indebtedness either at its stated maturity or at a lower cost of funds, (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any third-party, including by means of any "keep well" or other agreement to support or maintain any financial statement condition of another person, except in the ordinary and usual A-17 22 course of business, (C) accelerate or delay collection of notes or accounts receivable in advance of or beyond their regular due dates or the dates consistent with past practice, or (D) change any accounting principle, practice or method in a manner that is inconsistent with past practice, except to the extent required by U.S. GAAP as advised by the Company's regular independent accountants; (v) neither the Company nor any of its Subsidiaries shall take or fail to take any action that is reasonably likely to make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time, or that is, individually or in the aggregate, reasonably likely to have a Material Adverse Effect; (vi) except as required by applicable Law, an existing collective bargaining agreement or other Contract identified in Section 6.1(a)(vi) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries shall terminate, establish, adopt, enter into, make any new grants or awards under, amend or otherwise modify, any Compensation and Benefit Plans (other than issuances of additional options, performance shares or rights to acquire Shares granted pursuant to the terms of the Stock Plans as in effect on the date hereof in the ordinary and usual course of the operation of such Stock Plans, provided, that any such additional options, performance shares or rights to acquire Shares shall not vest in connection with the Merger and the other transactions contemplated by this Agreement), or except as required by any existing contract with a non-officer employer increase the salary, wage, bonus or other compensation of any employees, except increases occurring in the ordinary and usual course of business (which shall include normal periodic performance reviews and related compensation and benefit increases); (vii) except as required by applicable law, an existing collective bargaining agreement or other Contract identified in Section 6.1(a)(vii) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries shall grant any severance or termination pay to, or enter into any employment or severance agreement with any director or officer of it or such Subsidiaries, provided, that the foregoing shall not require the Company to violate any of its obligations existing prior to the date hereof as set forth in Section 5.1(h) of the Company Disclosure Letter; (viii) neither the Company nor any of its Subsidiaries shall settle or compromise any material claims or litigation or amend or terminate any of its material Contracts or waive, release or assign any material rights or claims; (ix) neither the Company nor any of its Subsidiaries shall make any material Tax election (other than in the ordinary and usual course or as is required by Law) or permit any insurance policy naming it as a beneficiary or loss-payable payee to be canceled or terminated except in the ordinary and usual course of business; and (x) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing. (b) Parent covenants and agrees as to itself and its Subsidiaries that after the date hereof and prior to the Effective Time (unless the Company shall otherwise approve, which approval shall not be unreasonably withheld or delayed, and except as otherwise expressly contemplated by this Agreement): (i) the business of Parent and its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it and its Subsidiaries shall use their respective best reasonable efforts to (A) preserve its business organization intact and maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors, employees and business associates and (B) maintain and keep material properties and assets in as good repair and condition as such are in as of the date hereof, subject to ordinary wear and tear; (ii) it shall not (A) amend its articles of incorporation or by-laws; (B) split, combine, subdivide or reclassify its outstanding shares of capital stock; (C) declare, set aside or pay any dividend payable, in cash, stock or property in respect of any capital stock, other than dividends from its direct or indirect wholly owned Subsidiaries and other than regularly quarterly cash dividends not in excess of $0.515 per share of Parent Common Stock and regularly quarterly cash dividends on the preferred and preference stock of its A-18 23 Subsidiaries; (D) repurchase, redeem or otherwise acquire, or permit any of its Subsidiaries to purchase or otherwise acquire, any shares of Parent Common Stock or any securities convertible into or exchangeable or exercisable for any shares of Parent Common Stock (other than repurchases, redemptions or other acquisitions which are made at the then-prevailing market price of Parent Common Stock on the NYSE and which in the aggregate do not exceed ten percent of the shares of Parent Common Stock outstanding as of the date hereof) or (E) except as permitted under this Agreement, enter into any agreement with respect to a merger, reorganization, share exchange, consolidation or similar transaction involving, or any purchase of all or substantially all of the equity securities of it or any of its Significant Subsidiaries (as such term is defined in Rule 1-02 of Regulation S-X under the Exchange Act); (iii) neither Parent nor any of its Subsidiaries shall, (A) issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of Parent Common Stock (other than (I) shares of Parent Common Stock issuable pursuant to options outstanding on the date hereof under the Parent Stock Plan, issuances of additional options or rights to acquire shares of Parent Common Stock granted pursuant to the terms of the Parent Stock Plan as in effect on the date hereof in the ordinary and usual course of the operation of such Parent Stock Plan and issuances of shares of Parent Common Stock pursuant to options granted after the date hereof pursuant to the Parent Stock Plan and (II) issuances of Parent Common Stock, or securities convertible with or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, shares of Parent Common Stock, to a third-party on arms-length terms not in excess of 20% of the number of shares of Parent Common Stock outstanding as of the date hereof), (B) other than pursuant to the year 1999, 2000 or 2001 capital appropriations/ spending budgets set forth in Section 6.1(b) of the Parent Disclosure Letter and other than in the ordinary and usual course of business (I) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any property or assets, and other than sales not in excess of $250,000,000 in the aggregate; or (II) by any means, make any acquisition of, or investment in, assets or stock of, or other interest in, any other Person or entity in excess of $250,000,000 in the aggregate or (C) acquire "Beneficial Ownership" (as such term is defined in the Rights Agreement) of any Shares; (iv) Parent shall not change any material accounting principle, practice or method in a manner that is inconsistent with past practice, except to the extent required by U.S. GAAP as advised by Parent's regular independent accountants; (v) neither Parent nor any of its Subsidiaries shall take or fail to take any action that is reasonably likely to make any representation or warranty of such party contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time, or that is, individually or in the aggregate, reasonably likely to have a Material Adverse Effect; and (vi) neither Parent nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing. 6.2. Acquisition Proposals. (a) The Company agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall, and that it shall direct and use its best efforts to cause its and its Subsidiaries' employees, agents and representatives (including any investment banker, attorney or accountant retained by it or any of its Subsidiaries ("Representatives")) not to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries or the making of any proposal or offer with respect to a merger, reorganization, share exchange, consolidation or similar transaction involving, or any purchase of all or, except for transactions in the ordinary course of business or expressly contemplated by this Agreement that could not interfere with the transactions contemplated by this Agreement, including by Section 6.1(a)(iii), any of the assets or any equity securities of, it or any of its Subsidiaries (any such proposal or offer being hereinafter referred to as a "Company Acquisition Proposal"). The Company further agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall, and that it shall direct and use its best efforts to cause its and its Subsidiaries' Representatives not to, directly or indirectly, engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any Person relating to a Company Acquisition Proposal, or otherwise facilitate any effort or attempt to make A-19 24 or implement a Company Acquisition Proposal; provided, however, that nothing contained in this Agreement (including the last preceding sentence and Section 6.1(b)) shall prevent the Company or its Board of Directors or Parent or its Board of Directors, as applicable, from (A) complying with Rule 14e-2 promulgated under the Exchange Act with regard to a Company Acquisition Proposal; (B) providing information in response to a request therefor by a Person who has made an unsolicited bona fide written Company Acquisition Proposal if the Company's Board of Directors receives from the Person so requesting such information an executed confidentiality agreement on terms, with respect to confidentiality, substantially similar to those contained in the Confidentiality Agreement (as defined in Section 9.7); (C) engaging in any negotiations or discussions with any Person who has made an unsolicited bona fide written Company Acquisition Proposal; or (D) recommending such Company Acquisition Proposal to the shareholders of the Company if and only to the extent that, in each such case referred to in clause (B), (C) or (D) above, prior to the time the Company Requisite Vote shall have been obtained, the Board of Directors of the Company determines in good faith after consultation with outside legal counsel and its financial advisor and based upon such other matters as it deems relevant that failure to take such action would likely result in a breach of their fiduciary duties under applicable law and that such Company Acquisition Proposal, if accepted, is reasonably likely to be consummated, taking into account all legal, financial and regulatory aspects of the proposal and the Person making the proposal and would, if consummated, be reasonably likely to result in a transaction more favorable to the Company's shareholders from a financial point of view than the transaction contemplated by this Agreement (any such more favorable Acquisition Proposal being referred to in this Agreement as a "Superior Proposal"). The Company agrees that it will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any Company Acquisition Proposal. The Company agrees that it will take the necessary steps to promptly inform the individuals or entities referred to in the first sentence hereof of the obligations undertaken in this Section 6.2 and in the Confidentiality Agreement. The Company agrees that it will use its best reasonable efforts to notify Parent within one day of the receipt thereof if any such inquiries, proposals or offers are received by, any such information is requested from, or any such discussions or negotiations are sought to be initiated or continued with, any of its Representatives indicating, in connection with such notice, the name of such Person and the material terms and conditions of any proposals or offers and thereafter shall keep Parent informed, on a current basis, on the status and terms of any such proposals or offers and the status of any such discussions or negotiations. The Company also agrees that it will promptly request each Person that has heretofore executed a confidentiality agreement in connection with its consideration of acquiring all or substantially all of it, Michigan Consolidated Gas Company or MCN Investment Corporation to return all confidential information heretofore furnished to such Person by or on behalf of it or any of its Subsidiaries. (b) Parent agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall, and that it shall direct and use its best efforts to cause its and its Subsidiaries' employees, agents and Representatives not to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries or the making of any proposal or offer with respect to a merger, reorganization, share exchange, consolidation or similar transaction involving, or any purchase of all or, except for transactions in the ordinary course of business or expressly contemplated by this Agreement that could not interfere with the transactions contemplated by this Agreement, any of the assets or any equity securities of it or any of its Subsidiaries to the extent that such proposal is conditioned on Parent's failure to obtain the Parent Requisite Vote or could reasonably be expected to result in a failure to consummate the transactions contemplated by this Agreement (any such proposal or offer being hereinafter referred to as a "Parent Adverse Proposal"). Parent further agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall, and that it shall direct and use its best efforts to cause its and its Subsidiaries' Representatives not to, directly or indirectly, engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any Person relating to a Parent Adverse Proposal, or otherwise facilitate any effort or attempt to make or implement a Parent Adverse Proposal; provided, however, that nothing contained in this Agreement shall prevent Parent or its Board of Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act with regard to a Parent Adverse Proposal; (B) providing information in response to a request therefor by a Person who has made an unsolicited bona fide written Parent Adverse Proposal if Parent's Board of Directors receives from the Person so requesting such information an executed A-20 25 confidentiality agreement on terms, with respect to confidentiality, substantially similar to those contained in the Confidentiality Agreement; (C) engaging in any negotiations or discussions with any Person who has made an unsolicited bona fide written Parent Adverse Proposal; or (D) recommending such Parent Adverse Proposal to the shareholders of Parent, if and only to the extent that, in each such case referred to in clause (B), (C) or (D) above, prior to the time the Parent Requisite Vote shall have been obtained the Board of Directors of Parent determines in good faith after consultation with outside legal counsel and its financial advisor and based upon such other matters as it deems relevant that failure to take such action would likely result in a breach of their fiduciary duties under applicable law and that such Parent Adverse Proposal, if accepted, is reasonably likely to be consummated, taking into account all legal, financial and regulatory aspects of the proposal and the Person making the proposal and would, if consummated, be reasonably likely to result in a transaction more favorable to the Parent's shareholders from a financial point of view than the transaction contemplated by this Agreement. Parent agrees that it will take the necessary steps to promptly inform the individuals or entities referred to in the first sentence of this Section 6.2(b) of the obligations undertaken in this Section 6.2(b) and in the Confidentiality Agreement. Parent agrees that it will use its best reasonable efforts to notify the Company within one day of the receipt thereof if any such inquiries, proposals or offers are received by, any such information is requested from, or any such discussions or negotiations are sought to be initiated or continued with, any of its Representatives indicating, in connection with such notice, the name of such Person and the material terms and conditions of any proposals or offers and thereafter shall keep the Company informed, on a current basis, on the status and terms of any such proposals or offers and the status of any such discussions or negotiations. 6.3. Information Supplied. The Company and Parent each agrees, as to itself and its Subsidiaries, that none of the information supplied or to be supplied by it or its Subsidiaries for inclusion or incorporation by reference in (i) the Registration Statement on Form S-4 to be filed with the SEC by Parent in connection with the issuance of Parent Common Stock in the Merger (including the joint proxy statement and prospectus (the "Prospectus/Proxy Statement") constituting a part thereof) (the "S-4 Registration Statement") will, at the time the S-4 Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) the Prospectus/Proxy Statement and any amendment or supplement thereto will, at the date of mailing to shareholders and at the times of the meetings of shareholders of the Company and Parent to be held in connection with the Merger and the issuance of Parent Common Stock, respectively, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company and Parent will cause the Form S-4 to comply as to form in all material respects with the applicable provisions of the Securities Act and the rules and regulations thereunder. 6.4. Shareholders Meetings. The Company will take, in accordance with applicable law and its articles of incorporation and by-laws, all action necessary to convene a meeting of holders of Shares (the "Shareholders Meeting") as promptly as practicable after the S-4 Registration Statement is declared effective to consider and vote upon the approval of this Agreement. Parent will take, in accordance with its articles of incorporation and by-laws, all action necessary to convene a meeting of holders of Parent Common Stock as promptly as practicable after the S-4 Registration Statement is declared effective to consider and vote upon the approval of the issuance of Parent Common Stock in the Merger. Subject to fiduciary obligations under applicable law, each of the Company's and Parent's Board of Directors shall recommend such approval and shall take all lawful action to solicit such approval. 6.5. Filings; Other Actions; Notification. (a) Parent and the Company shall promptly prepare and file with the SEC the Prospectus/Proxy Statement, and Parent shall prepare and file with the SEC the S-4 Registration Statement as promptly as practicable. Parent and the Company each shall use its best reasonable efforts to have the S-4 Registration Statement declared effective under the Securities Act as promptly as practicable after such filing, and promptly thereafter mail the Prospectus/Proxy Statement to the respective shareholders of each of the Company and Parent. Parent shall also use its best reasonable efforts to obtain prior to the effective date of the S-4 Registration Statement all necessary state securities law or "blue sky" A-21 26 permits and approvals required in connection with the Merger and to consummate the other transactions contemplated by this Agreement and will pay all expenses incident thereto. (b) The Company and Parent each shall use its best reasonable efforts to cause to be delivered to the other party and its directors a letter of its independent auditors, dated (i) the date on which the S-4 Registration Statement shall become effective and (ii) the Closing Date, and addressed to the other party and its directors, in form and substance customary for "comfort" letters delivered by independent public accountants in connection with registration statements similar to the S-4 Registration Statement. (c) The Company and Parent shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable Laws to consummate and make effective the Merger and the other transactions contemplated by this Agreement as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Entity in order to consummate the Merger or any of the other transactions contemplated by this Agreement. Subject to applicable laws relating to the exchange of information (including any obligations pursuant to any listing agreement with or rules of any national securities exchange), Parent and the Company shall have the right to review in advance, and to the extent practicable each will consult the other on, all the information relating to Parent or the Company, as the case may be, and any of their respective Subsidiaries, that appear in any filing made with, or written materials submitted to, any third party and/or any Governmental Entity (including any national securities exchange) in connection with the Merger and the other transactions contemplated by this Agreement. In exercising the foregoing right, each of the Company and Parent shall act reasonably and as promptly as practicable. (d) The Company and Parent each shall, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Prospectus/Proxy Statement, the S-4 Registration Statement or any other statement, filing, notice or application made by or on behalf of Parent, the Company or any of their respective Subsidiaries to any third party and/or any Governmental Entity in connection with the Merger and the transactions contemplated by this Agreement. (e) The Company and Parent each shall keep the other apprized of the status of matters relating to completion of the transactions contemplated hereby, including promptly furnishing the other with copies of any notices or other communications received by Parent or the Company, as the case may be, or any of its Subsidiaries, from any third party and/or any Governmental Entity with respect to the Merger and the other transactions contemplated by this Agreement. The Company and Parent each shall give prompt notice to the other of any change that is reasonably likely to result in a Material Adverse Effect on it or prevent, materially delay or materially impair the ability of the Company or Parent, as the case may be, to consummate the transactions contemplated by this Agreement. (f) In the event any claim, action, suit investigation or other proceeding by any Governmental Entity or other Person or other legal or administrative proceeding is commenced that questions the validity or legality of this Agreement or the Merger or the other transaction contemplated by this Agreement or claims damages in connection therewith, the Company and Parent each agree to cooperate and use their best reasonable efforts to defend against and respond thereto. 6.6. Access. Upon reasonable notice, and except as may otherwise be required by applicable law, the Company and Parent each shall (and shall cause its Subsidiaries to) afford the other's officers, employees, counsel, accountants and other authorized representatives reasonable access during normal business hours throughout the period prior to the Effective Time, to its properties, books, contracts and records and, during such period, the Company and Parent each shall (and shall cause its Subsidiaries to) furnish promptly to the other all information concerning its business, properties and personnel as may reasonably be requested, provided that no investigation pursuant to this Section shall affect or be deemed to modify any representation or warranty made by the Company, Parent or Merger Sub and provided, further, that the foregoing shall not A-22 27 require the Company or Parent to permit any inspection, or to disclose any information, that in the reasonable judgment of the Company or Parent (i) would result in the disclosure of any trade secrets of third parties or violate any of its obligations with respect to confidentiality if the Company or Parent, as the case may be, shall have used its best reasonable efforts to obtain the consent of such third party to such inspection or disclosure or (ii) constitutes information protected by attorney-client privilege, but only to the extent that disclosure would impair the Company's or Parent's, as the case may be, ability to assert such attorney-client privilege. All requests for information made pursuant to this Section shall be directed to an executive officer of the Company or Parent, as the case may be, or such Person as may be designated by either of its executive officers, as the case may be. All such information shall be governed by the terms of the Confidentiality Agreement. 6.7. Affiliates. At least ten business days prior to the date of the Shareholders Meeting, the Company shall deliver to Parent a list of names and addresses of those Persons who are, in the opinion of the Company, as of the time of the Shareholders Meeting referred to in Section 6.4, "affiliates" of the Company within the meaning of Rule 145 under the Securities Act. There shall be added to such list the names and addresses of any other Person subsequently identified by either Parent or the Company as a Person who may be deemed to be such an affiliate of the Company; provided, however, that no such Person identified by Parent shall be added to the list of affiliates of the Company if Parent shall receive from the Company, on or before the date of the Shareholders Meeting, an opinion of counsel reasonably satisfactory to Parent to the effect that such Person is not such an affiliate. The Company shall exercise its best efforts to deliver or cause to be delivered to Parent, prior to the date of the Shareholders Meeting, from each affiliate of the Company identified in the foregoing list (as the same may be supplemented as aforesaid), a letter dated as of the Closing Date substantially in the form attached as Exhibit A-1 (the "Affiliates Letter"). Parent shall not be required to maintain the effectiveness of the S-4 Registration Statement or any other registration statement under the Securities Act for the purposes of resale of Parent Common Stock by such affiliates received in the Merger and the certificates representing Parent Common Stock received by such affiliates shall bear a customary legend regarding applicable Securities Act restrictions and the provisions of this Section. 6.8. Stock Exchange Listing and De-listing. Parent shall use its best efforts to cause the shares of Parent Common Stock to be issued in the Merger to be approved for listing on the NYSE subject to official notice of issuance, prior to the Closing Date. The Surviving Corporation shall use its best efforts to cause the Shares to be de-listed from the NYSE and de-registered under the Exchange Act as soon as practicable following the Effective Time. 6.9. Publicity. The initial press release shall be a joint press release and thereafter the Company and Parent each shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Merger and the other transactions contemplated by this Agreement. 6.10. Benefits. (a) Stock Options. (i) At the Effective Time, each outstanding option to purchase Shares (a "Company Option") under the Stock Plans, whether vested or unvested, shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such Company Option, the number of shares of Parent Common Stock equal to the result (rounded to the nearest whole share) of multiplying the number of Shares subject to the Company Option immediately prior to the Effective Time by the Conversion Ratio (as defined below), at an exercise price per share equal to the result (rounded to the nearest whole cent) of dividing the per share exercise price of such Company Option immediately prior to the Effective Time by the Conversion Ratio; provided, however, that in the case of any Company Option to which Section 422 of the Code applies, the adjustments provided for in this Section shall be effected in a manner consistent with the requirements of Section 424(a) of the Code. At or prior to the Effective Time, the Company shall make all necessary arrangements with respect to the Stock Plans to permit the assumption of the unexercised Company Options by Parent pursuant to this Section. For purposes of this Section, the term "Conversion Ratio" means a fraction, the numerator of which is the average of the high and low sales price of one Share on the NYSE on the three trading days immediately preceding the Effective Time and the denominator of which is the average A-23 28 of the high and low sales price of one share of Parent Common Stock on the NYSE on the trading day immediately preceding the Effective Time. (ii) Effective at the Effective Time, Parent shall assume each Company Option in accordance with the terms of the Stock Plans and the stock option agreement by which it is evidenced. At or prior to the Effective Time, Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Options assumed by it in accordance with this Section. As soon as practicable after the Effective Time, Parent shall file a registration statement on Form S-8 (or any successor or other appropriate forms), or another appropriate form with respect to the shares of Parent Common Stock subject to such Company Options, and shall use its best reasonable efforts to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Company Options remain outstanding. (iii) Prior to the Effective Time, the Board of Directors of Parent, or an appropriate committee of non-employee directors thereof, shall adopt a resolution consistent with the interpretive guidance of the SEC so that the acquisition of shares of Parent Common Stock or options to acquire shares of Parent Common Stock pursuant to this Agreement and the Merger and the Merger shall be an exempt transaction for purposes of Section 16 by any officer or director of the Company who may become a covered person of Parent for purposes of Section 16 of the Exchange Act ("Section 16"). (b) Employee Benefits. (i) Parent agrees that, during the period commencing at the Effective Time and ending on the first anniversary thereof, the employees of the Company and its Subsidiaries ("Company Employees") will continue to be provided with compensation and benefits under employee benefit plans (other than plans involving the issuance of Shares) that are no less favorable in the aggregate than those currently provided by the Company and its Subsidiaries to such Company Employees under the Compensation and Benefit Plans of the Company and its Subsidiaries. (ii) From and after the Effective Time, Parent shall cause the Surviving Corporation and The Detroit Edison Company to honor (i) each existing employment, change of control, severance and termination agreement between the Company or any of its Subsidiaries, and any officer, director or employee of the Company or its Subsidiaries and (ii) all Compensation and Benefit Plans of the Company and its Subsidiaries in accordance with their terms as in effect immediately before the Effective Time. Notwithstanding the above, nothing in this Agreement precludes Parent or any of its Subsidiaries from amending, discontinuing or terminating any Compensation and Benefit Plan in accordance with the terms thereof. Parent acknowledges that it has been advised by the Company that the Merger constitutes a change of control for purposes of certain Company Compensation and Benefit Plans specifically identified in Section 6.10(b) of the Company Disclosure Letter. (iii) For all purposes under the employee benefit plans of Parent and its Affiliates providing benefits to any current Company Employees after the Effective Time (the "New Plans"), each Company Employee shall be credited with his or her years of service with the Company and its Affiliates before the Effective Time, to the same extent as such Company Employee was entitled, before the Effective Time, to credit for such service for such purposes under any similar Company Employee Plans, except to the extent such credit would result in a duplication of benefits. In addition, and without limiting the generality of the foregoing: (i) each Company Employee shall be immediately eligible to participate, without any waiting time, in any and all New Plans to the extent coverage under such New Plan replaces coverage under a comparable Company Employee Plan in which such Company Employee participated immediately before the Effective Time (such plans, collectively, the "Old Plans"); and (ii) for purposes of each New Plan providing medical, dental, pharmaceutical and/or vision benefits to any Company Employee, Parent shall cause all pre-existing condition exclusions of such New Plan to be waived for such employee and his or her covered dependents to the extent that such exclusions and requirements were waived under the corresponding Company Employee Plans, and Parent shall cause any eligible expenses incurred by such employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date that such employee's participation in the corresponding New Plan begins to be taken into account under such New Plan for purposes of satisfying all deductible, coinsurance and A-24 29 maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan-year as if such amounts had been paid in accordance with such New Plan. (iv) Between the date hereof and December 31, 1999, the Company shall take such reasonable and appropriate actions as agreed to by Parent to mitigate the tax cost to the Company of providing the "change of control" benefits identified in Section 5.1(h) of the Company Disclosure Letter. (c) Election to Parent's Board of Directors; Management Executive Committee. At the Effective Time of the Merger, Parent shall promptly increase the size of its Board of Directors or exercise its best efforts to secure the resignation of present directors in order to cause Alfred R. Glancy III and two additional persons selected by the Company after consultation with Parent from among the Company's directors as of the date hereof to be appointed to Parent's Board of Directors. (d) Employees. It is the present intention of Parent and the Company that following the Effective Time, there will be no involuntary reductions in force at the Surviving Corporation or its Subsidiaries, and that Parent, the Surviving Corporation and their respective Subsidiaries will continue Parent's and the Company's present strategy of achieving workforce reductions through attrition or other voluntary means; provided, however, that if any reductions in workforce in respect of employees of Parent and its Subsidiaries, including the Surviving Corporation and its Subsidiaries, become necessary, they shall be made on a fair and equitable basis, in light of the circumstances and the objectives to be achieved, giving consideration to previous work history, job experience, qualifications, and business needs without regard to whether employment prior to the Effective Time was with the Company or its Subsidiaries or Parent or its Subsidiaries, and any employees whose employment is terminated or jobs are eliminated by Parent, the Surviving Corporation or any of their respective Subsidiaries shall be entitled to participate on a fair and equitable basis in the job opportunity and employment placement programs offered by Parent, the Surviving Corporation or any of their respective Subsidiaries. Any workforce reductions carried out following the Effective Time by Parent or the Surviving Corporation and their respective Subsidiaries shall be done in accordance with all applicable collective bargaining agreements, and all laws and regulations governing the employment relationship and termination thereof including, without limitation, the Worker Adjustment and Retraining Notification Act and regulations promulgated thereunder, and any comparable state or local law. 6.11. Expenses. The Surviving Corporation or Parent shall pay all charges and expenses of the Company, Merger Sub or Parent, including those of the Exchange Agent, in connection with the transactions contemplated in Article IV, and Parent shall reimburse the Surviving Corporation for such charges and expenses paid by the Surviving Corporation. Except as otherwise provided in Section 8.5(b), whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the Merger and the other transactions contemplated by this Agreement shall be paid by the party incurring such expense, except that expenses incurred in connection with the filing fee for the S-4 Registration Statement and printing and mailing the Prospectus/Proxy Statement and the S-4 Registration Statement shall be shared equally by Parent and the Company. 6.12. Indemnification; Directors' and Officers' Insurance. (a) From and after the Effective Time, Parent agrees that it will indemnify and hold harmless each present and former director and officer of the Company, (when acting in such capacity) determined as of the Effective Time (the "Indemnified Parties"), against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages or liabilities (collectively, "Costs") incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company would have been permitted under Michigan law and its articles of incorporation and its by-laws in effect on the date hereof to indemnify such Person (and Parent shall also advance expenses as incurred to the fullest extent permitted under applicable law, provided, the Person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such Person is not entitled to indemnification). (b) Any Indemnified Party wishing to claim indemnification under paragraph (a) of this Section 6.12, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Parent thereof, A-25 30 but the failure to so notify shall not relieve Parent of any liability it may have to such Indemnified Party so long as such failure does not materially prejudice Parent. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), (i) Parent or the Surviving Corporation shall have the right to assume and control the defense thereof and Parent shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if Parent or the Surviving Corporation elects not to assume such defense or counsel for the Indemnified Parties advises in writing that there are issues which raise conflicts of interest between Parent or the Surviving Corporation and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them subject to the consent of Parent, which shall not be unreasonably withheld, and Parent or the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements setting forth such fees and expenses in reasonable detail are received; provided, however, that Parent shall be obligated pursuant to this paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of any such matter and (iii) Parent shall not be liable for any settlement effected without its prior written consent; and provided, further, that Parent shall not have any obligation hereunder to any Indemnified Party if and when a court of competent jurisdiction shall ultimately determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable law. (c) The Surviving Corporation shall maintain the Company's existing officers' and directors' liability insurance ("D&O Insurance") for a period of six years after the Effective Time so long as the annual premium therefor is not in excess of 200% of the last annual premium paid prior to the date hereof (the "Current Premium"); provided, however, that (x) the Surviving Corporation may substitute therefor policies (which may be "tail" policies) containing terms with respect to coverage and amount no less favorable to such directors and officers, and (y) if the existing D&O Insurance expires, is terminated or canceled during such six-year period, the Surviving Corporation will use its best efforts to obtain as much D&O Insurance as can be obtained for the remainder of such period for a premium not in excess (on an annualized basis) of 200% of the Current Premium. (d) The provisions of this Section 6.12 are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties, their heirs and their representatives. 6.13. Takeover Statutes. If any Takeover Statute is or may become applicable to the Merger or the other transactions contemplated by this Agreement, each of Parent and the Company and its Board of Directors shall grant such approvals and take such actions as are necessary so that such transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement or by the Merger and otherwise act to eliminate or minimize the effects of such statute or regulation on such transactions. 6.14. Dividends. The Company shall coordinate with Parent the declaration, setting of record dates and payment dates of dividends on Shares so that holders of Shares do not receive dividends on both Shares and Parent Common Stock received in the Merger in respect of any calendar quarter or fail to receive a dividend on either Shares or Parent Common Stock received in the Merger in respect of any calendar quarter. 6.15. Rate Matters. Other than currently pending rate filings, the Company shall, and shall cause its Subsidiaries to, discuss with Parent any material changes in its or its Subsidiaries regulated rates or charges (other than pass-through fuel rates or charges), standards of service or accounting from those in effect on the date hereof and consult with Parent prior to making any filing (or any amendment thereto), or effecting any agreement, commitment, arrangement or consent, whether written or oral, formal or informal, with respect thereto. 6.16. Taxation. Subject to Section 6.2, neither Parent nor the Company shall take or cause to be taken any action, whether before or after the Effective Time, that would disqualify the Merger as a "reorganization" within the meaning of Section 368(a) of the Code. 6.17. Transition Matters. (a) Promptly after the date hereof, Parent and the Company each shall designate three persons (the "Transition Coordinators") to, subject to applicable laws relating to the exchange A-26 31 of information, facilitate a full exchange of information concerning the business, operations, capital spending and budgets and financial results of Parent and the Company and to identify ways in which the operations of Parent and the Company can be consolidated or coordinated. The Transition Coordinators shall meet at least monthly in person and shall meet together quarterly with the Chief Executive Officers of Parent and the Company. From and after the date hereof, Parent and the Company agree that they shall consult with each other regarding all material business plans and decisions. (b) The Company and Parent each agree to use its reasonable best efforts to enter into a definitive agreement within 14 days of the date hereof for the sale to Parent of the Company's 95% membership interest in each of the following limited liability companies that own and operate synthetic fuel manufacturing facilities: (i) CRC No. 1, LLC Union City, Kentucky, (ii) CRC No. 3, LLC, Tazewell County Virginia and McDowell County Virginia, (iii) CRC No. 5, LLC Monongalia County, West Virginia, and (iv) CRC No. 6, LLC Laurel County, West Virginia. The Company and Parent each agree that the economic terms for each such sale shall be designed to produce a payment stream to the Company with a net present value of $40 per ton of capacity, utilizing a 12% discount rate. (c) The Company agrees to use its best efforts promptly to enter into, or to cause its Subsidiaries promptly to enter into, agreements to dispose of (i) such of its interests as are necessary so that the transactions contemplated by this Agreement will not jeopardize the status of any facilities in which the Company directly or indirectly owns any interest as "Qualifying Facilities" under the Public Utility Regulatory Policies Act of 1978, as amended, and (ii) all FERC-jurisdictional assets or facilities whether directly or indirectly owned or wholly or partially owned that would give rise to a requirement for approval of the Merger by the FERC, in each case prior to the date when all Governmental Consents (as defined below) are obtained and to use commercially reasonable efforts to maximize the after-tax proceeds from such sales or dispositions; provided, that the obligation to use best efforts shall not require the Company to take any action pursuant to this Section 6.17(c) that would cause (alone or together with other events) any failure to satisfy any condition to Closing. The Company agrees to keep Parent informed on a current basis regarding the status and terms of such dispositions and any other asset dispositions contemplated by the Company and its Subsidiaries and to work cooperatively with Parent to maximize the mutual benefit to the parties of such dispositions. 6.18. Community Involvement. After the Effective Time, Parent intends to continue, and intends to cause the Surviving Corporation to continue, to make aggregate annual charitable contributions to the communities served by Parent and the Surviving Corporation and otherwise maintain a substantial level of involvement in community activities in the State of Michigan that is similar to, or greater than, the normal aggregate annual level of charitable contributions, community development and related activities carried on by Parent and the Company prior to the date hereof. 6.19. 1935 Act and Power Act. (a) None of the parties hereto shall, nor shall any such party permit any of its Subsidiaries to, without the other party's consent, which shall not be unreasonably withheld or delayed, engage in any activities that would (i) cause a change in its status, or that of its Subsidiaries, under the 1935 Act, including, without limitation, the registration of either party pursuant to the 1935 Act or (ii) result in jurisdiction by the FERC over the Merger. (b) None of the parties hereto shall, nor shall any such party permit any of its Subsidiaries to, without the other party's consent, which shall not be unreasonably withheld or delayed, fail to take such actions that are necessary to (i) preserve existing exemptions from registration under the 1935 Act or (ii) allow the Merger to proceed without a requirement for approval by the FERC. 6.20. Feline Prides. At or prior to the Effective Time, Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon conversion of the Feline Prides in accordance with their terms. A-27 32 ARTICLE VII CONDITIONS 7.1. Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver at or prior to the Effective Time of each of the following conditions: (a) Shareholder Approval. This Agreement shall have been duly approved by holders of Shares constituting the Company Requisite Vote and shall have been duly approved by the sole shareholder of Merger Sub in accordance with applicable law and the articles of incorporation and by-laws of each such corporation, and the issuance of Parent Common Stock pursuant to the Merger shall have been duly approved by the holders of Parent Common Stock constituting the Parent Requisite Vote. (b) NYSE Listing. The shares of Parent Common Stock issuable to the Company shareholders pursuant to this Agreement shall have been authorized for listing on the NYSE upon official notice of issuance. (c) Regulatory Consents. The waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated, and, other than the filing provided for in Section 1.3, all notices, reports and other filings required to be made prior to the Effective Time by the Company or Parent or any of their respective Subsidiaries with, and all consents, registrations, approvals, permits and authorizations required to be obtained prior to the Effective Time by the Company or Parent or any of their respective Subsidiaries from, any Governmental Entity (collectively, "Governmental Consents") in connection with the execution and delivery of this Agreement and the consummation of the Merger and the other transactions contemplated hereby by the Company, Parent and Merger Sub shall have been made or obtained (as the case may be) and become final, except for those that the failure to make or to obtain, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect on Parent or the Company, as applicable, or provide a reasonable basis to conclude that the parties hereto or any of their affiliates or respective directors, officers, agents, advisors or other representatives would be subject to the risk of criminal or material financial liability. (d) Litigation. No court or Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, law, ordinance, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the Merger or the other transactions contemplated by this Agreement (collectively, an "Order"), and none of the U.S. Department of Justice, the Michigan Public Service Commission or the FERC shall have instituted any proceeding or be threatening to institute any proceeding seeking any such Order. (e) S-4. The S-4 Registration Statement shall have become effective under the Securities Act. No stop order suspending the effectiveness of the S-4 Registration Statement shall have been issued, and no proceedings for that purpose shall have been initiated or be threatened, by the SEC. (f) Blue Sky Approvals. Parent shall have received all state securities and "blue sky" permits and approvals necessary to consummate the transactions contemplated hereby. (g) Certain Transactions. The Company shall have completed the disposition of the interests required to be disposed of by Section 6.17(c) of this Agreement. 7.2. Conditions to Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to effect the Merger are also subject to the satisfaction or waiver by Parent at or prior to the Effective Time of the following conditions: (a) Representations and Warranties. The representations and warranties of the Company set forth in Sections 5.1(b)(i), 5.1(c)(i), 5.1(j), 5.1(p) and 5.1(q) of this Agreement shall be true and correct in all material respects (a) on the date hereof and (b) on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date (except for representations and warranties that expressly speak only as of specific date or time other than the date hereof or the Closing A-28 33 Date, which need only be true and correct in all material respects as of such date or time) and all other representations and warranties of the Company set forth in this Agreement shall be true and correct (i) on the date hereof and (ii) on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date (except for representations and warranties that expressly speak only as of specific date or time other than the date hereof or the Closing Date, which need only be true and correct as of such date or time) except in each of cases (i) and (ii) for such failures of those representations or warranties to be true and correct (without regard to any Material Adverse Effect, materiality or similar qualifications contained therein) which, individually or in the aggregate, have not had and are not reasonably likely to have, a Material Adverse Effect on Parent, and Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect. (b) Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect. (c) Consents Under Agreements. The Company shall have obtained the consent or approval of each Person whose consent or approval shall be required under any material Contract to which the Company or any of its Subsidiaries is a party. (d) Accountants Letter. Parent shall have received, in form and substance reasonably satisfactory to Parent, from Deloitte & Touche LLP, the Company's independent auditor, the "comfort" letter described in Section 6.5(b). (e) Affiliates Letters. Parent shall have received an Affiliates Letter from each Person identified as an affiliate of the Company pursuant to Section 6.7. (f) Material Adverse Effect. There shall not have occurred any Material Adverse Effect on the Company. (g) Tax Opinion. Parent shall have received the opinion of Sullivan & Cromwell, counsel to Parent, dated the Closing Date, to the effect that (based on customary assumptions and representations and subject to customary exceptions) the Merger will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code, and that each of Parent, Merger Sub and the Company will be a party to that reorganization within the meaning of Section 368(b) of the Code. The condition set forth in this Section 7.2(g) shall not be waivable after the Company Requisite Vote or the Parent Requisite Vote has been obtained unless further shareholder approval is obtained with appropriate disclosure. (h) Governmental Consents. All Governmental Consents in connection with the execution and delivery of this Agreement and the consummation of the Merger and the other transactions contemplated hereby shall have been obtained without imposing any terms or conditions that, individually or in the aggregate, in the reasonable judgment of Parent, are reasonably likely to have a Material Adverse Effect on Parent, the Company or the Surviving Corporation. 7.3. Conditions to Obligation of the Company. The obligation of the Company to effect the Merger is also subject to the satisfaction or waiver by the Company at or prior to the Effective Time of the following conditions: (a) Representations and Warranties. The representations and warranties of Parent and Merger Sub set forth in Section 5.1(b)(ii), 5.1(c)(ii), 5.1(c)(iii), and 5.1(q) this Agreement shall be true and correct in all material respects (a) on the date hereof and (b) on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date (except for representations and warranties that expressly speak only as of specific date or time other than the date hereof or the Closing Date, which need only be true and correct in all material respect as of such date or time) and all other representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct (i) on the date hereof and (ii) on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date (except for representations and A-29 34 warranties that expressly speak only as of specific date or time other than the date hereof or the Closing Date, which need only be true and correct in all material respects as of such date or time) except in each of cases (i) and (ii) for such failures of those representations or warranties to be true and correct (without regard to any Material Adverse Effect, materiality or similar qualifications contained therein) which, individually or in the aggregate, have not had and are not reasonably likely to have, a Material Adverse Effect on the Company, and the Company shall have received a certificate signed on behalf of Parent and Merger Sub by an executive officer of Parent to such effect. (b) Performance of Obligations of Parent and Merger Sub. Each of Parent and Merger Sub shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed on behalf of Parent and Merger Sub by the an executive officer of Parent to such effect. (c) Consents Under Agreements. Parent shall have obtained the consent or approval of each Person whose consent or approval shall be required in order to consummate the transactions contemplated by this Agreement under any material Contract to which Parent or any of its Subsidiaries is a party. (d) Accountants Letter. The Company shall have received, in form and substance reasonably satisfactory to the Company, from Deloitte & Touche LLP, Parent's independent auditor, the "comfort" letter described in Section 6.5(b). (e) Material Adverse Effect. There shall not have occurred any Material Adverse Effect on Parent. (f) Tax Opinion. The Company shall have received the opinion of Wachtell, Lipton, Rosen & Katz, counsel to the Company, dated the Closing Date, to the effect that (based on customary assumptions and representations and subject to customary exceptions) the Merger will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code, and that each of Parent, Merger Sub and the Company will be a party to that reorganization within the meaning of Section 368(b) of the Code. The condition set forth in this Section 7.3(f) shall not be waivable after the Company Requisite Vote or the Parent Requisite Vote has been obtained unless further shareholder approval is obtained with appropriate disclosure. ARTICLE VIII TERMINATION 8.1. Termination by Mutual Consent. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval by shareholders of the Company and Parent referred to in Section 7.1(a), by mutual written consent of the Company and Parent by action of their respective Boards of Directors. 8.2. Termination by Either Parent or the Company. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time by action of the Board of Directors of either Parent or the Company if: (i) the Merger shall not have been consummated by July 15, 2000, whether such date is before or after the date of approval by the shareholders of the Company or Parent (the "Termination Date"); provided that the Termination Date shall be automatically extended for nine months (the "Extended Date") if, on July 15, 2000: (x) any of the Governmental Consents described in Section 7.1(c) have not been obtained or waived, (y) each of the other conditions to the consummation of the Merger set forth in Article VII has been satisfied or waived or remains capable of satisfaction, and (z) any Governmental Consent that has not yet been obtained is being pursued diligently and in good faith; (ii) the approval of the Company's shareholders required by Section 7.1(a) shall not have been obtained at a meeting duly convened therefor or at any adjournment or postponement thereof; (iii) the approval of Parent's shareholders as required by Section 7.1(a) shall not have been obtained at a meeting duly convened therefor; (iv) any Order permanently restraining, enjoining or otherwise prohibiting consummation of the Merger shall become final and non-appealable (whether before or after the approval by the shareholders of the Company or Parent); or (v) on or after the Regulatory Termination Date (as defined below) the Board of Directors of Parent or of the Company A-30 35 reasonably determines that it is more likely than not that Governmental Consents necessary to satisfy the conditions to the parties' obligation to effect the Merger will not be obtained on terms that satisfy the standard set forth in Section 7.2(h) prior to the Extended Date; provided, that such party provides the other two weeks prior notice. The right to terminate this Agreement pursuant to clause (i) or (v) of the immediately preceding sentence shall not be available to any party that has breached in any material respect its obligations under this Agreement in any manner that shall have proximately contributed to the occurrence of the failure of the Merger to be consummated. As used in this Agreement, the term "Regulatory Termination Date" means the date one year from the date hereof unless the transactions contemplated by this Agreement shall require any approval of the FERC, in which case it shall mean the date 15 months from the date hereof. 8.3. Termination by the Company. This Agreement may be terminated and the Merger may be abandoned by action of the Board of Directors of the Company if: (a) at any time prior to the Effective Time, whether before or after the approval by shareholders of the Company referred to in Section 7.1(a),(i) the Board of Directors of Parent shall have withdrawn or adversely modified its approval or recommendation of this Agreement or failed to reconfirm its recommendation of this Agreement within five business days after a written request by the Company to do so or (ii) there has been a material breach by Parent or Merger Sub of any representation, warranty, covenant or agreement contained in this Agreement that is not curable or, if curable, is not cured within 30 days after written notice of such breach is given by the Company to the party committing such breach; or (b) (i) the Company Requisite Vote shall not have been obtained, (ii) the Company is not in breach of any of the terms of this Agreement, (iii) the Board of Directors of the Company authorizes the Company, subject to complying with the terms of this Agreement, to enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal and the Company notifies Parent in writing that it intends to enter into such an agreement, (iv) Parent does not make, within five business days of receipt of the Company's written notification of its intention to enter into a binding agreement for a Superior Proposal, an offer that the Board of Directors of the Company determines, in good faith after consultation with its financial advisors, is at least as favorable, from a financial point of view, to the shareholders of the Company as the Superior Proposal, and (v) the Company prior to such termination pays to Parent in immediately available funds any fees required to be paid pursuant to Section 8.5. The Company agrees (x) that it will not enter into a binding agreement referred to in clause (iii) of the last preceding sentence until at least the sixth business day after it has provided the notice to Parent required thereby and (y) to notify Parent promptly if its intention to enter into a written agreement referred to in its notification shall change at any time after giving such notification. 8.4. Termination by Parent. This Agreement may be terminated and the Merger may be abandoned by action of the Board of Directors of Parent if: (a) at any time prior to the Effective Time, whether before or after the approval by the shareholders of Parent referred to in Section 7.1(a), (i) the Board of Directors of the Company shall have withdrawn or adversely modified its approval or recommendation of this Agreement or failed to reconfirm its recommendation of this Agreement within five business days after a written request by Parent to do so or (ii) there has been a material breach by the Company of any representation, warranty, covenant or agreement contained in this Agreement that is not curable or, if curable, is not cured within 30 days after written notice of such breach is given by Parent to the Company; or (b) (i) the Parent Requisite Vote shall not have been obtained, (ii) Parent is not in breach of any of the terms of this Agreement, (iii) the Board of Directors of Parent authorizes Parent, subject to complying with the terms of this Agreement, to enter into a binding written agreement concerning a transaction that constitutes a Parent Adverse Proposal and Parent notifies the Company in writing that it intends to enter into such an agreement, (iv) the Company does not make within five business days of receipt of Parent's notification of its intention to enter into a binding agreement for a Parent Adverse Proposal, an offer the Board of Directors of Parent determines, in good faith after consultation with its financial advisors, is at least as favorable, from a financial point of view, to the shareholders of Parent as the Parent Adverse Proposal, and (v) Parent prior to such termination pays to the Company in immediately available funds any fees required to A-31 36 be paid pursuant to Section 8.5. Parent agrees (x) that it will not enter into any binding agreement referred to in clause (iii) of the last preceding sentence until at least the sixth business day after it has provided the notice to the Company required thereby and (y) to notify the Company promptly if its intention to enter into a written agreement referred to in its notification shall change at any time after giving such notification. 8.5. Effect of Termination and Abandonment. (a) In the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article VIII, this Agreement (other than as set forth in Section 9.1) shall become void and of no effect with no liability on the part of any party hereto (or of any of its directors, officers, employees, agents, legal and financial advisors or other representatives); provided, however, except as otherwise provided herein, no such termination shall relieve any party hereto of any liability or damages resulting from any breach of this Agreement. (b) In the event that (i) a Company Acquisition Proposal shall have been made to the Company or any of its Subsidiaries or any of its shareholders or any Person shall have publicly announced an intention (whether or not conditional) to make a Company Acquisition Proposal and thereafter this Agreement is terminated by either Parent or the Company pursuant to Section 8.2(ii), (ii) this Agreement is terminated by Parent pursuant to Section 8.4(a)(i) or, (iii) this Agreement is terminated by the Company pursuant to Section 8.3(b) then the Company shall, in the case of a termination pursuant to 8.3(b) prior to such termination, and otherwise promptly, but in no event later than two days after the date of such termination, pay Parent a termination fee of $55,000,000 and shall promptly, but in no event later than two days after being notified of such by Parent, pay all of the charges and expenses, including those of the Exchange Agent, incurred by Parent or Merger Sub in connection with this Agreement and the transactions contemplated by this Agreement up to a maximum amount of $15,000,000, in each case payable by wire transfer of same day funds; provided, however, that in the event of a termination pursuant to Section 8.2(ii) under the circumstances set forth in clause (i) of this Section 8.5(b), or a termination pursuant to Section 8.4(a)(i), the Company shall (a) promptly, but in no event later than two days after being notified of such by Parent, pay all of the charges and expenses incurred by Parent in connection with this Agreement and the transactions contemplated by this Agreement up to a maximum amount of $15,000,000, and, (b) if the Company enters into a definitive agreement to consummate or consummates a Company Acquisition Proposal within 12 months from the date of such termination, at the time of the entering into of such agreement or such consummation, as applicable, pay Parent a termination fee of $55,000,000. The Company acknowledges that the agreements contained in this Section 8.5(b) are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Parent and Merger Sub would not enter into this Agreement; accordingly, if the Company fails to promptly pay the amount due pursuant to this Section 8.5(b), and, in order to obtain such payment, Parent or Merger Sub commences a suit which results in a judgment against the Company for the fee set forth in this paragraph (b), the Company shall pay to Parent or Merger Sub its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made. (c) In the event that (i) a Parent Adverse Proposal shall have been made to Parent or any of its Subsidiaries or any of its shareholders or any Person shall have publicly announced an intention (whether or not conditional) to make a Parent Adverse Proposal and thereafter this Agreement is terminated by either the Company or Parent pursuant to Section 8.2(iii), (ii) this Agreement is terminated by the Company pursuant to Section 8.3(a)(i) or (iii) this Agreement is terminated by Parent pursuant to Section 8.4(b), then Parent shall, in the case of a termination pursuant to Section 8.4(b) prior to such termination, and otherwise promptly, but in no event later than two days after the date of such termination, pay the Company a termination fee of $85,000,000 and shall promptly, but in no event later than two days after being notified of such by the Company, pay all of the charges and expenses incurred by the Company in connection with this Agreement and the transactions contemplated by this Agreement up to a maximum amount of $15,000,000, in each case payable by wire transfer of same day funds; provided, however, that in the event of a termination pursuant to Section 8.2(iii) under the circumstances set forth in clause (i) of this Section 8.5(c), or a termination pursuant to Section 8.3(a)(i), Parent shall (a) promptly, but in no event later than two days after being notified of such by the Company, pay all of the charges and expenses incurred by the Company in connection with this Agreement and the transactions contemplated hereby up to a maximum amount of A-32 37 $15,000,000 and, (b) if Parent enters into a definitive agreement to consummate or consummates a Parent Adverse Proposal within 12 months from the date of such termination, at the time of the entering into of such agreement or such consummation, as applicable, pay the Company a termination fee of $85,000,000. Parent acknowledges that the agreements contained in this Section 8.5(c) are an integral part of the transactions contemplated by this Agreement and that, without these agreements, the Company would not enter into this Agreement; accordingly, if Parent fails to promptly pay the amount due pursuant to this Section 8.5(c), and, in order to obtain such payment, the Company commences a suit which results in a judgment against Parent for the fee set forth in this paragraph (c), Parent shall pay to the Company its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made. ARTICLE IX MISCELLANEOUS AND GENERAL 9.1. Survival. This Article IX and the agreements of the Company, Parent and Merger Sub contained in Sections 6.8 (Stock Exchange Listing and Delisting), 6.10 (Benefits), 6.11 (Expenses), 6.12 (Indemnification; Directors' and Officers' Insurance) and 6.16 (Taxation) shall survive the consummation of the Merger. This Article IX, the agreements of the Company, Parent and Merger Sub contained in Section 6.11 (Expenses), Section 8.5 (Effect of Termination and Abandonment) and the Confidentiality Agreement shall survive the termination of this Agreement. All other representations, warranties, covenants and agreements in this Agreement shall not survive the consummation of the Merger or the termination of this Agreement. 9.2. Modification or Amendment. Subject to the provisions of applicable law, at any time prior to the Effective Time, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorized officers of the respective parties. 9.3. Waiver of Conditions. The conditions to each of the parties' obligations to consummate the Merger are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. 9.4. Counterparts. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. 9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (A) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF MICHIGAN WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts of the State of Michigan and the Federal courts of the United States of America located in the State of Michigan solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a Michigan State or Federal court. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 9.6 or in such other manner as may be permitted by law shall be valid and sufficient service thereof. (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND A-33 38 UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5. 9.6. Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, or by facsimile: if to Parent or Merger Sub DTE Energy Company 2000 Second Avenue Detroit, MI 48226 Attention: General Counsel fax: (313) 235-0121 (with a copy to Joseph B. Frumkin, Esq., Sullivan & Cromwell, 125 Broad Street New York, NY 10004 fax: (212) 558-3588) if to the Company MCN Energy Group Inc. 500 Griswold Street Detroit, MI 48226 Attention: General Counsel fax: (313) 965-0009 (with a copy to Seth A. Kaplan, Esq., Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 fax: (212) 403-2000) or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above. 9.7. Entire Agreement. This Agreement (including any exhibits or appendices hereto), the Company Disclosure Letter, the Parent Disclosure Letter and the Confidentiality Agreement, dated August 30, 1999, between Parent and the Company (the "Confidentiality Agreement") constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof. 9.8. No Third Party Beneficiaries. Except as provided in Section 6.12 (Indemnification; Directors' and Officers' Insurance), this Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. A-34 39 9.9. Obligations of Parent and of the Company. Whenever this Agreement requires a Subsidiary of Parent to take any action, such requirement shall be deemed to include an undertaking on the part of Parent to cause such Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of the Company to take any action, such requirement shall be deemed to include an undertaking on the part of the Company to cause such Subsidiary to take such action and, after the Effective Time, on the part of the Surviving Corporation to cause such Subsidiary to take such action. 9.10. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 9.11. Interpretation. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." 9.12. Assignment. This Agreement shall not be assignable by operation of law or otherwise; provided, however, that Parent may designate, by written notice to the Company, another wholly owned direct or indirect subsidiary to be a Constituent Corporation in lieu of Merger Sub, in which event all references herein to Merger Sub shall be deemed references to such other subsidiary, except that all representations and warranties made herein with respect to Merger Sub as of the date of this Agreement shall be deemed representations and warranties made with respect to such other subsidiary as of the date of such designation. A-35 40 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first written above. MCN ENERGY GROUP INC. By: /s/ ALFRED R. GLANCY III ------------------------------------ Name: Alfred R. Glancy III Title: Chairman, President and Chief Executive Officer DTE ENERGY COMPANY By: /s/ ANTHONY F. EARLEY, JR. ------------------------------------ Name: Anthony F. Earley, Jr. Title: Chairman of the Board and Chief Executive Officer and President and Chief Operating Officer DTE ENTERPRISES, INC. By: /s/ ANTHONY F. EARLEY, JR. ------------------------------------ Name: Anthony F. Earley, Jr. Title: Chairman, Chief Executive Officer and President. A-36 41 EXHIBIT A-1 [FORM OF AFFILIATE LETTER] [DATE] DTE Energy Company 2000 2nd Avenue Detroit, Michigan 48226 Ladies and Gentlemen: I have been advised that as of the date hereof, I may be deemed to be an "affiliate" of MCN Energy Group, a Michigan corporation (the "Company"), as that term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the terms of the Agreement and Plan of Merger dated as of October 4, 1999, as it may be amended, supplemented or modified from time to time (the "Merger Agreement"), among the Company, DTE Energy Company, a Michigan corporation ("Parent"), and DTE Enterprises, Inc. a Michigan corporation and a wholly owned subsidiary of Parent ("Merger Sub"), the Company will be merged with and into Merger Sub (the "Merger"), with Merger Sub as the surviving corporation in the Merger. Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement. In consideration of the agreements contained herein, Parent's reliance on this letter in connection with the consummation of the Merger and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, I hereby represent, warrant and agree that I will not make any sale, transfer or other disposition of common stock, without par value, of Parent (the "Parent Common Stock") received by me pursuant to the Merger in violation of the Securities Act or the Rules and Regulations. I have been advised that the issuance of the shares of Parent Common Stock pursuant to the Merger will have been registered with the Commission under the Securities Act on a Registration Statement on Form S-4. I have also been advised, however, that since I may be deemed to be an affiliate of the Company at the time the Merger is submitted for a vote of the shareholders of the Company, the Parent Common Stock received by me may be disposed by me only (i) pursuant to an effective registration statement under the Securities Act, (ii) in conformity with the volume and other limitations of Rule 145 promulgated by the Commission under the Securities Act, or (iii) in reliance upon an exemption from registration that is available under the Securities Act. I also understand that instructions will be given to Parent's transfer agent with respect to the Parent Common Stock to be received by me pursuant to the Merger and that there will be placed on the certificates representing such shares of Parent Common Stock, or any substitutes therefor, a legend stating in substance as follows: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A REGISTRATION STATEMENT UNDER THAT ACT OR AN EXEMPTION FROM SUCH REGISTRATION." It is understood and agreed that the legend set forth above shall be removed upon surrender of certificates bearing such legend by delivery of substitute certificates without such legend if I shall have delivered to Parent an opinion of counsel, in form and substance reasonably satisfactory to Parent, to the effect that (i) the sale or disposition of the shares represented by the surrendered certificates may be effected without registration of the offering, sale and delivery of such shares under the Securities Act, and (ii) the shares to be so transferred may be publicly offered, sold and delivered by the transferee thereof without compliance with the registration provisions of the Securities Act. A-A-1 42 I further understand and agree that Parent is under no obligation to register the sale, transfer or other disposition of the Parent Common Stock by me or on my behalf under the Securities Act or to take any other action necessary in order to make compliance with an exemption from such registration available. This letter agreement constitutes the complete understanding between Parent and me concerning the subject matter hereof. Any notice required to be sent to either party hereunder shall be sent by registered or certified mail, return receipt requested, using the addresses set forth herein or such other address as shall be furnished in writing by the parties. This letter agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. If you are in agreement with the foregoing, please so indicate by signing below and returning a copy of this letter to the undersigned, at which time this letter shall become a binding agreement between us. Very truly yours, -------------------------------------- Name: Accepted this day of , 199 by DTE Energy Company By: - ---------------------------------------------------- Name: Title: A-A-2 EX-4.205 3 SUPPLEMENTAL INDENTURE 1 EXHIBIT 4-205 THE DETROIT EDISON COMPANY (2000 Second Avenue, Detroit, Michigan 48226) TO BANKERS TRUST COMPANY (Four Albany Street, New York, New York 10015) AS TRUSTEE ------------------------ INDENTURE Dated as of January 1, 2000 ------------------------ SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST DATED AS OF OCTOBER 1, 1924 PROVIDING FOR (A) GENERAL AND REFUNDING MORTGAGE BONDS, 2000 SERIES A AND (B) RECORDING AND FILING DATA 2 i TABLE OF CONTENTS* ------------------------

PAGE ---- PARTIES..................................................... 1 RECITALS Original Indenture and Supplementals...................... 1 Issue of Bonds under Indenture............................ 1 Bonds heretofore issued................................... 1 Reason for creation of new series......................... 5 Bonds to be 2000 Series A................................. 5 Further Assurance......................................... 5 Authorization of Supplemental Indenture................... 5 Consideration for Supplemental Indenture.................. 6 PART I. CREATION OF THREE HUNDRED TWENTY-FOURTH SERIES OF BONDS GENERAL AND REFUNDING MORTGAGE BONDS, 2000 SERIES A Sec. 1. Terms of Bonds of 2000 Series A..................... 6 Sec. 2. Redemption of Bonds of 2000 Series A................ 7 Sec. 3. Form of Bonds of 2000 Series A...................... 9 Form of Trustee's Certificate....................... 13 PART II. RECORDING AND FILING DATA Recording and filing of Original Indenture.................. 14 Recording and filing of Supplemental Indentures............. 14 Recording of Certificates of Provision for Payment.......... 19 PART III. THE TRUSTEE Terms and conditions of acceptance of trust by Trustee...... 19 PART IV. MISCELLANEOUS Confirmation of Section 318(c) of Trust Indenture Act....... 19 Execution in Counterparts................................... 19 Testimonium................................................. 20 Execution................................................... 20 Acknowledgement of execution by Company..................... 20 Acknowledgement of execution by Trustee..................... 21 Affidavit as to consideration and good faith................ 22

- ------------------------ * This Table of Contents shall not have any bearing upon the interpretation of any of the terms or provisions of this Indenture. 3 1 PARTIES. SUPPLEMENTAL INDENTURE, dated as of the first day of January, in the year two thousand, between THE DETROIT EDISON COMPANY, a corporation organized and existing under the laws of the State of Michigan and a transmitting utility (hereinafter called the "Company"), party of the first part, and BANKERS TRUST COMPANY, a corporation organized and existing under the laws of the State of New York, having its corporate trust office at Four Albany Street, in the Borough of Manhattan, The City and State of New York, as Trustee under the Mortgage and Deed of Trust hereinafter mentioned (hereinafter called the "Trustee"), party of the second part. ORIGINAL INDENTURE AND SUPPLEMENTALS. WHEREAS, the Company has heretofore executed and delivered its Mortgage and Deed of Trust (hereinafter referred to as the "Original Indenture"), dated as of October 1, 1924, to the Trustee, for the security of all bonds of the Company outstanding thereunder, and pursuant to the terms and provisions of the Original Indenture, indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, June 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, November 1, 1936, February 1, 1940, December 1, 1940, September 1, 1947, March 1, 1950, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, June 1, 1959, December 1, 1966, October 1, 1968, December 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, December 15, 1975, February 1, 1976, June 15, 1976, July 15, 1976, February 15, 1977, March 1, 1977, June 15, 1977, July 1, 1977, October 1, 1977, June 1, 1978, October 15, 1978, March 15, 1979, July 1, 1979, September 1, 1979, September 15, 1979, January 1, 1980, April 1, 1980, August 15, 1980, August 1, 1981, November 1, 1981, June 30, 1982, August 15, 1982, June 1, 1983, October 1, 1984, May 1, 1985, May 15, 1985, October 15, 1985, April 1, 1986, August 15, 1986, November 30, 1986, January 31, 1987, April 1, 1987, August 15, 1987, November 30, 1987, June 15, 1989, July 15, 1989, December 1, 1989, February 15, 1990, November 1, 1990, April 1, 1991, May 1, 1991, May 15, 1991, September 1, 1991, November 1, 1991, January 15, 1992, February 29, 1992, April 15, 1992, July 15, 1992, July 31, 1992, November 30, 1992, December 15, 1992, January 1, 1993, March 1, 1993, March 15, 1993, April 1, 1993, April 26, 1993, May 31, 1993, June 30, 1993, June 30, 1993, September 15, 1993, March 1, 1994, June 15, 1994, August 15, 1994, December 1, 1994, August 1, 1995, August 1, 1999 and August 15, 1999 supplemental to the Original Indenture, have heretofore been entered into between the Company and the Trustee (the Original Indenture and all indentures supplemental thereto together being hereinafter sometimes referred to as the "Indenture"); and ISSUE OF BONDS UNDER INDENTURE. WHEREAS, the Indenture provides that said bonds shall be issuable in one or more series, and makes provision that the rates of interest and dates for the payment thereof, the date of maturity or dates of maturity, if of serial maturity, the terms and rates of optional redemption (if redeemable), the forms of registered bonds without coupons of any series and any other provisions and agreements in respect thereof, in the Indenture provided and permitted, as the Board of Directors may determine, may be expressed in a supplemental indenture to be made by the Company to the Trustee thereunder; and BONDS HERETOFORE ISSUED. WHEREAS, bonds in the principal amount of Eight billion, seven hundred twelve million four hundred twenty-two thousand dollars ($8,712,422,000) have heretofore been issued under the indenture as follows, viz: (1) Bonds of Series A -- Principal Amount $26,016,000, (2) Bonds of Series B -- Principal Amount $23,000,000, (3) Bonds of Series C -- Principal Amount $20,000,000, (4) Bonds of Series D -- Principal Amount $50,000,000, (5) Bonds of Series E -- Principal Amount $15,000,000, (6) Bonds of Series F -- Principal Amount $49,000,000, (7) Bonds of Series G -- Principal Amount $35,000,000, 4 2 (8) Bonds of Series H -- Principal Amount $50,000,000, (9) Bonds of Series I -- Principal Amount $60,000,000, (10) Bonds of Series J -- Principal Amount $35,000,000, (11) Bonds of Series K -- Principal Amount $40,000,000, (12) Bonds of Series L -- Principal Amount $24,000,000, (13) Bonds of Series M -- Principal Amount $40,000,000, (14) Bonds of Series N -- Principal Amount $40,000,000, (15) Bonds of Series O -- Principal Amount $60,000,000, (16) Bonds of Series P -- Principal Amount $70,000,000, (17) Bonds of Series Q -- Principal Amount $40,000,000, (18) Bonds of Series W -- Principal Amount $50,000,000, (19) Bonds of Series AA -- Principal Amount $100,000,000, (20) Bonds of Series BB -- Principal Amount $50,000,000, (21) Bonds of Series CC -- Principal Amount $50,000,000, (22) Bonds of Series UU -- Principal Amount $100,000,000, (23-31) Bonds of Series DDP Nos. 1-9 -- Principal Amount $14,305,000, (32-45) Bonds of Series FFR Nos. 1-14 -- Principal Amount $45,600,000, (46-67) Bonds of Series GGP Nos. 1-22 -- Principal Amount $42,300,000, (68) Bonds of Series HH -- Principal Amount $50,000,000, (69-90) Bonds of Series IIP Nos. 1-22 -- Principal Amount $3,750,000, (91-98) Bonds of Series JJP Nos. 1-8 -- Principal Amount $6,850,000, (99-107) Bonds of Series KKP Nos. 1-9 -- Principal Amount $34,890,000, (108-122) Bonds of Series LLP Nos. 1-15 -- Principal Amount $8,850,000, (123-143) Bonds of Series NNP Nos. 1-21 -- Principal Amount $47,950,000, (144-161) Bonds of Series OOP Nos. 1-18 -- Principal Amount $18,880,000, (162-180) Bonds of Series QQP Nos. 1-19 -- Principal Amount $13,650,000, (181-195) Bonds of Series TTP Nos. 1-15 -- Principal Amount $3,800,000, (196) Bonds of 1980 Series A -- Principal Amount $50,000,000, Bonds of 1980 Series CP Nos. (197-221) 1-25 -- Principal Amount $35,000,000, Bonds of 1980 Series DP Nos. (222-232) 1-11 -- Principal Amount $10,750,000, Bonds of 1981 Series AP Nos. (233-248) 1-16 -- Principal Amount $124,000,000, (249) Bonds of 1985 Series A -- Principal Amount $35,000,000, (250) Bonds of 1985 Series B -- Principal Amount $50,000,000, (251) Bonds of Series PP -- Principal Amount $70,000,000, (252) Bonds of Series RR -- Principal Amount $70,000,000, (253) Bonds of Series EE -- Principal Amount $50,000,000, Bonds of Series MMP and MMP No. (254-255) 2 -- Principal Amount $5,430,000, (256) Bonds of Series T -- Principal Amount $75,000,000, (257) Bonds of Series U -- Principal Amount $75,000,000, (258) Bonds of 1986 Series B -- Principal Amount $100,000,000, (259) Bonds of 1987 Series D -- Principal Amount $250,000,000, (260) Bonds of 1987 Series E -- Principal Amount $150,000,000, (261) Bonds of 1987 Series C -- Principal Amount $225,000,000, (262) Bonds of Series V -- Principal Amount $100,000,000, (263) Bonds of Series SS -- Principal Amount $150,000,000, (264) Bonds of 1980 Series B -- Principal Amount $100,000,000, (265) Bonds of 1986 Series C -- Principal Amount $200,000,000, (266) Bonds of 1986 Series A -- Principal Amount $200,000,000, (267) Bonds of 1987 Series B -- Principal Amount $175,000,000, (268) Bonds of Series X -- Principal Amount $100,000,000, (269) Bonds of 1987 Series F -- Principal Amount $200,000,000, (270) Bonds of 1987 Series A -- Principal Amount $300,000,000, (271) Bonds of Series Y -- Principal Amount $60,000,000, (272) Bonds of Series Z -- Principal Amount $100,000,000, 5 3 (273) Bonds of 1989 Series A -- Principal Amount $300,000,000, (274) Bonds of 1984 Series AP -- Principal Amount $2,400,000, (275) Bonds of 1984 Series BP -- Principal Amount $7,750,000, (276) Bonds of Series R -- Principal Amount $100,000,000, (277) Bonds of Series S -- Principal Amount $150,000,000, (278) Bonds of 1993 Series D -- Principal Amount $100,000,000, (279) Bonds of 1992 Series E -- Principal Amount $50,000,000, (280) Bonds of 1993 Series B -- Principal Amount $50,000,000, (281) Bonds of 1989 Series BP -- Principal Amount $66,565,000, all of which have either been retired and cancelled, or no longer represent obligations of the Company, having been called for redemption and funds necessary to effect the payment, redemption and retirement thereof having been deposited with the Trustee as a special trust fund to be applied for such purpose; (282-287) Bonds of Series KKP Nos. 10-15 in the principal amount of One hundred seventy-nine million five hundred ninety thousand dollars ($179,590,000), of which Thirty-nine million seven hundred forty-five thousand dollars ($39,745,000) principal amount have heretofore been retired and One hundred thirty-nine million eight hundred forty-five thousand dollars ($139,845,000) principal amount are outstanding at the date hereof; (288) Bonds of 1990 Series A in the principal amount of One hundred ninety-four million six hundred forty-nine thousand dollars ($194,649,000) of which Sixty-two million seven hundred ninety thousand dollars ($62,790,000) principal amount have heretofore been retired and One hundred thirty-one million eight hundred fifty-nine thousand dollars ($131,859,000) principal amount are outstanding at the date hereof; (289) Bonds of 1990 Series B in the principal amount of Two hundred fifty-six million nine hundred thirty-two thousand dollars ($256,932,000) of which Ninety-five million one hundred sixty thousand dollars ($95,160,000) principal amount have heretofore been retired and One hundred sixty-one million seven hundred seventy-two thousand dollars ($161,772,000) principal amount are outstanding at the date hereof; (290) Bonds of 1990 Series C in the principal amount of Eighty-five million four hundred seventy-five thousand dollars ($85,475,000) of which Thirty-four million one hundred ninety thousand dollars ($34,190,000) principal amount have heretofore been retired and Fifty-one million two hundred eighty-five thousand dollars ($51,285,000) principal amount are outstanding at the date hereof; (291) Bonds of 1991 Series AP in the principal amount of Thirty-two million three hundred seventy-five thousand dollars ($32,375,000), all of which are outstanding at the date hereof; (292) Bonds of 1991 Series BP in the principal amount of Twenty-five million nine hundred ten thousand dollars ($25,910,000), all of which are outstanding at the date hereof; (293) Bonds of 1991 Series CP in the principal amount of Thirty-two million eight hundred thousand dollars ($32,800,000), all of which are outstanding at the date hereof; (294) Bonds of 1991 Series DP in the principal amount of Thirty-seven million six hundred thousand dollars ($37,600,000), all of which are outstanding at the date hereof; (295) Bonds of 1991 Series EP in the principal amount of Forty-one million four hundred eighty thousand dollars ($41,480,000), all of which are outstanding at the date hereof; 6 4 (296) Bonds of 1991 Series FP in the principal amount of Ninety-eight million three hundred seventy-five thousand dollars ($98,375,000), all of which are outstanding at the date hereof; (297) Bonds of 1992 Series BP in the principal amount of Twenty million nine hundred seventy-five thousand dollars ($20,975,000), all of which are outstanding at the date hereof; (298) Bonds of 1992 Series AP in the principal amount of Sixty-six million dollars ($66,000,000), all of which are outstanding at the date hereof; (299) Bonds of 1992 Series D in the principal amount of Three hundred million dollars ($300,000,000), of which thirty-four million dollars ($34,000,000) principal amount have heretofore been retired and Two hundred sixty-six million ($266,000,000) principal amount are outstanding at the date hereof; (300) Bonds of 1992 Series CP in the principal amount of Thirty-five million dollars ($35,000,000), all of which are outstanding at the date hereof; (301) Bonds of 1989 Series BP No. 2 in the principal amount of Thirty-six million dollars ($36,000,000), all of which are outstanding at the date hereof; (302) Bonds of 1993 Series C in the principal amount of Two hundred twenty-five million dollars ($225,000,000), of which Twenty-seven million dollars ($27,000,000) principal amount have heretofore been retired and One hundred ninety-eight million dollars ($198,000,000) principal amount are outstanding at the date hereof; (303) Bonds of 1993 Series E in the principal amount of Four hundred million dollars ($400,000,000), of which Thirty-one million five hundred thousand dollars ($31,500,000) principal amount have heretofore been retired and Three hundred sixty-eight million five hundred thousand dollars ($368,500,000) principal amount are outstanding at the date hereof; (304) Bonds of 1993 Series FP in the principal amount of Five million six hundred eighty-five thousand dollars ($5,685,000), all of which are outstanding at the date hereof; (305) Bonds of 1993 Series G in the principal amount of Two hundred twenty-five million dollars ($225,000,000), of which One hundred twenty-five million dollars ($125,000,000) principal amount have been retired and One hundred million dollars ($100,000,000) principal amount are outstanding at the date hereof; (306) Bonds of 1993 Series J in the principal amount of Three hundred million dollars ($300,000,000), of which Seventy eight million five hundred thousand dollars ($78,500,000) principal amount have heretofore been retired and Two hundred twenty-one million five hundred thousand dollars ($221,500,000) principal amount are outstanding at the date hereof; (307) Bonds of 1993 Series IP in the principal amount of Five million eight hundred twenty-five thousand dollars ($5,825,000), all of which are outstanding at the date hereof; (308) Bonds of 1993 Series AP in the principal amount of Sixty-five million dollars ($65,000,000), all of which are outstanding at the date hereof; (309) Bonds of 1993 Series H in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof; (310) Bonds of 1993 Series K in the principal amount of One hundred sixty million dollars ($160,000,000), all of which are outstanding at the date hereof; (311) Bonds of 1994 Series AP in the principal amount of Seven million five hundred thirty-five thousand dollars ($7,535,000), all of which are outstanding at the date hereof; 7 5 (312) Bonds of 1994 Series BP in the principal amount of Twelve million nine hundred thirty-five thousand dollars ($12,935,000), all of which are outstanding at the date hereof; (313) Bonds of 1994 Series C in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof; (314) Bonds of 1994 Series DP in the principal amount of Twenty-three million seven hundred thousand dollars ($23,700,000), all of which are outstanding at the date hereof; (315) Bonds of 1995 Series AP in the principal amount of Ninety-seven million dollars ($97,000,000), all of which are outstanding at the date hereof; (316) Bonds of 1995 Series BP in the principal amount of Twenty-two million, one hundred seventy-five thousand dollars ($22,175,000), all of which are outstanding at the date hereof; (317) Bonds of 1999 Series AP in the principal amount of One hundred eighteen million three hundred sixty thousand dollars ($118,360,000), all of which are outstanding at the date hereof; (318) Bonds of 1999 Series BP in the principal amount of Thirty-nine million seven hundred forty-five thousand dollars ($39,745,000), all of which are outstanding of the date hereof; (319) Bonds of 1999 Series CP in the principal amount of Sixty-six million five hundred sixty-five thousand dollars ($66,565,000), all of which are outstanding at the date hereof; and (320) Bonds of 1999 Series D in the principal amount of Forty million dollars ($40,000,000), all of which are outstanding at the date hereof and, accordingly, of the bonds so issued, Two billion nine hundred seventy-nine million eight hundred one thousand dollars ($2,979,801,000) principal amount are outstanding at the date hereof; and REASON FOR CREATION OF NEW SERIES. WHEREAS, the Company desires to issue a new series of bonds to be issued under the Indenture and to be authenticated and delivered pursuant to Section 8 of Article III of the Indenture; and BONDS TO BE 2000 SERIES A. WHEREAS, the Company desires by this Supplemental Indenture to create a new series of bonds, to be designated "General and Refunding Mortgage Bonds, 2000 Series A," and FURTHER ASSURANCE. WHEREAS, the Original Indenture, by its terms, includes in the property subject to the lien thereof all of the estates and properties, real, personal and mixed, rights, privileges and franchises of every nature and kind and wheresoever situate, then or thereafter owned or possessed by or belonging to the Company or to which it was then or at any time thereafter might be entitled in law or in equity (saving and excepting, however, the property therein specifically excepted or released from the lien thereof), and the Company therein covenanted that it would, upon reasonable request, execute and deliver such further instruments as may be necessary or proper for the better assuring and confirming unto the Trustee all or any part of the trust estate, whether then or thereafter owned or acquired by the Company (saving and excepting, however, property specifically excepted or released from the lien thereof); and AUTHORIZATION OF SUPPLEMENTAL INDENTURE. WHEREAS, the Company in the exercise of the powers and authority conferred upon and reserved to it under and by virtue of the provisions of the Indenture, and pursuant to resolutions of its Board of Directors has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture in the form hereof for the purposes herein provided; and 8 6 WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized; CONSIDERATION FOR SUPPLEMENTAL INDENTURE. NOW, THEREFORE, THIS INDENTURE WITNESSETH: That The Detroit Edison Company, in consideration of the premises and of the covenants contained in the Indenture and of the sum of One Dollar ($1.00) and other good and valuable consideration to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trusts under the Original Indenture and in said indentures supplemental thereto as follows: PART I. CREATION OF THREE HUNDRED TWENTY-FOURTH SERIES OF BONDS. GENERAL AND REFUNDING MORTGAGE BONDS, 2000 SERIES A TERMS OF BONDS OF 2000 SERIES A. SECTION 1. The Company hereby creates the Three hundred twenty-fourth series of bonds to be issued under and secured by the Original Indenture as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title "General and Refunding Mortgage Bonds, 2000 Series A" (elsewhere herein referred to as the "bonds of 2000 Series A"). The aggregate principal amount of bonds of 2000 Series A shall be limited to Two hundred twenty million dollars ($220,000,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds. The bonds of 2000 Series A shall mature on February 1, 2005 and shall be issued as registered bonds without coupons in denominations of $1,000 and any multiple thereof, and shall bear interest, payable semi-annually on February 1 and August 1 of each year (commencing on August 1, 2000), at the rate of seven and one-half per centum (7.5%) per annum until the principal shall have become due and payable, and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. The bonds of 2000 Series A will be issued in book-entry form through the facilities of The Depository Trust Company. Except as otherwise specifically provided in this Supplemental Indenture, the principal of and interest on the bonds of 2000 Series A shall be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. The interest on bonds of 2000 Series A, whether in temporary or definitive form, shall be payable without presentation of such bonds and (subject to the provisions of this Section 1) only to or upon the written order of the registered holders thereof. Each bond of 2000 Series A shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the February 1 or August 1 next preceding the date thereof to which interest has been paid on bonds of 2000 Series A, unless the bond is authenticated on a date to which interest has been paid, in which case interest shall be payable from the date of authentication, or unless the date of authentication is prior to August 1, 2000, in which case interest shall be payable from February 3, 2000 on the bond of 2000 Series A originally evidencing the debt represented thereby. The bonds of 2000 Series A in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered 1 and upwards (with such further designation as 9 7 may be appropriate and desirable to indicate by such designation the form, series and denomination of bonds of 2000 Series A). Until bonds of 2000 Series A in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of 2000 Series A in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 2000 Series A, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 2000 Series A, but without a recital of redemption prices and with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company. Interest on any bond of 2000 Series A which is payable on any interest payment date and is punctually paid or duly provided for shall be paid to the person in whose name that bond, or any previous bond to the extent evidencing the same debt as that evidenced by that bond, is registered at the close of business on the regular record date for such interest, which regular record date shall be the fifteenth calendar day (whether or not a business day) next preceding such interest payment date. If the Company shall default in the payment of the interest due on any interest payment date on the principal represented by any bond of 2000 Series A, such defaulted interest shall forthwith cease to be payable to the registered holder of that bond on the relevant regular record date by virtue of his having been such holder, and such defaulted interest may be paid to the registered holder of that bond (or any bond or bonds of 2000 Series A issued upon transfer or exchange thereof) on the date of payment of such defaulted interest or, at the election of the Company, to the person in whose name that bond (or any bond or bonds of 2000 Series A issued upon transfer or exchange thereof) is registered on a subsequent record date established by notice given by mail by or on behalf of the Company to the holders of bonds of 2000 Series A not less than (10) days preceding such subsequent record date, which subsequent record date shall be at least five (5) days prior to the payment date of such defaulted interest. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If any interest payment date, date of redemption or the stated maturity for the bonds of 2000 Series A would otherwise be a day that is not a business day, payment of principal and/or interest or premium, if any, with respect to the bonds of 2000 Series A will be paid on the next succeeding business day with the same force and effect as if made on such date and no interest on such payment will accrue from and after such date. "Business day" means any day other than a 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. REDEMPTION OF BONDS OF 2000 SERIES A. SECTION 2. The bonds of 2000 Series A shall be redeemable prior to stated maturity, at the election of the Company on any date prior to maturity, as a whole, or in part from time to time, by lot, at a redemption price equal to the greater of (1) the principal amount of the Bonds to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the bonds of 2000 Series A to be redeemed, discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield (defined below) plus 0.15%, plus in each case accrued interest to the redemption date. "Treasury Yield" means with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the 10 8 remaining term of the bonds of 2000 Series A that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the bonds of 2000 Series A. "Independent Investment Banker" means Salomon Smith Barney Inc., or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing selected by the Company and appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if that release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations for such redemption date, or (B) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Smith Barney Inc., Chase Securities Inc., Goldman, Sachs & Co. and Warburg Dillon Read LLC and their respective successors, provided, however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer "), the Company shall substitute for it another Primary Treasury Dealer. The bonds of 2000 Series A shall be redeemable as aforesaid and except as otherwise provided herein, and as specified in Article IV of the Indenture upon giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) days, but not more than sixty (60) days, prior to the date fixed for redemption to the registered holders of bonds of 2000 Series A so called for redemption at their last respective addresses appearing on the register thereof, but failure to mail such notice to the registered holders of any bonds of 2000 Series A designated for redemption shall not affect the validity of any such redemption of any other bonds of such series. Interest shall cease to accrue on any bonds of 2000 Series A (or any portion thereof) so called for redemption from and after the date fixed for redemption if payment sufficient to redeem the bonds of 2000 Series A (or such portion) designated for redemption has been duly provided for. Bonds of 2000 Series A redeemed in part only shall be in amounts of $1,000 or any multiple thereof. If the giving of the notice of redemption shall have been completed, or if provision satisfactory to the Trustee for the giving of such notice shall have been made, and if the Company shall have deposited with the Trustee in trust funds (which shall have become available for payment to the holders of the bonds of 2000 Series A so to be redeemed) sufficient to redeem bonds of 2000 Series A in whole or in part, on the date fixed for redemption, then all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and interest due or to become due thereon shall cease and be discharged and the holders of such bonds of 2000 Series A (or portions thereof) shall thereafter be restricted exclusively to such funds for any 11 9 and all claims of whatsoever nature on their part under the Indenture or in respect of such bonds (or portions thereof) and interest. The bonds of 2000 Series A shall not be entitled to or subject to any sinking fund. EXCHANGE AND TRANSFER. At the option of the registered holder, any bonds of 2000 Series A, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney, shall be exchangeable for a like aggregate principal amount of bonds of 2000 Series A of other authorized denominations, upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. Bonds of 2000 Series A shall be transferable at the office or agency of the Company in the Borough of Manhattan, The City of New York, The State of New York. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of 2000 Series A during any period of ten (10) days next preceding any interest payment date for such bonds. Bonds of 2000 Series A, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto or with the rules or regulations of any stock exchange or to conform to usage with respect thereto. FORM OF BONDS 2000 SERIES A. SECTION 4. The bonds of 2000 Series A and the form of Trustee's Certificate to be endorsed on such bonds shall be substantially in the following forms, respectively: [FORM OF FACE OF BOND] THIS BOND IS A GLOBAL BOND REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR BONDS IN CERTIFICATED FORM, THIS BOND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE DETROIT EDISON COMPANY GENERAL AND REFUNDING MORTGAGE BOND 2000 Series A, 7.5% due February 1, 2005 $................ No. ................ THE DETROIT EDISON COMPANY (hereinafter called the "Company"), a corporation of the State of Michigan, for value received, hereby promises to pay to or registered assigns, at its office or agency in the Borough of Manhattan, The City and State of New York, the principal sum of Two hundred twenty million dollars ($220,000,000) in lawful money of the United States of America on the first day of February, 2005, and to pay interest thereon at the rate specified in the title hereof, at such office or agency, in like lawful money, from 12 10 February 3, 2000, and after the first interest payment on bonds of this Series has been made or otherwise provided for, from the most recent date to which such interest has been paid, semi-annually on the first day of February and August in each year (commencing on August 1, 2000), to the person in whose name this bond is registered at the close of business on the fifteenth calendar day (whether or not a business day) next preceding the applicable interest payment date (subject to certain exceptions provided in the Indenture hereinafter mentioned), until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in such Indenture hereinafter mentioned on the reverse hereof and in the supplemental indenture pursuant to which this bond has been issued. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If any interest payment date, date of redemption or the stated maturity for the bonds of 2000 Series A would otherwise be a day that is not a business day, payment of principal and/or interest or premium, if any, with respect to the bonds of 2000 Series A will be paid on the next succeeding business day with the same force and effect as if made on such date and no interest on such payment will accrue from and after such date. "Business day" means any day other than a 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. Reference is hereby made to the further provisions of this bond set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though set forth at this place. This bond shall not be valid or become obligatory for any purpose until Bankers Trust Company, the Trustee under the Indenture hereinafter mentioned on the reverse hereof, or its successor thereunder, shall have signed the form of certificate endorsed hereon. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused this instrument to be executed on its behalf by its Vice President and Treasurer, with his manual or facsimile signature, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Secretary or its Assistant Corporate Secretary by manual or facsimile signature. Dated: THE DETROIT EDISON COMPANY By ........................................... Vice President and Treasurer Attest: ----------------------------- Vice President and Corporate Secretary [FORM OF REVERSE OF BOND] This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of said bonds known as General and Refunding Mortgage Bonds, 2000 Series A (elsewhere herein referred to as the "bonds of 2000 Series A"), limited to an aggregate principal amount of $220,000,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other 13 11 bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to Bankers Trust Company, a corporation of the State of New York, as Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of January 1, 2000) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of January 1, 2000, are hereinafter collectively called the "Indenture"). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in principal amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in principal amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company's interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of, or the interest on, this bond, which in those respects is unconditional. This bond is redeemable on giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) days, but not more than sixty (60) days, prior to the date fixed for redemption to the registered holder of this bond at his last address appearing on the register thereof, in the manner and upon the terms provided in the Indenture, at the election of the Company on any date as a whole or in part by lot, from time to time, at a redemption price equal to the greater of (1) the principal amount or (2) the sum of the present values of the remaining scheduled payments of principal and interest on this bond of 2000 Series A, discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield (as defined below) plus 0.15%, plus in each case accrued interest to the redemption date. "Treasury Yield" means with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for the redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the bonds of 2000 Series A that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the bonds of 2000 Series A. "Independent Investment Banker" means Salomon Smith Barney Inc., or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing selected by the Company and appointed by the Trustee. 14 12 "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if that release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations for such redemption date, or (B) if the Company obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Smith Barney Inc., Chase Securities Inc., Goldman Sachs & Co. and Warburg Dillon Read LLC and their respective successors, provided however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer), the Company shall substitute for it another Primary Treasury Dealer. Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of 2000 Series A (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds (or portions thereof) and interest. The bonds of 2000 Series A, including this bond, shall not be entitled or subject to a sinking fund. In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions, provided in the Indenture. This bond is transferable by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, The City and State of New York, upon surrender and cancellation of this bond, and, thereupon, a new registered bond or bonds of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee or transferees in exchange herefor, and this bond with others of like form may in like manner be exchanged for one or more new registered bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture. No recourse shall be had for the payment of the principal of, or the interest on, this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, 15 13 expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture. [FORM OF TRUSTEE'S CERTIFICATE] FORM OF TRUSTEE'S CERTIFICATE. This bond is one of the bonds, of the series designated therein, described in the within-mentioned Indenture. BANKERS TRUST COMPANY, as Trustee By ........................... Authorized Officer 16 14 PART II. RECORDING AND FILING DATA RECORDING AND FILING OF ORIGINAL INDENTURE. The Original Indenture and indentures supplemental thereto have been recorded and/or filed and Certificates of Provision for Payment have been recorded as hereinafter set forth. The Original Indenture has been recorded as a real estate mortgage and filed as a chattel mortgage in the offices of the respective Registers of Deeds of certain counties in the State of Michigan as set forth in the Supplemental Indenture dated as of September 1, 1947, has been recorded as a real estate mortgage in the office of the Register of Deeds of Genesee County, Michigan as set forth in the Supplemental Indenture dated as of May 1, 1974, has been filed in the Office of the Secretary of State of Michigan on November 16, 1951 and has been filed and recorded in the office of the Interstate Commerce Commission on December 8, 1969. RECORDING AND FILING OF SUPPLEMENTAL INDENTURES. Pursuant to the terms and provisions of the Original Indenture, indentures supplemental thereto heretofore entered into have been recorded as a real estate mortgage and/or filed as a chattel mortgage or as a financing statement in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, the Office of the Secretary of State of Michigan and the Office of the Interstate Commerce Commission, as set forth in supplemental indentures as follows:

RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ------------ ------------ --------------------- June 1, 1925(a)(b).......... Series B Bonds February 1, 1940 August 1, 1927(a)(b)........ Series C Bonds February 1, 1940 February 1, 1931(a)(b)...... Series D Bonds February 1, 1940 June 1, 1931(a)(b).......... Subject Properties February 1, 1940 October 1, 1932(a)(b)....... Series E Bonds February 1, 1940 September 25, 1935(a)(b).... Series F Bonds February 1, 1940 September 1, 1936(a)(b)..... Series G Bonds February 1, 1940 November 1, 1936(a)(b)...... Subject Properties February 1, 1940 February 1, 1940(a)(b)...... Subject Properties September 1, 1947 December 1, 1940(a)(b)...... Series H Bonds and Additional September 1, 1947 Provisions September 1, Series I Bonds, November 15, 1951 1947(a)(b)(c)............. Subject Properties and Additional Provisions March 1, 1950(a)(b)(c)...... Series J Bonds November 15, 1951 and Additional Provisions November 15, Series K Bonds January 15, 1953 1951(a)(b)(c)............. Additional Provisions and Subject Properties January 15, 1953(a)(b)...... Series L Bonds May 1, 1953 May 1, 1953(a).............. Series M Bonds and Subject March 15, 1954 Properties March 15, 1954(a)(c)........ Series N Bonds and Subject May 15, 1955 Properties May 15, 1955(a)(c).......... Series O Bonds and Subject August 15, 1957 Properties August 15, 1957(a)(c)....... Series P Bonds Additional June 1, 1959 Provisions and Subject Properties June 1, 1959(a)(c).......... Series Q Bonds and Subject December 1, 1966 Properties

17 15

RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ------------ ------------ --------------------- December 1, 1966(a)(c)...... Series R Bonds Additional October 1, 1968 Provisions and Subject Properties October 1, 1968(a)(c)....... Series S Bonds and Subject December 1, 1969 Properties December 1, 1969(a)(c)...... Series T Bonds and Subject July 1, 1970 Properties July 1, 1970(c)............. Series U Bonds and Subject December 15, 1970 Properties December 15, 1970(c)........ Series V and Series W Bonds June 15, 1971 June 15, 1971(c)............ Series X Bonds and Subject November 15, 1971 Properties November 15, 1971(c)........ Series Y Bonds and Subject January 15, 1973 Properties January 15, 1973(c)......... Series Z Bonds and Subject May 1, 1974 Properties May 1, 1974................. Series AA Bonds and Subject October 1, 1974 Properties October 1, 1974............. Series BB Bonds and Subject January 15, 1975 Properties January 15, 1975............ Series CC Bonds and Subject November 1, 1975 Properties November 1, 1975............ Series DDP Nos. 1-9 Bonds and December 15, 1975 Subject Properties December 15, 1975........... Series EE Bonds and Subject February 1, 1976 Properties February 1, 1976............ Series FFR Nos. 1-13 Bonds June 15, 1976 June 15, 1976............... Series GGP Nos. 1-7 Bonds and July 15, 1976 Subject Properties July 15, 1976............... Series HH Bonds and Subject February 15, 1977 Properties February 15, 1977........... Series MMP Bonds and Subject March 1, 1977 Properties March 1, 1977............... Series IIP Nos. 1-7 Bonds, Series June 15, 1977 JJP Nos. 1-7 Bonds, Series KKP Nos. 1-7 Bonds and Series LLP Nos. 1-7 Bonds June 15, 1977............... Series FFR No. 14 Bonds and July 1, 1977 Subject Properties July 1, 1977................ Series NNP Nos. 1-7 Bonds and October 1, 1977 Subject Properties October 1, 1977............. Series GGP Nos. 8-22 Bonds and June 1, 1978 Series OOP Nos. 1-17 Bonds and Subject Properties June 1, 1978................ Series PP Bonds, Series QQP Nos. October 15, 1978 1-9 Bonds and Subject Properties October 15, 1978............ Series RR Bonds and Subject March 15, 1979 Properties

18 16

RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ------------ ------------ --------------------- March 15, 1979.............. Series SS Bonds and Subject July 1, 1979 Properties July 1, 1979................ Series IIP Nos. 8-22 Bonds, Series September 1, 1979 NNP Nos. 8-21 Bonds and Series TTP Nos. 1-15 Bonds and Subject Properties September 1, 1979........... Series JJP No. 8 Bonds, Series KKP September 15, 1979 No. 8 Bonds, Series LLP Nos. 8-15 Bonds, Series MMP No. 2 Bonds and Series OOP No. 18 Bonds and Subject Properties September 15, 1979.......... Series UU Bonds January 1, 1980 January 1, 1980............. 1980 Series A Bonds and Subject April 1, 1980 Properties April 1, 1980............... 1980 Series B Bonds August 15, 1980 August 15, 1980............. Series QQP Nos. 10-19 Bonds, 1980 August 1, 1981 Series CP Nos. 1-12 Bonds and 1980 Series DP No. 1-11 Bonds and Subject Properties August 1, 1981.............. 1980 Series CP Nos. 13-25 Bonds November 1, 1981 and Subject Properties November 1, 1981............ 1981 Series AP Nos. 1-12 Bonds June 30, 1982 June 30, 1982............... Article XIV Reconfirmation August 15, 1982 August 15, 1982............. 1981 Series AP Nos. 13-14 and June 1, 1983 Subject Properties June 1, 1983................ 1981 Series AP Nos. 15-16 and October 1, 1984 Subject Properties October 1, 1984............. 1984 Series AP and 1984 Series BP May 1, 1985 Bonds and Subject Properties May 1, 1985................. 1985 Series A Bonds May 15, 1985 May 15, 1985................ 1985 Series B Bonds and Subject October 15, 1985 Properties October 15, 1985............ Series KKP No. 9 Bonds and Subject April 1, 1986 Properties April 1, 1986............... 1986 Series A and Subject August 15, 1986 Properties August 15, 1986............. 1986 Series B and Subject November 30, 1986 Properties November 30, 1986........... 1986 Series C January 31, 1987 January 31, 1987............ 1987 Series A April 1, 1987 April 1, 1987............... 1987 Series B and 1987 Series C August 15, 1987 August 15, 1987............. 1987 Series D and 1987 Series E November 30, 1987 and Subject Properties November 30, 1987........... 1987 Series F June 15, 1989

19 17

RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ------------ ------------ --------------------- June 15, 1989............... 1989 Series A July 15, 1989 July 15, 1989............... Series KKP No. 10 December 1, 1989 December 1, 1989............ Series KKP No. 11 and 1989 Series February 15, 1990 BP February 15, 1990........... 1990 Series A, 1990 Series B, 1990 November 1, 1990 Series C, 1990 Series D, 1990 Series E and 1990 Series F November 1, 1990............ Series KKP No. 12 April 1, 1991 April 1, 1991............... 1991 Series AP May 1, 1991 May 1, 1991................. 1991 Series BP and 1991 Series CP May 15, 1991 May 15, 1991................ 1991 Series DP September 1, 1991 September 1, 1991........... 1991 Series EP November 1, 1991 November 1, 1991............ 1991 Series FP January 15, 1992 January 15, 1992............ 1992 Series BP February 29, 1992 and April 15, 1992 February 29, 1992........... 1992 Series AP April 15, 1992 April 15, 1992.............. Series KKP No. 13 July 15, 1992 July 15, 1992............... 1992 Series CP November 30, 1992 July 31, 1992............... 1992 Series D November 30, 1992 April 1, 1986............... 1986 Series A and Subject August 15, 1986 Properties August 15, 1986............. 1986 Series B and Subject November 30, 1986 Properties November 30, 1986........... 1986 Series C January 31, 1987 January 31, 1987............ 1987 Series A April 1, 1987 April 1, 1987............... 1987 Series B and 1987 Series C August 15, 1987 August 15, 1987............. 1987 Series D and 1987 Series E November 30, 1987 and Subject Properties November 30, 1987........... 1987 Series F June 15, 1989 June 15, 1989............... 1989 Series A July 15, 1989 July 15, 1989............... Series KKP No. 10 December 1, 1989 December 1, 1989............ Series KKP No. 11 and 1989 Series February 15, 1990 BP February 15, 1990........... 1990 Series A, 1990 Series B, 1990 November 1, 1990 Series C, 1990 Series D, 1990 Series E and 1990 Series F November 1, 1990............ Series KKP No. 12 April 1, 1991 April 1, 1991............... 1991 Series AP May 1, 1991 May 1, 1991................. 1991 Series BP and 1991 Series CP May 15, 1991 May 15, 1991................ 1991 Series DP September 1, 1991 September 1, 1991........... 1991 Series EP November 1, 1991 November 1, 1991............ 1991 Series FP January 15, 1992 January 15, 1992............ 1992 Series BP February 29, 1992 and April 15, 1992 February 29, 1992........... 1992 Series AP April 15, 1992 April 15, 1992.............. Series KKP No. 13 July 15, 1992 July 15, 1992............... 1992 Series CP November 30, 1992

20 18

RECORDED AND/OR FILED AS SET FORTH IN SUPPLEMENTAL PURPOSE OF SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE DATED AS OF INDENTURE DATED AS OF: ------------ ------------ --------------------- November 30, 1992........... 1992 Series E and 1993 Series D March 15, 1993 December 15, 1992........... Series KKP No. 14 and 1989 Series March 15, 1992 BP No. 2 January 1, 1993............. 1993 Series C April 1, 1993 March 1, 1993............... 1993 Series E June 30, 1993 March 15, 1993.............. 1993 Series D September 15, 1993 April 1, 1993............... 1993 Series FP and 1993 Series IP September 15, 1993 April 26, 1993.............. 1993 Series G and Amendment of September 15, 1993 Article II, Section 5 May 31, 1993................ 1993 Series J September 15, 1993 September 15, 1993.......... 1993 Series K March 1, 1994 March 1, 1994............... 1994 Series AP June 15, 1994 June 15, 1994............... 1994 Series BP December 1, 1994 August 15, 1994............. 1994 Series C December 1, 1994 December 1, 1994............ Series KKP No. 15 and 1994 Series August 1, 1995 DP August 1, 1995.............. 1995 Series A Bond August 1, 1999 1995 Series DP

----------------------------------------- (a) See Supplemental Indenture dated as of July 1, 1970 for Interstate Commerce Commission filing and recordation information. (b) See Supplemental Indenture dated as of May 1, 1953 for Secretary of State of Michigan filing information. (c) See Supplemental Indenture dated as of May 1, 1974 for County of Genesee, Michigan recording and filing information. 21 19 RECORDING OF CERTIFICATES OF PROVISION FOR PAYMENT. All the bonds of Series A which were issued under the Original Indenture dated as of October 1, 1924, and of Series B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, W, Y, Z, AA, BB, CC, DDP Nos. 1-9, FFR Nos. 1-14, GGP Nos. 1-22, HH, IIP Nos. 1-22, JJP Nos. 1-8, KKP Nos. 1-9, LLP Nos. 1-15, NNP Nos. 1-21, OOP Nos. 1-18, QQP Nos. 1-17, TTP Nos. 1-15, UU, 1980 Series A, 1980 Series CP Nos. 1-25, 1980 Series DP Nos. 1-11, 1981 Series AP Nos. 1-16, 1984 Series AP, 1984 Series BP, 1985 Series A, 1985 Series B, 1987 Series A, PP, RR, EE, MMP, MMP No. 2, 1989 Series A and 1993 Series D which were issued under Supplemental Indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, December 1, 1940, September 1, 1947, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, December 15, 1970, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, February 1, 1976, June 15, 1976, July 15, 1976, October 1, 1977, March 1, 1977, July 1, 1979, March 1, 1977, March 1, 1977, March 1, 1977, September 1, 1979, July 1, 1977, July 1, 1979, September 15, 1979, October 1, 1977, June 1, 1978, October 1, 1977, July 1, 1979, January 1, 1980, August 15, 1980, November 1, 1981, October 1, 1984, May 1, 1985, May 15, 1985, January 31, 1987, June 1, 1978, October 15, 1978, December 15, 1975, February 15, 1977, September 1, 1979, June 15, 1989 and March 15, 1993 have matured or have been called for redemption and funds sufficient for such payment or redemption have been irrevocably deposited with the Trustee for that purpose; and Certificates of Provision for Payment have been recorded in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, with respect to all bonds of Series A, B, C, D, E, F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1 and GGP No. 8. PART III. THE TRUSTEE. TERMS AND CONDITIONS OF ACCEPTANCE OF TRUST BY TRUSTEE. The Trustee hereby accepts the trust hereby declared and provided, and agrees to perform the same upon the terms and conditions in the Original Indenture, as amended to date and as supplemented by this Supplemental Indenture, and in this Supplemental Indenture set forth, and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for and in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. PART IV. MISCELLANEOUS. CONFIRMATION OF SECTION 318(C) OF TRUST INDENTURE ACT. Except to the extent specifically provided therein, no provision of this supplemental indenture or any future supplemental indenture is intended to modify, and the parties do hereby adopt and confirm, the provisions of Section 318(c) of the Trust Indenture Act which amend and supercede provisions of the Indenture in effect prior to November 15, 1990. EXECUTION IN COUNTERPARTS. THIS SUPPLEMENTAL INDENTURE MAY BE SIMULTANEOUSLY EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL; BUT SUCH COUNTERPARTS SHALL TOGETHER CONSTITUTE BUT ONE AND THE SAME INSTRUMENT. 22 20 TESTIMONIUM. IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY AND BANKERS TRUST COMPANY HAVE CAUSED THESE PRESENTS TO BE SIGNED IN THEIR RESPECTIVE CORPORATE NAMES BY THEIR RESPECTIVE CHAIRMEN OF THE BOARD, PRESIDENTS, VICE PRESIDENTS, ASSISTANT VICE PRESIDENTS, TREASURERS OR ASSISTANT TREASURERS AND IMPRESSED WITH THEIR RESPECTIVE CORPORATE SEALS, ATTESTED BY THEIR RESPECTIVE SECRETARIES, ASSISTANT SECRETARIES, TREASURERS OR ASSISTANT TREASURERS ALL AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN. THE DETROIT EDISON COMPANY, (Corporate Seal) By ------------------------------- N. A. Khouri Assistant Treasurer EXECUTION. Attest: -------------------------------------------- Susan M. Beale Vice President and Corporate Secretary Signed, sealed and delivered by THE DETROIT EDISON COMPANY, in the presence of -------------------------------------------- K. Hier -------------------------------------------- R. Martinez STATE OF MICHIGAN SS.: COUNTY OF WAYNE ACKNOWLEDGMENT OF EXECUTION BY COMPANY. On this 27th day of January, 2000, before me, the subscriber, a Notary Public within and for the County of Oakland (acting in Wayne), in the State of Michigan, personally appeared N. A. Khouri, to me personally known, who, being by me duly sworn, did say that he does business at 2000 2nd Avenue, Detroit, Michigan 48226-1279 and is the Assistant Treasurer of THE DETROIT EDISON COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said N. A. Khouri, acknowledged said instrument to be the free act and deed of said corporation. ---------------------------------- Geraldine N. Rockymore, Notary (Notarial Seal) Public Oakland County, MI My Commission Expires December 23, 2002 (Acting in Wayne) 23 21

BANKERS TRUST COMPANY, (Corporate Seal) By -------------------------------------------- Marc J. Parilla Assistant Vice President Attest: ------------------------------------------------ Signed, sealed and delivered by BANKERS TRUST COMPANY, in the presence of ------------------------------------------------ ------------------------------------------------ STATE OF NEW YORK SS.: COUNTY OF NEW YORK ACKNOWLEDGEMENT OF EXECUTION BY TRUSTEE. On this day of January, 2000, before me, the subscriber, a Notary Public within and for the County of New York, in the State of New York, personally appeared Marc J. Parilla, to me personally known, who, being by me duly sworn, did say that his business office is located at Four Albany Street, New York, New York 10015, and he is Assistant Vice President of BANKERS TRUST COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said acknowledged said instrument to be the free act and deed of said corporation. (Notarial Seal) --------------------------------------------------- Notary Public, State of New York No. Qualified in NY County Commission Expires

24 22

STATE OF MICHIGAN SS.: COUNTY OF WAYNE AFFIDAVIT AS TO CONSIDERATION AND GOOD FAITH. N.A. Khouri, being duly sworn, says: that he is the Assistant Treasurer of THE DETROIT EDISON COMPANY, the Mortgagor named in the foregoing instrument, and that he has knowledge of the facts in regard to the making of said instrument and of the consideration therefor; that the consideration for said instrument was and is actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth. ------------------------------------------------ N.A. Khouri Sworn to before me this 27th day of January, 2000 ------------------------------------------------ Geraldine N. Rockymore, Notary Public Oakland County, MI My Commission Expires December 23, 2002 (Acting in Wayne) (Notarial Seal) This instrument was drafted by Frances B. Rohlman, Esq.,

2000 Second Avenue, Detroit, Michigan 48226 EXECUTED IN _____ COUNTERPARTS OF WHICH THIS IS COUNTERPART NO. _ . EX-11.8 4 DTE ENERGY COMPANY EARNINGS PER SHARE 1 EXHIBIT 11-8 DTE ENERGY COMPANY BASIC AND DILUTED EARNINGS PER SHARE OF COMMON STOCK

Year Ended December 31 ----------------------------------------------- 1999 1998 1997 ---- ---- ---- (Thousands, except per share amounts) BASIC: Net Income................................................. $ 482,653 $ 443,012 $ 417,333 Weighted average number of common shares outstanding (a)................................... 145,047 145,076 145,101 Earnings per share of Common Stock based on weighted average number of shares outstanding.................................... $ 3.33 $ 3.05 $ 2.88 DILUTED: Net Income................................................. $ 482,653 $ 443,012 $ 417,333 Weighted average number of common shares outstanding (a)................................... 145,047 145,076 145,101 Incremental shares from assumed conversion of options.................................... 89 106 12 ------------- ------------- ------------- 145,136 145,182 145,113 ============= ============= ============= Earnings per share of Common Stock assuming conversion of options........................... $3.33 $ 3.05 $ 2.88

- ----------------------------------- (a) Based on a daily average. EX-12.21 5 DTE ENERGY COMPUTATION OF RATIO OF EARNINGS 1 EXHIBIT 12-21 DTE ENERGY COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Year Ended December 31 ------------------------------------------------------ 1999 1998 1997 ---- ---- ---- (Millions, except for ratio and percent) Net income............................................. $ 483 $ 443 $ 417 --------------- ---------------- --------------- Taxes based on income: Current income taxes................................ 144 143 267 Deferred taxes - net................................ (73) 26 5 Investment tax credit adjustments - net............. (11) (15) (15) Municipal and state................................. 3 3 4 --------------- ---------------- --------------- Total taxes based on income....................... 63 157 261 --------------- ---------------- --------------- Fixed charges: Interest on long-term debt.......................... 279 279 275 Amortization of debt discount, premium and expense....................................... 18 11 11 Other interest...................................... 47 29 11 Interest factor of rents............................ 34 34 34 Preferred stock dividend factor..................... - 7 18 -------------- --------------- -------------- Total fixed charges.................................... 378 360 349 -------------- --------------- -------------- Earnings before taxes based on income and fixed charges................................... $ 924 $ 960 $ 1,027 =============== ================ =============== Ratio of earnings to fixed charges..................... 2.44 2.67 2.94 Preferred stock dividends.............................. $ - $ 6 $ 12 Dividends meeting requirement of IRC Section 247..................................... N/A 4 4 Percent deductible for income tax purposes N/A 40.00% 40.00% Amount deductible...................................... N/A 2 2 Amount not deductible.................................. N/A 4 10 Ratio of pretax income to net income................... N/A 1.35 1.61 Dividend factor for amount not deductible.............. N/A 5 16 Amount deductible...................................... N/A 2 2 -------------- --------------- -------------- Total preferred stock dividend factor........... $ N/A $ 7 $ 18 ============== =============== ==============

EX-12.22 6 DETROIT EDISON COMPUTATION OF RATIO OF EARNINGS 1 EXHIBIT 12-22 THE DETROIT EDISON COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Year Ended December 31 ------------------------------------------------------ 1999 1998 1997 ---- ---- ---- (Millions, except for ratio) Net income............................................. $ 434 $ 418 $ 417 --------------- ---------------- --------------- Taxes based on income: Current income taxes................................ 282 280 308 Deferred taxes - net................................ (60) (5) (6) Investment tax credit adjustments - net............. (11) (15) (14) Municipal and state................................. 3 3 4 --------------- ---------------- --------------- Total taxes based on income....................... 214 263 292 --------------- ---------------- --------------- Fixed charges: Interest on long-term debt.......................... 252 254 262 Amortization of debt discount, premium and expense....................................... 17 11 11 Other interest...................................... 19 13 9 Interest factor of rents............................ 34 34 34 --------------- ---------------- --------------- Total fixed charges............................... 322 312 316 --------------- ---------------- --------------- Earnings before taxes based on income and fixed charges................................... $ 970 $ 993 $ 1,025 =============== ================ =============== Ratio of earnings to fixed charges..................... 3.01 3.18 3.24

EX-12.23 7 DETROIT EDISON COMPUTATION OF RATIO OF EARNINGS 1 EXHIBIT 12-23 THE DETROIT EDISON COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

Year Ended December 31 --------------------------------------- 1999 1998 1997 ---- ---- ---- (Millions, except for ratio and percent) Net income ......................................................... $ 434 $ 418 $ 417 -------- --------- -------- Taxes based on income: Current income taxes .............................................. 282 280 308 Deferred taxes - net .............................................. (60) (5) (6) Investment tax credit adjustments - net............................ (11) (15) (14) Municipal and state ............................................... 3 3 4 -------- --------- -------- Total taxes based on income ..................................... 214 263 292 -------- --------- -------- Fixed charges: Interest on long-term debt ........................................ 252 254 262 Amortization of debt discount, premium and expense ................ 17 11 11 Other interest .................................................... 19 13 9 Interest factor of rents .......................................... 34 34 34 -------- --------- -------- Total fixed charges ............................................. 322 312 316 -------- --------- -------- Earnings before taxes based on income and fixed charges ............. $ 970 $ 993 $ 1,025 ======== ========= ======== Preferred stock dividends ........................................... $ -- $ 6 $ 12 Dividends meeting requirement of IRC Section 247 .................... N/A 4 4 Percent deductible for income tax purposes .......................... N/A 40.00% 40.00% Amount deductible ................................................... N/A 2 2 Amount not deductible ............................................... N/A 4 10 Ratio of pretax income to net income ................................ N/A 1.63 1.70 Dividend factor for amount not deductible ........................... N/A 7 17 Amount deductible ................................................... N/A 2 2 -------- --------- -------- Total preferred stock dividend factor ........................... N/A 9 19 Total fixed charges ............................................. 322 312 316 -------- --------- -------- Total fixed charges and preferred stock dividends ............... $ 322 $ 321 $ 335 ======== ========= ======== Ratio of earnings to fixed charges and preferred stock dividends .... 3.01 3.09 3.06

EX-21.4 8 SUBSIDIARIES OF THE COMPANY AND DETROIT EDISON 1 EXHIBIT 21-4 DTE ENERGY COMPANY as of February 08, 2000

OWNED BY OWNED BY SUBSIDIARY PARENT SELECTED ENTITY - ---------- ------ --------------- DTE CAPITAL CORPORATION 100% 100% (MICHIGAN) DTE ENERGY RESOURCES, INC. 100% 100% (MICHIGAN) DTE BIOMASS ENERGY, INC. 100% 100% (MICHIGAN) ADRIAN GAS PRODUCERS, L.L.C. * 50% 50% (MICHIGAN) BELLEFONTAINE GAS PRODUCERS, L.L.C. * 50% 50% (DELAWARE) BELLEVILLE GAS PRODUCERS, INC. 100% 100% (MICHIGAN) BIRMINGHAM GAS PRODUCERS, L.L.C. 100% 100% (MICHIGAN) BRIDGETON GAS PRODUCERS, L.L.C. * 50% 50% (DELAWARE) CRIMSON GAS PRODUCERS, L.L.C. * 50% 50% (MICHIGAN) DTE ARBOR GAS PRODUCERS. INC. 100% 100% (MICHIGAN) ESCAMBIA GAS PRODUCERS, INC. 100% 100% (MICHIGAN) FAYETTEVILLE GAS PRODUCERS L.L.C. * 98% 98% (NORTH CAROLINA) LYCOMING GAS PRODUCERS, INC. 100% 100% (MICHIGAN) MONTGOMERY GAS PRODUCERS, L.L.C. 100% 100% (MICHIGAN)

2

OWNED BY OWNED BY SUBSIDIARY PARENT SELECTED ENTITY - ---------- ------ --------------- MOUNTAINEER SYNFUEL, L.L.C. % (DELAWARE) OKLAHOMA GAS PRODUCERS, L.L.C. 100% 100% (MICHIGAN) ORLANDO GAS PRODUCERS, INC. 100% 100% (MICHIGAN) PHOENIX GAS PRODUCERS, L.L.C. % (MICHIGAN) PLAINVILLE GAS PRODUCERS, INC. 100% 100% (MICHIGAN) RES POWER, INC. 100% 100% (MICHIGAN) RIVERVIEW ENERGY SYSTEMS 50% 50% RALEIGH STEAM PRODUCERS, L.L.C. * 50% 50% (NORTH CAROLINA) RIVERVIEW GAS PRODUCERS, INC. 100% 100% (MICHIGAN) ROXANA GAS PRODUCERS, INC. 100% 100% (MICHIGAN) SACRAMENTO GAS PRODUCERS, L.L.C. * 50% 50% SALEM ENERGY SYSTEMS, L.L.C. * 50% 50% SONOMA ENERGY SYSTEMS, INC. 100% 100% (MICHIGAN) ST. LOUIS GAS PRODUCERS, L.L.C. * 50% 50% (DELAWARE) WAKE GAS PRODUCERS, L.L.C. 99% 99%

3

OWNED BY OWNED BY SUBSIDIARY PARENT SELECTED ENTITY - ---------- ------ --------------- WICHITA GAS PRODUCERS L.L.C. % (MICHIGAN) WINSTON GAS PRODUCERS, L.L.C. * 47.5% 47.5% DTE COAL SERVICES, INC. 100% 100% (MICHIGAN) DTE RAIL SERVICES, INC. 100% 100% (MICHIGAN) DTE TRANSPORTATION SERVICES, INC. 100% 100% } (MICHIGAN) DTE ENERGY MARKETING, INC. * 100% 100% (MICHIGAN) DTE COENERGY, L.L.C. 50% 50% DTE ENERGY SERVICES, INC. 100% 100% (MICHIGAN) DTE BH HOLDINGS, INC. 100% 100% (DELAWARE) DTE BH HOLDINGS, L.L.C. 100% 100% DTE BURNS HARBOR, L.L.C. 100% 100% (DELAWARE) DTE ES HOLDINGS, INC. 100% 100% (MICHIGAN) DTE HOLLAND, L.L.C. 100% 100% (MICHIGAN) DTE NORTHWIND L.L.C. 100% 100% (DELAWARE) DTE NORTHWIND OPERATIONS, L.L.C. 100% 100% (MICHIGAN)

4

OWNED BY OWNED BY SUBSIDIARY PARENT SELECTED ENTITY - ---------- ------ --------------- DTE RIVER HILL, L.L.C. 100% 100% (DELAWARE) DTE SPARROWS POINT L.L.C. 100% 100% (DELAWARE) DTE SPARROWS POINT OPERATIONS, INC. 100% 100% (MICHIGAN) DTE SYNFUELS, LLC 100% 100% (DELAWARE) DTE INDYCOKE L.L.C. 100% 100% } (DELAWARE) EES COKE BATTERY COMPANY, INC. 100% 100% (MICHIGAN) PCI ENTERPRISES COMPANY 100% 100% (MICHIGAN) RIVER HILL L.L.C. 100% 100% (DELAWARE) DTE ENERGY TRADING, INC. 100% 100% (MICHIGAN) DTE GENERATION, INC. 100% 100% (MICHIGAN) DTE RIVER ROUGE NO. 1, LLC 100% 100% (MICHIGAN) DTE ENTERPRISES, INC. 100% 100% (MICHIGAN) EDISON DEVELOPMENT CORPORATION 100% 100% (MICHIGAN) EDVENTURE CAPITAL CORP. 100% 100% (MICHIGAN) PLUG POWER, L.L.C. * 50% 50% (DELAWARE) SYNDECO REALTY CORPORATION 100% 100% (MICHIGAN)

5

OWNED BY OWNED BY SUBSIDIARY PARENT SELECTED ENTITY - ---------- ------ --------------- THE DETROIT EDISON COMPANY 100% 100% (MICHIGAN) MIDWEST ENERGY RESOURCES COMPANY 100% 100% (MICHIGAN) ST. CLAIR ENERGY CORPORATION 100% 100% (MICHIGAN) THE EDISON ILLUMINATING COMPANY OF DETROIT 100% 100% (MICHIGAN) WOLVERINE ENERGY SERVICES, INC. 100% 100% (MICHIGAN) DTE EDISON AMERICA CATALOG SALES, INC. 100% 100% (MICHIGAN) DTE EDISON AMERICA, INC. 100% 100% (MICHIGAN) DTE ENERGY SOLUTIONS, INC. 100% 100% (MICHIGAN) DTE ENGINEERING SERVICES, INC. * 100% 100% (MICHIGAN) MILAGRO INTEGRATED TECHNOLOGIES, L.L.C. 49% 49% (MICHIGAN) DTE ENERGY TECHNOLOGIES, INC. 100% 100% (MICHIGAN)

- ------------------ *Multiple Parents EX-23.13 9 CONSENT OF DELOITTE & TOUCHE LLP 1 EXHIBIT 23-13 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference of our report dated January 26, 2000 appearing in this Annual Report on Form 10-K of DTE Energy Company and The Detroit Edison Company for the year ended December 31, 1999 in the following registration statements: FORM REGISTRATION NUMBER DTE ENERGY COMPANY Form S-3 33-57545 Form S-4 333-89175 Form S-8 333-00023 THE DETROIT EDISON COMPANY Form S-3 33-53207 Form S-3 33-64296 Form S-3 333-65765 DELOITTE & TOUCHE LLP Detroit, Michigan February 23, 2000 EX-27.31 10 FINANCIAL DATA SCHEDULE FOR DTE ENERGY

<ARTICLE> 5

<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME, BALANCE SHEET, STATEMENT OF CASH FLOWS, STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND BASIC AND DILUTED EARNINGS PER SHARE OF COMMON STOCK AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<CIK> 0000936340 <NAME> DTE Energy Company <PERIOD-TYPE> 12-MOS <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> DEC-31-1999 <CASH> 163 <SECURITIES> 0 <RECEIVABLES> 719 <ALLOWANCES> 21 <INVENTORY> 344 <CURRENT-ASSETS> 1310 <PP&E> 12745 <DEPRECIATION> 5597 <TOTAL-ASSETS> 12316 <CURRENT-LIABILITIES> 1604 <BONDS> 3938 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 1950 <OTHER-SE> 1959 <TOTAL-LIABILITY-AND-EQUITY> 12316 <SALES> 0 <TOTAL-REVENUES> 4728 <CGS> 0 <TOTAL-COSTS> 3827 <OTHER-EXPENSES> 18 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 340 <INCOME-PRETAX> 543 <INCOME-TAX> 60 <INCOME-CONTINUING> 483 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 483 <EPS-BASIC> 3.33 <EPS-DILUTED> 3.33

EX-27.32 11 FINANCIAL DATA SCHEDULE FOR DETROIT EDISON COMPANY

<ARTICLE> 5

<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME, BALANCE SHEET, STATEMENT OF CASH FLOWS AND STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<CIK> 0000028385 <NAME> The Detroit Edison Company <PERIOD-TYPE> 12-MOS <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> DEC-31-1999 <CASH> 4 <SECURITIES> 0 <RECEIVABLES> 640 <ALLOWANCES> 20 <INVENTORY> 315 <CURRENT-ASSETS> 968 <PP&E> 12092 <DEPRECIATION> 5526 <TOTAL-ASSETS> 11051 <CURRENT-LIABILITIES> 1322 <BONDS> 3284 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 1951 <OTHER-SE> 1677 <TOTAL-LIABILITY-AND-EQUITY> 11051 <SALES> 0 <TOTAL-REVENUES> 4047 <CGS> 0 <TOTAL-COSTS> 3112 <OTHER-EXPENSES> 6 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 284 <INCOME-PRETAX> 645 <INCOME-TAX> 211 <INCOME-CONTINUING> 434 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 434 <EPS-BASIC> 0 <EPS-DILUTED> 0

EX-99.32 12 THIRD AMENDED AND RESTATED CREDIT AGREEMENT 1 EXHIBIT 99-32 ================================================================================ U.S. $400,000,000 THIRD AMENDED AND RESTATED CREDIT AGREEMENT Dated as of January 18, 2000 Among DTE CAPITAL CORPORATION, as Borrower and THE INITIAL LENDERS NAMED HEREIN, as Initial Lenders and CITIBANK, N.A., as Agent and ABN AMRO BANK N.V., BANK ONE N.A., BARCLAYS BANK PLC, BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH, COMERICA BANK, and DEN DANSKE BANK AKTIESELSKAB as Co-Agents SALOMON SMITH BARNEY INC., as Arranger ================================================================================ 2 TABLE OF CONTENTS

PAGE ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms.....................................................................1 SECTION 1.02. Computation of Time Periods..............................................................16 SECTION 1.03. Accounting Terms.........................................................................16 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Revolving Credit Advances............................................................17 SECTION 2.02. Making the Revolving Credit Advances.....................................................17 SECTION 2.03. The Competitive Bid Advances.............................................................19 SECTION 2.04. Fees.....................................................................................22 SECTION 2.05. Termination or Reduction of the Commitments..............................................23 SECTION 2.06. Repayment of Revolving Credit Advances; Term Loan Election........................................................................23 SECTION 2.07. Interest on Revolving Credit Advances....................................................23 SECTION 2.08. Interest Rate Determination..............................................................24 SECTION 2.09. Optional Conversion of Revolving Credit Advances.........................................25 SECTION 2.10. Prepayments of Revolving Credit Advances.................................................26 SECTION 2.11. Increased Costs..........................................................................26 SECTION 2.12. Illegality...............................................................................27 SECTION 2.13. Payments and Computations................................................................27 SECTION 2.14. Taxes....................................................................................28 SECTION 2.15. Sharing of Payments, Etc.................................................................30 SECTION 2.16. Extensions of Revolver Termination Date..................................................31 SECTION 2.17. Use of Proceeds..........................................................................32 ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03........................................................................32 SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing.......................................................................35 SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing.......................................................................35 SECTION 3.04. Determinations Under Section 3.01........................................................36

3

ARTICLE IV REPRESENTATIONS AND WARRANTIES PAGE SECTION 4.01. Representations and Warranties of the Borrower...........................................36 ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants....................................................................39 SECTION 5.02. Negative Covenants.......................................................................41 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default........................................................................44 ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action.................................................................47 SECTION 7.02. Agent's Reliance, Etc....................................................................47 SECTION 7.03. Citibank and Affiliates..................................................................47 SECTION 7.04. Lender Credit Decision...................................................................48 SECTION 7.05. Indemnification..........................................................................48 SECTION 7.06. Successor Agent..........................................................................48 ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc..........................................................................49 SECTION 8.02. Notices, Etc.............................................................................49 SECTION 8.03. No Waiver; Remedies......................................................................50 SECTION 8.04. Costs and Expenses.......................................................................50 SECTION 8.05. Right of Set-off.........................................................................51 SECTION 8.06. Binding Effect...........................................................................51 SECTION 8.07. Assignments, Designations and Participations.............................................52 SECTION 8.08. Confidentiality..........................................................................55 SECTION 8.09. Governing Law............................................................................55 SECTION 8.10. Execution in Counterparts................................................................55 SECTION 8.11. Jurisdiction, Etc........................................................................56 SECTION 8.12. Effective Date...........................................................................56 SECTION 8.13. Waiver of Jury Trial.....................................................................56

4 iii Schedules --------- Schedule I - List of Applicable Lending Offices Schedule 5.02(a) - Existing Liens Exhibits -------- Exhibit A-1 - Form of Revolving Credit Note Exhibit A-2 - Form of Competitive Bid Note Exhibit B-1 - Form of Notice of Revolving Credit Borrowing Exhibit B-2 - Form of Notice of Competitive Bid Borrowing Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Designation Agreement Exhibit E - Form of Certificate by DTE Energy Company Exhibit F - Form of Opinion of Counsel to the Loan Parties Exhibit G - Form of Assignment and Assumption Agreement Exhibit H - Form of Guaranty 5 THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of January 18, 2000 among DTE CAPITAL CORPORATION, a Michigan corporation (the "Borrower") which is wholly owned by DTE Energy Company, a Michigan corporation (the "Parent"), the banks, financial institutions and other institutional lenders (the "Initial Lenders") listed on the signature pages hereof, and CITIBANK, N.A. ("Citibank"), as agent (the "Agent") and ABN AMRO BANK N.V., BANK ONE N.A., BARCLAYS BANK PLC, BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH, COMERICA BANK and DEN DANSKE BANK AKTIESELSKAB, as co-agents, for the Lenders (as hereinafter defined). PRELIMINARY STATEMENTS. (1) The Borrower has entered into a Second Amended and Restated Credit Agreement dated as of January 19, 1999, (the "Existing Credit Agreement") with the Agent and certain lenders, financial institutions and other institutional lenders named therein or a party thereto immediately prior to the effectiveness of this Agreement (collectively, the "Existing Lenders"). (2) The Borrower has requested that the Initial Lenders enter into this Agreement to amend and restate the Existing Credit Agreement as set forth herein. The Initial Lenders have indicated their willingness to amend and restate the Existing Credit Agreement upon the terms and conditions stated herein. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto hereby agree that, subject to the satisfaction of the conditions set forth in Article III, the Existing Credit Agreement is amended and restated in its entirety to read as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "1998 Audited Statements" means the Consolidated balance sheets of the Parent and DECO and, after the Merger Date, MCN and MichCon as at December 31, 1998, and the related Consolidated statements of income and cash flows of such Person for the fiscal year then ended, accompanied by the opinion of such Person's independent public accountants. "1999 Interim Statements" means the Consolidated balance sheets of the Parent and DECO and, after the Merger Date, MCN and MichCon as at September 30, 1999, 6 2 and the related Consolidated statements of income and cash flows of the such Person for the nine months then ended, duly certified by a Financial Officer of such Person. "Advance" means a Revolving Credit Advance or a Competitive Bid Advance. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "Agent's Account" means the account of the Agent maintained by the Agent at Citibank with its office at Two Penns Way, Suite 200, New Castle, Delaware, 19720, Account No. 36852248, Attention: Christian Laughton. "Applicable Lending Office" means, with respect to each Lender, such Lender's Domestic Lending Office in the case of a Base Rate Advance and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance and, in the case of a Competitive Bid Advance, the office of such Lender notified by such Lender to the Agent as its Applicable Lending Office with respect to such Competitive Bid Advance. "Applicable Margin" means, as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

================================== ============================ ================================= Public Debt Rating Applicable Margin for Applicable Margin for S&P/Moody's Base Rate Advances Eurodollar Rate Advances - ---------------------------------- ---------------------------- --------------------------------- Level 1 0% .400% - ------- A- / A3 or above - ---------------------------------- ---------------------------- --------------------------------- Level 2 0% .500% - ------- Lower than Level 1, but at least BBB+ / Baal or above - ---------------------------------- ---------------------------- --------------------------------- Level 3 0% .600% - ------- Lower than Level 2, but at least BBB / Baa2 or above - ---------------------------------- ---------------------------- --------------------------------- Level 4 0% .800% - ------- Lower than Level 3, but at least BBB- / Baa3 or above - ---------------------------------- ---------------------------- --------------------------------- Level 5 0% 1.600% - ------- Lower than Level 4, or no Public Debt Rating in Effect - ---------------------------------- ---------------------------- ---------------------------------

At any time more than 50% of the Commitments are utilized, the Applicable Margin will 7 3 increase by (i) .125% at Levels 1, 2 and 3, (ii) .250% at Level 4, and (iii) .500% at Level 5. "Applicable Percentage" means, as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below: ========================================== ===================================== Public Debt Rating Applicable S&P/Moody's Percentage - ------------------------------------------ ------------------------------------- Level 1 ------- A- / A3 or above .100% - ------------------------------------------ ------------------------------------- Level 2 ------- Lower than Level 1, but at least BBB+ / Baa1 or above .125% - ------------------------------------------ ------------------------------------- Level 3 ------- Lower than Level 2, but at least BBB / Baa2 or above .150% - ------------------------------------------ ------------------------------------- Level 4 ------- Lower than Level 3, but at least BBB- / Baa3 or above .200% - ------------------------------------------ ------------------------------------- Level 5 ------- Lower than Level 4, or no Public Debt Rating in Effect .400% ========================================== ===================================== "Assigned Rights" means the rights of the Borrower under Sections 1, 2, 3 and 4 of the Support Agreement and all other rights that are intended to secure the obligations of the Borrower under this Agreement. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto. "Assignment and Assumption Agreement" means the assignment and assumption agreement, entered into by the Borrower and the Parent, and accepted by the Agent, in accordance with Sections 2.18, 5.02(b) or 8.06, in substantially the form of Exhibit G hereto, or such other agreement in form and substance satisfactory to the Agent and the Lenders, by which the Parent assumes all of the Borrower's obligations under this Agreement. "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of: 8 4 (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of 1% per annum, plus (ii) the rate obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average (adjusted to the basis of a year of 360 days) being determined weekly on each Monday (or, if such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for Citibank with respect to liabilities consisting of or including (among other liabilities) three-month U.S. dollar non-personal time deposits in the United States, plus (iii) the average during such three-week period of the annual assessment rates estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of Citibank in the United States; and (c) 1/2 of one percent per annum above the Federal Funds Rate. "Base Rate Advance" means a Revolving Credit Advance that bears interest as provided in Section 2.07(a)(i). "Borrower" has the meaning specified in the recital of parties to this Agreement. "Borrowing" means a Revolving Credit Borrowing or a Competitive Bid Borrowing. "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. "Capitalization" means the sum of tangible net worth plus Consolidated Debt. 9 5 "Collateral Assignment Agreement" means that certain Collateral Assignment Agreement, dated as of January 19, 1999, made by the Borrower to the Agent, as amended, supplemented or modified in accordance with the terms thereof and hereof. "Commitment" has the meaning specified in Section 2.01. "Competitive Bid Advance" means an advance by a Lender to the Borrower as part of a Competitive Bid Borrowing resulting from the competitive bidding procedure described in Section 2.03 and refers to a Fixed Rate Advance or a LIBO Rate Advance. "Competitive Bid Borrowing" means a borrowing consisting of simultaneous Competitive Bid Advances from each of the Lenders whose offer to make one or more Competitive Bid Advances as part of such borrowing has been accepted under the competitive bidding procedure described in Section 2.03. "Competitive Bid Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such Lender resulting from a Competitive Bid Advance made by such Lender. "Competitive Bid Reduction" has the meaning specified in Section 2.01. "Confidential Information" means information that a Loan Party furnishes to the Agent or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Agent or such Lender from a source other than a Loan Party. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Convert", "Conversion" and "Converted" each refers to a conversion of Revolving Credit Advances of one Type into Revolving Credit Advances of the other Type pursuant to Section 2.08 or 2.09. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days incurred in the ordinary course of such Person's business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) all obligations of such Person in respect of Hedge Agreements, (h) all Debt of others referred to in clauses (a) 10 6 through (g) above or clause (i) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (1) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (i) all Debt referred to in clauses (a) through (h) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. See the definition of "Nonrecourse Debt" below. "Declining Lender" has the meaning specified in Section 2.16. "DECO" means The Detroit Edison Company, a Michigan corporation wholly owned by the Parent. "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Designated Bidder" means (a) an Eligible Assignee or (b) a special purpose corporation that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and that issues (or the parent of which issues) commercial paper rated at least "Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or the then equivalent grade) by S&P that, in the case of either clause (a) or (b), (i) is organized under the laws of the United States or any State thereof, (ii) shall have become a party hereto pursuant to Section 8.07(d), (e) and (f) and (iii) is not otherwise a Lender. "Designation Agreement" means a designation agreement entered into by a Lender (other than a Designated Bidder) and a Designated Bidder, and accepted by the Agent, in substantially the form of Exhibit D hereto. "Disclosed Litigation" has the meaning specified in Section 3.01(b). "Domestic Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "EBITDA" means, for any period, net income (or net loss) plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation expense and 11 7 (d) amortization expense, in each case determined in accordance with GAAP for such period. "Effective Date" has the meaning specified in Section 3.01. "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender; (iii) a commercial bank organized under the laws of the United States, or any State thereof, and having a combined capital and surplus of at least $250,000,000; (iv) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having a combined capital and surplus of at least $250,000,000; (v) a commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having a combined capital and surplus of at least $250,000,000, so long as such bank is acting through a branch or agency located in the United States; (vi) the central bank of any country that is a member of the Organization for Economic Cooperation and Development; (vii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and having a combined capital and surplus of at least $250,000,000; and (viii) any other Person approved by the Agent and the Borrower, such approval not to be unreasonably withheld or delayed by either party; provided, however, that neither the Borrower nor an Affiliate of the Borrower shall qualify as an Eligible Assignee. "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Law" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. 12 8 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the Borrower's controlled group, or under common control with the Borrower, within the meaning of Section 414 of the Internal Revenue Code. "ERISA Event" means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "Eurodollar Rate" means, for any Interest Period for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the 13 9 London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Revolving Credit Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. The Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.08. "Eurodollar Rate Advance" means a Revolving Credit Advance that bears interest as provided in Section 2.07(a)(ii). "Eurodollar Rate Reserve Percentage" for any Interest Period for all Eurodollar Rate Advances or LIBO Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances or LIBO Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Existing Commitment" means, for each Existing Lender, all of such Existing Lender's rights in and to, and all of its obligations under, the Commitment (as defined in the Existing Credit Agreement) held by it under the Existing Credit Agreement as of the Effective Date. "Existing Credit Agreement" has the meaning specified in the Preliminary Statement hereto. "Existing Lenders" has the meaning specified in the Preliminary Statements hereto. "Existing Notes" means the Notes as defined in, and issued pursuant to, the Existing Credit Agreement. "Extending Lenders" has the meaning specified in Section 2.16. "Facility Fee" has the meaning specified in Section 2.04(a). 14 10 "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. "Financial Officer" of any Person means the chief executive officer, president, chief financial officer, controller, treasurer or any assistant treasurer of such Person. "Fixed Rate Advances" has the meaning specified in Section 2.03(a)(i). "Guaranty" means the guaranty entered into by the Parent in favor of the Agent and the Lenders in accordance with Sections 2.18 or 5.02(b), in substantially in the form of Exhibit H hereto. "GAAP" has the meaning specified in Section 1.03. "Hazardous Materials" means (a) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. "Hedge Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements, except for those hedge agreements, which agreements shall be pari passu with or subordinate to this Agreement, that may be entered into by the Parent for an aggregate notional amount of up to $1 billion in connection with the Merger. "Information Memorandum" means the information memorandum dated December 1999 used by the Agent and Salomon Smith Barney Inc., as arranger in connection with the syndication of the Commitments. "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing and each LIBO Rate Advance comprising part of the same Competitive Bid Borrowing, the period commencing on the date of such Eurodollar Rate Advance or LIBO Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to 15 11 Eurodollar Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, as the Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: (i) the Borrower may not select any Interest Period that ends after the Revolver Termination Date then in effect or, if the Advances have been converted to a term loan pursuant to Section 2.06 prior to such selection, which ends after the Maturity Date; (ii) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Revolving Credit Borrowing or for LIBO Rate Advances comprising part of the same Competitive Bid Borrowing shall be of the same duration; (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and (iv) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Junior Subordinated Debentures" means subordinated junior deferrable interest debentures issued by DECO from time to time. "Lenders" means the Initial Lenders and each Person that shall become a party hereto pursuant to Section 8.07(a), (b) and (c) and, except when used in reference to a Revolving Credit Advance, a Revolving Credit Borrowing, a Revolving Credit Note, a Commitment or a related term, each Designated Bidder. "LIBO Rate" means, for any Interest Period for all LIBO Rate Advances comprising part of the same Competitive Bid Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of 16 12 each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to the amount that would be the Reference Banks' respective ratable shares of such Borrowing if such Borrowing were to be a Revolving Credit Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. The LIBO Rate for any Interest Period for each LIBO Rate Advance comprising part of the same Competitive Bid Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.08. "LIBO Rate Advances" has the meaning specified in Section 2.03(a)(i). "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Documents" means this Agreement, the Notes, the Support Agreement, the Collateral Assignment Agreement and, if executed and delivered in accordance with Section 2.18, the Guaranty or the Assignment and Assumption Agreement. "Loan Parties" means the Borrower and the Parent. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of either Loan Party and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of either Loan Party or either Loan Party and its Subsidiaries taken as a whole, (b) the rights and remedies of the Agent or any Lender under any Loan Document or (c) the ability of either Loan Party to perform its obligations under any Loan Document to which it is a party. "Maturity Date" means the earlier of (a) the one year anniversary of the Term Loan Conversion Date and (b) the date of the termination in whole of the aggregate Commitments pursuant to Section 2.05, 2.18 or 6.01. "MCN" mean Michigan Energy Group Inc. "Merger" means the pending merger of the Parent and MCN Energy Group Inc. pursuant to the merger agreement between the Parent and MCN dated as of October 4, 1999, as amended as of November 12, 1999. 17 13 "Merger Date" means the effective date of the Merger. "MichCon" means Michigan Consolidated Gas Company. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any ERISA Affiliate and at least one Person other than the Borrower and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Nonrecourse Debt" means Debt of either Loan Party or any of their Subsidiaries in respect of which no recourse may be had by the creditors under such Debt against such Loan Party or such Subsidiary in its individual capacity or against the assets of such Loan Party or such Subsidiary, other than assets which were purchased by such Loan Party or such Subsidiary with the proceeds of such Debt. "Note" means a Revolving Credit Note or a Competitive Bid Note. "Notice of Competitive Bid Borrowing" has the meaning specified in Section 2.03(a)(i). "Notice of Revolving Credit Borrowing" has the meaning specified in Section 2.02(a). "Parent" has the meaning specified in the recital by the parties to this Agreement. "Parent Assumption Date" means the date upon which the Parent becomes the Borrower hereunder, either by execution and delivery of the Assignment and Assumption Agreement or by operation of law upon a merger or consolidation of the Borrower with or into the Parent. "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Permitted Liens" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as 18 14 materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 30 days; (c) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; and (d) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Public Debt Rating" means, as of any date, the lowest rating that has been most recently announced by either S&P or Moody's, as the case may be, for any class of non-credit enhanced senior unsecured Debt issued by the Borrower. For purposes of the foregoing, (a) if only one of S&P and Moody's shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage shall be determined by reference to the available rating; (b) if neither S&P nor Moody's shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage will be set in accordance with Level 5 under the definition of "Applicable Margin" or "Applicable Percentage", as the case may be; (c) if the ratings established by S&P and Moody's shall fall within different levels, the Applicable Margin and the Applicable Percentage shall be based upon the lower rating; (d) if any rating established by S&P or Moody's shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (e) if S&P or Moody's shall change the basis on which ratings are established, each reference to the Public Debt Rating announced by S&P or Moody's, as the case may be, shall refer to the then equivalent rating by S&P or Moody's, as the case may be. "Reference Banks" means Citibank, N.A., Barclays Bank PLC and Bank One N.A. "Register" has the meaning specified in Section 8.07(g). "Required Lenders" means at any time Lenders owed at least 66-2/3% of the then aggregate unpaid principal amount of the Revolving Credit Advances owing to Lenders, or, if no such principal amount is then outstanding, Lenders having at least 66-2/3% of the Commitments. "Revolver Termination Date" means the earlier of January 16, 2001 or, if extended pursuant to Section 2.16, the date that is 364 days after the Revolver Termination Date then in effect, and (b) the date of termination in whole of the Commitments pursuant to Section 2.05, 2.18 or 6.01; provided, however, that the 19 15 Revolver Termination Date of any Lender that is a Declining Lender to any requested extension pursuant to Section 2.16 shall be the Revolver Termination Date in effect immediately prior to the date on which such extension was granted, for all purposes of this Agreement. "Revolving Credit Advance" means an advance by a Lender to the Borrower as part of a Revolving Credit Borrowing and, if the Borrower has made the Term Loan Election in accordance with Section 2.06, includes each such advance that remains outstanding after the Term Loan Conversion Date, and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of Revolving Credit Advance). "Revolving Credit Borrowing" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by each of the Lenders pursuant to Section 2.01. "Revolving Credit Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A-1 hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender. "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. "SEC Reports" means the following reports and financial statements of the Parent and DECO and, after the Merger Date, MCN and MichCon, as the case may be: (a) the Form 10K of such Person for the year ended December 31, 1998 as filed with or sent to the Securities and Exchange Commission, (b) the Forms 10Q of such Person for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999 as filed with or sent to the Securities and Exchange Commission, (c) the 1998 Audited Statements; and (d) the 1999 Interim Statements. "Significant Subsidiary" means (i) DECO, (ii) after the Merger Date, MichCon, and (iii) any other Subsidiary of the Parent (A) the total assets (after intercompany eliminations) of which exceed 30% of the total assets of the Parent and its Subsidiaries or (B) the net worth of which exceeds 30% of the Consolidated Net Worth of the Parent and its Subsidiaries, in each case as shown on the consolidated balance sheet of the Parent and its Subsidiaries prepared on a pro forma basis after giving effect to the Merger. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or 20 16 any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Support Agreement" means that certain Support Agreement, dated as of January 19, 1999, between the Parent and the Borrower, as amended, supplemented or modified in accordance with the terms thereof and hereof. "Term Loan Conversion Date" has the meaning specified in Section 2.06. "Term Loan Election" has the meaning specified in Section 2.06. "Termination Event" has the meaning specified in Section 2.18. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. "Withdrawal Liability" has the meaning specified in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) ("GAAP"). 21 17 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Revolving Credit Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Credit Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until the earlier of the Revolver Termination Date and the Term Loan Conversion Date in an aggregate amount not to exceed at any time outstanding the amount set forth opposite such Lender's name on the signature pages hereof or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(g), as such amount may be reduced pursuant to Section 2.05 (such Lender's "Commitment"), provided that the aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to the extent of the aggregate amount of the Competitive Bid Advances then outstanding and such deemed use of the aggregate amount of the Commitments shall be allocated among the Lenders ratably according to their respective Commitments (such deemed use of the aggregate amount of the Commitments being a "Competitive Bid Reduction"). Each Revolving Credit Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof (or, if less, an aggregate amount equal to the amount by which the aggregate amount of a proposed Competitive Bid Borrowing requested by the Borrower exceeds the aggregate amount of Competitive Bid Advances offered to be made by the Lenders and accepted by the Borrower in respect of such Competitive Bid Borrowing, if such Competitive Bid Borrowing is made on the same date as such Revolving Credit Borrowing) and shall consist of Revolving Credit Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, the Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.10 and reborrow under this Section 2.01. SECTION 2.02. Making the Revolving Credit Advances. (a) Each Revolving Credit Borrowing shall be made on notice, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, or 9:00 A.M. (New York City time) the Business Day of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Base Rate Advances, by the Borrower to the Agent, which shall give to each Lender prompt notice thereof by telecopier or telex. Each such notice of a Revolving Credit Borrowing (a "Notice of Revolving Credit Borrowing") shall be by telephone, confirmed immediately in writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto, specifying therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of Advances comprising such Revolving Credit Borrowing, (iii) aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Revolving Credit Advance. Each Lender shall, before 11:00 A.M. (New York City time) on the date of such Revolving Credit Borrowing, make available for the account of its Applicable Lending Office to the Agent at the Agent's Account, in same day funds, such Lender's ratable portion of such Revolving Credit Borrowing. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower at the Agent's address referred to in Section 8.02. 22 18 (b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Revolving Credit Borrowing if the aggregate amount of such Revolving Credit Borrowing is less than $5,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than ten separate Revolving Credit Borrowings. (c) Each Notice of Revolving Credit Borrowing shall be irrevocable and binding on the Borrower. In the case of any Revolving Credit Borrowing that the related Notice of Revolving Credit Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Revolving Credit Borrowing for such Revolving Credit Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Revolving Credit Advance to be made by such Lender as part of such Revolving Credit Borrowing when such Revolving Credit Advance, as a result of such failure, is not made on such date. (d) Unless the Agent shall have received notice from a Lender prior to the date of any Revolving Credit Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such Revolving Credit Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Revolving Credit Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Revolving Credit Advances comprising such Revolving Credit Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Revolving Credit Advance as part of such Revolving Credit Borrowing for purposes of this Agreement. (e) The failure of any Lender to make the Revolving Credit Advance to be made by it as part of any Revolving Credit Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Revolving Credit Advance on the date of such Revolving Credit Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Advance to be made by such other Lender on the date of any Revolving Credit Borrowing. SECTION 2.03. The Competitive Bid Advances. (a) Each Lender severally agrees that the Borrower may make Competitive Bid Borrowings under this Section 2.03 from time to time on any Business Day during the period from the date hereof until the date occurring 23 19 30 days prior to the earlier of the Revolver Termination Date and the Term Loan Conversion Date in the manner set forth below; provided that, following the making of each Competitive Bid Borrowing, the aggregate amount of the Advances then outstanding shall not exceed the aggregate amount of the Commitments of the Lenders (computed without regard to any Competitive Bid Reduction). (i) The Borrower may request a Competitive Bid Borrowing under this Section 2.03 by delivering to the Agent, by telecopier or telex, a notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid Borrowing"), in substantially the form of Exhibit B-2 hereto, specifying therein the requested (v) date of such proposed Competitive Bid Borrowing, (w) aggregate amount of such proposed Competitive Bid Borrowing, (x) in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, Interest Period, or in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances, maturity date for repayment of each Fixed Rate Advance to be made as part of such Competitive Bid Borrowing (which maturity date may not be earlier than the date occurring 30 days after the date of such Competitive Bid Borrowing or later than the earlier of (I) 180 days after the date of such Competitive Bid Borrowing and (II) the earlier of the Revolver Termination Date and the Term Loan Conversion Date), (y) interest payment date or dates relating thereto, and (z) other terms (if any) to be applicable to such Competitive Bid Borrowing, not later than 10:00 A.M. (New York City time) (A) at least one Business Day prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall specify in the Notice of Competitive Bid Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum (the Advances comprising any such Competitive Bid Borrowing being referred to herein as "Fixed Rate Advances") and (B) at least five Business Days prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall instead specify in the Notice of Competitive Bid Borrowing that the rates of interest be offered by the Lenders are to be based on the LIBO Rate (the Advances comprising such Competitive Bid Borrowing being referred to herein as "LIBO Rate Advances"). Each Notice of Competitive Bid Borrowing shall be irrevocable and binding on the Borrower. The Agent shall in turn promptly notify each Lender of each request for a Competitive Bid Borrowing received by it from the Borrower by sending such Lender a copy of the related Notice of Competitive Bid Borrowing. (ii) Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more Competitive Bid Advances to the Borrower as part of such proposed Competitive Bid Borrowing at a rate or rates of interest specified by such Lender in its sole discretion, by notifying the Agent (which shall give prompt notice thereof to the Borrower), before 9:30 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and before 10:00 A.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, of the minimum amount and maximum amount of each Competitive Bid Advance which such Lender would be willing to make as part of such proposed Competitive Bid Borrowing (which amounts may, subject to the proviso to the first sentence of this Section 2.03(a), exceed 24 20 such Lender's Commitment, if any), the rate or rates of interest therefor and such Lender's Applicable Lending Office with respect to such Competitive Bid Advance; provided that if the Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify the Borrower of such offer at least 30 minutes before the time and on the date on which notice of such election is to be given to the Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Agent, before 10:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Agent by the other Lenders, and such Lender shall not be obligated to, and shall not, make any Competitive Bid Advance as part of such Competitive Bid Borrowing; provided that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Competitive Bid Advance as part of such proposed Competitive Bid Borrowing. (iii) The Borrower shall, in turn, before 10:30 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and before 11:00 A.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, either: (x) cancel such Competitive Bid Borrowing by giving the Agent notice to that effect, or (y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (ii) above, in its sole discretion, by giving notice to the Agent of the amount of each Competitive Bid Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to the Borrower by the Agent on behalf of such Lender for such Competitive Bid Advance pursuant to paragraph (ii) above) to be made by each Lender as part of such Competitive Bid Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (ii) above by giving the Agent notice to that effect. The Borrower shall accept the offers made by any Lender or Lenders to make Competitive Bid Advances in order of the lowest to the highest rates of interest offered by such Lenders. If two or more Lenders have offered the same interest rate, the amount to be borrowed at such interest rate will be allocated among such Lenders in proportion to the amount that each such Lender offered at such interest rate. (iv) If the Borrower notifies the Agent that such Competitive Bid Borrowing is cancelled pursuant to paragraph (iii)(x) above, the Agent shall give prompt notice thereof to the Lenders and such Competitive Bid Borrowing shall not be made. (v) If the Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (ii) above, of the date and aggregate amount of such Competitive Bid Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (ii) above have been accepted by 25 21 the Borrower, (B) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, of the amount of each Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing, and (C) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, upon receipt, that the Agent has received forms of documents appearing to fulfill the applicable conditions set forth in Article III. Each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing shall, before 12:00 noon (New York City time) on the date of such Competitive Bid Borrowing specified in the notice received from the Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Agent at the Agent's Account, in same day funds, such Lender's portion of such Competitive Bid Borrowing. Upon fulfillment of the applicable conditions set forth in Article III and after receipt by the Agent of such funds, the Agent will make such funds available to the Borrower at the Agent's address referred to in Section 8.02. Promptly after each Competitive Bid Borrowing the Agent will notify each Lender of the amount of the Competitive Bid Borrowing, the consequent Competitive Bid Reduction and the dates upon which such Competitive Bid Reduction commenced and will terminate. (vi) If the Borrower notifies the Agent that it accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, such notice of acceptance shall be irrevocable and binding on the Borrower. The Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in the related Notice of Competitive Bid Borrowing for such Competitive Bid Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing when such Competitive Bid Advance, as a result of such failure, is not made on such date. (b) Each Competitive Bid Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each Competitive Bid Borrowing, the Borrower and each Lender shall be in compliance with the limitations set forth in the proviso to the first sentence of subsection (a) above. (c) Within the limits and on the conditions set forth in this Section 2.03, the Borrower may from time to time borrow under this Section 2.03, repay or prepay pursuant to subsection (d) below, and reborrow under this Section 2.03, provided that a Competitive Bid Borrowing shall not be made within three Business Days of the date of any other Competitive Bid Borrowing. (d) The Borrower shall repay to the Agent for the account of each Lender that has made a Competitive Bid Advance, on the maturity date of each Competitive Bid Advance (such maturity date being that specified by the Borrower for repayment of such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to 26 22 subsection (a)(i) above and provided in the Competitive Bid Note evidencing such Competitive Bid Advance), the then unpaid principal amount of such Competitive Bid Advance. The Borrower shall have no right to prepay any principal amount of any Competitive Bid Advance unless, and then only on the terms, specified by the Borrower for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and set forth in the Competitive Bid Note evidencing such Competitive Bid Advance. (e) The Borrower shall pay interest on the unpaid principal amount of each Competitive Bid Advance from the date of such Competitive Bid Advance to the date the principal amount of such Competitive Bid Advance is repaid in full, at the rate of interest for such Competitive Bid Advance specified by the Lender making such Competitive Bid Advance in its notice with respect thereto delivered pursuant to subsection (a)(ii) above, payable on the interest payment date or dates specified by the Borrower for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above, as provided in the Competitive Bid Note evidencing such Competitive Bid Advance. Upon the occurrence and during the continuance of an Event of Default, the Borrower shall pay interest on the amount of unpaid principal of and interest on each Competitive Bid Advance owing to a Lender, payable in arrears on the date or dates interest is payable thereon, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Competitive Bid Advance under the terms of the Competitive Bid Note evidencing such Competitive Bid Advance unless otherwise agreed in such Competitive Bid Note. (f) The indebtedness of the Borrower resulting from each Competitive Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall be evidenced by a separate Competitive Bid Note of the Borrower payable to the order of the Lender making such Competitive Bid Advance. (g) Upon delivery of each Notice of Competitive Bid Borrowing, the Borrower shall pay a non-refundable fee of $3,000 to the Agent for its own account. SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to the Agent for the account of each Lender (other than the Designated Bidders) a facility fee (the "Facility Fee") on the aggregate amount of such Lender's Commitment from the date hereof in the case of each Initial Lender and from effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Maturity Date at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, and on the Maturity Date. (b) Agent's Fees. The Borrower shall pay to the Agent for its own account such fees as may from time to time be agreed between the Borrower and the Agent. SECTION 2.05. Termination or Reduction of the Commitments. (a) If the Borrower has not made the Term Loan Election at least 15 days prior to the Revolver Termination Date, the Commitments shall be automatically terminated on the Revolver Termination Date. If the Borrower has made the Term Loan Election in accordance with Section 27 23 2.06, from time to time after the Term Loan Conversion Date upon each prepayment of the Revolving Credit Advances, the aggregate Commitments of the Lenders under this Agreement shall be automatically and permanently reduced on a pro rata basis by an amount equal to the amount by which the aggregate Commitments of the Lenders under this Agreement immediately prior to such reduction exceeds the aggregate unpaid principal amount of the Revolving Credit Advances outstanding at such time. (b) The Borrower shall have the right, upon at least three Business Days' notice to the Agent, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and provided further that the aggregate amount of the Commitments of the Lenders shall not be reduced to an amount that is less than the aggregate principal amount of the Competitive Bid Advances then outstanding. Once terminated, a Commitment or portion thereof may not be reinstated. SECTION 2.06. Repayment of Revolving Credit Advances; Term Loan Election. (a) The Borrower shall, subject to the next succeeding sentence, repay to the Agent for the ratable account of the Lenders on the Revolver Termination Date the aggregate principal amount of the Revolving Credit Advances then outstanding. (b) The Borrower may, at any time prior to the Revolver Termination Date and upon not less than 15 days' notice to the Agent, elect (the "Term Loan Election") to convert all of the Revolving Credit Advances outstanding on the date specified in such notice (the "Term Loan Conversion Date") into a term loan which the Borrower shall repay in full to the Agent for the ratable account of the Lenders on the Maturity Date; provided that no Default has occurred and is continuing on the date of notice of the Term Loan Election or on the Term Loan Conversion Date. SECTION 2.07. Interest on Revolving Credit Advances. (a) Scheduled Interest. The Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance owing to each Lender from the date of such Revolving Credit Advance until such principal amount shall be paid in full, at the following rates per annum: (i) Base Rate Advances. During such periods as such Revolving Credit Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full. (ii) Eurodollar Rate Advances. During such periods as such Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Revolving Credit Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Revolving Credit Advance plus (y) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day 28 24 that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full. (b) Default Interest. (i) Upon the occurrence and during the continuance of an Event of Default, the Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above, and (ii) the Borrower shall pay, to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above. SECTION 2.08. Interest Rate Determination. (a) Each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate and each LIBO Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks. The Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.07(a)(ii). (b) If, with respect to any Eurodollar Rate Advances, the Required Lenders notify the Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. (c) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances. (d) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Advances shall automatically Convert into Base Rate Advances. 29 25 (e) Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended. (f) If fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate or LIBO Rate for any Eurodollar Rate Advances or LIBO Rate Advances, as the case may be, (i) the Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances or LIBO Rate Advances, as the case may be, (ii) with respect to Eurodollar Rate Advances, each such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (iii) the obligation of the Lenders to make Eurodollar Rate Advances or LIBO Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.09. Optional Conversion of Revolving Credit Advances. The Borrower may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all Revolving Credit Advances of one Type comprising the same Borrowing into Revolving Credit Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result in more separate Revolving Credit Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower. SECTION 2.10. Prepayments of Revolving Credit Advances. (a) Optional Prepayment. The Borrower may on any Business Day, upon notice given to the Agent not later than 11:00 A.M., (i) on the same day for Base Rate Advances and (ii) on the second Business Day prior to the prepayment in the case of Eurodollar Rate Advances stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amount of the Revolving Credit Advances comprising part of the same Revolving Credit Borrowing in whole or ratably in part, together with accrued 30 26 interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c). (b) Mandatory Prepayment. The Borrower shall, upon five Business Days notice from the Agent given at the request or with the consent of the Required Lenders, prepay the aggregate principal amount outstanding plus all interest thereon and all other amounts payable hereunder or under the Notes, in the event that (i) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Parent (or other securities convertible into such Voting Stock) representing 20% or more of the combined voting power of all Voting Stock of the Parent; or (ii) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Parent. SECTION 2.11. Increased Costs. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances or LIBO Rate Advances (excluding for purposes of this Section 2.11 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.14 shall govern) and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrower shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder. A certificate as to such amounts submitted to the 31 27 Borrower and the Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error. (c) In the event that a Lender demands payment from the Borrower for amounts owing pursuant to subsection (a) or (b) of this Section 2.11, the Borrower may, upon payment of such amounts and subject to the requirements of Sections 8.04 and 8.07, substitute for such Lender another financial institution, which financial institution shall be an Eligible Assignee and shall assume the Commitments of such Lender and purchase the Notes held by such Lender in accordance with Section 8.07, provided, however, that (i) no Default shall have occurred and be continuing, (ii) the Borrower shall have satisfied all of its obligations in connection with the Loan Documents with respect to such Lender, and (iii) if such assignee is not a Lender, (A) such assignee is acceptable to the Agent and (B) the Borrower shall have paid the Agent a $3,000 administrative fee. SECTION 2.12. Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or LIBO Rate Advances or to fund or maintain Eurodollar Rate Advances or LIBO Rate Advances hereunder, (i) each Eurodollar Rate Advance or LIBO Rate Advance, as the case may be, will automatically, upon such demand, Convert into a Base Rate Advance or an Advance that bears interest at the rate set forth in Section 2.07(a)(i), as the case may be, and (ii) the obligation of the Lenders to make Eurodollar Rate Advances or LIBO Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.13. Payments and Computations. (a) The Borrower shall make each payment hereunder and under the Notes not later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to the Agent at the Agent's Account in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.03, 2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder or under the Note held by such Lender, to charge 32 28 from time to time against any or all of the Borrower's accounts with such Lender any amount so due. (c) All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of facility fees shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or facility fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility fee, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.14. Taxes. (a) Any and all payments by the Borrower hereunder or under the Notes shall be made, in accordance with Section 2.13, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower 33 29 shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) The Borrower shall indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any taxes imposed by any jurisdiction on amounts payable under this Section 2.14) imposed on or paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrower shall furnish to the Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing payment thereof. In the case of any payment hereunder or under the Notes by or on behalf of the Borrower through an account or branch outside the United States or by or on behalf of the Borrower by a payor that is not a United States person, if the Borrower determines that no Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as requested in writing by the Borrower (but only so long as such Lender remains lawfully able to do so), shall provide each of the Agent and the Borrower with two original Internal Revenue Service forms 1001 or 4224, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes. If the forms provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender assignee becomes a party to this Agreement, the Lender assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, 34 30 applicable with respect to the Lender assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form 1001 or 4224, that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information. (f) For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form described in Section 2.14(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided, or if such form otherwise is not required under the first sentence of subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes. (g) In the event that a Lender demands payment from the Borrower for amounts owing pursuant to subsection (a) or (b) of this Section 2.14, the Borrower may, upon payment of such amounts and subject to the requirements of Sections 8.04 and 8.07, substitute for such Lender another financial institution, which financial institution shall be an Eligible Assignee and shall assume the Commitments of such Lender and purchase the Notes held by such Lender in accordance with Section 8.07, provided, however, that (i) no Default shall have occurred and be continuing, (ii) the Borrower shall have satisfied all of its obligations in connection with the Loan Documents with respect to such Lender, and (iii) if such assignee is not a Lender, (A) such assignee is acceptable to the Agent and (B) the Borrower shall have paid the Agent a $3,000 administrative fee. SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Revolving Credit Advances owing to it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its ratable share of payments on account of the Revolving Credit Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Revolving Credit Advances owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. 35 31 SECTION 2.16. Extensions of Revolver Termination Date. No earlier than 45 days and no later than 30 days prior to the Revolver Termination Date in effect at any time, the Borrower may, by written notice to the Agent, request that such Revolver Termination Date be extended for a period of 364 days. Such request shall be irrevocable and binding upon the Borrower. The Agent shall promptly notify each Lender of such request. If a Lender agrees, in its individual and sole discretion, to so extend its Commitment (an "Extending Lender"), it shall deliver to the Agent a written notice of its agreement to do so no earlier than 30 days and no later than 20 days prior to such Revolver Termination Date and the Agent shall notify the Borrower of such Extending Lender's agreement to extend its Commitment no later than 15 days prior to such Revolver Termination Date. The Commitment of any Lender that fails to accept or respond to the Borrower's request for extension of the Revolver Termination Date (a "Declining Lender") shall be terminated on the Revolver Termination Date originally in effect (without regard to any extension by other Lenders) and on such Revolver Termination Date the Borrower shall pay in full the principal amount of all Advances owing to such Declining Lender, together with accrued interest thereon to the date of such payment of principal and all other amounts payable to such Declining Lender under this Agreement. The Agent shall promptly notify each Extending Lender of the aggregate Commitments of the Declining Lenders. The Extending Lenders, or any of them, may offer to increase their respective Commitments by an aggregate amount up to the aggregate amount of the Declining Lenders' Commitments and any such Extending Lender shall deliver to the Agent a notice of its offer to so increase its Commitment no later than 15 days prior to such Revolver Termination Date. To the extent of any shortfall in the aggregate amount of extended Commitments, the Borrower shall have the right to require any Declining Lender to assign in full its rights and obligations under this Agreement to an Eligible Assignee designated by the Borrower and acceptable to the Agent, that agrees to accept all of such rights and obligations (a "Replacement Lender"), provided that (i) such increase and/or such assignment is otherwise in compliance with Section 8.07, (ii) such Declining Lender receives payment in full of the principal amount of all Advances owing to such Declining Lender, together with accrued interest thereon to the date of such payment of principal and all other amounts payable to such Declining Lender under this Agreement, and (iii) any such increase shall be effective on the Revolver Termination Date in effect at the time the Borrower requests such extension and any such assignment shall be effective on the date specified by the Borrower and agreed to by the Replacement Lender and the Agent. If Extending Lenders and Replacement Lenders provide Commitments in an aggregate amount at least equal to 51% of the aggregate amount of the Commitments outstanding 30 days prior to the Revolver Termination Date in effect at the time the Borrower requests such extension, the Revolver Termination Date shall be extended by 364 days for such Extending Lenders. SECTION 2.17. Use of Proceeds. The proceeds of the Advances shall be available (and the Borrower agrees that it shall use such proceeds) solely for general corporate purposes of the Borrower and its Subsidiaries. SECTION 2.18. Termination Events. If the Parent shall incur any Debt not existing on the Effective Date (excluding the extension of any Debt existing on the Effective Date) without simultaneously with, or prior to, the incurrence of such Debt (i) executing and 36 32 delivering to the Agent, on behalf of the Lenders, either the Guaranty or the Assignment and Assumption Agreement and (ii) delivering therewith: (A) Certified copies of the resolutions of the Board of Directors of each Loan Party executing and delivering such Loan Document approving such Loan Document; (B) A certificate of the Secretary or Assistant Secretary of each Loan Party executing and delivering such Loan Document certifying the names and true signatures of the officers of each such Loan Party authorized to sign such Loan Document and the other documents to be delivered thereunder; (C) A certificate of a duly authorized officer of each Loan Party executing and delivering such Loan Document certifying that (x) the representations and warranties contained in such Loan Document are correct on and as of the date of such Loan Document, before and after giving effect to such Loan Document, as though made on and as of such date and (y) no Default has occurred and is continuing or would result from the execution and delivery of such Loan Document; and (D) A favorable opinion of counsel to the Parent and the Borrower in form and substance satisfactory to the Agent as to such Loan Document and such other matters as any Lender through the Agent may reasonably request; (any such failure being a "Termination Event"), the Agent shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate. ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and as of the date hereof (the "Effective Date"), provided that the following conditions precedent have been satisfied on such date: (a) There shall have occurred no Material Adverse Change since December 31, 1998. (b) There shall exist no action, suit, investigation, litigation or proceeding affecting either Loan Party or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect other than the matters described in the SEC Reports (the "Disclosed Litigation") or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated hereby and there shall have been no adverse change in the status, or financial effect on any Loan 37 33 Party or any of its Subsidiaries of the Disclosed Litigation from that described in the SEC Reports. (c) Nothing shall have come to the attention of the Lenders during the course of their due diligence investigation to lead them to believe that the Information Memorandum was or has become misleading, incorrect or incomplete in any material respect; without limiting the generality of the foregoing, the Lenders shall have been given such access, as such Lenders have reasonably requested, to the management, records, books of account, contracts and properties of each Loan Party and its Subsidiaries as they shall have requested. (d) All governmental and third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lenders that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated by the Loan Documents. (e) The Borrower shall have notified each Lender and the Agent in writing as to the proposed Effective Date. (f) The Borrower shall have paid (i) all accrued fees and expenses of the Agent and the Lenders with respect to this Agreement, including fees contemplated in the Information Memorandum, and (ii) all facility fees accrued under the Existing Credit Agreement as of the Effective Date. (g) On the Effective Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated the Effective Date, stating that: (i) The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, and (ii) No event has occurred and is continuing that constitutes a Default. (iii) The Parent shall have delivered a certificate, substantially in form of Exhibit E hereto, signed on behalf of the Parent by a Financial Officer of the Parent. (h) The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for the Revolving Credit Notes) in sufficient copies for each Lender: (i) The Revolving Credit Notes to the order of the Lenders, respectively. 38 34 (ii) Certified copies of the resolutions of the Board of Directors of each Loan Party approving each Loan Document to which it is a party, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to each Loan Document to which it is a party. (iii) A certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of each Loan Party authorized to sign each Loan Document to which it is a party and the other documents to be delivered hereunder or thereunder. (iv) An audited Consolidated balance sheet of the Borrower and its Subsidiaries and the related statements of income and cash flows of the Borrower and its Subsidiaries, as of December 31, 1998. (v) A letter agreement, in form and substance satisfactory to the Agent, executed by each Loan Party acknowledging that all references in the Support Agreement to the Existing Agreement and the "Credit Agreement" will be deemed to be references to this Agreement. (vi) A letter agreement, in form and substance satisfactory to the Agent, executed by the Borrower acknowledging that all references in the Collateral Assignment Agreement to the Existing Agreement and the "Credit Agreement" will be deemed to be references to this Agreement, together with: (A) acknowledgment copies or stamped receipt copies of proper financing statements (or amendments to financing statements), duly filed on or before the Effective Date under the Uniform Commercial Code of all jurisdictions that the Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Support Agreement and the Collateral Assignment Agreement, covering the Assigned Rights described in the Support Agreement and the Collateral Assignment Agreement, and (B) completed requests for information, dated on or before the Effective Date, listing the financing statements referred to in clause (A) above and all other effective financing statements filed in the jurisdictions referred to in clause (A) above that name the Borrower as debtor, together with copies of such other financing statements. (vii) A favorable opinion of C.C. Nern, General Counsel of the Parent and the Borrower, or T.A. Hughes, Associate General Counsel of the Parent and the Borrower, substantially in the form of Exhibit F hereto and as to such other matters as any Lender through the Agent may reasonably request. (viii) A favorable opinion of King & Spalding, counsel for the Agent, in form and substance satisfactory to the Agent. 39 35 SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing. The obligation of each Lender to make a Revolving Credit Advance on the occasion of each Revolving Credit Borrowing shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Revolving Credit Borrowing (a) the following statements shall be true (and each of the giving of the applicable Notice of Revolving Credit Borrowing and the acceptance by the Borrower of the proceeds of such Revolving Credit Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true): (i) the representations and warranties contained in Section 4.01 are correct on and as of the date of such Revolving Credit Borrowing, before and after giving effect to such Revolving Credit Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, and (ii) no event has occurred and is continuing, or would result from such Revolving Credit Borrowing or from the application of the proceeds therefrom, that constitutes a Default; and (b) the Agent shall have received such other approvals, opinions or documents as any Lender through the Agent may reasonably request. SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing. The obligation of each Lender that is to make a Competitive Bid Advance on the occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as part of such Competitive Bid Borrowing is subject to the conditions precedent that (i) the Agent shall have received the written confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on or before the date of such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing, the Agent shall have received a Competitive Bid Note payable to the order of such Lender for each of the one or more Competitive Bid Advances to be made by such Lender as part of such Competitive Bid Borrowing, in a principal amount equal to the principal amount of the Competitive Bid Advance to be evidenced thereby and otherwise on such terms as were agreed to for such Competitive Bid Advance in accordance with Section 2.03, and (iii) on the date of such Competitive Bid Borrowing the following statements shall be true (and each of the giving of the applicable Notice of Competitive Bid Borrowing and the acceptance by the Borrower of the proceeds of such Competitive Bid Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Competitive Bid Borrowing such statements are true): (a) the representations and warranties contained in Section 4.01 are correct on and as of the date of such Competitive Bid Borrowing, before and after giving effect to such Competitive Bid Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, 40 36 (b) no event has occurred and is continuing, or would result from such Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default, and (c) no event has occurred and no circumstance exists as a result of which the information concerning either Loan Party that has been provided to the Agent and each Lender by either Loan Party in connection herewith would include an untrue statement of a material fact or omit to state any material fact or any fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. SECTION 3.04. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the Effective Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. (b) The execution, delivery and performance by the Borrower of the Loan Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, are within such Loan Party's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's charter or by-laws or (ii) law or any contractual restriction binding on or affecting the Borrower. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Borrower of this Agreement, the Notes or any other Loan Document to which it is a party. (d) This Agreement has been, and each of the Notes and each of the other Loan Documents to which it is a party when delivered hereunder will have been, duly executed and delivered by the Borrower. This Agreement is, and each of the Notes and 41 37 each of the other Loan Documents to which it is a party when delivered hereunder will be, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their respective terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally. (e) The 1998 Audited Statements and the 1999 Interim Statements, copies of each of which have been furnished to each Lender, fairly present, subject in the case of the 1999 Interim Statements, to year-end audit adjustments, the Consolidated financial condition of the relevant Person, as at such dates all in accordance with generally accepted accounting principles consistently applied. Since December 31, 1998, there has been no Material Adverse Change, except as shall have been disclosed in the SEC Reports. (f) There is no pending or threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of this Agreement, any Note or any other Loan Document or the consummation of the transactions contemplated hereby and there has been no adverse change in the status of any Disclosed Litigation, or its financial effect on any Loan Party or any of its Subsidiaries from that described in the SEC Reports. (g) The operations and properties of the Borrower and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without ongoing obligations or costs, and no circumstances exist that could be reasonably likely to (i) form the basis of an Environmental Action against the Borrower or any of its Subsidiaries or any of their properties that could have a Material Adverse Effect or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law that could have a Material Adverse Effect. (h) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan. (i) Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan, copies of which have been filed with the Internal Revenue Service, is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no material adverse change in such funding status. (j) Neither the Borrower nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan. 42 38 (k) Neither the Borrower nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA. (l) Except as set forth in the financial statements referred to in this Section 4.01, the Borrower and its Subsidiaries have no material liability with respect to "expected post retirement benefit obligations" within the meaning of Statement of Financial Accounting Standards No. 106. (m) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. (n) Neither the Borrower nor any of its Subsidiaries is, or after the making of any Advance or the application of the proceeds or repayment thereof, or the consummation of any of the other transactions contemplated hereby, will be, an "investment company", or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company" (within the meaning of the Investment Company Act of 1940, as amended). (o) At all times prior to the Parent Assumption Date, the Borrower is a "subsidiary company" of the Parent, which is a "holding company" (within the meaning of the Public Utility Holding Company Act of 1935, as amended), and, at all times before and after the Parent Assumption Date, the Parent is exempt from being required to seek approval to perform its obligations under the Loan Documents pursuant to Rule 2 of the Rules and Regulations promulgated pursuant to the Public Utility Holding Company Act of 1935, as amended. (p) At all times prior to the Parent Assumption Date, the Support Agreement (as it may be amended, supplemented, terminated or otherwise modified in accordance with its terms) is in full force and effect and enforceable in accordance with its terms. ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid or any Lendershall have any Commitment hereunder, the Borrower will: (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, 43 39 such compliance to include, without limitation, compliance with ERISA and Environmental Laws. (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors. (c) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates. (d) Preservation of Corporate Existence, Etc. Preserve and maintain its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Borrower may consummate any merger or consolidation permitted under Section 5.02(b) and provided further that the Borrower shall not be required to preserve any right or franchise if the Board of Directors of the Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower and that the loss thereof is not disadvantageous in any material respect to the Borrower or the Lenders. (e) Visitation Rights. At any reasonable time and from time to time, permit the Agent or any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (f) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (g) Maintenance of Properties, Etc. Subject to clause (d) above, maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted. (h) Reporting Requirements. Furnish to the Lenders: 44 40 (i) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Parent, Consolidated balance sheet of the Parent and its Consolidated Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Parent and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter; (ii) as soon as available and in any event within 90 days after the end of each fiscal year of the Parent, a copy of the annual report to Shareholders for such year for the Parent and its Consolidated Subsidiaries, containing the Consolidated balance sheet of the Parent and its Consolidated Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Parent and its Subsidiaries for such fiscal year, in each case accompanied by (A) an opinion by Deloitte & Touche LLP or other independent public accountants acceptable to the Required Lenders and (B) the report by the Parent filed with the Securities and Exchange Commission on Form U-3A-2 for such fiscal year, containing the Consolidating balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and Consolidating statements of income and Consolidating statements of retained earnings of the Borrower and its Subsidiaries for such fiscal year, in each case, having been prepared in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01; (iii) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, unaudited Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and unaudited Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, in each case duly certified (subject to year-end audit adjustments) by a Financial Officer of the Borrower as having been prepared in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01; (iv) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, the Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an opinion by Deloitte & Touche LLP or other independent public accountants acceptable to the Required Lenders; (v) as soon as possible and in any event within five days after the occurrence of each Default continuing on the date of such statement, a statement 45 41 of a Financial Officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto; (vi) promptly after the sending or filing thereof copies of all reports and registration statements that the Borrower or any Subsidiary filed with the Securities and Exchange Commission or any national securities exchange; (vii) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Borrower or any of its Subsidiaries of the type described in Section 4.01(f); (viii) promptly upon becoming aware of any fact or circumstance affecting the Parent or any of its Subsidiaries that would at any time render the Borrower unable to make the representation and warranty contained in Section 4.01(q) on such date, a statement of a duly authorized officer of the Borrower setting forth the details of such fact or circumstance and what action the Parent or such Subsidiary, as the case may be, has taken and proposes to take with respect thereto; and (ix) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. SECTION 5.02. Negative Covenants Prior to the Parent Assumption Date. At all times prior to the Parent Assumption Date, so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not: (a) Liens, Etc. Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any Lien on or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, other than: (i) Permitted Liens, (ii) purchase money Liens upon or in any real property or equipment acquired or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property) or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties of any character other than the real property or equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or 46 42 replaced, provided further that the aggregate principal amount of the indebtedness secured by the Liens referred to in this clause (ii) shall not exceed $20,000,000 at any time outstanding, (iii) the Liens existing on the Effective Date and described on Schedule 5.02(a) hereto, (iv) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Borrower or any Subsidiary of the Borrower or becomes a Subsidiary of the Borrower; provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with the Borrower or such Subsidiary or acquired by the Borrower or such Subsidiary, (v) other Liens securing Debt in an aggregate principal amount not to exceed $20,000,000 at any time outstanding, and (vi) Liens on the rights of the Borrower under one or more agreements between the Parent and the Borrower, whereby the Parent agrees to provide to the Borrower financial support (in the form of cash or liquid assets) in an aggregate amount no greater than $1,200,000,000, to the extent that the Borrower is unable to make timely payment of interest, principal or premium (or expenses or other obligations related thereto) on any Debt of the Borrower (other than the Debt hereunder), provided that such Liens are granted in favor of one or more creditors under such Debt in order to secure the obligations of the Borrower thereunder, and (vii) the replacement, extension or renewal of any Lien permitted by clause (iii), (iv) or (vi) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby. (b) Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or permit any of its Subsidiaries to do so, except that (i) any Subsidiary of the Borrower may merge or consolidate with or into any other Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower may merge with or dispose of assets to the Borrower, (iii) the Borrower may merge into the Parent, and (iv) the Borrower may merge or consolidate with or into another Person if the Borrower is the surviving entity and (1) the Parent and the Borrower shall have executed and delivered, and the Agent shall have accepted, the Assignment and Assumption Agreement accompanied by the documentation set forth in Section 2.18(ii) or (2) the Parent shall have executed and delivered, and the Agent shall have accepted, the Guaranty accompanied by the documentation set forth in Section 47 43 2.18(ii), provided, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. (c) Change in Nature of Business. Make any material change in the nature of its business as carried on at the date hereof. (d) Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles. SECTION 5.03. Negative Covenants Applicable on or after the Parent Assumption Date. Notwithstanding anything in the contrary set forth in Section 5.02, at all times on and after the Parent Assumption Date so long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not: (a) Liens, Etc. Create or suffer to exist, or permit any Significant Subsidiary to create or suffer to exist, any Lien on or with respect to any shares of any class of equity securities (including, without limitation, Voting Stock) of any Significant Subsidiary, whether such shares are now owned or hereafter acquired. (b) Debt. Create, incur, assume or suffer to exist any Debt except Debt that is expressly or effectively pari passu with or expressly subordinated to the Debt of the Borrower hereunder. (c) Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or permit any Significant Subsidiary to do so, except that (i) any Significant Subsidiary may merge or consolidate with or into any other Significant Subsidiary, (ii) any Significant Subsidiary may merge into or dispose of assets to the Borrower, and (iii) the Borrower may merge or consolidate with or into any other Person if the surviving entity has senior unsecured Debt outstanding rated at least BBB- by S&P and Baa3 by Moody's; provided, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. (d) Change in Nature of Business. Make, or permit any of its Significant Subsidiaries to make, any material change in the nature of its business as carried on January 18, 2000 other than as disclosed in the SEC Reports. (e) Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles. 48 44 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable; or the Borrower shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement or any Note within three Business Days after the same becomes due and payable; or (b) Any representation or warranty made by the Borrower herein, by the Borrower (or any of its officers) in connection with this Agreement or by the Parent in the Guaranty shall prove to have been incorrect in any material respect when made; or (c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 2.10(b), 5.01(d), (e) or (h), 5.02 or (if applicable) 5.03 or in the Collateral Assignment Agreement, (ii) the Parent shall fail to perform or observe any term, covenant or agreement contained in the Support Agreement or the Guaranty, as applicable, or (iii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 10 days after written notice thereof shall have been given to the Borrower by the Agent or any Lender; or (d) Either Loan Party or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal or notional amount of at least $10,000,000 in the aggregate (but excluding Debt outstanding hereunder and Nonrecourse Debt) of such Loan Party or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (e) Either Loan Party or DECO shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against either Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, 49 45 insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or either Loan Party or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or (f) Any judgment or order for the payment of money in excess of $10,000,000 shall be rendered against either Loan Party or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (g) Any non-monetary judgment or order shall be rendered against either Loan Party or any of its Subsidiaries that could be reasonably expected to have a Material Adverse Effect, and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (h) The Parent shall at any time (i) cease to hold 100% of the Voting Stock of the Borrower unless the Parent and the Borrower shall have executed and delivered, and the Agent shall have accepted, the Assignment and Assumption Agreement accompanied by the documentation set forth in Section 2.18(ii) or (ii) cease to hold 100% of the Voting Stock of DECO; or (i) The Borrower or any of its ERISA Affiliates shall incur, or, in the reasonable opinion of the Required Lenders, shall be reasonably likely to incur liability in excess of $10,000,000 in the aggregate as a result of one or more of the following: (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan; or (j) The Parent and its Subsidiaries, on a Consolidated basis, shall at any time cease to: (i) Maintain a ratio of Consolidated EBITDA to cash interest payable on all Debt (excluding, (A) such Nonrecourse Debt of their own and of their Subsidiaries and Affiliates as would be listed as such in the financial statements of the Parent of the kind delivered pursuant to Section 5.01(h)(ii) and (iii) and (B) the Junior Subordinated Debentures) of not less than 2:1 for each period of four consecutive fiscal quarters ending on the last day of September, December, March and June of each year, or 50 46 (ii) Maintain a ratio of Consolidated Debt (excluding, (A) such Nonrecourse Debt of their own and of their Subsidiaries as would be listed in the financial statements of the Parent and (B) the Junior Subordinated Debentures) to Capitalization of not greater than .65:1; or (k) any provision of any of the Loan Documents after delivery thereof pursuant to Section 3.01 shall for any reason cease to be valid and binding on or enforceable against any Loan Party to it, or any such Loan Party shall so state in writing; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VII THE AGENT SECTION 7.01. Authorization and Action. Each Lender hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided, however, that the Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the 51 47 Agent: (i) may treat the payee of any Note as the holder thereof until the Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. Citibank and Affiliates. With respect to its Commitment, the Advances made by it and the Note issued to it, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Borrower, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any such Subsidiary, all as if Citibank were not the Agent and without any duty to account therefor to the Lenders. SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05. Indemnification. The Lenders (other than the Designated Bidders) agree to indemnify the Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of the Revolving Credit Notes then held by each of them (or if no Revolving Credit Notes are at the time outstanding or if any Revolving Credit Notes are held by Persons that are not Lenders, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way 52 48 relating to or arising out of any Loan Document or any action taken or omitted by the Agent under any Loan Document, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender (other than the Designated Bidders) agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, any Loan Document, to the extent that the Agent is not reimbursed for such expenses by the Borrower. SECTION 7.06. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Revolving Credit Notes, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders (other than the Designated Bidders), do any of the following: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Revolving Credit Notes or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Revolving Credit Notes or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Revolving Credit Notes, or the number of Lenders, that shall be required for the Lenders or 53 49 any of them to take any action hereunder or (f) amend this Section 8.01; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement or any Note. SECTION 8.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed or delivered, if to the Borrower, at its address at 200 Second Avenue, Detroit, MI 48226, Attention: Christopher C. Arvani; if to any Initial Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, at its address at Two Penns Way, Suite 200, New Castle, Delaware 19720 Attention: Christian Laughton, with a copy to J. Nicholas McKee, 399 Park Avenue, New York, New York 10043; or, as to the Borrower or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Agent. All such notices and communications shall, when mailed, telecopied, telegraphed or telexed, be effective when deposited in the mails, telecopied, delivered to the telegraph company or confirmed by telex answerback, respectively, except that notices and communications to the Agent pursuant to Article II, III or VII shall not be effective until received by the Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand all reasonable costs and reasonable expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes, each other Loan Document and the other documents to be delivered hereunder and thereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and reasonable expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under the Loan Documents. The Borrower further agrees to pay on demand all reasonable costs and reasonable expenses of the Agent and the Lenders, if any (including, without limitation, reasonable internal and external counsel fees and expenses, provided such fees and expenses are not duplicative), in connection with the "workout", restructuring or enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 8.04(a). 54 50 (b) The Borrower agrees to indemnify, to the extent legally permissible, and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of, or in connection with the preparation for a defense of, any investigation, litigation or proceeding arising out of, related to or in connection with (i) the Notes, this Agreement, the other Loan Documents any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Advances or (ii) the actual or alleged presence of Hazardous Materials on any property of the Borrower or any of its Subsidiaries or any Environmental Action relating in any way to the Borrower or any of its Subsidiaries, in each case whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. The Borrower also agrees not to assert any claim against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Notes, this Agreement, the other Loan Documents any of the transactions contemplated herein or therein or the actual or proposed use of the proceeds of the Advances. (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance or LIBO Rate Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.08(d) or (e), 2.10 or 2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, the Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of each Loan Party contained in Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes. SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is hereby 55 51 authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account of either Loan Party against any and all of the obligations of either Loan Party now or hereafter existing under the Loan Documents Agreement and the Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify such Loan Party after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have. SECTION 8.06. Binding Effect. This Agreement shall become effective (other than Sections 2.01 and 2.03, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrower and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders to any Person, except to the Parent pursuant to the Assignment and Assumption Agreement accompanied by the documentation set forth in Section 2.18(ii). SECTION 8.07. Assignments, Designations and Participations. (a) Each Lender (other than the Designated Bidders) may, with the prior consent of the Agent and (for so long as no Default has occurred and is continuing) the Borrower (which consent shall not be unreasonably withheld) assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Revolving Credit Advances owed to it and the Revolving Credit Note or Notes held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement (other than any right to make Competitive Bid Advances, Competitive Bid Advances owing to it and Competitive Bid Notes), (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Revolving Credit Note subject to such assignment and a processing and recordation fee of $3,000. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to 56 52 such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender. (c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Revolving Credit Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. Within five Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Agent in exchange for the surrendered Revolving Credit Note a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder, a new Revolving Credit Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Revolving Credit Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Revolving Credit Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A-1 hereto. 57 53 (d) Each Lender (other than the Designated Bidders) may designate one or more banks or other entities to have a right to make Competitive Bid Advances as a Lender pursuant to Section 2.03; provided, however, that (i) no such Lender shall be entitled to make more than two such designations, (ii) each such Lender making one or more of such designations shall retain the right to make Competitive Bid Advances as a Lender pursuant to Section 2.03, (iii) each such designation shall be to a Designated Bidder and (iv) the parties to each such designation shall execute and deliver to the Agent, for its acceptance and recording in the Register, a Designation Agreement. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Designation Agreement, the designee thereunder shall be a party hereto with a right to make Competitive Bid Advances as a Lender pursuant to Section 2.03 and the obligations related thereto. (e) By executing and delivering a Designation Agreement, the Lender making the designation thereunder and its designee thereunder confirm and agree with each other and the other parties hereto as follows: (i) such Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; (ii) such Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such designee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Designation Agreement; (iv) such designee will, independently and without reliance upon the Agent, such designating Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such designee confirms that it is a Designated Bidder; (vi) such designee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such designee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (f) Upon its receipt of a Designation Agreement executed by a designating Lender and a designee representing that it is a Designated Bidder, the Agent shall, if such Designation Agreement has been completed and is substantially in the form of Exhibit D hereto, (i) accept such Designation Agreement, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. (g) The Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance and each Designation Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and, with respect to Lenders other than Designated Bidders, the Commitment of, and principal amount of the 58 54 Advances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (h) Each Lender may sell participations to one or more banks or other entities (other than the Borrower or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or any Note, or any consent to any departure by the Borrower therefrom, except to the extent that such amendment, waiver or consent would (A) reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, (B) increase the Commitments or (C) release the Parent under the Guaranty or terminate the Guaranty, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. Each participant shall be entitled to the benefits of Sections 2.11, 2.12 and 2.14 to the same extent as if it were a Lender and had acquired its interest under this Agreement by an assignment made pursuant to this Section 8.07, provided, however, that in no event shall the Borrower be obligated to make any payment with respect to such Sections that is greater than the amount that the Borrower would have otherwise made had no participations been sold under this Section 8.07(h). (i) Any Lender may, in connection with any assignment, designation or participation or proposed assignment, designation or participation pursuant to this Section 8.07, disclose to the assignee, designee or participant or proposed assignee, designee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee, designee or participant or proposed assignee, designee or participant shall agree to preserve the confidentiality of any Confidential Information relating to the Borrower received by it from such Lender. (j) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time (i) create a security interest in all or a portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System or (ii) with notice to the Agent and the Borrower, assign all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a 59 55 portion of its Commitment, the Revolving Credit Advances owed to it and the Revolving Credit Note or Notes held by it) to any of its Affiliates. SECTION 8.08. Confidentiality. Neither the Agent nor any Lender shall disclose any Confidential Information to any other Person without the consent of the Borrower, other than (a) to the Agent's or such Lender's Affiliates and their officers, directors, employees, agents and advisors and, as contemplated by Section 8.07(i), to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) to any rating agency when required by it, provided that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Confidential Information relating to either Loan Party received by it from such Lender and (d) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking. SECTION 8.09. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 8.10. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the Notes, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or the Notes in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the Notes in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. SECTION 8.12. Effective Date. As of the Effective Date, (i) the Existing Credit Agreement is amended and restated in full as set forth in this Agreement, (ii) the Commitments 60 56 (including the Existing Commitments) are restated as set forth in the signature pages hereof, (iii) the Existing Notes are cancelled and replaced by the Notes, and (iv) all obligations which, by the terms of the Existing Credit Agreement, are evidenced by the Existing Notes are evidenced by the Notes. SECTION 8.13. Waiver of Jury Trial. Each of the Borrower, the Agent and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the Notes or the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement thereof. 61 S-1 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. DTE CAPITAL CORPORATION By --------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 62 S-2 Commitment Lenders $31,000,000 CITIBANK, N.A. By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 63 S-3 Commitment ABN AMRO BANK N.V. $26,000,000 By ---------------------------- Name: Title: By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 64 S-4 Commitment BANK ONE, NA $26,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 65 S-5 Commitment BARCLAYS BANK PLC $26,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 66 S-6 Commitment BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN $26,000,000 ISLANDS BRANCH By ---------------------------- Name: Title: By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 67 S-7 Commitment COMERICA BANK $26,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 68 S-8 Commitment DEN DANSKE BANK AKTIESELSKAB $26,000,000 By ---------------------------- Name: Title: By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 69 S-9 Commitment THE BANK OF NEW YORK $20,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 70 S-10 Commitment THE BANK OF NOVA SCOTIA $20,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 71 S-11 Commitment THE CHASE MANHATTAN BANK $20,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 72 S-12 Commitment FIRST UNION NATIONAL BANK $20,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 73 S-13 Commitment SOCIETE GENERALE, CHICAGO BRANCH $20,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 74 S-14 Commitment BANK HAPOALIM, B.M. $15,000,000 By ---------------------------- Name: Title: By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 75 S-15 Commitment BW CAPITAL MARKETS, INC. $12,000,000 By ---------------------------- Name: Title: By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 76 S-16 Commitment THE INDUSTRIAL BANK OF JAPAN, $12,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 77 S-17 Commitment MELLON BANK, N.A. $12,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 78 S-18 Commitment PARIBAS $12,000,000 By ---------------------------- Name: Title: By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 79 S-19 Commitment UNION BANK OF CALIFORNIA, N.A. $12,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 80 S-20 Commitment CIBC, INC. $10,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 81 S-21 Commitment THE DAI-ICHI KANGYO BANK, LTD. $10,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 82 S-22 Commitment KEYBANK NATIONAL ASSOCIATION $10,000,00 By ---------------------------- Name: Title: By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 83 S-23 Commitment MICHIGAN NATIONAL BANK $8,000,000 By ---------------------------- Name: Title: SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 84

SCHEDULE I DTE CAPITAL CORPORATION APPLICABLE LENDING OFFICES - -------------------------------------------------------------------------------------------------------------------- NAME OF INITIAL LENDER DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - -------------------------------------------------------------------------------------------------------------------- Citibank, N.A. Two Penns Way, Suite 200 Same as Domestic Lending Office New Castle, DE 19720 Attention: Christian Laughton Telecopier: (302) 894-6120 - ---------------------------------- ---------------------------------------- ---------------------------------------- ABN AMRO Bank N.V. 208 South LaSalle, Suite 1500 Same as Domestic Lending Office Chicago, IL 60604-1003 Attention: Loan Administration Telecopier: (312) 992-5155 - ---------------------------------- ---------------------------------------- ---------------------------------------- Bank Hapoalim B.M. 1177 Avenue of the Americas Same as Domestic Lending Office New York, New York 10036 Attention: Laura Raffa Telecopier: (212) 782-2187 - ---------------------------------- ---------------------------------------- ---------------------------------------- Bank One, NA One First National Plaza Same as Domestic Lending Office Chicago, IL 60670 Attention: Lynn Pozsgay Telecopier: (312) 732-3055 - ---------------------------------- ---------------------------------------- ---------------------------------------- The Bank of New York One Wall Street Same as Domestic Lending Office New York, NY 10286 Attention: Lisa Williams Telecopier: (212) 635-7923 - ---------------------------------- ---------------------------------------- ---------------------------------------- The Bank of Nova Scotia 600 Peachtree St. N.E., Suite 2700 Same as Domestic Lending Office Atlanta, GA 30308 Attention: Shannon Dancila Telecopier: (404) 888-8998 - ---------------------------------- ---------------------------------------- ---------------------------------------- Barclays Bank PLC 75 Wall Street 222 Broadway New York, NY 10265 New York, NY 10038 Attention: Christine Francese Attention: Dawn Matthews Telecopier: (212) 412-5307 Telecopier: (212) 412-1098 - ---------------------------------- ---------------------------------------- ---------------------------------------- Bayerische Landesbank 560 Lexington Avenue Same as Domestic Lending Office Girozentrale New York, NY 10022 Attention: Sean O'Sullivan Telecopier: (212) 310-9868 - ---------------------------------- ---------------------------------------- ---------------------------------------- BW Capital Markets, Inc. 630 Fifth Avenue Same as Domestic Lending Office Rockefeller Center, Suite 1919 New York, NY 10111 Attention: Thomas Lowe Telecopier: (212) 218-1810 - ---------------------------------- ---------------------------------------- ---------------------------------------- The Chase Manhattan Bank One Chase Manhattan Plaza Same as Domestic Lending Office Third Floor New York, NY 10081 Attention: Lynett Lang Telecopier: (212) 552-5777 - --------------------------------------------------------------------------------------------------------------------

85

- -------------------------------------------------------------------------------------------------------------------- NAME OF INITIAL LENDER DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - -------------------------------------------------------------------------------------------------------------------- CIBC, Inc. Two Paces West Same as Domestic Lending Office 2727 Paces Ferry Road, Suite 1200 Atlanta, GA 30339 Attention: Sheryl Leonard Telecopier: (770) 319-4950 - ---------------------------------- ---------------------------------------- ---------------------------------------- Comerica Bank 500 Woodward Avenue, MC 3268 Same as Domestic Lending Office Detroit, MI 48226 Attention: Stacie McVeigh Telecopier: (313) 222-9514 - ---------------------------------- ---------------------------------------- ---------------------------------------- The Dai-Ichi Kangyo Bank, 10 S. Wacker Drive, Suite 2600 Same as Domestic Lending Office Ltd. Chicago, IL 60606 Attention: R. Cummings Telecopier: (312) 876-2011 - ---------------------------------- ---------------------------------------- ---------------------------------------- Den Danske Bank 280 Park Avenue, 4th Floor Same as Domestic Lending Office New York, NY 10017 Attention: Loan Administration Telecopier: (212) 490-0252 - ---------------------------------- ---------------------------------------- ---------------------------------------- The Industrial Bank of Japan, 227 West Monroe Street, Suite 2600 Same as Domestic Lending Office Limited Chicago, IL 60606 Attention: Debbie Sapyta Telecopier: (312) 855-8200 - ---------------------------------- ---------------------------------------- ---------------------------------------- First Union National Bank One First Union Center Same as Domestic Lending Office Charlotte, NC 28288-0735 Attention: Tom Bohrer Telecopier: (704) 383-6670 - ---------------------------------- ---------------------------------------- ---------------------------------------- KeyBank National 127 Public Square 127 Public Square Association Cleveland, OH 44114 Cleveland, OH 44114 Attention: Michael Jackson Attention: Laura Binkley Telecopier: (216) 689-4981 Telecopier: (216) 689-4981 - ---------------------------------- ---------------------------------------- ---------------------------------------- Mellon Bank, N.A. Three Mellon Bank Center, Rm 2332 Same as Domestic Lending Office Pittsburgh, PA 15259 Attention: Kathy Capp Telecopier: (412) 234-4644 - ---------------------------------- ---------------------------------------- ---------------------------------------- Michigan National Bank 27777 Inkster Road Same as Domestic Lending Office Dept. 10-64 Farmington Hills, MI 48333-9065 Attention: James Tesen Telecopier: (248) 473-3577 - ---------------------------------- ---------------------------------------- ---------------------------------------- Paribas 787 Seventh Avenue Same as Domestic Lending Office New York, NY 10019 Attention: Tecla Hurley Telecopier: (212) 841-2217 - ---------------------------------- ---------------------------------------- ---------------------------------------- The Sanwa Bank 10 South Wacker Drive Same as Domestic Lending Office Chicago, IL 60606 Attention: Richard Ault Telecopier: (312) 346-6677 - --------------------------------------------------------------------------------------------------------------------

86

- -------------------------------------------------------------------------------------------------------------------- NAME OF INITIAL LENDER DOMESTIC LENDING OFFICE EURODOLLAR LENDING OFFICE - -------------------------------------------------------------------------------------------------------------------- Societe Generale 181 West Madison, Suite 3400 181 West Madison, Suite 3400 Chicago, IL 60602 Chicago, IL 60602 Attention: R. Boyd Harman Attention: Albert Tune Telecopier: (312) 578-5099 Telecopier: (312) 578-5099 - ---------------------------------- ---------------------------------------- ---------------------------------------- Union Bank of California, Energy Capital Services Same as Domestic Lending Office N.A. 445 S. Figueroa Street, 15th Floor Los Angeles, CA 90071 Attention: Patricia Gonzalez Telecopier: (213) 236-4096 - --------------------------------------------------------------------------------------------------------------------

87 Schedule 5.02(a) Existing Liens None. 88 EXHIBIT A-1 - FORM OF REVOLVING CREDIT PROMISSORY NOTE U.S.$ Dated: , 2000 --------------- ---------------- FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a Michigan corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of (the "Lender") for the account of its Applicable Lending Office on the Revolver Termination Date (each as defined in the Credit Agreement referred to below) or, if the Borrower makes a Term Loan Election, on the Maturity Date (each as defined in the Credit Agreement referred to below), the principal sum of U.S.$[amount of the Lender's Commitment in figures] or, if less, the aggregate principal amount of the Revolving Credit Advances made by the Lender to the Borrower pursuant to the Third Amended and Restated Credit Agreement dated as of January 18, 2000 (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined) among the Borrower, the Lender and certain other lenders parties thereto, and Citibank, N.A., as Agent for the Lender and such other lenders outstanding on the Revolver Termination Date or Maturity Date, as applicable. The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Advance from the date of such Revolving Credit Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Citibank, N.A., as Agent, at Two Penns Way, Suite 200, New Castle, Delaware 19720, Account No. 36852248, Attention: Christian Laughton, in same day funds. Each Revolving Credit Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note. This Promissory Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i) provides for the making of Revolving Credit Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Revolving Credit Advance being evidenced by this Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. [NAME OF BORROWER] By ------------------------------ Title: 89 ADVANCES AND PAYMENTS OF PRINCIPAL

=============================================================================================================================== AMOUNT OF AMOUNT OF PRINCIPAL UNPAID NOTATION DATE ADVANCE PAID OR PREPAID PRINCIPAL MADE BY BALANCE - ------------------------------------------------------------------------------------------------------------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- - ----------------- --------------------------- ------------------------------ ---------------------- --------------------------- ===============================================================================================================================

90 EXHIBIT A-2 - FORM OF COMPETITIVE BID PROMISSORY NOTE U.S.$ Dated: , --------------- ------------- ---- FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a Michigan corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of (the "Lender") for the account of its Applicable Lending Office (as defined in the Third Amended and Restated Credit Agreement dated as of January 18, 2000 (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined)) among the Borrower, the Lender and certain other lenders parties thereto, and Citibank, N.A., as Agent for the Lender and such other lenders), on , the principal amount of $U.S. . The Borrower promises to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, at the interest rate and payable on the interest payment date or dates provided below: Interest Rate: % per annum (calculated on the basis of a year of days for the actual number of days elapsed). Both principal and interest are payable in lawful money of the United States of America to for the account of the Lender at the office of , at in same day funds. This Promissory Note is one of the Competitive Bid Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events. The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. This Promissory Note shall be governed by, and construed in accordance with, the laws of the State of New York. [NAME OF BORROWER] By ------------------------------- Title: 91 EXHIBIT B-1 - FORM OF NOTICE OF REVOLVING CREDIT BORROWING Citibank, N.A., as Agent for the Lenders parties to the Credit Agreement referred to below 399 Park Avenue New York, NY 10043 [Date] Attention: ---------------- Ladies and Gentlemen: The undersigned, [NAME OF BORROWER], refers to the Third Amended and Restated Credit Agreement, dated as of January 18, 2000 (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and , as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Revolving Credit Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Revolving Credit Borrowing (the "Proposed Revolving Credit Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed Revolving Credit Borrowing is , . (ii) The Type of Advances comprising the Proposed Revolving Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed Revolving Credit Borrowing is $ . [(iv) The initial Interest Period for each Eurodollar Rate Advance made as part of the Proposed Revolving Credit Borrowing is month[s].] The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Revolving Credit Borrowing: (A) the representations and warranties contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Revolving Credit Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and 92 2 (B) no event has occurred and is continuing, or would result from such Proposed Revolving Credit Borrowing or from the application of the proceeds therefrom, that constitutes a Default. Very truly yours, [NAME OF BORROWER] By --------------------------------- Title: 93 EXHIBIT B-2 - FORM OF NOTICE OF COMPETITIVE BID BORROWING Citibank, N.A., as Agent for the Lenders parties to the Credit Agreement referred to below 399 Park Avenue New York, NY 10043 [Date] Attention: ---------------- Ladies and Gentlemen: The undersigned, [NAME OF BORROWER], refers to the Third Amended and Restated Credit Agreement, dated as of January 18, 2000 (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.03 of the Credit Agreement that the undersigned hereby requests a Competitive Bid Borrowing under the Credit Agreement, and in that connection sets forth the terms on which such Competitive Bid Borrowing (the "Proposed Competitive Bid Borrowing") is requested to be made: (A) Date of Competitive Bid Borrowing ------------------------ (B) Amount of Competitive Bid Borrowing ------------------------ (C) [Maturity Date] [Interest Period] ------------------------ (D) Interest Rate Basis ------------------------ (E) Interest Payment Date(s) ------------------------ (F) ------------------- ------------------------ (G) ------------------- ------------------------ (H) ------------------- ------------------------ The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Competitive Bid Borrowing: (a) the representations and warranties contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Competitive Bid Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (b) no event has occurred and is continuing, or would result from the Proposed Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default; 94 2 (c) no event has occurred and no circumstance exists as a result of which the information concerning the undersigned that has been provided to the Agent and each Lender as of the date hereof by the undersigned in connection with the Credit Agreement would include an untrue statement of a material fact or omit to state any material fact or any fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; and (d) the aggregate amount of the Proposed Competitive Bid Borrowing and all other Borrowings to be made on the same day under the Credit Agreement is within the aggregate amount of the unused Commitments of the Lenders. The undersigned hereby confirms that the Proposed Competitive Bid Borrowing is to be made available to it in accordance with Section 2.03(a)(v) of the Credit Agreement. Very truly yours, [NAME OF BORROWER] By ------------------------------- Title: 95 EXHIBIT C - FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Third Amended and Restated Credit Agreement dated as of January 18, 2000 (as amended or modified from time to time, the "Credit Agreement") among DTE Capital Corporation, a Michigan corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement) and Citibank, N.A., as agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. The "Assignor" and the "Assignee" referred to on Schedule I hereto agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement as of the date hereof (other than in respect of Competitive Bid Advances and Competitive Bid Notes) equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement (other than in respect of Competitive Bid Advances and Competitive Bid Notes). After giving effect to such sale and assignment, the Assignee's Commitment and the amount of the Revolving Credit Advances owing to the Assignee will be as set forth on Schedule 1 hereto. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iv) attaches the Revolving Credit Note held by the Assignor and requests that the Agent exchange such Revolving Credit Note for a new Revolving Credit Note payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto or new Revolving Credit Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto and the Assignor in an amount equal to the Commitment retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1 hereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms 96 2 that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service forms required under Section 2.14 of the Credit Agreement. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1 hereto. 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Revolving Credit Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Revolving Credit Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. 8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. 97 3 Schedule 1 to Assignment and Acceptance Percentage interest assigned: % ----- Assignee's Commitment: $ ---------- Aggregate outstanding principal amount of Revolving Credit Advances assigned: $ ---------- Principal amount of Revolving Credit Note payable to Assignee: $ ---------- Principal amount of Revolving Credit Note payable to Assignor: $ ---------- Effective Date(1): , ----------------- ---- [NAME OF ASSIGNOR], as Assignor By ------------------------------- Title: Dated: , ---------------- ---- [NAME OF ASSIGNEE], as Assignee By ------------------------------- Title: Dated: , ---------------- ---- Domestic Lending Office: [Address] Eurodollar Lending Office: [Address] Accepted [and Approved](2) this - -------------------------------- (1) This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Agent. (2) Required if the Assignee is an Eligible Assignee solely by reason of clause (viii) of the definition of "Eligible Assignee". 98 4 day of , - ---------- --------------- ---- , as Agent - ------------------------- By ---------------------------- Title: [Approved this day of , .] ---------- --------------- ---- [NAME OF BORROWER] By ]** ---------------------------- Title: 99 EXHIBIT D - FORM OF DESIGNATION AGREEMENT Dated , --------------- ---- Reference is made to the Third Amended and Restated Credit Agreement dated as of January 18, 2000 (as amended or modified from time to time, the "Credit Agreement") among DTE Capital Corporation, a Michigan corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement) and Citibank, N.A., as agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. (the "Designor") and (the "Designee") agree as follows: 1. The Designor hereby designates the Designee, and the Designee hereby accepts such designation, to have a right to make Competitive Bid Advances pursuant to Section 2.03 of the Credit Agreement. 2. The Designor makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto and (ii) the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto. 3. The Designee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Designation Agreement; (ii) agrees that it will, independently and without reliance upon the Agent, the Designor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is a Designated Bidder; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; and (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. 4. Following the execution of this Designation Agreement by the Designor and its Designee, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Designation Agreement (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on the signature page hereto. 100 2 5. Upon such acceptance and recording by the Agent, as of the Effective Date, the Designee shall be a party to the Credit Agreement with a right to make Competitive Bid Advances as a Lender pursuant to Section 2.03 of the Credit Agreement and the rights and obligations of a Lender related thereto. 6. This Designation Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 7. This Designation Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Designation Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Designation Agreement. IN WITNESS WHEREOF, the Designor and the Designee have caused this Designation Agreement to be executed by their officers thereunto duly authorized as of the date first above written. Effective Date(3): ---------------, ----- [NAME OF DESIGNOR], as Designor By ----------------------------- Title: [NAME OF DESIGNEE], as Designee By ----------------------------- Title: Applicable Lending Office (and address for notices): [Address] Accepted this day --- of , ----------------- ----- - -------------------------, as Agent By ----------------------- Title: - ------------------- (3) This date should be no earlier than five Business Days after the delivery of this Designation Agreement to the Agent. 101 EXHIBIT E - FORM OF CERTIFICATE BY DTE ENERGY COMPANY DTE ENERGY COMPANY OFFICER'S CERTIFICATE I, , [Insert title of Financial Officer (as defined in the Credit Agreement)] of DTE ENERGY COMPANY, a Michigan corporation (the "Parent"), DO HEREBY CERTIFY, in connection with a Borrowing on this date under the Third Amended and Restated Credit Agreement dated as of January 18, 2000 among DTE Capital Corporation, the Banks parties thereto, Citibank, N.A., as agent for said Banks (the "Credit Agreement", the terms defined therein being used herein as therein defined), that: 1. The Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan. 2. The execution, delivery and performance by the Parent of the Support Agreement, and the consummation of the transactions contemplated hereby and thereby, are within the Parent's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Parent's charter or by-laws or (ii) law or any contractual restriction binding on or affecting the Parent. 3. All governmental and third party consents and approvals necessary in connection with the transactions contemplated by the Support Agreement and the other Loan Documents to which the Parent is a party shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect, and no law or regulation shall be applicable that restrains, prevents or imposes materially adverse conditions upon the Parent with respect to the transactions contemplated by the Loan Documents to which it is a party. 4. The Support Agreement has been, and each of the other Loan Documents to which the Parent is a party when delivered pursuant to the Credit Agreement will have been, duly executed and delivered by the Parent. The Support Agreement is, and each of the other Loan Documents to which it is a party when delivered hereunder will be, the legal, valid and binding obligation of the Parent enforceable against the Parent in accordance with their respective terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally. 5. The Consolidated balance sheet of the Parent and its Subsidiaries as at December 31, 1998, and the related Consolidated statements of income and cash flows of the Parent and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Deloitte & Touche LLP, independent public accountants, and the Consolidated balance sheet of the Parent and its Subsidiaries as at September 30, 1999 and the related Consolidated statements of income and cash flows of the Parent and its Subsidiaries for the nine months then ended, copies of which have been furnished to each Lender, attached hereto as Annex A are hereby duly certified by [Insert title of Financial Officer], 102 as fairly presenting, subject in the case of said balance sheet as at September 30, 1999, and said statements of income and cash flows for the nine months then ended, to year-end audit adjustments, the Consolidated financial condition of the Parent and its Subsidiaries as at such dates and the Consolidated results of the operations of the Parent and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles consistently applied. Since December 31, 1998 there has been no Material Adverse Change with respect to the Parent. IN WITNESS WHEREOF, I have signed this certificate this 18th day of January, 2000. ------------------------------------ [Title:] SIGNATURE PAGE TO CREDIT AGREEMENT 103 EXHIBIT F - FORM OF OPINION OF COUNSEL TO THE LOAN PARTIES [Date] To each of the Lenders parties to the Third Amended and Restated Credit Agreement dated as of January 18, 2000 among DTE Capital Corporation, said Lenders and Citibank, N.A. as Agent, with Salomon Smith Barney Inc. as Arranger DTE Capital Corporation Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 3.01(h)(vii) of the Third Amended and Restated Credit Agreement, dated as of January 18, 2000 (the "CREDIT AGREEMENT"), among DTE Capital Corporation (the "BORROWER"), the Lenders parties thereto and Citibank, N.A., as Agent for said Lenders, with Salomon Smith Barney Inc. as Arranger. Terms defined in the Credit Agreement are used herein as therein defined. I am General Counsel for each Loan Party, and have acted in that capacity in connection with the preparation, execution and delivery of the Loan Documents. In that connection, I, in conjunction with the members of my staff, have examined: (1) Each Loan Document, executed by each of the parties thereto. (2) The other documents furnished by the Borrower pursuant to Article III of the Credit Agreement. (3) The Articles of Incorporation of each Loan Party and all amendments thereto (the "CHARTERS"). (4) The By-Laws of each Loan Party and all amendments thereto (the "BY-LAWS"). (5) Certificates from the State of Michigan attesting to the continued corporate existence and good standing of each Loan Party in that State. 104 2 To each of the Lenders parties to the Third Amended and Restated Credit Agreement dated as of January 18, 2000 among DTE Capital Corporation, said Lenders and Citibank, N.A. as Agent, with Salomon Smith Barney Inc. as Arranger (6) Acknowledgment copies or stamped receipt copies of the UCC-1 financial statement filed by the Agent in connection with the Existing Credit Agreement and any amendments thereto (the "UCC FILINGS") under the Uniform Commercial Code as in effect the State of Michigan (the "UCC"), naming the Borrower as debtor and the Agent as secured party, which UCC Filings have been filed in the filing offices listed in Schedule 1 hereto. I have also examined the originals, or copies certified to my satisfaction, of the documents listed in a certificate of a Financial Officer of each Loan Party, dated the date hereof (the "CERTIFICATES"), certifying that the documents listed in such certificate are all of the indentures, loan or credit agreements, leases, guarantees, mortgages, security agreements, bonds, notes and other agreements or instruments, and all of the orders, writs, judgments, awards, injunctions and decrees, that affect or purport to affect the Borrower's right to borrow money or any Loan Party's obligations under the Loan Documents to which it is party. In addition, I have examined the originals, copies certified to my satisfaction, of such other corporate records of each Loan Party, certificates of public officials and of officers of each Loan Party, and agreements, instruments and other documents, as we have deemed necessary as a basis for the opinions expressed below. As to questions of fact material to such opinions, I have, when relevant facts were not independently established by me, relied upon certificates of public officials. I have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Initial Lenders and the Agent. My opinions expressed below are limited to the law of the State of Michigan and the federal law of the United States. Based upon the foregoing and upon such investigation as I have deemed necessary, I am of the following opinion: SECTION 2. Each Loan Party is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan. SECTION 3. The execution, delivery and performance by each Loan Party of the Loan Documents to which it is party, and the consummation of the transactions contemplated thereby, are within such Loan Party's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Charters or the By-Laws of such Loan Party or (ii) any law, rule or regulation applicable to such Loan Party (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System) or (iii) any contractual or legal restriction contained in any document listed in the Certificates or, to the best of my knowledge (after due inquiry), contained in any other similar document. 105 3 To each of the Lenders parties to the Third Amended and Restated Credit Agreement dated as of January 18, 2000 among DTE Capital Corporation, said Lenders and Citibank, N.A. as Agent, with Salomon Smith Barney Inc. as Arranger SECTION 4. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery, recordation, filing or performance by the Loan Parties of the Loan Documents to which each is a party, and (ii) the grant by the Borrower of the security interest granted by it pursuant to the Assignment Agreement. SECTION 5. Each Loan Document has been duly executed and delivered on behalf of each Loan Party thereto. SECTION 6. Except as may have been disclosed to you in the SEC Reports, to the best of my knowledge (after due inquiry) there are no pending or overtly threatened actions or proceedings affecting any Loan Party or any of their Subsidiaries before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect or (ii) purport to affect the legality, validity, binding effect or enforceability of any Loan Documents or the consummation of the transactions contemplated thereby. SECTION 7. If, despite the provisions of Section 8.09 of the Credit Agreement, Section 17 of the Collateral Assignment Agreement and Section 10 of the Support Agreement wherein the parties thereto agree that the Loan Documents shall be governed by, and construed in accordance with, the laws of the State of New York, a court of the State of Michigan or a federal court sitting in the State of Michigan were to hold that the Loan Documents are governed by, and to be construed in accordance with the laws of the State of Michigan, the Loan Documents would be, under the laws of the State of Michigan, legal, valid and binding obligations of each Loan Party thereto enforceable against such Loan Party in accordance with their respective terms. SECTION 8. The Collateral Assignment Agreement creates a valid first priority security interest in the Assigned Rights, securing the payment of the Obligations. The UCC Filings are in appropriate form and have been filed pursuant to the UCC, resulting in the perfection of such security interest in the Assigned Rights. SECTION 9. Neither the Borrower nor any of its Subsidiaries is an "investment company," or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended; the Parent is an exempt holding company pursuant to the provisions of Rule 2 of the rules and regulations promulgated pursuant to the Public Utility Holding Company Act of 1935, as amended. The opinions set forth above are subject to the following qualifications: 106 4 To each of the Lenders parties to the Third Amended and Restated Credit Agreement dated as of January 18, 2000 among DTE Capital Corporation, said Lenders and Citibank, N.A. as Agent, with Salomon Smith Barney Inc. as Arranger (a) Our opinion in paragraph 6 above as to enforceability is subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar law affecting creditors' rights generally. (b) Our opinion in paragraph 6 above as to enforceability is subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law). (c) We express no opinion as to participation and the effect of the law of any jurisdiction other than the State of Michigan wherein any Lender may be located or wherein enforcement of the Loan Documents may be sought that limits the rates of interest legally chargeable or collectible. Very truly yours, 107 EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT (this "AGREEMENT"), dated as of , , among (i) DTE CAPITAL CORPORATION, a Michigan corporation (in its capacity as assignor hereunder, the "ASSIGNOR"), (ii) DTE ENERGY COMPANY, a Michigan corporation (in its capacity as the assignee hereunder, the "ASSIGNEE"), (iii) CITIBANK, N.A., as agent (the "AGENT") for the Lenders from time to time party to the Credit Agreement referred to below, and (iv) the Lenders listed on the signature pages hereof. PRELIMINARY STATEMENTS: WHEREAS, the Assignor is a party to, and, as of the date hereof, the Borrower under and as defined in, that certain Third Amended and Restated Credit Agreement, dated as of January 18, 2000 (said Agreement, as amended hereby and as it may hereafter be amended or otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein being used herein as therein defined), among the Borrower, the Lenders named therein and Citibank, N.A., as Agent thereunder. WHEREAS, in connection with the Credit Agreement, the Assignor has also executed and delivered Notes to the order of each Lender. [WHEREAS, under the Section 2.18 of the Credit Agreement, the Assignee must execute a Guaranty or an Assignment and Assumption Agreement if it incurs any Debt not outstanding on the Effective Date.] [WHEREAS, the Assignee desires to incur Debt not outstanding on the Effective Date and has chosen to enter into this Assignment and Assumption Agreement.] [WHEREAS, under Section 5.02(b) of the Credit Agreement, the Parent must execute the Guaranty or the Assignment and Assumption Agreement if the Borrower merges or consolidates with or into any Person besides the Parent;] WHEREAS, the Assignee desires to accept all of the Assignor's right, title and interest in and to, and assume all of the Assignor's obligations, covenants, agreements and liabilities under, the Credit Agreement and the Notes. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, effective on and as of the Transfer Date, the Assignor and the Assignee hereby agree with and for the benefit of the Agent and the Lenders, and the Agent on its own behalf and on behalf of the Lenders agrees with and for the benefit of the Assignor and Assignee, as follows: SECTION 1. ASSIGNMENT AND ASSUMPTION. (a) Effective on and as of , (such date and time being the "TRANSFER DATE"), the Assignor hereby sells, assigns and transfers to the Assignee, and the Assignee hereby accepts from the Assignor, all of the Assignor's right, title and interest in and to the Credit 108 Agreement and the Notes. (b) Effective on and as of the Transfer Date, subject to the terms and provisions hereof, the Assignee hereby unconditionally and irrevocably assumes all obligations, covenants and agreements to be performed by the Assignor under, and all liabilities of the Assignor arising under, out of or in connection with, the Credit Agreement and the Notes, and in furtherance of said assumption, the Assignee agrees that on and after the Transfer Date, it shall be bound in all respects by all of the grants, terms, covenants, representations, warranties and conditions of the Credit Agreement and the Notes, as if the Assignee were the original Borrower under and as defined in the Credit Agreement and the Notes, without further action required on the part of any party hereto or thereto. In addition, on and after the Transfer Date, subject to the terms and provisions hereof, the Assignee assumes, agrees to observe and perform, and promises to pay all obligations, duties and liabilities of the Assignor, now or hereafter existing, arising out of, under or in connection with, the Credit Agreement and the Notes (including, without limitation, the punctual payment when due of the principal, interest and fees owing thereunder from time to time), in each case as though the Assignee were the original Borrower under and as defined therein. Further, subject to the terms and provisions hereof, the Assignor hereby confirms and agrees that each of the Credit Agreement and the Notes is, and the Assignee hereby confirms and agrees that each of the Credit Agreement and the Notes shall on and after the Transfer Date continue to be, in full force and effect in accordance with its terms, and the Assignee hereby ratifies and confirms in all respects, effective on and as of the Transfer Date, each of the Credit Agreement and the Notes. SECTION 2. REPRESENTATIONS AND WARRANTIES. The Assignor and the Assignee each represents and warrants that it has received copies of and has reviewed the Loan Documents. Effective on and as of the Transfer Date, the Assignee makes each of the representations and warranties of the Borrower set forth in the Credit Agreement all as if Assignee were the original Borrower under and as defined therein and had originally executed and delivered the Credit Agreement and the Notes, and confirms that each such representation and warranty is true and correct on and as of the Transfer Date, and that no Default has occurred and is continuing on and as of the Transfer Date. SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ASSIGNEE. The Assignee represents and warrants, as of the date hereof, as follows: (a) The Assignee is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of it incorporation. (b) The execution, delivery and performance by the Assignee of this Agreement are within the Assignee's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Assignee's charter or by-laws or (ii) any applicable law or any contractual restriction binding on or affecting the Assignee. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Assignee of this Agreement. 109 (d) This Agreement has been duly executed and delivered by the Assignee and is a legal, valid and binding obligation of the Assignee enforceable against the Assignee in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally. SECTION 4. REFERENCE TO AND EFFECT ON THE ASSIGNED AGREEMENTS. The Assignee further confirms and agrees that, effective on and as of the Transfer Date, each reference in each of the Credit Agreement and the Notes to the "Borrower" or any like term shall be deemed to refer to the Assignee to the extent the context permits. SECTION 5. EFFECT OF THE AGREEMENT. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, the Assignor shall remain fully liable to the Agent and the Lenders for any breach of the representations and warranties made by it in the Loan Documents on the date thereof or upon the date of each Borrowing. SECTION 6. COSTS AND EXPENSES. The Assignee agrees to pay on demand all reasonable costs and expenses in connection with the preparation, execution, delivery, modification and amendment of this Agreement, and all costs and expenses, if any (including, without limitation, counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement. The Assignee also agrees to indemnify the Agent and each Lender from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent or any Lender (as the case may be) in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent or any Lender hereunder, except for such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Person seeking such indemnity. SECTION 7. GOVERNING LAW, ETC. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to any conflicts of law principles, and shall be binding upon the Assignee, the Assignor and their respective successors and assigns; provided, that the parties hereto shall have no right to assign any rights, obligations or liabilities hereunder except in accordance with the terms of the Loan Documents. SECTION 8. WAIVER OF JURY TRIAL. Each of the Assignor and the Assignee irrevocably waives hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of the Assignor and the Assignee, as the case may be, in the negotiation, administration, performance or enforcement thereof. SECTION 9. JURISDICTION, ETC. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably 110 and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. SECTION 10. THIRD PARTY BENEFICIARIES. This Agreement is for the sole benefit of the Assignor, the Assignee, the Agent, the Lenders and their permitted successors and assigns and nothing herein, express or implied, is intended to or shall confer on any other Person any legal or equitable benefit or remedy under or by reason of this Agreement. SECTION 11. NOTICES. All notices and other communications provided for hereunder shall be in writing (including telecopy transmission) and (except when particular means are specified) mailed, faxed or delivered, if to the Assignor or the Assignee, at its address at 200 Second Avenue, Detroit, MI 48226, Attention: Christopher C. Arvani, telecopy: 313-235-0170; and if to the Agent, at its address at , Attention: , telecopy: , with a copy to , , telecopy: ; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed or telecopied, be effective when deposited in the mails or transmitted, respectively. [Signatures on next page] 111 IN WITNESS WHEREOF, the Assignor and the Assignee have each caused this Agreement to be duly executed and delivered by an officer thereunto duly authorized as of the date first above written. DTE CAPITAL CORPORATION By ---------------------------------- Name: Title: DTE ENERGY COMPANY By ---------------------------------- Name: Title: ACCEPTED BY: CITIBANK, N.A., as Agent By ---------------------------------- Name: Title: 112 EXHIBIT H GUARANTY GUARANTY, dated as of , 2000 (this "GUARANTY"), of DTE ENERGY COMPANY, a Michigan corporation (the "PARENT"), in favor of the Agent and the Lenders under the Credit Agreement referred to herein. W I T N E S S E T H: WHEREAS, the Parent is the direct owner of 100% of the outstanding common stock of DTE Capital Corporation, a Michigan corporation (the "BORROWER"); WHEREAS, the Borrower may make borrowings from the Lenders pursuant to that certain Third Amended and Restated Credit Agreement, dated as of January 18, 2000 (said Agreement, as it may hereafter be amended or otherwise modified from time to time, being the "CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein being used herein as therein defined), among the Borrower, the Lenders named therein and Citibank, N.A., as Agent thereunder; [WHEREAS, under Section 2.18 of the Credit Agreement, the Parent must execute the Guaranty or the Assignment and Assumption Agreement if it incurs any Debt not outstanding on the Effective Date;] [WHEREAS, the Parent desires both to incur Debt not outstanding on the Effective Date and to enable the Borrower to incur and maintain Debt under the Credit Agreement on more advantageous and reasonable terms;] [WHEREAS, under Section 5.02(b) of the Credit Agreement, the Parent must execute the Guaranty or the Assignment and Assumption Agreement if the Borrower merges or consolidates with or into any Person besides the Parent;] [WHEREAS, the Borrower desires to merge or consolidate with or into a Person besides the Parent, and Parent desires to enable the Borrower to incur and maintain Debt under the Credit Agreement on more advantageous and reasonable terms;] NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows for the benefit of the Agent and the Lenders: SECTION 1. GUARANTY. The Parent hereby unconditionally guarantees the punctual payment when due, without set off or counterclaim, whether at stated maturity, by acceleration or otherwise, of all obligations (whether payable at scheduled maturity, upon acceleration, as a mandatory prepayment or otherwise) of the Borrower now or hereafter existing under the Credit Agreement 113 2 and the Notes, whether for principal, interest, fees, expenses or otherwise (such obligations being the "OBLIGATIONS"), and agrees to pay any and all expenses (including counsel fees and expenses) incurred by the Agent and any Lender in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, the Parent's liability shall extend to all amounts that constitute part of the Obligations and would be owed by the Borrower to the Agent and the Lenders under the Credit Agreement and the other documents entered into in connection therewith and (collectively, the "LOAN DOCUMENTS") but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Borrower. SECTION 2. GUARANTY ABSOLUTE. The Parent guarantees that the Obligations will be paid strictly in accordance with the terms of the Credit Agreement and the other Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or the Lenders, as the case may be, with respect thereto. The obligations of the Parent under this Guaranty are independent of the Obligations, and a separate action or actions may be brought and prosecuted against the Parent to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or whether the Borrower is joined in any such action or actions. The liability of the Parent under this Guaranty shall, to the fullest extent permitted by law, be absolute and unconditional irrespective of, and the Parent waives any defense based upon: (i) any lack of validity or enforceability against the Borrower of the Credit Agreement, the other Loan Documents or any other agreement or instrument relating thereto; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from the Credit Agreement or the other Loan Documents, including, without limitation, any increase in the Obligations resulting from the extension of additional credit to the Borrower or any of its subsidiaries or otherwise; (iii) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Obligations; (iv) any manner of application of collateral, or proceeds thereof, to all or any of the Obligations, or any manner of sale or other disposition of any collateral for all or any of the Obligations or any other assets of the Borrower or any of its subsidiaries; (v) any change, restructuring or termination of the corporate structure or existence of the Borrower or any of its subsidiaries; or (vi) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor. 114 3 This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the Agent or any Lender upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made. SECTION 3. WAIVER. The Parent hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Guaranty and any requirement that the Agent or any Lender protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral. SECTION 4. SUBROGATION. The Parent will not exercise any rights which it may acquire by way of subrogation under this Guaranty, by any payment made hereunder or otherwise, until all the Obligations and all other amounts payable under this Guaranty shall have been paid in full and the Commitments shall have expired or terminated. If any amount shall be paid to the Parent on account of such subrogation rights at any time prior to the later of (x) the payment in full of the Obligations and all other amounts payable under this Guaranty and (y) the expiration or termination of the Commitments, such amount shall be held in trust for the benefit of the Agent and the Lenders and shall forthwith be paid to the Agent to be credited and applied upon the Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement and the other Loan Documents or to be held by the Agent as collateral security for any Obligations thereafter existing. If (i) the Parent shall make payment to the Agent and the Lenders of all or any part of the Obligations, (ii) all the Obligations and all other amounts payable under this Guaranty shall be paid in full and (iii) the Commitments shall have expired or terminated, the Agent and the Lenders (as appropriate) will, at the Parent's request, execute and deliver to the Parent appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Parent of an interest in the Obligations resulting from such payment by the Parent. SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PARENT. The Parent represents and warrants, as of the date hereof, as follows: (a) The Parent is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. (b) The execution, delivery and performance by the Parent of this Guaranty are within the Parent's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Parent's charter or by-laws or (ii) law or any contractual restriction binding on or affecting the Parent. (c) No authorization or approval or other action by, and no notice to or filing 115 4 with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Parent of this Guaranty. (d) This Guaranty has been duly executed and delivered by the Parent and is a legal, valid and binding obligation of the Parent enforceable against the Parent in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally. (e) The 1998 Audited Statements and the 1999 Interim Statements, copies of each of which have been furnished to each Lender, fairly present, subject in the case of the 1999 Interim Statements, to year-end audit adjustments, the Consolidated financial condition of the relevant Person, as at such dates all in accordance with generally accepted accounting principles consistently applied. Since December 31, 1998, there has been no Material Adverse Change, except as shall have been disclosed in the SEC Reports. (f) The Parent owns beneficially and of record, free and clear of all Liens, 100% of the common stock of the Borrower. (g) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan. (h) Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan, copies of which have been filed with the Internal Revenue Service, is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no material adverse change in such funding status. (i) Neither the Parent nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan. (j) Neither the Parent nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV or ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA. (k) Except as set forth in the financial statements referred to in this Section 5, the Parent and its Subsidiaries have no material liability with respect to "expected post retirement benefit obligations" within the meaning of Statement of Financial Accounting Standards No. 106. (l) There is no pending or threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Parent or any of its Subsidiaries before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of this Guaranty, the Credit Agreement, any Note or any other Loan Document or the consummation of the transactions 116 5 contemplated hereby or thereby and there has been no material adverse change in the status of any Disclosed Litigation, or its financial effect on any Loan Party or any of its Subsidiaries from that described in the SEC Reports. (m) The operations and properties of the Parent and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without ongoing obligations or costs except as disclosed in the SEC Reports, and no circumstances exist that could be reasonably likely to (i) form the basis of an Environmental Action against the Borrower or any of its Subsidiaries or any of their properties that could have a Material Adverse Effect or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law that could have a Material Adverse Effect. (n) Neither the Parent nor any of its Subsidiaries is, or after the making of any Advance or the application of the proceeds or repayment thereof, or the consummation of any of the other transactions contemplated hereby, will be, an "investment company", or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company" (within the meaning of the Investment Company Act of 1940, as amended). SECTION 6. AFFIRMATIVE COVENANTS OF THE PARENT. So long as any amount in respect of any Note shall remain unpaid or any Lender shall have any Commitment, the Parent will or will cause the Borrower to, unless the Required Lenders shall otherwise consent in writing: (a) CREDIT AGREEMENT. Cause the Borrower to perform and observe for the benefit of the Agent and the Lenders each and every covenant and agreement of the Borrower set forth in Article V of the Credit Agreement, including but not limited to delivering to the Agent and the Lenders all financial statements and financial and other information required to be delivered pursuant to Section 5.01 of the Credit Agreement. (b) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and Environmental Laws. (c) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors. (d) PERFORMANCE AND COMPLIANCE WITH OTHER AGREEMENTS. Perform and comply 117 6 with, and with respect to the Borrower, cause the performance by and compliance with, each of the material provisions of each material indenture, credit agreement, contract or other agreement by which such Loan Party is bound, non-performance or non-compliance with which would have a material adverse effect upon such Loan Party's business or credit or, in the case of the Parent, materially and adversely affect its ability to perform its obligations hereunder except material contracts or other agreements being contested in good faith. (e) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Borrower may consummate any merger or consolidation permitted under Section 5.02(b) of the Credit Agreement and the Parent may consummate any merger or consolidation permitted under Section 7(c) of this Guaranty and provided further that a Subsidiary shall not be required to preserve its corporate existence or any right or franchise if the failure to preserve such corporate existence, right or franchise will not cause or result in a Material Adverse Change. (f) MAINTENANCE OF INSURANCE. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties (including, without limitation, the operation and ownership of nuclear generating facilities) in the same general areas in which the Borrower or such Subsidiary operates. (g) INSPECTION RIGHTS. At any reasonable time and from time to time, permit the Agent or any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Parent and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Parent and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (h) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Parent and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (i) OWNERSHIP OF SUBSIDIARIES. Maintain at all times beneficial ownership, free and clear of all Liens, of 100% of the Voting Stock of the Borrower and DECO. (j) FINANCIAL COVENANTS. (i) Maintain a ratio of Consolidated EBITDA to cash interest payable on all Debt (excluding, (A) such Nonrecourse Debt of their own and of their Subsidiaries and Affiliates as would be listed as such in the financial statements of the Parent of the kind delivered pursuant to Section 5.01(h)(ii) and (iii) and (B) the Junior Subordinated Debentures) of not less than 2:1 for each period of four consecutive fiscal quarters ending on the last day of September, December, March and June of each year, or 118 7 (ii) Maintain a ratio of Consolidated Debt (excluding, (A) such Nonrecourse Debt of their own and of their Subsidiaries as would be listed in the financial statements of the Parent and (B) the Junior Subordinated Debentures) to Capitalization of not greater than .65:1 (k) MAINTENANCE OF PROPERTIES, ETC. Subject to clause (e) above, maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted. (l) REPORTING REQUIREMENTS. Furnish, or cause the Borrower to furnish, to the Lenders: (i) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Parent, Consolidated balance sheet of the Parent and its Consolidated Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Parent and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter; (ii) as soon as available and in any event within 90 days after the end of each fiscal year of the Parent, a copy of the annual report to Shareholders for such year for the Parent and its Consolidated Subsidiaries, containing the Consolidated balance sheet of the Parent and its Consolidated Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Parent and its Subsidiaries for such fiscal year, in each case accompanied by (A) an opinion by Deloitte & Touche LLP or other independent public accountants acceptable to the Required Lenders and (B) the report by the Parent filed with the Securities and Exchange Commission on Form U-3A-2 for such fiscal year, containing the Consolidating balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and Consolidating statements of income and Consolidating statements of retained earnings of the Borrower and its Subsidiaries for such fiscal year, in each case, having been prepared in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01 of the Credit Agreement; (iii) as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Borrower, unaudited Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such quarter and unaudited Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, in each case duly certified (subject to year-end audit adjustments) by a Financial Officer of the Borrower as having been prepared in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01 of the Credit Agreement; (iv) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, the Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an 119 8 opinion by Deloitte & Touche LLP or other independent public accountants acceptable to the Required Lenders; (v) as soon as possible and in any event within five days after the occurrence of each Default continuing on the date of such statement, a statement of a Financial Officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto; (vi) promptly after the sending or filing thereof copies of all reports and registration statements that the Borrower or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange; (vii) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Borrower or any of its Subsidiaries of the type described in Section 4.01(f); (viii) promptly upon becoming aware of any fact or circumstance affecting the Parent or any of its Subsidiaries that would at any time render the Borrower unable to make the representation and warranty contained in Section 4.01(q) on such date, a statement of a duly authorized officer of the Borrower setting forth the details of such fact or circumstance and what action the Parent or such Subsidiary, as the case may be, has taken and proposes to take with respect thereto; and (ix) such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. SECTION 7. NEGATIVE COVENANTS OF THE PARENT. So long as any amount in respect of any Note shall remain unpaid, any Lender shall have any Commitment, the Parent will not and will not cause the Borrower to, unless the Required Lenders shall otherwise consent in writing: (a) LIENS, ETC. Create or suffer to exist, or permit any Significant Subsidiary to create or suffer to exist, any Lien on or with respect to any shares of any class of equity securities (including, without limitation, Voting Stock) of any Significant Subsidiary, whether such shares are now owned or hereafter acquired. (b) DEBT. Create, incur, assume or suffer to exist any Debt except Debt that is expressly or effectively pari passu with or expressly subordinated to the Debt of the Parent hereunder. (c) MERGERS, ETC. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or permit any Significant Subsidiary to do so, except that (i) any Significant Subsidiary may merge or consolidate with or into any other Significant Subsidiary, (ii) any Significant Subsidiary may 120 9 merge into or dispose of assets to the Parent, and (iii) the Parent may merge or consolidate with or into any other Person if the surviving entity has senior unsecured Debt outstanding rated at least BBB- by S&P and Baa3 by Moody's; provided, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. (d) CHANGE IN NATURE OF BUSINESS. Make, or permit any Significant Subsidiary to make, any material change in the nature of its business as carried on January 18, 2000 other than as disclosed in the SEC Reports. (e) ACCOUNTING CHANGES. Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles. SECTION 8. WAIVERS. (a) The Parent hereby waives any failure or delay on the part of the Borrower in asserting or enforcing any of its rights or in making any claims or demands hereunder. The Borrower, the Agent or any Lender may at any time, without the Parent's consent, without notice to the Parent and without affecting or impairing the Borrower's, the Agent's or such Lender's rights or the Parent's obligations hereunder, do any of the following with respect to any Loan Document to which it is a party: (i) make changes, modifications, amendments or alterations thereto, by operation of law or otherwise, including, without limitation (in the case of the Credit Agreement and the Notes), any increase in the Commitments or the rate of interest payable with respect to Advances or any change in the method of calculating the rate of interest payable with respect thereto, (ii) grant renewals and extensions of time, for payment or otherwise, (iii) accept new or additional documents, instruments or agreements relating to or in substitution thereof, or (iv) otherwise handle the enforcement of their respective rights and remedies in accordance with their business judgment. (b) If the Parent shall at any time or from time to time fail to perform or comply with any of its obligations contained herein and if for any reason the Agent or any Lender shall have failed to receive when due and payable (whether at stated maturity, by acceleration, or otherwise) the payment of all or any part of principal of, or interest on, or any other amount payable by the Borrower in respect of any Obligations owing to the Agent or such Lender (as the case may be), then in each case, to the fullest extent permitted by law, (i) it shall be assumed conclusively without necessity of proof that such failure by the Parent was the sole and direct cause of the Agent's or such Lender's (as the case may be) failure to receive such payment when due irrespective of any other contributing or intervening cause whatsoever, and (ii) the Parent further irrevocably waives any right or defense that the Parent may have to cause the Agent or any Lender (as the case may be) to prove the cause or amount of any damages or to mitigate the same. (c) The Parent irrevocably waives, to the fullest extent permitted by law and for the benefit of, and as a separate undertaking with, the Agent and each Lender, any defense to the performance of this Guaranty that may be available to the Parent as a consequence of this Guaranty's being rejected or otherwise not assumed by the Borrower or any trustee or similar 121 10 official for the Borrower or for any substantial part of the property of the Borrower, or as a consequence of this Guaranty's being otherwise terminated or modified, in any bankruptcy or insolvency proceeding, whether such rejection, non-assumption, termination or modification shall have been by reason of this Guaranty's being held to be an executory contract or by reason of any other circumstance. If, notwithstanding the foregoing, this Guaranty shall be rejected or otherwise not assumed, or terminated or modified, the Parent agrees, to the fullest extent permitted by law, for the benefit of, and as a separate undertaking with, the Agent and each Lender, that the Parent will be unconditionally liable to pay to the Agent and each Lender (as the case may be) an amount equal to each payment that would otherwise be payable by the Parent under or in connection with this Guaranty if this Guaranty were not so rejected or otherwise not assumed or terminated or modified. SECTION 9. AMENDMENTS, ETC. No amendment or waiver of any provision of this Guaranty, nor consent to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the Parent and consented to by the Required Lenders. SECTION 10. NOTICES. All notices and other communications provided for hereunder shall be in writing (including telecopy transmission) and (except when particular means are specified) mailed, faxed or delivered, if to the Parent or the Borrower, at its address at 200 Second Avenue, Detroit, MI 48226, Attention: Christopher C. Arvani, telecopy: 313-235-0170; if to any Lender, at its Domestic Lending Office specified opposite its name on Schedule I to the Credit Agreement; if to any Lender not a Lender on the date hereof, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, at its address at , Attention: , telecopy: , with a copy to , telecopy: ; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall, when mailed or telecopied, be effective when deposited in the mails or transmitted, respectively. SECTION 11. COSTS, EXPENSES AND TAXES. (a) The Parent agrees to pay on demand all reasonable costs and reasonable expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Guaranty and the other documents to be delivered hereunder and thereunder, including, without limitation, the reasonable fees and reasonable expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under the Guaranty. The Parent further agrees to pay on demand all costs and expenses of the Agent and the Lenders, if any (including, without limitation, internal and external counsel fees and expenses, provided such fees and expenses are not duplicative), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Guaranty and the other documents to be delivered hereunder, including, without 122 11 limitation, fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 11(a). (b) The Parent agrees to indemnify, to the extent legally permissible, and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "INDEMNIFIED PARTY") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of, or in connection with the preparation for a defense of, any investigation, litigation or proceeding arising out of, related to or in connection with the Guaranty or any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. The Parent also agrees not to assert any claim against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Guaranty any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances. (c) Any and all payments made by the Parent hereunder shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of the Agent and each Lender, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction under the laws of which the Agent or such Lender (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction of such Lender's Applicable Lending Office or political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payment hereunder being hereinafter referred to as "TAXES"). If the Parent shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under the Notes to the Agent or any Lender, (A) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this subsection (b)) the Agent or such Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (B) the Parent shall make such deductions and (C) the Parent shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (d) In addition, the Parent agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, performing under or otherwise with respect to, this Guaranty (hereinafter referred to as "OTHER TAXES"). (e) The Parent shall indemnify each Lender and the Agent for the full amount of Taxes or Other Taxes (including, without limitation, any taxes imposed by any jurisdiction on 123 12 amounts payable under this Section 11) imposed on or paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Beneficiary makes written demand therefor. (f) Within 30 days after the date of any payment of Taxes, the Parent will furnish to the Agent, at its address referred to in Section 10 hereof, the original or a certified copy of a receipt evidencing payment thereof. In the case of any payment hereunder by or on behalf of the Parent through an account or branch outside the United States or by or on behalf of the Parent by a payor that is not a United States person, if the Parent determines that no Taxes are payable in respect thereof, the Parent shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of this subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (g) Without prejudice to the survival of any other agreement of the Parent hereunder, the agreements and obligations of the Parent contained in this Section 11 shall survive the payment in full of the Obligations. SECTION 12. CONTINUING GUARANTY; ASSIGNMENT UNDER CREDIT AGREEMENT. This Guaranty is a continuing guaranty and shall (i) remain in full force and effect, until the later of (x) the payment in full of the Obligations and all other amounts payable under this Guaranty and (y) the expiration or termination of the Commitments, (ii) be binding upon the Parent, its successors and assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent and the Lenders and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii), any Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement in accordance with Section 8.07 of the Credit Agreement and the transferee shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject, however, to the provisions of Article VII (concerning the Agent) of the Credit Agreement. SECTION 13 GOVERNING LAW. This Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 14. REMEDIES. The remedies herein provided shall be cumulative and non-exclusive and shall be in addition to any other rights and remedies the Agent or the Lenders may have under this Guaranty. SECTION 15. WAIVER OF JURY TRIAL. The Parent irrevocably waives hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of 124 13 or relating to this Guaranty the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement thereof. SECTION 16. JURISDICTION, ETC. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Guaranty in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. [Signatures on next page] 125 14 IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly executed as of the day and year first above written. DTE ENERGY COMPANY By ----------------------------------------- Name: Title: ACKNOWLEDGED AND ACCEPTED: CITIBANK, N.A., as Agent By -------------------------------- Name: Title: 126 SCHEDULE I OUTSTANDING DEBT DOCUMENTS -----END PRIVACY-ENHANCED MESSAGE-----

EX-2.1

   1

                                                                     EXHIBIT 2-1

                          AGREEMENT AND PLAN OF MERGER
                                     AMONG
                               DTE ENERGY COMPANY
                             MCN ENERGY GROUP INC.
                                      AND
                             DTE ENTERPRISES, INC.

                          DATED AS OF OCTOBER 4, 1999

                       AS AMENDED AS OF NOVEMBER 12, 1999
   2

                               TABLE OF CONTENTS



                                                                         PAGE
                                                                         ----
                                                                   
RECITALS.............................................................      1
ARTICLE I
  The Merger; Closing; Effective Time................................      1
  1.1.   The Merger..................................................      1
  1.2.   Closing.....................................................      1
  1.3.   Effective Time..............................................      1
ARTICLE II
  Articles of Incorporation and By-Laws of the Surviving
     Corporation.....................................................      1
  2.1.   The Articles of Incorporation...............................      1
  2.2.   The By-Laws.................................................      2
ARTICLE III
  Officers and Directors of the Surviving Corporation................      2
  3.1.   Directors...................................................      2
  3.2.   Officers....................................................      2
ARTICLE IV
  Effect of the Merger on Capital Stock; Election Procedures.........      2
  4.1.   Effect on Capital Stock.....................................      2
         (a) Merger Consideration....................................      2
         (b) Cancellation of Shares..................................      2
         (c) Merger Sub..............................................      2
  4.2.   Allocation of Merger Consideration; Election Procedures;
         Exchange Procedures.........................................      3
         (a) Allocation..............................................      3
         (b) Election Procedures.....................................      3
         (c) Exchange and Payment Procedures.........................      5
         (d) Distributions with Respect to Unexchanged Shares;
             Voting..................................................      5
         (e) Transfers...............................................      5
         (f) Fractional Shares.......................................      5
         (g) Termination of Exchange Fund............................      6
         (h) Lost, Stolen or Destroyed Certificates..................      6
         (i) Affiliates..............................................      6
  4.3.   Dissenters' Rights..........................................      6
  4.4.   Adjustments to Prevent Dilution.............................      6
  4.5.   Tax Opinion Adjustment......................................      7
  4.6.   Uncertificated Shares of Parent Common Stock................      7
ARTICLE V
  Representations and Warranties.....................................      7
  5.1.   Representations and Warranties of the Company, Parent and
         Merger Sub..................................................      7
         (a) Organization, Good Standing and Qualification...........      7
         (b) Capital Structure.......................................      8
         (c) Corporate Authority; Approval and Fairness..............      9
         (d) Governmental Filings; No Violations.....................     10
         (e) Reports; Financial Statements...........................     11
         (f) Absence of Certain Changes..............................     11
         (g) Litigation and Liabilities..............................     11
         (h) Employee Benefits.......................................     12
         (i) Compliance with Laws; Permits...........................     13
         (j) Takeover Statutes.......................................     13


                                       A-i
   3



                                                                         PAGE
                                                                         ----
                                                                   
         (k) Environmental Matters...................................     13
         (l) Taxes...................................................     14
         (m) Labor Matters...........................................     15
         (n) Intellectual Property...................................     15
         (o) Insurance...............................................     15
         (p) Rights Plan.............................................     15
         (q) Brokers and Finders.....................................     16
         (r) Year 2000...............................................     16
         (s) Regulatory Proceedings..................................     16
         (t) FERC Jurisdiction.......................................     16
         (u) Regulation as a Utility.................................     16
         (v) Ownership of Shares.....................................     16
ARTICLE VI
  Covenants..........................................................     17
  6.1.   Interim Operations..........................................     17
  6.2.   Acquisition Proposals.......................................     19
  6.3.   Information Supplied........................................     21
  6.4.   Shareholders Meetings.......................................     21
  6.5.   Filings; Other Actions; Notification........................     21
  6.6.   Access......................................................     22
  6.7.   Affiliates..................................................     23
  6.8.   Stock Exchange Listing and De-listing.......................     23
  6.9.   Publicity...................................................     23
  6.10.  Benefits....................................................     23
         (a) Stock Options...........................................     23
         (b) Employee Benefits.......................................     24
         (c) Election to Parent's Board of Directors; Management
             Executive Committee.....................................     25
         (d) Employees...............................................     25
  6.11.  Expenses....................................................     25
  6.12.  Indemnification; Directors' and Officers' Insurance.........     25
  6.13.  Takeover Statutes...........................................     26
  6.14.  Dividends...................................................     26
  6.15.  Rate Matters................................................     26
  6.16.  Taxation....................................................     26
  6.17.  Transition Matters..........................................     26
  6.18.  Community Involvement.......................................     27
  6.19.  1935 Act and Power Act......................................     27
  6.20.  Feline Prides...............................................     27
ARTICLE VII
  Conditions.........................................................     28
  7.1.   Conditions to Each Party's Obligation to Effect the
         Merger......................................................     28
         (a) Shareholder Approval....................................     28
         (b) NYSE Listing............................................     28
         (c) Regulatory Consents.....................................     28
         (d) Litigation..............................................     28
         (e) S-4.....................................................     28
         (f) Blue Sky Approvals......................................     28
         (g) Certain Transactions....................................     28
  7.2.   Conditions to Obligations of Parent and Merger Sub..........     28
         (a) Representations and Warranties..........................     28


                                      A-ii
   4



                                                                         PAGE
                                                                         ----
                                                                   
         (b) Performance of Obligations of the Company...............     29
         (c) Consents Under Agreements...............................     29
         (d) Accountants Letter......................................     29
         (e) Affiliates Letters......................................     29
         (f) Material Adverse Effect.................................     29
         (g) Tax Opinion.............................................     29
         (h) Governmental Consents...................................     29
  7.3.   Conditions to Obligation of the Company.....................     29
         (a) Representations and Warranties..........................     29
         (b) Performance of Obligations of Parent and Merger Sub.....     30
         (c) Consents Under Agreements...............................     30
         (d) Accountants Letter......................................     30
         (e) Material Adverse Effect.................................     30
         (f) Tax Opinion.............................................     30
ARTICLE VIII
  Termination........................................................     30
  8.1.   Termination by Mutual Consent...............................     30
  8.2.   Termination by Either Parent or the Company.................     30
  8.3.   Termination by the Company..................................     31
  8.4.   Termination by Parent.......................................     31
  8.5.   Effect of Termination and Abandonment.......................     32
ARTICLE IX
  Miscellaneous and General..........................................     33
  9.1.   Survival....................................................     33
  9.2.   Modification or Amendment...................................     33
  9.3.   Waiver of Conditions........................................     33
  9.4.   Counterparts................................................     33
  9.5.   GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL...............     33
  9.6.   Notices.....................................................     34
  9.7.   Entire Agreement............................................     34
  9.8.   No Third Party Beneficiaries................................     34
  9.9.   Obligations of Parent and of the Company....................     35
  9.10.  Severability................................................     35
  9.11.  Interpretation..............................................     35
  9.12.  Assignment..................................................     35


                                      A-iii
   5

                          AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of October 4, 1999 and as amended as of November 12, 1999, among DTE Energy
Company, a Michigan corporation ("Parent"), MCN Energy Group Inc., a Michigan
corporation (the "Company"), and DTE Enterprises, Inc., a Michigan corporation
and wholly owned subsidiary of Parent ("Merger Sub," the Company and Merger Sub
sometimes being hereinafter collectively referred to as the "Constituent
Corporations").

                                    RECITALS

     WHEREAS, the respective boards of directors of each of Parent, Merger Sub
and the Company have approved the merger of the Company with and into Merger Sub
(the "Merger") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement;

     WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");

     WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.

     NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:

                                   ARTICLE I

                      THE MERGER; CLOSING; EFFECTIVE TIME

     1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, at the Effective Time (as defined in Section 1.3) the Company
shall be merged with and into Merger Sub and the separate corporate existence of
the Company shall thereupon cease. Merger Sub shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of Merger Sub with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Article III. The Merger shall have the
effects specified in the Michigan Business Corporation Act, as amended (the
"MBCA").

     1.2. Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York
at 9:00 A.M. on the fifth business day after the last to be fulfilled or waived
of the conditions set forth in Article VII (other than those conditions that by
their nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions) shall be satisfied or waived in accordance with
this Agreement or (ii) at such other place and time and/or on such other date as
the Company and Parent may agree in writing (the "Closing Date").

     1.3. Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger (the "Michigan Certificate
of Merger") to be executed and filed with the Department of Commerce of the
State of Michigan as provided in Section 450.1707 of the MBCA. The Merger shall
become effective at the time when the Michigan Certificate of Merger has been
duly endorsed by the Department of Commerce of the State of Michigan (the
"Effective Time").

                                   ARTICLE II

                     ARTICLES OF INCORPORATION AND BY-LAWS
                          OF THE SURVIVING CORPORATION

     2.1. The Articles of Incorporation. The articles of incorporation of the
Surviving Corporation shall be the articles of incorporation of Merger Sub as in
effect immediately prior to the Effective Time (the "Articles"), until duly
amended as provided therein or by applicable law.

                                       A-1
   6

     2.2. The By-Laws. The by-laws of Merger Sub in effect at the Effective Time
shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.

                                  ARTICLE III

                             OFFICERS AND DIRECTORS
                          OF THE SURVIVING CORPORATION

     3.1. Directors. The directors of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Articles and the By-Laws.

     3.2. Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Articles and the By-Laws.

                                   ARTICLE IV

                     EFFECT OF THE MERGER ON CAPITAL STOCK;
                              ELECTION PROCEDURES

     4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:

     (a) Merger Consideration. Subject to the allocation and election procedures
in Section 4.2 and subject to Section 4.5, each share of the common stock, par
value $0.01 per share, of the Company (the "Common Stock"), including the
associated right to purchase Series A Junior Participating Preferred Stock (each
a "Right" and together with the Common Stock, a "Share" and, collectively, the
"Shares") issued pursuant to the Rights Agreement, dated as of December 20,
1989, as amended by an amendment dated as of July 23, 1997, by and between the
Company and First Chicago Trust Company of New York, as Rights Agent, (the
"Rights Agreement"), issued and outstanding immediately prior to the Effective
Time (other than Shares owned by Parent or Shares that are owned by the Company
or any direct or indirect Subsidiary of the Company and in each case not held on
behalf of third parties (each, an "Excluded Share" and collectively, "Excluded
Shares")) shall be converted into the right to receive either (i) $28.50 in cash
(the "Cash Consideration") or (ii) .775 shares of common stock, without par
value, of Parent (the "Parent Common Stock") (the "Stock Consideration" and,
together with the Cash Consideration, the "Merger Consideration"). All
references in this agreement to Parent Common Stock to be issued pursuant to the
Merger shall be deemed to include the corresponding rights ("Parent Rights") to
purchase Series A Junior Participating Preferred Stock of Parent pursuant to the
Parent Rights Agreement (as defined in Section 5.1(b)(ii)), except where the
context otherwise requires. At the Effective Time, all Shares shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
certificate (a "Certificate") representing any of such Shares (other than
Excluded Shares) shall thereafter represent only the right to receive the Merger
Consideration and the right, if any, to receive pursuant to Section 4.2(f) cash
in lieu of fractional shares into which such Shares have been converted pursuant
to this Section 4.1(a) and any dividends or other distributions pursuant to
Section 4.2(d).

     (b) Cancellation of Shares. Each Excluded Share shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.

     (c) Merger Sub. At the Effective Time, each share of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall remain
outstanding and each certificate therefor shall continue to evidence one share
of common stock of the Surviving Corporation.

                                       A-2
   7

     4.2. Allocation of Merger Consideration; Election Procedures; Exchange
Procedures.

     (a) Allocation. Subject to Section 4.5, notwithstanding anything in this
Agreement to the contrary, the number of Shares (the "Cash Election Number") to
be converted into the right to receive Cash Consideration in the Merger shall be
equal to 55 percent of the number of Shares issued and outstanding immediately
prior to the Effective Time of the Merger (not including any Excluded Shares).
Subject to Section 4.5, the number of Shares to be converted into the right to
receive Stock Consideration in the Merger (the "Stock Election Number") shall be
equal to the number of Shares issued and outstanding immediately prior to the
Effective Time of the Merger (not including any Excluded Shares) less the Cash
Election Number.

     (b) Election Procedures.

     (i) As of the Effective Time, Parent shall deposit, or shall cause to be
deposited, with an exchange agent selected by Parent, with the Company's prior
approval, which shall not be unreasonably withheld (the "Exchange Agent"), for
the benefit of the holders of Shares, (A) certificates representing the shares
of Parent Common Stock, (B) cash and (C) any dividends or other distributions
with respect to the Parent Common Stock to be issued or paid pursuant to
Sections 4.1 and 4.2(d) in exchange for outstanding Shares upon due surrender of
the Certificates pursuant to the provisions of this Article IV (such cash and
certificates for shares of Parent Common Stock, together with the amount of any
dividends or other distributions payable with respect thereto, being hereinafter
referred to as the "Exchange Fund").

     (ii) Subject to allocation and proration in accordance with the provisions
of this Section 4.2 and Section 4.5, if appropriate, each record holder of
Shares (other than Excluded Shares) issued and outstanding immediately prior to
the Election Deadline (as defined below) shall be entitled (A) to elect to
receive in respect of each such Share (x) Cash Consideration (a "Cash Election")
or (y) Stock Consideration (a "Stock Election") or (B) to indicate that such
record holder has no preference as to the receipt of Cash Consideration or Stock
Consideration for such Shares (a "Non-Election"). Shares in respect of which a
Non-Election is made (including shares in respect of which such an election is
deemed to have been made pursuant to this Section 4.2 and Section 4.3
(collectively, "Non-Election Shares")) shall be deemed by Parent, in its sole
and absolute discretion, subject to Section 4.2(a), to be, in whole or in part,
Shares in respect of which Cash Elections or Stock Elections have been made.

     (iii) Elections pursuant to Section 4.2(b)(ii) shall be made on a form with
such other provisions to be reasonably agreed upon by the Company and Parent (a
"Form of Election") to be provided by the Exchange Agent for that purpose to
holders of record of Shares (other than holders of Excluded Shares), together
with appropriate transmittal materials, at a time approximately one month prior
to the anticipated Closing Date (as defined in Section 1.2) or on such other
date as the Company and Parent shall mutually agree. Elections shall be made by
mailing to the Exchange Agent a duly completed Form of Election. To be
effective, a Form of Election must be (x) properly completed, signed and
submitted to the Exchange Agent at its designated office, by 9:00 a.m., on the
Closing Date (which date shall be publicly announced by Parent as soon as
practicable but in no event less than five trading days prior to the Closing
Date) (the "Election Deadline") and (y) accompanied by the Certificate(s)
representing the Shares as to which the election is being made (or by an
appropriate guarantee of delivery of such Certificate(s) by a commercial bank or
trust company in the United States or a member of a registered national security
exchange or of the National Association of Securities Dealers, Inc., provided
that such Certificates are in fact delivered to the Exchange Agent within three
trading days after the date of execution of such guarantee of delivery). A
holder of record of Shares who holds such shares as nominee, trustee or in
another representative capacity (a "Holder Representative") may submit multiple
Forms of Election, provided that such Holder Representative certifies that each
such Form of Election delivered to the Exchange Agent covers all the Shares held
by such Holder Representative on behalf of a particular beneficial owner. The
Company shall use its best efforts to make a Form of Election available to all
Persons (as defined below) who become holders of record of Shares (other than
Excluded Shares) between the date of mailing described in the first sentence of
this Section 4.2(b)(iii) and the Election Deadline. Parent shall determine, in
its sole and absolute discretion, which authority it may delegate in whole or in
part to the Exchange Agent, whether Forms of Election have been properly
completed, signed and submitted or revoked. The decision of Parent (or the
Exchange Agent, as the case may be) in such matters
                                       A-3
   8

shall be conclusive and binding. Neither Parent nor the Exchange Agent will be
under any obligation to notify any Person of any defect in a Form of Election
submitted to the Exchange Agent. A holder of Shares that does not submit an
effective Form of Election prior to the Election Deadline shall be deemed to
have made a Non-Election. For the purposes of this Agreement, the term "Person"
shall mean any individual, corporation (including not-for-profit), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature organized or existing under the laws of any
jurisdiction.

     (iv) An election may be revoked, but only by written notice received by the
Exchange Agent prior to the Election Deadline. Any Certificate(s) representing
Shares that have been submitted to the Exchange Agent in connection with an
election shall be returned without charge to the holder thereof in the event
such election is revoked as aforesaid and such holder requests in writing the
return of such Certificate(s). Upon any such revocation, unless a duly completed
Form of Election is thereafter submitted in accordance with paragraph (b)(ii),
such Shares shall be Non-Election Shares. In the event that this Agreement is
terminated pursuant to the provisions hereof, any Shares that have been
transmitted to the Exchange Agent pursuant to the provisions hereof shall
promptly be returned without charge to the Person submitting the same.

     (v) If the aggregate number of Shares covered by Cash Elections (the "Cash
Election Shares") exceeds the Cash Election Number, all Non-Election Shares
shall be deemed to be Shares in respect of which Stock Elections have been made
and (x) each Cash Election Share shall be converted into (i) the right to
receive an amount in cash, without interest, equal to the product of (A) the
Cash Consideration and (B) a fraction (the "Cash Fraction"), the numerator of
which shall be the Cash Election Number and the denominator of which shall be
the total number of Cash Election Shares, and (ii) a number of shares of Parent
Common Stock equal to the product of (A) the Exchange Ratio and (B) a fraction
equal to one minus the Cash Fraction and (y) each Stock Election Share
(including those deemed to be Stock Election Shares (as defined below) pursuant
to this Section 4.2(b)(v)) shall be converted into the right to receive the
Stock Consideration.

     (vi) If the aggregate number of Shares covered by Stock Elections (the
"Stock Election Shares") exceeds the Stock Election Number, all Non-Election
Shares shall be deemed to be Shares in respect of which Cash Elections have been
made and (x) each Stock Election Share shall be converted into (i) the right to
receive a number of shares of Parent Common Stock, equal to the product of (A)
the Exchange Ratio and (B) a fraction (the "Stock Fraction"), the numerator of
which shall be the Stock Election Number and the denominator of which shall be
the total number of Stock Election Shares, and (ii) an amount in cash, without
interest, equal to the product of (A) the Cash Consideration and (B) a fraction
equal to one minus the Stock Fraction and (y) each Cash Election Share
(including those deemed to be Cash Election Shares) shall be converted into the
right to receive the Cash Consideration.

     (vii) In the event that neither clause (v) nor clause (vi) of this Section
4.2(b) is applicable, a number of Non-Election Shares shall be deemed Stock
Election Shares such that the total Stock Election Shares equals the Stock
Election Number and any remaining Non-Election Shares shall be deemed Cash
Election Shares and (x) all Cash Election Shares and all Non-Election Shares in
respect of which Cash Elections are deemed to have been made shall be converted
into the right to receive Cash Consideration, and (y) all Stock Election Shares
and all Non-Election Shares in respect of which Stock Elections are deemed to
have been made shall be converted into the right to receive Stock Consideration
(and cash in lieu of fractional interests).

     (viii) Each record holder of Shares immediately prior to the Effective Time
shall be entitled to elect to receive the Stock Consideration for part of such
holder's Shares and the Cash Consideration for the remaining part of such
holder's Shares (a "Mixed Election" and, collectively with a Stock Election and
a Cash Election, an "Election"). Mixed Elections shall be made on a Form of
Election. With respect to each holder of Shares who makes a Mixed Election, the
Shares such holder elects to be converted into the right to receive Cash
Consideration shall be treated as Cash Election Shares for purposes of this
Section 4.2 and Section 4.5, and the Shares such holder elects to be converted
into the right to receive shares of Parent Common Stock shall be treated as
Stock Election Shares for purposes of this Section 4.2 and Section 4.5.

     (ix) The Exchange Agent, in consultation with Parent and the Company, shall
make all computations to give effect to this Section 4.2.
                                       A-4
   9

     (c) Exchange and Payment Procedures. As soon as practicable after the
Election Deadline, Parent shall cause the Exchange Agent to mail to each record
holder of Shares who did not submit a Form of Election or who did not submit a
Certificate or Certificates to the Exchange Agent with such holder's properly
submitted Form of Election: (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates to the Exchange Agent)
and (ii) instructions for effecting the surrender of the Certificates and
receiving the Merger Consideration to which such holder shall be entitled
therefor pursuant to this Article IV. Upon surrender of a Certificate (or
affidavits of loss in lieu thereof) to the Exchange Agent for cancellation,
together with a duly executed letter of transmittal or Form of Election, as the
case may be, and such other documents as the Exchange Agent may require, the
holder of such Certificate shall be entitled to receive in exchange therefor (i)
a certificate representing that number of shares of Parent Common Stock into
which the Shares previously represented by such Certificate are converted in
accordance with this Article IV, (ii) the cash to which such holder is entitled
in accordance with this Article IV, (iii) cash in lieu of fractional shares, if
any, which such holder has the right to receive pursuant to Section 4.2(f) and
(iv) any dividends or other distributions pursuant to Section 4.2(d). In the
event the Merger Consideration and cash in lieu of fractional shares, if any,
which such holder has the right to receive pursuant to Section 4.2(f), and any
dividend or other distributions pursuant to Section 4.2(d), is to be delivered
to any person who is not the person in whose name the Certificate surrendered in
exchange therefor is registered in the transfer records of the Company, the
Merger Consideration, and cash in lieu of fractional shares which such holder
has the right to receive pursuant to Section 4.2(f), and any dividends or other
distributions pursuant to Section 4.2(d) may be delivered to a transferee if the
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence satisfactory to
the Exchange Agent that any applicable stock transfer taxes have been paid or
are not payable.

     (d) Distributions with Respect to Unexchanged Shares; Voting. All Shares of
Parent Common Stock to be issued pursuant to the Merger shall be deemed issued
and outstanding as of the Effective Time and whenever a dividend or other
distribution is declared by Parent in respect of the Parent Common Stock, the
record date for which is at or after the Effective Time, that declaration shall
include dividends or other distributions in respect of all shares issuable
pursuant to this Agreement. No dividends or other distributions in respect of
the Parent Common Stock shall be paid to any holder of any unsurrendered
Certificate until such Certificate is surrendered for exchange in accordance
with this Article IV. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be issued and/or paid to the
holder of the certificates representing Parent Common Stock issued in exchange
therefor, without interest, (A) at the time of such surrender, the dividends or
other distributions with a record date after the Effective Time theretofore
payable with respect to such Parent Common Stock and not paid and (B) at the
appropriate payment date, the dividends or other distributions payable with
respect to such Parent Common Stock with a record date after the Effective Time
but with a payment date subsequent to surrender.

     (e) Transfers. After the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time.

     (f) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Parent Common Stock will be issued to holders
of Shares and in lieu of any such fractional shares, each holder of Shares who
would otherwise have been entitled to receive a fractional share of Parent
Common Stock upon surrender of Certificates for exchange pursuant to this
Article IV will be paid an amount in cash (without interest) equal to such
holder's proportionate interest in the net proceeds from the sale or sales in
the open market by the Exchange Agent, on behalf of all such holders, of the
aggregate fractional shares of Parent Common Stock issued to the Exchange Agent
on behalf of such holders pursuant to this Article IV. As soon as practicable
following the Effective Time, the Exchange Agent shall determine the excess of
(i) the number of full shares of Parent Common Stock delivered to the Exchange
Agent by Parent over (ii) the aggregate number of full shares of Parent Common
Stock to be distributed to holders of Shares (such excess being herein called
the "Excess Parent Common Shares"). The Exchange Agent, as agent for the former
holders of Shares, shall sell the Excess Parent Common Shares at the prevailing
prices on the New York Stock Exchange, Inc. (the "NYSE"). The sales of the
Excess Parent Common Shares by the Exchange Agent shall

                                       A-5
   10

be executed on the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. Parent shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs, if any,
including the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of Excess Parent Common Shares. Until the net proceeds
of such sale have been distributed to the former holders of Shares, the Exchange
Agent will hold such proceeds in trust for such former holders.

     (g) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any Parent Common Stock)
that remains unclaimed by the shareholders of the Company for 180 days after the
Effective Time shall be returned to Parent. Any shareholders of the Company who
have not theretofore complied with this Article IV shall thereafter look only to
Parent for payment of the Cash Consideration, their shares of Parent Common
Stock and any cash, dividends and other distributions in respect thereof payable
and/or issuable pursuant to Section 4.1 and Section 4.2(c) upon due surrender of
their Certificates (or affidavits of loss in lieu thereof), in each case,
without any interest thereon. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation, the Exchange Agent or any other Person shall be liable to
any former holder of Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.

     (h) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such Person of a bond in
customary amount as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate and subject to compliance with the terms
of Section 4.2, shares of Parent Common Stock and any cash payable and any
unpaid dividends or other distributions in respect thereof pursuant to Section
4.1 and Section 4.2(d) upon due surrender of, and deliverable in respect of, the
Shares represented by such Certificate pursuant to this Agreement.

     (i) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as determined pursuant
to Section 6.7) of the Company shall not be exchanged until Parent has received
a written agreement from such Person as provided in Section 6.7 hereof.

     4.3. Dissenters' Rights. In accordance with Section 450.1762 of the MBCA,
no dissenters' rights shall be available to holders of Shares in connection with
the Merger.

     4.4. Adjustments to Prevent Dilution. (a) In the event that the Company
changes the number of Shares issued and outstanding prior to the Effective Time
as a result of a reclassification, stock split (including a reverse split),
stock dividend or distribution, recapitalization, merger, subdivision, issuer
tender or exchange offer, or other similar transaction, the Merger Consideration
shall be equitably adjusted to reflect such change.

     (b) In the event Parent (i) changes or establishes a record date for
changing the number of shares of Parent Common Stock issued and outstanding
prior to the Effective Time as a result of a stock split, stock dividend, stock
combination, recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding Parent Common Stock or (ii) pays or
makes an extraordinary dividend or distribution in respect of Parent Common
Stock (other than a distribution referred to in clause (i) of this sentence)
and, in either case, the record date therefor shall be prior to the Effective
Time, the Stock Consideration shall be proportionately adjusted. Regular
quarterly cash dividends and increases thereon shall not be considered
extraordinary for purposes of the preceding sentence. If, between the date
hereof and the Effective Time, Parent shall merge or consolidate with or into
any other corporation (a "Business Combination")and the terms thereof shall
provide that Parent Common Stock shall be converted into or exchanged for the
shares of any other corporation or entity, then provision shall be made so that
shareholders of the Company who would be entitled to receive shares of Parent
Common Stock pursuant to this Agreement shall be entitled to receive, in lieu of
each share of Parent Common Stock issuable to such shareholders as provided
herein, the same kind and amount of securities or assets as shall be
distributable upon such Business Combination with respect to one share of Parent
Common Stock and, if necessary or advisable, the parties hereto shall agree on
an appropriate restructuring of the transactions contemplated herein.

                                       A-6
   11

     4.5. Tax Opinion Adjustment. In the event that either the condition set
forth in Section 7.2(g) or the condition set forth in Section 7.3(f) is not
satisfied but would be capable of being satisfied if the number of Shares being
converted into Parent Common Stock were increased, and all other conditions set
forth in Article VII have been satisfied (or, with respect to conditions to be
satisfied at the Effective Time, will in fact be satisfied), then the number of
Shares being converted into Parent Common Stock shall be increased (and the
number of Shares converted into cash shall be decreased) to the extent necessary
to permit the satisfaction of the conditions set forth in each of Sections
7.2(g) and 7.3(f), provided, that, each additional Share that is converted into
the right to receive shares of Parent Common Stock solely as a result of the
operation of this Section 4.5, to the extent that the conversion is necessary so
that the value of the Parent Common Stock paid as consideration for Shares is
not less than 41% of the value of the total consideration for Shares, shall be
converted into the right to receive a number of shares of Parent Common Stock
having a value of $28.50 (it being understood that value, in each case, shall be
calculated consistent with the methods used in connection with the provision of
the tax opinions contemplated by Section 7.2(g) and 7.3(f)). For purposes of
Section 4.2(b), such additional Shares shall continue to be treated as part of
the Cash Election Number and the shares of Parent Common Stock issued in respect
thereof shall be treated as Cash Consideration. If required by law or the rules
of the NYSE, Parent will use its best reasonable efforts to obtain the requisite
approval of its shareholders for the issuance of a number of shares of Parent
Common Stock sufficient to take into account the revised number of shares of
Parent Common Stock to be issued. On the Closing Date, Parent and the Company
each shall obtain from its respective counsel a determination whether the
conditions set forth in Section 7.2(g) or 7.3(f), as the case may be, can be
satisfied without making any adjustment set forth in this Section 4.5 and, if
such condition cannot be satisfied without such an adjustment, a determination
as to the minimum percentage of the Merger Consideration that the Stock
Consideration must constitute in order for such counsel to render such opinion.
Parent and the Company shall jointly inform the Exchange Agent whether any
adjustment pursuant to this Section 4.5 is required; and, if so, the extent of
any such adjustment.

     4.6. Uncertificated Shares of Parent Common Stock. The Company agrees that
if Parent establishes procedures for book-entry transfer of shares of Parent
Common Stock (or other similar system for uncertificated shares of Parent Common
Stock) prior to the Effective Time, issuance of Parent Common Stock pursuant to
this Agreement may be made pursuant to such book-entry or similar procedures.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     5.1. Representations and Warranties of the Company, Parent and Merger
Sub. Except as set forth in the corresponding sections or subsections of the
disclosure letter, dated the date hereof, delivered by the Company to Parent or
by Parent to the Company (each, a "Disclosure Letter", and the "Company
Disclosure Letter" and the "Parent Disclosure Letter", respectively), as the
case may be, the Company (except for subparagraphs (b)(ii), (b)(iii), (c)(ii),
(q)(ii) and (v)(ii) below and references in paragraphs (a), (e) and (l) below to
documents made available by Parent to the Company) hereby represents and
warrants to Parent and Merger Sub, and Parent (except for subparagraphs (b)(i),
(c)(i), (j), (p), (q)(i), (s), (t) and (v)(i) below and references in paragraphs
(a), (e) and (l) below to documents made available by the Company to Parent), on
behalf of itself and Merger Sub, hereby represents and warrants to the Company,
that:

     (a) Organization, Good Standing and Qualification. Each of it and its
Subsidiaries is a corporation or other entity duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
assets or properties or conduct of its business requires such qualification,
except where the failure to be so organized, qualified or in good standing, or
to have given power or authority when taken together with all other such
failures, is not reasonably likely to have a Material Adverse Effect (as defined
below). It has made available to Parent, in the case of the Company, and to the
Company, in the case of Parent, a complete and correct copy of its Subsidiaries'
articles of incorporation and by-laws or comparable governing documents for
non-corporate

                                       A-7
   12

entities ("Organizational Documents"), each as amended to date. Such
Organizational Documents as so made available are in full force and effect.
Section 5.1(a) of the Disclosure Letters contains a correct and complete list of
each jurisdiction where the Company, in the case of the Company Disclosure
Letter, and Parent, in the case of the Parent Disclosure Letter, and in each
case, each of its Subsidiaries is organized.

     As used in this Agreement, the term (i) "Subsidiary" means, with respect to
the Company, Parent or Merger Sub, as the case may be, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
is directly or indirectly owned or controlled by such party or by one or more of
its respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries and (ii) "Material Adverse Effect" means, with respect
to the Company or Parent, as the case may be, a material adverse effect on the
condition (financial or otherwise), properties, business, operations, results of
operations or prospects of the Company or Parent, as the case may be, and its
respective Subsidiaries taken as a whole (other than any change or effect
arising out of (i) any transaction taken to comply with Section 6.17(c), (ii)
the Company's recognition of a write-down of its gas and oil properties under
the full cost method of accounting as prescribed by Rule 4-10 of Regulation S-X
under the Securities Act and Exchange Act, (iii) general economic conditions or
(iv) conditions generally affecting the electric or gas utility industries).

     (b) Capital Structure. (i) The authorized capital stock of the Company
consists of 250,000,000 Shares (which are entitled to vote as a class), of which
85,655,381 Shares were outstanding as of the close of business on the date
hereof, and 25,000,000 shares of preferred stock, without par value (the
"Preferred Shares"), none of which were outstanding as of the date hereof. All
of the outstanding Shares have been duly authorized and are validly issued,
fully paid and nonassessable. Other than up to 4,560,345 shares subject to
issuance related to the 2,645,000 outstanding Preferred Redeemable Increased
Dividend Equity Securities (the "Feline Prides") and 250,000 shares of Series A
Junior Participating Preferred Stock subject to issuance pursuant to the Rights
Agreement, none of which were outstanding as of the close of business on the
date hereof, the Company has no Shares or Preferred Shares subject to issuance,
except that, as of the date hereof, there were 2,515,914 Shares subject to
issuance pursuant to the Company's Stock Incentive Plan, Long Term Incentive
Performance Share Plan, Mandatory Deferred Compensation Plan and Non-employee
Directors Compensation Plan (the "Stock Plans"). Section 5.1(b) of the Company
Disclosure Letter contains a correct and complete list of each outstanding
option to purchase Shares under the Stock Plans (each a "Company Option"), date
of grant, exercise price, expiration date and number of Shares subject thereto.
Each of the outstanding shares of capital stock or other securities of each of
the Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by a direct or indirect wholly owned Subsidiary of the
Company, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth in this Section 5.1(b), there are no preemptive
or other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that obligate the Company
or any of its Subsidiaries to issue or sell any shares of capital stock or other
securities of the Company or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of the Company or any
of its Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. After the Effective Time, the Feline Prides
will be convertible only into, with respect to each Purchase Contract (as
defined in the Purchase Contract Agreement dated March 25, 1997, between the
Company and First National Bank of Chicago (the "Purchase Contract Agreement")),
for each Share issuable on account of such Purchase Contract the right to
receive on the Purchase Contract Settlement Date (as defined in the Purchase
Contract Agreement) the Merger Consideration and cash in lieu of fractional
shares, if any, pursuant to Section 4.2(f) into which a Share would be converted
pursuant to Section 4.2 if such Share were a Non-Election Share, assuming for
purposes of such conversion that the Purchase Contract Settlement Date had
occurred immediately prior to the Effective Time. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the shareholders of the Company on any matter
("Voting Debt"). Section 5.1(b) of the Company Disclosure Letter sets forth a
true and complete list of each Person in which the Company owns, directly or
                                       A-8
   13

indirectly, any voting interest that may require a filing by Parent under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "HSR Act").

     (ii) The authorized capital stock of Parent consists of 400,000,000 shares
of Parent Common Stock (which are entitled to vote as a class), of which
145,045,159 shares were outstanding as of the close of business on September 30,
1999, 5,000,000 shares of preferred stock, without par value (the "Parent
Preferred Shares"), none of which were outstanding as of the date hereof. All of
the outstanding shares of Parent Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. Other than 1,500,000 shares of
Series A Junior Participating Preferred Stock reserved for issuance pursuant to
the Rights Agreement, dated as of September 23, 1997, between Parent and The
Detroit Edison Company, as Rights Agent (the "Parent Rights Agreement"), none of
which were outstanding as of the date hereof, Parent has no shares of Parent
Common Stock or Parent Preferred Shares subject to issuance, except that, as of
September 30, 1999, there were 997,575 shares of Parent Common Stock subject to
issuance pursuant to Parent's Long-Term Incentive Plan (the "Parent Stock
Plan"). Section 5.1(b) of the Parent Disclosure Letter contains a correct and
complete list of each outstanding option to purchase shares of Parent Common
Stock under the Parent Stock Plan, including the date of grant, exercise price,
expiration date and number of shares of Parent Common Stock subject thereto.
Each of the out standing shares of capital stock or other securities of each of
Parent's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by a direct or indirect wholly owned Subsidiary of
Parent, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements, calls,
commitments or rights of any kind that obligate Parent or any of its
Subsidiaries to issue or sell any shares of capital stock or other securities of
it or any of its Subsidiaries or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of Parent or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. Parent does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
shareholders of Parent on any matter ("Parent Voting Debt"). As of the date
hereof, Parent has not granted registration rights to any person or entity which
rights are currently exercisable or will become exercisable between the date
hereof and the Effective Time.

     (iii) The authorized capital stock of Merger Sub consists of 60,000 shares
of common stock (entitled to vote as a class), 1,000 of which are validly
issued, fully paid, nonassessable and outstanding as of the date hereof. All of
the issued and outstanding capital stock of Merger Sub is, and at the Effective
Time will be, owned by Parent, and there are (A) no other voting securities of
Merger Sub, (B) no securities of Merger Sub convertible into or exchangeable for
shares of capital stock or voting securities of Merger Sub and (C) no options or
other rights to acquire from Merger Sub, and no obligations of Merger Sub to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Merger Sub. Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
in this Agreement and has not conducted any business prior to the date hereof
and has no, and prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement.

     (c) Corporate Authority; Approval and Fairness. (i) The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform (in the case of consummation
of the Merger, subject to obtaining requisite shareholder approval) its
obligations under this Agreement and to consummate, subject only to approval of
this Agreement by the holders of a majority of the outstanding Shares (the
"Company Requisite Vote"), the Merger. Assuming the due authorization, execution
and delivery of this Agreement by Parent and Merger Sub, this Agreement is a
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles (the
"Bankruptcy and Equity Exception"). The board of directors of the Company (A)
has unanimously adopted this Agreement and (B) has received the

                                       A-9
   14

opinion of its financial advisor, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), to the effect that the consideration to be
received by the holders of the Shares in the Merger is fair to such holders from
a financial point of view, a copy of which opinion has been delivered to Parent.

     (ii) Each of the Parent and Merger Sub has all requisite corporate power
and authority and has taken all corporate action necessary in order to execute,
deliver and perform (in the case of consummation of the Merger, subject to
obtaining requisite shareholder approval) its obligations under this Agreement
and to consummate, subject only to any shareholder approval necessary to permit
the issuance of the shares of Parent Common Stock required to be issued pursuant
to Article IV (the "Parent Requisite Vote"), the Merger. Assuming the due
authorization, execution and delivery of this Agreement by the Company, this
Agreement is a valid and binding agreement of Parent enforceable against Parent
in accordance with its terms, subject to the Bankruptcy and Equity Exception.
Assuming the due authorization, execution and delivery of this Agreement by the
Company, this Agreement is a valid and binding agreement of Merger Sub
enforceable against Merger Sub in accordance with its terms. The Boards of
Directors of Parent and Merger Sub (A) have adopted this Agreement and (B) have
received the opinion of Parent's financial advisor, Warburg Dillon Read LLC, to
the effect that the consideration to be paid by Parent to the holders of Shares
in the Merger is fair to Parent from a financial point of view. Prior to the
Effective Time, Parent will have taken all necessary action to permit it to
issue the number of shares of Parent Common Stock required to be issued pursuant
to Article IV. The Parent Common Stock, when issued, will be validly issued,
fully paid and nonassessable, and no shareholder of Parent will have any
preemptive right of subscription or purchase in respect thereof. The Parent
Common Stock, when issued, will be registered under the Securities Act and the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "Exchange Act") and registered or exempt from
registration under any applicable state securities or "blue sky" laws.

     (d) Governmental Filings; No Violations. (i) Other than the reports,
filings and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act, the
Exchange Act and the Securities Act, (C) required to be made with the NYSE or
the Chicago Stock Exchange, (D) to comply with state securities or "blue sky"
laws, (E) with, to or of the Federal Energy Regulatory Commission (the "FERC")
pursuant to the Federal Power Act, as amended (the "Power Act"), if required,
(F) under the Public Utility Holding Company Act of 1935, as amended (the "1935
Act"), (G) with, to or of federal or state regulatory bodies pursuant to
Environmental Laws (as defined in Section 5.1(k)) and (H) identified in Section
5.1(d) of the respective Disclosure Letter, no notices, reports or other filings
are required to be made by it or any of its Subsidiaries with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by it or any of its Subsidiaries from, any governmental or regulatory
authority, agency, commission, body or other governmental entity ("Governmental
Entity"), in connection with the execution and delivery of this Agreement by it
and the consummation by it of the Merger and the other transactions contemplated
hereby, except those that the failure to make or obtain are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect or
prevent, materially delay or materially impair the ability of it to consummate
the transactions contemplated by this Agreement.

     (ii) The execution, delivery and performance of this Agreement by it do
not, and the consummation by it of the Merger and the other transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, its articles of incorporation or by-laws or the
Organizational Documents of any of its Subsidiaries, (B) a breach or violation
of, a default under, or the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance on the assets of it or any
of its Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any agreement, lease, license, contract, note, mortgage, indenture, arrangement
or other obligation ("Contracts") binding upon it or any of its Subsidiaries or
any Law (as defined in Section 5.1(i)) or governmental or non-governmental
permit or license to which it or any of its Subsidiaries is subject or (C) any
change in the rights or obligations of any party under any of the Contracts,
except, in the case of clause (B) or (C) above, for any breach, violation,
default, acceleration, creation or change that, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect or
prevent, materially delay or materially impair the ability of it to consummate
the transactions contemplated by this Agreement. Section 5.1(d) of the Company
Disclosure Letter, with respect to the Company, and the Parent Disclosure
Letter, with respect to Parent, sets forth a correct and complete list of

                                      A-10
   15

material Contracts of the Company, in the case of the Company Disclosure Letter,
and of Parent, in the case of the Parent Disclosure Letter, and any of its
respective Subsidiaries pursuant to which consents or waivers are or may be
required prior to consummation of the transactions contemplated by this
Agreement (whether or not subject to the exception set forth with respect to
clauses (B) and (C) above).

     (e) Reports; Financial Statements. All material filings required to be made
by it and its Subsidiaries since December 31, 1995 under the Securities Act, the
Exchange Act, the 1935 Act, the Power Act and state law applicable to public
utilities, and under regulations applicable to public utilities in the United
States, have been made in accordance with the requirements of the relevant
Governmental Entities, except for such failures to make filings that are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect, and it has complied as of their respective dates, in all material
respects with all applicable requirements of appropriate statutes and rules and
regulations. It has delivered to the other party each registration statement,
report, proxy statement or information statement prepared by it since December
31, 1998 (the "Audit Date"), including (i) its Annual Report on Form 10-K for
the year ended December 31, 1998, and (ii) its Quarterly Reports on Form 10-Q
for the periods ended March 31, 1999, and June 30, 1999, each in the form
(including exhibits, annexes and any amendments thereto) filed with the
Securities and Exchange Commission (the "SEC") (collectively, including any such
reports filed subsequent to the date hereof and as amended, the "Reports"). As
of their respective dates, (or, if amended, as of the date of such amendment)
the Reports did not, and any Reports filed with the SEC subsequent to the date
hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Reports (including the related notes and
schedules) presents fairly, or will present fairly, in all material respects,
the consolidated financial position of it and its Subsidiaries as of its date
and each of the consolidated statements of income, cash flows and changes in
shareholders' equity included in or incorporated by reference into the Reports
(including any related notes and schedules) presents fairly, or will present
fairly, the results of operations, cash flows and changes in shareholders'
equity, as the case may be, of it and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with generally accepted accounting principles in the
United States ("U.S. GAAP") consistently applied during the periods involved,
except as may be noted therein.

     (f) Absence of Certain Changes. Except as disclosed in its Reports filed
prior to the date hereof, since the Audit Date it and its Subsidiaries have
conducted their respective businesses only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course of
such businesses and there has not been (i) any change in the condition
(financial or otherwise), properties, business, operations, results of
operations or prospects of it and its Subsidiaries or any development or
combination of developments of which its officers have actual knowledge that,
individually or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect; (ii) any declaration, setting aside or payment of any
dividend, or other distribution in cash, stock or property in respect of its
capital stock, except for dividends or other distributions on its capital stock
publicly announced prior to the date hereof and except as expressly permitted
hereby; (iii) any split in its capital stock, combination, subdivision or
reclassification of any of its capital stock or issuance or authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, except as expressly contemplated hereby; or
(iv) any change by it in accounting principles, or material change in its
accounting practices or methods. Since the Audit Date, except as provided for
herein or as disclosed in the Reports filed prior to the date hereof, there has
not been any increase in the compensation payable or that could become payable
by it or any of its Subsidiaries to officers or key employees or any amendment
of any of the Compensation and Benefit Plans (as defined in Section 5.1(h)(i))
other than increases or amendments in the ordinary and usual course.

     (g) Litigation and Liabilities. Except as disclosed in the Reports filed
prior to the date hereof, there are no (i) civil, criminal or administrative
actions, suits, claims, hearings, investigations or proceedings pending or, to
the actual knowledge of its officers, threatened against it or any of its
Affiliates (as defined below), (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise and whether or not required to be

                                      A-11
   16

disclosed, or any facts or circumstances of which its officers have actual
knowledge that could reasonably be expected to result in any claims against, or
obligations or liabilities of, it or any of its Affiliates or (iii) developments
since the date of such Reports with respect to such disclosed actions, suits,
claims, hearings, investigations or proceedings, except, in each case, for those
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect or prevent or materially burden or materially impair the
ability of it to consummate the transactions contemplated by this Agreement. As
used herein, the term "Affiliate" shall have the meaning ascribed to such term
in Rule 12b-2 under the Exchange Act.

     (h) Employee Benefits.

     (i) A copy (or, if not in writing, a summary) of each bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, compensation, medical, health or other plan,
agreement, policy or arrangement that covers employees, directors, former
employees or former directors of it and its Subsidiaries (the "Compensation and
Benefit Plans") (other than immaterial policies and arrangements not related to
severance) and any trust agreement or insurance contract forming a part of such
Compensation and Benefit Plans has been provided or made available to the other
party prior to the date hereof. The Compensation and Benefit Plans are listed in
Section 5.1(h) of its Disclosure Letter and those containing any "change of
control" or similar provisions are specifically identified in Section 5.1(h) of
its Disclosure Letter.

     (ii) All Compensation and Benefit Plans are in substantial compliance with
all applicable law, including the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Each Compensation and Benefit Plan
that is an "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "Pension Plan") and that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service (the "IRS"), nor are there any existing circumstances
likely to result in revocation of any such favorable determination letter. No
actions, suits, or claims (other than routine claims for benefits) have been
filed or, to the actual knowledge of its officers, are contemplated or
threatened against any Compensation and Benefits Plan or against the assets of
any Compensation and Benefits Plan; and, to the actual knowledge of its
officers, there is no basis for such action, suit or claim. Neither it nor any
of its Subsidiaries has engaged in a transaction with respect to any
Compensation and Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject it or any of its
Subsidiaries to a material tax or penalty imposed by either Section 4975 of the
Code or Section 502 of ERISA that has not previously been satisfied.

     (iii) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by it or any Subsidiary with respect to any ongoing,
frozen or terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with the
Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). It and its Subsidiaries have not incurred and do not expect to
incur any withdrawal liability with respect to a multiemployer plan under
Subtitle E to Title IV of ERISA regardless of whether based on contributions of
an ERISA Affiliate. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Agreement.

     (iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date hereof.
Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has
an "accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA. Neither it nor its
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.

     (v) Under each Pension Plan which is a single-employer plan, as of the last
day of the most recent plan year ended prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within
                                      A-12
   17

the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan, and there has been no material change in the financial condition of such
Pension Plan since the last day of the most recent plan year.

     (vi) Neither it nor its Subsidiaries have any obligations for retiree
health and life benefits under any Compensation and Benefit Plan, except as set
forth in the SEC filings or Section 5.1(h) of the Company Disclosure Letter; the
terms of each such plan provide that such retiree health and life benefits may
be amended or terminated at any time, except to the extent limited by any
collective bargaining agreement.

     (vii) The consummation of the Merger and the other transactions
contemplated by this Agreement will not (x) entitle any employees of it or its
Subsidiaries to severance pay or any increase in severance pay upon any
termination of employment prior to or after the date hereof, (y) accelerate the
time of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans, or (z) result in any breach or violation of, or
a default under, any of the Compensation and Benefit Plans.

     (viii) The Company has amended the terms of any and all Compensation and
Benefit Plans, as applicable, to eliminate the automatic funding of accrued
benefits under such plans via the Rabbi Trust established effective January 3,
1991, in connection with the consummation of the Merger and the other
transactions contemplated by this Agreement.

     (ix) No Compensation and Benefit Plan is maintained outside the United
States.

     (i) Compliance with Laws; Permits. Except as set forth in the Reports filed
prior to the date hereof, the businesses of each of it and its Subsidiaries have
not been, and are not being, conducted in violation of any federal, state, local
or foreign law, statute, ordinance, rule, regulation, judgment, order,
injunction, decree, arbitration award, agency requirement, license or permit of
any Governmental Entity (collectively, "Laws"), except for violations that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect or prevent or materially burden or materially impair the ability
of it to consummate the transactions contemplated by this Agreement. Except as
set forth in the Reports filed prior to the date hereof, no investigation or
review by any Governmental Entity with respect to it or any of its Subsidiaries
is pending or, to the actual knowledge of its officers, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, except for those
the outcome of which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect or prevent or materially burden or
materially impair its ability to consummate the transactions contemplated by
this Agreement. Each of it and its Subsidiaries has all permits, licenses,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct its business as presently conducted,
except those the absence of which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect or prevent or materially
burden or materially impair its ability to consummate the Merger and the other
transactions contemplated by this Agreement.

     (j) Takeover Statutes. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation (each a
"Takeover Statute") or any anti-takeover provision in the Company's articles of
incorporation or by-laws is, or at the Effective Time will be, applicable to the
Company, the Shares, the Merger or the other transactions contemplated by this
Agreement.

     (k) Environmental Matters. Except as disclosed in the Reports prior to the
date hereof and except as has not had and is not reasonably likely to have a
Material Adverse Effect: (i) each of it and its Subsidiaries is in compliance
with all applicable Environmental Laws; (ii) no property (including soils,
groundwater, surface water, buildings or other structures) currently owned or
operated by it or any of its Subsidiaries is contaminated with any Hazardous
Substance which could reasonably be expected to result in liability relating to
or require remediation under any Environmental Law; (iii) no property formerly
owned or operated by it or any of its Subsidiaries has been contaminated with
any Hazardous Substance during or prior to such period of ownership or operation
which could reasonably be expected to result in liability relating to or require

                                      A-13
   18

remediation under any Environmental Law; (iv) neither it nor any of its
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither it nor any of its
Subsidiaries has been associated with any release or threat of release of any
Hazardous Substance which could reasonably be expected to result in liability
relating to or require remediation under any Environmental Law; (vi) neither it
nor any of its Subsidiaries has received any notice, demand, letter, claim or
request for information alleging that it or any of its Subsidiaries may be in
violation of or subject to liability under any Environmental Law; (vii) neither
it nor any of its Subsidiaries is subject to any order, decree, injunction or
other arrangement with any Governmental Entity or any indemnity or other
agreement with any third party relating to liability under any Environmental Law
or relating to Hazardous Substances; (viii) there are no other circumstances or
conditions involving it or any of its Subsidiaries or the transactions
contemplated in this Agreement that could reasonably be expected to result in
any claim, liability, investigation, cost or restriction on the ownership, use,
or transfer of any property pursuant to any Environmental Law; and (ix) the
Company has delivered to Parent, and Parent has made available to the Company,
copies of all environmental reports, studies, assessments, sampling data and
other environmental information in its possession relating to it or its
Subsidiaries or their respective current and former properties or operations.

     As used herein, the term "Environmental Law" means any federal, state,
local or foreign statute, law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health, safety, or natural
resources, (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (C) noise, odor, indoor air, employee
exposure, wetlands, pollution, contamination or any injury or threat of injury
to persons or property relating to any Hazardous Substance.

     As used herein, the term "Hazardous Substance" means any substance that is:
(A) listed, classified or regulated pursuant to any Environmental Law; (B) any
petroleum or coal product or by-product, any waste, ash or sludge,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive material or radon; and (C) any other substance which may
be the subject of regulatory action by any Government Entity in connection with
any Environmental Law.

     (l) Taxes. Except for failures and inaccuracies that are not, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect, each
of it and its Subsidiaries (i) have prepared in good faith and duly and timely
filed (taking into account any extension of time within which to file) all Tax
Returns (as defined below) required to be filed by any of them and all such
filed Tax Returns are complete and accurate; (ii) has paid all Taxes (as defined
below) that are shown as due on such filed Tax Returns or that it or any of its
Subsidiaries are obligated to withhold from amounts owing to any employee,
creditor or third party, except with respect to matters contested in good faith;
and (iii) has not waived any statute of limitations with respect to Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.
Except as set forth in the Company Disclosure Letter, (i) neither it nor any of
its Subsidiaries is a party to any Tax allocation, indemnity or sharing
agreement (other than such an agreement between it and any of its Subsidiaries)
and (ii) neither it nor any of its Subsidiaries has any liability for Taxes as a
result of its or any of its Subsidiaries inclusion in any group's consolidated
or combined Tax returns other than a group of which it is a common parent,
except, in the case of clause (ii), as is not reasonably likely to have a
Material Adverse Effect. As of the date hereof, there are not pending or, to the
actual knowledge of its officers threatened in writing, any audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters that, individually or in the aggregate are reasonably likely to have a
Material Adverse Effect. There are not, to the actual knowledge of its officers,
any unresolved questions or claims concerning its or any of its Subsidiaries'
Tax liability that, individually or in the aggregate, are reasonably likely to
have a Material Adverse Effect. Neither it nor any of its Subsidiaries has any
liability with respect to Taxes in excess of the amounts accrued with respect
thereto that are reflected in the financial statements included in the Reports
filed on or prior to the date hereof, except as is not, individually or in the
aggregate reasonably likely to have a Material Adverse Effect.

     As used in this Agreement, (i) the term "Tax" (including, with correlative
meaning, the terms "Taxes", and "Taxable") includes all federal, state, local
and foreign income, profits, alternative minimum tax, franchise, gross receipts,
environmental, customs duty, capital stock, severances, stamp, payroll, sales,
                                      A-14
   19

employment, unemployment, disability, use, property, withholding, excise,
add-on, production, value added, occupancy and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts and any interest in respect of
such penalties and additions, and (ii) the term "Tax Return" includes all
returns and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes.

     (m) Labor Matters. Except as set forth in Section 5.1(m) of its Disclosure
Letter, neither it nor any of its Subsidiaries is a party to or otherwise bound
by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is it or any of its
Subsidiaries the subject of any material proceeding asserting that it or any of
its Subsidiaries has committed an unfair labor practice or is seeking to compel
it to bargain with any labor union or labor organization nor is there pending
or, to the actual knowledge of its officers, threatened, nor has there been for
the past five years, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving it or any of its Subsidiaries. Each party has
previously made available to the other correct and complete copies of all labor
and collective bargaining agreements, Contracts or other agreements or
understandings with a labor union or labor organization to which it or any of
its Subsidiaries is party or by which any of them are otherwise bound
(collectively, the "Labor Agreements"). The consummation of the Merger and the
other transactions contemplated by this Agreement will not entitle any third
party (including any labor union or labor organization) to any payments under
any of the Labor Agreements.

     (n) Intellectual Property.

     (i) It or its Subsidiaries own (free and clear of any and all liens, claims
or encumbrances), or is licensed or otherwise possesses sufficient legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
brand marks, brand names, copyrights, and any applications therefor, technology,
know-how, computer software programs or applications, databases, industrial
designs and tangible or intangible proprietary information or materials that are
currently used (or, with respect to trademarks, trade names, brand marks, brand
names and service marks, have been used within the last five years) in its and
its Subsidiaries' businesses (collectively, "Intellectual Property Rights"),
except for any such failures to own, be licensed or possess that, individually
or in the aggregate, are not reasonably likely to have a Material Adverse
Effect.

     (ii) Except as disclosed in the Reports filed prior to the date hereof, and
except for such matters that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect, (i) the use of the
Intellectual Property Rights by it or its Subsidiaries does not conflict with,
infringe upon, violate or interfere with or constitute an appropriation of any
right, title, interest or goodwill including, without limitation, any
intellectual property right, patent, trademark, trade name, service mark, brand
mark, brand name, copyright, technology, know-how, computer software program or
application, database or industrial design of any other Person and (ii) there
have been no claims made and neither it nor any of its Subsidiaries has received
notice of any claim or otherwise knows that any Intellectual Property Right is
invalid, conflicts with the asserted right of any other Person, has not been
used or enforced or has been failed to be used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability of any
Intellectual Property Right of it or any of its Subsidiaries.

     (o) Insurance. All material fire and casualty, general liability, business
interruption, product liability, and sprinkler and water damage insurance
policies maintained by it or any of its Subsidiaries are with reputable
insurance carriers, provide full and adequate coverage for all normal risks
incident to the business of it and its Subsidiaries and their respective
properties and assets, and are in character and amount at least equivalent to
that carried by persons engaged in similar businesses and subject to the same or
similar perils or hazards, except for any such failures to maintain insurance
policies that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect.

     (p) Rights Plan. (i) The Company has amended the Rights Agreement to
provide that (x) Parent shall not be deemed an Acquiring Person (as defined in
the Rights Agreement), (y) the Distribution Date (as defined in the Rights
Agreement) shall not be deemed to occur and (z) the Rights will not separate
from the

                                      A-15
   20

Shares, in each case, as a result of entering into this Agreement or
consummating the Merger and/or the other transactions contemplated hereby.

     (ii) The Company has taken all necessary action with respect to all of the
outstanding Rights (as defined in the Rights Agreement) so that, as of
immediately prior to the Effective Time, the Rights Agreement will expire
without any payment by the Company in respect of the Rights.

     (q) Brokers and Finders. Neither it nor any of its officers, directors or
employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with the Merger or the
other transactions contemplated in this Agreement except that (i) the Company
has employed Merrill Lynch as its financial advisor, the arrangements with which
have been disclosed to Parent prior to the date hereof and (ii) Parent has
employed Warburg Dillon Read LLC as it financial advisor, the arrangements with
which have been disclosed to the Company prior to the date hereof.

     (r) Year 2000. Except as disclosed in the Reports filed prior to the date
hereof, all computer systems and computer software used by it or any of its
Subsidiaries, and the material computer systems and computer software of its
material commercial counterparties, recognize or are being adapted so that,
prior to December 31, 1999, they shall recognize the advent of the year A.D.
2000 and can correctly recognize or are being adapted so that they can correctly
recognize and manipulate date information relating to dates on or after January
1, 2000 and the operation and functionality of such computer systems and such
computer software will not be adversely affected by the advent of the year A.D.
2000 or any manipulation of data featuring information relating to dates before,
on or after January 1, 2000 ("Millennium Functionality"), except in each case
for such computer systems and computer software, the failure of which to achieve
Millennium Functionality, individually or in the aggregate, has not had and is
not reasonably likely to have a Material Adverse Effect. Except as disclosed in
the Reports filed prior to the date hereof, the costs of the adaptions necessary
to achieve Millennium Functionality are not reasonably likely to have a Material
Adverse Effect.

     (s) Regulatory Proceedings. Except as set forth in the Reports, neither the
Company nor any of its Subsidiaries, all or part of whose rates or services are
regulated by a Governmental Entity, (i) has rates which have been or are being
collected subject to refund, pending final resolution of any proceeding pending
before a Governmental Entity or on appeal to the courts or (ii) is a party to
any proceeding before a Governmental Entity or on appeal from orders of a
Governmental Entity which have had or are reasonably likely to result in orders
having a Material Adverse Effect.

     (t) FERC Jurisdiction. To the actual knowledge of its officers, neither the
Company nor any of its Subsidiaries, nor any other entity in which the Company,
directly or indirectly owns or expects to retain any interest, owns or operates
any FERC jurisdictional facilities giving rise to a requirement for approval of
the Merger by the FERC.

     (u) Regulation as a Utility. (i) It is not regulated as a public utility or
public service company by any state. Other than as set forth in Section 5.1(u)
of its Disclosure Letter, none of its Subsidiaries or Affiliates is subject to
regulation as a public utility or public service company (or similar
designation) by any state in the United States or in any foreign country.

     (ii) Each of Parent and the Company is a holding company exempt from
registration pursuant to Section 3(a)(1) of the 1935 Act, as amended.

     (v) Ownership of Shares. (i) Neither the Company nor any of its
Subsidiaries "Beneficially Owns" (as such term is defined in the Parent Rights
Agreement) any shares of Parent Common Stock.

     (ii) Neither Parent nor any of its Subsidiaries "Beneficially Owns" (as
such term is defined in the Rights Agreement) any Shares.

                                      A-16
   21

                                   ARTICLE VI

                                   COVENANTS

     6.1. Interim Operations.

     (a) The Company covenants and agrees as to itself and its Subsidiaries that
after the date hereof and prior to the Effective Time (unless Parent shall
otherwise approve, which approval shall not be unreasonably withheld or delayed,
and except as otherwise expressly contemplated by this Agreement):

     (i) the business of the Company and its Subsidiaries shall be conducted in
the ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use their respective best reasonable efforts to (A)
preserve its business organization intact and maintain its existing relations
and goodwill with customers, suppliers, distributors, creditors, lessors,
employees and business associates and (B) maintain and keep material properties
and assets in as good repair and condition as such are in as of the date hereof,
subject to ordinary wear and tear;

     (ii) the Company shall not (A) issue, sell, pledge, dispose of or encumber
any capital stock owned by it in any of its Subsidiaries; (B) amend its articles
of incorporation or by-laws or amend, modify or terminate the Rights Agreement;
(C) split, combine, subdivide or reclassify its outstanding shares of capital
stock; (D) declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock (other than dividends from its direct
or indirect wholly owned Subsidiaries and other than regular quarterly cash
dividends not in excess of $0.255 per Share and regular quarterly cash dividends
on the preferred and preference stock of its Subsidiaries); or (E) repurchase,
redeem or otherwise acquire (except for (I) mandatory sinking funds obligations
existing on the date hereof and (II) open market repurchases pursuant to the
terms of the Company's Direct Stock Purchase Plan and Dividend Reinvestment
Plan), or permit any of its Subsidiaries to purchase or otherwise acquire, any
shares of its capital stock or any securities convertible into or exchangeable
or exercisable for any shares of its capital stock;

     (iii) neither the Company nor any of its Subsidiaries shall (A) issue,
sell, pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock of
any class or any other property or assets (other than (I) Shares issuable
pursuant to options and other rights outstanding on the date hereof under the
Stock Plans, issuances of additional options or rights to acquire Shares granted
pursuant to the terms of the Stock Plans as in effect on the date hereof in the
ordinary and usual course of the operation of such Stock Plans and issuances of
Shares pursuant to options granted after the date hereof pursuant to the Stock
Plans and (II) Shares issuable pursuant to the terms of the outstanding Feline
Prides); (B) (I) transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of or encumber any of its coal fines property or assets, or, (II) except
as identified on Section 6.1(a)(iii) of the Company Disclosure Letter, other
than in the ordinary and usual course of business and other than sales not in
excess of $100,000,000 in the aggregate or $30,000,000 in respect of any
transaction or series of related transactions, transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of or encumber any other property or
assets; (C) make or authorize or commit for any capital expenditures or
operation and maintenance expenditures in excess of 110% of those contemplated
to be spent pursuant to the year 1999, 2000 or 2001 capital
appropriations/spending budgets set forth in Section 6.1(a) of the Company
Disclosure Letter; or (D) by any means, make any acquisition of, or investment
in, assets or stock of, or other interest in, any other Person or entity in
excess of $100,000,000 in the aggregate or $30,000,000 in respect of any
transaction or series of related transactions;

     (iv) except as set forth in Section 6.1(a)(iv) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries shall (A) incur, assume
or prepay any long-term debt or incur or assume any short-term debt other than
in the ordinary and usual course of business in amounts and for purposes
consistent with past practice under existing lines of credit, and except for the
incurrence of long-term indebtedness in connection with the refinancing of
existing indebtedness either at its stated maturity or at a lower cost of funds,
(B) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
third-party, including by means of any "keep well" or other agreement to support
or maintain any financial statement condition of another person, except in the
ordinary and usual

                                      A-17
   22

course of business, (C) accelerate or delay collection of notes or accounts
receivable in advance of or beyond their regular due dates or the dates
consistent with past practice, or (D) change any accounting principle, practice
or method in a manner that is inconsistent with past practice, except to the
extent required by U.S. GAAP as advised by the Company's regular independent
accountants;

     (v) neither the Company nor any of its Subsidiaries shall take or fail to
take any action that is reasonably likely to make any representation or warranty
of the Company contained herein inaccurate in any material respect at, or as of
any time prior to, the Effective Time, or that is, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect;

     (vi) except as required by applicable Law, an existing collective
bargaining agreement or other Contract identified in Section 6.1(a)(vi) of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries shall
terminate, establish, adopt, enter into, make any new grants or awards under,
amend or otherwise modify, any Compensation and Benefit Plans (other than
issuances of additional options, performance shares or rights to acquire Shares
granted pursuant to the terms of the Stock Plans as in effect on the date hereof
in the ordinary and usual course of the operation of such Stock Plans, provided,
that any such additional options, performance shares or rights to acquire Shares
shall not vest in connection with the Merger and the other transactions
contemplated by this Agreement), or except as required by any existing contract
with a non-officer employer increase the salary, wage, bonus or other
compensation of any employees, except increases occurring in the ordinary and
usual course of business (which shall include normal periodic performance
reviews and related compensation and benefit increases);

     (vii) except as required by applicable law, an existing collective
bargaining agreement or other Contract identified in Section 6.1(a)(vii) of the
Company Disclosure Letter, neither the Company nor any of its Subsidiaries shall
grant any severance or termination pay to, or enter into any employment or
severance agreement with any director or officer of it or such Subsidiaries,
provided, that the foregoing shall not require the Company to violate any of its
obligations existing prior to the date hereof as set forth in Section 5.1(h) of
the Company Disclosure Letter;

     (viii) neither the Company nor any of its Subsidiaries shall settle or
compromise any material claims or litigation or amend or terminate any of its
material Contracts or waive, release or assign any material rights or claims;

     (ix) neither the Company nor any of its Subsidiaries shall make any
material Tax election (other than in the ordinary and usual course or as is
required by Law) or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be canceled or terminated except in the ordinary and usual
course of business; and

     (x) neither the Company nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.

     (b) Parent covenants and agrees as to itself and its Subsidiaries that
after the date hereof and prior to the Effective Time (unless the Company shall
otherwise approve, which approval shall not be unreasonably withheld or delayed,
and except as otherwise expressly contemplated by this Agreement):

     (i) the business of Parent and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and its
Subsidiaries shall use their respective best reasonable efforts to (A) preserve
its business organization intact and maintain its existing relations and
goodwill with customers, suppliers, distributors, creditors, lessors, employees
and business associates and (B) maintain and keep material properties and assets
in as good repair and condition as such are in as of the date hereof, subject to
ordinary wear and tear;

     (ii) it shall not (A) amend its articles of incorporation or by-laws; (B)
split, combine, subdivide or reclassify its outstanding shares of capital stock;
(C) declare, set aside or pay any dividend payable, in cash, stock or property
in respect of any capital stock, other than dividends from its direct or
indirect wholly owned Subsidiaries and other than regularly quarterly cash
dividends not in excess of $0.515 per share of Parent Common Stock and regularly
quarterly cash dividends on the preferred and preference stock of its

                                      A-18
   23

Subsidiaries; (D) repurchase, redeem or otherwise acquire, or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of Parent Common Stock
or any securities convertible into or exchangeable or exercisable for any shares
of Parent Common Stock (other than repurchases, redemptions or other
acquisitions which are made at the then-prevailing market price of Parent Common
Stock on the NYSE and which in the aggregate do not exceed ten percent of the
shares of Parent Common Stock outstanding as of the date hereof) or (E) except
as permitted under this Agreement, enter into any agreement with respect to a
merger, reorganization, share exchange, consolidation or similar transaction
involving, or any purchase of all or substantially all of the equity securities
of it or any of its Significant Subsidiaries (as such term is defined in Rule
1-02 of Regulation S-X under the Exchange Act);

     (iii) neither Parent nor any of its Subsidiaries shall, (A) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of Parent Common Stock (other than (I)
shares of Parent Common Stock issuable pursuant to options outstanding on the
date hereof under the Parent Stock Plan, issuances of additional options or
rights to acquire shares of Parent Common Stock granted pursuant to the terms of
the Parent Stock Plan as in effect on the date hereof in the ordinary and usual
course of the operation of such Parent Stock Plan and issuances of shares of
Parent Common Stock pursuant to options granted after the date hereof pursuant
to the Parent Stock Plan and (II) issuances of Parent Common Stock, or
securities convertible with or exchangeable or exercisable for, or options,
warrants, calls, commitments or rights of any kind to acquire, shares of Parent
Common Stock, to a third-party on arms-length terms not in excess of 20% of the
number of shares of Parent Common Stock outstanding as of the date hereof), (B)
other than pursuant to the year 1999, 2000 or 2001 capital appropriations/
spending budgets set forth in Section 6.1(b) of the Parent Disclosure Letter and
other than in the ordinary and usual course of business (I) transfer, lease,
license, guarantee, sell, mortgage, pledge, dispose of or encumber any property
or assets, and other than sales not in excess of $250,000,000 in the aggregate;
or (II) by any means, make any acquisition of, or investment in, assets or stock
of, or other interest in, any other Person or entity in excess of $250,000,000
in the aggregate or (C) acquire "Beneficial Ownership" (as such term is defined
in the Rights Agreement) of any Shares;

     (iv) Parent shall not change any material accounting principle, practice or
method in a manner that is inconsistent with past practice, except to the extent
required by U.S. GAAP as advised by Parent's regular independent accountants;

     (v) neither Parent nor any of its Subsidiaries shall take or fail to take
any action that is reasonably likely to make any representation or warranty of
such party contained herein inaccurate in any material respect at, or as of any
time prior to, the Effective Time, or that is, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect; and

     (vi) neither Parent nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.

     6.2. Acquisition Proposals. (a) The Company agrees that neither it nor any
of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries ("Representatives")) not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate any inquiries or the making of any
proposal or offer with respect to a merger, reorganization, share exchange,
consolidation or similar transaction involving, or any purchase of all or,
except for transactions in the ordinary course of business or expressly
contemplated by this Agreement that could not interfere with the transactions
contemplated by this Agreement, including by Section 6.1(a)(iii), any of the
assets or any equity securities of, it or any of its Subsidiaries (any such
proposal or offer being hereinafter referred to as a "Company Acquisition
Proposal"). The Company further agrees that neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to cause its and its
Subsidiaries' Representatives not to, directly or indirectly, engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any Person relating to a Company Acquisition
Proposal, or otherwise facilitate any effort or attempt to make

                                      A-19
   24

or implement a Company Acquisition Proposal; provided, however, that nothing
contained in this Agreement (including the last preceding sentence and Section
6.1(b)) shall prevent the Company or its Board of Directors or Parent or its
Board of Directors, as applicable, from (A) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a Company Acquisition
Proposal; (B) providing information in response to a request therefor by a
Person who has made an unsolicited bona fide written Company Acquisition
Proposal if the Company's Board of Directors receives from the Person so
requesting such information an executed confidentiality agreement on terms, with
respect to confidentiality, substantially similar to those contained in the
Confidentiality Agreement (as defined in Section 9.7); (C) engaging in any
negotiations or discussions with any Person who has made an unsolicited bona
fide written Company Acquisition Proposal; or (D) recommending such Company
Acquisition Proposal to the shareholders of the Company if and only to the
extent that, in each such case referred to in clause (B), (C) or (D) above,
prior to the time the Company Requisite Vote shall have been obtained, the Board
of Directors of the Company determines in good faith after consultation with
outside legal counsel and its financial advisor and based upon such other
matters as it deems relevant that failure to take such action would likely
result in a breach of their fiduciary duties under applicable law and that such
Company Acquisition Proposal, if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal and would, if consummated, be
reasonably likely to result in a transaction more favorable to the Company's
shareholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal"). The Company agrees that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Company Acquisition Proposal. The Company agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 6.2 and
in the Confidentiality Agreement. The Company agrees that it will use its best
reasonable efforts to notify Parent within one day of the receipt thereof if any
such inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its Representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers and thereafter shall keep Parent informed,
on a current basis, on the status and terms of any such proposals or offers and
the status of any such discussions or negotiations. The Company also agrees that
it will promptly request each Person that has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring all
or substantially all of it, Michigan Consolidated Gas Company or MCN Investment
Corporation to return all confidential information heretofore furnished to such
Person by or on behalf of it or any of its Subsidiaries.

     (b) Parent agrees that neither it nor any of its Subsidiaries nor any of
the officers and directors of it or its Subsidiaries shall, and that it shall
direct and use its best efforts to cause its and its Subsidiaries' employees,
agents and Representatives not to, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation or
similar transaction involving, or any purchase of all or, except for
transactions in the ordinary course of business or expressly contemplated by
this Agreement that could not interfere with the transactions contemplated by
this Agreement, any of the assets or any equity securities of it or any of its
Subsidiaries to the extent that such proposal is conditioned on Parent's failure
to obtain the Parent Requisite Vote or could reasonably be expected to result in
a failure to consummate the transactions contemplated by this Agreement (any
such proposal or offer being hereinafter referred to as a "Parent Adverse
Proposal"). Parent further agrees that neither it nor any of its Subsidiaries
nor any of the officers and directors of it or its Subsidiaries shall, and that
it shall direct and use its best efforts to cause its and its Subsidiaries'
Representatives not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to a Parent Adverse Proposal, or otherwise
facilitate any effort or attempt to make or implement a Parent Adverse Proposal;
provided, however, that nothing contained in this Agreement shall prevent Parent
or its Board of Directors from (A) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a Parent Adverse Proposal; (B) providing
information in response to a request therefor by a Person who has made an
unsolicited bona fide written Parent Adverse Proposal if Parent's Board of
Directors receives from the Person so requesting such information an executed

                                      A-20
   25

confidentiality agreement on terms, with respect to confidentiality,
substantially similar to those contained in the Confidentiality Agreement; (C)
engaging in any negotiations or discussions with any Person who has made an
unsolicited bona fide written Parent Adverse Proposal; or (D) recommending such
Parent Adverse Proposal to the shareholders of Parent, if and only to the extent
that, in each such case referred to in clause (B), (C) or (D) above, prior to
the time the Parent Requisite Vote shall have been obtained the Board of
Directors of Parent determines in good faith after consultation with outside
legal counsel and its financial advisor and based upon such other matters as it
deems relevant that failure to take such action would likely result in a breach
of their fiduciary duties under applicable law and that such Parent Adverse
Proposal, if accepted, is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
Person making the proposal and would, if consummated, be reasonably likely to
result in a transaction more favorable to the Parent's shareholders from a
financial point of view than the transaction contemplated by this Agreement.
Parent agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence of this Section 6.2(b)
of the obligations undertaken in this Section 6.2(b) and in the Confidentiality
Agreement. Parent agrees that it will use its best reasonable efforts to notify
the Company within one day of the receipt thereof if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such discussions or negotiations are sought to be initiated or continued
with, any of its Representatives indicating, in connection with such notice, the
name of such Person and the material terms and conditions of any proposals or
offers and thereafter shall keep the Company informed, on a current basis, on
the status and terms of any such proposals or offers and the status of any such
discussions or negotiations.

     6.3. Information Supplied. The Company and Parent each agrees, as to itself
and its Subsidiaries, that none of the information supplied or to be supplied by
it or its Subsidiaries for inclusion or incorporation by reference in (i) the
Registration Statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger (including the
joint proxy statement and prospectus (the "Prospectus/Proxy Statement")
constituting a part thereof) (the "S-4 Registration Statement") will, at the
time the S-4 Registration Statement becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(ii) the Prospectus/Proxy Statement and any amendment or supplement thereto
will, at the date of mailing to shareholders and at the times of the meetings of
shareholders of the Company and Parent to be held in connection with the Merger
and the issuance of Parent Common Stock, respectively, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Company and
Parent will cause the Form S-4 to comply as to form in all material respects
with the applicable provisions of the Securities Act and the rules and
regulations thereunder.

     6.4. Shareholders Meetings. The Company will take, in accordance with
applicable law and its articles of incorporation and by-laws, all action
necessary to convene a meeting of holders of Shares (the "Shareholders Meeting")
as promptly as practicable after the S-4 Registration Statement is declared
effective to consider and vote upon the approval of this Agreement. Parent will
take, in accordance with its articles of incorporation and by-laws, all action
necessary to convene a meeting of holders of Parent Common Stock as promptly as
practicable after the S-4 Registration Statement is declared effective to
consider and vote upon the approval of the issuance of Parent Common Stock in
the Merger. Subject to fiduciary obligations under applicable law, each of the
Company's and Parent's Board of Directors shall recommend such approval and
shall take all lawful action to solicit such approval.

     6.5. Filings; Other Actions; Notification. (a) Parent and the Company shall
promptly prepare and file with the SEC the Prospectus/Proxy Statement, and
Parent shall prepare and file with the SEC the S-4 Registration Statement as
promptly as practicable. Parent and the Company each shall use its best
reasonable efforts to have the S-4 Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing, and
promptly thereafter mail the Prospectus/Proxy Statement to the respective
shareholders of each of the Company and Parent. Parent shall also use its best
reasonable efforts to obtain prior to the effective date of the S-4 Registration
Statement all necessary state securities law or "blue sky"

                                      A-21
   26

permits and approvals required in connection with the Merger and to consummate
the other transactions contemplated by this Agreement and will pay all expenses
incident thereto.

     (b) The Company and Parent each shall use its best reasonable efforts to
cause to be delivered to the other party and its directors a letter of its
independent auditors, dated (i) the date on which the S-4 Registration Statement
shall become effective and (ii) the Closing Date, and addressed to the other
party and its directors, in form and substance customary for "comfort" letters
delivered by independent public accountants in connection with registration
statements similar to the S-4 Registration Statement.

     (c) The Company and Parent shall cooperate with each other and use (and
shall cause their respective Subsidiaries to use) their respective commercially
reasonable efforts to take or cause to be taken all actions, and do or cause to
be done all things, necessary, proper or advisable on its part under this
Agreement and applicable Laws to consummate and make effective the Merger and
the other transactions contemplated by this Agreement as soon as practicable,
including preparing and filing as promptly as practicable all documentation to
effect all necessary notices, reports and other filings and to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement. Subject to applicable laws relating
to the exchange of information (including any obligations pursuant to any
listing agreement with or rules of any national securities exchange), Parent and
the Company shall have the right to review in advance, and to the extent
practicable each will consult the other on, all the information relating to
Parent or the Company, as the case may be, and any of their respective
Subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental Entity (including any
national securities exchange) in connection with the Merger and the other
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the Company and Parent shall act reasonably and as promptly as
practicable.

     (d) The Company and Parent each shall, upon request by the other, furnish
the other with all information concerning itself, its Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Prospectus/Proxy Statement, the S-4
Registration Statement or any other statement, filing, notice or application
made by or on behalf of Parent, the Company or any of their respective
Subsidiaries to any third party and/or any Governmental Entity in connection
with the Merger and the transactions contemplated by this Agreement.

     (e) The Company and Parent each shall keep the other apprized of the status
of matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of any notices or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
The Company and Parent each shall give prompt notice to the other of any change
that is reasonably likely to result in a Material Adverse Effect on it or
prevent, materially delay or materially impair the ability of the Company or
Parent, as the case may be, to consummate the transactions contemplated by this
Agreement.

     (f) In the event any claim, action, suit investigation or other proceeding
by any Governmental Entity or other Person or other legal or administrative
proceeding is commenced that questions the validity or legality of this
Agreement or the Merger or the other transaction contemplated by this Agreement
or claims damages in connection therewith, the Company and Parent each agree to
cooperate and use their best reasonable efforts to defend against and respond
thereto.

     6.6. Access. Upon reasonable notice, and except as may otherwise be
required by applicable law, the Company and Parent each shall (and shall cause
its Subsidiaries to) afford the other's officers, employees, counsel,
accountants and other authorized representatives reasonable access during normal
business hours throughout the period prior to the Effective Time, to its
properties, books, contracts and records and, during such period, the Company
and Parent each shall (and shall cause its Subsidiaries to) furnish promptly to
the other all information concerning its business, properties and personnel as
may reasonably be requested, provided that no investigation pursuant to this
Section shall affect or be deemed to modify any representation or warranty made
by the Company, Parent or Merger Sub and provided, further, that the foregoing
shall not
                                      A-22
   27

require the Company or Parent to permit any inspection, or to disclose any
information, that in the reasonable judgment of the Company or Parent (i) would
result in the disclosure of any trade secrets of third parties or violate any of
its obligations with respect to confidentiality if the Company or Parent, as the
case may be, shall have used its best reasonable efforts to obtain the consent
of such third party to such inspection or disclosure or (ii) constitutes
information protected by attorney-client privilege, but only to the extent that
disclosure would impair the Company's or Parent's, as the case may be, ability
to assert such attorney-client privilege. All requests for information made
pursuant to this Section shall be directed to an executive officer of the
Company or Parent, as the case may be, or such Person as may be designated by
either of its executive officers, as the case may be. All such information shall
be governed by the terms of the Confidentiality Agreement.

     6.7. Affiliates. At least ten business days prior to the date of the
Shareholders Meeting, the Company shall deliver to Parent a list of names and
addresses of those Persons who are, in the opinion of the Company, as of the
time of the Shareholders Meeting referred to in Section 6.4, "affiliates" of the
Company within the meaning of Rule 145 under the Securities Act. There shall be
added to such list the names and addresses of any other Person subsequently
identified by either Parent or the Company as a Person who may be deemed to be
such an affiliate of the Company; provided, however, that no such Person
identified by Parent shall be added to the list of affiliates of the Company if
Parent shall receive from the Company, on or before the date of the Shareholders
Meeting, an opinion of counsel reasonably satisfactory to Parent to the effect
that such Person is not such an affiliate. The Company shall exercise its best
efforts to deliver or cause to be delivered to Parent, prior to the date of the
Shareholders Meeting, from each affiliate of the Company identified in the
foregoing list (as the same may be supplemented as aforesaid), a letter dated as
of the Closing Date substantially in the form attached as Exhibit A-1 (the
"Affiliates Letter"). Parent shall not be required to maintain the effectiveness
of the S-4 Registration Statement or any other registration statement under the
Securities Act for the purposes of resale of Parent Common Stock by such
affiliates received in the Merger and the certificates representing Parent
Common Stock received by such affiliates shall bear a customary legend regarding
applicable Securities Act restrictions and the provisions of this Section.

     6.8. Stock Exchange Listing and De-listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger to
be approved for listing on the NYSE subject to official notice of issuance,
prior to the Closing Date. The Surviving Corporation shall use its best efforts
to cause the Shares to be de-listed from the NYSE and de-registered under the
Exchange Act as soon as practicable following the Effective Time.

     6.9. Publicity. The initial press release shall be a joint press release
and thereafter the Company and Parent each shall consult with each other prior
to issuing any press releases or otherwise making public announcements with
respect to the Merger and the other transactions contemplated by this Agreement.

     6.10. Benefits.

     (a) Stock Options. (i) At the Effective Time, each outstanding option to
purchase Shares (a "Company Option") under the Stock Plans, whether vested or
unvested, shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such Company Option, the number of
shares of Parent Common Stock equal to the result (rounded to the nearest whole
share) of multiplying the number of Shares subject to the Company Option
immediately prior to the Effective Time by the Conversion Ratio (as defined
below), at an exercise price per share equal to the result (rounded to the
nearest whole cent) of dividing the per share exercise price of such Company
Option immediately prior to the Effective Time by the Conversion Ratio;
provided, however, that in the case of any Company Option to which Section 422
of the Code applies, the adjustments provided for in this Section shall be
effected in a manner consistent with the requirements of Section 424(a) of the
Code. At or prior to the Effective Time, the Company shall make all necessary
arrangements with respect to the Stock Plans to permit the assumption of the
unexercised Company Options by Parent pursuant to this Section. For purposes of
this Section, the term "Conversion Ratio" means a fraction, the numerator of
which is the average of the high and low sales price of one Share on the NYSE on
the three trading days immediately preceding the Effective Time and the
denominator of which is the average

                                      A-23
   28

of the high and low sales price of one share of Parent Common Stock on the NYSE
on the trading day immediately preceding the Effective Time.

     (ii) Effective at the Effective Time, Parent shall assume each Company
Option in accordance with the terms of the Stock Plans and the stock option
agreement by which it is evidenced. At or prior to the Effective Time, Parent
shall take all corporate action necessary to reserve for issuance a sufficient
number of shares of Parent Common Stock for delivery upon exercise of Company
Options assumed by it in accordance with this Section. As soon as practicable
after the Effective Time, Parent shall file a registration statement on Form S-8
(or any successor or other appropriate forms), or another appropriate form with
respect to the shares of Parent Common Stock subject to such Company Options,
and shall use its best reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Company Options remain
outstanding.

     (iii) Prior to the Effective Time, the Board of Directors of Parent, or an
appropriate committee of non-employee directors thereof, shall adopt a
resolution consistent with the interpretive guidance of the SEC so that the
acquisition of shares of Parent Common Stock or options to acquire shares of
Parent Common Stock pursuant to this Agreement and the Merger and the Merger
shall be an exempt transaction for purposes of Section 16 by any officer or
director of the Company who may become a covered person of Parent for purposes
of Section 16 of the Exchange Act ("Section 16").

     (b) Employee Benefits. (i) Parent agrees that, during the period commencing
at the Effective Time and ending on the first anniversary thereof, the employees
of the Company and its Subsidiaries ("Company Employees") will continue to be
provided with compensation and benefits under employee benefit plans (other than
plans involving the issuance of Shares) that are no less favorable in the
aggregate than those currently provided by the Company and its Subsidiaries to
such Company Employees under the Compensation and Benefit Plans of the Company
and its Subsidiaries.

     (ii) From and after the Effective Time, Parent shall cause the Surviving
Corporation and The Detroit Edison Company to honor (i) each existing
employment, change of control, severance and termination agreement between the
Company or any of its Subsidiaries, and any officer, director or employee of the
Company or its Subsidiaries and (ii) all Compensation and Benefit Plans of the
Company and its Subsidiaries in accordance with their terms as in effect
immediately before the Effective Time. Notwithstanding the above, nothing in
this Agreement precludes Parent or any of its Subsidiaries from amending,
discontinuing or terminating any Compensation and Benefit Plan in accordance
with the terms thereof. Parent acknowledges that it has been advised by the
Company that the Merger constitutes a change of control for purposes of certain
Company Compensation and Benefit Plans specifically identified in Section
6.10(b) of the Company Disclosure Letter.

     (iii) For all purposes under the employee benefit plans of Parent and its
Affiliates providing benefits to any current Company Employees after the
Effective Time (the "New Plans"), each Company Employee shall be credited with
his or her years of service with the Company and its Affiliates before the
Effective Time, to the same extent as such Company Employee was entitled, before
the Effective Time, to credit for such service for such purposes under any
similar Company Employee Plans, except to the extent such credit would result in
a duplication of benefits. In addition, and without limiting the generality of
the foregoing: (i) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan replaces coverage under a comparable Company
Employee Plan in which such Company Employee participated immediately before the
Effective Time (such plans, collectively, the "Old Plans"); and (ii) for
purposes of each New Plan providing medical, dental, pharmaceutical and/or
vision benefits to any Company Employee, Parent shall cause all pre-existing
condition exclusions of such New Plan to be waived for such employee and his or
her covered dependents to the extent that such exclusions and requirements were
waived under the corresponding Company Employee Plans, and Parent shall cause
any eligible expenses incurred by such employee and his or her covered
dependents during the portion of the plan year of the Old Plan ending on the
date that such employee's participation in the corresponding New Plan begins to
be taken into account under such New Plan for purposes of satisfying all
deductible, coinsurance and

                                      A-24
   29

maximum out-of-pocket requirements applicable to such employee and his or her
covered dependents for the applicable plan-year as if such amounts had been paid
in accordance with such New Plan.

     (iv) Between the date hereof and December 31, 1999, the Company shall take
such reasonable and appropriate actions as agreed to by Parent to mitigate the
tax cost to the Company of providing the "change of control" benefits identified
in Section 5.1(h) of the Company Disclosure Letter.

     (c) Election to Parent's Board of Directors; Management Executive
Committee. At the Effective Time of the Merger, Parent shall promptly increase
the size of its Board of Directors or exercise its best efforts to secure the
resignation of present directors in order to cause Alfred R. Glancy III and two
additional persons selected by the Company after consultation with Parent from
among the Company's directors as of the date hereof to be appointed to Parent's
Board of Directors.

     (d) Employees. It is the present intention of Parent and the Company that
following the Effective Time, there will be no involuntary reductions in force
at the Surviving Corporation or its Subsidiaries, and that Parent, the Surviving
Corporation and their respective Subsidiaries will continue Parent's and the
Company's present strategy of achieving workforce reductions through attrition
or other voluntary means; provided, however, that if any reductions in workforce
in respect of employees of Parent and its Subsidiaries, including the Surviving
Corporation and its Subsidiaries, become necessary, they shall be made on a fair
and equitable basis, in light of the circumstances and the objectives to be
achieved, giving consideration to previous work history, job experience,
qualifications, and business needs without regard to whether employment prior to
the Effective Time was with the Company or its Subsidiaries or Parent or its
Subsidiaries, and any employees whose employment is terminated or jobs are
eliminated by Parent, the Surviving Corporation or any of their respective
Subsidiaries shall be entitled to participate on a fair and equitable basis in
the job opportunity and employment placement programs offered by Parent, the
Surviving Corporation or any of their respective Subsidiaries. Any workforce
reductions carried out following the Effective Time by Parent or the Surviving
Corporation and their respective Subsidiaries shall be done in accordance with
all applicable collective bargaining agreements, and all laws and regulations
governing the employment relationship and termination thereof including, without
limitation, the Worker Adjustment and Retraining Notification Act and
regulations promulgated thereunder, and any comparable state or local law.

     6.11. Expenses. The Surviving Corporation or Parent shall pay all charges
and expenses of the Company, Merger Sub or Parent, including those of the
Exchange Agent, in connection with the transactions contemplated in Article IV,
and Parent shall reimburse the Surviving Corporation for such charges and
expenses paid by the Surviving Corporation. Except as otherwise provided in
Section 8.5(b), whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense, except that expenses incurred in connection with the filing fee
for the S-4 Registration Statement and printing and mailing the Prospectus/Proxy
Statement and the S-4 Registration Statement shall be shared equally by Parent
and the Company.

     6.12. Indemnification; Directors' and Officers' Insurance. (a) From and
after the Effective Time, Parent agrees that it will indemnify and hold harmless
each present and former director and officer of the Company, (when acting in
such capacity) determined as of the Effective Time (the "Indemnified Parties"),
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted under Michigan law and its articles of
incorporation and its by-laws in effect on the date hereof to indemnify such
Person (and Parent shall also advance expenses as incurred to the fullest extent
permitted under applicable law, provided, the Person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification).

     (b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 6.12, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof,
                                      A-25
   30

but the failure to so notify shall not relieve Parent of any liability it may
have to such Indemnified Party so long as such failure does not materially
prejudice Parent. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
or the Surviving Corporation shall have the right to assume and control the
defense thereof and Parent shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Parties in connection with the defense thereof, except that
if Parent or the Surviving Corporation elects not to assume such defense or
counsel for the Indemnified Parties advises in writing that there are issues
which raise conflicts of interest between Parent or the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them subject to the consent of Parent, which shall not be
unreasonably withheld, and Parent or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements setting forth such fees and expenses in reasonable detail
are received; provided, however, that Parent shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of
any such matter and (iii) Parent shall not be liable for any settlement effected
without its prior written consent; and provided, further, that Parent shall not
have any obligation hereunder to any Indemnified Party if and when a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.

     (c) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance ("D&O Insurance") for a period of
six years after the Effective Time so long as the annual premium therefor is not
in excess of 200% of the last annual premium paid prior to the date hereof (the
"Current Premium"); provided, however, that (x) the Surviving Corporation may
substitute therefor policies (which may be "tail" policies) containing terms
with respect to coverage and amount no less favorable to such directors and
officers, and (y) if the existing D&O Insurance expires, is terminated or
canceled during such six-year period, the Surviving Corporation will use its
best efforts to obtain as much D&O Insurance as can be obtained for the
remainder of such period for a premium not in excess (on an annualized basis) of
200% of the Current Premium.

     (d) The provisions of this Section 6.12 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.

     6.13. Takeover Statutes. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and its Board of Directors shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement or by the Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.

     6.14. Dividends. The Company shall coordinate with Parent the declaration,
setting of record dates and payment dates of dividends on Shares so that holders
of Shares do not receive dividends on both Shares and Parent Common Stock
received in the Merger in respect of any calendar quarter or fail to receive a
dividend on either Shares or Parent Common Stock received in the Merger in
respect of any calendar quarter.

     6.15. Rate Matters. Other than currently pending rate filings, the Company
shall, and shall cause its Subsidiaries to, discuss with Parent any material
changes in its or its Subsidiaries regulated rates or charges (other than
pass-through fuel rates or charges), standards of service or accounting from
those in effect on the date hereof and consult with Parent prior to making any
filing (or any amendment thereto), or effecting any agreement, commitment,
arrangement or consent, whether written or oral, formal or informal, with
respect thereto.

     6.16. Taxation. Subject to Section 6.2, neither Parent nor the Company
shall take or cause to be taken any action, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.

     6.17. Transition Matters. (a) Promptly after the date hereof, Parent and
the Company each shall designate three persons (the "Transition Coordinators")
to, subject to applicable laws relating to the exchange

                                      A-26
   31

of information, facilitate a full exchange of information concerning the
business, operations, capital spending and budgets and financial results of
Parent and the Company and to identify ways in which the operations of Parent
and the Company can be consolidated or coordinated. The Transition Coordinators
shall meet at least monthly in person and shall meet together quarterly with the
Chief Executive Officers of Parent and the Company. From and after the date
hereof, Parent and the Company agree that they shall consult with each other
regarding all material business plans and decisions.

     (b) The Company and Parent each agree to use its reasonable best efforts to
enter into a definitive agreement within 14 days of the date hereof for the sale
to Parent of the Company's 95% membership interest in each of the following
limited liability companies that own and operate synthetic fuel manufacturing
facilities: (i) CRC No. 1, LLC Union City, Kentucky, (ii) CRC No. 3, LLC,
Tazewell County Virginia and McDowell County Virginia, (iii) CRC No. 5, LLC
Monongalia County, West Virginia, and (iv) CRC No. 6, LLC Laurel County, West
Virginia. The Company and Parent each agree that the economic terms for each
such sale shall be designed to produce a payment stream to the Company with a
net present value of $40 per ton of capacity, utilizing a 12% discount rate.

     (c) The Company agrees to use its best efforts promptly to enter into, or
to cause its Subsidiaries promptly to enter into, agreements to dispose of (i)
such of its interests as are necessary so that the transactions contemplated by
this Agreement will not jeopardize the status of any facilities in which the
Company directly or indirectly owns any interest as "Qualifying Facilities"
under the Public Utility Regulatory Policies Act of 1978, as amended, and (ii)
all FERC-jurisdictional assets or facilities whether directly or indirectly
owned or wholly or partially owned that would give rise to a requirement for
approval of the Merger by the FERC, in each case prior to the date when all
Governmental Consents (as defined below) are obtained and to use commercially
reasonable efforts to maximize the after-tax proceeds from such sales or
dispositions; provided, that the obligation to use best efforts shall not
require the Company to take any action pursuant to this Section 6.17(c) that
would cause (alone or together with other events) any failure to satisfy any
condition to Closing. The Company agrees to keep Parent informed on a current
basis regarding the status and terms of such dispositions and any other asset
dispositions contemplated by the Company and its Subsidiaries and to work
cooperatively with Parent to maximize the mutual benefit to the parties of such
dispositions.

     6.18. Community Involvement. After the Effective Time, Parent intends to
continue, and intends to cause the Surviving Corporation to continue, to make
aggregate annual charitable contributions to the communities served by Parent
and the Surviving Corporation and otherwise maintain a substantial level of
involvement in community activities in the State of Michigan that is similar to,
or greater than, the normal aggregate annual level of charitable contributions,
community development and related activities carried on by Parent and the
Company prior to the date hereof.

     6.19. 1935 Act and Power Act. (a) None of the parties hereto shall, nor
shall any such party permit any of its Subsidiaries to, without the other
party's consent, which shall not be unreasonably withheld or delayed, engage in
any activities that would (i) cause a change in its status, or that of its
Subsidiaries, under the 1935 Act, including, without limitation, the
registration of either party pursuant to the 1935 Act or (ii) result in
jurisdiction by the FERC over the Merger.

     (b) None of the parties hereto shall, nor shall any such party permit any
of its Subsidiaries to, without the other party's consent, which shall not be
unreasonably withheld or delayed, fail to take such actions that are necessary
to (i) preserve existing exemptions from registration under the 1935 Act or (ii)
allow the Merger to proceed without a requirement for approval by the FERC.

     6.20. Feline Prides. At or prior to the Effective Time, Parent shall take
all corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon conversion of the Feline Prides
in accordance with their terms.

                                      A-27
   32

                                  ARTICLE VII

                                   CONDITIONS

     7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:

     (a) Shareholder Approval. This Agreement shall have been duly approved by
holders of Shares constituting the Company Requisite Vote and shall have been
duly approved by the sole shareholder of Merger Sub in accordance with
applicable law and the articles of incorporation and by-laws of each such
corporation, and the issuance of Parent Common Stock pursuant to the Merger
shall have been duly approved by the holders of Parent Common Stock constituting
the Parent Requisite Vote.

     (b) NYSE Listing. The shares of Parent Common Stock issuable to the Company
shareholders pursuant to this Agreement shall have been authorized for listing
on the NYSE upon official notice of issuance.

     (c) Regulatory Consents. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated, and,
other than the filing provided for in Section 1.3, all notices, reports and
other filings required to be made prior to the Effective Time by the Company or
Parent or any of their respective Subsidiaries with, and all consents,
registrations, approvals, permits and authorizations required to be obtained
prior to the Effective Time by the Company or Parent or any of their respective
Subsidiaries from, any Governmental Entity (collectively, "Governmental
Consents") in connection with the execution and delivery of this Agreement and
the consummation of the Merger and the other transactions contemplated hereby by
the Company, Parent and Merger Sub shall have been made or obtained (as the case
may be) and become final, except for those that the failure to make or to
obtain, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on Parent or the Company, as applicable, or provide a
reasonable basis to conclude that the parties hereto or any of their affiliates
or respective directors, officers, agents, advisors or other representatives
would be subject to the risk of criminal or material financial liability.

     (d) Litigation. No court or Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, law,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger or the other
transactions contemplated by this Agreement (collectively, an "Order"), and none
of the U.S. Department of Justice, the Michigan Public Service Commission or the
FERC shall have instituted any proceeding or be threatening to institute any
proceeding seeking any such Order.

     (e) S-4. The S-4 Registration Statement shall have become effective under
the Securities Act. No stop order suspending the effectiveness of the S-4
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or be threatened, by the SEC.

     (f) Blue Sky Approvals. Parent shall have received all state securities and
"blue sky" permits and approvals necessary to consummate the transactions
contemplated hereby.

     (g) Certain Transactions. The Company shall have completed the disposition
of the interests required to be disposed of by Section 6.17(c) of this
Agreement.

     7.2. Conditions to Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are also subject to the satisfaction
or waiver by Parent at or prior to the Effective Time of the following
conditions:

     (a) Representations and Warranties. The representations and warranties of
the Company set forth in Sections 5.1(b)(i), 5.1(c)(i), 5.1(j), 5.1(p) and
5.1(q) of this Agreement shall be true and correct in all material respects (a)
on the date hereof and (b) on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that expressly speak
only as of specific date or time other than the date hereof or the Closing

                                      A-28
   33

Date, which need only be true and correct in all material respects as of such
date or time) and all other representations and warranties of the Company set
forth in this Agreement shall be true and correct (i) on the date hereof and
(ii) on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that expressly speak only as of
specific date or time other than the date hereof or the Closing Date, which need
only be true and correct as of such date or time) except in each of cases (i)
and (ii) for such failures of those representations or warranties to be true and
correct (without regard to any Material Adverse Effect, materiality or similar
qualifications contained therein) which, individually or in the aggregate, have
not had and are not reasonably likely to have, a Material Adverse Effect on
Parent, and Parent shall have received a certificate signed on behalf of the
Company by an executive officer of the Company to such effect.

     (b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by an executive officer
of the Company to such effect.

     (c) Consents Under Agreements. The Company shall have obtained the consent
or approval of each Person whose consent or approval shall be required under any
material Contract to which the Company or any of its Subsidiaries is a party.

     (d) Accountants Letter. Parent shall have received, in form and substance
reasonably satisfactory to Parent, from Deloitte & Touche LLP, the Company's
independent auditor, the "comfort" letter described in Section 6.5(b).

     (e) Affiliates Letters. Parent shall have received an Affiliates Letter
from each Person identified as an affiliate of the Company pursuant to Section
6.7.

     (f) Material Adverse Effect. There shall not have occurred any Material
Adverse Effect on the Company.

     (g) Tax Opinion. Parent shall have received the opinion of Sullivan &
Cromwell, counsel to Parent, dated the Closing Date, to the effect that (based
on customary assumptions and representations and subject to customary
exceptions) the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that each
of Parent, Merger Sub and the Company will be a party to that reorganization
within the meaning of Section 368(b) of the Code. The condition set forth in
this Section 7.2(g) shall not be waivable after the Company Requisite Vote or
the Parent Requisite Vote has been obtained unless further shareholder approval
is obtained with appropriate disclosure.

     (h) Governmental Consents. All Governmental Consents in connection with the
execution and delivery of this Agreement and the consummation of the Merger and
the other transactions contemplated hereby shall have been obtained without
imposing any terms or conditions that, individually or in the aggregate, in the
reasonable judgment of Parent, are reasonably likely to have a Material Adverse
Effect on Parent, the Company or the Surviving Corporation.

     7.3. Conditions to Obligation of the Company. The obligation of the Company
to effect the Merger is also subject to the satisfaction or waiver by the
Company at or prior to the Effective Time of the following conditions:

     (a) Representations and Warranties. The representations and warranties of
Parent and Merger Sub set forth in Section 5.1(b)(ii), 5.1(c)(ii), 5.1(c)(iii),
and 5.1(q) this Agreement shall be true and correct in all material respects (a)
on the date hereof and (b) on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that expressly speak
only as of specific date or time other than the date hereof or the Closing Date,
which need only be true and correct in all material respect as of such date or
time) and all other representations and warranties of Parent and Merger Sub set
forth in this Agreement shall be true and correct (i) on the date hereof and
(ii) on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except for representations and

                                      A-29
   34

warranties that expressly speak only as of specific date or time other than the
date hereof or the Closing Date, which need only be true and correct in all
material respects as of such date or time) except in each of cases (i) and (ii)
for such failures of those representations or warranties to be true and correct
(without regard to any Material Adverse Effect, materiality or similar
qualifications contained therein) which, individually or in the aggregate, have
not had and are not reasonably likely to have, a Material Adverse Effect on the
Company, and the Company shall have received a certificate signed on behalf of
Parent and Merger Sub by an executive officer of Parent to such effect.

     (b) Performance of Obligations of Parent and Merger Sub. Each of Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on behalf of
Parent and Merger Sub by the an executive officer of Parent to such effect.

     (c) Consents Under Agreements. Parent shall have obtained the consent or
approval of each Person whose consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement under any material
Contract to which Parent or any of its Subsidiaries is a party.

     (d) Accountants Letter. The Company shall have received, in form and
substance reasonably satisfactory to the Company, from Deloitte & Touche LLP,
Parent's independent auditor, the "comfort" letter described in Section 6.5(b).

     (e) Material Adverse Effect. There shall not have occurred any Material
Adverse Effect on Parent.

     (f) Tax Opinion. The Company shall have received the opinion of Wachtell,
Lipton, Rosen & Katz, counsel to the Company, dated the Closing Date, to the
effect that (based on customary assumptions and representations and subject to
customary exceptions) the Merger will be treated for Federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code, and that
each of Parent, Merger Sub and the Company will be a party to that
reorganization within the meaning of Section 368(b) of the Code. The condition
set forth in this Section 7.3(f) shall not be waivable after the Company
Requisite Vote or the Parent Requisite Vote has been obtained unless further
shareholder approval is obtained with appropriate disclosure.

                                  ARTICLE VIII

                                  TERMINATION

     8.1. Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders of the Company and Parent referred
to in Section 7.1(a), by mutual written consent of the Company and Parent by
action of their respective Boards of Directors.

     8.2. Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Directors of either Parent or the Company if: (i)
the Merger shall not have been consummated by July 15, 2000, whether such date
is before or after the date of approval by the shareholders of the Company or
Parent (the "Termination Date"); provided that the Termination Date shall be
automatically extended for nine months (the "Extended Date") if, on July 15,
2000: (x) any of the Governmental Consents described in Section 7.1(c) have not
been obtained or waived, (y) each of the other conditions to the consummation of
the Merger set forth in Article VII has been satisfied or waived or remains
capable of satisfaction, and (z) any Governmental Consent that has not yet been
obtained is being pursued diligently and in good faith; (ii) the approval of the
Company's shareholders required by Section 7.1(a) shall not have been obtained
at a meeting duly convened therefor or at any adjournment or postponement
thereof; (iii) the approval of Parent's shareholders as required by Section
7.1(a) shall not have been obtained at a meeting duly convened therefor; (iv)
any Order permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable (whether before
or after the approval by the shareholders of the Company or Parent); or (v) on
or after the Regulatory Termination Date (as defined below) the Board of
Directors of Parent or of the Company

                                      A-30
   35

reasonably determines that it is more likely than not that Governmental Consents
necessary to satisfy the conditions to the parties' obligation to effect the
Merger will not be obtained on terms that satisfy the standard set forth in
Section 7.2(h) prior to the Extended Date; provided, that such party provides
the other two weeks prior notice. The right to terminate this Agreement pursuant
to clause (i) or (v) of the immediately preceding sentence shall not be
available to any party that has breached in any material respect its obligations
under this Agreement in any manner that shall have proximately contributed to
the occurrence of the failure of the Merger to be consummated. As used in this
Agreement, the term "Regulatory Termination Date" means the date one year from
the date hereof unless the transactions contemplated by this Agreement shall
require any approval of the FERC, in which case it shall mean the date 15 months
from the date hereof.

     8.3. Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned by action of the Board of Directors of the Company if:

     (a) at any time prior to the Effective Time, whether before or after the
approval by shareholders of the Company referred to in Section 7.1(a),(i) the
Board of Directors of Parent shall have withdrawn or adversely modified its
approval or recommendation of this Agreement or failed to reconfirm its
recommendation of this Agreement within five business days after a written
request by the Company to do so or (ii) there has been a material breach by
Parent or Merger Sub of any representation, warranty, covenant or agreement
contained in this Agreement that is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by the Company to
the party committing such breach; or

     (b) (i) the Company Requisite Vote shall not have been obtained, (ii) the
Company is not in breach of any of the terms of this Agreement, (iii) the Board
of Directors of the Company authorizes the Company, subject to complying with
the terms of this Agreement, to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and the Company
notifies Parent in writing that it intends to enter into such an agreement, (iv)
Parent does not make, within five business days of receipt of the Company's
written notification of its intention to enter into a binding agreement for a
Superior Proposal, an offer that the Board of Directors of the Company
determines, in good faith after consultation with its financial advisors, is at
least as favorable, from a financial point of view, to the shareholders of the
Company as the Superior Proposal, and (v) the Company prior to such termination
pays to Parent in immediately available funds any fees required to be paid
pursuant to Section 8.5. The Company agrees (x) that it will not enter into a
binding agreement referred to in clause (iii) of the last preceding sentence
until at least the sixth business day after it has provided the notice to Parent
required thereby and (y) to notify Parent promptly if its intention to enter
into a written agreement referred to in its notification shall change at any
time after giving such notification.

     8.4. Termination by Parent. This Agreement may be terminated and the Merger
may be abandoned by action of the Board of Directors of Parent if:

     (a) at any time prior to the Effective Time, whether before or after the
approval by the shareholders of Parent referred to in Section 7.1(a), (i) the
Board of Directors of the Company shall have withdrawn or adversely modified its
approval or recommendation of this Agreement or failed to reconfirm its
recommendation of this Agreement within five business days after a written
request by Parent to do so or (ii) there has been a material breach by the
Company of any representation, warranty, covenant or agreement contained in this
Agreement that is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by Parent to the Company; or

     (b) (i) the Parent Requisite Vote shall not have been obtained, (ii) Parent
is not in breach of any of the terms of this Agreement, (iii) the Board of
Directors of Parent authorizes Parent, subject to complying with the terms of
this Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Parent Adverse Proposal and Parent notifies the
Company in writing that it intends to enter into such an agreement, (iv) the
Company does not make within five business days of receipt of Parent's
notification of its intention to enter into a binding agreement for a Parent
Adverse Proposal, an offer the Board of Directors of Parent determines, in good
faith after consultation with its financial advisors, is at least as favorable,
from a financial point of view, to the shareholders of Parent as the Parent
Adverse Proposal, and (v) Parent prior to such termination pays to the Company
in immediately available funds any fees required to
                                      A-31
   36

be paid pursuant to Section 8.5. Parent agrees (x) that it will not enter into
any binding agreement referred to in clause (iii) of the last preceding sentence
until at least the sixth business day after it has provided the notice to the
Company required thereby and (y) to notify the Company promptly if its intention
to enter into a written agreement referred to in its notification shall change
at any time after giving such notification.

     8.5. Effect of Termination and Abandonment. (a) In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
VIII, this Agreement (other than as set forth in Section 9.1) shall become void
and of no effect with no liability on the part of any party hereto (or of any of
its directors, officers, employees, agents, legal and financial advisors or
other representatives); provided, however, except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any breach of this Agreement.

     (b) In the event that (i) a Company Acquisition Proposal shall have been
made to the Company or any of its Subsidiaries or any of its shareholders or any
Person shall have publicly announced an intention (whether or not conditional)
to make a Company Acquisition Proposal and thereafter this Agreement is
terminated by either Parent or the Company pursuant to Section 8.2(ii), (ii)
this Agreement is terminated by Parent pursuant to Section 8.4(a)(i) or, (iii)
this Agreement is terminated by the Company pursuant to Section 8.3(b) then the
Company shall, in the case of a termination pursuant to 8.3(b) prior to such
termination, and otherwise promptly, but in no event later than two days after
the date of such termination, pay Parent a termination fee of $55,000,000 and
shall promptly, but in no event later than two days after being notified of such
by Parent, pay all of the charges and expenses, including those of the Exchange
Agent, incurred by Parent or Merger Sub in connection with this Agreement and
the transactions contemplated by this Agreement up to a maximum amount of
$15,000,000, in each case payable by wire transfer of same day funds; provided,
however, that in the event of a termination pursuant to Section 8.2(ii) under
the circumstances set forth in clause (i) of this Section 8.5(b), or a
termination pursuant to Section 8.4(a)(i), the Company shall (a) promptly, but
in no event later than two days after being notified of such by Parent, pay all
of the charges and expenses incurred by Parent in connection with this Agreement
and the transactions contemplated by this Agreement up to a maximum amount of
$15,000,000, and, (b) if the Company enters into a definitive agreement to
consummate or consummates a Company Acquisition Proposal within 12 months from
the date of such termination, at the time of the entering into of such agreement
or such consummation, as applicable, pay Parent a termination fee of
$55,000,000. The Company acknowledges that the agreements contained in this
Section 8.5(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and Merger Sub would not
enter into this Agreement; accordingly, if the Company fails to promptly pay the
amount due pursuant to this Section 8.5(b), and, in order to obtain such
payment, Parent or Merger Sub commences a suit which results in a judgment
against the Company for the fee set forth in this paragraph (b), the Company
shall pay to Parent or Merger Sub its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest on the amount of the
fee at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.

     (c) In the event that (i) a Parent Adverse Proposal shall have been made to
Parent or any of its Subsidiaries or any of its shareholders or any Person shall
have publicly announced an intention (whether or not conditional) to make a
Parent Adverse Proposal and thereafter this Agreement is terminated by either
the Company or Parent pursuant to Section 8.2(iii), (ii) this Agreement is
terminated by the Company pursuant to Section 8.3(a)(i) or (iii) this Agreement
is terminated by Parent pursuant to Section 8.4(b), then Parent shall, in the
case of a termination pursuant to Section 8.4(b) prior to such termination, and
otherwise promptly, but in no event later than two days after the date of such
termination, pay the Company a termination fee of $85,000,000 and shall
promptly, but in no event later than two days after being notified of such by
the Company, pay all of the charges and expenses incurred by the Company in
connection with this Agreement and the transactions contemplated by this
Agreement up to a maximum amount of $15,000,000, in each case payable by wire
transfer of same day funds; provided, however, that in the event of a
termination pursuant to Section 8.2(iii) under the circumstances set forth in
clause (i) of this Section 8.5(c), or a termination pursuant to Section
8.3(a)(i), Parent shall (a) promptly, but in no event later than two days after
being notified of such by the Company, pay all of the charges and expenses
incurred by the Company in connection with this Agreement and the transactions
contemplated hereby up to a maximum amount of

                                      A-32
   37

$15,000,000 and, (b) if Parent enters into a definitive agreement to consummate
or consummates a Parent Adverse Proposal within 12 months from the date of such
termination, at the time of the entering into of such agreement or such
consummation, as applicable, pay the Company a termination fee of $85,000,000.
Parent acknowledges that the agreements contained in this Section 8.5(c) are an
integral part of the transactions contemplated by this Agreement and that,
without these agreements, the Company would not enter into this Agreement;
accordingly, if Parent fails to promptly pay the amount due pursuant to this
Section 8.5(c), and, in order to obtain such payment, the Company commences a
suit which results in a judgment against Parent for the fee set forth in this
paragraph (c), Parent shall pay to the Company its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on the
amount of the fee at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.

                                   ARTICLE IX

                           MISCELLANEOUS AND GENERAL

     9.1. Survival. This Article IX and the agreements of the Company, Parent
and Merger Sub contained in Sections 6.8 (Stock Exchange Listing and Delisting),
6.10 (Benefits), 6.11 (Expenses), 6.12 (Indemnification; Directors' and
Officers' Insurance) and 6.16 (Taxation) shall survive the consummation of the
Merger. This Article IX, the agreements of the Company, Parent and Merger Sub
contained in Section 6.11 (Expenses), Section 8.5 (Effect of Termination and
Abandonment) and the Confidentiality Agreement shall survive the termination of
this Agreement. All other representations, warranties, covenants and agreements
in this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.

     9.2. Modification or Amendment. Subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.

     9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.

     9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.

     9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (A) THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF
MICHIGAN WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties
hereby irrevocably submit to the jurisdiction of the courts of the State of
Michigan and the Federal courts of the United States of America located in the
State of Michigan solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Michigan State
or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 9.6 or in such other
manner as may be permitted by law shall be valid and sufficient service thereof.

     (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND

                                      A-33
   38

UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.

     9.6. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:

     if to Parent or Merger Sub

     DTE Energy Company
     2000 Second Avenue
     Detroit, MI 48226
     Attention: General Counsel
     fax: (313) 235-0121

     (with a copy to Joseph B. Frumkin, Esq.,
     Sullivan & Cromwell,
     125 Broad Street
     New York, NY 10004
     fax: (212) 558-3588)

     if to the Company

     MCN Energy Group Inc.
     500 Griswold Street
     Detroit, MI 48226
     Attention: General Counsel
     fax: (313) 965-0009

     (with a copy to Seth A. Kaplan, Esq.,
     Wachtell, Lipton, Rosen & Katz
     51 West 52nd Street
     New York, New York 10019
     fax: (212) 403-2000)

or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.

     9.7. Entire Agreement. This Agreement (including any exhibits or appendices
hereto), the Company Disclosure Letter, the Parent Disclosure Letter and the
Confidentiality Agreement, dated August 30, 1999, between Parent and the Company
(the "Confidentiality Agreement") constitute the entire agreement, and supersede
all other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.

     9.8. No Third Party Beneficiaries. Except as provided in Section 6.12
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.

                                      A-34
   39

     9.9. Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.

     9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.

     9.11. Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."

     9.12. Assignment. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that Parent may designate, by written
notice to the Company, another wholly owned direct or indirect subsidiary to be
a Constituent Corporation in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other subsidiary, except
that all representations and warranties made herein with respect to Merger Sub
as of the date of this Agreement shall be deemed representations and warranties
made with respect to such other subsidiary as of the date of such designation.

                                      A-35
   40

     IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.

                                          MCN ENERGY GROUP INC.

                                          By:   /s/ ALFRED R. GLANCY III
                                            ------------------------------------
                                            Name: Alfred R. Glancy III
                                            Title: Chairman, President and Chief
                                                   Executive Officer

                                          DTE ENERGY COMPANY

                                          By:  /s/ ANTHONY F. EARLEY, JR.
                                            ------------------------------------
                                            Name: Anthony F. Earley, Jr.
                                            Title: Chairman of the Board and
                                                   Chief Executive Officer and
                                                   President and Chief Operating
                                                   Officer

                                          DTE ENTERPRISES, INC.

                                          By:  /s/ ANTHONY F. EARLEY, JR.
                                            ------------------------------------
                                            Name: Anthony F. Earley, Jr.
                                            Title: Chairman, Chief Executive
                                                   Officer and President.

                                      A-36
   41

                                                                     EXHIBIT A-1

                           [FORM OF AFFILIATE LETTER]

                                                                          [DATE]

DTE Energy Company
2000 2nd Avenue
Detroit, Michigan 48226

Ladies and Gentlemen:

     I have been advised that as of the date hereof, I may be deemed to be an
"affiliate" of MCN Energy Group, a Michigan corporation (the "Company"), as that
term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules
and Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"). Pursuant to the terms of the Agreement and Plan of Merger
dated as of October 4, 1999, as it may be amended, supplemented or modified from
time to time (the "Merger Agreement"), among the Company, DTE Energy Company, a
Michigan corporation ("Parent"), and DTE Enterprises, Inc. a Michigan
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), the Company
will be merged with and into Merger Sub (the "Merger"), with Merger Sub as the
surviving corporation in the Merger. Capitalized terms used but not defined
herein shall have the respective meanings ascribed to such terms in the Merger
Agreement.

     In consideration of the agreements contained herein, Parent's reliance on
this letter in connection with the consummation of the Merger and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, I hereby represent, warrant and agree that I will not make any
sale, transfer or other disposition of common stock, without par value, of
Parent (the "Parent Common Stock") received by me pursuant to the Merger in
violation of the Securities Act or the Rules and Regulations. I have been
advised that the issuance of the shares of Parent Common Stock pursuant to the
Merger will have been registered with the Commission under the Securities Act on
a Registration Statement on Form S-4. I have also been advised, however, that
since I may be deemed to be an affiliate of the Company at the time the Merger
is submitted for a vote of the shareholders of the Company, the Parent Common
Stock received by me may be disposed by me only (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rule 145 promulgated by the Commission under the
Securities Act, or (iii) in reliance upon an exemption from registration that is
available under the Securities Act.

     I also understand that instructions will be given to Parent's transfer
agent with respect to the Parent Common Stock to be received by me pursuant to
the Merger and that there will be placed on the certificates representing such
shares of Parent Common Stock, or any substitutes therefor, a legend stating in
substance as follows:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN A
     TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
     AS AMENDED, APPLIES AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IN
     COMPLIANCE WITH THE REQUIREMENTS OF RULE 145 OR PURSUANT TO A REGISTRATION
     STATEMENT UNDER THAT ACT OR AN EXEMPTION FROM SUCH REGISTRATION."

     It is understood and agreed that the legend set forth above shall be
removed upon surrender of certificates bearing such legend by delivery of
substitute certificates without such legend if I shall have delivered to Parent
an opinion of counsel, in form and substance reasonably satisfactory to Parent,
to the effect that (i) the sale or disposition of the shares represented by the
surrendered certificates may be effected without registration of the offering,
sale and delivery of such shares under the Securities Act, and (ii) the shares
to be so transferred may be publicly offered, sold and delivered by the
transferee thereof without compliance with the registration provisions of the
Securities Act.

                                      A-A-1
   42

     I further understand and agree that Parent is under no obligation to
register the sale, transfer or other disposition of the Parent Common Stock by
me or on my behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such registration
available.

     This letter agreement constitutes the complete understanding between Parent
and me concerning the subject matter hereof. Any notice required to be sent to
either party hereunder shall be sent by registered or certified mail, return
receipt requested, using the addresses set forth herein or such other address as
shall be furnished in writing by the parties. This letter agreement shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of New York.

     If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time this
letter shall become a binding agreement between us.

                                          Very truly yours,

                                          --------------------------------------
                                          Name:

Accepted this                day
of                , 199  by

DTE Energy Company

By:
- ----------------------------------------------------
Name:
Title:

                                      A-A-2

EX-4.205

   1
                                                                   EXHIBIT 4-205


                           THE DETROIT EDISON COMPANY
                              (2000 Second Avenue,
                            Detroit, Michigan 48226)

                                       TO
                             BANKERS TRUST COMPANY
                              (Four Albany Street,
                           New York, New York 10015)

                                                  AS TRUSTEE

                            ------------------------

                                   INDENTURE
                          Dated as of January 1, 2000

                            ------------------------

                   SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST
                          DATED AS OF OCTOBER 1, 1924

                                 PROVIDING FOR

                   (A) GENERAL AND REFUNDING MORTGAGE BONDS,
                                   2000 SERIES A

                                      AND

                         (B) RECORDING AND FILING DATA
   2
                                        i

                               TABLE OF CONTENTS*

                            ------------------------



                                                              PAGE
                                                              ----
                                                           
PARTIES.....................................................    1
RECITALS
  Original Indenture and Supplementals......................    1
  Issue of Bonds under Indenture............................    1
  Bonds heretofore issued...................................    1
  Reason for creation of new series.........................    5
  Bonds to be 2000 Series A.................................    5
  Further Assurance.........................................    5
  Authorization of Supplemental Indenture...................    5
  Consideration for Supplemental Indenture..................    6
                             PART I.
             CREATION OF THREE HUNDRED TWENTY-FOURTH
                         SERIES OF BONDS
              GENERAL AND REFUNDING MORTGAGE BONDS,
                          2000 SERIES A
Sec. 1. Terms of Bonds of 2000 Series A.....................    6
Sec. 2. Redemption of Bonds of 2000 Series A................    7
Sec. 3. Form of Bonds of 2000 Series A......................    9
        Form of Trustee's Certificate.......................   13
                             PART II.
                    RECORDING AND FILING DATA
Recording and filing of Original Indenture..................   14
Recording and filing of Supplemental Indentures.............   14
Recording of Certificates of Provision for Payment..........   19
                            PART III.
                           THE TRUSTEE
Terms and conditions of acceptance of trust by Trustee......   19
                             PART IV.
                          MISCELLANEOUS
Confirmation of Section 318(c) of Trust Indenture Act.......   19
Execution in Counterparts...................................   19
Testimonium.................................................   20
Execution...................................................   20
Acknowledgement of execution by Company.....................   20
Acknowledgement of execution by Trustee.....................   21
Affidavit as to consideration and good faith................   22


- ------------------------
* This Table of Contents shall not have any bearing upon the interpretation of
  any of the terms or provisions of this Indenture.
   3
                                        1

PARTIES.           SUPPLEMENTAL INDENTURE, dated as of the first day of January,
                 in the year two thousand, between THE DETROIT EDISON COMPANY, a
                 corporation organized and existing under the laws of the State
                 of Michigan and a transmitting utility (hereinafter called the
                 "Company"), party of the first part, and BANKERS TRUST COMPANY,
                 a corporation organized and existing under the laws of the
                 State of New York, having its corporate trust office at Four
                 Albany Street, in the Borough of Manhattan, The City and State
                 of New York, as Trustee under the Mortgage and Deed of Trust
                 hereinafter mentioned (hereinafter called the "Trustee"), party
                 of the second part.

ORIGINAL
INDENTURE AND
SUPPLEMENTALS.     WHEREAS, the Company has heretofore executed and delivered
                 its Mortgage and Deed of Trust (hereinafter referred to as the
                 "Original Indenture"), dated as of October 1, 1924, to the
                 Trustee, for the security of all bonds of the Company
                 outstanding thereunder, and pursuant to the terms and
                 provisions of the Original Indenture, indentures dated as of,
                 respectively, June 1, 1925, August 1, 1927, February 1, 1931,
                 June 1, 1931, October 1, 1932, September 25, 1935, September 1,
                 1936, November 1, 1936, February 1, 1940, December 1, 1940,
                 September 1, 1947, March 1, 1950, November 15, 1951, January
                 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15,
                 1957, June 1, 1959, December 1, 1966, October 1, 1968, December
                 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971,
                 November 15, 1971, January 15, 1973, May 1, 1974, October 1,
                 1974, January 15, 1975, November 1, 1975, December 15, 1975,
                 February 1, 1976, June 15, 1976, July 15, 1976, February 15,
                 1977, March 1, 1977, June 15, 1977, July 1, 1977, October 1,
                 1977, June 1, 1978, October 15, 1978, March 15, 1979, July 1,
                 1979, September 1, 1979, September 15, 1979, January 1, 1980,
                 April 1, 1980, August 15, 1980, August 1, 1981, November 1,
                 1981, June 30, 1982, August 15, 1982, June 1, 1983, October 1,
                 1984, May 1, 1985, May 15, 1985, October 15, 1985, April 1,
                 1986, August 15, 1986, November 30, 1986, January 31, 1987,
                 April 1, 1987, August 15, 1987, November 30, 1987, June 15,
                 1989, July 15, 1989, December 1, 1989, February 15, 1990,
                 November 1, 1990, April 1, 1991, May 1, 1991, May 15, 1991,
                 September 1, 1991, November 1, 1991, January 15, 1992, February
                 29, 1992, April 15, 1992, July 15, 1992, July 31, 1992,
                 November 30, 1992, December 15, 1992, January 1, 1993, March 1,
                 1993, March 15, 1993, April 1, 1993, April 26, 1993, May 31,
                 1993, June 30, 1993, June 30, 1993, September 15, 1993, March
                 1, 1994, June 15, 1994, August 15, 1994, December 1, 1994,
                 August 1, 1995, August 1, 1999 and August 15, 1999 supplemental
                 to the Original Indenture, have heretofore been entered into
                 between the Company and the Trustee (the Original Indenture and
                 all indentures supplemental thereto together being hereinafter
                 sometimes referred to as the "Indenture"); and

ISSUE OF BONDS
UNDER INDENTURE.   WHEREAS, the Indenture provides that said bonds shall be
                 issuable in one or more series, and makes provision that the
                 rates of interest and dates for the payment thereof, the date
                 of maturity or dates of maturity, if of serial maturity, the
                 terms and rates of optional redemption (if redeemable), the
                 forms of registered bonds without coupons of any series and any
                 other provisions and agreements in respect thereof, in the
                 Indenture provided and permitted, as the Board of Directors may
                 determine, may be expressed in a supplemental indenture to be
                 made by the Company to the Trustee thereunder; and

BONDS HERETOFORE
ISSUED.            WHEREAS, bonds in the principal amount of Eight billion,
                 seven hundred twelve million four hundred twenty-two thousand
                 dollars ($8,712,422,000) have heretofore been issued under the
                 indenture as follows, viz:

                                         
                              (1)  Bonds of Series A                --   Principal Amount  $26,016,000,

                              (2)  Bonds of Series B                --   Principal Amount  $23,000,000,

                              (3)  Bonds of Series C                --   Principal Amount  $20,000,000,

                              (4)  Bonds of Series D                --   Principal Amount  $50,000,000,

                              (5)  Bonds of Series E                --   Principal Amount  $15,000,000,

                              (6)  Bonds of Series F                --   Principal Amount  $49,000,000,

                              (7)  Bonds of Series G                --   Principal Amount  $35,000,000,


                        
   4
                                        2
                                   
                              (8)    Bonds of Series H                --   Principal Amount  $50,000,000,

                              (9)    Bonds of Series I                --   Principal Amount  $60,000,000,

                             (10)    Bonds of Series J                --   Principal Amount  $35,000,000,

                             (11)    Bonds of Series K                --   Principal Amount  $40,000,000,

                             (12)    Bonds of Series L                --   Principal Amount  $24,000,000,

                             (13)    Bonds of Series M                --   Principal Amount  $40,000,000,

                             (14)    Bonds of Series N                --   Principal Amount  $40,000,000,

                             (15)    Bonds of Series O                --   Principal Amount  $60,000,000,

                             (16)    Bonds of Series P                --   Principal Amount  $70,000,000,

                             (17)    Bonds of Series Q                --   Principal Amount  $40,000,000,

                             (18)    Bonds of Series W                --   Principal Amount  $50,000,000,

                             (19)    Bonds of Series AA               --   Principal Amount  $100,000,000,

                             (20)    Bonds of Series BB               --   Principal Amount  $50,000,000,

                             (21)    Bonds of Series CC               --   Principal Amount  $50,000,000,

                             (22)    Bonds of Series UU               --   Principal Amount  $100,000,000,

                          (23-31)    Bonds of Series DDP Nos. 1-9     --   Principal Amount  $14,305,000,

                          (32-45)    Bonds of Series FFR Nos. 1-14    --   Principal Amount  $45,600,000,

                          (46-67)    Bonds of Series GGP Nos. 1-22    --   Principal Amount  $42,300,000,

                             (68)    Bonds of Series HH               --   Principal Amount  $50,000,000,

                          (69-90)    Bonds of Series IIP Nos. 1-22    --   Principal Amount  $3,750,000,

                          (91-98)    Bonds of Series JJP Nos. 1-8     --   Principal Amount  $6,850,000,

                         (99-107)    Bonds of Series KKP Nos. 1-9     --   Principal Amount  $34,890,000,

                        (108-122)    Bonds of Series LLP Nos. 1-15    --   Principal Amount  $8,850,000,

                        (123-143)    Bonds of Series NNP Nos. 1-21    --   Principal Amount  $47,950,000,

                        (144-161)    Bonds of Series OOP Nos. 1-18    --   Principal Amount  $18,880,000,

                        (162-180)    Bonds of Series QQP Nos. 1-19    --   Principal Amount  $13,650,000,

                        (181-195)    Bonds of Series TTP Nos. 1-15    --   Principal Amount  $3,800,000,

                            (196)    Bonds of 1980 Series A           --   Principal Amount  $50,000,000,

                                     Bonds of 1980 Series CP Nos.
                        (197-221)    1-25                             --   Principal Amount  $35,000,000,

                                     Bonds of 1980 Series DP Nos.
                        (222-232)    1-11                             --   Principal Amount  $10,750,000,

                                     Bonds of 1981 Series AP Nos.
                        (233-248)    1-16                             --   Principal Amount  $124,000,000,

                            (249)    Bonds of 1985 Series A           --   Principal Amount  $35,000,000,

                            (250)    Bonds of 1985 Series B           --   Principal Amount  $50,000,000,

                            (251)    Bonds of Series PP               --   Principal Amount  $70,000,000,

                            (252)    Bonds of Series RR               --   Principal Amount  $70,000,000,

                            (253)    Bonds of Series EE               --   Principal Amount  $50,000,000,

                                     Bonds of Series MMP and MMP No.
                        (254-255)    2                                --   Principal Amount  $5,430,000,

                            (256)    Bonds of Series T                --   Principal Amount  $75,000,000,

                            (257)    Bonds of Series U                --   Principal Amount  $75,000,000,

                            (258)    Bonds of 1986 Series B           --   Principal Amount  $100,000,000,

                            (259)    Bonds of 1987 Series D           --   Principal Amount  $250,000,000,

                            (260)    Bonds of 1987 Series E           --   Principal Amount  $150,000,000,

                            (261)    Bonds of 1987 Series C           --   Principal Amount  $225,000,000,

                            (262)    Bonds of Series V                --   Principal Amount  $100,000,000,

                            (263)    Bonds of Series SS               --   Principal Amount  $150,000,000,

                            (264)    Bonds of 1980 Series B           --   Principal Amount  $100,000,000,

                            (265)    Bonds of 1986 Series C           --   Principal Amount  $200,000,000,

                            (266)    Bonds of 1986 Series A           --   Principal Amount  $200,000,000,

                            (267)    Bonds of 1987 Series B           --   Principal Amount  $175,000,000,

                            (268)    Bonds of Series X                --   Principal Amount  $100,000,000,

                            (269)    Bonds of 1987 Series F           --   Principal Amount  $200,000,000,

                            (270)    Bonds of 1987 Series A           --   Principal Amount  $300,000,000,

                            (271)    Bonds of Series Y                --   Principal Amount  $60,000,000,

                            (272)    Bonds of Series Z                --   Principal Amount  $100,000,000,


                              
   5
                                        3
                                     
                            (273)    Bonds of 1989 Series A          --   Principal Amount  $300,000,000,

                            (274)    Bonds of 1984 Series AP         --   Principal Amount  $2,400,000,

                            (275)    Bonds of 1984 Series BP         --   Principal Amount  $7,750,000,

                            (276)    Bonds of Series R               --   Principal Amount  $100,000,000,

                            (277)    Bonds of Series S               --   Principal Amount  $150,000,000,

                            (278)    Bonds of 1993 Series D          --   Principal Amount  $100,000,000,

                            (279)    Bonds of 1992 Series E          --   Principal Amount  $50,000,000,

                            (280)    Bonds of 1993 Series B          --   Principal Amount  $50,000,000,

                            (281)    Bonds of 1989 Series BP         --   Principal Amount  $66,565,000,


                            

                 all of which have either been retired and cancelled, or no
                 longer represent obligations of the Company, having been called
                 for redemption and funds necessary to effect the payment,
                 redemption and retirement thereof having been deposited with
                 the Trustee as a special trust fund to be applied for such
                 purpose;

                 (282-287) Bonds of Series KKP Nos. 10-15 in the principal
                 amount of One hundred seventy-nine million five hundred ninety
                 thousand dollars ($179,590,000), of which Thirty-nine million
                 seven hundred forty-five thousand dollars ($39,745,000)
                 principal amount have heretofore been retired and One hundred
                 thirty-nine million eight hundred forty-five thousand dollars
                 ($139,845,000) principal amount are outstanding at the date
                 hereof;

                 (288) Bonds of 1990 Series A in the principal amount of One
                 hundred ninety-four million six hundred forty-nine thousand
                 dollars ($194,649,000) of which Sixty-two million seven hundred
                 ninety thousand dollars ($62,790,000) principal amount have
                 heretofore been retired and One hundred thirty-one million
                 eight hundred fifty-nine thousand dollars ($131,859,000)
                 principal amount are outstanding at the date hereof;

                 (289) Bonds of 1990 Series B in the principal amount of Two
                 hundred fifty-six million nine hundred thirty-two thousand
                 dollars ($256,932,000) of which Ninety-five million one hundred
                 sixty thousand dollars ($95,160,000) principal amount have
                 heretofore been retired and One hundred sixty-one million seven
                 hundred seventy-two thousand dollars ($161,772,000) principal
                 amount are outstanding at the date hereof;

                 (290) Bonds of 1990 Series C in the principal amount of
                 Eighty-five million four hundred seventy-five thousand dollars
                 ($85,475,000) of which Thirty-four million one hundred ninety
                 thousand dollars ($34,190,000) principal amount have heretofore
                 been retired and Fifty-one million two hundred eighty-five
                 thousand dollars ($51,285,000) principal amount are outstanding
                 at the date hereof;

                 (291) Bonds of 1991 Series AP in the principal amount of
                 Thirty-two million three hundred seventy-five thousand dollars
                 ($32,375,000), all of which are outstanding at the date hereof;

                 (292) Bonds of 1991 Series BP in the principal amount of
                 Twenty-five million nine hundred ten thousand dollars
                 ($25,910,000), all of which are outstanding at the date hereof;

                 (293) Bonds of 1991 Series CP in the principal amount of
                 Thirty-two million eight hundred thousand dollars
                 ($32,800,000), all of which are outstanding at the date hereof;

                 (294) Bonds of 1991 Series DP in the principal amount of
                 Thirty-seven million six hundred thousand dollars
                 ($37,600,000), all of which are outstanding at the date hereof;

                 (295) Bonds of 1991 Series EP in the principal amount of
                 Forty-one million four hundred eighty thousand dollars
                 ($41,480,000), all of which are outstanding at the date hereof;
   6
                                        4

                 (296) Bonds of 1991 Series FP in the principal amount of
                 Ninety-eight million three hundred seventy-five thousand
                 dollars ($98,375,000), all of which are outstanding at the date
                 hereof;

                 (297) Bonds of 1992 Series BP in the principal amount of Twenty
                 million nine hundred seventy-five thousand dollars
                 ($20,975,000), all of which are outstanding at the date hereof;

                 (298) Bonds of 1992 Series AP in the principal amount of
                 Sixty-six million dollars ($66,000,000), all of which are
                 outstanding at the date hereof;

                 (299) Bonds of 1992 Series D in the principal amount of Three
                 hundred million dollars ($300,000,000), of which thirty-four
                 million dollars ($34,000,000) principal amount have heretofore
                 been retired and Two hundred sixty-six million ($266,000,000)
                 principal amount are outstanding at the date hereof;

                 (300) Bonds of 1992 Series CP in the principal amount of
                 Thirty-five million dollars ($35,000,000), all of which are
                 outstanding at the date hereof;

                 (301) Bonds of 1989 Series BP No. 2 in the principal amount of
                 Thirty-six million dollars ($36,000,000), all of which are
                 outstanding at the date hereof;

                 (302) Bonds of 1993 Series C in the principal amount of Two
                 hundred twenty-five million dollars ($225,000,000), of which
                 Twenty-seven million dollars ($27,000,000) principal amount
                 have heretofore been retired and One hundred ninety-eight
                 million dollars ($198,000,000) principal amount are outstanding
                 at the date hereof;

                 (303) Bonds of 1993 Series E in the principal amount of Four
                 hundred million dollars ($400,000,000), of which Thirty-one
                 million five hundred thousand dollars ($31,500,000) principal
                 amount have heretofore been retired and Three hundred
                 sixty-eight million five hundred thousand dollars
                 ($368,500,000) principal amount are outstanding at the date
                 hereof;

                 (304) Bonds of 1993 Series FP in the principal amount of Five
                 million six hundred eighty-five thousand dollars ($5,685,000),
                 all of which are outstanding at the date hereof;

                 (305) Bonds of 1993 Series G in the principal amount of Two
                 hundred twenty-five million dollars ($225,000,000), of which
                 One hundred twenty-five million dollars ($125,000,000)
                 principal amount have been retired and One hundred million
                 dollars ($100,000,000) principal amount are outstanding at the
                 date hereof;

                 (306) Bonds of 1993 Series J in the principal amount of Three
                 hundred million dollars ($300,000,000), of which Seventy eight
                 million five hundred thousand dollars ($78,500,000) principal
                 amount have heretofore been retired and Two hundred twenty-one
                 million five hundred thousand dollars ($221,500,000) principal
                 amount are outstanding at the date hereof;

                 (307) Bonds of 1993 Series IP in the principal amount of Five
                 million eight hundred twenty-five thousand dollars
                 ($5,825,000), all of which are outstanding at the date hereof;

                 (308) Bonds of 1993 Series AP in the principal amount of
                 Sixty-five million dollars ($65,000,000), all of which are
                 outstanding at the date hereof;

                 (309) Bonds of 1993 Series H in the principal amount of Fifty
                 million dollars ($50,000,000), all of which are outstanding at
                 the date hereof;

                 (310) Bonds of 1993 Series K in the principal amount of One
                 hundred sixty million dollars ($160,000,000), all of which are
                 outstanding at the date hereof;

                 (311) Bonds of 1994 Series AP in the principal amount of Seven
                 million five hundred thirty-five thousand dollars ($7,535,000),
                 all of which are outstanding at the date hereof;
   7
                                        5

                 (312) Bonds of 1994 Series BP in the principal amount of Twelve
                 million nine hundred thirty-five thousand dollars
                 ($12,935,000), all of which are outstanding at the date hereof;

                 (313) Bonds of 1994 Series C in the principal amount of Two
                 hundred million dollars ($200,000,000), all of which are
                 outstanding at the date hereof;

                 (314) Bonds of 1994 Series DP in the principal amount of
                 Twenty-three million seven hundred thousand dollars
                 ($23,700,000), all of which are outstanding at the date hereof;

                 (315) Bonds of 1995 Series AP in the principal amount of
                 Ninety-seven million dollars ($97,000,000), all of which are
                 outstanding at the date hereof;

                 (316) Bonds of 1995 Series BP in the principal amount of
                 Twenty-two million, one hundred seventy-five thousand dollars
                 ($22,175,000), all of which are outstanding at the date hereof;

                 (317) Bonds of 1999 Series AP in the principal amount of One
                 hundred eighteen million three hundred sixty thousand dollars
                 ($118,360,000), all of which are outstanding at the date
                 hereof;

                 (318) Bonds of 1999 Series BP in the principal amount of
                 Thirty-nine million seven hundred forty-five thousand dollars
                 ($39,745,000), all of which are outstanding of the date hereof;

                 (319) Bonds of 1999 Series CP in the principal amount of
                 Sixty-six million five hundred sixty-five thousand dollars
                 ($66,565,000), all of which are outstanding at the date hereof;
                 and

                 (320) Bonds of 1999 Series D in the principal amount of Forty
                 million dollars ($40,000,000), all of which are outstanding at
                 the date hereof

                 and, accordingly, of the bonds so issued, Two billion nine
                 hundred seventy-nine million eight hundred one thousand dollars
                 ($2,979,801,000) principal amount are outstanding at the date
                 hereof; and

REASON FOR
CREATION OF NEW
SERIES.            WHEREAS, the Company desires to issue a new series of bonds
                 to be issued under the Indenture and to be authenticated and
                 delivered pursuant to Section 8 of Article III of the
                 Indenture; and

BONDS TO BE
2000 SERIES A.     WHEREAS, the Company desires by this Supplemental Indenture
                 to create a new series of bonds, to be designated "General and
                 Refunding Mortgage Bonds, 2000 Series A," and

FURTHER
ASSURANCE.         WHEREAS, the Original Indenture, by its terms, includes in
                 the property subject to the lien thereof all of the estates and
                 properties, real, personal and mixed, rights, privileges and
                 franchises of every nature and kind and wheresoever situate,
                 then or thereafter owned or possessed by or belonging to the
                 Company or to which it was then or at any time thereafter might
                 be entitled in law or in equity (saving and excepting, however,
                 the property therein specifically excepted or released from the
                 lien thereof), and the Company therein covenanted that it
                 would, upon reasonable request, execute and deliver such
                 further instruments as may be necessary or proper for the
                 better assuring and confirming unto the Trustee all or any part
                 of the trust estate, whether then or thereafter owned or
                 acquired by the Company (saving and excepting, however,
                 property specifically excepted or released from the lien
                 thereof); and

AUTHORIZATION OF
SUPPLEMENTAL
INDENTURE.         WHEREAS, the Company in the exercise of the powers and
                 authority conferred upon and reserved to it under and by virtue
                 of the provisions of the Indenture, and pursuant to resolutions
                 of its Board of Directors has duly resolved and determined to
                 make, execute and deliver to the Trustee a supplemental
                 indenture in the form hereof for the purposes herein provided;
                 and
   8
                                        6

                   WHEREAS, all conditions and requirements necessary to make
                 this Supplemental Indenture a valid and legally binding
                 instrument in accordance with its terms have been done,
                 performed and fulfilled, and the execution and delivery hereof
                 have been in all respects duly authorized;

CONSIDERATION FOR
SUPPLEMENTAL
INDENTURE.         NOW, THEREFORE, THIS INDENTURE WITNESSETH: That The Detroit
                 Edison Company, in consideration of the premises and of the
                 covenants contained in the Indenture and of the sum of One
                 Dollar ($1.00) and other good and valuable consideration to it
                 duly paid by the Trustee at or before the ensealing and
                 delivery of these presents, the receipt whereof is hereby
                 acknowledged, hereby covenants and agrees to and with the
                 Trustee and its successors in the trusts under the Original
                 Indenture and in said indentures supplemental thereto as
                 follows:

                                             PART I.

                             CREATION OF THREE HUNDRED TWENTY-FOURTH
                                        SERIES OF BONDS.

                              GENERAL AND REFUNDING MORTGAGE BONDS,
                                          2000 SERIES A

TERMS OF BONDS OF
2000 SERIES A.     SECTION 1. The Company hereby creates the Three hundred
                 twenty-fourth series of bonds to be issued under and secured by
                 the Original Indenture as amended to date and as further
                 amended by this Supplemental Indenture, to be designated, and
                 to be distinguished from the bonds of all other series, by the
                 title "General and Refunding Mortgage Bonds, 2000 Series A"
                 (elsewhere herein referred to as the "bonds of 2000 Series A").
                 The aggregate principal amount of bonds of 2000 Series A shall
                 be limited to Two hundred twenty million dollars
                 ($220,000,000), except as provided in Sections 7 and 13 of
                 Article II of the Original Indenture with respect to exchanges
                 and replacements of bonds.

                   The bonds of 2000 Series A shall mature on February 1, 2005
                 and shall be issued as registered bonds without coupons in
                 denominations of $1,000 and any multiple thereof, and shall
                 bear interest, payable semi-annually on February 1 and August 1
                 of each year (commencing on August 1, 2000), at the rate of
                 seven and one-half per centum (7.5%) per annum until the
                 principal shall have become due and payable, and thereafter
                 until the Company's obligation with respect to the payment of
                 said principal shall have been discharged as provided in the
                 Indenture. The bonds of 2000 Series A will be issued in
                 book-entry form through the facilities of The Depository Trust
                 Company. Except as otherwise specifically provided in this
                 Supplemental Indenture, the principal of and interest on the
                 bonds of 2000 Series A shall be payable at the office or agency
                 of the Company in the Borough of Manhattan, The City of New
                 York, The State of New York in any coin or currency of the
                 United States of America which at the time of payment is legal
                 tender for public and private debts. The interest on bonds of
                 2000 Series A, whether in temporary or definitive form, shall
                 be payable without presentation of such bonds and (subject to
                 the provisions of this Section 1) only to or upon the written
                 order of the registered holders thereof.

                   Each bond of 2000 Series A shall be dated the date of its
                 authentication and interest shall be payable on the principal
                 represented thereby from the February 1 or August 1 next
                 preceding the date thereof to which interest has been paid on
                 bonds of 2000 Series A, unless the bond is authenticated on a
                 date to which interest has been paid, in which case interest
                 shall be payable from the date of authentication, or unless the
                 date of authentication is prior to August 1, 2000, in which
                 case interest shall be payable from February 3, 2000 on the
                 bond of 2000 Series A originally evidencing the debt
                 represented thereby.

                   The bonds of 2000 Series A in definitive form shall be, at
                 the election of the Company, fully engraved or shall be
                 lithographed or printed in authorized denominations as
                 aforesaid and numbered 1 and upwards (with such further
                 designation as
   9
                                        7

                 may be appropriate and desirable to indicate by such
                 designation the form, series and denomination of bonds of 2000
                 Series A). Until bonds of 2000 Series A in definitive form are
                 ready for delivery, the Company may execute, and upon its
                 request in writing the Trustee shall authenticate and deliver
                 in lieu thereof, bonds of 2000 Series A in temporary form, as
                 provided in Section 10 of Article II of the Indenture.
                 Temporary bonds of 2000 Series A, if any, may be printed and
                 may be issued in authorized denominations in substantially the
                 form of definitive bonds of 2000 Series A, but without a
                 recital of redemption prices and with such omissions,
                 insertions and variations as may be appropriate for temporary
                 bonds, all as may be determined by the Company.

                   Interest on any bond of 2000 Series A which is payable on any
                 interest payment date and is punctually paid or duly provided
                 for shall be paid to the person in whose name that bond, or any
                 previous bond to the extent evidencing the same debt as that
                 evidenced by that bond, is registered at the close of business
                 on the regular record date for such interest, which regular
                 record date shall be the fifteenth calendar day (whether or not
                 a business day) next preceding such interest payment date. If
                 the Company shall default in the payment of the interest due on
                 any interest payment date on the principal represented by any
                 bond of 2000 Series A, such defaulted interest shall forthwith
                 cease to be payable to the registered holder of that bond on
                 the relevant regular record date by virtue of his having been
                 such holder, and such defaulted interest may be paid to the
                 registered holder of that bond (or any bond or bonds of 2000
                 Series A issued upon transfer or exchange thereof) on the date
                 of payment of such defaulted interest or, at the election of
                 the Company, to the person in whose name that bond (or any bond
                 or bonds of 2000 Series A issued upon transfer or exchange
                 thereof) is registered on a subsequent record date established
                 by notice given by mail by or on behalf of the Company to the
                 holders of bonds of 2000 Series A not less than (10) days
                 preceding such subsequent record date, which subsequent record
                 date shall be at least five (5) days prior to the payment date
                 of such defaulted interest. Interest will be computed on the
                 basis of a 360-day year of twelve 30-day months.

                   If any interest payment date, date of redemption or the
                 stated maturity for the bonds of 2000 Series A would otherwise
                 be a day that is not a business day, payment of principal
                 and/or interest or premium, if any, with respect to the bonds
                 of 2000 Series A will be paid on the next succeeding business
                 day with the same force and effect as if made on such date and
                 no interest on such payment will accrue from and after such
                 date.

                   "Business day" means any day other than a 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.

REDEMPTION OF
BONDS OF 2000
SERIES A.           SECTION 2. The bonds of 2000 Series A shall be redeemable
                  prior to stated maturity, at the election of the Company on
                  any date prior to maturity, as a whole, or in part from time
                  to time, by lot, at a redemption price equal to the greater of
                  (1) the principal amount of the Bonds to be redeemed or (2)
                  the sum of the present values of the remaining scheduled
                  payments of principal and interest on the bonds of 2000 Series
                  A to be redeemed, discounted to the redemption date on a
                  semiannual basis (assuming a 360-day year consisting of twelve
                  30-day months) at the Treasury Yield (defined below) plus
                  0.15%, plus in each case accrued interest to the redemption
                  date.

                   "Treasury Yield" means with respect to any redemption date,
                 the rate per annum equal to the semiannual equivalent yield to
                 maturity of the Comparable Treasury Issue, assuming a price for
                 the Comparable Treasury Issue (expressed as a percentage of its
                 principal amount) equal to the Comparable Treasury Price for
                 the redemption date.

                   "Comparable Treasury Issue" means the United States Treasury
                 security selected by an Independent Investment Banker as having
                 a maturity comparable to the
   10
                                        8

                 remaining term of the bonds of 2000 Series A that would be
                 utilized, at the time of selection and in accordance with
                 customary financial practice, in pricing new issues of
                 corporate debt securities of comparable maturity to the
                 remaining term of the bonds of 2000 Series A.

                   "Independent Investment Banker" means Salomon Smith Barney
                 Inc., or, if such firm is unwilling or unable to select the
                 Comparable Treasury Issue, an independent investment banking
                 institution of national standing selected by the Company and
                 appointed by the Trustee.

                   "Comparable Treasury Price" means, with respect to any
                 redemption date, (i) the average of the bid and asked prices
                 for the Comparable Treasury Issue (expressed in each case as a
                 percentage of its principal amount) on the third business day
                 preceding such redemption date, as set forth in the daily
                 statistical release (or any successor release) published by the
                 Federal Reserve Bank of New York and designated "Composite 3:30
                 p.m. Quotations for U.S. Government Securities" or (ii) if that
                 release (or any successor release) is not published or does not
                 contain such prices on such business day, (A) the average of
                 the Reference Treasury Dealer Quotations for such redemption
                 date, after excluding the highest and lowest such Reference
                 Treasury Dealer Quotations for such redemption date, or (B) if
                 the Company obtains fewer than four such Reference Treasury
                 Dealer Quotations, the average of all such Quotations.

                   "Reference Treasury Dealer Quotations" means with respect to
                 each Reference Treasury Dealer and any redemption date, the
                 average, as determined by the Trustee, of the bid and asked
                 prices for the Comparable Treasury Issue (expressed in each
                 case as a percentage of its principal amount) quoted in writing
                 to the Trustee by such Reference Treasury Dealer at 5:00 p.m.
                 on the third Business Day preceding such redemption date.

                   "Reference Treasury Dealer" means each of Salomon Smith
                 Barney Inc., Chase Securities Inc., Goldman, Sachs & Co. and
                 Warburg Dillon Read LLC and their respective successors,
                 provided, however, that if any of the foregoing shall cease to
                 be a primary U.S. Government Securities dealer in New York City
                 (a "Primary Treasury Dealer "), the Company shall substitute
                 for it another Primary Treasury Dealer.

                   The bonds of 2000 Series A shall be redeemable as aforesaid
                 and except as otherwise provided herein, and as specified in
                 Article IV of the Indenture upon giving notice of such
                 redemption by first class mail, postage prepaid, by or on
                 behalf of the Company at least thirty (30) days, but not more
                 than sixty (60) days, prior to the date fixed for redemption to
                 the registered holders of bonds of 2000 Series A so called for
                 redemption at their last respective addresses appearing on the
                 register thereof, but failure to mail such notice to the
                 registered holders of any bonds of 2000 Series A designated for
                 redemption shall not affect the validity of any such redemption
                 of any other bonds of such series. Interest shall cease to
                 accrue on any bonds of 2000 Series A (or any portion thereof)
                 so called for redemption from and after the date fixed for
                 redemption if payment sufficient to redeem the bonds of 2000
                 Series A (or such portion) designated for redemption has been
                 duly provided for. Bonds of 2000 Series A redeemed in part only
                 shall be in amounts of $1,000 or any multiple thereof.

                   If the giving of the notice of redemption shall have been
                 completed, or if provision satisfactory to the Trustee for the
                 giving of such notice shall have been made, and if the Company
                 shall have deposited with the Trustee in trust funds (which
                 shall have become available for payment to the holders of the
                 bonds of 2000 Series A so to be redeemed) sufficient to redeem
                 bonds of 2000 Series A in whole or in part, on the date fixed
                 for redemption, then all obligations of the Company in respect
                 of such bonds (or portions thereof) so to be redeemed and
                 interest due or to become due thereon shall cease and be
                 discharged and the holders of such bonds of 2000 Series A (or
                 portions thereof) shall thereafter be restricted exclusively to
                 such funds for any
   11
                                        9

                 and all claims of whatsoever nature on their part under the
                 Indenture or in respect of such bonds (or portions thereof) and
                 interest.

                   The bonds of 2000 Series A shall not be entitled to or
                 subject to any sinking fund.

EXCHANGE AND
TRANSFER.          At the option of the registered holder, any bonds of 2000
                 Series A, upon surrender thereof for cancellation at the office
                 or agency of the Company in the Borough of Manhattan, The City
                 of New York, The State of New York, together with a written
                 instrument of transfer (if so required by the Company or by the
                 Trustee) in form approved by the Company duly executed by the
                 holder or by its duly authorized attorney, shall be
                 exchangeable for a like aggregate principal amount of bonds of
                 2000 Series A of other authorized denominations, upon the terms
                 and conditions specified herein and in Section 7 of Article II
                 of the Indenture. Bonds of 2000 Series A shall be transferable
                 at the office or agency of the Company in the Borough of
                 Manhattan, The City of New York, The State of New York. The
                 Company waives its rights under Section 7 of Article II of the
                 Indenture not to make exchanges or transfers of bonds of 2000
                 Series A during any period of ten (10) days next preceding any
                 interest payment date for such bonds.

                   Bonds of 2000 Series A, in definitive and temporary form, may
                 bear such legends as may be necessary to comply with any law or
                 with any rules or regulations made pursuant thereto or with the
                 rules or regulations of any stock exchange or to conform to
                 usage with respect thereto.

FORM OF BONDS
2000 SERIES A.     SECTION 4. The bonds of 2000 Series A and the form of
                 Trustee's Certificate to be endorsed on such bonds shall be
                 substantially in the following forms, respectively:

                                     [FORM OF FACE OF BOND]

                 THIS BOND IS A GLOBAL BOND REGISTERED IN THE NAME OF A
                 DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS
                 EXCHANGED IN WHOLE OR IN PART FOR BONDS IN CERTIFICATED FORM,
                 THIS BOND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
                 DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") TO A NOMINEE OF THE
                 DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
                 SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
                 UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
                 OF THE DEPOSITARY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
                 OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS
                 REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
                 REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
                 (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
                 AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
                 DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
                 OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
                 REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                           THE DETROIT EDISON COMPANY
                      GENERAL AND REFUNDING MORTGAGE BOND
                    2000 Series A, 7.5% due February 1, 2005

                   $................                        No. ................

                   THE DETROIT EDISON COMPANY (hereinafter called the
                 "Company"), a corporation of the State of Michigan, for value
                 received, hereby promises to pay to                      or
                 registered assigns, at its office or agency in the Borough of
                 Manhattan, The City and State of New York, the principal sum of
                 Two hundred twenty million dollars ($220,000,000) in lawful
                 money of the United States of America on the first day of
                 February, 2005, and to pay interest thereon at the rate
                 specified in the title hereof, at such office or agency, in
                 like lawful money, from
   12
                                       10

                 February 3, 2000, and after the first interest payment on bonds
                 of this Series has been made or otherwise provided for, from
                 the most recent date to which such interest has been paid,
                 semi-annually on the first day of February and August in each
                 year (commencing on August 1, 2000), to the person in whose
                 name this bond is registered at the close of business on the
                 fifteenth calendar day (whether or not a business day) next
                 preceding the applicable interest payment date (subject to
                 certain exceptions provided in the Indenture hereinafter
                 mentioned), until the Company's obligation with respect to
                 payment of said principal shall have been discharged, all as
                 provided, to the extent and in the manner specified in such
                 Indenture hereinafter mentioned on the reverse hereof and in
                 the supplemental indenture pursuant to which this bond has been
                 issued.

                   Interest will be computed on the basis of a 360-day year of
                 twelve 30-day months.

                   If any interest payment date, date of redemption or the
                 stated maturity for the bonds of 2000 Series A would otherwise
                 be a day that is not a business day, payment of principal
                 and/or interest or premium, if any, with respect to the bonds
                 of 2000 Series A will be paid on the next succeeding business
                 day with the same force and effect as if made on such date and
                 no interest on such payment will accrue from and after such
                 date.

                   "Business day" means any day other than a 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.

                   Reference is hereby made to the further provisions of this
                 bond set forth on the reverse hereof and such further
                 provisions shall for all purposes have the same effect as
                 though set forth at this place.

                   This bond shall not be valid or become obligatory for any
                 purpose until Bankers Trust Company, the Trustee under the
                 Indenture hereinafter mentioned on the reverse hereof, or its
                 successor thereunder, shall have signed the form of certificate
                 endorsed hereon.

                   IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has caused
                 this instrument to be executed on its behalf by its Vice
                 President and Treasurer, with his manual or facsimile
                 signature, and its corporate seal, or a facsimile thereof, to
                 be impressed or imprinted hereon and the same to be attested by
                 its Secretary or its Assistant Corporate Secretary by manual or
                 facsimile signature.

                                

                           Dated:
                                                         THE DETROIT EDISON COMPANY
                                                         By ...........................................
                                                             Vice President and Treasurer

                           Attest:
                           -----------------------------
                           Vice President and Corporate Secretary

                      

                           [FORM OF REVERSE OF BOND]

                   This bond is one of an authorized issue of bonds of the
                 Company, unlimited as to amount except as provided in the
                 Indenture hereinafter mentioned or any indentures supplemental
                 thereto, and is one of a series of said bonds known as General
                 and Refunding Mortgage Bonds, 2000 Series A (elsewhere herein
                 referred to as the "bonds of 2000 Series A"), limited to an
                 aggregate principal amount of $220,000,000, except as otherwise
                 provided in the Indenture hereinafter mentioned. This bond and
                 all other
   13
                                       11

                 bonds of said series are issued and to be issued under, and are
                 all equally and ratably secured (except insofar as any sinking,
                 amortization, improvement or analogous fund, established in
                 accordance with the provisions of the Indenture hereinafter
                 mentioned, may afford additional security for the bonds of any
                 particular series and except as provided in Section 3 of
                 Article VI of said Indenture) by an Indenture, dated as of
                 October 1, 1924, duly executed by the Company to Bankers Trust
                 Company, a corporation of the State of New York, as Trustee, to
                 which Indenture and all indentures supplemental thereto
                 (including the Supplemental Indenture dated as of January 1,
                 2000) reference is hereby made for a description of the
                 properties and franchises mortgaged and conveyed, the nature
                 and extent of the security, the terms and conditions upon which
                 the bonds are issued and under which additional bonds may be
                 issued, and the rights of the holders of the bonds and of the
                 Trustee in respect of such security (which Indenture and all
                 indentures supplemental thereto, including the Supplemental
                 Indenture dated as of January 1, 2000, are hereinafter
                 collectively called the "Indenture"). As provided in the
                 Indenture, said bonds may be for various principal sums and are
                 issuable in series, which may mature at different times, may
                 bear interest at different rates and may otherwise vary as in
                 said Indenture provided. With the consent of the Company and to
                 the extent permitted by and as provided in the Indenture, the
                 rights and obligations of the Company and of the holders of the
                 bonds and the terms and provisions of the Company and of the
                 holders of the bonds and the terms and provisions of the
                 Indenture, or of any indenture supplemental thereto, may be
                 modified or altered in certain respects by affirmative vote of
                 at least eighty-five percent (85%) in principal amount of the
                 bonds then outstanding, and, if the rights of one or more, but
                 less than all, series of bonds then outstanding are to be
                 affected by the action proposed to be taken, then also by
                 affirmative vote of at least eighty-five percent (85%) in
                 principal amount of the series of bonds so to be affected
                 (excluding in every instance bonds disqualified from voting by
                 reason of the Company's interest therein as specified in the
                 Indenture); provided, however, that, without the consent of the
                 holder hereof, no such modification or alteration shall, among
                 other things, affect the terms of payment of the principal of,
                 or the interest on, this bond, which in those respects is
                 unconditional.

                   This bond is redeemable on giving notice of such redemption
                 by first class mail, postage prepaid, by or on behalf of the
                 Company at least thirty (30) days, but not more than sixty (60)
                 days, prior to the date fixed for redemption to the registered
                 holder of this bond at his last address appearing on the
                 register thereof, in the manner and upon the terms provided in
                 the Indenture, at the election of the Company on any date as a
                 whole or in part by lot, from time to time, at a redemption
                 price equal to the greater of (1) the principal amount or (2)
                 the sum of the present values of the remaining scheduled
                 payments of principal and interest on this bond of 2000 Series
                 A, discounted to the redemption date on a semiannual basis
                 (assuming a 360-day year consisting of twelve 30-day months) at
                 the Treasury Yield (as defined below) plus 0.15%, plus in each
                 case accrued interest to the redemption date.

                   "Treasury Yield" means with respect to any redemption date,
                 the rate per annum equal to the semiannual equivalent yield to
                 maturity of the Comparable Treasury Issue, assuming a price for
                 the Comparable Treasury Issue (expressed as a percentage of its
                 principal amount) equal to the Comparable Treasury Price for
                 the redemption date.

                   "Comparable Treasury Issue" means the United States Treasury
                 security selected by an Independent Investment Banker as having
                 a maturity comparable to the remaining term of the bonds of
                 2000 Series A that would be utilized, at the time of selection
                 and in accordance with customary financial practice, in pricing
                 new issues of corporate debt securities of comparable maturity
                 to the remaining term of the bonds of 2000 Series A.

                   "Independent Investment Banker" means Salomon Smith Barney
                 Inc., or, if such firm is unwilling or unable to select the
                 Comparable Treasury Issue, an independent investment banking
                 institution of national standing selected by the Company and
                 appointed by the Trustee.
   14
                                       12

                   "Comparable Treasury Price" means, with respect to any
                 redemption date, (i) the average of the bid and asked prices
                 for the Comparable Treasury Issue (expressed in each case as a
                 percentage of its principal amount) on the third business day
                 preceding such redemption date, as set forth in the daily
                 statistical release (or any successor release) published by the
                 Federal Reserve Bank of New York and designated "Composite 3:30
                 p.m. Quotations for U.S. Government Securities" or (ii) if that
                 release (or any successor release) is not published or does not
                 contain such prices on such business day, (A) the average of
                 the Reference Treasury Dealer Quotations for such redemption
                 date, after excluding the highest and lowest such Reference
                 Treasury Dealer Quotations for such redemption date, or (B) if
                 the Company obtains fewer than four such Reference Treasury
                 Dealer Quotations, the average of all such Quotations.

                   "Reference Treasury Dealer Quotations" means with respect to
                 each Reference Treasury Dealer and any redemption date, the
                 average, as determined by the Trustee, of the bid and asked
                 prices for the Comparable Treasury Issue (expressed in each
                 case as a percentage of its principal amount) quoted in writing
                 to the Trustee by such Reference Treasury Dealer at 5:00 p.m.
                 on the third Business Day preceding such redemption date.

                   "Reference Treasury Dealer" means each of Salomon Smith
                 Barney Inc., Chase Securities Inc., Goldman Sachs & Co. and
                 Warburg Dillon Read LLC and their respective successors,
                 provided however, that if any of the foregoing shall cease to
                 be a primary U.S. Government Securities dealer in New York City
                 (a "Primary Treasury Dealer), the Company shall substitute for
                 it another Primary Treasury Dealer.

                   Under the Indenture, funds may be deposited with the Trustee
                 (which shall have become available for payment), in advance of
                 the redemption date of any of the bonds of 2000 Series A (or
                 portions thereof), in trust for the redemption of such bonds
                 (or portions thereof) and the interest due or to become due
                 thereon, and thereupon all obligations of the Company in
                 respect of such bonds (or portions thereof) so to be redeemed
                 and such interest shall cease and be discharged, and the
                 holders thereof shall thereafter be restricted exclusively to
                 such funds for any and all claims of whatsoever nature on their
                 part under the Indenture or with respect to such bonds (or
                 portions thereof) and interest.

                   The bonds of 2000 Series A, including this bond, shall not be
                 entitled or subject to a sinking fund.

                   In case an event of default, as defined in the Indenture,
                 shall occur, the principal of all the bonds issued thereunder
                 may become or be declared due and payable, in the manner, with
                 the effect and subject to the conditions, provided in the
                 Indenture.

                   This bond is transferable by the registered holder hereof, in
                 person or by his attorney duly authorized in writing, on the
                 books of the Company kept at its office or agency in the
                 Borough of Manhattan, The City and State of New York, upon
                 surrender and cancellation of this bond, and, thereupon, a new
                 registered bond or bonds of the same series of authorized
                 denominations for a like aggregate principal amount will be
                 issued to the transferee or transferees in exchange herefor,
                 and this bond with others of like form may in like manner be
                 exchanged for one or more new registered bonds of the same
                 series of other authorized denominations, but of the same
                 aggregate principal amount, all as provided and upon the terms
                 and conditions set forth in the Indenture, and upon payment, in
                 any event, of the charges prescribed in the Indenture.

                   No recourse shall be had for the payment of the principal of,
                 or the interest on, this bond, or for any claim based hereon or
                 otherwise in respect hereof or of the Indenture, or of any
                 indenture supplemental thereto, against any incorporator, or
                 against any past, present or future stockholder, director or
                 officer, as such, of the Company, or of any predecessor or
                 successor corporation, either directly or through the Company
                 or any such predecessor or successor corporation, whether for
                 amounts unpaid on stock subscriptions or by virtue of any
                 constitution, statute or rule of law, or by the enforcement of
                 any assessment or penalty or otherwise howsoever, all such
                 liability being, by the acceptance hereof and as part of the
                 consideration for the issue hereof,
   15
                                       13

                 expressly waived and released by every holder or owner hereof,
                 as more fully provided in the Indenture.

                        [FORM OF TRUSTEE'S CERTIFICATE]

FORM OF TRUSTEE'S
CERTIFICATE.       This bond is one of the bonds, of the series designated
                 therein, described in the within-mentioned Indenture.

                                       BANKERS TRUST COMPANY,
                                                                      as Trustee

                                       By ...........................
                                         Authorized Officer
   16
                                       14

                                            PART II.

                                    RECORDING AND FILING DATA

RECORDING AND
FILING OF ORIGINAL
INDENTURE.         The Original Indenture and indentures supplemental thereto
                 have been recorded and/or filed and Certificates of Provision
                 for Payment have been recorded as hereinafter set forth.

                   The Original Indenture has been recorded as a real estate
                 mortgage and filed as a chattel mortgage in the offices of the
                 respective Registers of Deeds of certain counties in the State
                 of Michigan as set forth in the Supplemental Indenture dated as
                 of September 1, 1947, has been recorded as a real estate
                 mortgage in the office of the Register of Deeds of Genesee
                 County, Michigan as set forth in the Supplemental Indenture
                 dated as of May 1, 1974, has been filed in the Office of the
                 Secretary of State of Michigan on November 16, 1951 and has
                 been filed and recorded in the office of the Interstate
                 Commerce Commission on December 8, 1969.

RECORDING AND
FILING OF
SUPPLEMENTAL
INDENTURES.        Pursuant to the terms and provisions of the Original
                 Indenture, indentures supplemental thereto heretofore entered
                 into have been recorded as a real estate mortgage and/or filed
                 as a chattel mortgage or as a financing statement in the
                 offices of the respective Registers of Deeds of certain
                 counties in the State of Michigan, the Office of the Secretary
                 of State of Michigan and the Office of the Interstate Commerce
                 Commission, as set forth in supplemental indentures as follows:



                                                                                            RECORDED AND/OR
                                                                                         FILED AS SET FORTH IN
                               SUPPLEMENTAL                      PURPOSE OF                  SUPPLEMENTAL
                                INDENTURE                       SUPPLEMENTAL                   INDENTURE
                               DATED AS OF                       INDENTURE                   DATED AS OF:
                               ------------                     ------------             ---------------------
                                                                                   
                       June 1, 1925(a)(b)..........  Series B Bonds                      February 1, 1940
                       August 1, 1927(a)(b)........  Series C Bonds                      February 1, 1940
                       February 1, 1931(a)(b)......  Series D Bonds                      February 1, 1940
                       June 1, 1931(a)(b)..........  Subject Properties                  February 1, 1940
                       October 1, 1932(a)(b).......  Series E Bonds                      February 1, 1940
                       September 25, 1935(a)(b)....  Series F Bonds                      February 1, 1940
                       September 1, 1936(a)(b).....  Series G Bonds                      February 1, 1940
                       November 1, 1936(a)(b)......  Subject Properties                  February 1, 1940
                       February 1, 1940(a)(b)......  Subject Properties                  September 1, 1947
                       December 1, 1940(a)(b)......  Series H Bonds and Additional       September 1, 1947
                                                       Provisions
                       September 1,                  Series I Bonds,                     November 15, 1951
                         1947(a)(b)(c).............    Subject Properties and
                                                       Additional Provisions
                       March 1, 1950(a)(b)(c)......  Series J Bonds                      November 15, 1951
                                                       and Additional Provisions
                       November 15,                  Series K Bonds                      January 15, 1953
                         1951(a)(b)(c).............    Additional Provisions and
                                                       Subject Properties
                       January 15, 1953(a)(b)......  Series L Bonds                      May 1, 1953
                       May 1, 1953(a)..............  Series M Bonds and Subject          March 15, 1954
                                                       Properties
                       March 15, 1954(a)(c)........  Series N Bonds and Subject          May 15, 1955
                                                       Properties
                       May 15, 1955(a)(c)..........  Series O Bonds and Subject          August 15, 1957
                                                       Properties
                       August 15, 1957(a)(c).......  Series P Bonds Additional           June 1, 1959
                                                       Provisions and Subject
                                                       Properties
                       June 1, 1959(a)(c)..........  Series Q Bonds and Subject          December 1, 1966
                                                       Properties

   17
                                       15



                                                                                            RECORDED AND/OR
                                                                                         FILED AS SET FORTH IN
                               SUPPLEMENTAL                      PURPOSE OF                  SUPPLEMENTAL
                                INDENTURE                       SUPPLEMENTAL                   INDENTURE
                               DATED AS OF                       INDENTURE                   DATED AS OF:
                               ------------                     ------------             ---------------------
                                                                                   
                       December 1, 1966(a)(c)......  Series R Bonds Additional           October 1, 1968
                                                       Provisions and Subject
                                                       Properties
                       October 1, 1968(a)(c).......  Series S Bonds and Subject          December 1, 1969
                                                       Properties
                       December 1, 1969(a)(c)......  Series T Bonds and Subject          July 1, 1970
                                                       Properties
                       July 1, 1970(c).............  Series U Bonds and Subject          December 15, 1970
                                                       Properties
                       December 15, 1970(c)........  Series V and Series W Bonds         June 15, 1971
                       June 15, 1971(c)............  Series X Bonds and Subject          November 15, 1971
                                                       Properties
                       November 15, 1971(c)........  Series Y Bonds and Subject          January 15, 1973
                                                       Properties
                       January 15, 1973(c).........  Series Z Bonds and Subject          May 1, 1974
                                                       Properties
                       May 1, 1974.................  Series AA Bonds and Subject         October 1, 1974
                                                       Properties
                       October 1, 1974.............  Series BB Bonds and Subject         January 15, 1975
                                                       Properties
                       January 15, 1975............  Series CC Bonds and Subject         November 1, 1975
                                                       Properties
                       November 1, 1975............  Series DDP Nos. 1-9 Bonds and       December 15, 1975
                                                       Subject Properties
                       December 15, 1975...........  Series EE Bonds and Subject         February 1, 1976
                                                       Properties
                       February 1, 1976............  Series FFR Nos. 1-13 Bonds          June 15, 1976
                       June 15, 1976...............  Series GGP Nos. 1-7 Bonds and       July 15, 1976
                                                       Subject Properties
                       July 15, 1976...............  Series HH Bonds and Subject         February 15, 1977
                                                       Properties
                       February 15, 1977...........  Series MMP Bonds and Subject        March 1, 1977
                                                       Properties
                       March 1, 1977...............  Series IIP Nos. 1-7 Bonds, Series   June 15, 1977
                                                       JJP Nos. 1-7 Bonds, Series KKP
                                                       Nos. 1-7 Bonds and Series LLP
                                                       Nos. 1-7 Bonds
                       June 15, 1977...............  Series FFR No. 14 Bonds and         July 1, 1977
                                                       Subject Properties
                       July 1, 1977................  Series NNP Nos. 1-7 Bonds and       October 1, 1977
                                                       Subject Properties
                       October 1, 1977.............  Series GGP Nos. 8-22 Bonds and      June 1, 1978
                                                       Series OOP Nos. 1-17 Bonds and
                                                       Subject Properties
                       June 1, 1978................  Series PP Bonds, Series QQP Nos.    October 15, 1978
                                                       1-9 Bonds and Subject Properties
                       October 15, 1978............  Series RR Bonds and Subject         March 15, 1979
                                                       Properties

   18
                                       16



                                                                                            RECORDED AND/OR
                                                                                         FILED AS SET FORTH IN
                               SUPPLEMENTAL                      PURPOSE OF                  SUPPLEMENTAL
                                INDENTURE                       SUPPLEMENTAL                   INDENTURE
                               DATED AS OF                       INDENTURE                   DATED AS OF:
                               ------------                     ------------             ---------------------
                                                                                   
                       March 15, 1979..............  Series SS Bonds and Subject         July 1, 1979
                                                       Properties
                       July 1, 1979................  Series IIP Nos. 8-22 Bonds, Series  September 1, 1979
                                                       NNP Nos. 8-21 Bonds and Series
                                                       TTP Nos. 1-15 Bonds and Subject
                                                       Properties
                       September 1, 1979...........  Series JJP No. 8 Bonds, Series KKP  September 15, 1979
                                                       No. 8 Bonds, Series LLP Nos.
                                                       8-15 Bonds, Series MMP No. 2
                                                       Bonds and Series OOP No. 18
                                                       Bonds and Subject Properties
                       September 15, 1979..........  Series UU Bonds                     January 1, 1980
                       January 1, 1980.............  1980 Series A Bonds and Subject     April 1, 1980
                                                       Properties
                       April 1, 1980...............  1980 Series B Bonds                 August 15, 1980
                       August 15, 1980.............  Series QQP Nos. 10-19 Bonds, 1980   August 1, 1981
                                                       Series CP Nos. 1-12 Bonds and
                                                       1980 Series DP No. 1-11 Bonds
                                                       and Subject Properties
                       August 1, 1981..............  1980 Series CP Nos. 13-25 Bonds     November 1, 1981
                                                       and Subject Properties
                       November 1, 1981............  1981 Series AP Nos. 1-12 Bonds      June 30, 1982
                       June 30, 1982...............  Article XIV Reconfirmation          August 15, 1982
                       August 15, 1982.............  1981 Series AP Nos. 13-14 and       June 1, 1983
                                                       Subject Properties
                       June 1, 1983................  1981 Series AP Nos. 15-16 and       October 1, 1984
                                                       Subject Properties
                       October 1, 1984.............  1984 Series AP and 1984 Series BP   May 1, 1985
                                                       Bonds and Subject Properties
                       May 1, 1985.................  1985 Series A Bonds                 May 15, 1985
                       May 15, 1985................  1985 Series B Bonds and Subject     October 15, 1985
                                                       Properties
                       October 15, 1985............  Series KKP No. 9 Bonds and Subject  April 1, 1986
                                                       Properties
                       April 1, 1986...............  1986 Series A and Subject           August 15, 1986
                                                       Properties
                       August 15, 1986.............  1986 Series B and Subject           November 30, 1986
                                                       Properties
                       November 30, 1986...........  1986 Series C                       January 31, 1987
                       January 31, 1987............  1987 Series A                       April 1, 1987
                       April 1, 1987...............  1987 Series B and 1987 Series C     August 15, 1987
                       August 15, 1987.............  1987 Series D and 1987 Series E     November 30, 1987
                                                       and Subject Properties
                       November 30, 1987...........  1987 Series F                       June 15, 1989

   19
                                       17



                                                                                            RECORDED AND/OR
                                                                                         FILED AS SET FORTH IN
                               SUPPLEMENTAL                      PURPOSE OF                  SUPPLEMENTAL
                                INDENTURE                       SUPPLEMENTAL                   INDENTURE
                               DATED AS OF                       INDENTURE                   DATED AS OF:
                               ------------                     ------------             ---------------------
                                                                                   
                       June 15, 1989...............  1989 Series A                       July 15, 1989
                       July 15, 1989...............  Series KKP No. 10                   December 1, 1989
                       December 1, 1989............  Series KKP No. 11 and 1989 Series   February 15, 1990
                                                       BP
                       February 15, 1990...........  1990 Series A, 1990 Series B, 1990  November 1, 1990
                                                       Series C, 1990 Series D, 1990
                                                       Series E and 1990 Series F
                       November 1, 1990............  Series KKP No. 12                   April 1, 1991
                       April 1, 1991...............  1991 Series AP                      May 1, 1991
                       May 1, 1991.................  1991 Series BP and 1991 Series CP   May 15, 1991
                       May 15, 1991................  1991 Series DP                      September 1, 1991
                       September 1, 1991...........  1991 Series EP                      November 1, 1991
                       November 1, 1991............  1991 Series FP                      January 15, 1992
                       January 15, 1992............  1992 Series BP                      February 29, 1992 and
                                                                                         April 15, 1992
                       February 29, 1992...........  1992 Series AP                      April 15, 1992
                       April 15, 1992..............  Series KKP No. 13                   July 15, 1992
                       July 15, 1992...............  1992 Series CP                      November 30, 1992
                       July 31, 1992...............  1992 Series D                       November 30, 1992
                       April 1, 1986...............  1986 Series A and Subject           August 15, 1986
                                                       Properties
                       August 15, 1986.............  1986 Series B and Subject           November 30, 1986
                                                       Properties
                       November 30, 1986...........  1986 Series C                       January 31, 1987
                       January 31, 1987............  1987 Series A                       April 1, 1987
                       April 1, 1987...............  1987 Series B and 1987 Series C     August 15, 1987
                       August 15, 1987.............  1987 Series D and 1987 Series E     November 30, 1987
                                                       and Subject Properties
                       November 30, 1987...........  1987 Series F                       June 15, 1989
                       June 15, 1989...............  1989 Series A                       July 15, 1989
                       July 15, 1989...............  Series KKP No. 10                   December 1, 1989
                       December 1, 1989............  Series KKP No. 11 and 1989 Series   February 15, 1990
                                                       BP
                       February 15, 1990...........  1990 Series A, 1990 Series B, 1990  November 1, 1990
                                                       Series C, 1990 Series D, 1990
                                                       Series E and 1990 Series F
                       November 1, 1990............  Series KKP No. 12                   April 1, 1991
                       April 1, 1991...............  1991 Series AP                      May 1, 1991
                       May 1, 1991.................  1991 Series BP and 1991 Series CP   May 15, 1991
                       May 15, 1991................  1991 Series DP                      September 1, 1991
                       September 1, 1991...........  1991 Series EP                      November 1, 1991
                       November 1, 1991............  1991 Series FP                      January 15, 1992
                       January 15, 1992............  1992 Series BP                      February 29, 1992 and
                                                                                         April 15, 1992
                       February 29, 1992...........  1992 Series AP                      April 15, 1992
                       April 15, 1992..............  Series KKP No. 13                   July 15, 1992
                       July 15, 1992...............  1992 Series CP                      November 30, 1992

   20
                                       18



                                                                                            RECORDED AND/OR
                                                                                         FILED AS SET FORTH IN
                               SUPPLEMENTAL                      PURPOSE OF                  SUPPLEMENTAL
                                INDENTURE                       SUPPLEMENTAL                   INDENTURE
                               DATED AS OF                       INDENTURE                   DATED AS OF:
                               ------------                     ------------             ---------------------
                                                                                   
                       November 30, 1992...........  1992 Series E and 1993 Series D     March 15, 1993
                       December 15, 1992...........  Series KKP No. 14 and 1989 Series   March 15, 1992
                                                       BP No. 2
                       January 1, 1993.............  1993 Series C                       April 1, 1993
                       March 1, 1993...............  1993 Series E                       June 30, 1993
                       March 15, 1993..............  1993 Series D                       September 15, 1993
                       April 1, 1993...............  1993 Series FP and 1993 Series IP   September 15, 1993
                       April 26, 1993..............  1993 Series G and Amendment of      September 15, 1993
                                                       Article II, Section 5
                       May 31, 1993................  1993 Series J                       September 15, 1993
                       September 15, 1993..........  1993 Series K                       March 1, 1994
                       March 1, 1994...............  1994 Series AP                      June 15, 1994
                       June 15, 1994...............  1994 Series BP                      December 1, 1994
                       August 15, 1994.............  1994 Series C                       December 1, 1994
                       December 1, 1994............  Series KKP No. 15 and 1994 Series   August 1, 1995
                                                       DP
                       August 1, 1995..............  1995 Series A Bond                  August 1, 1999
                                                       1995 Series DP


                -----------------------------------------
                (a) See Supplemental Indenture dated as of July 1, 1970 for
                    Interstate Commerce Commission filing and recordation
                    information.

                (b) See Supplemental Indenture dated as of May 1, 1953 for
                    Secretary of State of Michigan filing information.

                (c) See Supplemental Indenture dated as of May 1, 1974 for
                    County of Genesee, Michigan recording and filing
                    information.
   21
                                       19

RECORDING OF
CERTIFICATES
OF PROVISION
FOR PAYMENT.       All the bonds of Series A which were issued under the
                 Original Indenture dated as of October 1, 1924, and of Series
                 B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, W, Y, Z,
                 AA, BB, CC, DDP Nos. 1-9, FFR Nos. 1-14, GGP Nos. 1-22, HH, IIP
                 Nos. 1-22, JJP Nos. 1-8, KKP Nos. 1-9, LLP Nos. 1-15, NNP Nos.
                 1-21, OOP Nos. 1-18, QQP Nos. 1-17, TTP Nos. 1-15, UU, 1980
                 Series A, 1980 Series CP Nos. 1-25, 1980 Series DP Nos. 1-11,
                 1981 Series AP Nos. 1-16, 1984 Series AP, 1984 Series BP, 1985
                 Series A, 1985 Series B, 1987 Series A, PP, RR, EE, MMP, MMP
                 No. 2, 1989 Series A and 1993 Series D which were issued under
                 Supplemental Indentures dated as of, respectively, June 1,
                 1925, August 1, 1927, February 1, 1931, October 1, 1932,
                 September 25, 1935, September 1, 1936, December 1, 1940,
                 September 1, 1947, November 15, 1951, January 15, 1953, May 1,
                 1953, March 15, 1954, May 15, 1955, August 15, 1957, December
                 15, 1970, November 15, 1971, January 15, 1973, May 1, 1974,
                 October 1, 1974, January 15, 1975, November 1, 1975, February
                 1, 1976, June 15, 1976, July 15, 1976, October 1, 1977, March
                 1, 1977, July 1, 1979, March 1, 1977, March 1, 1977, March 1,
                 1977, September 1, 1979, July 1, 1977, July 1, 1979, September
                 15, 1979, October 1, 1977, June 1, 1978, October 1, 1977, July
                 1, 1979, January 1, 1980, August 15, 1980, November 1, 1981,
                 October 1, 1984, May 1, 1985, May 15, 1985, January 31, 1987,
                 June 1, 1978, October 15, 1978, December 15, 1975, February 15,
                 1977, September 1, 1979, June 15, 1989 and March 15, 1993 have
                 matured or have been called for redemption and funds sufficient
                 for such payment or redemption have been irrevocably deposited
                 with the Trustee for that purpose; and Certificates of
                 Provision for Payment have been recorded in the offices of the
                 respective Registers of Deeds of certain counties in the State
                 of Michigan, with respect to all bonds of Series A, B, C, D, E,
                 F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3,
                 GGP Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1
                 and GGP No. 8.

                                            PART III.

                                          THE TRUSTEE.

TERMS AND
CONDITIONS OF
ACCEPTANCE OF
TRUST BY TRUSTEE.  The Trustee hereby accepts the trust hereby declared and
                 provided, and agrees to perform the same upon the terms and
                 conditions in the Original Indenture, as amended to date and as
                 supplemented by this Supplemental Indenture, and in this
                 Supplemental Indenture set forth, and upon the following terms
                 and conditions:

                   The Trustee shall not be responsible in any manner whatsoever
                 for and in respect of the validity or sufficiency of this
                 Supplemental Indenture or the due execution hereof by the
                 Company or for or in respect of the recitals contained herein,
                 all of which recitals are made by the Company solely.

                                            PART IV.

                                         MISCELLANEOUS.

CONFIRMATION OF
SECTION 318(C) OF
TRUST INDENTURE
ACT.               Except to the extent specifically provided therein, no
                 provision of this supplemental indenture or any future
                 supplemental indenture is intended to modify, and the parties
                 do hereby adopt and confirm, the provisions of Section 318(c)
                 of the Trust Indenture Act which amend and supercede provisions
                 of the Indenture in effect prior to November 15, 1990.

EXECUTION IN
COUNTERPARTS.      THIS SUPPLEMENTAL INDENTURE MAY BE SIMULTANEOUSLY EXECUTED IN
                 ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED
                 SHALL BE DEEMED TO BE AN ORIGINAL; BUT SUCH COUNTERPARTS SHALL
                 TOGETHER CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.
   22
                                       20

TESTIMONIUM.       IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY AND BANKERS
                 TRUST COMPANY HAVE CAUSED THESE PRESENTS TO BE SIGNED IN THEIR
                 RESPECTIVE CORPORATE NAMES BY THEIR RESPECTIVE CHAIRMEN OF THE
                 BOARD, PRESIDENTS, VICE PRESIDENTS, ASSISTANT VICE PRESIDENTS,
                 TREASURERS OR ASSISTANT TREASURERS AND IMPRESSED WITH THEIR
                 RESPECTIVE CORPORATE SEALS, ATTESTED BY THEIR RESPECTIVE
                 SECRETARIES, ASSISTANT SECRETARIES, TREASURERS OR ASSISTANT
                 TREASURERS ALL AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.

                                              THE DETROIT EDISON COMPANY,

                 (Corporate Seal)             By
                                                 -------------------------------
                                                          N. A. Khouri
                                                      Assistant Treasurer

EXECUTION.       Attest:

               --------------------------------------------
                        Susan M. Beale
                 Vice President and Corporate
                           Secretary

                 Signed, sealed and delivered by THE
                 DETROIT EDISON COMPANY, in the
                 presence of

               --------------------------------------------
                            K. Hier

               --------------------------------------------
                          R. Martinez

                 STATE OF MICHIGAN
                                                SS.:
                 COUNTY OF WAYNE

ACKNOWLEDGMENT
OF EXECUTION
BY COMPANY.        On this 27th day of January, 2000, before me, the subscriber,
                 a Notary Public within and for the County of Oakland (acting in
                 Wayne), in the State of Michigan, personally appeared N. A.
                 Khouri, to me personally known, who, being by me duly sworn,
                 did say that he does business at 2000 2nd Avenue, Detroit,
                 Michigan 48226-1279 and is the Assistant Treasurer of THE
                 DETROIT EDISON COMPANY, one of the corporations described in
                 and which executed the foregoing instrument; that he knows the
                 corporate seal of the said corporation and that the seal
                 affixed to said instrument is the corporate seal of said
                 corporation; and that said instrument was signed and sealed in
                 behalf of said corporation by authority of its Board of
                 Directors and that he subscribed his name thereto by like
                 authority; and said N. A. Khouri, acknowledged said instrument
                 to be the free act and deed of said corporation.

                                              ----------------------------------
                                                Geraldine N. Rockymore, Notary
                 (Notarial Seal)                            Public
                                                      Oakland County, MI
                                                    My Commission Expires
                                                      December 23, 2002
                                                      (Acting in Wayne)
   23
                                       21



                                                                          BANKERS TRUST COMPANY,
                         (Corporate Seal)                                 By
                                                                              --------------------------------------------
                                                                              Marc J. Parilla
                                                                              Assistant Vice President

                         Attest:
                         ------------------------------------------------
                         Signed, sealed and delivered by
                         BANKERS TRUST COMPANY, in the
                         presence of
                         ------------------------------------------------

                         ------------------------------------------------

                                      STATE OF NEW YORK
                                                           SS.:
                                     COUNTY OF NEW YORK
ACKNOWLEDGEMENT
OF EXECUTION
BY TRUSTEE.              On this      day of January, 2000, before me, the
                         subscriber, a Notary Public within and for the County of New
                         York, in the State of New York, personally appeared Marc J.
                         Parilla, to me personally known, who, being by me duly
                         sworn, did say that his business office is located at Four
                         Albany Street, New York, New York 10015, and he is Assistant
                         Vice President of BANKERS TRUST COMPANY, one of the
                         corporations described in and which executed the foregoing
                         instrument; that he knows the corporate seal of the said
                         corporation and that the seal affixed to said instrument is
                         the corporate seal of said corporation; and that said
                         instrument was signed and sealed in behalf of said
                         corporation by authority of its Board of Directors and that
                         he subscribed his name thereto by like authority; and said
                                      acknowledged said instrument to be the free act
                         and deed of said corporation.

                         (Notarial Seal)
                                                                       ---------------------------------------------------

                                                                                Notary Public, State of New York
                                                                                               No.
                                                                                     Qualified in NY County
                                                                                       Commission Expires

   24
                                       22




STATE OF MICHIGAN
                    SS.:
COUNTY OF WAYNE

AFFIDAVIT AS TO
CONSIDERATION
AND GOOD FAITH.           N.A. Khouri, being duly sworn, says: that he is the
                          Assistant Treasurer of THE DETROIT EDISON COMPANY, the
                          Mortgagor named in the foregoing instrument, and that he has
                          knowledge of the facts in regard to the making of said
                          instrument and of the consideration therefor; that the
                          consideration for said instrument was and is actual and
                          adequate, and that the same was given in good faith for the
                          purposes in such instrument set forth.

                                                                           ------------------------------------------------
                                                                                             N.A. Khouri

                          Sworn to before me this 27th day of
                          January, 2000

                          ------------------------------------------------
                               Geraldine N. Rockymore, Notary Public
                                         Oakland County, MI
                                       My Commission Expires
                                         December 23, 2002
                                         (Acting in Wayne)
                                          (Notarial Seal)

                              This instrument was drafted by Frances B. Rohlman, Esq.,
                  2000 Second Avenue, Detroit, Michigan 48226
EXECUTED IN  _____
COUNTERPARTS OF WHICH
THIS IS COUNTERPART NO. _  .

EX-11.8

   1
                                                                    EXHIBIT 11-8

                               DTE ENERGY COMPANY
                      BASIC AND DILUTED EARNINGS PER SHARE
                                 OF COMMON STOCK



                                                                               Year Ended December 31
                                                                 -----------------------------------------------
                                                                       1999             1998             1997
                                                                       ----             ----             ----

                                                                        (Thousands, except per share amounts)
                                                                                         
BASIC:
   Net Income.................................................   $    482,653      $    443,012     $    417,333
   Weighted average number of common
     shares outstanding (a)...................................        145,047           145,076          145,101
   Earnings per share of Common Stock
     based on weighted average number
     of shares outstanding....................................        $  3.33          $   3.05          $  2.88

DILUTED:
   Net Income.................................................   $    482,653      $    443,012     $    417,333
   Weighted average number of common
     shares outstanding (a)...................................        145,047           145,076          145,101
   Incremental shares from assumed
     conversion of options....................................             89               106               12
                                                                -------------     -------------    -------------
                                                                      145,136           145,182          145,113
                                                                =============     =============    =============

   Earnings per share of Common Stock
     assuming conversion of options...........................          $3.33          $   3.05          $  2.88



- -----------------------------------


(a)  Based on a daily average.

EX-12.21

   1

                                                                   EXHIBIT 12-21

                               DTE ENERGY COMPANY
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES



                                                                           Year Ended December 31
                                                          ------------------------------------------------------
                                                                1999                1998                1997
                                                                ----                ----                ----

                                                                 (Millions, except for ratio and percent)
                                                                                      
Net income.............................................   $           483    $            443    $           417
                                                          ---------------    ----------------    ---------------

Taxes based on income:
   Current income taxes................................               144                 143                267
   Deferred taxes - net................................               (73)                 26                  5
   Investment tax credit adjustments - net.............               (11)                (15)               (15)
   Municipal and state.................................                 3                   3                  4
                                                          ---------------    ----------------    ---------------
     Total taxes based on income.......................                63                 157                261
                                                          ---------------    ----------------    ---------------

Fixed charges:
   Interest on long-term debt..........................               279                 279                275
   Amortization of debt discount, premium
     and expense.......................................                18                  11                 11
   Other interest......................................                47                  29                 11
   Interest factor of rents............................                34                  34                 34
   Preferred stock dividend factor.....................                 -                   7                 18
                                                           --------------     ---------------     --------------
Total fixed charges....................................               378                 360                349
                                                           --------------     ---------------     --------------

Earnings before taxes based on income
   and fixed charges...................................   $           924    $            960    $         1,027
                                                          ===============    ================    ===============

Ratio of earnings to fixed charges.....................              2.44                2.67               2.94

Preferred stock dividends..............................    $            -     $             6     $           12
Dividends meeting requirement of
   IRC Section 247.....................................               N/A                   4                  4
Percent deductible for income tax purposes                            N/A               40.00%             40.00%
Amount deductible......................................               N/A                   2                  2
Amount not deductible..................................               N/A                   4                 10
Ratio of pretax income to net income...................               N/A                1.35               1.61
Dividend factor for amount not deductible..............               N/A                   5                 16
Amount deductible......................................               N/A                   2                  2
                                                           --------------     ---------------     --------------
       Total preferred stock dividend factor...........    $          N/A     $             7     $           18
                                                           ==============     ===============     ==============

EX-12.22

   1

                                                                   EXHIBIT 12-22

                           THE DETROIT EDISON COMPANY
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES



                                                                           Year Ended December 31
                                                          ------------------------------------------------------
                                                                1999                1998                1997
                                                                ----                ----                ----

                                                                       (Millions, except for ratio)
                                                                                      
Net income.............................................   $           434    $            418    $           417
                                                          ---------------    ----------------    ---------------

Taxes based on income:
   Current income taxes................................               282                 280                308
   Deferred taxes - net................................               (60)                 (5)                (6)
   Investment tax credit adjustments - net.............               (11)                (15)               (14)
   Municipal and state.................................                 3                   3                  4
                                                          ---------------    ----------------    ---------------
     Total taxes based on income.......................               214                 263                292
                                                          ---------------    ----------------    ---------------

Fixed charges:
   Interest on long-term debt..........................               252                 254                262
   Amortization of debt discount, premium
     and expense.......................................                17                  11                 11
   Other interest......................................                19                  13                  9
   Interest factor of rents............................                34                  34                 34
                                                          ---------------    ----------------    ---------------
     Total fixed charges...............................               322                 312                316
                                                          ---------------    ----------------    ---------------

Earnings before taxes based on income
   and fixed charges...................................   $           970    $            993    $         1,025
                                                          ===============    ================    ===============

Ratio of earnings to fixed charges.....................              3.01                3.18               3.24

EX-12.23

   1
                                                                   EXHIBIT 12-23

                           THE DETROIT EDISON COMPANY
                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
                          AND PREFERRED STOCK DIVIDENDS



                                                                                    Year Ended December 31
                                                                           ---------------------------------------
                                                                             1999            1998           1997
                                                                             ----            ----           ----
                                                                           (Millions, except for ratio and percent)

                                                                                                  
  Net income .........................................................     $    434        $     418       $    417
                                                                           --------        ---------       --------

  Taxes based on income:
    Current income taxes ..............................................         282              280            308
    Deferred taxes - net ..............................................         (60)              (5)            (6)
    Investment tax credit adjustments - net............................         (11)             (15)           (14)
    Municipal and state ...............................................           3                3              4
                                                                           --------        ---------       --------
      Total taxes based on income .....................................         214              263            292
                                                                           --------        ---------       --------

  Fixed charges:
    Interest on long-term debt ........................................         252              254            262
    Amortization of debt discount, premium and expense ................          17               11             11
    Other interest ....................................................          19               13              9
    Interest factor of rents ..........................................          34               34             34
                                                                           --------        ---------       --------
      Total fixed charges .............................................         322              312            316
                                                                           --------        ---------       --------

  Earnings before taxes based on income and fixed charges .............    $    970        $     993       $  1,025
                                                                           ========        =========       ========

  Preferred stock dividends ...........................................    $     --        $       6       $     12
  Dividends meeting requirement of IRC Section 247 ....................         N/A                4              4
  Percent deductible for income tax purposes ..........................         N/A            40.00%         40.00%
  Amount deductible ...................................................         N/A                2              2
  Amount not deductible ...............................................         N/A                4             10
  Ratio of pretax income to net income ................................         N/A             1.63           1.70
  Dividend factor for amount not deductible ...........................         N/A                7             17
  Amount deductible ...................................................         N/A                2              2
                                                                           --------        ---------       --------
      Total preferred stock dividend factor ...........................         N/A                9             19
      Total fixed charges .............................................         322              312            316
                                                                           --------        ---------       --------
      Total fixed charges and preferred stock dividends ...............    $    322            $ 321       $    335
                                                                           ========        =========       ========
  Ratio of earnings to fixed charges and preferred stock dividends ....        3.01             3.09           3.06

EX-21.4

   1
                                                                    EXHIBIT 21-4

DTE ENERGY COMPANY as of February 08, 2000



                                                               OWNED BY           OWNED BY
SUBSIDIARY                                                       PARENT    SELECTED ENTITY
- ----------                                                       ------    ---------------
                                                                     
DTE CAPITAL CORPORATION                                           100%          100%
 (MICHIGAN)


DTE ENERGY RESOURCES, INC.                                        100%          100%
 (MICHIGAN)


    DTE BIOMASS ENERGY, INC.                                      100%          100%
    (MICHIGAN)


      ADRIAN GAS PRODUCERS, L.L.C. *                               50%           50%
      (MICHIGAN)


      BELLEFONTAINE GAS PRODUCERS, L.L.C. *                        50%           50%
      (DELAWARE)


      BELLEVILLE GAS PRODUCERS, INC.                              100%          100%
      (MICHIGAN)


      BIRMINGHAM GAS PRODUCERS, L.L.C.                            100%          100%
      (MICHIGAN)


      BRIDGETON GAS PRODUCERS, L.L.C. *                            50%           50%
      (DELAWARE)


      CRIMSON GAS PRODUCERS, L.L.C. *                              50%           50%
      (MICHIGAN)


      DTE ARBOR GAS PRODUCERS. INC.                               100%          100%
      (MICHIGAN)


      ESCAMBIA GAS PRODUCERS, INC.                                100%          100%
      (MICHIGAN)


      FAYETTEVILLE GAS PRODUCERS  L.L.C. *                         98%           98%
      (NORTH CAROLINA)


      LYCOMING GAS PRODUCERS, INC.                                100%          100%
      (MICHIGAN)


      MONTGOMERY GAS PRODUCERS, L.L.C.                            100%          100%
      (MICHIGAN)


   2



                                                               OWNED BY           OWNED BY
SUBSIDIARY                                                       PARENT    SELECTED ENTITY
- ----------                                                       ------    ---------------
                                                                     
 MOUNTAINEER SYNFUEL, L.L.C.                                         %
 (DELAWARE)


 OKLAHOMA GAS PRODUCERS, L.L.C.                                   100%            100%
 (MICHIGAN)


 ORLANDO GAS PRODUCERS, INC.                                      100%            100%
 (MICHIGAN)


 PHOENIX GAS PRODUCERS, L.L.C.                                       %
 (MICHIGAN)


 PLAINVILLE GAS PRODUCERS, INC.                                   100%            100%
 (MICHIGAN)


 RES POWER, INC.                                                  100%            100%
 (MICHIGAN)


      RIVERVIEW ENERGY SYSTEMS                                     50%             50%



 RALEIGH STEAM PRODUCERS, L.L.C. *                                 50%             50%
 (NORTH CAROLINA)


 RIVERVIEW GAS PRODUCERS, INC.                                    100%            100%
 (MICHIGAN)


 ROXANA GAS PRODUCERS, INC.                                       100%            100%
 (MICHIGAN)


 SACRAMENTO GAS PRODUCERS, L.L.C. *                                50%             50%



 SALEM ENERGY SYSTEMS, L.L.C. *                                    50%             50%



 SONOMA ENERGY SYSTEMS, INC.                                      100%            100%
 (MICHIGAN)


 ST. LOUIS GAS PRODUCERS, L.L.C. *                                 50%             50%
 (DELAWARE)


 WAKE GAS PRODUCERS, L.L.C.                                        99%             99%


   3



                                                           OWNED BY             OWNED BY
SUBSIDIARY                                                   PARENT      SELECTED ENTITY
- ----------                                                   ------      ---------------
                                                                   

    WICHITA GAS PRODUCERS L.L.C.                                 %
    (MICHIGAN)


    WINSTON GAS PRODUCERS, L.L.C. *                          47.5%             47.5%



DTE COAL SERVICES, INC.                                       100%              100%
(MICHIGAN)


    DTE RAIL SERVICES, INC.                                   100%              100%
    (MICHIGAN)


         DTE TRANSPORTATION SERVICES, INC.                    100%              100%
         } (MICHIGAN)


DTE ENERGY MARKETING, INC. *                                  100%              100%
(MICHIGAN)


    DTE COENERGY, L.L.C.                                       50%               50%



DTE ENERGY SERVICES, INC.                                     100%              100%
(MICHIGAN)


    DTE BH HOLDINGS, INC.                                     100%              100%
    (DELAWARE)


    DTE BH HOLDINGS, L.L.C.                                   100%              100%



    DTE BURNS HARBOR, L.L.C.                                  100%              100%
    (DELAWARE)


    DTE ES HOLDINGS, INC.                                     100%              100%
    (MICHIGAN)


    DTE HOLLAND, L.L.C.                                       100%              100%
    (MICHIGAN)


    DTE NORTHWIND L.L.C.                                      100%              100%
    (DELAWARE)


    DTE NORTHWIND OPERATIONS, L.L.C.                          100%              100%
    (MICHIGAN)


   4



                                                            OWNED BY           OWNED BY
SUBSIDIARY                                                    PARENT    SELECTED ENTITY
- ----------                                                    ------    ---------------
                                                                 
          DTE RIVER HILL, L.L.C.                               100%          100%
          (DELAWARE)


          DTE SPARROWS POINT L.L.C.                            100%          100%
          (DELAWARE)


          DTE SPARROWS POINT OPERATIONS, INC.                  100%          100%
          (MICHIGAN)


          DTE SYNFUELS, LLC                                    100%          100%
          (DELAWARE)


               DTE INDYCOKE L.L.C.                             100%          100%
               } (DELAWARE)


          EES COKE BATTERY COMPANY, INC.                       100%          100%
          (MICHIGAN)


          PCI ENTERPRISES COMPANY                              100%          100%
          (MICHIGAN)


          RIVER HILL L.L.C.                                    100%          100%
          (DELAWARE)


      DTE ENERGY TRADING, INC.                                 100%          100%
      (MICHIGAN)


      DTE GENERATION, INC.                                     100%          100%
      (MICHIGAN)


          DTE RIVER ROUGE NO. 1, LLC                           100%          100%
          (MICHIGAN)


DTE ENTERPRISES, INC.                                          100%          100%
 (MICHIGAN)


EDISON DEVELOPMENT CORPORATION                                 100%          100%
 (MICHIGAN)


      EDVENTURE CAPITAL CORP.                                  100%          100%
      (MICHIGAN)


      PLUG POWER, L.L.C. *                                      50%           50%
      (DELAWARE)


SYNDECO REALTY CORPORATION                                     100%          100%
 (MICHIGAN)


   5



                                                           OWNED BY           OWNED BY
SUBSIDIARY                                                   PARENT    SELECTED ENTITY
- ----------                                                   ------    ---------------
                                                                 
THE DETROIT EDISON COMPANY                                     100%          100%
 (MICHIGAN)


      MIDWEST ENERGY RESOURCES COMPANY                         100%          100%
      (MICHIGAN)


      ST. CLAIR ENERGY CORPORATION                             100%          100%
      (MICHIGAN)


      THE EDISON ILLUMINATING COMPANY OF DETROIT               100%          100%
      (MICHIGAN)


WOLVERINE ENERGY SERVICES, INC.                                100%          100%
 (MICHIGAN)


      DTE EDISON AMERICA CATALOG SALES, INC.                   100%          100%
      (MICHIGAN)


      DTE EDISON AMERICA, INC.                                 100%          100%
      (MICHIGAN)


      DTE ENERGY SOLUTIONS, INC.                               100%          100%
      (MICHIGAN)


          DTE ENGINEERING SERVICES, INC. *                     100%          100%
          (MICHIGAN)


          MILAGRO INTEGRATED TECHNOLOGIES, L.L.C.               49%           49%
          (MICHIGAN)


      DTE ENERGY TECHNOLOGIES, INC.                            100%          100%
      (MICHIGAN)



- ------------------
*Multiple Parents

EX-23.13

   1

                                                                   EXHIBIT 23-13


INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference of our report dated January 26,
2000 appearing in this Annual Report on Form 10-K of DTE Energy Company and The
Detroit Edison Company for the year ended December 31, 1999 in the following
registration statements:


           FORM                                   REGISTRATION NUMBER

           DTE ENERGY COMPANY
           Form S-3                               33-57545
           Form S-4                               333-89175
           Form S-8                               333-00023

           THE DETROIT EDISON COMPANY
           Form S-3                               33-53207
           Form S-3                               33-64296
           Form S-3                               333-65765




DELOITTE & TOUCHE LLP

Detroit, Michigan
February 23, 2000

EX-27.31

 

<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME, BALANCE SHEET, STATEMENT OF CASH FLOWS,
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND BASIC AND DILUTED EARNINGS PER
SHARE OF COMMON STOCK AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.

<CIK> 0000936340
<NAME> DTE Energy Company

                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                             163
<SECURITIES>                                         0
<RECEIVABLES>                                      719
<ALLOWANCES>                                        21
<INVENTORY>                                        344
<CURRENT-ASSETS>                                  1310
<PP&E>                                           12745
<DEPRECIATION>                                    5597
<TOTAL-ASSETS>                                   12316
<CURRENT-LIABILITIES>                             1604
<BONDS>                                           3938
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                          1950
<OTHER-SE>                                        1959
<TOTAL-LIABILITY-AND-EQUITY>                     12316
<SALES>                                              0
<TOTAL-REVENUES>                                  4728
<CGS>                                                0
<TOTAL-COSTS>                                     3827
<OTHER-EXPENSES>                                    18
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 340
<INCOME-PRETAX>                                    543
<INCOME-TAX>                                        60
<INCOME-CONTINUING>                                483
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                       483
<EPS-BASIC>                                       3.33
<EPS-DILUTED>                                     3.33


 

EX-27.32

 

<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME, BALANCE SHEET, STATEMENT OF CASH FLOWS AND
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.

<CIK> 0000028385
<NAME> The Detroit Edison Company

                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                               4
<SECURITIES>                                         0
<RECEIVABLES>                                      640
<ALLOWANCES>                                        20
<INVENTORY>                                        315
<CURRENT-ASSETS>                                   968
<PP&E>                                           12092
<DEPRECIATION>                                    5526
<TOTAL-ASSETS>                                   11051
<CURRENT-LIABILITIES>                             1322
<BONDS>                                           3284
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                          1951
<OTHER-SE>                                        1677
<TOTAL-LIABILITY-AND-EQUITY>                     11051
<SALES>                                              0
<TOTAL-REVENUES>                                  4047
<CGS>                                                0
<TOTAL-COSTS>                                     3112
<OTHER-EXPENSES>                                     6
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 284
<INCOME-PRETAX>                                    645
<INCOME-TAX>                                       211
<INCOME-CONTINUING>                                434
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                       434
<EPS-BASIC>                                          0
<EPS-DILUTED>                                        0


 

EX-99.32

   1
                                                                   EXHIBIT 99-32


================================================================================

                                U.S. $400,000,000

                           THIRD AMENDED AND RESTATED

                                CREDIT AGREEMENT

                          Dated as of January 18, 2000

                                      Among

                            DTE CAPITAL CORPORATION,

                                   as Borrower

                                       and

                        THE INITIAL LENDERS NAMED HEREIN,

                               as Initial Lenders

                                       and

                                 CITIBANK, N.A.,

                                    as Agent

                                       and

                               ABN AMRO BANK N.V.,
                                 BANK ONE N.A.,
                               BARCLAYS BANK PLC,
           BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH,
                                 COMERICA BANK,

                                       and

                          DEN DANSKE BANK AKTIESELSKAB

                                  as Co-Agents

                           SALOMON SMITH BARNEY INC.,

                                   as Arranger
================================================================================


   2
                                TABLE OF CONTENTS



                                                                                                               PAGE

                                                      ARTICLE I
                                           DEFINITIONS AND ACCOUNTING TERMS

                                                                                                       
         SECTION 1.01.  Certain Defined Terms.....................................................................1
         SECTION 1.02.  Computation of Time Periods..............................................................16
         SECTION 1.03.  Accounting Terms.........................................................................16


                                                      ARTICLE II
                                          AMOUNTS AND TERMS OF THE ADVANCES

         SECTION 2.01.  The Revolving Credit Advances............................................................17
         SECTION 2.02.  Making the Revolving Credit Advances.....................................................17
         SECTION 2.03.  The Competitive Bid Advances.............................................................19
         SECTION 2.04.  Fees.....................................................................................22
         SECTION 2.05.  Termination or Reduction of the Commitments..............................................23
         SECTION 2.06.  Repayment of Revolving Credit Advances; Term Loan
                                 Election........................................................................23
         SECTION 2.07.  Interest on Revolving Credit Advances....................................................23
         SECTION 2.08.  Interest Rate Determination..............................................................24
         SECTION 2.09.  Optional Conversion of Revolving Credit Advances.........................................25
         SECTION 2.10.  Prepayments of Revolving Credit Advances.................................................26
         SECTION 2.11.  Increased Costs..........................................................................26
         SECTION 2.12.  Illegality...............................................................................27
         SECTION 2.13.  Payments and Computations................................................................27
         SECTION 2.14.  Taxes....................................................................................28
         SECTION 2.15.  Sharing of Payments, Etc.................................................................30
         SECTION 2.16.  Extensions of Revolver Termination Date..................................................31
         SECTION 2.17.  Use of Proceeds..........................................................................32


                                                      ARTICLE III
                                       CONDITIONS TO EFFECTIVENESS AND LENDING

         SECTION 3.01.  Conditions Precedent to Effectiveness of Sections 2.01
                                 and 2.03........................................................................32
         SECTION 3.02.  Conditions Precedent to Each Revolving Credit
                                 Borrowing.......................................................................35
         SECTION 3.03.  Conditions Precedent to Each Competitive Bid
                                 Borrowing.......................................................................35
         SECTION 3.04.  Determinations Under Section 3.01........................................................36



   3



                                                      ARTICLE IV
                                            REPRESENTATIONS AND WARRANTIES
                                                                                                               PAGE
                                                                                                       
         SECTION 4.01.  Representations and Warranties of the Borrower...........................................36

                                                      ARTICLE V
                                              COVENANTS OF THE BORROWER

         SECTION 5.01.  Affirmative Covenants....................................................................39
         SECTION 5.02.  Negative Covenants.......................................................................41

                                                      ARTICLE VI
                                                  EVENTS OF DEFAULT

         SECTION 6.01.  Events of Default........................................................................44

                                                     ARTICLE VII
                                                      THE AGENT

         SECTION 7.01.  Authorization and Action.................................................................47
         SECTION 7.02.  Agent's Reliance, Etc....................................................................47
         SECTION 7.03.  Citibank and Affiliates..................................................................47
         SECTION 7.04.  Lender Credit Decision...................................................................48
         SECTION 7.05.  Indemnification..........................................................................48
         SECTION 7.06.  Successor Agent..........................................................................48

                                                     ARTICLE VIII
                                                    MISCELLANEOUS

         SECTION 8.01.  Amendments, Etc..........................................................................49
         SECTION 8.02.  Notices, Etc.............................................................................49
         SECTION 8.03.  No Waiver; Remedies......................................................................50
         SECTION 8.04.  Costs and Expenses.......................................................................50
         SECTION 8.05.  Right of Set-off.........................................................................51
         SECTION 8.06.  Binding Effect...........................................................................51
         SECTION 8.07.  Assignments, Designations and Participations.............................................52
         SECTION 8.08.  Confidentiality..........................................................................55
         SECTION 8.09.  Governing Law............................................................................55
         SECTION 8.10.  Execution in Counterparts................................................................55
         SECTION 8.11.  Jurisdiction, Etc........................................................................56
         SECTION 8.12.  Effective Date...........................................................................56
         SECTION 8.13.  Waiver of Jury Trial.....................................................................56


   4

                                      iii




  Schedules
  ---------

  Schedule I       -  List of Applicable Lending Offices

  Schedule 5.02(a)  - Existing Liens




  Exhibits
  --------

  Exhibit A-1       -  Form of Revolving Credit Note

  Exhibit A-2       -  Form of Competitive Bid Note

  Exhibit B-1       -  Form of Notice of Revolving Credit Borrowing

  Exhibit B-2       -  Form of Notice of Competitive Bid Borrowing

  Exhibit C         -  Form of Assignment and Acceptance

  Exhibit D         -  Form of Designation Agreement

  Exhibit E        -   Form of Certificate by DTE Energy Company

  Exhibit F        -   Form of Opinion of Counsel to the Loan Parties

  Exhibit G        -   Form of Assignment and Assumption Agreement

  Exhibit H        -   Form of Guaranty

   5


                  THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of
January 18, 2000 among DTE CAPITAL CORPORATION, a Michigan corporation (the
"Borrower") which is wholly owned by DTE Energy Company, a Michigan corporation
(the "Parent"), the banks, financial institutions and other institutional
lenders (the "Initial Lenders") listed on the signature pages hereof, and
CITIBANK, N.A. ("Citibank"), as agent (the "Agent") and ABN AMRO BANK N.V., BANK
ONE N.A., BARCLAYS BANK PLC, BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS
BRANCH, COMERICA BANK and DEN DANSKE BANK AKTIESELSKAB, as co-agents, for the
Lenders (as hereinafter defined).


                  PRELIMINARY STATEMENTS.

                  (1) The Borrower has entered into a Second Amended and
Restated Credit Agreement dated as of January 19, 1999, (the "Existing Credit
Agreement") with the Agent and certain lenders, financial institutions and other
institutional lenders named therein or a party thereto immediately prior to the
effectiveness of this Agreement (collectively, the "Existing Lenders").

                  (2) The Borrower has requested that the Initial Lenders enter
into this Agreement to amend and restate the Existing Credit Agreement as set
forth herein. The Initial Lenders have indicated their willingness to amend and
restate the Existing Credit Agreement upon the terms and conditions stated
herein.

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein, the parties hereto hereby
agree that, subject to the satisfaction of the conditions set forth in Article
III, the Existing Credit Agreement is amended and restated in its entirety to
read as follows:


                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):

                  "1998 Audited Statements" means the Consolidated balance
         sheets of the Parent and DECO and, after the Merger Date, MCN and
         MichCon as at December 31, 1998, and the related Consolidated
         statements of income and cash flows of such Person for the fiscal year
         then ended, accompanied by the opinion of such Person's independent
         public accountants.

                  "1999 Interim Statements" means the Consolidated balance
         sheets of the Parent and DECO and, after the Merger Date, MCN and
         MichCon as at September 30, 1999,

   6


                                       2

and the related Consolidated statements of income and cash flows of the such
Person for the nine months then ended, duly certified by a Financial Officer of
such Person.

     "Advance" means a Revolving Credit Advance or a Competitive Bid Advance.

     "Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.

     "Agent's Account" means the account of the Agent maintained by the Agent at
Citibank with its office at Two Penns Way, Suite 200, New Castle, Delaware,
19720, Account No. 36852248, Attention: Christian Laughton.

     "Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance and,
in the case of a Competitive Bid Advance, the office of such Lender notified by
such Lender to the Agent as its Applicable Lending Office with respect to such
Competitive Bid Advance.

     "Applicable Margin" means, as of any date, a percentage per annum
determined by reference to the Public Debt Rating in effect on such date as set
forth below:




================================== ============================ =================================
                                                          
Public Debt Rating                     Applicable Margin for           Applicable Margin for
   S&P/Moody's                          Base Rate Advances           Eurodollar Rate Advances
- ---------------------------------- ---------------------------- ---------------------------------

Level 1                                          0%                          .400%
- -------
A- / A3 or above
- ---------------------------------- ---------------------------- ---------------------------------

Level 2                                          0%                          .500%
- -------
Lower than Level 1, but at least
BBB+ / Baal or above
- ---------------------------------- ---------------------------- ---------------------------------

Level 3                                          0%                          .600%
- -------
Lower than Level 2, but at least
BBB / Baa2 or above
- ---------------------------------- ---------------------------- ---------------------------------

Level 4                                          0%                          .800%
- -------
Lower than Level 3, but at least
BBB- / Baa3 or above
- ---------------------------------- ---------------------------- ---------------------------------

Level 5                                          0%                         1.600%
- -------
Lower than Level 4, or
no Public Debt Rating in Effect
- ---------------------------------- ---------------------------- ---------------------------------


At any time more than 50% of the Commitments are utilized, the Applicable Margin
will

   7


                                       3


increase by (i) .125% at Levels 1, 2 and 3, (ii) .250% at Level 4, and (iii)
 .500% at Level 5.

     "Applicable Percentage" means, as of any date, a percentage per annum
determined by reference to the Public Debt Rating in effect on such date as set
forth below:


========================================== =====================================

            Public Debt Rating                          Applicable
               S&P/Moody's                              Percentage
- ------------------------------------------ -------------------------------------

 Level 1
 -------
 A- / A3 or above                                         .100%
- ------------------------------------------ -------------------------------------

 Level 2
 -------
 Lower than Level 1, but at least BBB+ /
 Baa1 or above                                            .125%
- ------------------------------------------ -------------------------------------

 Level 3
 -------
 Lower than Level 2, but at least
 BBB / Baa2 or above                                      .150%
- ------------------------------------------ -------------------------------------

 Level 4
 -------
 Lower than Level 3, but at least BBB- /
 Baa3 or above                                            .200%
- ------------------------------------------ -------------------------------------

 Level 5
 -------
 Lower than Level 4, or
 no Public Debt Rating in Effect                          .400%
========================================== =====================================


     "Assigned Rights" means the rights of the Borrower under Sections 1, 2, 3
and 4 of the Support Agreement and all other rights that are intended to secure
the obligations of the Borrower under this Agreement.

     "Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.

     "Assignment and Assumption Agreement" means the assignment and assumption
agreement, entered into by the Borrower and the Parent, and accepted by the
Agent, in accordance with Sections 2.18, 5.02(b) or 8.06, in substantially the
form of Exhibit G hereto, or such other agreement in form and substance
satisfactory to the Agent and the Lenders, by which the Parent assumes all of
the Borrower's obligations under this Agreement.

     "Base Rate" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the highest of:

   8

                                        4

                         (a) the rate of interest announced publicly by Citibank
                    in New York, New York, from time to time, as Citibank's base
                    rate;

                         (b) the sum (adjusted to the nearest 1/16 of 1% or, if
                    there is no nearest 1/16 of 1%, to the next higher 1/16 of
                    1%) of (i) 1/2 of 1% per annum, plus (ii) the rate obtained
                    by dividing (A) the latest three-week moving average of
                    secondary market morning offering rates in the United States
                    for three-month certificates of deposit of major United
                    States money market banks, such three-week moving average
                    (adjusted to the basis of a year of 360 days) being
                    determined weekly on each Monday (or, if such day is not a
                    Business Day, on the next succeeding Business Day) for the
                    three-week period ending on the previous Friday by Citibank
                    on the basis of such rates reported by certificate of
                    deposit dealers to and published by the Federal Reserve Bank
                    of New York or, if such publication shall be suspended or
                    terminated, on the basis of quotations for such rates
                    received by Citibank from three New York certificate of
                    deposit dealers of recognized standing selected by Citibank,
                    by (B) a percentage equal to 100% minus the average of the
                    daily percentages specified during such three-week period by
                    the Board of Governors of the Federal Reserve System (or any
                    successor) for determining the maximum reserve requirement
                    (including, but not limited to, any emergency, supplemental
                    or other marginal reserve requirement) for Citibank with
                    respect to liabilities consisting of or including (among
                    other liabilities) three-month U.S. dollar non-personal time
                    deposits in the United States, plus (iii) the average during
                    such three-week period of the annual assessment rates
                    estimated by Citibank for determining the then current
                    annual assessment payable by Citibank to the Federal Deposit
                    Insurance Corporation (or any successor) for insuring U.S.
                    dollar deposits of Citibank in the United States; and

                         (c) 1/2 of one percent per annum above the Federal
                    Funds Rate.

                    "Base Rate Advance" means a Revolving Credit Advance that
               bears interest as provided in Section 2.07(a)(i).

                    "Borrower" has the meaning specified in the recital of
               parties to this Agreement.

                    "Borrowing" means a Revolving Credit Borrowing or a
               Competitive Bid Borrowing.

                    "Business Day" means a day of the year on which banks are
               not required or authorized by law to close in New York City and,
               if the applicable Business Day relates to any Eurodollar Rate
               Advances, on which dealings are carried on in the London
               interbank market.

                    "Capitalization" means the sum of tangible net worth plus
               Consolidated Debt.

   9
                                        5


          "Collateral Assignment Agreement" means that certain Collateral
     Assignment Agreement, dated as of January 19, 1999, made by the Borrower to
     the Agent, as amended, supplemented or modified in accordance with the
     terms thereof and hereof.

          "Commitment" has the meaning specified in Section 2.01.

          "Competitive Bid Advance" means an advance by a Lender to the Borrower
     as part of a Competitive Bid Borrowing resulting from the competitive
     bidding procedure described in Section 2.03 and refers to a Fixed Rate
     Advance or a LIBO Rate Advance.

          "Competitive Bid Borrowing" means a borrowing consisting of
     simultaneous Competitive Bid Advances from each of the Lenders whose offer
     to make one or more Competitive Bid Advances as part of such borrowing has
     been accepted under the competitive bidding procedure described in Section
     2.03.

          "Competitive Bid Note" means a promissory note of the Borrower payable
     to the order of any Lender, in substantially the form of Exhibit A-2
     hereto, evidencing the indebtedness of the Borrower to such Lender
     resulting from a Competitive Bid Advance made by such Lender.

          "Competitive Bid Reduction" has the meaning specified in Section 2.01.

          "Confidential Information" means information that a Loan Party
     furnishes to the Agent or any Lender in a writing designated as
     confidential, but does not include any such information that is or becomes
     generally available to the public or that is or becomes available to the
     Agent or such Lender from a source other than a Loan Party.

          "Consolidated" refers to the consolidation of accounts in accordance
     with GAAP.

          "Convert", "Conversion" and "Converted" each refers to a conversion of
     Revolving Credit Advances of one Type into Revolving Credit Advances of the
     other Type pursuant to Section 2.08 or 2.09.

          "Debt" of any Person means, without duplication, (a) all indebtedness
     of such Person for borrowed money, (b) all obligations of such Person for
     the deferred purchase price of property or services (other than trade
     payables not overdue by more than 60 days incurred in the ordinary course
     of such Person's business), (c) all obligations of such Person evidenced by
     notes, bonds, debentures or other similar instruments, (d) all obligations
     of such Person created or arising under any conditional sale or other title
     retention agreement with respect to property acquired by such Person (even
     though the rights and remedies of the seller or lender under such agreement
     in the event of default are limited to repossession or sale of such
     property), (e) all obligations of such Person as lessee under leases that
     have been or should be, in accordance with GAAP, recorded as capital
     leases, (f) all obligations, contingent or otherwise, of such Person in
     respect of acceptances, letters of credit or similar extensions of credit,
     (g) all obligations of such Person in respect of Hedge Agreements, (h) all
     Debt of others referred to in clauses (a)

   10
                                       6


     through (g) above or clause (i) below guaranteed directly or indirectly in
     any manner by such Person, or in effect guaranteed directly or indirectly
     by such Person through an agreement (1) to pay or purchase such Debt or to
     advance or supply funds for the payment or purchase of such Debt, (2) to
     purchase, sell or lease (as lessee or lessor) property, or to purchase or
     sell services, primarily for the purpose of enabling the debtor to make
     payment of such Debt or to assure the holder of such Debt against loss, (3)
     to supply funds to or in any other manner invest in the debtor (including
     any agreement to pay for property or services irrespective of whether such
     property is received or such services are rendered) or (4) otherwise to
     assure a creditor against loss, and (i) all Debt referred to in clauses (a)
     through (h) above secured by (or for which the holder of such Debt has an
     existing right, contingent or otherwise, to be secured by) any Lien on
     property (including, without limitation, accounts and contract rights)
     owned by such Person, even though such Person has not assumed or become
     liable for the payment of such Debt. See the definition of "Nonrecourse
     Debt" below.

          "Declining Lender" has the meaning specified in Section 2.16.

          "DECO" means The Detroit Edison Company, a Michigan corporation wholly
     owned by the Parent.

          "Default" means any Event of Default or any event that would
     constitute an Event of Default but for the requirement that notice be given
     or time elapse or both.

          "Designated Bidder" means (a) an Eligible Assignee or (b) a special
     purpose corporation that is engaged in making, purchasing or otherwise
     investing in commercial loans in the ordinary course of its business and
     that issues (or the parent of which issues) commercial paper rated at least
     "Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or the then
     equivalent grade) by S&P that, in the case of either clause (a) or (b), (i)
     is organized under the laws of the United States or any State thereof, (ii)
     shall have become a party hereto pursuant to Section 8.07(d), (e) and (f)
     and (iii) is not otherwise a Lender.

          "Designation Agreement" means a designation agreement entered into by
     a Lender (other than a Designated Bidder) and a Designated Bidder, and
     accepted by the Agent, in substantially the form of Exhibit D hereto.

          "Disclosed Litigation" has the meaning specified in Section 3.01(b).

          "Domestic Lending Office" means, with respect to any Lender, the
     office of such Lender specified as its "Domestic Lending Office" opposite
     its name on Schedule I hereto or in the Assignment and Acceptance pursuant
     to which it became a Lender, or such other office of such Lender as such
     Lender may from time to time specify to the Borrower and the Agent.

          "EBITDA" means, for any period, net income (or net loss) plus the sum
     of (a) interest expense, (b) income tax expense, (c) depreciation expense
     and

   11
                                       7


        (d) amortization expense, in each case determined in accordance with
        GAAP for such period.

                  "Effective Date" has the meaning specified in Section 3.01.

                  "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
         Lender; (iii) a commercial bank organized under the laws of the United
         States, or any State thereof, and having a combined capital and surplus
         of at least $250,000,000; (iv) a savings and loan association or
         savings bank organized under the laws of the United States, or any
         State thereof, and having a combined capital and surplus of at least
         $250,000,000; (v) a commercial bank organized under the laws of any
         other country that is a member of the Organization for Economic
         Cooperation and Development or has concluded special lending
         arrangements with the International Monetary Fund associated with its
         General Arrangements to Borrow, or a political subdivision of any such
         country, and having a combined capital and surplus of at least
         $250,000,000, so long as such bank is acting through a branch or agency
         located in the United States; (vi) the central bank of any country that
         is a member of the Organization for Economic Cooperation and
         Development; (vii) a finance company, insurance company or other
         financial institution or fund (whether a corporation, partnership,
         trust or other entity) that is engaged in making, purchasing or
         otherwise investing in commercial loans in the ordinary course of its
         business and having a combined capital and surplus of at least
         $250,000,000; and (viii) any other Person approved by the Agent and the
         Borrower, such approval not to be unreasonably withheld or delayed by
         either party; provided, however, that neither the Borrower nor an
         Affiliate of the Borrower shall qualify as an Eligible Assignee.

                  "Environmental Action" means any action, suit, demand, demand
         letter, claim, notice of non-compliance or violation, notice of
         liability or potential liability, investigation, proceeding, consent
         order or consent agreement relating in any way to any Environmental
         Law, Environmental Permit or Hazardous Materials or arising from
         alleged injury or threat of injury to health, safety or the
         environment, including, without limitation, (a) by any governmental or
         regulatory authority for enforcement, cleanup, removal, response,
         remedial or other actions or damages and (b) by any governmental or
         regulatory authority or any third party for damages, contribution,
         indemnification, cost recovery, compensation or injunctive relief.

                  "Environmental Law" means any federal, state, local or foreign
         statute, law, ordinance, rule, regulation, code, order, judgment,
         decree or judicial or agency interpretation, policy or guidance
         relating to pollution or protection of the environment, health, safety
         or natural resources, including, without limitation, those relating to
         the use, handling, transportation, treatment, storage, disposal,
         release or discharge of Hazardous Materials.

                  "Environmental Permit" means any permit, approval,
         identification number, license or other authorization required under
         any Environmental Law.

   12

                                       8

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "ERISA Affiliate" means any Person that for purposes of Title
         IV of ERISA is a member of the Borrower's controlled group, or under
         common control with the Borrower, within the meaning of Section 414 of
         the Internal Revenue Code.

                  "ERISA Event" means (a) (i) the occurrence of a reportable
         event, within the meaning of Section 4043 of ERISA, with respect to any
         Plan unless the 30-day notice requirement with respect to such event
         has been waived by the PBGC, or (ii) the requirements of subsection (1)
         of Section 4043(b) of ERISA (without regard to subsection (2) of such
         Section) are met with a contributing sponsor, as defined in Section
         4001(a)(13) of ERISA, of a Plan, and an event described in paragraph
         (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably
         expected to occur with respect to such Plan within the following 30
         days; (b) the application for a minimum funding waiver with respect to
         a Plan; (c) the provision by the administrator of any Plan of a notice
         of intent to terminate such Plan pursuant to Section 4041(a)(2) of
         ERISA (including any such notice with respect to a plan amendment
         referred to in Section 4041(e) of ERISA); (d) the cessation of
         operations at a facility of the Borrower or any ERISA Affiliate in the
         circumstances described in Section 4062(e) of ERISA; (e) the withdrawal
         by the Borrower or any ERISA Affiliate from a Multiple Employer Plan
         during a plan year for which it was a substantial employer, as defined
         in Section 4001(a)(2) of ERISA; (f) the conditions for the imposition
         of a lien under Section 302(f) of ERISA shall have been met with
         respect to any Plan; (g) the adoption of an amendment to a Plan
         requiring the provision of security to such Plan pursuant to Section
         307 of ERISA; or (h) the institution by the PBGC of proceedings to
         terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence
         of any event or condition described in Section 4042 of ERISA that
         constitutes grounds for the termination of, or the appointment of a
         trustee to administer, a Plan.

                  "Eurocurrency Liabilities" has the meaning assigned to that
         term in Regulation D of the Board of Governors of the Federal Reserve
         System, as in effect from time to time.

                  "Eurodollar Lending Office" means, with respect to any Lender,
         the office of such Lender specified as its "Eurodollar Lending Office"
         opposite its name on Schedule I hereto or in the Assignment and
         Acceptance pursuant to which it became a Lender (or, if no such office
         is specified, its Domestic Lending Office), or such other office of
         such Lender as such Lender may from time to time specify to the
         Borrower and the Agent.

                  "Eurodollar Rate" means, for any Interest Period for each
         Eurodollar Rate Advance comprising part of the same Revolving Credit
         Borrowing, an interest rate per annum equal to the rate per annum
         obtained by dividing (a) the average (rounded upward to the nearest
         whole multiple of 1/16 of 1% per annum, if such average is not such a
         multiple) of the rate per annum at which deposits in U.S. dollars are
         offered by the principal office of each of the Reference Banks in
         London, England to prime banks in the

   13

                                       9


          London interbank market at 11:00 A.M. (London time) two Business Days
          before the first day of such Interest Period in an amount
          substantially equal to such Reference Bank's Eurodollar Rate Advance
          comprising part of such Revolving Credit Borrowing to be outstanding
          during such Interest Period and for a period equal to such Interest
          Period by (b) a percentage equal to 100% minus the Eurodollar Rate
          Reserve Percentage for such Interest Period. The Eurodollar Rate for
          any Interest Period for each Eurodollar Rate Advance comprising part
          of the same Revolving Credit Borrowing shall be determined by the
          Agent on the basis of applicable rates furnished to and received by
          the Agent from the Reference Banks two Business Days before the first
          day of such Interest Period, subject, however, to the provisions of
          Section 2.08.

                  "Eurodollar Rate Advance" means a Revolving Credit Advance
          that bears interest as provided in Section 2.07(a)(ii).

                  "Eurodollar Rate Reserve Percentage" for any Interest Period
         for all Eurodollar Rate Advances or LIBO Rate Advances comprising part
         of the same Borrowing means the reserve percentage applicable two
         Business Days before the first day of such Interest Period under
         regulations issued from time to time by the Board of Governors of the
         Federal Reserve System (or any successor) for determining the maximum
         reserve requirement (including, without limitation, any emergency,
         supplemental or other marginal reserve requirement) for a member bank
         of the Federal Reserve System in New York City with respect to
         liabilities or assets consisting of or including Eurocurrency
         Liabilities (or with respect to any other category of liabilities that
         includes deposits by reference to which the interest rate on Eurodollar
         Rate Advances or LIBO Rate Advances is determined) having a term equal
         to such Interest Period.

                  "Events of Default" has the meaning specified in Section 6.01.

                  "Existing Commitment" means, for each Existing Lender, all of
         such Existing Lender's rights in and to, and all of its obligations
         under, the Commitment (as defined in the Existing Credit Agreement)
         held by it under the Existing Credit Agreement as of the Effective
         Date.

                  "Existing Credit Agreement" has the meaning specified in the
         Preliminary Statement hereto.

                  "Existing Lenders" has the meaning specified in the
         Preliminary Statements hereto.

                  "Existing Notes" means the Notes as defined in, and issued
         pursuant to, the Existing Credit Agreement.

                  "Extending Lenders" has the meaning specified in Section 2.16.

                  "Facility Fee" has the meaning specified in Section 2.04(a).

   14

                                       10


                  "Federal Funds Rate" means, for any period, a fluctuating
         interest rate per annum equal for each day during such period to the
         weighted average of the rates on overnight federal funds transactions
         with members of the Federal Reserve System arranged by federal funds
         brokers, as published for such day (or, if such day is not a Business
         Day, for the next preceding Business Day) by the Federal Reserve Bank
         of New York, or, if such rate is not so published for any day that is a
         Business Day, the average of the quotations for such day on such
         transactions received by the Agent from three federal funds brokers of
         recognized standing selected by it.

                  "Financial Officer" of any Person means the chief executive
         officer, president, chief financial officer, controller, treasurer or
         any assistant treasurer of such Person.

                  "Fixed Rate Advances" has the meaning specified in Section
         2.03(a)(i).

                  "Guaranty" means the guaranty entered into by the Parent in
         favor of the Agent and the Lenders in accordance with Sections 2.18 or
         5.02(b), in substantially in the form of Exhibit H hereto.

                  "GAAP" has the meaning specified in Section 1.03.

                  "Hazardous Materials" means (a) petroleum and petroleum
         products, by-products or breakdown products, radioactive materials,
         asbestos-containing materials, polychlorinated biphenyls and radon gas
         and (b) any other chemicals, materials or substances designated,
         classified or regulated as hazardous or toxic or as a pollutant or
         contaminant under any Environmental Law.

                  "Hedge Agreements" means interest rate swap, cap or collar
         agreements, interest rate future or option contracts, currency swap
         agreements, currency future or option contracts and other similar
         agreements, except for those hedge agreements, which agreements shall
         be pari passu with or subordinate to this Agreement, that may be
         entered into by the Parent for an aggregate notional amount of up to $1
         billion in connection with the Merger.

                  "Information Memorandum" means the information memorandum
         dated December 1999 used by the Agent and Salomon Smith Barney Inc., as
         arranger in connection with the syndication of the Commitments.

                  "Insufficiency" means, with respect to any Plan, the amount,
         if any, of its unfunded benefit liabilities, as defined in Section
         4001(a)(18) of ERISA.

                  "Interest Period" means, for each Eurodollar Rate Advance
         comprising part of the same Revolving Credit Borrowing and each LIBO
         Rate Advance comprising part of the same Competitive Bid Borrowing, the
         period commencing on the date of such Eurodollar Rate Advance or LIBO
         Rate Advance or the date of the Conversion of any Base Rate Advance
         into such Eurodollar Rate Advance and ending on the last day of the
         period selected by the Borrower pursuant to the provisions below and,
         thereafter, with respect to

   15


                                      11


         Eurodollar Rate Advances, each subsequent period commencing on the
         last day of the immediately preceding Interest Period and ending on
         the last day of the period selected by the Borrower pursuant to the
         provisions below. The duration of each such Interest Period shall be
         one, two, three or six months, as the Borrower may, upon notice
         received by the Agent not later than 11:00 A.M. (New York City time)
         on the third Business Day prior to the first day of such Interest
         Period, select; provided, however, that:

                    (i)  the Borrower may not select any Interest Period that
               ends after the Revolver Termination Date then in effect or, if
               the Advances have been converted to a term loan pursuant to
               Section 2.06 prior to such selection, which ends after the
               Maturity Date;

                    (ii) Interest Periods commencing on the same date for
               Eurodollar Rate Advances comprising part of the same Revolving
               Credit Borrowing or for LIBO Rate Advances comprising part of the
               same Competitive Bid Borrowing shall be of the same duration;

                    (iii) whenever the last day of any Interest Period would
               otherwise occur on a day other than a Business Day, the last day
               of such Interest Period shall be extended to occur on the next
               succeeding Business Day, provided, however, that, if such
               extension would cause the last day of such Interest Period to
               occur in the next following calendar month, the last day of such
               Interest Period shall occur on the next preceding Business Day;
               and

                    (iv) whenever the first day of any Interest Period occurs on
               a day of an initial calendar month for which there is no
               numerically corresponding day in the calendar month that succeeds
               such initial calendar month by the number of months equal to the
               number of months in such Interest Period, such Interest Period
               shall end on the last Business Day of such succeeding calendar
               month.

               "Internal Revenue Code" means the Internal Revenue Code of
         1986, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

               "Junior Subordinated Debentures" means subordinated junior
         deferrable interest debentures issued by DECO from time to time.

               "Lenders" means the Initial Lenders and each Person that shall
         become a party hereto pursuant to Section 8.07(a), (b) and (c) and,
         except when used in reference to a Revolving Credit Advance, a
         Revolving Credit Borrowing, a Revolving Credit Note, a Commitment or a
         related term, each Designated Bidder.

               "LIBO Rate" means, for any Interest Period for all LIBO Rate
         Advances comprising part of the same Competitive Bid Borrowing, an
         interest rate per annum equal to the rate per annum obtained by
         dividing (a) the average (rounded upward to the nearest whole multiple
         of 1/16 of 1% per annum, if such average is not such a multiple) of the
         rate per annum at which deposits in U.S. dollars are offered by the
         principal office of

   16


                                       12

          each of the Reference Banks in London, England to prime banks in
          the London interbank market at 11:00 A.M. (London time) two Business
          Days before the first day of such Interest Period in an amount
          substantially equal to the amount that would be the Reference Banks'
          respective ratable shares of such Borrowing if such Borrowing were to
          be a Revolving Credit Borrowing to be outstanding during such Interest
          Period and for a period equal to such Interest Period by (b) a
          percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
          for such Interest Period. The LIBO Rate for any Interest Period for
          each LIBO Rate Advance comprising part of the same Competitive Bid
          Borrowing shall be determined by the Agent on the basis of applicable
          rates furnished to and received by the Agent from the Reference Banks
          two Business Days before the first day of such Interest Period,
          subject, however, to the provisions of Section 2.08.

               "LIBO Rate Advances" has the meaning specified in Section
          2.03(a)(i).

               "Lien" means any lien, security interest or other charge or
          encumbrance of any kind, or any other type of preferential
          arrangement, including, without limitation, the lien or retained
          security title of a conditional vendor and any easement, right of way
          or other encumbrance on title to real property.

               "Loan Documents" means this Agreement, the Notes, the Support
          Agreement, the Collateral Assignment Agreement and, if executed and
          delivered in accordance with Section 2.18, the Guaranty or the
          Assignment and Assumption Agreement.

               "Loan Parties" means the Borrower and the Parent.

               "Material Adverse Change" means any material adverse change in
          the business, condition (financial or otherwise), operations,
          performance, properties or prospects of either Loan Party and its
          Subsidiaries taken as a whole.

               "Material Adverse Effect" means a material adverse effect on (a)
          the business, condition (financial or otherwise), operations,
          performance, properties or prospects of either Loan Party or either
          Loan Party and its Subsidiaries taken as a whole, (b) the rights and
          remedies of the Agent or any Lender under any Loan Document or (c) the
          ability of either Loan Party to perform its obligations under any Loan
          Document to which it is a party.

               "Maturity Date" means the earlier of (a) the one year anniversary
          of the Term Loan Conversion Date and (b) the date of the termination
          in whole of the aggregate Commitments pursuant to Section 2.05, 2.18
          or 6.01.

               "MCN" mean Michigan Energy Group Inc.

               "Merger" means the pending merger of the Parent and MCN Energy
          Group Inc. pursuant to the merger agreement between the Parent and MCN
          dated as of October 4, 1999, as amended as of November 12, 1999.

   17


                                     13

               "Merger Date" means the effective date of the Merger.

               "MichCon" means Michigan Consolidated Gas Company.

               "Moody's" means Moody's Investors Service, Inc.

               "Multiemployer Plan" means a multiemployer plan, as defined in
          Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA
          Affiliate is making or accruing an obligation to make contributions,
          or has within any of the preceding five plan years made or accrued an
          obligation to make contributions.

               "Multiple Employer Plan" means a single employer plan, as defined
          in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
          of the Borrower or any ERISA Affiliate and at least one Person other
          than the Borrower and the ERISA Affiliates or (b) was so maintained
          and in respect of which the Borrower or any ERISA Affiliate could have
          liability under Section 4064 or 4069 of ERISA in the event such plan
          has been or were to be terminated.

               "Nonrecourse Debt" means Debt of either Loan Party or any of
          their Subsidiaries in respect of which no recourse may be had by the
          creditors under such Debt against such Loan Party or such Subsidiary
          in its individual capacity or against the assets of such Loan Party or
          such Subsidiary, other than assets which were purchased by such Loan
          Party or such Subsidiary with the proceeds of such Debt.

               "Note" means a Revolving Credit Note or a Competitive Bid Note.

               "Notice of Competitive Bid Borrowing" has the meaning specified
          in Section 2.03(a)(i).

               "Notice of Revolving Credit Borrowing" has the meaning specified
          in Section 2.02(a).

               "Parent" has the meaning specified in the recital by the parties
          to this Agreement.

               "Parent Assumption Date" means the date upon which the Parent
          becomes the Borrower hereunder, either by execution and delivery of
          the Assignment and Assumption Agreement or by operation of law upon a
          merger or consolidation of the Borrower with or into the Parent.

               "PBGC" means the Pension Benefit Guaranty Corporation (or any
          successor).

               "Permitted Liens" means such of the following as to which no
          enforcement, collection, execution, levy or foreclosure proceeding
          shall have been commenced: (a) Liens for taxes, assessments and
          governmental charges or levies to the extent not required to be paid
          under Section 5.01(b) hereof; (b) Liens imposed by law, such as

   18

                                       14

          materialmen's, mechanics', carriers', workmen's and repairmen's Liens
          and other similar Liens arising in the ordinary course of business
          securing obligations that are not overdue for a period of more than 30
          days; (c) pledges or deposits to secure obligations under workers'
          compensation laws or similar legislation or to secure public or
          statutory obligations; and (d) easements, rights of way and other
          encumbrances on title to real property that do not render title to the
          property encumbered thereby unmarketable or materially adversely
          affect the use of such property for its present purposes.

               "Person" means an individual, partnership, corporation (including
          a business trust), joint stock company, trust, unincorporated
          association, joint venture, limited liability company or other entity,
          or a government or any political subdivision or agency thereof.

               "Plan" means a Single Employer Plan or a Multiple Employer Plan.

               "Public Debt Rating" means, as of any date, the lowest rating
          that has been most recently announced by either S&P or Moody's, as the
          case may be, for any class of non-credit enhanced senior unsecured
          Debt issued by the Borrower. For purposes of the foregoing, (a) if
          only one of S&P and Moody's shall have in effect a Public Debt Rating,
          the Applicable Margin and the Applicable Percentage shall be
          determined by reference to the available rating; (b) if neither S&P
          nor Moody's shall have in effect a Public Debt Rating, the Applicable
          Margin and the Applicable Percentage will be set in accordance with
          Level 5 under the definition of "Applicable Margin" or "Applicable
          Percentage", as the case may be; (c) if the ratings established by S&P
          and Moody's shall fall within different levels, the Applicable Margin
          and the Applicable Percentage shall be based upon the lower rating;
          (d) if any rating established by S&P or Moody's shall be changed, such
          change shall be effective as of the date on which such change is first
          announced publicly by the rating agency making such change; and (e) if
          S&P or Moody's shall change the basis on which ratings are
          established, each reference to the Public Debt Rating announced by S&P
          or Moody's, as the case may be, shall refer to the then equivalent
          rating by S&P or Moody's, as the case may be.

               "Reference Banks" means Citibank, N.A., Barclays Bank PLC and
          Bank One N.A.

               "Register" has the meaning specified in Section 8.07(g).

               "Required Lenders" means at any time Lenders owed at least
          66-2/3% of the then aggregate unpaid principal amount of the Revolving
          Credit Advances owing to Lenders, or, if no such principal amount is
          then outstanding, Lenders having at least 66-2/3% of the Commitments.

               "Revolver Termination Date" means the earlier of January 16, 2001
          or, if extended pursuant to Section 2.16, the date that is 364 days
          after the Revolver Termination Date then in effect, and (b) the date
          of termination in whole of the Commitments pursuant to Section 2.05,
          2.18 or 6.01; provided, however, that the

   19


                                       15

          Revolver Termination Date of any Lender that is a Declining Lender to
          any requested extension pursuant to Section 2.16 shall be the Revolver
          Termination Date in effect immediately prior to the date on which such
          extension was granted, for all purposes of this Agreement.

                  "Revolving Credit Advance" means an advance by a Lender to the
         Borrower as part of a Revolving Credit Borrowing and, if the Borrower
         has made the Term Loan Election in accordance with Section 2.06,
         includes each such advance that remains outstanding after the Term Loan
         Conversion Date, and refers to a Base Rate Advance or a Eurodollar Rate
         Advance (each of which shall be a "Type" of Revolving Credit Advance).

                  "Revolving Credit Borrowing" means a borrowing consisting of
         simultaneous Revolving Credit Advances of the same Type made by each of
         the Lenders pursuant to Section 2.01.

                  "Revolving Credit Note" means a promissory note of the
         Borrower payable to the order of any Lender, in substantially the form
         of Exhibit A-1 hereto, evidencing the aggregate indebtedness of the
         Borrower to such Lender resulting from the Revolving Credit Advances
         made by such Lender.

                  "S&P" means Standard & Poor's Ratings Group, a division of
         McGraw-Hill, Inc.

                  "SEC Reports" means the following reports and financial
         statements of the Parent and DECO and, after the Merger Date, MCN and
         MichCon, as the case may be:

                         (a) the Form 10K of such Person for the year ended
                    December 31, 1998 as filed with or sent to the Securities
                    and Exchange Commission,

                         (b) the Forms 10Q of such Person for the quarters ended
                    March 31, 1999, June 30, 1999 and September 30, 1999 as
                    filed with or sent to the Securities and Exchange
                    Commission,

                         (c) the 1998 Audited Statements; and

                         (d) the 1999 Interim Statements.

                  "Significant Subsidiary" means (i) DECO, (ii) after the Merger
         Date, MichCon, and (iii) any other Subsidiary of the Parent (A) the
         total assets (after intercompany eliminations) of which exceed 30% of
         the total assets of the Parent and its Subsidiaries or (B) the net
         worth of which exceeds 30% of the Consolidated Net Worth of the Parent
         and its Subsidiaries, in each case as shown on the consolidated balance
         sheet of the Parent and its Subsidiaries prepared on a pro forma basis
         after giving effect to the Merger.

                  "Single Employer Plan" means a single employer plan, as
         defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
         employees of the Borrower or


   20
                                       16

         any ERISA Affiliate could have liability under Section 4069 of ERISA in
         the event such plan has been or were to be terminated.

                  "Subsidiary" of any Person means any corporation, partnership,
         joint venture, limited liability company, trust or estate of which (or
         in which) more than 50% of (a) the issued and outstanding capital stock
         having ordinary voting power to elect a majority of the Board of
         Directors of such corporation (irrespective of whether at the time
         capital stock of any other class or classes of such corporation shall
         or might have voting power upon the occurrence of any contingency), (b)
         the interest in the capital or profits of such limited liability
         company, partnership or joint venture or (c) the beneficial interest in
         such trust or estate is at the time directly owned or controlled by
         such Person, by such Person and one or more of its other Subsidiaries
         or by one or more of such Person's other Subsidiaries.

                  "Support Agreement" means that certain Support Agreement,
         dated as of January 19, 1999, between the Parent and the Borrower, as
         amended, supplemented or modified in accordance with the terms thereof
         and hereof.

                  "Term Loan Conversion Date" has the meaning specified in
         Section 2.06.

                  "Term Loan Election" has the meaning specified in Section
         2.06.

                  "Termination Event" has the meaning specified in Section 2.18.

                  "Voting Stock" means capital stock issued by a corporation, or
         equivalent interests in any other Person, the holders of which are
         ordinarily, in the absence of contingencies, entitled to vote for the
         election of directors (or persons performing similar functions) of such
         Person, even if the right so to vote has been suspended by the
         happening of such a contingency.

                  "Withdrawal Liability" has the meaning specified in Part I of
         Subtitle E of Title IV of ERISA.

                  SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".

                  SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e) ("GAAP").



   21

                                       17

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

                  SECTION 2.01. The Revolving Credit Advances. Each Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
Revolving Credit Advances to the Borrower from time to time on any Business Day
during the period from the Effective Date until the earlier of the Revolver
Termination Date and the Term Loan Conversion Date in an aggregate amount not to
exceed at any time outstanding the amount set forth opposite such Lender's name
on the signature pages hereof or, if such Lender has entered into any Assignment
and Acceptance, set forth for such Lender in the Register maintained by the
Agent pursuant to Section 8.07(g), as such amount may be reduced pursuant to
Section 2.05 (such Lender's "Commitment"), provided that the aggregate amount of
the Commitments of the Lenders shall be deemed used from time to time to the
extent of the aggregate amount of the Competitive Bid Advances then outstanding
and such deemed use of the aggregate amount of the Commitments shall be
allocated among the Lenders ratably according to their respective Commitments
(such deemed use of the aggregate amount of the Commitments being a "Competitive
Bid Reduction"). Each Revolving Credit Borrowing shall be in an aggregate amount
of $5,000,000 or an integral multiple of $1,000,000 in excess thereof (or, if
less, an aggregate amount equal to the amount by which the aggregate amount of a
proposed Competitive Bid Borrowing requested by the Borrower exceeds the
aggregate amount of Competitive Bid Advances offered to be made by the Lenders
and accepted by the Borrower in respect of such Competitive Bid Borrowing, if
such Competitive Bid Borrowing is made on the same date as such Revolving Credit
Borrowing) and shall consist of Revolving Credit Advances of the same Type made
on the same day by the Lenders ratably according to their respective
Commitments. Within the limits of each Lender's Commitment, the Borrower may
borrow under this Section 2.01, prepay pursuant to Section 2.10 and reborrow
under this Section 2.01.

                  SECTION 2.02. Making the Revolving Credit Advances. (a) Each
Revolving Credit Borrowing shall be made on notice, given not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the
proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Eurodollar Rate Advances, or 9:00 A.M. (New York City time) the
Business Day of the proposed Revolving Credit Borrowing in the case of a
Revolving Credit Borrowing consisting of Base Rate Advances, by the Borrower to
the Agent, which shall give to each Lender prompt notice thereof by telecopier
or telex. Each such notice of a Revolving Credit Borrowing (a "Notice of
Revolving Credit Borrowing") shall be by telephone, confirmed immediately in
writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto,
specifying therein the requested (i) date of such Revolving Credit Borrowing,
(ii) Type of Advances comprising such Revolving Credit Borrowing, (iii)
aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a
Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Revolving Credit Advance. Each Lender shall,
before 11:00 A.M. (New York City time) on the date of such Revolving Credit
Borrowing, make available for the account of its Applicable Lending Office to
the Agent at the Agent's Account, in same day funds, such Lender's ratable
portion of such Revolving Credit Borrowing. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Agent will make such funds available to the Borrower at the Agent's
address referred to in Section 8.02.


   22
                                       18


         (b) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for any Revolving
Credit Borrowing if the aggregate amount of such Revolving Credit Borrowing is
less than $5,000,000 or if the obligation of the Lenders to make Eurodollar Rate
Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the
Eurodollar Rate Advances may not be outstanding as part of more than ten
separate Revolving Credit Borrowings.

         (c) Each Notice of Revolving Credit Borrowing shall be irrevocable and
binding on the Borrower. In the case of any Revolving Credit Borrowing that the
related Notice of Revolving Credit Borrowing specifies is to be comprised of
Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Revolving Credit
Borrowing for such Revolving Credit Borrowing the applicable conditions set
forth in Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Revolving Credit Advance to be made by such Lender as part of such Revolving
Credit Borrowing when such Revolving Credit Advance, as a result of such
failure, is not made on such date.

         (d) Unless the Agent shall have received notice from a Lender prior to
the date of any Revolving Credit Borrowing that such Lender will not make
available to the Agent such Lender's ratable portion of such Revolving Credit
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Revolving Credit Borrowing in accordance with
subsection (a) of this Section 2.02 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have so made such ratable
portion available to the Agent, such Lender and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, the interest rate applicable at the time to Revolving
Credit Advances comprising such Revolving Credit Borrowing and (ii) in the case
of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent
such corresponding amount, such amount so repaid shall constitute such Lender's
Revolving Credit Advance as part of such Revolving Credit Borrowing for purposes
of this Agreement.

         (e) The failure of any Lender to make the Revolving Credit Advance to
be made by it as part of any Revolving Credit Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Revolving Credit
Advance to be made by such other Lender on the date of any Revolving Credit
Borrowing.

             SECTION 2.03. The Competitive Bid Advances. (a) Each Lender
severally agrees that the Borrower may make Competitive Bid Borrowings under
this Section 2.03 from time to time on any Business Day during the period from
the date hereof until the date occurring


   23
                                       19


30 days prior to the earlier of the Revolver Termination Date and the Term Loan
Conversion Date in the manner set forth below; provided that, following the
making of each Competitive Bid Borrowing, the aggregate amount of the Advances
then outstanding shall not exceed the aggregate amount of the Commitments of the
Lenders (computed without regard to any Competitive Bid Reduction).

                  (i) The Borrower may request a Competitive Bid Borrowing under
         this Section 2.03 by delivering to the Agent, by telecopier or telex, a
         notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid
         Borrowing"), in substantially the form of Exhibit B-2 hereto,
         specifying therein the requested (v) date of such proposed Competitive
         Bid Borrowing, (w) aggregate amount of such proposed Competitive Bid
         Borrowing, (x) in the case of a Competitive Bid Borrowing consisting of
         LIBO Rate Advances, Interest Period, or in the case of a Competitive
         Bid Borrowing consisting of Fixed Rate Advances, maturity date for
         repayment of each Fixed Rate Advance to be made as part of such
         Competitive Bid Borrowing (which maturity date may not be earlier than
         the date occurring 30 days after the date of such Competitive Bid
         Borrowing or later than the earlier of (I) 180 days after the date of
         such Competitive Bid Borrowing and (II) the earlier of the Revolver
         Termination Date and the Term Loan Conversion Date), (y) interest
         payment date or dates relating thereto, and (z) other terms (if any) to
         be applicable to such Competitive Bid Borrowing, not later than 10:00
         A.M. (New York City time) (A) at least one Business Day prior to the
         date of the proposed Competitive Bid Borrowing, if the Borrower shall
         specify in the Notice of Competitive Bid Borrowing that the rates of
         interest to be offered by the Lenders shall be fixed rates per annum
         (the Advances comprising any such Competitive Bid Borrowing being
         referred to herein as "Fixed Rate Advances") and (B) at least five
         Business Days prior to the date of the proposed Competitive Bid
         Borrowing, if the Borrower shall instead specify in the Notice of
         Competitive Bid Borrowing that the rates of interest be offered by the
         Lenders are to be based on the LIBO Rate (the Advances comprising such
         Competitive Bid Borrowing being referred to herein as "LIBO Rate
         Advances"). Each Notice of Competitive Bid Borrowing shall be
         irrevocable and binding on the Borrower. The Agent shall in turn
         promptly notify each Lender of each request for a Competitive Bid
         Borrowing received by it from the Borrower by sending such Lender a
         copy of the related Notice of Competitive Bid Borrowing.

                  (ii) Each Lender may, if, in its sole discretion, it elects to
         do so, irrevocably offer to make one or more Competitive Bid Advances
         to the Borrower as part of such proposed Competitive Bid Borrowing at a
         rate or rates of interest specified by such Lender in its sole
         discretion, by notifying the Agent (which shall give prompt notice
         thereof to the Borrower), before 9:30 A.M. (New York City time) on the
         date of such proposed Competitive Bid Borrowing, in the case of a
         Competitive Bid Borrowing consisting of Fixed Rate Advances and before
         10:00 A.M. (New York City time) three Business Days before the date of
         such proposed Competitive Bid Borrowing, in the case of a Competitive
         Bid Borrowing consisting of LIBO Rate Advances, of the minimum amount
         and maximum amount of each Competitive Bid Advance which such Lender
         would be willing to make as part of such proposed Competitive Bid
         Borrowing (which amounts may, subject to the proviso to the first
         sentence of this Section 2.03(a), exceed


   24
                                       20


         such Lender's Commitment, if any), the rate or rates of interest
         therefor and such Lender's Applicable Lending Office with respect to
         such Competitive Bid Advance; provided that if the Agent in its
         capacity as a Lender shall, in its sole discretion, elect to make any
         such offer, it shall notify the Borrower of such offer at least 30
         minutes before the time and on the date on which notice of such
         election is to be given to the Agent by the other Lenders. If any
         Lender shall elect not to make such an offer, such Lender shall so
         notify the Agent, before 10:00 A.M. (New York City time) on the date on
         which notice of such election is to be given to the Agent by the other
         Lenders, and such Lender shall not be obligated to, and shall not, make
         any Competitive Bid Advance as part of such Competitive Bid Borrowing;
         provided that the failure by any Lender to give such notice shall not
         cause such Lender to be obligated to make any Competitive Bid Advance
         as part of such proposed Competitive Bid Borrowing.

                  (iii) The Borrower shall, in turn, before 10:30 A.M. (New York
         City time) on the date of such proposed Competitive Bid Borrowing, in
         the case of a Competitive Bid Borrowing consisting of Fixed Rate
         Advances and before 11:00 A.M. (New York City time) three Business Days
         before the date of such proposed Competitive Bid Borrowing, in the case
         of a Competitive Bid Borrowing consisting of LIBO Rate Advances,
         either:

                           (x) cancel such Competitive Bid Borrowing by giving
                  the Agent notice to that effect, or

                           (y) accept one or more of the offers made by any
                  Lender or Lenders pursuant to paragraph (ii) above, in its
                  sole discretion, by giving notice to the Agent of the amount
                  of each Competitive Bid Advance (which amount shall be equal
                  to or greater than the minimum amount, and equal to or less
                  than the maximum amount, notified to the Borrower by the Agent
                  on behalf of such Lender for such Competitive Bid Advance
                  pursuant to paragraph (ii) above) to be made by each Lender as
                  part of such Competitive Bid Borrowing, and reject any
                  remaining offers made by Lenders pursuant to paragraph (ii)
                  above by giving the Agent notice to that effect. The Borrower
                  shall accept the offers made by any Lender or Lenders to make
                  Competitive Bid Advances in order of the lowest to the highest
                  rates of interest offered by such Lenders. If two or more
                  Lenders have offered the same interest rate, the amount to be
                  borrowed at such interest rate will be allocated among such
                  Lenders in proportion to the amount that each such Lender
                  offered at such interest rate.

                  (iv) If the Borrower notifies the Agent that such Competitive
         Bid Borrowing is cancelled pursuant to paragraph (iii)(x) above, the
         Agent shall give prompt notice thereof to the Lenders and such
         Competitive Bid Borrowing shall not be made.

                  (v) If the Borrower accepts one or more of the offers made by
         any Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent
         shall in turn promptly notify (A) each Lender that has made an offer as
         described in paragraph (ii) above, of the date and aggregate amount of
         such Competitive Bid Borrowing and whether or not any offer or offers
         made by such Lender pursuant to paragraph (ii) above have been accepted
         by


   25
                                       21


         the Borrower, (B) each Lender that is to make a Competitive Bid Advance
         as part of such Competitive Bid Borrowing, of the amount of each
         Competitive Bid Advance to be made by such Lender as part of such
         Competitive Bid Borrowing, and (C) each Lender that is to make a
         Competitive Bid Advance as part of such Competitive Bid Borrowing, upon
         receipt, that the Agent has received forms of documents appearing to
         fulfill the applicable conditions set forth in Article III. Each Lender
         that is to make a Competitive Bid Advance as part of such Competitive
         Bid Borrowing shall, before 12:00 noon (New York City time) on the date
         of such Competitive Bid Borrowing specified in the notice received from
         the Agent pursuant to clause (A) of the preceding sentence or any later
         time when such Lender shall have received notice from the Agent
         pursuant to clause (C) of the preceding sentence, make available for
         the account of its Applicable Lending Office to the Agent at the
         Agent's Account, in same day funds, such Lender's portion of such
         Competitive Bid Borrowing. Upon fulfillment of the applicable
         conditions set forth in Article III and after receipt by the Agent of
         such funds, the Agent will make such funds available to the Borrower at
         the Agent's address referred to in Section 8.02. Promptly after each
         Competitive Bid Borrowing the Agent will notify each Lender of the
         amount of the Competitive Bid Borrowing, the consequent Competitive Bid
         Reduction and the dates upon which such Competitive Bid Reduction
         commenced and will terminate.

                  (vi) If the Borrower notifies the Agent that it accepts one or
         more of the offers made by any Lender or Lenders pursuant to paragraph
         (iii)(y) above, such notice of acceptance shall be irrevocable and
         binding on the Borrower. The Borrower shall indemnify each Lender
         against any loss, cost or expense incurred by such Lender as a result
         of any failure to fulfill on or before the date specified in the
         related Notice of Competitive Bid Borrowing for such Competitive Bid
         Borrowing the applicable conditions set forth in Article III,
         including, without limitation, any loss (including loss of anticipated
         profits), cost or expense incurred by reason of the liquidation or
         reemployment of deposits or other funds acquired by such Lender to fund
         the Competitive Bid Advance to be made by such Lender as part of such
         Competitive Bid Borrowing when such Competitive Bid Advance, as a
         result of such failure, is not made on such date.

         (b) Each Competitive Bid Borrowing shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each Competitive Bid Borrowing, the Borrower and each
Lender shall be in compliance with the limitations set forth in the proviso to
the first sentence of subsection (a) above.

         (c) Within the limits and on the conditions set forth in this Section
2.03, the Borrower may from time to time borrow under this Section 2.03, repay
or prepay pursuant to subsection (d) below, and reborrow under this Section
2.03, provided that a Competitive Bid Borrowing shall not be made within three
Business Days of the date of any other Competitive Bid Borrowing.

         (d) The Borrower shall repay to the Agent for the account of each
Lender that has made a Competitive Bid Advance, on the maturity date of each
Competitive Bid Advance (such maturity date being that specified by the Borrower
for repayment of such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to


   26
                                       22


subsection (a)(i) above and provided in the Competitive Bid Note evidencing such
Competitive Bid Advance), the then unpaid principal amount of such Competitive
Bid Advance. The Borrower shall have no right to prepay any principal amount of
any Competitive Bid Advance unless, and then only on the terms, specified by the
Borrower for such Competitive Bid Advance in the related Notice of Competitive
Bid Borrowing delivered pursuant to subsection (a)(i) above and set forth in the
Competitive Bid Note evidencing such Competitive Bid Advance.

         (e) The Borrower shall pay interest on the unpaid principal amount of
each Competitive Bid Advance from the date of such Competitive Bid Advance to
the date the principal amount of such Competitive Bid Advance is repaid in full,
at the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto delivered
pursuant to subsection (a)(ii) above, payable on the interest payment date or
dates specified by the Borrower for such Competitive Bid Advance in the related
Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i)
above, as provided in the Competitive Bid Note evidencing such Competitive Bid
Advance. Upon the occurrence and during the continuance of an Event of Default,
the Borrower shall pay interest on the amount of unpaid principal of and
interest on each Competitive Bid Advance owing to a Lender, payable in arrears
on the date or dates interest is payable thereon, at a rate per annum equal at
all times to 2% per annum above the rate per annum required to be paid on such
Competitive Bid Advance under the terms of the Competitive Bid Note evidencing
such Competitive Bid Advance unless otherwise agreed in such Competitive Bid
Note.

         (f) The indebtedness of the Borrower resulting from each Competitive
Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall be
evidenced by a separate Competitive Bid Note of the Borrower payable to the
order of the Lender making such Competitive Bid Advance.

         (g) Upon delivery of each Notice of Competitive Bid Borrowing, the
Borrower shall pay a non-refundable fee of $3,000 to the Agent for its own
account.

             SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to
the Agent for the account of each Lender (other than the Designated Bidders) a
facility fee (the "Facility Fee") on the aggregate amount of such Lender's
Commitment from the date hereof in the case of each Initial Lender and from
effective date specified in the Assignment and Acceptance pursuant to which it
became a Lender in the case of each other Lender until the Maturity Date at a
rate per annum equal to the Applicable Percentage in effect from time to time,
payable in arrears quarterly on the last day of each March, June, September and
December, and on the Maturity Date.

         (b) Agent's Fees. The Borrower shall pay to the Agent for its own
account such fees as may from time to time be agreed between the Borrower and
the Agent.

             SECTION 2.05. Termination or Reduction of the Commitments. (a)
If the Borrower has not made the Term Loan Election at least 15 days prior to
the Revolver Termination Date, the Commitments shall be automatically terminated
on the Revolver Termination Date. If the Borrower has made the Term Loan
Election in accordance with Section


   27
                                       23


2.06, from time to time after the Term Loan Conversion Date upon each prepayment
of the Revolving Credit Advances, the aggregate Commitments of the Lenders under
this Agreement shall be automatically and permanently reduced on a pro rata
basis by an amount equal to the amount by which the aggregate Commitments of the
Lenders under this Agreement immediately prior to such reduction exceeds the
aggregate unpaid principal amount of the Revolving Credit Advances outstanding
at such time.

         (b) The Borrower shall have the right, upon at least three Business
Days' notice to the Agent, to terminate in whole or reduce ratably in part the
unused portions of the respective Commitments of the Lenders, provided that each
partial reduction shall be in the aggregate amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and provided further that the aggregate
amount of the Commitments of the Lenders shall not be reduced to an amount that
is less than the aggregate principal amount of the Competitive Bid Advances then
outstanding. Once terminated, a Commitment or portion thereof may not be
reinstated.

                  SECTION 2.06. Repayment of Revolving Credit Advances; Term
Loan Election. (a) The Borrower shall, subject to the next succeeding sentence,
repay to the Agent for the ratable account of the Lenders on the Revolver
Termination Date the aggregate principal amount of the Revolving Credit Advances
then outstanding.

         (b) The Borrower may, at any time prior to the Revolver Termination
Date and upon not less than 15 days' notice to the Agent, elect (the "Term Loan
Election") to convert all of the Revolving Credit Advances outstanding on the
date specified in such notice (the "Term Loan Conversion Date") into a term loan
which the Borrower shall repay in full to the Agent for the ratable account of
the Lenders on the Maturity Date; provided that no Default has occurred and is
continuing on the date of notice of the Term Loan Election or on the Term Loan
Conversion Date.

                  SECTION 2.07. Interest on Revolving Credit Advances. (a)
Scheduled Interest. The Borrower shall pay interest on the unpaid principal
amount of each Revolving Credit Advance owing to each Lender from the date of
such Revolving Credit Advance until such principal amount shall be paid in full,
at the following rates per annum:

                  (i) Base Rate Advances. During such periods as such Revolving
         Credit Advance is a Base Rate Advance, a rate per annum equal at all
         times to the sum of (x) the Base Rate in effect from time to time plus
         (y) the Applicable Margin in effect from time to time, payable in
         arrears quarterly on the last day of each March, June, September and
         December during such periods and on the date such Base Rate Advance
         shall be Converted or paid in full.

                  (ii) Eurodollar Rate Advances. During such periods as such
         Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum
         equal at all times during each Interest Period for such Revolving
         Credit Advance to the sum of (x) the Eurodollar Rate for such Interest
         Period for such Revolving Credit Advance plus (y) the Applicable Margin
         in effect from time to time, payable in arrears on the last day of such
         Interest Period and, if such Interest Period has a duration of more
         than three months, on each day


   28
                                       24


         that occurs during such Interest Period every three months from the
         first day of such Interest Period and on the date such Eurodollar Rate
         Advance shall be Converted or paid in full.

         (b) Default Interest. (i) Upon the occurrence and during the
continuance of an Event of Default, the Borrower shall pay interest on the
unpaid principal amount of each Revolving Credit Advance owing to each Lender,
payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on such Revolving Credit Advance pursuant to clause (a)(i)
or (a)(ii) above, and (ii) the Borrower shall pay, to the fullest extent
permitted by law, the amount of any interest, fee or other amount payable
hereunder that is not paid when due, from the date such amount shall be due
until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid on Base Rate
Advances pursuant to clause (a)(i) above.

             SECTION 2.08. Interest Rate Determination. (a) Each Reference
Bank agrees to furnish to the Agent timely information for the purpose of
determining each Eurodollar Rate and each LIBO Rate. If any one or more of the
Reference Banks shall not furnish such timely information to the Agent for the
purpose of determining any such interest rate, the Agent shall determine such
interest rate on the basis of timely information furnished by the remaining
Reference Banks. The Agent shall give prompt notice to the Borrower and the
Lenders of the applicable interest rate determined by the Agent for purposes of
Section 2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference
Bank for the purpose of determining the interest rate under Section 2.07(a)(ii).

         (b) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Agent that the Eurodollar Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance, and (ii) the obligation of the Lenders to make, or to Convert Revolving
Credit Advances into, Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist.

         (c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent will
forthwith so notify the Borrower and the Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Base Rate Advances.

         (d) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.


   29
                                       25


         (e) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.

         (f) If fewer than two Reference Banks furnish timely information to the
Agent for determining the Eurodollar Rate or LIBO Rate for any Eurodollar Rate
Advances or LIBO Rate Advances, as the case may be,

                  (i) the Agent shall forthwith notify the Borrower and the
         Lenders that the interest rate cannot be determined for such Eurodollar
         Rate Advances or LIBO Rate Advances, as the case may be,

                  (ii) with respect to Eurodollar Rate Advances, each such
         Advance will automatically, on the last day of the then existing
         Interest Period therefor, Convert into a Base Rate Advance (or if such
         Advance is then a Base Rate Advance, will continue as a Base Rate
         Advance), and

                  (iii) the obligation of the Lenders to make Eurodollar Rate
         Advances or LIBO Rate Advances or to Convert Revolving Credit Advances
         into Eurodollar Rate Advances shall be suspended until the Agent shall
         notify the Borrower and the Lenders that the circumstances causing such
         suspension no longer exist.

                  SECTION 2.09. Optional Conversion of Revolving Credit
Advances. The Borrower may on any Business Day, upon notice given to the Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of Sections
2.08 and 2.12, Convert all Revolving Credit Advances of one Type comprising the
same Borrowing into Revolving Credit Advances of the other Type; provided,
however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances
shall be made only on the last day of an Interest Period for such Eurodollar
Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate
Advances shall be in an amount not less than the minimum amount specified in
Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result
in more separate Revolving Credit Borrowings than permitted under Section
2.02(b). Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Revolving
Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar
Rate Advances, the duration of the initial Interest Period for each such
Advance. Each notice of Conversion shall be irrevocable and binding on the
Borrower.

                  SECTION 2.10. Prepayments of Revolving Credit Advances. (a)
Optional Prepayment. The Borrower may on any Business Day, upon notice given to
the Agent not later than 11:00 A.M., (i) on the same day for Base Rate Advances
and (ii) on the second Business Day prior to the prepayment in the case of
Eurodollar Rate Advances stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall, prepay
the outstanding principal amount of the Revolving Credit Advances comprising
part of the same Revolving Credit Borrowing in whole or ratably in part,
together with accrued


   30
                                       26


interest to the date of such prepayment on the principal amount prepaid;
provided, however, that (x) each partial prepayment shall be in an aggregate
principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof and (y) in the event of any such prepayment of a Eurodollar Rate
Advance, the Borrower shall be obligated to reimburse the Lenders in respect
thereof pursuant to Section 8.04(c).

                  (b) Mandatory Prepayment. The Borrower shall, upon five
Business Days notice from the Agent given at the request or with the consent of
the Required Lenders, prepay the aggregate principal amount outstanding plus all
interest thereon and all other amounts payable hereunder or under the Notes, in
the event that (i) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of Voting Stock of the Parent (or other securities
convertible into such Voting Stock) representing 20% or more of the combined
voting power of all Voting Stock of the Parent; or (ii) any Person or two or
more Persons acting in concert shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the
Parent.

                  SECTION 2.11. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender of agreeing to make or
making, funding or maintaining Eurodollar Rate Advances or LIBO Rate Advances
(excluding for purposes of this Section 2.11 any such increased costs resulting
from (i) Taxes or Other Taxes (as to which Section 2.14 shall govern) and (ii)
changes in the basis of taxation of overall net income or overall gross income
by the United States or by the foreign jurisdiction or state under the laws of
which such Lender is organized or has its Applicable Lending Office or any
political subdivision thereof), then the Borrower shall from time to time, upon
demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender additional amounts sufficient to compensate
such Lender for such increased cost. A certificate as to the amount of such
increased cost, submitted to the Borrower and the Agent by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.

         (b) If any Lender determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by such Lender or any
corporation controlling such Lender and that the amount of such capital is
increased by or based upon the existence of such Lender's commitment to lend
hereunder and other commitments of this type, then, upon demand by such Lender
(with a copy of such demand to the Agent), the Borrower shall pay to the Agent
for the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such corporation in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Lender's commitment to lend hereunder. A certificate as to such amounts
submitted to the


   31
                                       27


Borrower and the Agent by such Lender shall be conclusive and binding for all
purposes, absent manifest error.

         (c) In the event that a Lender demands payment from the Borrower for
amounts owing pursuant to subsection (a) or (b) of this Section 2.11, the
Borrower may, upon payment of such amounts and subject to the requirements of
Sections 8.04 and 8.07, substitute for such Lender another financial
institution, which financial institution shall be an Eligible Assignee and shall
assume the Commitments of such Lender and purchase the Notes held by such Lender
in accordance with Section 8.07, provided, however, that (i) no Default shall
have occurred and be continuing, (ii) the Borrower shall have satisfied all of
its obligations in connection with the Loan Documents with respect to such
Lender, and (iii) if such assignee is not a Lender, (A) such assignee is
acceptable to the Agent and (B) the Borrower shall have paid the Agent a $3,000
administrative fee.

                  SECTION 2.12. Illegality. Notwithstanding any other provision
of this Agreement, if any Lender shall notify the Agent that the introduction of
or any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or LIBO Rate Advances or
to fund or maintain Eurodollar Rate Advances or LIBO Rate Advances hereunder,
(i) each Eurodollar Rate Advance or LIBO Rate Advance, as the case may be, will
automatically, upon such demand, Convert into a Base Rate Advance or an Advance
that bears interest at the rate set forth in Section 2.07(a)(i), as the case may
be, and (ii) the obligation of the Lenders to make Eurodollar Rate Advances or
LIBO Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate
Advances shall be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.

                  SECTION 2.13. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes not later than 11:00 A.M.
(New York City time) on the day when due in U.S. dollars to the Agent at the
Agent's Account in same day funds. The Agent will promptly thereafter cause to
be distributed like funds relating to the payment of principal or interest or
facility fees ratably (other than amounts payable pursuant to Section 2.03,
2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Lender to such Lender for the account of its Applicable
Lending Office, in each case to be applied in accordance with the terms of this
Agreement. Upon its acceptance of an Assignment and Acceptance and recording of
the information contained therein in the Register pursuant to Section 8.07(c),
from and after the effective date specified in such Assignment and Acceptance,
the Agent shall make all payments hereunder and under the Notes in respect of
the interest assigned thereby to the Lender assignee thereunder, and the parties
to such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

         (b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note
held by such Lender, to charge


   32
                                       28


from time to time against any or all of the Borrower's accounts with such Lender
any amount so due.

         (c) All computations of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days, as the case may be, and
all computations of interest based on the Eurodollar Rate or the Federal Funds
Rate and of facility fees shall be made by the Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
facility fees are payable. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

         (d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to be
made in the next following calendar month, such payment shall be made on the
next preceding Business Day.

         (e) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Federal Funds Rate.

                  SECTION 2.14. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.13,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, taxes
imposed on its overall net income, and franchise taxes imposed on it in lieu of
net income taxes, by the jurisdiction under the laws of which such Lender or the
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender, taxes imposed on its overall net income, and
franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction
of such Lender's Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities in respect of payments hereunder or under the Notes being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender or the Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14) such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower



   33
                                       29


shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.

         (b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").

         (c) The Borrower shall indemnify each Lender and the Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any taxes imposed
by any jurisdiction on amounts payable under this Section 2.14) imposed on or
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be made within 30 days from the date such
Lender or the Agent (as the case may be) makes written demand therefor.

         (d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Agent, at its address referred to in Section 8.02, the
original or a certified copy of a receipt evidencing payment thereof. In the
case of any payment hereunder or under the Notes by or on behalf of the Borrower
through an account or branch outside the United States or by or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel acceptable to the Agent stating that such payment is exempt
from Taxes. For purposes of this subsection (d) and subsection (e), the terms
"United States" and "United States person" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.

         (e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender and on the date of the Assignment
and Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter as requested in writing by the Borrower
(but only so long as such Lender remains lawfully able to do so), shall provide
each of the Agent and the Borrower with two original Internal Revenue Service
forms 1001 or 4224, as appropriate, or any successor or other form prescribed by
the Internal Revenue Service, certifying that such Lender is exempt from or
entitled to a reduced rate of United States withholding tax on payments pursuant
to this Agreement or the Notes. If the forms provided by a Lender at the time
such Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes unless and until such Lender provides
the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form; provided, however, that, if at the date of
the Assignment and Acceptance pursuant to which a Lender assignee becomes a
party to this Agreement, the Lender assignor was entitled to payments under
subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,


   34
                                       30


applicable with respect to the Lender assignee on such date. If any form or
document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender reasonably considers to be confidential, the Lender shall
give notice thereof to the Borrower and shall not be obligated to include in
such form or document such confidential information.

         (f) For any period with respect to which a Lender has failed to provide
the Borrower with the appropriate form described in Section 2.14(e) (other than
if such failure is due to a change in law occurring subsequent to the date on
which a form originally was required to be provided, or if such form otherwise
is not required under the first sentence of subsection (e) above), such Lender
shall not be entitled to indemnification under Section 2.14(a) or (c) with
respect to Taxes imposed by the United States by reason of such failure;
provided, however, that should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower shall take such steps
as the Lender shall reasonably request to assist the Lender to recover such
Taxes.

         (g) In the event that a Lender demands payment from the Borrower for
amounts owing pursuant to subsection (a) or (b) of this Section 2.14, the
Borrower may, upon payment of such amounts and subject to the requirements of
Sections 8.04 and 8.07, substitute for such Lender another financial
institution, which financial institution shall be an Eligible Assignee and shall
assume the Commitments of such Lender and purchase the Notes held by such Lender
in accordance with Section 8.07, provided, however, that (i) no Default shall
have occurred and be continuing, (ii) the Borrower shall have satisfied all of
its obligations in connection with the Loan Documents with respect to such
Lender, and (iii) if such assignee is not a Lender, (A) such assignee is
acceptable to the Agent and (B) the Borrower shall have paid the Agent a $3,000
administrative fee.

                  SECTION 2.15. Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Revolving Credit Advances
owing to it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of
its ratable share of payments on account of the Revolving Credit Advances
obtained by all the Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the Revolving Credit Advances owing to them as
shall be necessary to cause such purchasing Lender to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender's ratable share (according to the proportion
of (i) the amount of such Lender's required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.15 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.



   35
                                       31


                  SECTION 2.16. Extensions of Revolver Termination Date. No
earlier than 45 days and no later than 30 days prior to the Revolver Termination
Date in effect at any time, the Borrower may, by written notice to the Agent,
request that such Revolver Termination Date be extended for a period of 364
days. Such request shall be irrevocable and binding upon the Borrower. The Agent
shall promptly notify each Lender of such request. If a Lender agrees, in its
individual and sole discretion, to so extend its Commitment (an "Extending
Lender"), it shall deliver to the Agent a written notice of its agreement to do
so no earlier than 30 days and no later than 20 days prior to such Revolver
Termination Date and the Agent shall notify the Borrower of such Extending
Lender's agreement to extend its Commitment no later than 15 days prior to such
Revolver Termination Date. The Commitment of any Lender that fails to accept or
respond to the Borrower's request for extension of the Revolver Termination Date
(a "Declining Lender") shall be terminated on the Revolver Termination Date
originally in effect (without regard to any extension by other Lenders) and on
such Revolver Termination Date the Borrower shall pay in full the principal
amount of all Advances owing to such Declining Lender, together with accrued
interest thereon to the date of such payment of principal and all other amounts
payable to such Declining Lender under this Agreement. The Agent shall promptly
notify each Extending Lender of the aggregate Commitments of the Declining
Lenders. The Extending Lenders, or any of them, may offer to increase their
respective Commitments by an aggregate amount up to the aggregate amount of the
Declining Lenders' Commitments and any such Extending Lender shall deliver to
the Agent a notice of its offer to so increase its Commitment no later than 15
days prior to such Revolver Termination Date. To the extent of any shortfall in
the aggregate amount of extended Commitments, the Borrower shall have the right
to require any Declining Lender to assign in full its rights and obligations
under this Agreement to an Eligible Assignee designated by the Borrower and
acceptable to the Agent, that agrees to accept all of such rights and
obligations (a "Replacement Lender"), provided that (i) such increase and/or
such assignment is otherwise in compliance with Section 8.07, (ii) such
Declining Lender receives payment in full of the principal amount of all
Advances owing to such Declining Lender, together with accrued interest thereon
to the date of such payment of principal and all other amounts payable to such
Declining Lender under this Agreement, and (iii) any such increase shall be
effective on the Revolver Termination Date in effect at the time the Borrower
requests such extension and any such assignment shall be effective on the date
specified by the Borrower and agreed to by the Replacement Lender and the Agent.
If Extending Lenders and Replacement Lenders provide Commitments in an aggregate
amount at least equal to 51% of the aggregate amount of the Commitments
outstanding 30 days prior to the Revolver Termination Date in effect at the time
the Borrower requests such extension, the Revolver Termination Date shall be
extended by 364 days for such Extending Lenders.

                  SECTION 2.17. Use of Proceeds. The proceeds of the Advances
shall be available (and the Borrower agrees that it shall use such proceeds)
solely for general corporate purposes of the Borrower and its Subsidiaries.

                  SECTION 2.18. Termination Events. If the Parent shall incur
any Debt not existing on the Effective Date (excluding the extension of any Debt
existing on the Effective Date) without simultaneously with, or prior to, the
incurrence of such Debt (i) executing and


   36
                                       32


delivering to the Agent, on behalf of the Lenders, either the Guaranty or the
Assignment and Assumption Agreement and (ii) delivering therewith:

                  (A) Certified copies of the resolutions of the Board of
         Directors of each Loan Party executing and delivering such Loan
         Document approving such Loan Document;

                  (B) A certificate of the Secretary or Assistant Secretary of
         each Loan Party executing and delivering such Loan Document certifying
         the names and true signatures of the officers of each such Loan Party
         authorized to sign such Loan Document and the other documents to be
         delivered thereunder;

                  (C) A certificate of a duly authorized officer of each Loan
         Party executing and delivering such Loan Document certifying that (x)
         the representations and warranties contained in such Loan Document are
         correct on and as of the date of such Loan Document, before and after
         giving effect to such Loan Document, as though made on and as of such
         date and (y) no Default has occurred and is continuing or would result
         from the execution and delivery of such Loan Document; and

                  (D) A favorable opinion of counsel to the Parent and the
         Borrower in form and substance satisfactory to the Agent as to such
         Loan Document and such other matters as any Lender through the Agent
         may reasonably request;

(any such failure being a "Termination Event"), the Agent shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate.

                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

                  SECTION 3.01. Conditions Precedent to Effectiveness of
Sections 2.01 and 2.03. Sections 2.01 and 2.03 of this Agreement shall become
effective on and as of the date hereof (the "Effective Date"), provided that the
following conditions precedent have been satisfied on such date:

                  (a) There shall have occurred no Material Adverse Change since
         December 31, 1998.

                  (b) There shall exist no action, suit, investigation,
         litigation or proceeding affecting either Loan Party or any of its
         Subsidiaries pending or threatened before any court, governmental
         agency or arbitrator that (i) could be reasonably likely to have a
         Material Adverse Effect other than the matters described in the SEC
         Reports (the "Disclosed Litigation") or (ii) purports to affect the
         legality, validity or enforceability of any Loan Document or the
         consummation of the transactions contemplated hereby and there shall
         have been no adverse change in the status, or financial effect on any
         Loan


   37
                                       33


         Party or any of its Subsidiaries of the Disclosed Litigation from that
         described in the SEC Reports.

                  (c) Nothing shall have come to the attention of the Lenders
         during the course of their due diligence investigation to lead them to
         believe that the Information Memorandum was or has become misleading,
         incorrect or incomplete in any material respect; without limiting the
         generality of the foregoing, the Lenders shall have been given such
         access, as such Lenders have reasonably requested, to the management,
         records, books of account, contracts and properties of each Loan Party
         and its Subsidiaries as they shall have requested.

                  (d) All governmental and third party consents and approvals
         necessary in connection with the transactions contemplated hereby shall
         have been obtained (without the imposition of any conditions that are
         not acceptable to the Lenders) and shall remain in effect, and no law
         or regulation shall be applicable in the reasonable judgment of the
         Lenders that restrains, prevents or imposes materially adverse
         conditions upon the transactions contemplated by the Loan Documents.

                  (e) The Borrower shall have notified each Lender and the Agent
         in writing as to the proposed Effective Date.

                  (f) The Borrower shall have paid (i) all accrued fees and
         expenses of the Agent and the Lenders with respect to this Agreement,
         including fees contemplated in the Information Memorandum, and (ii) all
         facility fees accrued under the Existing Credit Agreement as of the
         Effective Date.

                  (g) On the Effective Date, the following statements shall be
         true and the Agent shall have received for the account of each Lender a
         certificate signed by a duly authorized officer of the Borrower, dated
         the Effective Date, stating that:

                           (i) The representations and warranties contained in
                  Section 4.01 are correct on and as of the Effective Date, and

                           (ii) No event has occurred and is continuing that
                  constitutes a Default.

                           (iii) The Parent shall have delivered a certificate,
                  substantially in form of Exhibit E hereto, signed on behalf of
                  the Parent by a Financial Officer of the Parent.

                  (h) The Agent shall have received on or before the Effective
         Date the following, each dated such day, in form and substance
         satisfactory to the Agent and (except for the Revolving Credit Notes)
         in sufficient copies for each Lender:

                           (i) The Revolving Credit Notes to the order of the
                  Lenders, respectively.


   38
                                       34


                           (ii) Certified copies of the resolutions of the Board
                  of Directors of each Loan Party approving each Loan Document
                  to which it is a party, and of all documents evidencing other
                  necessary corporate action and governmental approvals, if any,
                  with respect to each Loan Document to which it is a party.

                           (iii) A certificate of the Secretary or an Assistant
                  Secretary of each Loan Party certifying the names and true
                  signatures of the officers of each Loan Party authorized to
                  sign each Loan Document to which it is a party and the other
                  documents to be delivered hereunder or thereunder.

                           (iv) An audited Consolidated balance sheet of the
                  Borrower and its Subsidiaries and the related statements of
                  income and cash flows of the Borrower and its Subsidiaries, as
                  of December 31, 1998.

                           (v) A letter agreement, in form and substance
                  satisfactory to the Agent, executed by each Loan Party
                  acknowledging that all references in the Support Agreement to
                  the Existing Agreement and the "Credit Agreement" will be
                  deemed to be references to this Agreement.

                           (vi) A letter agreement, in form and substance
                  satisfactory to the Agent, executed by the Borrower
                  acknowledging that all references in the Collateral Assignment
                  Agreement to the Existing Agreement and the "Credit Agreement"
                  will be deemed to be references to this Agreement, together
                  with:

                                    (A) acknowledgment copies or stamped receipt
                           copies of proper financing statements (or amendments
                           to financing statements), duly filed on or before the
                           Effective Date under the Uniform Commercial Code of
                           all jurisdictions that the Agent may deem necessary
                           or desirable in order to perfect and protect the
                           first priority liens and security interests created
                           under the Support Agreement and the Collateral
                           Assignment Agreement, covering the Assigned Rights
                           described in the Support Agreement and the Collateral
                           Assignment Agreement, and

                                    (B) completed requests for information,
                           dated on or before the Effective Date, listing the
                           financing statements referred to in clause (A) above
                           and all other effective financing statements filed in
                           the jurisdictions referred to in clause (A) above
                           that name the Borrower as debtor, together with
                           copies of such other financing statements.

                           (vii) A favorable opinion of C.C. Nern, General
                  Counsel of the Parent and the Borrower, or T.A. Hughes,
                  Associate General Counsel of the Parent and the Borrower,
                  substantially in the form of Exhibit F hereto and as to such
                  other matters as any Lender through the Agent may reasonably
                  request.

                           (viii) A favorable opinion of King & Spalding,
                  counsel for the Agent, in form and substance satisfactory to
                  the Agent.



   39
                                       35


                  SECTION 3.02. Conditions Precedent to Each Revolving Credit
Borrowing. The obligation of each Lender to make a Revolving Credit Advance on
the occasion of each Revolving Credit Borrowing shall be subject to the
conditions precedent that the Effective Date shall have occurred and on the date
of such Revolving Credit Borrowing (a) the following statements shall be true
(and each of the giving of the applicable Notice of Revolving Credit Borrowing
and the acceptance by the Borrower of the proceeds of such Revolving Credit
Borrowing shall constitute a representation and warranty by the Borrower that on
the date of such Borrowing such statements are true):

                  (i) the representations and warranties contained in Section
         4.01 are correct on and as of the date of such Revolving Credit
         Borrowing, before and after giving effect to such Revolving Credit
         Borrowing and to the application of the proceeds therefrom, as though
         made on and as of such date, and

                  (ii) no event has occurred and is continuing, or would result
         from such Revolving Credit Borrowing or from the application of the
         proceeds therefrom, that constitutes a Default;

and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.

                  SECTION 3.03. Conditions Precedent to Each Competitive Bid
Borrowing. The obligation of each Lender that is to make a Competitive Bid
Advance on the occasion of a Competitive Bid Borrowing to make such Competitive
Bid Advance as part of such Competitive Bid Borrowing is subject to the
conditions precedent that (i) the Agent shall have received the written
confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on
or before the date of such Competitive Bid Borrowing, but prior to such
Competitive Bid Borrowing, the Agent shall have received a Competitive Bid Note
payable to the order of such Lender for each of the one or more Competitive Bid
Advances to be made by such Lender as part of such Competitive Bid Borrowing, in
a principal amount equal to the principal amount of the Competitive Bid Advance
to be evidenced thereby and otherwise on such terms as were agreed to for such
Competitive Bid Advance in accordance with Section 2.03, and (iii) on the date
of such Competitive Bid Borrowing the following statements shall be true (and
each of the giving of the applicable Notice of Competitive Bid Borrowing and the
acceptance by the Borrower of the proceeds of such Competitive Bid Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Competitive Bid Borrowing such statements are true):

                  (a) the representations and warranties contained in Section
         4.01 are correct on and as of the date of such Competitive Bid
         Borrowing, before and after giving effect to such Competitive Bid
         Borrowing and to the application of the proceeds therefrom, as though
         made on and as of such date,


   40
                                       36


                  (b) no event has occurred and is continuing, or would result
         from such Competitive Bid Borrowing or from the application of the
         proceeds therefrom, that constitutes a Default, and

                  (c) no event has occurred and no circumstance exists as a
         result of which the information concerning either Loan Party that has
         been provided to the Agent and each Lender by either Loan Party in
         connection herewith would include an untrue statement of a material
         fact or omit to state any material fact or any fact necessary to make
         the statements contained therein, in the light of the circumstances
         under which they were made, not misleading.

                  SECTION 3.04. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Borrower,
by notice to the Lenders, designates as the proposed Effective Date, specifying
its objection thereto. The Agent shall promptly notify the Lenders of the
occurrence of the Effective Date.


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION  4.01.  Representations  and  Warranties  of  the
Borrower.  The  Borrower  represents  and warrants as follows:

                  (a) The Borrower is a corporation duly organized, validly
         existing and in good standing under the laws of the jurisdiction of its
         incorporation.

                  (b) The execution, delivery and performance by the Borrower of
         the Loan Documents to which it is a party, and the consummation of the
         transactions contemplated hereby and thereby, are within such Loan
         Party's corporate powers, have been duly authorized by all necessary
         corporate action, and do not contravene (i) the Borrower's charter or
         by-laws or (ii) law or any contractual restriction binding on or
         affecting the Borrower.

                  (c) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         or any other third party is required for the due execution, delivery
         and performance by the Borrower of this Agreement, the Notes or any
         other Loan Document to which it is a party.

                  (d) This Agreement has been, and each of the Notes and each of
         the other Loan Documents to which it is a party when delivered
         hereunder will have been, duly executed and delivered by the Borrower.
         This Agreement is, and each of the Notes and

   41

                                       37


         each of the other Loan Documents to which it is a party when delivered
         hereunder will be, the legal, valid and binding obligation of the
         Borrower enforceable against the Borrower in accordance with their
         respective terms, subject to the effect of any applicable bankruptcy,
         insolvency, reorganization, moratorium or similar law affecting
         creditors rights generally.

                  (e) The 1998 Audited Statements and the 1999 Interim
         Statements, copies of each of which have been furnished to each Lender,
         fairly present, subject in the case of the 1999 Interim Statements, to
         year-end audit adjustments, the Consolidated financial condition of the
         relevant Person, as at such dates all in accordance with generally
         accepted accounting principles consistently applied. Since December 31,
         1998, there has been no Material Adverse Change, except as shall have
         been disclosed in the SEC Reports.

                  (f) There is no pending or threatened action, suit,
         investigation, litigation or proceeding, including, without limitation,
         any Environmental Action, affecting the Borrower or any of its
         Subsidiaries before any court, governmental agency or arbitrator that
         (i) could be reasonably likely to have a Material Adverse Effect (other
         than the Disclosed Litigation) or (ii) purports to affect the legality,
         validity or enforceability of this Agreement, any Note or any other
         Loan Document or the consummation of the transactions contemplated
         hereby and there has been no adverse change in the status of any
         Disclosed Litigation, or its financial effect on any Loan Party or any
         of its Subsidiaries from that described in the SEC Reports.

                  (g) The operations and properties of the Borrower and each of
         its Subsidiaries comply in all material respects with all applicable
         Environmental Laws and Environmental Permits, all past non-compliance
         with such Environmental Laws and Environmental Permits has been
         resolved without ongoing obligations or costs, and no circumstances
         exist that could be reasonably likely to (i) form the basis of an
         Environmental Action against the Borrower or any of its Subsidiaries or
         any of their properties that could have a Material Adverse Effect or
         (ii) cause any such property to be subject to any restrictions on
         ownership, occupancy, use or transferability under any Environmental
         Law that could have a Material Adverse Effect.

                  (h) No ERISA Event has occurred or is reasonably expected to
         occur with respect to any Plan.

                  (i) Schedule B (Actuarial Information) to the most recent
         annual report (Form 5500 Series) for each Plan, copies of which have
         been filed with the Internal Revenue Service, is complete and accurate
         and fairly presents the funding status of such Plan, and since the date
         of such Schedule B there has been no material adverse change in such
         funding status.

                  (j) Neither the Borrower nor any ERISA Affiliate has incurred
         or is reasonably expected to incur any Withdrawal Liability to any
         Multiemployer Plan.

   42

                                       38


                  (k) Neither the Borrower nor any ERISA Affiliate has been
         notified by the sponsor of a Multiemployer Plan that such Multiemployer
         Plan is in reorganization or has been terminated, within the meaning of
         Title IV of ERISA, and no such Multiemployer Plan is reasonably
         expected to be in reorganization or to be terminated, within the
         meaning of Title IV of ERISA.

                  (l) Except as set forth in the financial statements referred
         to in this Section 4.01, the Borrower and its Subsidiaries have no
         material liability with respect to "expected post retirement benefit
         obligations" within the meaning of Statement of Financial Accounting
         Standards No. 106.

                  (m) The Borrower is not engaged in the business of extending
         credit for the purpose of purchasing or carrying margin stock (within
         the meaning of Regulation U issued by the Board of Governors of the
         Federal Reserve System), and no proceeds of any Advance will be used to
         purchase or carry any margin stock or to extend credit to others for
         the purpose of purchasing or carrying any margin stock.

                  (n) Neither the Borrower nor any of its Subsidiaries is, or
         after the making of any Advance or the application of the proceeds or
         repayment thereof, or the consummation of any of the other transactions
         contemplated hereby, will be, an "investment company", or an
         "affiliated person" of, or "promoter" or "principal underwriter" for,
         an "investment company" (within the meaning of the Investment Company
         Act of 1940, as amended).

                  (o) At all times prior to the Parent Assumption Date, the
         Borrower is a "subsidiary company" of the Parent, which is a "holding
         company" (within the meaning of the Public Utility Holding Company Act
         of 1935, as amended), and, at all times before and after the Parent
         Assumption Date, the Parent is exempt from being required to seek
         approval to perform its obligations under the Loan Documents pursuant
         to Rule 2 of the Rules and Regulations promulgated pursuant to the
         Public Utility Holding Company Act of 1935, as amended.

                  (p) At all times prior to the Parent Assumption Date, the
         Support Agreement (as it may be amended, supplemented, terminated or
         otherwise modified in accordance with its terms) is in full force and
         effect and enforceable in accordance with its terms.

                                    ARTICLE V

                            COVENANTS OF THE BORROWER

                  SECTION  5.01.  Affirmative  Covenants.  So long as any
Advance  shall  remain  unpaid or any Lendershall have any Commitment hereunder,
the Borrower will:

                  (a) Compliance with Laws, Etc. Comply, and cause each of its
         Subsidiaries to comply, in all material respects, with all applicable
         laws, rules, regulations and orders,

   43

                                       39


         such compliance to include, without limitation, compliance with ERISA
         and Environmental Laws.

                  (b) Payment of Taxes, Etc. Pay and discharge, and cause each
         of its Subsidiaries to pay and discharge, before the same shall become
         delinquent, (i) all taxes, assessments and governmental charges or
         levies imposed upon it or upon its property and (ii) all lawful claims
         that, if unpaid, might by law become a Lien upon its property;
         provided, however, that neither the Borrower nor any of its
         Subsidiaries shall be required to pay or discharge any such tax,
         assessment, charge or claim that is being contested in good faith and
         by proper proceedings and as to which appropriate reserves are being
         maintained, unless and until any Lien resulting therefrom attaches to
         its property and becomes enforceable against its other creditors.

                  (c) Maintenance of Insurance. Maintain, and cause each of its
         Subsidiaries to maintain, insurance with responsible and reputable
         insurance companies or associations in such amounts and covering such
         risks as is usually carried by companies engaged in similar businesses
         and owning similar properties in the same general areas in which the
         Borrower or such Subsidiary operates.

                  (d) Preservation of Corporate Existence, Etc. Preserve and
         maintain its corporate existence, rights (charter and statutory) and
         franchises; provided, however, that the Borrower may consummate any
         merger or consolidation permitted under Section 5.02(b) and provided
         further that the Borrower shall not be required to preserve any right
         or franchise if the Board of Directors of the Borrower or such
         Subsidiary shall determine that the preservation thereof is no longer
         desirable in the conduct of the business of the Borrower and that the
         loss thereof is not disadvantageous in any material respect to the
         Borrower or the Lenders.

                  (e) Visitation Rights. At any reasonable time and from time to
         time, permit the Agent or any of the Lenders or any agents or
         representatives thereof, to examine and make copies of and abstracts
         from the records and books of account of, and visit the properties of,
         the Borrower and any of its Subsidiaries, and to discuss the affairs,
         finances and accounts of the Borrower and any of its Subsidiaries with
         any of their officers or directors and with their independent certified
         public accountants.

                  (f) Keeping of Books. Keep, and cause each of its Subsidiaries
         to keep, proper books of record and account, in which full and correct
         entries shall be made of all financial transactions and the assets and
         business of the Borrower and each such Subsidiary in accordance with
         generally accepted accounting principles in effect from time to time.

                  (g) Maintenance of Properties, Etc. Subject to clause (d)
         above, maintain and preserve, all of its properties that are used or
         useful in the conduct of its business in good working order and
         condition, ordinary wear and tear excepted.

                  (h) Reporting Requirements.  Furnish to the Lenders:

   44

                                       40


                           (i) as soon as available and in any event within 45
                  days after the end of each of the first three quarters of each
                  fiscal year of the Parent, Consolidated balance sheet of the
                  Parent and its Consolidated Subsidiaries as of the end of such
                  quarter and Consolidated statements of income and cash flows
                  of the Parent and its Subsidiaries for the period commencing
                  at the end of the previous fiscal year and ending with the end
                  of such quarter;

                           (ii) as soon as available and in any event within 90
                  days after the end of each fiscal year of the Parent, a copy
                  of the annual report to Shareholders for such year for the
                  Parent and its Consolidated Subsidiaries, containing the
                  Consolidated balance sheet of the Parent and its Consolidated
                  Subsidiaries as of the end of such fiscal year and
                  Consolidated statements of income and cash flows of the Parent
                  and its Subsidiaries for such fiscal year, in each case
                  accompanied by (A) an opinion by Deloitte & Touche LLP or
                  other independent public accountants acceptable to the
                  Required Lenders and (B) the report by the Parent filed with
                  the Securities and Exchange Commission on Form U-3A-2 for such
                  fiscal year, containing the Consolidating balance sheet of the
                  Borrower and its Subsidiaries as of the end of such fiscal
                  year and Consolidating statements of income and Consolidating
                  statements of retained earnings of the Borrower and its
                  Subsidiaries for such fiscal year, in each case, having been
                  prepared in accordance with generally accepted accounting
                  principles consistent with those applied in the preparation of
                  the financial statements referred to in Section 4.01;

                           (iii) as soon as available and in any event within 45
                  days after the end of each of the first three quarters of each
                  fiscal year of the Borrower, unaudited Consolidated balance
                  sheet of the Borrower and its Consolidated Subsidiaries as of
                  the end of such quarter and unaudited Consolidated statements
                  of income and cash flows of the Borrower and its Subsidiaries
                  for the period commencing at the end of the previous fiscal
                  year and ending with the end of such quarter, in each case
                  duly certified (subject to year-end audit adjustments) by a
                  Financial Officer of the Borrower as having been prepared in
                  accordance with generally accepted accounting principles
                  consistent with those applied in the preparation of the
                  financial statements referred to in Section 4.01;

                           (iv) as soon as available and in any event within 90
                  days after the end of each fiscal year of the Borrower, the
                  Consolidated balance sheet of the Borrower and its
                  Consolidated Subsidiaries as of the end of such fiscal year
                  and Consolidated statements of income and cash flows of the
                  Borrower and its Subsidiaries for such fiscal year, in each
                  case accompanied by an opinion by Deloitte & Touche LLP or
                  other independent public accountants acceptable to the
                  Required Lenders;

                           (v) as soon as possible and in any event within five
                  days after the occurrence of each Default continuing on the
                  date of such statement, a statement

   45

                                       41


                  of a Financial Officer of the Borrower setting forth details
                  of such Default and the action that the Borrower has taken and
                  proposes to take with respect thereto;

                           (vi) promptly after the sending or filing thereof
                  copies of all reports and registration statements that the
                  Borrower or any Subsidiary filed with the Securities and
                  Exchange Commission or any national securities exchange;

                           (vii) promptly after the commencement thereof, notice
                  of all actions and proceedings before any court, governmental
                  agency or arbitrator affecting the Borrower or any of its
                  Subsidiaries of the type described in Section 4.01(f);

                           (viii) promptly upon becoming aware of any fact or
                  circumstance affecting the Parent or any of its Subsidiaries
                  that would at any time render the Borrower unable to make the
                  representation and warranty contained in Section 4.01(q) on
                  such date, a statement of a duly authorized officer of the
                  Borrower setting forth the details of such fact or
                  circumstance and what action the Parent or such Subsidiary, as
                  the case may be, has taken and proposes to take with respect
                  thereto; and

                           (ix) such other information respecting the Borrower
                  or any of its Subsidiaries as any Lender through the Agent may
                  from time to time reasonably request.

                  SECTION 5.02. Negative Covenants Prior to the Parent
Assumption Date. At all times prior to the Parent Assumption Date, so long as
any Advance shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower will not:

                  (a) Liens, Etc. Create or suffer to exist, or permit any of
         its Subsidiaries to create or suffer to exist, any Lien on or with
         respect to any of its properties, whether now owned or hereafter
         acquired, or assign, or permit any of its Subsidiaries to assign, any
         right to receive income, other than:

                           (i)  Permitted Liens,

                           (ii) purchase money Liens upon or in any real
                  property or equipment acquired or held by the Borrower or any
                  Subsidiary in the ordinary course of business to secure the
                  purchase price of such property or equipment or to secure Debt
                  incurred solely for the purpose of financing the acquisition
                  of such property or equipment, or Liens existing on such
                  property or equipment at the time of its acquisition (other
                  than any such Liens created in contemplation of such
                  acquisition that were not incurred to finance the acquisition
                  of such property) or extensions, renewals or replacements of
                  any of the foregoing for the same or a lesser amount,
                  provided, however, that no such Lien shall extend to or cover
                  any properties of any character other than the real property
                  or equipment being acquired, and no such extension, renewal or
                  replacement shall extend to or cover any properties not
                  theretofore subject to the Lien being extended, renewed or



   46

                                       42


                  replaced, provided further that the aggregate principal amount
                  of the indebtedness secured by the Liens referred to in this
                  clause (ii) shall not exceed $20,000,000 at any time
                  outstanding,

                           (iii) the Liens existing on the Effective Date and
                  described on Schedule 5.02(a) hereto,

                           (iv) Liens on property of a Person existing at the
                  time such Person is merged into or consolidated with the
                  Borrower or any Subsidiary of the Borrower or becomes a
                  Subsidiary of the Borrower; provided that such Liens were not
                  created in contemplation of such merger, consolidation or
                  acquisition and do not extend to any assets other than those
                  of the Person so merged into or consolidated with the Borrower
                  or such Subsidiary or acquired by the Borrower or such
                  Subsidiary,

                           (v) other Liens securing Debt in an aggregate
                  principal amount not to exceed $20,000,000 at any time
                  outstanding, and

                           (vi) Liens on the rights of the Borrower under one or
                  more agreements between the Parent and the Borrower, whereby
                  the Parent agrees to provide to the Borrower financial support
                  (in the form of cash or liquid assets) in an aggregate amount
                  no greater than $1,200,000,000, to the extent that the
                  Borrower is unable to make timely payment of interest,
                  principal or premium (or expenses or other obligations related
                  thereto) on any Debt of the Borrower (other than the Debt
                  hereunder), provided that such Liens are granted in favor of
                  one or more creditors under such Debt in order to secure the
                  obligations of the Borrower thereunder, and

                           (vii) the replacement, extension or renewal of any
                  Lien permitted by clause (iii), (iv) or (vi) above upon or in
                  the same property theretofore subject thereto or the
                  replacement, extension or renewal (without increase in the
                  amount or change in any direct or contingent obligor) of the
                  Debt secured thereby.

                  (b) Mergers, Etc. Merge or consolidate with or into, or
         convey, transfer, lease or otherwise dispose of (whether in one
         transaction or in a series of transactions) all or substantially all of
         its assets (whether now owned or hereafter acquired) to, any Person, or
         permit any of its Subsidiaries to do so, except that (i) any Subsidiary
         of the Borrower may merge or consolidate with or into any other
         Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower may
         merge with or dispose of assets to the Borrower, (iii) the Borrower may
         merge into the Parent, and (iv) the Borrower may merge or consolidate
         with or into another Person if the Borrower is the surviving entity and
         (1) the Parent and the Borrower shall have executed and delivered, and
         the Agent shall have accepted, the Assignment and Assumption Agreement
         accompanied by the documentation set forth in Section 2.18(ii) or (2)
         the Parent shall have executed and delivered, and the Agent shall have
         accepted, the Guaranty accompanied by the documentation set forth in
         Section


   47

                                       43


         2.18(ii), provided, in each case, that no Default shall have occurred
         and be continuing at the time of such proposed transaction or would
         result therefrom.

                  (c) Change in Nature of Business. Make any material change in
         the nature of its business as carried on at the date hereof.

                  (d) Accounting Changes. Make or permit, or permit any of its
         Subsidiaries to make or permit, any change in accounting policies or
         reporting practices, except as required or permitted by generally
         accepted accounting principles.

                  SECTION 5.03. Negative Covenants Applicable on or after the
         Parent Assumption Date. Notwithstanding anything in the contrary set
         forth in Section 5.02, at all times on and after the Parent Assumption
         Date so long as any Advance shall remain unpaid or any Lender shall
         have any Commitment hereunder, the Borrower will not:

                  (a) Liens, Etc. Create or suffer to exist, or permit any
         Significant Subsidiary to create or suffer to exist, any Lien on or
         with respect to any shares of any class of equity securities
         (including, without limitation, Voting Stock) of any Significant
         Subsidiary, whether such shares are now owned or hereafter acquired.

                  (b) Debt. Create, incur, assume or suffer to exist any Debt
         except Debt that is expressly or effectively pari passu with or
         expressly subordinated to the Debt of the Borrower hereunder.

                  (c) Mergers, Etc. Merge or consolidate with or into, or
         convey, transfer, lease or otherwise dispose of (whether in one
         transaction or in a series of transactions) all or substantially all of
         its assets (whether now owned or hereafter acquired) to, any Person, or
         permit any Significant Subsidiary to do so, except that (i) any
         Significant Subsidiary may merge or consolidate with or into any other
         Significant Subsidiary, (ii) any Significant Subsidiary may merge into
         or dispose of assets to the Borrower, and (iii) the Borrower may merge
         or consolidate with or into any other Person if the surviving entity
         has senior unsecured Debt outstanding rated at least BBB- by S&P and
         Baa3 by Moody's; provided, in each case, that no Default shall have
         occurred and be continuing at the time of such proposed transaction or
         would result therefrom.

                  (d) Change in Nature of Business. Make, or permit any of its
         Significant Subsidiaries to make, any material change in the nature of
         its business as carried on January 18, 2000 other than as disclosed in
         the SEC Reports.

                  (e) Accounting Changes. Make or permit, or permit any of its
         Subsidiaries to make or permit, any change in accounting policies or
         reporting practices, except as required or permitted by generally
         accepted accounting principles.

   48

                                       44


                                   ARTICLE VI

                                EVENTS OF DEFAULT

                  SECTION  6.01.  Events of  Default.  If any of the  following
events  ("Events of  Default")  shall occur and be continuing:

                  (a) The Borrower shall fail to pay any principal of any
         Advance when the same becomes due and payable; or the Borrower shall
         fail to pay any interest on any Advance or make any other payment of
         fees or other amounts payable under this Agreement or any Note within
         three Business Days after the same becomes due and payable; or

                  (b) Any representation or warranty made by the Borrower
         herein, by the Borrower (or any of its officers) in connection with
         this Agreement or by the Parent in the Guaranty shall prove to have
         been incorrect in any material respect when made; or

                  (c) (i) The Borrower shall fail to perform or observe any
         term, covenant or agreement contained in Section 2.10(b), 5.01(d), (e)
         or (h), 5.02 or (if applicable) 5.03 or in the Collateral Assignment
         Agreement, (ii) the Parent shall fail to perform or observe any term,
         covenant or agreement contained in the Support Agreement or the
         Guaranty, as applicable, or (iii) the Borrower shall fail to perform or
         observe any other term, covenant or agreement contained in any Loan
         Document on its part to be performed or observed if such failure shall
         remain unremedied for 10 days after written notice thereof shall have
         been given to the Borrower by the Agent or any Lender; or

                  (d) Either Loan Party or any of its Subsidiaries shall fail to
         pay any principal of or premium or interest on any Debt that is
         outstanding in a principal or notional amount of at least $10,000,000
         in the aggregate (but excluding Debt outstanding hereunder and
         Nonrecourse Debt) of such Loan Party or such Subsidiary (as the case
         may be), when the same becomes due and payable (whether by scheduled
         maturity, required prepayment, acceleration, demand or otherwise), and
         such failure shall continue after the applicable grace period, if any,
         specified in the agreement or instrument relating to such Debt; or any
         other event shall occur or condition shall exist under any agreement or
         instrument relating to any such Debt and shall continue after the
         applicable grace period, if any, specified in such agreement or
         instrument, if the effect of such event or condition is to accelerate,
         or to permit the acceleration of, the maturity of such Debt; or any
         such Debt shall be declared to be due and payable, or required to be
         prepaid or redeemed (other than by a regularly scheduled required
         prepayment or redemption), purchased or defeased, or an offer to
         prepay, redeem, purchase or defease such Debt shall be required to be
         made, in each case prior to the stated maturity thereof; or

                  (e) Either Loan Party or DECO shall generally not pay its
         debts as such debts become due, or shall admit in writing its inability
         to pay its debts generally, or shall make a general assignment for the
         benefit of creditors; or any proceeding shall be instituted by or
         against either Loan Party or any of its Subsidiaries seeking to
         adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
         up, reorganization, arrangement, adjustment, protection, relief, or
         composition of it or its debts under any law relating to bankruptcy,

   49

                                       45


         insolvency or reorganization or relief of debtors, or seeking the entry
         of an order for relief or the appointment of a receiver, trustee,
         custodian or other similar official for it or for any substantial part
         of its property and, in the case of any such proceeding instituted
         against it (but not instituted by it), either such proceeding shall
         remain undismissed or unstayed for a period of 30 days, or any of the
         actions sought in such proceeding (including, without limitation, the
         entry of an order for relief against, or the appointment of a receiver,
         trustee, custodian or other similar official for, it or for any
         substantial part of its property) shall occur; or either Loan Party or
         any of its Subsidiaries shall take any corporate action to authorize
         any of the actions set forth above in this subsection (e); or

                  (f) Any judgment or order for the payment of money in excess
         of $10,000,000 shall be rendered against either Loan Party or any of
         its Subsidiaries and either (i) enforcement proceedings shall have been
         commenced by any creditor upon such judgment or order or (ii) there
         shall be any period of 10 consecutive days during which a stay of
         enforcement of such judgment or order, by reason of a pending appeal or
         otherwise, shall not be in effect; or

                  (g) Any non-monetary judgment or order shall be rendered
         against either Loan Party or any of its Subsidiaries that could be
         reasonably expected to have a Material Adverse Effect, and there shall
         be any period of 10 consecutive days during which a stay of enforcement
         of such judgment or order, by reason of a pending appeal or otherwise,
         shall not be in effect; or

                  (h) The Parent shall at any time (i) cease to hold 100% of the
         Voting Stock of the Borrower unless the Parent and the Borrower shall
         have executed and delivered, and the Agent shall have accepted, the
         Assignment and Assumption Agreement accompanied by the documentation
         set forth in Section 2.18(ii) or (ii) cease to hold 100% of the Voting
         Stock of DECO; or

                  (i) The Borrower or any of its ERISA Affiliates shall incur,
         or, in the reasonable opinion of the Required Lenders, shall be
         reasonably likely to incur liability in excess of $10,000,000 in the
         aggregate as a result of one or more of the following: (i) the
         occurrence of any ERISA Event; (ii) the partial or complete withdrawal
         of the Borrower or any of its ERISA Affiliates from a Multiemployer
         Plan; or (iii) the reorganization or termination of a Multiemployer
         Plan; or

                  (j) The Parent and its Subsidiaries, on a Consolidated basis,
shall at any time cease to:

                           (i) Maintain a ratio of Consolidated EBITDA to cash
                  interest payable on all Debt (excluding, (A) such Nonrecourse
                  Debt of their own and of their Subsidiaries and Affiliates as
                  would be listed as such in the financial statements of the
                  Parent of the kind delivered pursuant to Section 5.01(h)(ii)
                  and (iii) and (B) the Junior Subordinated Debentures) of not
                  less than 2:1 for each period of four consecutive fiscal
                  quarters ending on the last day of September, December, March
                  and June of each year, or

   50

                                       46


                           (ii) Maintain a ratio of Consolidated Debt
                  (excluding, (A) such Nonrecourse Debt of their own and of
                  their Subsidiaries as would be listed in the financial
                  statements of the Parent and (B) the Junior Subordinated
                  Debentures) to Capitalization of not greater than .65:1; or

                  (k) any provision of any of the Loan Documents after delivery
         thereof pursuant to Section 3.01 shall for any reason cease to be valid
         and binding on or enforceable against any Loan Party to it, or any such
         Loan Party shall so state in writing;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes,
all interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Borrower under the
Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances
shall automatically be terminated and (B) the Notes, all such interest and all
such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.


                                   ARTICLE VII

                                    THE AGENT

                  SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to this Agreement or applicable law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

                  SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the


   51

                                       47


Agent: (i) may treat the payee of any Note as the holder thereof until the Agent
receives and accepts an Assignment and Acceptance entered into by the Lender
that is the payee of such Note, as assignor, and an Eligible Assignee, as
assignee, as provided in Section 8.07; (ii) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, any
Loan Document or any other instrument or document furnished pursuant hereto; and
(vi) shall incur no liability under or in respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopier, telegram or telex) believed by it to be genuine and signed or
sent by the proper party or parties.

                  SECTION 7.03. Citibank and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Citibank shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Citibank in its
individual capacity. Citibank and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any such Subsidiary, all as if Citibank were not
the Agent and without any duty to account therefor to the Lenders.

                  SECTION 7.04. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.

                  SECTION 7.05. Indemnification. The Lenders (other than the
Designated Bidders) agree to indemnify the Agent (to the extent not reimbursed
by the Borrower), ratably according to the respective principal amounts of the
Revolving Credit Notes then held by each of them (or if no Revolving Credit
Notes are at the time outstanding or if any Revolving Credit Notes are held by
Persons that are not Lenders, ratably according to the respective amounts of
their Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against the Agent in any way

   52

                                       48


relating to or arising out of any Loan Document or any action taken or omitted
by the Agent under any Loan Document, provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender (other than the Designated Bidders) agrees to reimburse
the Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, any Loan
Document, to the extent that the Agent is not reimbursed for such expenses by
the Borrower.

                  SECTION 7.06. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.


                                  ARTICLE VIII

                                  MISCELLANEOUS

                  SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Revolving Credit Notes, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all the Lenders (other than
the Designated Bidders), do any of the following: (a) waive any of the
conditions specified in Section 3.01, (b) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations, (c) reduce the
principal of, or interest on, the Revolving Credit Notes or any fees or other
amounts payable hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, the Revolving Credit Notes or any fees or other
amounts payable hereunder, (e) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Revolving Credit Notes, or the
number of Lenders, that shall be required for the Lenders or

   53

                                       49


any of them to take any action hereunder or (f) amend this Section 8.01; and
provided further that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement or any
Note.

                  SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed
or delivered, if to the Borrower, at its address at 200 Second Avenue, Detroit,
MI 48226, Attention: Christopher C. Arvani; if to any Initial Lender, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender, at its Domestic Lending Office specified in the Assignment and
Acceptance pursuant to which it became a Lender; and if to the Agent, at its
address at Two Penns Way, Suite 200, New Castle, Delaware 19720 Attention:
Christian Laughton, with a copy to J. Nicholas McKee, 399 Park Avenue, New York,
New York 10043; or, as to the Borrower or the Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Agent. All such notices and
communications shall, when mailed, telecopied, telegraphed or telexed, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company or confirmed by telex answerback, respectively, except that notices and
communications to the Agent pursuant to Article II, III or VII shall not be
effective until received by the Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered hereunder shall be
effective as delivery of a manually executed counterpart thereof.

                  SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender or the Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

                  SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand all reasonable costs and reasonable expenses of the Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Agreement, the Notes, each other Loan
Document and the other documents to be delivered hereunder and thereunder,
including, without limitation, (A) all due diligence, syndication (including
printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, consultant, and audit expenses and (B) the reasonable
fees and reasonable expenses of counsel for the Agent with respect thereto and
with respect to advising the Agent as to its rights and responsibilities under
the Loan Documents. The Borrower further agrees to pay on demand all reasonable
costs and reasonable expenses of the Agent and the Lenders, if any (including,
without limitation, reasonable internal and external counsel fees and expenses,
provided such fees and expenses are not duplicative), in connection with the
"workout", restructuring or enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the Notes and the other documents
to be delivered hereunder, including, without limitation, reasonable fees and
expenses of counsel for the Agent and each Lender in connection with the
enforcement of rights under this Section 8.04(a).

   54

                                       50


         (b) The Borrower agrees to indemnify, to the extent legally
permissible, and hold harmless the Agent and each Lender and each of their
Affiliates and their officers, directors, employees, agents and advisors (each,
an "Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) the Notes, this Agreement, the other Loan Documents any of
the transactions contemplated herein or therein or the actual or proposed use of
the proceeds of the Advances or (ii) the actual or alleged presence of Hazardous
Materials on any property of the Borrower or any of its Subsidiaries or any
Environmental Action relating in any way to the Borrower or any of its
Subsidiaries, in each case whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors, shareholders or creditors
or an Indemnified Party or any other Person or any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss, liability
or expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. The Borrower also agrees not to assert any claim against the
Agent, any Lender, any of their Affiliates, or any of their respective
directors, officers, employees, attorneys and agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to the Notes, this Agreement, the other Loan Documents
any of the transactions contemplated herein or therein or the actual or proposed
use of the proceeds of the Advances.

         (c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance or LIBO Rate Advance is made by the Borrower to or for the account
of a Lender other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.08(d) or (e), 2.10
or 2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or
for any other reason, the Borrower shall, upon demand by such Lender (with a
copy of such demand to the Agent), pay to the Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses,
costs or expenses that it may reasonably incur as a result of such payment or
Conversion, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Advance.

         (d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of each Loan Party contained
in Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.

                  SECTION 8.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 6.01 to authorize
the Agent to declare the Notes due and payable pursuant to the provisions of
Section 6.01, each Lender and each of its Affiliates is hereby

   55

                                       51


authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender or such Affiliate to or for the credit or the account
of either Loan Party against any and all of the obligations of either Loan Party
now or hereafter existing under the Loan Documents Agreement and the Note held
by such Lender, whether or not such Lender shall have made any demand under this
Agreement or such Note and although such obligations may be unmatured. Each
Lender agrees promptly to notify such Loan Party after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender and its
Affiliates under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender and
its Affiliates may have.

                  SECTION 8.06. Binding Effect. This Agreement shall become
effective (other than Sections 2.01 and 2.03, which shall only become effective
upon satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders to any
Person, except to the Parent pursuant to the Assignment and Assumption Agreement
accompanied by the documentation set forth in Section 2.18(ii).

                  SECTION 8.07. Assignments, Designations and Participations.
(a) Each Lender (other than the Designated Bidders) may, with the prior consent
of the Agent and (for so long as no Default has occurred and is continuing) the
Borrower (which consent shall not be unreasonably withheld) assign to one or
more Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment, the
Revolving Credit Advances owed to it and the Revolving Credit Note or Notes held
by it); provided, however, that (i) each such assignment shall be of a constant,
and not a varying, percentage of all rights and obligations under this Agreement
(other than any right to make Competitive Bid Advances, Competitive Bid Advances
owing to it and Competitive Bid Notes), (ii) except in the case of an assignment
to a Person that, immediately prior to such assignment, was a Lender or an
assignment of all of a Lender's rights and obligations under this Agreement, the
amount of the Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, (iii) each such assignment
shall be to an Eligible Assignee, and (iv) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Revolving Credit Note
subject to such assignment and a processing and recordation fee of $3,000. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to

   56

                                       52


such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).

         (b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of, or the perfection or priority of any lien or security interest created
or purported to be created under or in connection with, this Agreement or any
other instrument or document furnished pursuant hereto; (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations that by the terms of this Agreement are required to be performed
by it as a Lender.

         (c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Revolving Credit Note or Notes subject to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent in exchange for the surrendered Revolving
Credit Note a new Note to the order of such Eligible Assignee in an amount equal
to the Commitment assumed by it pursuant to such Assignment and Acceptance and,
if the assigning Lender has retained a Commitment hereunder, a new Revolving
Credit Note to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Revolving Credit Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Revolving Credit Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A-1 hereto.

   57

                                       53


         (d) Each Lender (other than the Designated Bidders) may designate one
or more banks or other entities to have a right to make Competitive Bid Advances
as a Lender pursuant to Section 2.03; provided, however, that (i) no such Lender
shall be entitled to make more than two such designations, (ii) each such Lender
making one or more of such designations shall retain the right to make
Competitive Bid Advances as a Lender pursuant to Section 2.03, (iii) each such
designation shall be to a Designated Bidder and (iv) the parties to each such
designation shall execute and deliver to the Agent, for its acceptance and
recording in the Register, a Designation Agreement. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Designation Agreement, the designee thereunder shall be a party hereto
with a right to make Competitive Bid Advances as a Lender pursuant to Section
2.03 and the obligations related thereto.

         (e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security
interest created or purported to be created under or in connection with, this
Agreement or any other instrument or document furnished pursuant hereto; (ii)
such Lender makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such designee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Designation Agreement; (iv) such designee will,
independently and without reliance upon the Agent, such designating Lender or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such designee confirms that it is a
Designated Bidder; (vi) such designee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement as are delegated to the Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such designee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.

         (f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Agent shall, if such Designation Agreement has been completed and is
substantially in the form of Exhibit D hereto, (i) accept such Designation
Agreement, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower.

         (g) The Agent shall maintain at its address referred to in Section 8.02
a copy of each Assignment and Acceptance and each Designation Agreement
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and, with respect to Lenders other than Designated
Bidders, the Commitment of, and principal amount of the


   58

                                       54


Advances owing to, each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

         (h) Each Lender may sell participations to one or more banks or other
entities (other than the Borrower or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) such Lender's obligations
under this Agreement (including, without limitation, its Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (v) no participant
under any such participation shall have any right to approve any amendment or
waiver of any provision of this Agreement or any Note, or any consent to any
departure by the Borrower therefrom, except to the extent that such amendment,
waiver or consent would (A) reduce the principal of, or interest on, the Notes
or any fees or other amounts payable hereunder, (B) increase the Commitments or
(C) release the Parent under the Guaranty or terminate the Guaranty, in each
case to the extent subject to such participation, or postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation. Each participant shall be entitled to the benefits of Sections
2.11, 2.12 and 2.14 to the same extent as if it were a Lender and had acquired
its interest under this Agreement by an assignment made pursuant to this Section
8.07, provided, however, that in no event shall the Borrower be obligated to
make any payment with respect to such Sections that is greater than the amount
that the Borrower would have otherwise made had no participations been sold
under this Section 8.07(h).

         (i) Any Lender may, in connection with any assignment, designation or
participation or proposed assignment, designation or participation pursuant to
this Section 8.07, disclose to the assignee, designee or participant or proposed
assignee, designee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided that, prior
to any such disclosure, the assignee, designee or participant or proposed
assignee, designee or participant shall agree to preserve the confidentiality of
any Confidential Information relating to the Borrower received by it from such
Lender.

         (j) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time (i) create a security interest in all or a portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System or (ii) with notice to the Agent and the Borrower, assign all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a


   59

                                       55


portion of its Commitment, the Revolving Credit Advances owed to it and the
Revolving Credit Note or Notes held by it) to any of its Affiliates.

                  SECTION 8.08. Confidentiality. Neither the Agent nor any
Lender shall disclose any Confidential Information to any other Person without
the consent of the Borrower, other than (a) to the Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and, as
contemplated by Section 8.07(i), to actual or prospective assignees and
participants, and then only on a confidential basis, (b) as required by any law,
rule or regulation or judicial process, (c) to any rating agency when required
by it, provided that, prior to any such disclosure, such rating agency shall
undertake to preserve the confidentiality of any Confidential Information
relating to either Loan Party received by it from such Lender and (d) as
requested or required by any state, federal or foreign authority or examiner
regulating banks or banking.

                  SECTION 8.09.  Governing  Law.  This  Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York.

                  SECTION 8.10. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

                  SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the Notes, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or the Notes in the courts of any jurisdiction.

         (b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any New
York State or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

                  SECTION 8.12. Effective Date. As of the Effective Date, (i)
the Existing Credit Agreement is amended and restated in full as set forth in
this Agreement, (ii) the Commitments

   60

                                       56


(including the Existing Commitments) are restated as set forth in the signature
pages hereof, (iii) the Existing Notes are cancelled and replaced by the Notes,
and (iv) all obligations which, by the terms of the Existing Credit Agreement,
are evidenced by the Existing Notes are evidenced by the Notes.

                  SECTION 8.13. Waiver of Jury Trial. Each of the Borrower, the
Agent and the Lenders hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the Notes or the
actions of the Agent or any Lender in the negotiation, administration,
performance or enforcement thereof.

   61




                                                                            S-1





                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.


                                            DTE CAPITAL CORPORATION


                                            By
                                              ---------------------------
                                              Name:
                                              Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   62


                                                                             S-2


Commitment                                  Lenders

$31,000,000                                 CITIBANK, N.A.


                                            By
                                              ----------------------------
                                              Name:
                                              Title:




         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   63


                                                                            S-3



Commitment                                   ABN AMRO BANK N.V.

$26,000,000

                                             By
                                               ----------------------------
                                               Name:
                                               Title:



                                             By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   64

                                                                             S-4


Commitment                                   BANK ONE, NA

$26,000,000

                                             By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   65

                                                                             S-5


Commitment                                    BARCLAYS BANK PLC

$26,000,000

                                              By
                                                ----------------------------
                                                Name:
                                                Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   66

                                                                             S-6

Commitment                                    BAYERISCHE LANDESBANK
                                                 GIROZENTRALE, CAYMAN
$26,000,000                                      ISLANDS BRANCH



                                              By
                                                ----------------------------
                                                Name:
                                                Title:


                                              By
                                                ----------------------------
                                                Name:
                                                Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   67

                                                                             S-7



Commitment                                     COMERICA BANK

$26,000,000

                                               By
                                                 ----------------------------
                                                 Name:
                                                 Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   68
                                                                             S-8


Commitment                                      DEN DANSKE BANK AKTIESELSKAB

$26,000,000

                                                By
                                                   ----------------------------
                                                   Name:
                                                   Title:



                                                By
                                                   ----------------------------
                                                   Name:
                                                   Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   69
                                                                             S-9


Commitment                                      THE BANK OF NEW YORK

$20,000,000

                                                By
                                                   ----------------------------
                                                   Name:
                                                   Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   70
                                                                            S-10


Commitment                                      THE BANK OF NOVA SCOTIA

$20,000,000

                                                By
                                                   ----------------------------
                                                   Name:
                                                   Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   71
                                                                            S-11


Commitment                                  THE CHASE MANHATTAN BANK

$20,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   72
                                                                            S-12




Commitment                                  FIRST UNION NATIONAL BANK

$20,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   73
                                                                            S-13



Commitment                                  SOCIETE GENERALE, CHICAGO
BRANCH

$20,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   74
                                                                            S-14




Commitment                                  BANK HAPOALIM, B.M.

$15,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:



                                            By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   75
                                                                            S-15



Commitment                                  BW CAPITAL MARKETS, INC.

$12,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:



                                            By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   76
                                                                            S-16


Commitment                                  THE INDUSTRIAL BANK OF JAPAN,
$12,000,000


                                            By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   77
                                                                            S-17


Commitment                                  MELLON BANK, N.A.

$12,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:




         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   78
                                                                            S-18


Commitment                                  PARIBAS

$12,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:



                                            By
                                               ----------------------------
                                               Name:
                                               Title:




         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   79
                                                                            S-19


Commitment                                  UNION BANK OF CALIFORNIA, N.A.

$12,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   80
                                                                            S-20


Commitment                                  CIBC, INC.

$10,000,000

                                            By
                                               ----------------------------
                                               Name:
                                               Title:


         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   81
                                                                            S-21


Commitment                                    THE DAI-ICHI KANGYO BANK, LTD.

$10,000,000

                                              By
                                                ----------------------------
                                                Name:
                                                Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   82


                                                                            S-22


Commitment                                    KEYBANK NATIONAL ASSOCIATION

$10,000,00

                                              By
                                                ----------------------------
                                                Name:
                                                Title:



                                              By
                                                ----------------------------
                                                Name:
                                                Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   83

                                                                            S-23


Commitment                                    MICHIGAN NATIONAL BANK

$8,000,000

                                              By
                                                ----------------------------
                                                Name:
                                                Title:



         SIGNATURE PAGE TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
   84







                                                                                                            SCHEDULE I
                                                                                               DTE CAPITAL CORPORATION
                                                                                            APPLICABLE LENDING OFFICES

- --------------------------------------------------------------------------------------------------------------------

NAME OF INITIAL LENDER             DOMESTIC LENDING OFFICE                  EURODOLLAR LENDING OFFICE
- --------------------------------------------------------------------------------------------------------------------
                                                                      
Citibank, N.A.                     Two Penns Way, Suite 200                 Same as Domestic Lending Office
                                   New Castle, DE  19720
                                   Attention: Christian Laughton
                                   Telecopier: (302) 894-6120
- ---------------------------------- ---------------------------------------- ----------------------------------------

ABN AMRO Bank N.V.                 208 South LaSalle, Suite 1500            Same as Domestic Lending Office
                                   Chicago, IL  60604-1003
                                   Attention: Loan Administration
                                   Telecopier:  (312) 992-5155
- ---------------------------------- ---------------------------------------- ----------------------------------------

Bank Hapoalim B.M.                 1177 Avenue of the Americas              Same as Domestic Lending Office
                                   New York, New York  10036
                                   Attention: Laura Raffa
                                   Telecopier:  (212) 782-2187
- ---------------------------------- ---------------------------------------- ----------------------------------------

Bank One, NA                       One First National Plaza                 Same as Domestic Lending Office
                                   Chicago, IL  60670
                                   Attention:  Lynn Pozsgay
                                   Telecopier:  (312) 732-3055
- ---------------------------------- ---------------------------------------- ----------------------------------------

The Bank of New York               One Wall Street                          Same as Domestic Lending Office
                                   New York, NY  10286
                                   Attention:  Lisa Williams
                                   Telecopier:  (212) 635-7923
- ---------------------------------- ---------------------------------------- ----------------------------------------

The Bank of Nova Scotia            600 Peachtree St. N.E., Suite 2700       Same as Domestic Lending Office
                                   Atlanta, GA 30308
                                   Attention:  Shannon Dancila
                                   Telecopier:  (404)  888-8998
- ---------------------------------- ---------------------------------------- ----------------------------------------

Barclays Bank PLC                  75 Wall Street                           222 Broadway
                                   New York, NY  10265                      New York, NY  10038
                                   Attention:  Christine Francese           Attention:  Dawn Matthews
                                   Telecopier:  (212) 412-5307              Telecopier:  (212) 412-1098
- ---------------------------------- ---------------------------------------- ----------------------------------------

Bayerische Landesbank              560 Lexington Avenue                     Same as Domestic Lending Office
Girozentrale                       New York, NY  10022
                                   Attention:  Sean O'Sullivan
                                   Telecopier:  (212) 310-9868
- ---------------------------------- ---------------------------------------- ----------------------------------------

BW Capital Markets, Inc.           630 Fifth Avenue                         Same as Domestic Lending Office
                                   Rockefeller Center, Suite 1919
                                   New York, NY  10111
                                   Attention: Thomas Lowe
                                   Telecopier:  (212) 218-1810
- ---------------------------------- ---------------------------------------- ----------------------------------------

The Chase Manhattan Bank           One Chase Manhattan Plaza                Same as Domestic Lending Office
                                   Third Floor
                                   New York, NY  10081
                                   Attention:  Lynett Lang
                                   Telecopier:  (212) 552-5777
- --------------------------------------------------------------------------------------------------------------------


   85






- --------------------------------------------------------------------------------------------------------------------

NAME OF INITIAL LENDER             DOMESTIC LENDING OFFICE                  EURODOLLAR LENDING OFFICE
- --------------------------------------------------------------------------------------------------------------------
                                                                     
CIBC, Inc.                         Two Paces West                           Same as Domestic Lending Office
                                   2727 Paces Ferry Road, Suite 1200
                                   Atlanta, GA  30339
                                   Attention: Sheryl Leonard
                                   Telecopier:  (770) 319-4950
- ---------------------------------- ---------------------------------------- ----------------------------------------

Comerica Bank                      500 Woodward Avenue, MC 3268             Same as Domestic Lending Office
                                   Detroit, MI  48226
                                   Attention:  Stacie McVeigh
                                   Telecopier:  (313) 222-9514
- ---------------------------------- ---------------------------------------- ----------------------------------------

The Dai-Ichi Kangyo Bank,          10 S. Wacker Drive, Suite 2600           Same as Domestic Lending Office
Ltd.                               Chicago, IL  60606
                                   Attention:  R. Cummings
                                   Telecopier:  (312) 876-2011
- ---------------------------------- ---------------------------------------- ----------------------------------------

Den Danske Bank                    280 Park Avenue, 4th Floor               Same as Domestic Lending Office
                                   New York, NY  10017
                                   Attention:  Loan Administration
                                   Telecopier:  (212) 490-0252
- ---------------------------------- ---------------------------------------- ----------------------------------------

The Industrial Bank of Japan,      227 West Monroe Street, Suite 2600       Same as Domestic Lending Office
   Limited                         Chicago, IL  60606
                                   Attention:  Debbie Sapyta
                                   Telecopier:  (312) 855-8200
- ---------------------------------- ---------------------------------------- ----------------------------------------

First Union National Bank          One First Union Center                   Same as Domestic Lending Office
                                   Charlotte, NC 28288-0735
                                   Attention:  Tom Bohrer
                                   Telecopier:  (704) 383-6670
- ---------------------------------- ---------------------------------------- ----------------------------------------

KeyBank National                   127 Public Square                        127 Public Square
Association                        Cleveland, OH  44114                     Cleveland, OH  44114
                                   Attention:  Michael Jackson              Attention:  Laura Binkley
                                   Telecopier:  (216) 689-4981              Telecopier:  (216) 689-4981
- ---------------------------------- ---------------------------------------- ----------------------------------------

Mellon Bank, N.A.                  Three Mellon Bank Center, Rm 2332        Same as Domestic Lending Office
                                   Pittsburgh, PA  15259
                                   Attention: Kathy Capp
                                   Telecopier:  (412) 234-4644
- ---------------------------------- ---------------------------------------- ----------------------------------------

Michigan National Bank             27777 Inkster Road                       Same as Domestic Lending Office
                                   Dept. 10-64
                                   Farmington Hills, MI 48333-9065
                                   Attention:  James Tesen
                                   Telecopier:  (248) 473-3577
- ---------------------------------- ---------------------------------------- ----------------------------------------

 Paribas                           787 Seventh Avenue                       Same as Domestic Lending Office
                                   New York, NY  10019
                                   Attention:  Tecla Hurley
                                   Telecopier:  (212) 841-2217
- ---------------------------------- ---------------------------------------- ----------------------------------------

The Sanwa Bank                     10 South Wacker Drive                    Same as Domestic Lending Office
                                   Chicago, IL  60606
                                   Attention:  Richard Ault
                                   Telecopier:  (312) 346-6677
- --------------------------------------------------------------------------------------------------------------------


   86





- --------------------------------------------------------------------------------------------------------------------

NAME OF INITIAL LENDER             DOMESTIC LENDING OFFICE                  EURODOLLAR LENDING OFFICE
- --------------------------------------------------------------------------------------------------------------------
                                                                      
Societe Generale                   181 West Madison, Suite 3400             181 West Madison, Suite 3400
                                   Chicago, IL  60602                       Chicago, IL  60602
                                   Attention:  R. Boyd Harman               Attention:  Albert Tune
                                   Telecopier:  (312) 578-5099              Telecopier:  (312) 578-5099
- ---------------------------------- ---------------------------------------- ----------------------------------------

Union Bank of California,          Energy Capital Services                  Same as Domestic Lending Office
N.A.                               445 S. Figueroa Street, 15th Floor
                                   Los Angeles, CA  90071
                                   Attention:  Patricia Gonzalez
                                   Telecopier:  (213) 236-4096
- --------------------------------------------------------------------------------------------------------------------




   87





                                Schedule 5.02(a)

                                 Existing Liens



                                      None.



   88


                                                           EXHIBIT A-1 - FORM OF
                                                                REVOLVING CREDIT
                                                                 PROMISSORY NOTE


U.S.$                                         Dated:                 , 2000
     ---------------                                 ----------------

                  FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
Michigan corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
                          (the "Lender") for the account of its Applicable
Lending Office on the Revolver Termination Date (each as defined in the Credit
Agreement referred to below) or, if the Borrower makes a Term Loan Election, on
the Maturity Date (each as defined in the Credit Agreement referred to below),
the principal sum of U.S.$[amount of the Lender's Commitment in figures] or, if
less, the aggregate principal amount of the Revolving Credit Advances made by
the Lender to the Borrower pursuant to the Third Amended and Restated Credit
Agreement dated as of January 18, 2000 (as amended or modified from time to
time, the "Credit Agreement"; the terms defined therein being used herein as
therein defined) among the Borrower, the Lender and certain other lenders
parties thereto, and Citibank, N.A., as Agent for the Lender and such other
lenders outstanding on the Revolver Termination Date or Maturity Date, as
applicable.

                  The Borrower promises to pay interest on the unpaid principal
amount of each Revolving Credit Advance from the date of such Revolving Credit
Advance until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Credit Agreement.

                  Both principal and interest are payable in lawful money of the
United States of America to Citibank, N.A., as Agent, at Two Penns Way, Suite
200, New Castle, Delaware 19720, Account No. 36852248, Attention: Christian
Laughton, in same day funds. Each Revolving Credit Advance owing to the Lender
by the Borrower pursuant to the Credit Agreement, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note.

                  This Promissory Note is one of the Revolving Credit Notes
referred to in, and is entitled to the benefits of, the Credit Agreement. The
Credit Agreement, among other things, (i) provides for the making of Revolving
Credit Advances by the Lender to the Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Revolving
Credit Advance being evidenced by this Promissory Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.

                                              [NAME OF BORROWER]


                                              By
                                                 ------------------------------
                                                 Title:


   89


                       ADVANCES AND PAYMENTS OF PRINCIPAL









===============================================================================================================================

                          AMOUNT OF            AMOUNT OF PRINCIPAL                 UNPAID                    NOTATION
      DATE                 ADVANCE              PAID OR PREPAID                   PRINCIPAL                  MADE BY
                                                                                   BALANCE
- -------------------------------------------------------------------------------------------------------------------------------
                                                                                        


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


- ----------------- --------------------------- ------------------------------ ---------------------- ---------------------------


===============================================================================================================================




   90



                                                           EXHIBIT A-2 - FORM OF
                                                                 COMPETITIVE BID
                                                                 PROMISSORY NOTE


U.S.$                                                Dated:              ,
     ---------------                                        -------------  ----

                  FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a
Michigan corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
                          (the "Lender") for the account of its Applicable
Lending Office (as defined in the Third Amended and Restated Credit Agreement
dated as of January 18, 2000 (as amended or modified from time to time, the
"Credit Agreement"; the terms defined therein being used herein as therein
defined)) among the Borrower, the Lender and certain other lenders parties
thereto, and Citibank, N.A., as Agent for the Lender and such other lenders), on
               ,      the principal amount of $U.S.               .

                  The Borrower promises to pay interest on the unpaid principal
amount hereof from the date hereof until such principal amount is paid in full,
at the interest rate and payable on the interest payment date or dates provided
below:

     Interest Rate:      % per annum (calculated on the basis of a year of days
     for the actual number of days elapsed).

                  Both principal and interest are payable in lawful money of the
United States of America to                           for the account of the
Lender at the office of                          , at
in same day funds.

                  This Promissory Note is one of the Competitive Bid Notes
referred to in, and is entitled to the benefits of, the Credit Agreement. The
Credit Agreement, among other things, contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events.

                  The Borrower hereby waives presentment, demand, protest and
notice of any kind. No failure to exercise, and no delay in exercising, any
rights hereunder on the part of the holder hereof shall operate as a waiver of
such rights.

                  This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.

                                              [NAME OF BORROWER]


                                              By
                                                -------------------------------
                                                Title:


   91





                                                 EXHIBIT B-1 - FORM OF NOTICE OF
                                                      REVOLVING CREDIT BORROWING

Citibank, N.A., as Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below
  399 Park Avenue
  New York, NY  10043                                [Date]

                  Attention:
                             ----------------

Ladies and Gentlemen:

              The undersigned, [NAME OF BORROWER], refers to the Third Amended
and Restated Credit Agreement, dated as of January 18, 2000 (as amended or
modified from time to time, the "Credit Agreement"; the terms defined therein
being used herein as therein defined), among the undersigned, certain Lenders
parties thereto and                     , as Agent for said Lenders, and hereby
gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement
that the undersigned hereby requests a Revolving Credit Borrowing under the
Credit Agreement, and in that connection sets forth below the information
relating to such Revolving Credit Borrowing (the "Proposed Revolving Credit
Borrowing") as required by Section 2.02(a) of the Credit Agreement:

              (i)    The Business Day of the Proposed Revolving Credit Borrowing
     is                ,     .

              (ii)   The Type of Advances comprising the Proposed Revolving
     Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].

              (iii)  The aggregate amount of the Proposed Revolving Credit
     Borrowing is $               .

              [(iv)  The initial Interest Period for each Eurodollar Rate
     Advance made as part of the Proposed Revolving Credit Borrowing is
     month[s].]

              The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Revolving Credit Borrowing:

              (A)    the representations and warranties contained in Section
     4.01 of the Credit Agreement are correct, before and after giving
     effect to the Proposed Revolving Credit Borrowing and to the
     application of the proceeds therefrom, as though made on and as of such
     date; and



   92

                                                                               2





              (B)    no event has occurred and is continuing, or would result
     from such Proposed Revolving Credit Borrowing or from the application
     of the proceeds therefrom, that constitutes a Default.

                                            Very truly yours,

                                            [NAME OF BORROWER]


                                            By
                                              ---------------------------------
                                              Title:


   93





                                                 EXHIBIT B-2 - FORM OF NOTICE OF
                                                       COMPETITIVE BID BORROWING


Citibank, N.A., as Agent
  for the Lenders parties
  to the Credit Agreement
  referred to below
  399 Park Avenue
  New York, NY  10043                                            [Date]


                  Attention:
                             ----------------


Ladies and Gentlemen:

              The undersigned, [NAME OF BORROWER], refers to the Third Amended
and Restated Credit Agreement, dated as of January 18, 2000 (as amended or
modified from time to time, the "Credit Agreement"; the terms defined therein
being used herein as therein defined), among the undersigned, certain Lenders
parties thereto and Citibank, N.A., as Agent for said Lenders, and hereby gives
you notice, irrevocably, pursuant to Section 2.03 of the Credit Agreement that
the undersigned hereby requests a Competitive Bid Borrowing under the Credit
Agreement, and in that connection sets forth the terms on which such Competitive
Bid Borrowing (the "Proposed Competitive Bid Borrowing") is requested to be
made:

         (A)  Date of Competitive Bid Borrowing
                                                  ------------------------
         (B)  Amount of Competitive Bid Borrowing
                                                  ------------------------
         (C)  [Maturity Date] [Interest Period]
                                                  ------------------------
         (D)  Interest Rate Basis
                                                  ------------------------
         (E)  Interest Payment Date(s)
                                                  ------------------------
         (F)
              -------------------                 ------------------------
         (G)
              -------------------                 ------------------------
         (H)
              -------------------                 ------------------------

              The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Competitive Bid Borrowing:

              (a)    the representations and warranties contained in Section
         4.01 of the Credit Agreement are correct, before and after giving
         effect to the Proposed Competitive Bid Borrowing and to the application
         of the proceeds therefrom, as though made on and as of such date;

              (b)    no event has occurred and is continuing, or would result
         from the Proposed Competitive Bid Borrowing or from the application of
         the proceeds therefrom, that constitutes a Default;


   94

                                                                               2

              (c)    no event has occurred and no circumstance exists as a
         result of which the information concerning the undersigned that has
         been provided to the Agent and each Lender as of the date hereof by the
         undersigned in connection with the Credit Agreement would include an
         untrue statement of a material fact or omit to state any material fact
         or any fact necessary to make the statements contained therein, in the
         light of the circumstances under which they were made, not misleading;
         and

              (d) the aggregate amount of the Proposed Competitive Bid
         Borrowing and all other Borrowings to be made on the same day under the
         Credit Agreement is within the aggregate amount of the unused
         Commitments of the Lenders.

              The undersigned hereby confirms that the Proposed Competitive Bid
Borrowing is to be made available to it in accordance with Section 2.03(a)(v)
of the Credit Agreement.

                                              Very truly yours,

                                              [NAME OF BORROWER]



                                              By
                                                -------------------------------
                                                Title:


   95





                                                             EXHIBIT C - FORM OF
                                                       ASSIGNMENT AND ACCEPTANCE


              Reference is made to the Third Amended and Restated Credit
Agreement dated as of January 18, 2000 (as amended or modified from time to
time, the "Credit Agreement") among DTE Capital Corporation, a Michigan
corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement)
and Citibank, N.A., as agent for the Lenders (the "Agent"). Terms defined in the
Credit Agreement are used herein with the same meaning.

              The "Assignor" and the "Assignee" referred to on Schedule I
hereto agree as follows:

              1.    The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor's rights and obligations under the Credit Agreement as of the
date hereof (other than in respect of Competitive Bid Advances and Competitive
Bid Notes) equal to the percentage interest specified on Schedule 1 hereto of
all outstanding rights and obligations under the Credit Agreement (other than in
respect of Competitive Bid Advances and Competitive Bid Notes). After giving
effect to such sale and assignment, the Assignee's Commitment and the amount of
the Revolving Credit Advances owing to the Assignee will be as set forth on
Schedule 1 hereto.

              2.    The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or the performance or observance by the Borrower of
any of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) attaches the Revolving Credit Note
held by the Assignor and requests that the Agent exchange such Revolving Credit
Note for a new Revolving Credit Note payable to the order of the Assignee in an
amount equal to the Commitment assumed by the Assignee pursuant hereto or new
Revolving Credit Notes payable to the order of the Assignee in an amount equal
to the Commitment assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitment retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto.

              3.    The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms


   96

                                                                               2



that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service
forms required under Section 2.14 of the Credit Agreement.

              4.    Following the execution of this Assignment and Acceptance,
it will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1 hereto.

              5.    Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

              6.    Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Revolving Credit Notes in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
facility fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Revolving Credit Notes for periods prior to the Effective Date directly
between themselves.

              7.    This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.

              8.    This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.

              IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.

   97





                                                                               3




                                   Schedule 1
                                       to
                            Assignment and Acceptance
         Percentage interest assigned:
              %
         -----

         Assignee's Commitment:
         $
          ----------

         Aggregate outstanding principal amount of Revolving Credit Advances
         assigned:
         $
          ----------

         Principal amount of Revolving Credit Note payable to Assignee:
         $
          ----------

         Principal amount of Revolving Credit Note payable to Assignor:
         $
          ----------

         Effective Date(1):
                                           ,
                          -----------------  ----

                                              [NAME OF ASSIGNOR], as Assignor

                                              By
                                                -------------------------------
                                                Title:

                                              Dated:                 ,
                                                     ----------------  ----

                                              [NAME OF ASSIGNEE], as Assignee

                                              By
                                                -------------------------------
                                                Title:

                                              Dated:                 ,
                                                     ----------------  ----

                                              Domestic Lending Office:
                                               [Address]
                                              Eurodollar Lending Office:
                                               [Address]

Accepted [and Approved](2) this

- --------------------------------

(1)      This date should be no earlier than five Business Days after the
         delivery of this Assignment and Acceptance to the Agent.

(2)      Required if the Assignee is an Eligible Assignee solely by reason of
         clause (viii) of the definition of "Eligible Assignee".



   98


                                                                               4


           day of                ,
- ----------        ---------------  ----

                         , as Agent
- -------------------------

By
  ----------------------------
   Title:

[Approved this            day of                ,     .]
               ----------        ---------------  ----

[NAME OF BORROWER]

By                            ]**
  ----------------------------
   Title:


   99





                                                             EXHIBIT D - FORM OF
                                                           DESIGNATION AGREEMENT

                          Dated                ,
                               ---------------  ----

              Reference is made to the Third Amended and Restated Credit
Agreement dated as of January 18, 2000 (as amended or modified from time to
time, the "Credit Agreement") among DTE Capital Corporation, a Michigan
corporation (the "Borrower"), the Lenders (as defined in the Credit Agreement)
and Citibank, N.A., as agent for the Lenders (the "Agent"). Terms defined in the
Credit Agreement are used herein with the same meaning.

                                       (the "Designor") and
(the "Designee") agree as follows:

              1.    The Designor hereby designates the Designee, and the
Designee hereby accepts such designation, to have a right to make Competitive
Bid Advances pursuant to Section 2.03 of the Credit Agreement.

              2.    The Designor makes no representation or warranty and
assumes no responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto and (ii) the financial
condition of the Borrower or the performance or observance by the Borrower of
any of its obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto.

              3.    The Designee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements referred
to in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Designation Agreement; (ii) agrees that it will, independently and without
reliance upon the Agent, the Designor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is a Designated Bidder; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; and (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender.

              4.    Following the execution of this Designation Agreement by
the Designor and its Designee, it will be delivered to the Agent for acceptance
and recording by the Agent. The effective date for this Designation Agreement
(the "Effective Date") shall be the date of acceptance hereof by the Agent,
unless otherwise specified on the signature page hereto.
   100
                                                                               2




                  5. Upon such acceptance and recording by the Agent, as of the
Effective Date, the Designee shall be a party to the Credit Agreement with a
right to make Competitive Bid Advances as a Lender pursuant to Section 2.03 of
the Credit Agreement and the rights and obligations of a Lender related thereto.

                  6. This Designation Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

                  7. This Designation Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Designation Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Designation Agreement.

                  IN WITNESS WHEREOF, the Designor and the Designee have caused
this Designation Agreement to be executed by their officers thereunto duly
authorized as of the date first above written.

Effective Date(3):
                                ---------------, -----

                           [NAME OF DESIGNOR],
                               as Designor

                           By
                             -----------------------------
                             Title:

                           [NAME OF DESIGNEE],
                             as Designee

                           By
                             -----------------------------
                             Title:

                           Applicable Lending Office (and address for notices):

                                        [Address]

Accepted this    day
             ---
of                ,
  ----------------- -----

- -------------------------, as Agent
By
  -----------------------
  Title:

- -------------------
(3)      This date should be no earlier than five Business Days after the
         delivery of this Designation Agreement to the Agent.

   101





                                                 EXHIBIT E - FORM OF CERTIFICATE
                                                           BY DTE ENERGY COMPANY

                               DTE ENERGY COMPANY
                              OFFICER'S CERTIFICATE

                  I,                          , [Insert title of Financial
Officer (as defined in the Credit Agreement)] of DTE ENERGY COMPANY, a Michigan
corporation (the "Parent"), DO HEREBY CERTIFY, in connection with a Borrowing on
this date under the Third Amended and Restated Credit Agreement dated as of
January 18, 2000 among DTE Capital Corporation, the Banks parties thereto,
Citibank, N.A., as agent for said Banks (the "Credit Agreement", the terms
defined therein being used herein as therein defined), that:

                  1. The Parent is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Michigan.

                  2. The execution, delivery and performance by the Parent of
         the Support Agreement, and the consummation of the transactions
         contemplated hereby and thereby, are within the Parent's corporate
         powers, have been duly authorized by all necessary corporate action,
         and do not contravene (i) the Parent's charter or by-laws or (ii) law
         or any contractual restriction binding on or affecting the Parent.

                  3. All governmental and third party consents and approvals
         necessary in connection with the transactions contemplated by the
         Support Agreement and the other Loan Documents to which the Parent is a
         party shall have been obtained (without the imposition of any
         conditions that are not acceptable to the Lenders) and shall remain in
         effect, and no law or regulation shall be applicable that restrains,
         prevents or imposes materially adverse conditions upon the Parent with
         respect to the transactions contemplated by the Loan Documents to which
         it is a party.

                  4. The Support Agreement has been, and each of the other Loan
         Documents to which the Parent is a party when delivered pursuant to the
         Credit Agreement will have been, duly executed and delivered by the
         Parent. The Support Agreement is, and each of the other Loan Documents
         to which it is a party when delivered hereunder will be, the legal,
         valid and binding obligation of the Parent enforceable against the
         Parent in accordance with their respective terms, subject to the effect
         of any applicable bankruptcy, insolvency, reorganization, moratorium or
         similar law affecting creditors rights generally.

                  5. The Consolidated balance sheet of the Parent and its
         Subsidiaries as at December 31, 1998, and the related Consolidated
         statements of income and cash flows of the Parent and its Subsidiaries
         for the fiscal year then ended, accompanied by an opinion of Deloitte &
         Touche LLP, independent public accountants, and the Consolidated
         balance sheet of the Parent and its Subsidiaries as at September 30,
         1999 and the related Consolidated statements of income and cash flows
         of the Parent and its Subsidiaries for the nine months then ended,
         copies of which have been furnished to each Lender, attached hereto as
         Annex A are hereby duly certified by [Insert title of Financial
         Officer],


   102


         as fairly presenting, subject in the case of said balance sheet as at
         September 30, 1999, and said statements of income and cash flows for
         the nine months then ended, to year-end audit adjustments, the
         Consolidated financial condition of the Parent and its Subsidiaries as
         at such dates and the Consolidated results of the operations of the
         Parent and its Subsidiaries for the periods ended on such dates, all in
         accordance with generally accepted accounting principles consistently
         applied. Since December 31, 1998 there has been no Material Adverse
         Change with respect to the Parent.

                  IN WITNESS WHEREOF, I have signed this certificate this 18th
day of January, 2000.

                                    ------------------------------------
                                    [Title:]





                      SIGNATURE PAGE TO CREDIT AGREEMENT
   103





                                                             EXHIBIT F - FORM OF
                                          OPINION OF COUNSEL TO THE LOAN PARTIES



                                                 [Date]


  To each of the Lenders parties
  to the Third Amended and
  Restated Credit Agreement
  dated as of January 18, 2000
  among DTE Capital Corporation,
  said Lenders and Citibank, N.A.
  as Agent, with Salomon Smith Barney
  Inc. as Arranger

                             DTE Capital Corporation

  Ladies and Gentlemen:

           This opinion is furnished to you pursuant to Section 3.01(h)(vii) of
  the Third Amended and Restated Credit Agreement, dated as of January 18, 2000
  (the "CREDIT AGREEMENT"), among DTE Capital Corporation (the "BORROWER"), the
  Lenders parties thereto and Citibank, N.A., as Agent for said Lenders, with
  Salomon Smith Barney Inc. as Arranger. Terms defined in the Credit Agreement
  are used herein as therein defined.

           I am General Counsel for each Loan Party, and have acted in that
  capacity in connection with the preparation, execution and delivery of the
  Loan Documents.

           In that connection, I, in conjunction with the members of my staff,
have examined:

               (1) Each Loan Document, executed by each of the parties thereto.

               (2) The other documents furnished by the Borrower pursuant to
          Article III of the Credit Agreement.

               (3) The Articles of Incorporation of each Loan Party and all
          amendments thereto (the "CHARTERS").

               (4) The By-Laws of each Loan Party and all amendments thereto
          (the "BY-LAWS").

               (5) Certificates from the State of Michigan attesting to the
          continued corporate existence and good standing of each Loan Party in
          that State.


   104
                                                                               2
To each of the Lenders parties
to the Third Amended and
Restated Credit Agreement
dated as of January 18, 2000
among DTE Capital Corporation,
said Lenders and Citibank, N.A.
as Agent, with Salomon Smith Barney
Inc. as Arranger


               (6)        Acknowledgment copies or stamped receipt copies of the
          UCC-1 financial statement filed by the Agent in connection with the
          Existing Credit Agreement and any amendments thereto (the "UCC
          FILINGS") under the Uniform Commercial Code as in effect the State of
          Michigan (the "UCC"), naming the Borrower as debtor and the Agent as
          secured party, which UCC Filings have been filed in the filing offices
          listed in Schedule 1 hereto.

  I have also examined the originals, or copies certified to my satisfaction, of
  the documents listed in a certificate of a Financial Officer of each Loan
  Party, dated the date hereof (the "CERTIFICATES"), certifying that the
  documents listed in such certificate are all of the indentures, loan or credit
  agreements, leases, guarantees, mortgages, security agreements, bonds, notes
  and other agreements or instruments, and all of the orders, writs, judgments,
  awards, injunctions and decrees, that affect or purport to affect the
  Borrower's right to borrow money or any Loan Party's obligations under the
  Loan Documents to which it is party. In addition, I have examined the
  originals, copies certified to my satisfaction, of such other corporate
  records of each Loan Party, certificates of public officials and of officers
  of each Loan Party, and agreements, instruments and other documents, as we
  have deemed necessary as a basis for the opinions expressed below. As to
  questions of fact material to such opinions, I have, when relevant facts were
  not independently established by me, relied upon certificates of public
  officials. I have assumed the due execution and delivery, pursuant to due
  authorization, of the Credit Agreement by the Initial Lenders and the Agent.

           My opinions expressed below are limited to the law of the State of
  Michigan and the federal law of the United States.

           Based upon the foregoing and upon such investigation as I have deemed
  necessary, I am of the following opinion:

         SECTION 2. Each Loan Party is a corporation duly organized, validly
     existing and in good standing under the laws of the State of Michigan.

         SECTION 3. The execution, delivery and performance by each Loan Party
     of the Loan Documents to which it is party, and the consummation of the
     transactions contemplated thereby, are within such Loan Party's corporate
     powers, have been duly authorized by all necessary corporate action, and do
     not contravene (i) the Charters or the By-Laws of such Loan Party or (ii)
     any law, rule or regulation applicable to such Loan Party (including,
     without limitation, Regulation X of the Board of Governors of the Federal
     Reserve System) or (iii) any contractual or legal restriction contained in
     any document listed in the Certificates or, to the best of my knowledge
     (after due inquiry), contained in any other similar document.

   105
                                                                               3

To each of the Lenders parties
to the Third Amended and
Restated Credit Agreement
dated as of January 18, 2000
among DTE Capital Corporation,
said Lenders and Citibank, N.A.
as Agent, with Salomon Smith Barney
Inc. as Arranger

          SECTION 4. No authorization, approval or other action by, and no
     notice to or filing with, any governmental authority or regulatory body or
     any other third party is required for (i) the due execution, delivery,
     recordation, filing or performance by the Loan Parties of the Loan
     Documents to which each is a party, and (ii) the grant by the Borrower of
     the security interest granted by it pursuant to the Assignment Agreement.

          SECTION 5. Each Loan Document has been duly executed and delivered on
     behalf of each Loan Party thereto.

          SECTION 6. Except as may have been disclosed to you in the SEC
     Reports, to the best of my knowledge (after due inquiry) there are no
     pending or overtly threatened actions or proceedings affecting any Loan
     Party or any of their Subsidiaries before any court, governmental agency or
     arbitrator that (i) could be reasonably likely to have a Material Adverse
     Effect or (ii) purport to affect the legality, validity, binding effect or
     enforceability of any Loan Documents or the consummation of the
     transactions contemplated thereby.

          SECTION 7. If, despite the provisions of Section 8.09 of the Credit
     Agreement, Section 17 of the Collateral Assignment Agreement and Section 10
     of the Support Agreement wherein the parties thereto agree that the Loan
     Documents shall be governed by, and construed in accordance with, the laws
     of the State of New York, a court of the State of Michigan or a federal
     court sitting in the State of Michigan were to hold that the Loan Documents
     are governed by, and to be construed in accordance with the laws of the
     State of Michigan, the Loan Documents would be, under the laws of the State
     of Michigan, legal, valid and binding obligations of each Loan Party
     thereto enforceable against such Loan Party in accordance with their
     respective terms.

          SECTION 8. The Collateral Assignment Agreement creates a valid first
     priority security interest in the Assigned Rights, securing the payment of
     the Obligations. The UCC Filings are in appropriate form and have been
     filed pursuant to the UCC, resulting in the perfection of such security
     interest in the Assigned Rights.

          SECTION 9. Neither the Borrower nor any of its Subsidiaries is an
     "investment company," or an "affiliated person" of, or "promoter" or
     "principal underwriter" for, an "investment company," as such terms are
     defined in the Investment Company Act of 1940, as amended; the Parent is an
     exempt holding company pursuant to the provisions of Rule 2 of the rules
     and regulations promulgated pursuant to the Public Utility Holding Company
     Act of 1935, as amended.

           The opinions set forth above are subject to the following
qualifications:


   106

                                                                               4
To each of the Lenders parties
to the Third Amended and
Restated Credit Agreement
dated as of January 18, 2000
among DTE Capital Corporation,
said Lenders and Citibank, N.A.
as Agent, with Salomon Smith Barney
Inc. as Arranger


          (a) Our opinion in paragraph 6 above as to enforceability is subject
     to the effect of any applicable bankruptcy, insolvency (including, without
     limitation, all laws relating to fraudulent transfers), reorganization,
     moratorium or similar law affecting creditors' rights generally.

          (b) Our opinion in paragraph 6 above as to enforceability is subject
     to the effect of general principles of equity, including, without
     limitation, concepts of materiality, reasonableness, good faith and fair
     dealing (regardless of whether considered in a proceeding in equity or at
     law).

          (c) We express no opinion as to participation and the effect of the
     law of any jurisdiction other than the State of Michigan wherein any Lender
     may be located or wherein enforcement of the Loan Documents may be sought
     that limits the rates of interest legally chargeable or collectible.

                                               Very truly yours,


   107



                                    EXHIBIT G

                   FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

         ASSIGNMENT AND ASSUMPTION AGREEMENT (this "AGREEMENT"), dated as of
              ,     , among (i) DTE CAPITAL CORPORATION, a Michigan corporation
(in its capacity as assignor hereunder, the "ASSIGNOR"), (ii) DTE ENERGY
COMPANY, a Michigan corporation (in its capacity as the assignee hereunder, the
"ASSIGNEE"), (iii) CITIBANK, N.A., as agent (the "AGENT") for the Lenders from
time to time party to the Credit Agreement referred to below, and (iv) the
Lenders listed on the signature pages hereof.

                             PRELIMINARY STATEMENTS:

         WHEREAS, the Assignor is a party to, and, as of the date hereof, the
Borrower under and as defined in, that certain Third Amended and Restated Credit
Agreement, dated as of January 18, 2000 (said Agreement, as amended hereby and
as it may hereafter be amended or otherwise modified from time to time, being
the "CREDIT AGREEMENT", the terms defined therein and not otherwise defined
herein being used herein as therein defined), among the Borrower, the Lenders
named therein and Citibank, N.A., as Agent thereunder.

         WHEREAS, in connection with the Credit Agreement, the Assignor has also
executed and delivered Notes to the order of each Lender.

         [WHEREAS, under the Section 2.18 of the Credit Agreement, the Assignee
must execute a Guaranty or an Assignment and Assumption Agreement if it incurs
any Debt not outstanding on the Effective Date.]

         [WHEREAS, the Assignee desires to incur Debt not outstanding on the
Effective Date and has chosen to enter into this Assignment and Assumption
Agreement.]

         [WHEREAS, under Section 5.02(b) of the Credit Agreement, the Parent
must execute the Guaranty or the Assignment and Assumption Agreement if the
Borrower merges or consolidates with or into any Person besides the Parent;]

         WHEREAS, the Assignee desires to accept all of the Assignor's right,
title and interest in and to, and assume all of the Assignor's obligations,
covenants, agreements and liabilities under, the Credit Agreement and the Notes.

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, effective on and as of the Transfer
Date, the Assignor and the Assignee hereby agree with and for the benefit of the
Agent and the Lenders, and the Agent on its own behalf and on behalf of the
Lenders agrees with and for the benefit of the Assignor and Assignee, as
follows:

         SECTION 1. ASSIGNMENT AND ASSUMPTION.

         (a) Effective on and as of           ,      (such date and time being
the "TRANSFER DATE"), the Assignor hereby sells, assigns and transfers to the
Assignee, and the Assignee hereby accepts from the Assignor, all of the
Assignor's right, title and interest in and to the Credit


   108


Agreement and the Notes.

         (b) Effective on and as of the Transfer Date, subject to the terms and
provisions hereof, the Assignee hereby unconditionally and irrevocably assumes
all obligations, covenants and agreements to be performed by the Assignor under,
and all liabilities of the Assignor arising under, out of or in connection with,
the Credit Agreement and the Notes, and in furtherance of said assumption, the
Assignee agrees that on and after the Transfer Date, it shall be bound in all
respects by all of the grants, terms, covenants, representations, warranties and
conditions of the Credit Agreement and the Notes, as if the Assignee were the
original Borrower under and as defined in the Credit Agreement and the Notes,
without further action required on the part of any party hereto or thereto. In
addition, on and after the Transfer Date, subject to the terms and provisions
hereof, the Assignee assumes, agrees to observe and perform, and promises to pay
all obligations, duties and liabilities of the Assignor, now or hereafter
existing, arising out of, under or in connection with, the Credit Agreement and
the Notes (including, without limitation, the punctual payment when due of the
principal, interest and fees owing thereunder from time to time), in each case
as though the Assignee were the original Borrower under and as defined therein.
Further, subject to the terms and provisions hereof, the Assignor hereby
confirms and agrees that each of the Credit Agreement and the Notes is, and the
Assignee hereby confirms and agrees that each of the Credit Agreement and the
Notes shall on and after the Transfer Date continue to be, in full force and
effect in accordance with its terms, and the Assignee hereby ratifies and
confirms in all respects, effective on and as of the Transfer Date, each of the
Credit Agreement and the Notes.

         SECTION 2. REPRESENTATIONS AND WARRANTIES. The Assignor and the
Assignee each represents and warrants that it has received copies of and has
reviewed the Loan Documents. Effective on and as of the Transfer Date, the
Assignee makes each of the representations and warranties of the Borrower set
forth in the Credit Agreement all as if Assignee were the original Borrower
under and as defined therein and had originally executed and delivered the
Credit Agreement and the Notes, and confirms that each such representation and
warranty is true and correct on and as of the Transfer Date, and that no Default
has occurred and is continuing on and as of the Transfer Date.

         SECTION 3. REPRESENTATIONS,  WARRANTIES  AND COVENANTS OF THE ASSIGNEE.
The Assignee represents and warrants, as of the date hereof, as follows:

         (a) The Assignee is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of it incorporation.

         (b) The execution, delivery and performance by the Assignee of this
Agreement are within the Assignee's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Assignee's
charter or by-laws or (ii) any applicable law or any contractual restriction
binding on or affecting the Assignee.

         (c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Assignee of this Agreement.

   109


         (d) This Agreement has been duly executed and delivered by the Assignee
and is a legal, valid and binding obligation of the Assignee enforceable against
the Assignee in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors rights generally.

         SECTION 4. REFERENCE TO AND EFFECT ON THE ASSIGNED AGREEMENTS. The
Assignee further confirms and agrees that, effective on and as of the Transfer
Date, each reference in each of the Credit Agreement and the Notes to the
"Borrower" or any like term shall be deemed to refer to the Assignee to the
extent the context permits.

         SECTION 5. EFFECT OF THE AGREEMENT. Notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, the Assignor
shall remain fully liable to the Agent and the Lenders for any breach of the
representations and warranties made by it in the Loan Documents on the date
thereof or upon the date of each Borrowing.

         SECTION 6. COSTS AND EXPENSES. The Assignee agrees to pay on demand all
reasonable costs and expenses in connection with the preparation, execution,
delivery, modification and amendment of this Agreement, and all costs and
expenses, if any (including, without limitation, counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement. The Assignee also agrees to indemnify the Agent
and each Lender from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent or any Lender (as the case may be) in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Agent or any Lender hereunder, except for such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of the
Person seeking such indemnity.

         SECTION 7. GOVERNING LAW, ETC. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to any conflicts of law principles, and shall be binding upon the Assignee, the
Assignor and their respective successors and assigns; provided, that the parties
hereto shall have no right to assign any rights, obligations or liabilities
hereunder except in accordance with the terms of the Loan Documents.

         SECTION 8. WAIVER OF JURY TRIAL. Each of the Assignor and the Assignee
irrevocably waives hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the actions of the
Assignor and the Assignee, as the case may be, in the negotiation,
administration, performance or enforcement thereof.

         SECTION 9.  JURISDICTION, ETC.

         (a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably

   110


and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement in the courts of any jurisdiction.

         (b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

         SECTION 10. THIRD PARTY BENEFICIARIES. This Agreement is for the sole
benefit of the Assignor, the Assignee, the Agent, the Lenders and their
permitted successors and assigns and nothing herein, express or implied, is
intended to or shall confer on any other Person any legal or equitable benefit
or remedy under or by reason of this Agreement.

         SECTION 11. NOTICES. All notices and other communications provided for
hereunder shall be in writing (including telecopy transmission) and (except when
particular means are specified) mailed, faxed or delivered, if to the Assignor
or the Assignee, at its address at 200 Second Avenue, Detroit, MI 48226,
Attention: Christopher C. Arvani, telecopy: 313-235-0170; and if to the Agent,
at its address at                      , Attention:                     ,
telecopy:                    , with a copy to                     ,
                   , telecopy:                ; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other parties. All such notices and communications shall, when mailed or
telecopied, be effective when deposited in the mails or transmitted,
respectively.



                            [Signatures on next page]



   111


                  IN WITNESS WHEREOF, the Assignor and the Assignee have each
caused this Agreement to be duly executed and delivered by an officer thereunto
duly authorized as of the date first above written.

                             DTE CAPITAL CORPORATION


                             By
                               ----------------------------------
                               Name:
                               Title:



                             DTE ENERGY COMPANY


                             By
                               ----------------------------------
                               Name:
                               Title:



ACCEPTED BY:

CITIBANK, N.A., as Agent


By
   ----------------------------------
   Name:
   Title:



   112






                                    EXHIBIT H

                                    GUARANTY

         GUARANTY, dated as of                   , 2000 (this "GUARANTY"), of
DTE ENERGY COMPANY, a Michigan corporation (the "PARENT"), in favor of the Agent
and the Lenders under the Credit Agreement referred to herein.

                              W I T N E S S E T H:

         WHEREAS, the Parent is the direct owner of 100% of the outstanding
common stock of DTE Capital Corporation, a Michigan corporation (the
"BORROWER");

         WHEREAS, the Borrower may make borrowings from the Lenders pursuant to
that certain Third Amended and Restated Credit Agreement, dated as of January
18, 2000 (said Agreement, as it may hereafter be amended or otherwise modified
from time to time, being the "CREDIT AGREEMENT", the terms defined therein and
not otherwise defined herein being used herein as therein defined), among the
Borrower, the Lenders named therein and Citibank, N.A., as Agent thereunder;

         [WHEREAS, under Section 2.18 of the Credit Agreement, the Parent must
execute the Guaranty or the Assignment and Assumption Agreement if it incurs any
Debt not outstanding on the Effective Date;]

         [WHEREAS, the Parent desires both to incur Debt not outstanding on the
Effective Date and to enable the Borrower to incur and maintain Debt under the
Credit Agreement on more advantageous and reasonable terms;]

         [WHEREAS, under Section 5.02(b) of the Credit Agreement, the Parent
must execute the Guaranty or the Assignment and Assumption Agreement if the
Borrower merges or consolidates with or into any Person besides the Parent;]

         [WHEREAS, the Borrower desires to merge or consolidate with or into a
Person besides the Parent, and Parent desires to enable the Borrower to incur
and maintain Debt under the Credit Agreement on more advantageous and reasonable
terms;]

         NOW, THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows for the benefit of the Agent
and the Lenders:

         SECTION 1.  GUARANTY.

         The Parent hereby unconditionally guarantees the punctual payment when
due, without set off or counterclaim, whether at stated maturity, by
acceleration or otherwise, of all obligations (whether payable at scheduled
maturity, upon acceleration, as a mandatory prepayment or otherwise) of the
Borrower now or hereafter existing under the Credit Agreement


   113
                                                                               2

and the Notes, whether for principal, interest, fees, expenses or otherwise
(such obligations being the "OBLIGATIONS"), and agrees to pay any and all
expenses (including counsel fees and expenses) incurred by the Agent and any
Lender in enforcing any rights under this Guaranty. Without limiting the
generality of the foregoing, the Parent's liability shall extend to all amounts
that constitute part of the Obligations and would be owed by the Borrower to the
Agent and the Lenders under the Credit Agreement and the other documents entered
into in connection therewith and (collectively, the "LOAN DOCUMENTS") but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower.

         SECTION 2.  GUARANTY ABSOLUTE.

         The Parent guarantees that the Obligations will be paid strictly in
accordance with the terms of the Credit Agreement and the other Loan Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent or the
Lenders, as the case may be, with respect thereto. The obligations of the Parent
under this Guaranty are independent of the Obligations, and a separate action or
actions may be brought and prosecuted against the Parent to enforce this
Guaranty, irrespective of whether any action is brought against the Borrower or
whether the Borrower is joined in any such action or actions. The liability of
the Parent under this Guaranty shall, to the fullest extent permitted by law, be
absolute and unconditional irrespective of, and the Parent waives any defense
based upon:

                  (i) any lack of validity or enforceability against the
Borrower of the Credit Agreement, the other Loan Documents or any other
agreement or instrument relating thereto;

                  (ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to departure from the Credit Agreement or the other
Loan Documents, including, without limitation, any increase in the Obligations
resulting from the extension of additional credit to the Borrower or any of its
subsidiaries or otherwise;

                  (iii) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;

                  (iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Obligations or any other
assets of the Borrower or any of its subsidiaries;

                  (v) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its subsidiaries; or

                  (vi) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor.

   114

                                                                               3

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by the Agent or any Lender upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had
not been made.

         SECTION 3.  WAIVER.

         The Parent hereby waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Obligations and this Guaranty
and any requirement that the Agent or any Lender protect, secure, perfect or
insure any security interest or lien or any property subject thereto or exhaust
any right or take any action against the Borrower or any other Person or any
collateral.

         SECTION 4.  SUBROGATION.

         The Parent will not exercise any rights which it may acquire by way of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until all the Obligations and all other amounts payable under this Guaranty
shall have been paid in full and the Commitments shall have expired or
terminated. If any amount shall be paid to the Parent on account of such
subrogation rights at any time prior to the later of (x) the payment in full of
the Obligations and all other amounts payable under this Guaranty and (y) the
expiration or termination of the Commitments, such amount shall be held in trust
for the benefit of the Agent and the Lenders and shall forthwith be paid to the
Agent to be credited and applied upon the Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement and the other
Loan Documents or to be held by the Agent as collateral security for any
Obligations thereafter existing. If (i) the Parent shall make payment to the
Agent and the Lenders of all or any part of the Obligations, (ii) all the
Obligations and all other amounts payable under this Guaranty shall be paid in
full and (iii) the Commitments shall have expired or terminated, the Agent and
the Lenders (as appropriate) will, at the Parent's request, execute and deliver
to the Parent appropriate documents, without recourse and without representation
or warranty, necessary to evidence the transfer by subrogation to the Parent of
an interest in the Obligations resulting from such payment by the Parent.

         SECTION 5.  REPRESENTATIONS AND WARRANTIES OF THE PARENT.

         The Parent represents and warrants, as of the date hereof, as follows:

                  (a) The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation.

                  (b) The execution, delivery and performance by the Parent of
this Guaranty are within the Parent's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (i) the
Parent's charter or by-laws or (ii) law or any contractual restriction binding
on or affecting the Parent.

                  (c) No authorization or approval or other action by, and no
notice to or filing

   115

                                                                               4

with, any governmental authority or regulatory body or any other third party is
required for the due execution, delivery and performance by the Parent of this
Guaranty.

                  (d) This Guaranty has been duly executed and delivered by the
Parent and is a legal, valid and binding obligation of the Parent enforceable
against the Parent in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors rights generally.

                  (e) The 1998 Audited Statements and the 1999 Interim
Statements, copies of each of which have been furnished to each Lender, fairly
present, subject in the case of the 1999 Interim Statements, to year-end audit
adjustments, the Consolidated financial condition of the relevant Person, as at
such dates all in accordance with generally accepted accounting principles
consistently applied. Since December 31, 1998, there has been no Material
Adverse Change, except as shall have been disclosed in the SEC Reports.

                  (f) The  Parent  owns  beneficially  and of record,  free and
clear of all  Liens,  100% of the common stock of the Borrower.

                  (g) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan.

                  (h) Schedule B (Actuarial Information) to the most recent
annual report (Form 5500 Series) for each Plan, copies of which have been filed
with the Internal Revenue Service, is complete and accurate and fairly presents
the funding status of such Plan, and since the date of such Schedule B there has
been no material adverse change in such funding status.

                  (i) Neither the Parent nor any ERISA Affiliate has incurred or
is reasonably expected to incur any Withdrawal Liability to any Multiemployer
Plan.

                  (j) Neither the Parent nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or has been terminated, within the meaning of Title IV or
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of ERISA.

                  (k) Except as set forth in the financial statements referred
to in this Section 5, the Parent and its Subsidiaries have no material liability
with respect to "expected post retirement benefit obligations" within the
meaning of Statement of Financial Accounting Standards No. 106.

                  (l) There is no pending or threatened action, suit,
investigation, litigation or proceeding, including, without limitation, any
Environmental Action, affecting the Parent or any of its Subsidiaries before any
court, governmental agency or arbitrator that (i) could be reasonably likely to
have a Material Adverse Effect (other than the Disclosed Litigation) or (ii)
purports to affect the legality, validity or enforceability of this Guaranty,
the Credit Agreement, any Note or any other Loan Document or the consummation of
the transactions



   116
                                                                               5


contemplated hereby or thereby and there has been no material adverse change in
the status of any Disclosed Litigation, or its financial effect on any Loan
Party or any of its Subsidiaries from that described in the SEC Reports.

                  (m) The operations and properties of the Parent and each of
its Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past non-compliance with such
Environmental Laws and Environmental Permits has been resolved without ongoing
obligations or costs except as disclosed in the SEC Reports, and no
circumstances exist that could be reasonably likely to (i) form the basis of an
Environmental Action against the Borrower or any of its Subsidiaries or any of
their properties that could have a Material Adverse Effect or (ii) cause any
such property to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law that could have a Material Adverse
Effect.

                  (n) Neither the Parent nor any of its Subsidiaries is, or
after the making of any Advance or the application of the proceeds or repayment
thereof, or the consummation of any of the other transactions contemplated
hereby, will be, an "investment company", or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" (within the
meaning of the Investment Company Act of 1940, as amended).

SECTION 6.        AFFIRMATIVE COVENANTS OF THE PARENT.

         So long as any amount in respect of any Note shall remain unpaid or any
Lender shall have any Commitment, the Parent will or will cause the Borrower to,
unless the Required Lenders shall otherwise consent in writing:

         (a)      CREDIT AGREEMENT. Cause the Borrower to perform and observe
for the benefit of the Agent and the Lenders each and every covenant and
agreement of the Borrower set forth in Article V of the Credit Agreement,
including but not limited to delivering to the Agent and the Lenders all
financial statements and financial and other information required to be
delivered pursuant to Section 5.01 of the Credit Agreement.

         (b)      COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
compliance with ERISA and Environmental Laws.

         (c)      PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon it or
upon its property and (ii) all lawful claims that, if unpaid, might by law
become a Lien upon its property; provided, however, that neither the Borrower
nor any of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained, unless
and until any Lien resulting therefrom attaches to its property and becomes
enforceable against its other creditors.

         (d)      PERFORMANCE AND COMPLIANCE WITH OTHER AGREEMENTS. Perform and
comply

   117
                                                                               6

with, and with respect to the Borrower, cause the performance by and compliance
with, each of the material provisions of each material indenture, credit
agreement, contract or other agreement by which such Loan Party is bound,
non-performance or non-compliance with which would have a material adverse
effect upon such Loan Party's business or credit or, in the case of the Parent,
materially and adversely affect its ability to perform its obligations hereunder
except material contracts or other agreements being contested in good faith.

         (e) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Borrower may consummate any merger or consolidation permitted under
Section 5.02(b) of the Credit Agreement and the Parent may consummate any merger
or consolidation permitted under Section 7(c) of this Guaranty and provided
further that a Subsidiary shall not be required to preserve its corporate
existence or any right or franchise if the failure to preserve such corporate
existence, right or franchise will not cause or result in a Material Adverse
Change.

         (f) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
(including, without limitation, the operation and ownership of nuclear
generating facilities) in the same general areas in which the Borrower or such
Subsidiary operates.

         (g) INSPECTION RIGHTS. At any reasonable time and from time to time,
permit the Agent or any of the Lenders or any agents or representatives thereof,
to examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Parent and any of its Subsidiaries,
and to discuss the affairs, finances and accounts of the Parent and any of its
Subsidiaries with any of their officers or directors and with their independent
certified public accountants.

         (h) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to keep,
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Parent and
each such Subsidiary in accordance with generally accepted accounting principles
in effect from time to time.

         (i) OWNERSHIP OF SUBSIDIARIES. Maintain at all times beneficial
ownership, free and clear of all Liens, of 100% of the Voting Stock of the
Borrower and DECO.

         (j) FINANCIAL COVENANTS.

                  (i) Maintain a ratio of Consolidated EBITDA to cash interest
payable on all Debt (excluding, (A) such Nonrecourse Debt of their own and of
their Subsidiaries and Affiliates as would be listed as such in the financial
statements of the Parent of the kind delivered pursuant to Section 5.01(h)(ii)
and (iii) and (B) the Junior Subordinated Debentures) of not less than 2:1 for
each period of four consecutive fiscal quarters ending on the last day of
September, December, March and June of each year, or


   118
                                                                               7


                  (ii) Maintain a ratio of Consolidated Debt (excluding, (A)
such Nonrecourse Debt of their own and of their Subsidiaries as would be listed
in the financial statements of the Parent and (B) the Junior Subordinated
Debentures) to Capitalization of not greater than .65:1

         (k)      MAINTENANCE OF PROPERTIES, ETC. Subject to clause (e) above,
maintain and preserve, all of its properties that are used or useful in the
conduct of its business in good working order and condition, ordinary wear and
tear excepted.

         (l)      REPORTING REQUIREMENTS.  Furnish, or cause the Borrower to
furnish, to the Lenders:

                  (i) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Parent,
Consolidated balance sheet of the Parent and its Consolidated Subsidiaries as of
the end of such quarter and Consolidated statements of income and cash flows of
the Parent and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter;

                  (ii) as soon as available and in any event within 90 days
after the end of each fiscal year of the Parent, a copy of the annual report to
Shareholders for such year for the Parent and its Consolidated Subsidiaries,
containing the Consolidated balance sheet of the Parent and its Consolidated
Subsidiaries as of the end of such fiscal year and Consolidated statements of
income and cash flows of the Parent and its Subsidiaries for such fiscal year,
in each case accompanied by (A) an opinion by Deloitte & Touche LLP or other
independent public accountants acceptable to the Required Lenders and (B) the
report by the Parent filed with the Securities and Exchange Commission on Form
U-3A-2 for such fiscal year, containing the Consolidating balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and
Consolidating statements of income and Consolidating statements of retained
earnings of the Borrower and its Subsidiaries for such fiscal year, in each
case, having been prepared in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 4.01 of the Credit Agreement;

                  (iii) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year of the
Borrower, unaudited Consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and unaudited
Consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, in each case duly certified (subject to
year-end audit adjustments) by a Financial Officer of the Borrower as having
been prepared in accordance with generally accepted accounting principles
consistent with those applied in the preparation of the financial statements
referred to in Section 4.01 of the Credit Agreement;

                  (iv) as soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower, the Consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of the end of such
fiscal year and Consolidated statements of income and cash flows of the Borrower
and its Subsidiaries for such fiscal year, in each case accompanied by an
   119

                                                                              8

opinion by Deloitte & Touche LLP or other independent public accountants
acceptable to the Required Lenders;

                  (v) as soon as possible and in any event within five days
after the occurrence of each Default continuing on the date of such statement, a
statement of a Financial Officer of the Borrower setting forth details of such
Default and the action that the Borrower has taken and proposes to take with
respect thereto;

                  (vi) promptly after the sending or filing thereof copies of
all reports and registration statements that the Borrower or any Subsidiary
files with the Securities and Exchange Commission or any national securities
exchange;

                  (vii) promptly after the commencement thereof, notice of all
actions and proceedings before any court, governmental agency or arbitrator
affecting the Borrower or any of its Subsidiaries of the type described in
Section 4.01(f);

                  (viii) promptly upon becoming aware of any fact or
circumstance affecting the Parent or any of its Subsidiaries that would at any
time render the Borrower unable to make the representation and warranty
contained in Section 4.01(q) on such date, a statement of a duly authorized
officer of the Borrower setting forth the details of such fact or circumstance
and what action the Parent or such Subsidiary, as the case may be, has taken and
proposes to take with respect thereto; and

                  (ix) such other information respecting the Borrower or any of
its Subsidiaries as any Lender through the Agent may from time to time
reasonably request.

         SECTION 7.  NEGATIVE COVENANTS OF THE PARENT.

         So long as any amount in respect of any Note shall remain unpaid, any
Lender shall have any Commitment, the Parent will not and will not cause the
Borrower to, unless the Required Lenders shall otherwise consent in writing:

                  (a) LIENS, ETC. Create or suffer to exist, or permit any
Significant Subsidiary to create or suffer to exist, any Lien on or with respect
to any shares of any class of equity securities (including, without limitation,
Voting Stock) of any Significant Subsidiary, whether such shares are now owned
or hereafter acquired.

                  (b) DEBT. Create, incur, assume or suffer to exist any Debt
except Debt that is expressly or effectively pari passu with or expressly
subordinated to the Debt of the Parent hereunder.

                  (c) MERGERS, ETC. Merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or permit any Significant
Subsidiary to do so, except that (i) any Significant Subsidiary may merge or
consolidate with or into any other Significant Subsidiary, (ii) any Significant
Subsidiary may

   120
                                                                              9

merge into or dispose of assets to the Parent, and (iii) the Parent may merge or
consolidate with or into any other Person if the surviving entity has senior
unsecured Debt outstanding rated at least BBB- by S&P and Baa3 by Moody's;
provided, in each case, that no Default shall have occurred and be continuing at
the time of such proposed transaction or would result therefrom.

                  (d) CHANGE IN NATURE OF BUSINESS. Make, or permit any
Significant Subsidiary to make, any material change in the nature of its
business as carried on January 18, 2000 other than as disclosed in the SEC
Reports.

                  (e) ACCOUNTING CHANGES. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or reporting
practices, except as required or permitted by generally accepted accounting
principles.

         SECTION 8.  WAIVERS.


         (a)      The Parent hereby waives any failure or delay on the part of
the Borrower in asserting or enforcing any of its rights or in making any claims
or demands hereunder. The Borrower, the Agent or any Lender may at any time,
without the Parent's consent, without notice to the Parent and without affecting
or impairing the Borrower's, the Agent's or such Lender's rights or the Parent's
obligations hereunder, do any of the following with respect to any Loan Document
to which it is a party: (i) make changes, modifications, amendments or
alterations thereto, by operation of law or otherwise, including, without
limitation (in the case of the Credit Agreement and the Notes), any increase in
the Commitments or the rate of interest payable with respect to Advances or any
change in the method of calculating the rate of interest payable with respect
thereto, (ii) grant renewals and extensions of time, for payment or otherwise,
(iii) accept new or additional documents, instruments or agreements relating to
or in substitution thereof, or (iv) otherwise handle the enforcement of their
respective rights and remedies in accordance with their business judgment.

         (b)      If the Parent shall at any time or from time to time fail to
perform or comply with any of its obligations contained herein and if for any
reason the Agent or any Lender shall have failed to receive when due and payable
(whether at stated maturity, by acceleration, or otherwise) the payment of all
or any part of principal of, or interest on, or any other amount payable by the
Borrower in respect of any Obligations owing to the Agent or such Lender (as the
case may be), then in each case, to the fullest extent permitted by law, (i) it
shall be assumed conclusively without necessity of proof that such failure by
the Parent was the sole and direct cause of the Agent's or such Lender's (as the
case may be) failure to receive such payment when due irrespective of any other
contributing or intervening cause whatsoever, and (ii) the Parent further
irrevocably waives any right or defense that the Parent may have to cause the
Agent or any Lender (as the case may be) to prove the cause or amount of any
damages or to mitigate the same.

         (c)      The Parent irrevocably waives, to the fullest extent permitted
by law and for the benefit of, and as a separate undertaking with, the Agent and
each Lender, any defense to the performance of this Guaranty that may be
available to the Parent as a consequence of this Guaranty's being rejected or
otherwise not assumed by the Borrower or any trustee or similar

   121
                                                                             10

official for the Borrower or for any substantial part of the property of the
Borrower, or as a consequence of this Guaranty's being otherwise terminated or
modified, in any bankruptcy or insolvency proceeding, whether such rejection,
non-assumption, termination or modification shall have been by reason of this
Guaranty's being held to be an executory contract or by reason of any other
circumstance. If, notwithstanding the foregoing, this Guaranty shall be rejected
or otherwise not assumed, or terminated or modified, the Parent agrees, to the
fullest extent permitted by law, for the benefit of, and as a separate
undertaking with, the Agent and each Lender, that the Parent will be
unconditionally liable to pay to the Agent and each Lender (as the case may be)
an amount equal to each payment that would otherwise be payable by the Parent
under or in connection with this Guaranty if this Guaranty were not so rejected
or otherwise not assumed or terminated or modified.

         SECTION 9.  AMENDMENTS, ETC.

         No amendment or waiver of any provision of this Guaranty, nor consent
to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Parent and consented to by the Required
Lenders.

         SECTION 10.  NOTICES.

         All notices and other communications provided for hereunder shall be in
writing (including telecopy transmission) and (except when particular means are
specified) mailed, faxed or delivered, if to the Parent or the Borrower, at its
address at 200 Second Avenue, Detroit, MI 48226, Attention: Christopher C.
Arvani, telecopy: 313-235-0170; if to any Lender, at its Domestic Lending Office
specified opposite its name on Schedule I to the Credit Agreement; if to any
Lender not a Lender on the date hereof, at its Domestic Lending Office specified
in the Assignment and Acceptance pursuant to which it became a Lender; and if to
the Agent, at its address at                                         ,
Attention:               , telecopy:                 , with a copy to
                                        , telecopy:                    ; or, as
to each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications shall,
when mailed or telecopied, be effective when deposited in the mails or
transmitted, respectively.

         SECTION 11.  COSTS, EXPENSES AND TAXES.

         (a)      The Parent agrees to pay on demand all reasonable costs and
reasonable expenses of the Agent in connection with the preparation, execution,
delivery, administration, modification and amendment of this Guaranty and the
other documents to be delivered hereunder and thereunder, including, without
limitation, the reasonable fees and reasonable expenses of counsel for the Agent
with respect thereto and with respect to advising the Agent as to its rights and
responsibilities under the Guaranty. The Parent further agrees to pay on demand
all costs and expenses of the Agent and the Lenders, if any (including, without
limitation, internal and external counsel fees and expenses, provided such fees
and expenses are not duplicative), in connection with the enforcement (whether
through negotiations, legal proceedings or otherwise) of this Guaranty and the
other documents to be delivered hereunder, including, without
   122
                                                                             11

limitation, fees and expenses of counsel for the Agent and each Lender in
connection with the enforcement of rights under this Section 11(a).

         (b)      The Parent agrees to indemnify, to the extent legally
permissible, and hold harmless the Agent and each Lender and each of their
Affiliates and their officers, directors, employees, agents and advisors (each,
an "INDEMNIFIED PARTY") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with the Guaranty or any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Advances, except to the extent
such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. The Parent
also agrees not to assert any claim against the Agent, any Lender, any of their
Affiliates, or any of their respective directors, officers, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Guaranty any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Advances.

         (c)      Any and all payments made by the Parent hereunder shall be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of the Agent and each Lender, taxes
imposed on its overall net income, and franchise taxes imposed on it in lieu of
net income taxes, by the jurisdiction under the laws of which the Agent or such
Lender (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender, taxes imposed on its overall net income, and
franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction
of such Lender's Applicable Lending Office or political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payment hereunder being hereinafter referred to as
"TAXES"). If the Parent shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under the Notes to the Agent or any
Lender, (A) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this subsection (b)) the Agent or such Lender (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (B) the Parent shall make such deductions and (C) the
Parent shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.

         (d)      In addition, the Parent agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, performing under or otherwise with
respect to, this Guaranty (hereinafter referred to as "OTHER TAXES").

         (e)      The Parent shall indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any taxes
imposed by any jurisdiction on
   123
                                                                             12

amounts payable under this Section 11) imposed on or paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Beneficiary makes written demand
therefor.

         (f)      Within 30 days after the date of any payment of Taxes, the
Parent will furnish to the Agent, at its address referred to in Section 10
hereof, the original or a certified copy of a receipt evidencing payment
thereof. In the case of any payment hereunder by or on behalf of the Parent
through an account or branch outside the United States or by or on behalf of the
Parent by a payor that is not a United States person, if the Parent determines
that no Taxes are payable in respect thereof, the Parent shall furnish, or shall
cause such payor to furnish, to the Agent, at such address, an opinion of
counsel acceptable to the Agent stating that such payment is exempt from Taxes.
For purposes of this subsection (e), the terms "United States" and "United
States person" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.

         (g)      Without prejudice to the survival of any other agreement of
the Parent hereunder, the agreements and obligations of the Parent contained in
this Section 11 shall survive the payment in full of the Obligations.

         SECTION 12.  CONTINUING GUARANTY; ASSIGNMENT UNDER CREDIT AGREEMENT.

         This Guaranty is a continuing guaranty and shall (i) remain in full
force and effect, until the later of (x) the payment in full of the Obligations
and all other amounts payable under this Guaranty and (y) the expiration or
termination of the Commitments, (ii) be binding upon the Parent, its successors
and assigns, and (iii) inure to the benefit of, and be enforceable by, the Agent
and the Lenders and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), any Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement in accordance with Section 8.07 of the Credit
Agreement and the transferee shall thereupon become vested with all the benefits
in respect thereof granted to such Lender herein or otherwise, subject, however,
to the provisions of Article VII (concerning the Agent) of the Credit Agreement.

         SECTION 13 GOVERNING LAW.

         This Guaranty shall be governed by, and construed in accordance with,
the laws of the State of New York.

         SECTION 14.  REMEDIES.

         The remedies herein provided shall be cumulative and non-exclusive and
shall be in addition to any other rights and remedies the Agent or the Lenders
may have under this Guaranty.

         SECTION 15.  WAIVER OF JURY TRIAL.

         The Parent irrevocably waives hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of
   124
                                                                             13

or relating to this Guaranty the actions of the Agent or any Lender in the
negotiation, administration, performance or enforcement thereof.

         SECTION 16.  JURISDICTION, ETC.

         (a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Guaranty, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Guaranty shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Guaranty in the courts of any jurisdiction.

         (b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty in any New York State or
federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.


                            [Signatures on next page]


   125
                                                                             14

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


                                    DTE ENERGY COMPANY



                                    By
                                      -----------------------------------------
                                      Name:
                                      Title:



ACKNOWLEDGED AND ACCEPTED:

CITIBANK, N.A., as Agent



By
  --------------------------------
  Name:
  Title:


   126



                                   SCHEDULE I

                           OUTSTANDING DEBT DOCUMENTS