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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JUNE 18, 1998
MICHIGAN CONSOLIDATED GAS COMPANY
(Exact name of registrant as specified in its charter)
MICHIGAN 1-7310 38-0478040
State of Incorporation (Commission File (I.R.S. Employer
Number) Identification No.)
500 GRISWOLD STREET, DETROIT, MICHIGAN 48226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(313) 965-2430
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Item 5. Other Events
The registrant is filing herewith the following in connection with its
offering of its Extendable MandatOry Par Put Remarketed Securities ("MOPPRS")
due June 30, 2038 and its Resetable MAndatory Putable/remarketable Securities
("MAPS") due June 30, 2038 pursuant to the registration statement of the
registrant on Form S-3 (No. 333-56333) filed with the Securities and Exchange
Commission under the Securities Act of 1933.
Index to Exhibits
Exhibit
Number Exhibit
- ------- -------
1-1 Purchase Agreement dated June 18, 1998 with respect to the
MAPS.
1-2 Purchase Agreement dated June 18, 1998 with respect to the
MOPPRS.
4-1 First Supplemental Indenture dated as of June 18, 1998 to the
Senior Debt Securities Indenture dated as of June 1, 1998
between Michigan Consolidated Gas Company and Citibank, N.A.
4-2 Thirty-fifth Supplemental Indenture dated as of June 18, 1998
to the Indenture of Mortgage and Deed of Trust dated as of
March 1, 1944 between Michigan Consolidated Gas Company and
Citibank, N.A. and Robert T. Kirchner, Trustees.
10-1 Reset Remarketing Agreement, dated as of June 23, 1998, by and
between Michigan Consolidated Gas Company and Salomon
Brothers Inc.
10-2 Reset Remarketing Agreement, dated as of June 23, 1998, by and
between Michigan Consolidated Gas Company and Merrill Lynch
& Co./Merrill Lynch, Pierce, Fenner & Smith Incorporated.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Michigan Consolidated Gas Company
/s/ Howard L. Dow III
---------------------------
Howard L. Dow III
Senior Vice President
and Chief Financial Officer
Date: June 26, 1998
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EXHIBIT 1.1
MICHIGAN CONSOLIDATED GAS COMPANY
(A MICHIGAN CORPORATION)
DEBT SECURITIES
PURCHASE AGREEMENT
JUNE 18, 1998
SALOMON BROTHERS INC
A. G. EDWARDS & SONS, INC.
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Michigan Consolidated Gas Company (the "Company"), a Michigan
corporation, confirms its agreement (this "Agreement") with Salomon Brothers Inc
and each of the other Underwriters named in Schedule II hereto (collectively,
the "Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Salomon Brothers Inc and
A.G. Edwards & Sons, Inc. are acting as representatives (in such capacity, the
"Representatives") with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the principal
amount set forth in Schedule II of $75,000,000 aggregate principal amount of the
Company's Resetable MAndatory Putable/remarketable Securities ("MAPS(sm)") due
June 30, 2038 (the "Securities"). The Securities will be issued by the Company
under its Indenture, dated as of June 1, 1998 (the "Indenture"), between the
Company and Citibank, N.A., as trustee (the "Trustee"), which will be secured by
the concurrent issuance and delivery to the Trustee of the Company's First
Mortgage Bonds, Collateral Series A (the "COLLATERAL BONDS"), issued under and
ratably secured by the Indenture of Mortgage and Deed of Trust dated as of March
1, 1944 (the "ORIGINAL SECURED INDENTURE"), as supplemented and amended by
thirty-five indentures supplemental thereto, including specifically the
Twenty-ninth Supplemental Indenture, and the Thirty-fifth Supplemental Indenture
creating the series in which the Collateral Bonds are to be issued (the
"THIRTY-FIFTH
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SUPPLEMENTAL INDENTURE") (the Original Secured Indenture and all supplemental
indentures thereto being referred to collectively herein as the "Secured
Indenture"), in a principal amount equal to that of and having other terms that
mirror those of the Securities. The Company proposes to sell to the Underwriters
Securities of the designation, with the terms and the aggregate principal amount
specified in Schedule I hereto.
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (No. 333-56333) covering the
registration of debt securities of the Company, including the Securities, under
the Securities Act of 1933, as amended (the "1933 ACT") including the related
preliminary prospectus or prospectuses, and the offering thereof from time to
time in accordance with Rule 415 of the rules and regulations of the Commission
under the 1933 Act (the "1933 ACT REGULATIONS") and the Company has have filed
such post-effective amendments thereto as may be required prior to the execution
of this Agreement. Such registration statement, as so amended, has been declared
effective by the Commission. Such registration statement, as so amended,
including the exhibits and schedules thereto, if any, and the information, if
any, deemed to be a part thereof pursuant to Rule 430A(b) of the 1933 Act
Regulations (the "RULE 430a INFORMATION") or Rule 434(d) of the 1933 Act
Regulations (the "RULE 434 INFORMATION"), is referred to herein as the
"REGISTRATION STATEMENT"; and the final prospectus and the prospectus supplement
relating to the offering of the Securities, are collectively referred to herein
as the "Prospectus"; provided, however, that all references to the "Registration
Statement" shall be deemed to include all documents incorporated therein by
reference pursuant to the Securities Exchange Act of 1934, as amended (the "1934
ACT"), prior to the execution of this Agreement; provided, further, that if the
Company files a registration statement with the Commission pursuant to Section
462(b) of the 1933 Act Regulations (the "RULE 462(b) REGISTRATION STATEMENT"),
then after such filing, all references to "Registration Statement" shall be
deemed to include the Rule 462(b) Registration Statement; and provided, further,
that if the Company elects to rely upon Rule 434 of the 1933 Act Regulations,
the term "PROSPECTUS" shall refer to the final or preliminary prospectus and the
applicable term sheet (a "TERM SHEET") and all references in this Agreement to
the date of such Prospectus shall mean the date of the applicable Term Sheet. A
"preliminary prospectus" shall be deemed to refer to any prospectus used before
the registration statement became effective and any prospectus that omitted, as
applicable, the Rule 430A Information, the Rule 434 Information or other
information to be included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any
amendment or supplement to any of the foregoing shall be deemed to include the
electronically transmitted copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus) or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is
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incorporated by reference in the Registration Statement, any preliminary
prospectus or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to mean and include the
filing of any document under the 1934 Act which is incorporated by reference in
the Registration Statement, such preliminary prospectus or the Prospectus, as
the case may be.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter that:
(i) No stop order suspending the effectiveness of the
Registration Statement or any Rule 464(b) Registration Statement has been issued
under the 1933 Act and no proceeding for that purpose has been instituted or are
pending or, to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional information has
been complied with.
(ii) The Company meets the requirements for the use of Form
S-3 under the 1933 Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act. At the
respective times the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendments thereto (including the filing of the
Company's most recent Annual Report on Form 10-K with the Commission) became
effective and as of the date hereof, the Registration Statement, any Rule 462
Registration Statement and any amendments or supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the Trust Indenture Act of 1939, as amended (the
"1939 ACT"), and the rules and regulations of the Commission under the 1939 Act
(the "1939 ACT REGULATIONS") and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at the time
that the Prospectus or any such amendment or supplement was issued and at the
Closing Date, included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Company elects to rely upon Rule 434 of the 1933
Act Regulations, the Company will comply with the requirements of Rule 434.
Notwithstanding the foregoing, the representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter through
Salomon Brothers Inc expressly for use in the Registration Statement or the
Prospectus.
Each preliminary prospectus and prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters
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for use in connection with the offering of the Securities will, at the time of
such delivery, be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(iii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement and the Prospectus, at the time they
were or hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1934 Act, and the rules and
regulations of Commission thereunder (the "1934 Act Regulations"), and, when
read together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was issued
and on the Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading.
(iv) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(v) The financial statements of the Company included or
incorporated by reference in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates indicated
and the statements of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified. Such
financial state ments have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included or incorporated by
reference in the Registration Statement and the Prospectus present fairly in
accordance with GAAP the information required to be stated therein. The ratio of
earnings to fixed charges included in the Prospectus has been calculated in
compliance with Item 503(d) of Regulation S-K of the Commission. The selected
financial information and the summary financial data included in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement.
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated therein, (A) there has been no material adverse change and no development
which could reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise (a "MATERIAL ADVERSE EFFECT"), whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those arising in the ordinary
course of business, which are material with respect to the Company and its
subsidiaries, considered as one enterprise, (C) except for regular quarterly
dividends on the Company's common stock in amounts per share that are consistent
with past practice or the applicable charter document or supplement thereto,
respectively, there
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has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Michigan, with corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as described
in the Prospectus and to enter into and perform its obligations under, or as
contemplated under, this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or be in good standing would not, singly or in the aggregate, have a
Material Adverse Effect.
(viii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted and as described in the Prospectus, and is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not, singly or in the
aggregate, have a Material Adverse Effect. Except as otherwise stated in the
Registration Statement and the Prospectus, all of the issued and outstanding
shares of capital stock of each subsidiary of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and all such
shares are owned by the Company, directly or through its subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity. None of the outstanding shares of capital stock of the subsidiaries was
issued in violation of preemptive or other similar rights arising by operation
of law, under the charter or by-laws of any subsidiary or under any agreement to
which the Company or any subsidiary is a party, or otherwise.
(ix) The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights arising by
operation of law, under the charter or by-laws of the Company, under any
agreement to which the Company or any of its subsidiaries is a party or
otherwise.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) The Securities have been duly authorized for issuance
and sale pursuant to this Agreement and at the Closing Date, will have been duly
executed by the Company and, when authenticated in the manner provided for in
the Indenture and delivered by the Company against payment of the purchase price
therefor, will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms
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except to the extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity) (the "BANKRUPTCY EXCEPTIONS"). The Securities will be in the form
contemplated by, and entitled to the benefits of, the Indenture and conform in
all material respects to the description thereof contained in the Prospectus and
will be in substantially the form filed or incorporated by reference, as the
case may be, as an exhibit to the Registration Statement.
(xii) The Collateral Bonds have been duly authorized for
issuance and delivery to the Trustee, and at the Closing Date will have been
duly executed by the Company and, when authenticated in the manner provided for
in the Secured Indenture and delivered by the Company as security for the
Securities, will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions. The
Collateral Bonds will be in the form contemplated by, and entitled to the
benefits of, the Secured Indenture and conform in all material respects to the
description thereof contained in the Prospectus and will be substantially in the
form filed or incorporated by reference, as the case may be, as an exhibit to
the Registration Statement.
(xiii) The Indenture has been duly and validly authorized,
executed and delivered by the Company and qualified under the 1939 Act and
constitutes a valid and legally binding instrument, enforceable against the
Company in accordance with its terms except to the extent that the enforcement
thereof may be limited by the Bankruptcy Exceptions; the Indenture conforms in
all material respects to the description thereof contained in the Prospectus and
will be in substantially the form filed or incorporated by reference, as the
case may be, as an exhibit to the Registration Statement.
(xiv) The issuance and delivery by the Company of the
Collateral Bonds to the Trustee constitute a sale by the Company of the
Collateral Bonds to the Trustee as of the Closing Date or, if not a sale, the
grant by the Company to the Trustee of a perfected security interest in the
Collateral Bonds for the benefit of the holders of the Senior Notes.
(xv) The Secured Indenture constitutes a legally valid and
direct enforceable first mortgage lien, except as the same may be limited by the
laws of the State of Michigan (where all of the property covered thereby is
located) affecting the remedies for the enforcement of the security provided for
therein, which laws do not make inadequate the remedies necessary for the
realization of the benefits of such security, or as the same may be limited by
the Bankruptcy Exceptions, upon substantially all of the Company's properties
and franchises, now owned or hereafter acquired, free from all prior liens,
charges or encumbrances, except as set forth in subparagraph xxiii below, and in
the case of property hereafter acquired, any thereof existing at the time of
acquisition.
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(xvi) None of the Company or any of its subsidiaries is in
violation of its charter or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, note, lease, loan
or credit agreement or any other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which any of them may be bound, or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, or in violation of any applicable law, rule or regulation or any
judgment, order, writ or decree of any government, governmental instrumentality
or court, domestic or foreign, having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties or assets, which
violation or default would, singly or in the aggregate, have a Material Adverse
Effect.
(xvii) The execution, delivery and performance by the Company
of this Agreement, the Mandatory Tender Remarketing Agreement, to be dated as of
the Closing Date, between the Company and Salomon Brothers Inc, as remarketing
agent with respect to the Securities (the "Mandatory Tender Remarketing
Agreement"), the Reset Remarketing Agreement, to be dated as of the Closing
Date, between the Company and Salomon Brothers Inc as reset remarketing agent
with respect to the Securities (the "Reset Remarketing Agreement" and, together
with the Mandatory Tender Remarketing Agreement, the "Remarketing Agreements");
the execution, delivery and performance by the Company of the Indenture, the
Securities, the Thirty-fifth Supplemental Indenture to the Original Secured
Indenture, the Collateral Bonds and any other agreement or instrument entered
into or issued or to be entered into or issued by the Company in connection with
the transactions contemplated hereby or thereby; and the consummation of the
transactions contemplated herein and therein and in the Registration Statement
and the Prospectus (including the issuance and sale of the Securities and the
issuance and pledge of the Collateral Bonds, and the use of the proceeds from
the sale of the Securities as described in the Prospectus under the caption "Use
of Proceeds"); and compliance by the Company with its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them may be bound (other than the
lien of the Indenture), or to which any property or assets of the Company or any
subsidiary thereof is subject (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not, singly or in the aggregate,
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter of by-laws of the Company or any of
its subsidiaries or any applicable law, statute, rule or regulation, judgment,
order, writ or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective property, assets or operations.
(xviii) On the Closing Date, the Remarketing Agreements will
have been validly authorized, executed and delivered by the Company and will
constitute a valid and legally
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binding instrument, enforceable against the Company in accordance with its terms
except to the extent that the enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xix) No labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is imminent,
and the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its or any of its subsidiary's principal suppliers,
manufacturers, customers or contractors which, in either case, may reasonably be
expected to result in a Material Adverse Effect.
(xx) There is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries which is required to be
disclosed in the Registration Statement and the Prospectus (other than as
disclosed therein), or which might reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Effect, or which might be reasonably
expected to materially and adversely affect the assets, properties or operations
thereof or the consummation of the transactions contemplated by this Agreement,
or the Remarketing Agreements or the performance by the Company of its
obligations hereunder and thereunder; and the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary thereof is a
party or of which any of their respective properties or operations is the
subject which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the business,
could not reasonably be expected to, singly or in the aggregate, result in a
Material Adverse Effect.
(xxi) There are no contracts or documents which are required
to be described in the Registration Statement, the Prospectus or the documents
incorporated by reference therein or to be filed as exhibits thereto which have
not been so described and/or filed as required.
(xxii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or required
for the performance by the Company of its obligations hereunder, in connection
with (a) the offering, issuance or sale of the Securities under this Agreement,
(b) the issuance and delivery to the Trustee of the Collateral Bonds, or (c) the
consummation of the transactions contemplated by this Agreement, the Indenture
and the Remarketing Agreements, except such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations or foreign or
state securities or blue sky laws.
(xxiii) The Company has good and marketable title to the
properties specifically described in and conveyed by the Secured Indenture
(except such property as may have been disposed of or released from the lien
thereof in accordance with the terms thereof) subject only to the lien of the
Secured Indenture, to permissible encumbrances, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the execution of
the Original Secured Indenture, to any liens existing thereon or purchase money
liens placed thereon at the time of such acquisition as permitted by the Secured
Indenture, and to certain other reservations,
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rights of grantors under revocable permits, easements, licenses, zoning laws and
ordinances and restrictions and minor defects or irregularities of title which
do not materially impair the use of the property affected thereby in the
operation of the business of the Company; the Company and its subsidiaries have
good and marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except the liens of the
Secured Indenture and such liens, encumbrances and defects as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries; and
any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its subsidiaries; the
pipeline, distribution main and underground gas storage easements enjoyed by the
Company and its subsidiaries are valid, subsisting and enforceable easements
with such exceptions as do not materially interfere with the conduct of the
business of the Company and its subsidiaries.
(xxiv) The Company and its subsidiaries possess all licenses,
franchises, permits, certificates, authorizations, approvals, consents, orders
and other operating rights (collectively, the "Governmental Licenses") issued by
the Federal Energy Regulatory Commission, the State of Michigan, and all other
federal, state, local or foreign regulatory agencies or bodies, governmental
authorities or agencies necessary for the ownership or lease of the material
properties owned or leased by each of them and to conduct the business now
operated by each of them; the Company and its subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except where
the failure to so comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the failure of such Governmental Licenses to be in full
force and effect would not, singly or in the aggregate, have a Material Adverse
Effect, and contain no unduly burdensome provisions that would interfere with
the conduct of the business of the Company and its subsidiaries, considered as
one enterprise and, except as otherwise set forth in the Registration Statement
and the Prospectus, there are no legal or governmental proceedings pending or
threatened that would result in a material modification, suspension or
revocation thereof.
(xxv) The Company is a "public utility company" and a
"subsidiary company" of MCN Energy Group ("MCN"), a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935 (the "1935
Act"), and such "holding company" and the Company are presently exempt from the
provisions of the 1935 Act (except Section 9 thereof).
(xxvi) Except as described in the Registration Statement and
except as would not, singly or in the aggregate, result in a Material Adverse
Effect, (A) none of the Company or any of its subsidiaries is in violation of
any federal, state, local or foreign statute, law, rule, regulation, ordinance
or code, including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
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chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "HAZARDOUS
MATERIALS") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
the "ENVIRONMENTAL LAWS"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are in compliance with their requirements, or (C) there
are no pending or threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries.
(xxvii) None of the Company or its subsidiaries is, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus, and
upon the issuance and delivery to the Trustee of the Collateral Bonds, none will
be, an "investment company" or an entity under the "control" of an "investment
company" as such terms are defined under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xxviii) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively, the
"Cuba Act") or is exempt therefrom.
(xxix) None of the Company and its subsidiaries or any of
their respective directors, officers or controlling persons, has taken, directly
or indirectly, any action resulting in a violation of Regulation M under the
1934 Act, or designed to cause or result in, or that has constituted or that
reasonably might be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.
(xxx) No "forward looking statement" (as defined in Rule 175
under the 1933 Act) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable basis
or was disclosed other than in good faith.
(b) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as the case may be, to each Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to the Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, at the price per security set forth in
Schedule I hereto, the respective principal amounts of the Securities set forth
opposite the name of the such Underwriter, plus any additional principal amount
of Securities
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<PAGE> 11
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) Delivery of and payment for the Securities shall be made at the
offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New
York, New York 10019, or at such other place as shall be agreed upon by the
Representatives and the Company, at 9:00 a.m. (Eastern time) on the third
(fourth, if pricing of the Securities occurs after 4:30 p.m. (Eastern time) on
any given day) business day after the date of execution of this Agreement
(unless postponed in accordance with the provisions of Section 10), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Company (such time and date of payment and
delivery being referred to herein as the "Closing Date").
(c) The Collateral Bonds that will secure the obligations of the
Company in respect of the Securities will be issued and delivered to the Trustee
of the Collateral Bonds on the Closing Date.
(d) On the Closing Date the Company shall deliver the Securities to The
Depository Trust Company, on behalf of the Representatives, for the account of
each Underwriter against payment to the Company by wire transfer of immediately
available funds to a bank account designated by the Company. It is understood
that each Underwriter has authorized the Representatives, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. Salomon Brothers Inc, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Date, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(e) Upon delivery, the Securities shall be in registered form and in
such denominations as set forth on Schedule I hereto. The certificates
representing the Securities shall be registered in the name of Cede & Co. and
shall be made available for inspection by the Representatives in New York, New
York not later than 10:00 a.m. (Eastern time) on the business day prior to the
Closing Date.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Promptly following the execution of this Agreement, the Company
will cause the Prospectus, including as a part thereof a prospectus supplement
relating to the Securities and the Collateral Bonds, to be filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations and will take
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus.
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<PAGE> 12
(b) The Company, subject to Section 3(c), will comply with the
requirements of Rule 430A or Rule 434 of the 1933 Act Regulations, as
applicable, and will notify the Representatives immediately, and confirm the
notice in writing, (i) of the effectiveness of any post-effective amendment to
the Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or Prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(c) The Company will give the Representatives notice of their intention
to file or prepare any amendment to the Registration Statement (including any
post-effective amendment and any filing under Rule 462(b) of the 1933 Act
Regulations), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise; will furnish the Representatives with copies of any such Rule
462(b) Registration Statement, Term Sheet, amendment, supplement or revision a
reasonable amount of time prior to such proposed filing or use, as the case may
be; and will not file any such Rule 462(b) Registration Statement, Term Sheet,
amendment, supplement or revision to which the Representatives or counsel for
the Underwriters shall object.
(d) The Company has furnished or will deliver to the Representatives
and counsel for the Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also deliver
to the Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits)
for each of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) The Company will deliver to each Underwriter, without charge, as
many copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each Underwriter, without
charge, during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be
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<PAGE> 13
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(f) The Company will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act or the 1934 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement any
Prospectus in order that the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any time to amend the Registration Statement or
amend or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(c), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters, without charge, such number of copies
of such amendment or supplement as the Underwriters may reasonably request.
(g) The Company will use its best efforts, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as the Representatives may designate; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Securities have been so qualified,
the Company will file such statements and reports as may be required by the laws
of such jurisdiction to continue such qualification in effect for so long as may
be required in connection with distribution of the Securities.
(h) The Company will timely file such reports pursuant to the 1934 Act
as are necessary in order to make generally available to its securityholders and
to deliver to the Representatives as soon as practicable an earnings statement
for the purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(i) The Company will use the net proceeds received by it from the sale
of the Securities in the manner specified in the Prospectus under the caption
"USE OF PROCEEDS."
(j) On the Closing Date, the Company will issue and deliver the
Collateral Bonds to the Trustee as security for the Securities as described in
the Prospectus under the caption "DESCRIPTION OF THE NOTES--Security; Release
Date."
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<PAGE> 14
(k) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the 1933
Act Regulations, then immediately following the execution of this Agreement, the
Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A or Rule 434 and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or Term Sheet, or, if required by
such Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted.
(l) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) and pay the applicable fees in accordance with Rule 111 of the 1933
Act Regulations by the earlier of (i) 10:00 p.m. Eastern time on the date of
this Agreement and (ii) the time confirmations are sent or given, as specified
by Rule 462(b)(2).
(m) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(n) So long as any of the Securities are outstanding, to furnish the
Representatives copies of all reports and financial statements furnished by the
Company to each securities exchange on which securities issued by the Company
may be listed pursuant to requirements of or agreements with such exchange or to
the Commission pursuant to the 1934 Act of the 1934 Act Regulations.
(o) During a period of fifteen days from the date of the Prospectus,
the Company will not, without the prior written consent of Salomon Brothers Inc,
directly or indirectly, issue, pledge, sell, offer to sell, grant any option for
the sale of or otherwise transfer or dispose of, any debt securities of the
Company which mature more than one year after the Closing Date and which are
substantially similar to the Securities, without the prior written consent of
Salomon Brothers Inc, except for the offer by the Company of $75,000,000
aggregate principal amount of its Extendable MandatOry Par Put Remarketed
Securities(sm) ("MOPPRS(sm)") due June 30, 2038.
(p) None of the Company, its subsidiaries or any of their respective
directors, officers or controlling persons, will take, directly or indirectly,
any action resulting in a violation of Regulation M under the 1934 Act, or
designed to cause or result in, or that reasonably might be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including,
without limitation, expenses related to the following, if incurred: (i) the
preparation, delivery, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto; (ii) the printing and delivery to the Underwriters of this
Agreement, the
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<PAGE> 15
Indenture, the Remarketing Agreements and any and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
Securities and the issuance and delivery of the Collateral Bonds; (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, as well as the preparation, issuance and delivery of the
certificates for the Collateral Bonds to the Trustee, including any costs, taxes
and expenses incident to the issuance and delivery of the Securities; (iv) the
fees and disbursements of the Company's counsel, accountants and other advisors
or agents; (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(g), including filing fees and the
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto; (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheet, the Prospectus and any amendments or
supplements thereto, and the printing and delivery of any additional Prospectus
and any amendments or supplements thereto as may be contemplated by the
Remarketing Agreements; (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto; (viii)
the fees and disbursements of the Trustee, including the fees and disbursements
of counsel to the Trustee; (ix) any fees payable to the Commission; and (x) any
fees payable in connection with the rating of the Securities by rating agencies.
If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained or in
certificates of any officer of the Company delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act and on the date hereof and on
the Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of counsel to the Underwriters. A prospectus containing information
relating to the description of the Securities, the specific method of
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b) (or any required post-effective amendment providing
such information shall have been filed and declared effective in accordance with
the requirements of Rule 430A), or, if the Company has elected to rely upon Rule
434 of the 1933 Act Regulations, a Term Sheet including the Rule 434 Information
shall have been filed with the Commission in accordance with Rule 424(b).
(b) On the Closing Date the Representatives shall have received:
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<PAGE> 16
(1) The favorable opinion, dated as of the Closing Date, of
Ronald E. Christian, Esq., Vice President, General Counsel and Secretary of the
Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, to the effect that:
(i) The Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the State of Michigan.
(ii) The Company has corporate power and
authority to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Prospectus and
to enter into and perform its obligations under this Agreement.
(iii) The Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not, individually or in the aggregate, result in a
Material Adverse Effect.
(iv) The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock were issued in violation of
preemptive or other similar rights arising by operation of law, under
the charter or by-laws of the Company; under any agreement to which the
Company, or any of its subsidiaries is a party, or otherwise.
(v) The Securities are in the form contemplated
by the Indenture, have been duly and validly authorized by the Company
and, when executed by the Company and authenticated by the Trustee in
the manner provided for in the Indenture and delivered by the Company
against payment of the purchase price therefor, will constitute legal,
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions. Each
holder of the Securities will be entitled to the benefits provided by
the Indenture; the form of certificate used to evidence the Securities
is in due and proper form and complies with the requirements of the
Indenture; and the Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Prospectus.
(vi) The Collateral Bonds are in the form
contemplated by the Secured Indenture, have been duly and validly
authorized by the Company and, when executed by the Company and
authenticated by the Trustee in the manner provided for in the
Indenture, and issued and delivered by the Company to the Trustee as
security for the Securities, will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that
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<PAGE> 17
enforcement thereof may be limited by the Bankruptcy Exceptions. The
form of certificate used to evidence the Collateral Bonds is in due and
proper form and complies with the requirements of the Secured
Indenture; and the Collateral Bonds and the Secured Indenture conform
in all material respects to the descriptions thereof contained in the
Prospectus.
(vii) The issuance and delivery by the Company
of the Collateral Bonds to the Trustee constitute a sale by the Company
of the Collateral Bonds to the Trustee as of the Closing Date or, if
not a sale, the grant by the Company to the Trustee of a perfected
security interest in the Collateral Bonds for the benefit of the
holders of the Senior Notes.
(viii) Except as to property acquired
subsequent to the date of execution of the Thirty-fourth Supplemental
Indenture, the Company has good and marketable title to the property
specifically or generally described in the Secured Indenture (except
such property as may have been disposed of or released from the lien
thereof in accordance with the terms thereof) subject only to the lien
of the Secured Indenture, to permitted liens, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the
execution of the Original Secured Indenture, to any liens existing
thereon or purchase money liens placed thereon at the time of such
acquisition as permitted by the Secured Indenture, and to certain other
reservations, rights of grantors under revocable permits, easements,
licenses, zoning laws and ordinances and restrictions and minor defects
or irregularities of title which do not, in the opinion of such
counsel, materially impair the use of the property affected thereby in
the operation of the business of the Company; the pipeline,
distribution main and underground gas storage easements enjoyed by the
Company and its subsidiaries are valid, subsisting and enforceable
easements with such exceptions as are not material and do not interfere
with the conduct of the business of the Company and its subsidiaries.
(ix) The Secured Indenture constitutes a
legally valid and enforceable first mortgage lien, except as the same
may be limited by the laws of the State of Michigan (where the property
covered thereby is located) affecting the remedies for the enforcement
of the security provided for therein, which laws do not, in the opinion
of such counsel, make inadequate the remedies necessary for the
realization of the benefits of such security, or as the same may be
limited by the Bankruptcy Exceptions, upon substantially all of the
Company's properties and franchises, now owned or hereafter acquired,
free from all prior liens, charges or encumbrances other than the lien
of the Secured Indenture, permitted liens, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the
execution of the Original Secured Indenture, any liens existing thereof
or purchase money liens placed thereon at the time of such acquisition
as permitted by the grantors under revocable permits, easements,
licenses, zoning laws and ordinances and restrictions and minor defects
or irregularities of title
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<PAGE> 18
which do not, in the opinion of such counsel, materially impair the use
of the property affected thereby in the operation of the business of
the Company.
(x) All taxes and fees required to be paid by
the laws of the State of Michigan and jurisdictional subdivisions
thereof with respect to the execution of the Thirty-Fifth Supplemental
Indenture and the issuance and delivery of the Collateral Bonds have
been paid.
(xi) Each subsidiary of the Company has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Prospectus, and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would
not, individually or in the aggregate, have a Material Adverse Effect.
Except as otherwise disclosed in the Registration Statement and the
Prospectus, all of the issued and outstanding capital stock of each
such subsidiary of the Company has been duly authorized and validly
issued, is fully paid and non-assessable and all such shares are owned
by the Company, directly or through its subsidiaries and, to the best
of such counsel's knowledge, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. None of the
outstanding shares of capital stock of any subsidiary of the Company
was issued in violation of preemptive or other similar rights of any
securityholder of such subsidiary.
(xii) This Agreement has been duly authorized,
executed and delivered by the Company.
(xiii) The Registration Statement, including
any Rule 462(b) Registration Statement, has been declared effective
under the 1933 Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and, to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings therefor have been initiated or threatened
by the Commission.
(xiv) The Registration Statement, including any
Rule 462(b) Registration Statement, the Rule 430A Information and the
Rule 434 Information, as applicable, the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations;
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<PAGE> 19
the Indenture and the Statements of Eligibility on Form T-1 with
respect to the Trustee filed with the Commission as part of the
Registration Statement complied as to form in all material respects
with the requirements of the 1939 Act and the 1939 Act Regulations.
(xv) The documents incorporated by reference in
the Prospectus (other than the financial statements and supporting
schedules therein, as to which such counsel need express no opinion),
when they were filed with the Commission complied as to form in all
material respects with the requirements of the 1934 Act and the 1934
Act Regulations.
(xvi) The Company meets the registrant
requirements for use of Form S-3 under the 1933 Act Regulations.
(xvii) The Indenture has been duly and validly
authorized, executed and delivered by the Company and qualified under
the 1939 Act and, assuming due authorization, execution and delivery
thereof by the Trustee, constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms,
except as the enforcement thereof may be limited by the Bankruptcy
Exceptions.
(xviii) The Secured Indenture has been duly and
validly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except to
the extent that the enforcement thereof may be limited by the
Bankruptcy Exceptions; the Secured Indenture has been duly qualified
under the 1939 Act.
(xix) The Thirty-Fifth Supplemental Indenture
to the Original Secured Indenture has been duly and validly authorized,
executed and delivered by the Company and qualified under the 1939 Act
and, assuming due authorization, execution and delivery thereof by the
Trustee, constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by the Bankruptcy Exceptions.
(xx) Each of the Remarketing Agreements has
been validly authorized, executed and delivered by the Company and will
constitute a valid and legally binding instrument, enforceable against
the Company in accordance with its terms except to the extent that the
enforcement thereof may be limited by the Bankruptcy Exceptions.
(xxi) All taxes and fees required to be paid by
the laws of the State of Michigan and jurisdictional subdivisions
thereof with respect to the execution of the Indenture and the issuance
of the Securities have been paid.
(xxii) The execution, delivery and performance
by the Company of this Agreement, and the Remarketing Agreements; the
execution, delivery and performance by the Company of the Indenture,
the Securities, the Thirty-fifth
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<PAGE> 20
Supplemental Indenture to the Original Secured Indenture, the
Collateral Bonds and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company in connection
with the transactions contemplated hereby or thereby; the consummation
of the transactions contemplated herein and therein and in the
Registration Statement and Prospectus (including the issuance and sale
of the Securities, the issuance and delivery to the Trustee of the
Collateral Bonds, and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds"); and compliance by the Company with its obligations
hereunder and thereunder do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary thereof pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to such
counsel, to which the Company or its subsidiaries is a party or by
which any of them may be bound, or to which any of the properties,
assets or operations of the Company or its subsidiaries is subject,
except for such conflicts, breaches, defaults, liens, charges or
encumbrances that would not, singly or in the aggregate, result in a
Material Adverse Effect, nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any if
its subsidiaries, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to such counsel, of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any
of their respective properties, assets or operations.
(xxiii) To the best of such counsel's
knowledge, there is not any action, suit, proceeding, inquiry or
investigation pending or threatened before or by any court or
governmental agency or body, domestic or foreign, pending or
threatened, against or affecting the Company or any of its subsidiaries
which is required to be dis closed in the Registration Statement and
the Prospectus (other than as disclosed therein), or which might
reasonably be expected to, singly or in the aggregate, result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the assets, properties or operations
thereof or the consummation of the transactions contemplated in this
Agreement, the Indenture, the Thirty-Fifth Supplemental Indenture to
the Original Secured Indenture or the Remarketing Agreements, or the
performance by the Company of its obligations hereunder and thereunder;
and the aggregate of all pending legal or governmental proceedings to
which the Company or any of its subsidiaries is a party or to which any
of their respective property or assets is the subject which are not
described in the Registration Statement or the Prospectus, including
ordinary routine litigation incidental to the business of the Company
or its subsidiaries, could not reasonably be expected to, singly or in
the aggregate, result in a Material Adverse Effect.
(xxiv) The information in the Prospectus under
the captions "Summary," "The Company," "Use of Proceeds," "Description
of the First Mortgage
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<PAGE> 21
Bonds," and "Description of the Senior Debt Securities" and in the
Registration Statement under Item 14, to the extent that they involve
matters of law, summaries of legal matters, the Company's charter and
by-laws or legal proceedings, or legal conclusions, has been reviewed
by such counsel and is correct in all material respects.
(xxv) To the best of such counsel's knowledge,
there are no statutes or regulations that are required to be described
in the Prospectus that are not described as required.
(xxvi) To the best of such counsel's knowledge
and information, neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws and no default by the Company or
any subsidiary exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan or credit agreement, note, lease,
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them or any of their
respective properties or assets are bound, except for violations and
defaults that would not, singly or in the aggregate, result in a
Material Adverse Effect.
(xxvii) All descriptions in the Prospectus of
contracts and other documents to which the Company or any of its
subsidiaries is a party are accurate in all material respects. To the
best of such counsel's knowledge and information, there are no
franchises, contracts, indentures, mortgages, loan or credit
agreements, notes, leases or other instruments required to be described
or referred to in the Registration Statement or incorporated by
reference as exhibits thereto other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto, and
the descriptions thereof or references thereto are correct in all
material respects. No default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in the Secured Indenture any other contract, indenture,
mortgage, agreement, note lease or other instrument so described,
referred to, filed or incorporated by reference.
(xxviii) All legally required proceedings in
connection with the authorization, issuance and validity of the
Securities and the sale of the Securities in accordance with this
Agreement (other than the filing of post-issuance reports, the
non-filing of which would not render the Securities invalid), and in
connection with the issuance and delivery to the Trustee of the
Collateral Bonds, have been taken; and no filing with, authorization,
approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or
foreign (other than under the 1933 Act and the 1933 Act Regulations,
which have been obtained, or as may be required under the securities or
blue sky laws of the various states, as to which such counsel need
express no opinion) is necessary or required in connection with the due
authorization, execution and delivery of this Agreement, the
Remarketing Agreements or the Thirty-Fifth Supplemental Indenture, or
for the offering, issuance and sale of the Securities, the issuance and
pledge of the Collateral Bonds, or the performance by the
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<PAGE> 22
Company of its obligations in this Agreement, the Thirty-Fifth
Supplemental Indenture, the Indenture, the Remarketing Agreements and
the Securities.
(xxix) The Company and its subsidiaries possess
all licenses, franchises, permits, certificates, authorizations,
approvals, consents, orders and other operating rights (collectively,
the "Governmental Licenses") issued by the Federal Energy Regulatory
Commission; the State of Michigan, and all other federal, state, local
or foreign regulatory agencies or bodies, governmental authorities or
agencies necessary for the ownership or lease of the material
properties owned or leased by each of them and for the operation of the
business carried on by each of them as described in the Registration
Statement and the Prospectus except where the failure to so comply
would not, singly or in the aggregate, have a Material Adverse Effect;
all such licenses, franchises, permits, certificates, authorizations,
approvals, consents and orders are in full force and effect, except
when the failure of such Governmental Licenses to be in full force
would not, singly or in the aggregate, have a Material Adverse Effect,
and contain no unduly burdensome provisions that would interfere with
the conduct of the business of the Company or its subsidiaries,
considered as one enterprise and, except as otherwise set forth in the
Registration Statement or the Prospectus, there are no legal or
governmental proceedings pending or threatened that would result in a
material modification, suspension or revocation thereof.
(xxx) Each of the Company and its subsidiaries
has good and marketable title to all material real and personal
property owned by each of them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Registration Statement and the Prospectus or (b) do not, singly or in
the aggregate, materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such
property by the Company or any of its subsidiaries; and any real
property and buildings held under lease by the Company, or its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the conduct of the business of the Company or such subsidiaries.
(xxxi) The Company is not an "investment
company" or an entity under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
(xxxii) MCN and the Company are presently
exempt from the provisions of the Public Utility Holding Company Act of
1935 (except Section 9 thereof) which would otherwise require either of
them to register thereunder.
Moreover, such counsel shall confirm that
nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement, including any Rule
430A Information and Rule 434 Information (if
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<PAGE> 23
applicable)(except for financial statements and the notes thereto, the
financial schedules and any other financial data included or
incorporated by reference therein, as to which such counsel need
express no opinion), at the time such Registration Statement became
effective or at the date of this Agreement, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus or any amendment or
supplement thereto (except for financial statements and the notes
thereto, the financial schedules, and any other financial data included
or incorporated by reference therein, as to which such counsel need
express no opinion), at the time the Prospectus were issued, at the
time of any such amended or supplemented Prospectus were issued or at
the Closing Date, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing Date, of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Company, in
form and substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters,
to the effect that:
(i) The Registration Statement, including any
Rule 462(b) Registration Statement, is effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued
under the 1933 Act and no proceedings therefor have been initiated or,
to the best of such counsel's knowledge, threatened by the Commission.
(ii) The Registration Statement, including any
Rule 462(b) Registration Statement, the Rule 430A Information and the
Rule 434 Information, as applicable, the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations.
(iii) The statements in the Prospectus under
the captions and "Description of the Senior Debt Securities" and
"Description of the First Mortgage Bonds," to the extent that they
involve matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, have been reviewed by such counsel
and are correct in all material respects.
(iv) Assuming that the Remarketing Agreements
being delivered at the Closing Date have been duly authorized, executed
and delivered by the Company
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<PAGE> 24
under Michigan law, each of them is a valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms except to the extent that the enforcement thereof may be
limited by the Bankruptcy Exceptions.
(v) The Securities, the Indenture and the
Remarketing Agreements conform in all material respects to the
descriptions thereof contained in the Prospectus.
(vi) No authorization, approval, consent,
order, registration, qualification of or with any court or federal or
New York state governmental authority or agency is required for the
issuance and sale of the Securities by the Company to the Underwriters,
or the issuance and delivery to the Trustee by the Company of the
Collateral Bonds, or the performance by the Company of its obligations
under the Agreement, the Indenture, the Secured Indenture, the
Thirty-Fifth Supplemental Indenture, the Remarketing Agreements, the
Securities, and the Collateral Bonds except such as has been obtained
and made under the federal securities laws or such as may be required
under the securities or blue sky laws of the various states, as to
which such counsel need express no opinion.
Moreover, such counsel shall confirm that
nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement, including any Rule
430A Information and Rule 434 Information (if applicable)(except for
financial statements and the notes thereto, the financial schedules and
any other financial data included or incorporated by reference therein,
as to which such counsel need express no opinion), at the time such
Registration Statement became effective or at the date of this
Agreement, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or
any amendment or supplement thereto (except for financial statements
and the notes thereto, the financial schedules, and any other financial
data included or incorporated by reference therein, as to which such
counsel need express no opinion), at the time the Prospectus were
issued, at the time of any such amended or supplemented Prospectus were
issued or at the Closing Date, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(3) The favorable opinion, dated as of the Closing Date, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters, in form and substance satisfactory to the Representatives, with
respect to such matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters. In giving such
opinion, LeBoeuf, Lamb, Greene & MacRae, L.L.P. may rely as to certain matters
of Michigan law upon the opinion of Ronald E. Christian, Esq., counsel for the
Company, which shall be delivered in accordance with Section 5(b)(1) hereof.
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<PAGE> 25
(4) The opinion, dated as of the Closing Date, of Skadden,
Arps, Slate, Meagher & Flom LLP, special counsel to the Company, generally to
the effect that, subject to the qualifications and limitations stated therein
and in the Prospectus, the statements set forth in the Prospectus under the
caption "Certain United States Federal Income Tax Considerations," insofar as
they purport to constitute summaries of matters of United States federal tax law
and regulations or legal conclusions with respect thereto, constitute accurate
summaries of the matters discussed therein in all material respects.
(c) On the Closing Date, the Representatives shall have received a
certificate of the President or a Vice President of the Company and of the Chief
Financial Officer or Chief Accounting Officer of the Company, dated as of the
Closing Date, to the effect that (i) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not in the ordinary course of business, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of the Closing Date,
(iii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied on or prior to the Closing Date, and
(iv) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or
threatened by the Commission.
(d) At the time of the execution of this Agreement, the Representatives
shall have received from Deloitte & Touche LLP a letter dated such date in form
and substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect set forth below and as to such other matters as the Representatives may
reasonably request, that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
1933 Act and the 1933 Act Regulations;
(ii) In their opinion, the consolidated financial statements
and any financial statement schedules audited by them and included or
incorporated by reference in the Registration Statement and the
Prospectus, as amended or supplemented, comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations;
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
including a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
condensed consolidated financial statements included in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the
Registration Statement and the Prospectus, as amended or supplemented,
for the periods specified in such letter, a reading of the latest
available unaudited interim consolidated financial statements of the
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<PAGE> 26
Company and its subsidiaries, a reading of the minutes of the Company
and its subsidiaries since the audited consolidated financial
statements set forth in the Company's Annual Report on Form 10-K for
the most recent year, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated financial
statements set forth in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Registration
Statement and the Prospectus as amended or supplemented do not
comply as to form in all material respects with the applicable
accounting requirements of the 1934 Act and the 1934 Act
Regulations as they apply to Form 10-Q or any material
modifications should be made for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements set forth in the Company's Annual Report
on Form 10-K for the most recent year ended incorporated by
reference in the Registration Statement and the Prospectus as
amended or supplemented;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus, as amended or
supplemented, do not agree with the corresponding items in the
unaudited consolidated financial statements from which such
data and items were derived;
(C) any unaudited pro forma consolidated condensed
financial statements or any unaudited pro forma consolidating
financial statements included or incorporated by reference in
the Prospectus, as amended or supplemented, do not comply as
to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations or
the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements;
(D) as of a specified date not more than five days
prior to the date of this Agreement, there has been any
decrease or increase in the capital stock or any increase or
decrease in long-term debt including capital lease obligations
and current maturities (except for sinking fund and
installment requirements under their long-term debt
agreements, terms of the preferred securities of subsidiaries
and purchases in the open market in anticipation thereof) or
any increase in short-term debt, or any decrease in
consolidated common shareholders' equity of the Company and
its consolidated subsidiaries (other than periodic dividends
declared to shareholders), in each case as compared with the
corresponding amounts shown in the latest consolidated
statement of financial position of the Company and its
subsidiaries incorporated by reference in the Registration
Statement and the Prospectus as amended or supplemented,
except in each case for increases or
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<PAGE> 27
decreases which the Prospectus as amended or supplemented,
including financial information incorporated by reference,
discloses have occurred or may occur or which are described in
such letter; and
(E) for the period from the date of the latest
consolidated financial statements included or incorporated by
reference in the Prospectus, as amended or supplemented, to
the end of the latest period for which unaudited condensed
consolidated financial statements or financial information are
available there were any decreases in consolidated operating
revenues, operating income, net income or earnings available
for Common Stock of the Company and its consolidated
subsidiaries, or any increases in any items specified by the
Representatives, in each case as compared with the
corresponding period in the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus, as amended or supplemented,
including financial information incorporated by reference,
discloses have occurred or may occur or which are described in
such letter; and
(F) the unaudited condensed consolidated financial
statements referred to in Clause (E) are not stated on a basis
substantially consistent with the audited consolidated
financial statements incorporated by reference in the
Registration Statement and the Prospectus, as amended or
supplemented.
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus, as amended or supplemented, and included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most
recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial
statements for such five fiscal years which were included or
incorporated by reference in the Company's Annual Reports on Form 10-K
for such fiscal years;
(v) In addition to the limited procedures, reading of minutes,
inquiries and other procedures referred to in clause (iii) and (iv)
above, they have carried out certain other specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information which are derived from the general accounting and financial
records of the Company and its subsidiaries, which appear in the
Prospectus, as amended or supplemented, and the Registration Statement,
in The Company's Annual Report on Form 10-K for the latest year ended
and in the Company's Quarterly Reports on Form 10-Q since the latest
Annual Report on Form 10-K and which are specified by the
Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting and financial records of
the Company and its subsidiaries and have found them to be in
agreement; and
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<PAGE> 28
(vi) If applicable and agreed to by the parties to this
Agreement, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the selected financial data, pro forma financial information,
prospective financial statements, consolidating financial statements
and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the Representatives.
(e) On the Closing Date, the Representatives shall have received from
Deloitte & Touche LLP a letter, dated as of the Closing Date, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(d) of this Section, except that the specified date referred to shall be a date
not more than three business days prior to the Closing Date.
(f) On the Closing Date, the Securities shall be rated at least "A2" by
Moody's Investors Service and "A" by Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc. and the Company shall have delivered to the Representatives
a letter, dated the Closing Date, from such rating agencies, or other evidence
satisfactory to the Representatives, confirming that the Securities have such
ratings; and since the date of this Agreement, there shall not have occurred any
decrease in the ratings of any of the securities of the Company or of the
Securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the 1933 Act Regulations) and such
organization shall not have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the securities
of the Company or of the Securities.
(g) On the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
the Securities as herein contemplated shall be satisfactory in form and
substance to the Representatives and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement, may be
terminated by the Representatives by notice to the Company at any time on or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section 4 and except that
Sections 1, 6 and 7 shall survive any such termination and remain in full force
and effect.
SECTION 6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter and each
person who controls any Underwriter within the meaning of either the 1933 Act or
the 1934 Act against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject
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<PAGE> 29
under the 1933 Act, the 1934 Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the registration statement for the registration of the Securities as originally
filed or in any amendment thereof, or in any Preliminary Prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through the Representatives specifically for inclusion therein;
provided, however, that the indemnification contained in this paragraph (a) with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Securities by such Underwriter to any person if a copy of the
Prospectus shall not have been delivered or sent to such person within the time
required by the Act and the regulations thereunder, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus,
provided that the Offerors have delivered the Prospectus to the several
Underwriters in requisite quantity on a timely basis to permit such delivery or
sending. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Registration Statement, and each person who controls the Company within the
meaning of either the 1933 Act or the 1934 Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the statements
set forth in the last paragraph of the cover page regarding delivery of the
Securities, the legend in block capital letters on page 3 related to
stabilization, syndicate covering transactions and penalty bids and, under the
heading "Underwriting" or "Plan of Distribution", (i) the sentences related to
concessions and reallowances and (ii) the paragraph related to stabilization,
syndicate covering transactions and penalty bids in any Preliminary Prospectus
and the Prospectus constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in any Preliminary Prospectus
or the Prospectus.
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<PAGE> 30
(c) Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 6 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Underwriters severally agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and by the
Underwriters on the other from the offering of the Securities; provided,
however, that in no case shall any Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or commission
applicable to the Securities purchased by such Underwriter hereunder. If the
allocation provided by the
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<PAGE> 31
immediately preceding sentence is unavailable for any reason, the Company and
the Underwriters severally shall contribute in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Underwriters on the other in connection with
the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Underwriters shall be
deemed to be equal to the total underwriting discounts and commissions, in each
case as set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Company on the
one hand or the Underwriters on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 6, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
SECTION 7. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of any Underwriter or controlling person,
or by or on behalf of the Company, and shall survive delivery of and payment for
the Securities to the Underwriters.
SECTION 8. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Company at any time on or prior to the Closing Date, if (i) there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change or any
development which could reasonably be expected to result in a prospective
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) there has occurred any material adverse
change in the financial markets in the United States or any outbreak of
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<PAGE> 32
hostilities or escalation of hostilities or other calamity or crisis, or any
change or development involving a prospective change in national or
international political, financial or economic conditions the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company or any of its affiliates has
been suspended or limited by the Commission, the National Association of
Securities Dealers, Inc. ("NASD") or the New York Stock Exchange, or if trading
generally on either the American Stock Exchange, the New York Stock Exchange or
in the over-the-counter market has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said exchanges or by such system or
by order of the Commission, NASD or any other governmental authority, or (iv) if
a banking moratorium has been declared by either Federal, New York or Michigan
authorities.
(b) If this Agreement is terminated pursuant to this Section 8, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided, further, that Sections 1, 6 and 7 shall
survive such termination and remain in full force and effect.
SECTION 9. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Date to purchase the Securities
which it or they are obligated to purchase under this Agreement (the "DEFAULTED
SECURITIES"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 9 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone the Closing Date for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or the
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9.
-32-
<PAGE> 33
SECTION 10. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at Seven World Trade
Center, New York, New York 10048, attention of Legal Department (Marianne
Spinelli, Esq.) with a copy to LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West
55th Street, New York, New York 10019-5389, attention of William S. Lamb, Esq.;
notices to the Company shall be directed to it at Michigan Consolidated Gas
Company, 500 Griswold Street, Detroit, Michigan 48226, attention of Ronald E.
Christian, Esq., Vice President, General Counsel and Secretary.
SECTION 11. Parties. This Agreement shall inure to the benefit of and
be binding upon the Company, and the Underwriters and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein or therein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the parties hereto and
thereto and their respective successors and legal representatives, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. SPECIFIED TIMES OF DAY REFER
TO NEW YORK CITY TIME UNLESS OTHERWISE INDICATED.
SECTION 13. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
-33-
<PAGE> 34
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Underwriters and the Company in accordance with its terms.
Very truly yours,
MICHIGAN CONSOLIDATED GAS
COMPANY
By: /s/ Howard L. Dow III
-------------------------------
Name: Howard L. Dow III
Title: Senior Vice President and
Chief Financial Officer
CONFIRMED AND ACCEPTED, as of the date first above written:
SALOMON BROTHERS INC
A.G. EDWARDS & SONS, INC.
By: SALOMON BROTHERS INC
By: /s/ Kimberly Blue
--------------------------------
Authorized Signatory
For themselves and as Representatives of the other
Underwriters named in Schedule II hereto.
-34-
<PAGE> 35
SCHEDULE I
REPRESENTATIVES: Salomon Brothers Inc
A.G. Edwards & Sons, Inc.
PURCHASE PRICE AND DESCRIPTION OF THE SECURITIES:
TITLE: Resetable MAndatory Putable/remarketable Securities
("MAPS(sm)") due June 30, 2038.
PRINCIPAL AMOUNT: $75,000,000.
PURCHASE PRICE: 102.850% of the principal amount thereof.
INDENTURE: Indenture, dated as of June 1, 1998, between Michigan
Consolidated Gas Company and Citibank, N.A., as trustee.
DATE OF MATURITY: June 30, 2038.
INTEREST RATE: 6.20%.
INTEREST PAYMENT DATES: June 30 and December 30.
REDEMPTION PROVISIONS: As set forth in The Prospectus under the
caption headed "Description of the Notes-
Redemption."
AUTHORIZED DENOMINATIONS: $1,000 and integral multiples thereof.
OTHER PROVISIONS:
TIME AND DATE OF DELIVERY AND PAYMENT:
TIME: 9:00 A.M. (Eastern time)
DATE: June 23, 1998
LOCATION: LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019-5389
<PAGE> 36
PLACE OF DELIVERY AND PAYMENT:
DELIVERY: Salomon Brothers Inc
c/o The Depository Trust Company
55 Water Street
New York, New York 10041
PAYMENT: Wire Transfer of same day funds.
-2-
<PAGE> 37
SCHEDULE II
<TABLE>
<CAPTION>
Principal Amount
Name of Underwriter of the Securities
------------------- -----------------
<S> <C>
Salomon Brothers Inc....................................... $37,500,000
A.G. Edwards & Sons, Inc. ................................. $37,500,000
Total...................................................... $75,000,000
===========
</TABLE>
<PAGE> 1
EXHIBIT 1.2
MICHIGAN CONSOLIDATED GAS COMPANY
(A MICHIGAN CORPORATION)
DEBT SECURITIES
PURCHASE AGREEMENT
JUNE 18, 1998
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
FIRST CHICAGO CAPITAL MARKETS, INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Michigan Consolidated Gas Company (the "Company"), a Michigan
corporation, confirms its agreement (this "Agreement") with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of
the other Underwriters named in Schedule II hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch and First
Chicago Capital Markets, Inc. are acting as representatives (in such capacity,
the "Representatives") with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the principal
amount set forth in Schedule II of $75,000,000 aggregate principal amount of the
Company's Extendable MandatOry Par Put Remarketed Securities (sm)
("MOPPRS(sm)"), due June 30, 2038 (the "Securities"). The Securities will be
issued by the Company under its Indenture, dated as of June 1, 1998 (the
"Indenture"), between the Company and Citibank, N.A., as trustee (the
"Trustee"), which will be secured by the concurrent issuance and delivery to the
Trustee of the Company's First Mortgage Bonds, Collateral Series A (the
"COLLATERAL BONDS"), issued under and ratably secured by the Indenture
<PAGE> 2
of Mortgage and Deed of Trust dated as of March 1, 1944 (the "ORIGINAL SECURED
INDENTURE"), as supplemented and amended by thirty-five indentures supplemental
thereto, including specifically the Twenty-ninth Supplemental Indenture, and the
Thirty-fifth Supplemental Indenture creating the series in which the Collateral
Bonds are to be issued (the "THIRTY-FIFTH SUPPLEMENTAL INDENTURE") (the Original
Secured Indenture and all supplemental indentures thereto being referred to
collectively herein as the "Secured Indenture"), in a principal amount equal to
that of and having other terms that mirror those of the Securities. The Company
proposes to sell to the Underwriters Securities of the designation, with the
terms and the aggregate principal amount specified in Schedule I hereto.
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (No. 333-56333) covering the
registration of debt securities of the Company, including the Securities, under
the Securities Act of 1933, as amended (the "1933 ACT") including the related
preliminary prospectus or prospectuses, and the offering thereof from time to
time in accordance with Rule 415 of the rules and regulations of the Commission
under the 1933 Act (the "1933 ACT REGULATIONS") and the Company has filed such
post-effective amendments thereto as may be required prior to the execution of
this Agreement. Such registration statement, as so amended, has been declared
effective by the Commission. Such registration statement, as so amended,
including the exhibits and schedules thereto, if any, and the information, if
any, deemed to be a part thereof pursuant to Rule 430A(b) of the 1933 Act
Regulations (the "RULE 430A INFORMATION") or Rule 434(d) of the 1933 Act
Regulations (the "RULE 434 INFORMATION"), is referred to herein as the
"REGISTRATION STATEMENT"; and the final prospectus and the prospectus supplement
relating to the offering of the Securities, are collectively referred to herein
as the "Prospectus"; provided, however, that all references to the "Registration
Statement" shall be deemed to include all documents incorporated therein by
reference pursuant to the Securities Exchange Act of 1934, as amended (the "1934
ACT"), prior to the execution of this Agreement; provided, further, that if the
Company files a registration statement with the Commission pursuant to Section
462(b) of the 1933 Act Regulations (the "RULE 462(b) REGISTRATION STATEMENT"),
then after such filing, all references to "Registration Statement" shall be
deemed to include the Rule 462(b) Registration statement; and provided, further,
that if the Company elects to rely upon Rule 434 of the 1933 Act Regulations,
the term "PROSPECTUS" shall refer to the final or preliminary prospectus and the
applicable term sheet (a "TERM SHEET") and all references in this Agreement to
the date of such Prospectus shall mean the date of the applicable Term Sheet. A
"preliminary prospectus" shall be deemed to refer to any prospectus used before
the registration statement became effective and any prospectus that omitted, as
applicable, the Rule 430A Information, the Rule 434 Information or other
information to be included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any
amendment or supplement to any of the foregoing shall be deemed to include the
electronically transmitted copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
-2-
<PAGE> 3
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus) or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter that:
(i) No stop order suspending the effectiveness of the
Registration Statement or any Rule 464(b) Registration Statement has been issued
under the 1933 Act and no proceeding for that purpose has been instituted or are
pending or, to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional information has
been complied with.
(ii) The Company meets the requirements for the use of Form
S-3 under the 1933 Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act. At the
respective times the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendments thereto (including the filing of the
Company's most recent Annual Report on Form 10-K with the Commission) became
effective and as of the date hereof, the Registration Statement, any Rule 462
Registration Statement and any amendments or supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and the Trust Indenture Act of 1939, as amended (the
"1939 ACT"), and the rules and regulations of the Commission under the 1939 Act
(the "1939 ACT REGULATIONS") and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at the time
that the Prospectus or any such amendment or supplement was issued and at the
Closing Date, included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Company elects to rely upon Rule 434 of the 1933
Act Regulations, the Company will comply with the requirements of Rule 434.
Notwithstanding the foregoing, the representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter through
Merrill Lynch expressly for use in the Registration Statement or the Prospectus.
-3-
<PAGE> 4
Each preliminary prospectus and prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for use
in connection with the offering of the Securities will, at the time of such
delivery, be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(iii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement and the Prospectus, at the time they
were or hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1934 Act, and the rules and
regulations of Commission thereunder (the "1934 Act Regulations"), and, when
read together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was issued
and on the Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading.
(iv) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(v) The financial statements of the Company included or
incorporated by reference in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates indicated
and the statements of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified. Such
financial state ments have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included or incorporated by
reference in the Registration Statement and the Prospectus present fairly in
accordance with GAAP the information required to be stated therein. The ratio of
earnings to fixed charges included in the Prospectus has been calculated in
compliance with Item 503(d) of Regulation S-K of the Commission. The selected
financial information and the summary financial data included in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement.
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated therein, (A) there has been no material adverse change and no development
which could reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise (a "MATERIAL ADVERSE EFFECT"), whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by the
Company or any of its
-4-
<PAGE> 5
subsidiaries, other than those arising in the ordinary course of business, which
are material with respect to the Company and its subsidiaries, considered as one
enterprise, (C) except for regular quarterly dividends on the Company's common
stock in amounts per share that are consistent with past practice or the
applicable charter document or supplement thereto, respectively, there has been
no dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Michigan, with corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as described
in the Prospectus and to enter into and perform its obligations under, or as
contemplated under, this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify or be in good standing would not, singly or in the aggregate, have a
Material Adverse Effect.
(viii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted and as described in the Prospectus, and is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not, singly or in the
aggregate, have a Material Adverse Effect. Except as otherwise stated in the
Registration Statement and the Prospectus, all of the issued and outstanding
shares of capital stock of each subsidiary of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and all such
shares are owned by the Company, directly or through its subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity. None of the outstanding shares of capital stock of the subsidiaries was
issued in violation of preemptive or other similar rights arising by operation
of law, under the charter or by-laws of any subsidiary or under any agreement to
which the Company or any subsidiary is a party, or otherwise.
(ix) The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights arising by
operation of law, under the charter or by-laws of the Company, under any
agreement to which the Company or any of its subsidiaries is a party or
otherwise.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
-5-
<PAGE> 6
(xi) The Securities have been duly authorized for issuance and
sale pursuant to this Agreement and at the Closing Date, will have been duly
executed by the Company and, when authenticated in the manner provided for in
the Indenture and delivered by the Company against payment of the purchase price
therefor, will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity, (the
"BANKRUPTCY EXCEPTIONS"). The Securities will be in the form contemplated by,
and entitled to the benefits of, the Indenture and conform in all material
respects to the description thereof contained in the Prospectus and will be in
substantially the form filed or incorporated by reference, as the case may be,
as an exhibit to the Registration Statement.
(xii) The Collateral Bonds have been duly authorized for
issuance and delivery to the Trustee, and at the Closing Date will have been
duly executed by the Company and, when authenticated in the manner provided for
in the Secured Indenture and delivered by the Company as security for the
Securities, will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions. The
Collateral Bonds will be in the form contemplated by, and entitled to the
benefits of, the Secured Indenture and conform in all material respects to the
description thereof contained in the Prospectus and will be substantially in the
form filed or incorporated by reference, as the case may be, as an exhibit to
the Registration Statement.
(xiii) The Indenture has been duly and validly authorized,
executed and delivered by the Company and qualified under the 1939 Act and
constitutes a valid and legally binding instrument, enforceable against the
Company in accordance with its terms except to the extent that the enforcement
thereof may be limited by the Bankruptcy Exceptions; the Indenture conforms in
all material respects to the description thereof contained in the Prospectus and
will be in substantially the form filed or incorporated by reference, as the
case may be, as an exhibit to the Registration Statement.
(xiv) The issuance and delivery by the Company of the
Collateral Bonds to the Trustee constitute a sale by the Company of the
Collateral Bonds to the Trustee as of the Closing Date, or, if not a sale, the
grant by the Company to the Trustee of a perfected security interest in the
Collateral Bonds for the benefit of the holders of the Senior Notes.
(xv) The Secured Indenture constitutes a legally valid and
enforceable first mortgage lien, except as the same may be limited by the laws
of the State of Michigan (where all of the property covered thereby is located)
affecting the remedies for the enforcement of the security provided for therein,
which laws do not make inadequate the remedies necessary for the realization of
the benefits of such security, or as the same may be limited by the Bankruptcy
Exceptions, upon substantially all of the Company's properties and franchises,
now owned or
-6-
<PAGE> 7
hereafter acquired, free from all prior liens, charges or encumbrances, except
as set forth in subparagraph xxiii below, and in the case of property hereafter
acquired, any thereof existing at the time of acquisition.
(xvi) None of the Company or any of its subsidiaries is in
violation of its charter or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, note, lease, loan
or credit agreement or any other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which any of them may be bound, or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, or in violation of any applicable law, rule or regulation or any
judgment, order, writ or decree of any government, governmental instrumentality
or court, domestic or foreign, having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties or assets, which
violation or default would, singly or in the aggregate, have a Material Adverse
Effect.
(xvii) The execution, delivery and performance by the Company
of this Agreement, the Mandatory Tender Remarketing Agreement, to be dated as of
the Closing Date, between the Company and Merrill Lynch, as Remarketing Agent
with respect to the Securities (the "Mandatory Tender Remarketing Agreement"),
the Reset Remarketing Agreement, to be dated as of the Closing Date, between the
Company and Merrill Lynch as Reset Remarketing Agent with respect to the
Securities (the "Reset Remarketing Agreement" and, together with the Mandatory
Tender Remarketing Agreement, the "Remarketing Agreements"); the execution,
delivery and performance by the Company of the Indenture, the Securities, the
Thirty-fifth Supplemental Indenture to the Original Secured Indenture, the
Collateral Bonds and any other agreement or instrument entered into or issued or
to be entered into or issued by the Company in connection with the transactions
contemplated hereby or thereby; and the consummation of the transactions
contemplated herein and therein and in the Registration Statement and the
Prospectus (including the issuance and sale of the Securities and the issuance
and delivery of the Collateral Bonds, and the use of the proceeds from the sale
of the Securities as described in the Prospectus under the caption "Use of
Proceeds"); and compliance by the Company with its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them may be bound (other than the
lien of the Indenture), or to which any property or assets of the Company or any
subsidiary thereof is subject (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not, singly or in the aggregate,
result in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter of by-laws of the Company or any of
its subsidiaries or any applicable law, statute, rule or regulation, judgment,
order, writ or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective property, assets or operations.
-7-
<PAGE> 8
(xviii) On the Closing Date, the Remarketing Agreements will
have been validly authorized, executed and delivered by the Company and will
constitute a valid and legally binding instrument, enforceable against the
Company in accordance with its terms except to the extent that the enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xix) No labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is imminent,
and the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its or any of its subsidiary's principal suppliers,
manufacturers, customers or contractors which, in either case, may reasonably be
expected to result in a Material Adverse Effect.
(xx) There is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries which is required to be
disclosed in the Registration Statement and the Prospectus (other than as
disclosed therein), or which might reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Effect, or which might be reasonably
expected to materially and adversely affect the assets, properties or operations
thereof or the consummation of the transactions contemplated by this Agreement,
or the Remarketing Agreements or the performance by the Company of its
obligations hereunder and thereunder; and the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary thereof is a
party or of which any of their respective properties or operations is the
subject which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the business,
could not reasonably be expected to, singly or in the aggregate, result in a
Material Adverse Effect.
(xxi) There are no contracts or documents which are required
to be described in the Registration Statement, the Prospectus or the documents
incorporated by reference therein or to be filed as exhibits thereto which have
not been so described and/or filed as required.
(xxii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or required
for the performance by the Company of its obligations hereunder, in connection
with (a) the offering, issuance or sale of the Securities under this Agreement,
(b) the issuance and delivery to the Trustee of the Collateral Bonds, or (c) the
consummation of the transactions contemplated by this Agreement, the Indenture
and the Remarketing Agreements, except such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations or foreign or
state securities or blue sky laws.
(xxiii) The Company has good and marketable title to the
properties specifically described in and conveyed by the Secured Indenture
(except such property as may have been disposed of or released from the lien
thereof in accordance with the terms thereof) subject only to the lien of the
Secured Indenture, to permissible encumbrances, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the execution of
the Original
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<PAGE> 9
Secured Indenture, to any liens existing thereon or purchase money liens placed
thereon at the time of such acquisition as permitted by the Secured Indenture,
and to certain other reservations, rights of grantors under revocable permits,
easements, licenses, zoning laws and ordinances and restrictions and minor
defects or irregularities of title which do not materially impair the use of the
property affected thereby in the operation of the business of the Company; the
Company and its subsidiaries have good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except the liens of the Secured Indenture and such liens,
encumbrances and defects as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries; the pipeline, distribution main and underground
gas storage easements enjoyed by the Company and its subsidiaries are valid,
subsisting and enforceable easements with such exceptions as do not materially
interfere with the conduct of the business of the Company and its subsidiaries.
(xxiv) The Company and its subsidiaries possess all licenses,
franchises, permits, certificates, authorizations, approvals, consents, orders
and other operating rights (collectively, the "Governmental Licenses") issued by
the Federal Energy Regulatory Commission, the State of Michigan, and all other
federal, state, local or foreign regulatory agencies or bodies, governmental
authorities or agencies necessary for the ownership or lease of the material
properties owned or leased by each of them and to conduct the business now
operated by each of them; the Company and its subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except where
the failure to so comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect except when the failure of such Governmental Licenses to be in full force
and effect would not, singly or in the aggregate, have a Material Adverse Effect
and contain no unduly burdensome provisions that would interfere with the
conduct of the business of the Company and its subsidiaries, considered as one
enterprise and, except as otherwise set forth in the Registration Statement and
the Prospectus, there are no legal or governmental proceedings pending or
threatened that would result in a material modification, suspension or
revocation thereof.
(xxv) The Company is a "public utility company" and a
"subsidiary company" of MCN Energy Group ("MCN"), a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935 (the "1935
Act"), and such "holding company" and the Company are presently exempt from the
provisions of the 1935 Act (except Section 9 thereof).
(xxvi) Except as described in the Registration Statement and
except as would not, singly or in the aggregate, result in a Material Adverse
Effect, (A) none of the Company or any of its subsidiaries is in violation of
any federal, state, local or foreign statute, law, rule, regulation, ordinance
or code, including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the environment
(including, without
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<PAGE> 10
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "HAZARDOUS MATERIALS") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, the "ENVIRONMENTAL LAWS"), (B)
the Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are in compliance with
their requirements, or (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company or any of its subsidiaries.
(xxvii) None of the Company or its subsidiaries is, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus, and
upon the issuance and delivery to the Trustee of the Collateral Bonds, none will
be, an "investment company" or an entity under the "control" of an "investment
company" as such terms are defined under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xxviii) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively, the
"Cuba Act") or is exempt therefrom.
(xxix) None of the Company and its subsidiaries or any of
their respective directors, officers or controlling persons, has taken, directly
or indirectly, any action resulting in a violation of Regulation M under the
1934 Act, or designed to cause or result in, or that has constituted or that
reasonably might be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.
(xxx) No "forward looking statement" (as defined in Rule 175
under the 1933 Act) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable basis
or was disclosed other than in good faith.
(b) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as the case may be, to each Underwriter as to the
matters covered thereby.
SECTION 2. Sale and Delivery to the Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, at the price per
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<PAGE> 11
security set forth in Schedule I hereto, the respective principal amounts of the
Securities set forth opposite the name of the such Underwriter, plus any
additional principal amount of Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Delivery of and payment for the Securities shall be made at the
offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New
York, New York 10019, or at such other place as shall be agreed upon by the
Representatives and the Company, at 9:00 a.m. (Eastern time) on the third
(fourth, if pricing of the Securities occurs after 4:30 p.m. (Eastern time) on
any given day) business day after the date of execution of this Agreement
(unless postponed in accordance with the provisions of Section 10), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Company (such time and date of payment and
delivery being referred to herein as the "Closing Date").
(c) The Collateral Bonds that will secure the obligations of the
Company in respect of the Securities will be issued and delivered to the Trustee
of the Collateral Bonds on the Closing Date.
(d) On the Closing Date the Company shall deliver the Securities to The
Depository Trust Company, on behalf of the Representatives, for the account of
each Underwriter against payment to the Company by wire transfer of immediately
available funds to a bank account designated by the Company. It is understood
that each Underwriter has authorized the Representatives, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. Merrill Lynch, individually and not
as representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Date, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(e) Upon delivery, the Securities shall be in registered form and in
such denominations as set forth on Schedule I hereto. The certificates
representing the Securities shall be registered in the name of Cede & Co. and
shall be made available for inspection by the Representatives in New York, New
York not later than 10:00 a.m. (Eastern time) on the business day prior to the
Closing Date.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Promptly following the execution of this Agreement, the Company
will cause the Prospectus, including as a part thereof a prospectus supplement
relating to the Securities and the Collateral Bonds, to be filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations and will take
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus.
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<PAGE> 12
(b) The Company, subject to Section 3(c), will comply with the
requirements of Rule 430A or Rule 434 of the 1933 Act Regulations, as
applicable, and will notify the Representatives immediately, and confirm the
notice in writing, (i) of the effectiveness of any post-effective amendment to
the Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or Prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(c) The Company will give the Representatives notice of their intention
to file or prepare any amendment to the Registration Statement (including any
post-effective amendment and any filing under Rule 462(b) of the 1933 Act
Regulations), any Term Sheet or any amendment, supplement or revision to either
the prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act
or otherwise; will furnish the Representatives with copies of any such Rule
462(b) Registration Statement, Term Sheet, amendment, supplement or revision a
reasonable amount of time prior to such proposed filing or use, as the case may
be; and will not file any such Rule 462(b) Registration Statement, Term Sheet,
amendment, supplement or revision to which the Representatives or counsel for
the Underwriters shall object.
(d) The Company has furnished or will deliver to the Representatives
and counsel for the Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also deliver
to the Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits)
for each of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(e) The Company will deliver to each Underwriter, without charge, as
many copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each Underwriter, without
charge, during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be
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<PAGE> 13
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(f) The Company will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act or the 1934 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement any
Prospectus in order that the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any time to amend the Registration Statement or
amend or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(c), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters, without charge, such number of copies
of such amendment or supplement as the Underwriters may reasonably request.
(g) The Company will use its best efforts, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as the Representatives may designate; provided, however, that the
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Securities have been so qualified,
the Company will file such statements and reports as may be required by the laws
of such jurisdiction to continue such qualification in effect for so long as may
be required in connection with distribution of the Securities.
(h) The Company will timely file such reports pursuant to the 1934 Act
as are necessary in order to make generally available to its securityholders and
to deliver to the Representatives as soon as practicable an earnings statement
for the purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(i) The Company will use the net proceeds received by it from the sale
of the Securities in the manner specified in the Prospectus under the caption
"USE OF PROCEEDS."
(j) On the Closing Date, the Company will issue and deliver the
Collateral Bonds to the Trustee as security for the Securities as described in
the Prospectus under the caption "DESCRIPTION OF THE NOTES--Security; Release
Date."
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<PAGE> 14
(k) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the 1933
Act Regulations, then immediately following the execution of this Agreement, the
Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A or Rule 434 and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or Term Sheet, or, if required by
such Rule 430A, a post-effective amendment to the Registration Statement
(including an amended Prospectus), containing all information so omitted.
(l) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) and pay the applicable fees in accordance with Rule 111 of the 1933
Act Regulations by the earlier of (i) 10:00 p.m. Eastern time on the date of
this Agreement and (ii) the time confirmations are sent or given, as specified
by Rule 462(b)(2).
(m) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(n) So long as any of the Securities are outstanding, to furnish the
Representatives copies of all reports and financial statements furnished by the
Company to each securities exchange on which securities issued by the Company
may be listed pursuant to requirements of or agreements with such exchange or to
the Commission pursuant to the 1934 Act of the 1934 Act Regulations.
(o) During a period of fifteen days from the date of the Prospectus,
the Company will not, without the prior written consent of Merrill Lynch,
directly or indirectly, issue, pledge, sell, offer to sell, grant any option for
the sale of or otherwise transfer or dispose of, any debt securities of the
Company which mature more than one year after the Closing Date and which are
substantially similar to the Securities, without the prior written consent of
Merrill Lynch, except for the offer by the Company of $75,000,000 aggregate
principal amount of its Resetable MAndatory Putable/remarketable Securities
("MAPS(sm)") due June 30, 2038.
(p) None of the Company, its subsidiaries or any of their respective
directors, officers or controlling persons, will take, directly or indirectly,
any action resulting in a violation of Regulation M under the 1934 Act, or
designed to cause or result in, or that reasonably might be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including,
without limitation, expenses related to the following, if incurred: (i) the
preparation, delivery, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto; (ii) the printing and delivery to the Underwriters of this
Agreement, the
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<PAGE> 15
Indenture, the Remarketing Agreements and any and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
Securities and the issuance and delivery of the Collateral Bonds; (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, as well as the preparation, issuance and delivery of the
certificates for the Collateral Bonds to the Trustee, including any costs, taxes
and expenses incident to the issuance and delivery of the Securities; (iv) the
fees and disbursements of the Company's counsel, accountants and other advisors
or agents; (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(g), including filing fees and the
fees and disbursements of counsel for the Underwriters in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto; (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheet, the Prospectus and any amendments or
supplements thereto, and the printing and delivery of any additional Prospectus
and any amendments or supplements thereto as may be contemplated by the
Remarketing Agreements; (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto; (viii)
the fees and disbursements of the Trustee, including the fees and disbursements
of counsel to the Trustee; (ix) any fees payable to the Commission; and (x) any
fees payable in connection with the rating of the Securities by rating agencies.
If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained or in
certificates of any officer of the Company delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective under the 1933 Act and on the date hereof and on
the Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of counsel to the Underwriters. A prospectus containing information
relating to the description of the Securities, the specific method of
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b) (or any required post-effective amendment providing
such information shall have been filed and declared effective in accordance with
the requirements of Rule 430A), or, if the Company has elected to rely upon Rule
434 of the 1933 Act Regulations, a Term Sheet including the Rule 434 Information
shall have been filed with the Commission in accordance with Rule 424(b).
(b) On the Closing Date the Representatives shall have received:
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(1) The favorable opinion, dated as of the Closing Date, of
Ronald E. Christian, Esq., Vice President, General Counsel and Secretary of the
Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of Michigan.
(ii) The Company has corporate power and
authority to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Prospectus and
to enter into and perform its obligations under this Agreement.
(iii) The Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not, individually or in the aggregate, result in a
Material Adverse Effect.
(iv) The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock were issued in violation of
preemptive or other similar rights arising by operation of law, under
the charter or by-laws of the Company; under any agreement to which the
Company, or any of its subsidiaries is a party, or otherwise.
(v) The Securities are in the form
contemplated by the Indenture, have been duly and validly authorized
by the Company and, when executed by the Company and authenticated by
the Trustee in the manner provided for in the Indenture and delivered
by the Company against payment of the purchase price therefor, will
constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions. Each holder of the Securities will be entitled
to the benefits provided by the Indenture; the form of certificate
used to evidence the Securities is in due and proper form and complies
with the requirements of the Indenture; and the Securities and the
Indenture conform in all material respects to the descriptions thereof
contained in the Prospectus.
(vi) The Collateral Bonds are in the form
contemplated by the Secured Indenture, have been duly and validly
authorized by the Company and, when executed by the Company and
authenticated by the Trustee in the manner provided for in the
Indenture, and issued and delivered by the Company to the Trustee as
security for the Securities, will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that
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<PAGE> 17
enforcement thereof may be limited by the Bankruptcy Exceptions. The
form of certificate used to evidence the Collateral Bonds is in due and
proper form and complies with the requirements of the Secured
Indenture; and the Collateral Bonds and the Secured Indenture conform
in all material respects to the descriptions thereof contained in the
Prospectus.
(vii) The issuance and delivery by the Company
of the Collateral Bonds to the Trustee constitute a sale by the Company
of the Collateral Bonds to the Trustee as of the Closing Date, or, if
not a sale, the grant by the Company to the Trustee of a perfected
security interest in the Collateral Bonds for the benefit of the
holders of the Senior Notes.
(viii) Except as to property acquired
subsequent to the date of execution of the Thirty-fourth Supplemental
Indenture, the Company has good and marketable title to the property
specifically or generally described in the Secured Indenture (except
such property as may have been disposed of or released from the lien
thereof in accordance with the terms thereof) subject only to the lien
of the Secured Indenture, to permitted liens, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the
execution of the Original Secured Indenture, to any liens existing
thereon or purchase money liens placed thereon at the time of such
acquisition as permitted by the Secured Indenture, and to certain other
reservations, rights of grantors under revocable permits, easements,
licenses, zoning laws and ordinances and restrictions and minor defects
or irregularities of title which do not, in the opinion of such
counsel, materially impair the use of the property affected thereby in
the operation of the business of the Company; the pipeline,
distribution main and underground gas storage easements enjoyed by the
Company and its subsidiaries are valid, subsisting and enforceable
easements with such exceptions as are not material and do not interfere
with the conduct of the business of the Company and its subsidiaries.
(ix) The Secured Indenture constitutes a
legally valid and enforceable first mortgage lien, except as the same
may be limited by the laws of the State of Michigan (where the property
covered thereby is located) affecting the remedies for the enforcement
of the security provided for therein, which laws do not, in the opinion
of such counsel, make inadequate the remedies necessary for the
realization of the benefits of such security, or as the same may be
limited by the Bankruptcy Exceptions, upon substantially all of the
Company's properties and franchises, now owned or hereafter acquired,
free from all prior liens, charges or encumbrances other than the lien
of the Secured Indenture, permitted liens, as defined in the Secured
Indenture, as to property acquired by the Company subsequent to the
execution of the Original Secured Indenture, any liens existing thereof
or purchase money liens placed thereon at the time of such acquisition
as permitted by the grantors under revocable permits, easements,
licenses, zoning laws and ordinances and restrictions and minor defects
or irregularities of title which do not, in the opinion of such
counsel, materially impair the use of the property affected thereby in
the operation of the business of the Company.
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<PAGE> 18
(x) All taxes and fees required to be paid by
the laws of the State of Michigan and jurisdictional subdivisions
thereof with respect to the execution of the Thirty-Fifth Supplemental
Indenture and the issuance and delivery of the Collateral Bonds have
been paid.
(xi) Each subsidiary of the Company has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Prospectus, and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would
not, individually or in the aggregate, have a Material Adverse Effect.
Except as otherwise disclosed in the Registration Statement and the
Prospectus, all of the issued and outstanding capital stock of each
such subsidiary of the Company has been duly authorized and validly
issued, is fully paid and non-assessable and all such shares are owned
by the Company, directly or through its subsidiaries and, to the best
of such counsel's knowledge, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. None of the
outstanding shares of capital stock of any subsidiary of the Company
was issued in violation of preemptive or other similar rights of any
securityholder of such subsidiary.
(xii) This Agreement has been duly authorized,
executed and delivered by the Company.
(xiii) The Registration Statement, including
any Rule 462(b) Registration Statement, has been declared effective
under the 1933 Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and, to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings therefor have been initiated or threatened
by the Commission.
(xiv) The Registration Statement, including any
Rule 462(b) Registration Statement, the Rule 430A Information and the
Rule 434 Information, as applicable, the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations; the
Indenture and the Statements of Eligibility on Form T-1 with respect to
the Trustee filed with the Commission as part of the Registration
Statement complied as to form in all material respects with the
requirements of the 1939 Act and the 1939 Act Regulations.
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<PAGE> 19
(xv) The documents incorporated by reference
in the Prospectus (other than the financial statements and supporting
schedules therein, as to which such counsel need express no opinion),
when they were filed with the Commission complied as to form in all
material respects with the requirements of the 1934 Act and the 1934
Act Regulations.
(xvi) The Company meets the registrant
requirements for use of Form S-3 under the 1933 Act Regulations.
(xvii) The Indenture has been duly and validly
authorized, executed and delivered by the Company and qualified under
the 1939 Act and, assuming due authorization, execution and delivery
thereof by the Trustee, constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms,
except as the enforcement thereof may be limited by the Bankruptcy
Exceptions.
(xviii) The Secured Indenture has been duly and
validly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except to
the extent that the enforcement thereof may be limited by the
Bankruptcy Exceptions; the Secured Indenture has been duly qualified
under the 1939 Act.
(xix) The Thirty-Fifth Supplemental Indenture
to the Original Secured Indenture has been duly and validly authorized,
executed and delivered by the Company and qualified under the 1939 Act
and, assuming due authorization, execution and delivery thereof by the
Trustee, constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by the Bankruptcy Exceptions.
(xx) Each of the Remarketing Agreements has
been validly authorized, executed and delivered by the Company and will
constitute a valid and legally binding instrument, enforceable against
the Company in accordance with its terms, except to the extent that the
enforcement thereof may be limited by the Bankruptcy Exceptions.
(xxi) All taxes and fees required to be paid
by the laws of the State of Michigan and jurisdictional subdivisions
thereof with respect to the execution of the Indenture and the issuance
of the Securities have been paid.
(xxii) The execution, delivery and performance
by the Company of this Agreement, and the Remarketing Agreements; the
execution, delivery and performance by the Company of the Indenture,
the Securities, the Thirty-fifth Supplemental Indenture to the Original
Secured Indenture, the Collateral Bonds and any other agreement or
instrument entered into or issued or to be entered into or issued by
the Company in connection with the transactions contemplated hereby or
thereby; the consummation of the transactions contemplated herein and
therein and in the Registration
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<PAGE> 20
Statement and Prospectus (including the issuance and sale of the
Securities, the issuance and delivery to the Trustee of the Collateral
Bonds, and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds"); and
compliance by the Company with its obligations hereunder and thereunder
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default under or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary thereof pursuant to any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or any other agreement
or instrument, known to such counsel, to which the Company or its
subsidiaries is a party or by which any of them may be bound, or to
which any of the properties, assets or operations of the Company or its
subsidiaries is subject, except for such conflicts, breaches, defaults,
liens, charges or encumbrances that would not, singly or in the
aggregate, result in a Material Adverse Effect, nor will such action
result in any violation of the provisions of the charter or by-laws of
the Company or any if its subsidiaries, or any applicable law, statute,
rule, regulation, judgment, order, writ or decree, known to such
counsel, of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, assets or
operations.
(xxiii) To the best of such counsel's
knowledge, there is not any action, suit, proceeding, inquiry or
investigation pending or threatened before or by any court or
governmental agency or body, domestic or foreign, pending or
threatened, against or affecting the Company or any of its subsidiaries
which is required to be dis closed in the Registration Statement and
the Prospectus (other than as disclosed therein), or which might
reasonably be expected to, singly or in the aggregate, result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the assets, properties or operations
thereof or the consummation of the transactions contemplated in this
Agreement, the Indenture, the Thirty-Fifth Supplemental Indenture to
the Original Secured Indenture or the Remarketing Agreements, or the
performance by the Company of its obligations hereunder and thereunder;
and the aggregate of all pending legal or governmental proceedings to
which the Company or any of its subsidiaries is a party or to which any
of their respective property or assets is the subject which are not
described in the Registration Statement or the Prospectus, including
ordinary routine litigation incidental to the business of the Company
or its subsidiaries, could not reasonably be expected to, singly or in
the aggregate, result in a Material Adverse Effect.
(xxiv) The information in the Prospectus under
the captions "Summary," "The Company," "Use of Proceeds," "Description
of the First Mortgage Bonds," and "Description of the Senior Debt
Securities" and in the Registration Statement under Item 14, to the
extent that they involve matters of law, summaries of legal matters,
the Company's charter and by-laws or legal proceedings, or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects.
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<PAGE> 21
(xxv) To the best of such counsel's
knowledge, there are no statutes or regulations that are required
to be described in the Prospectus that are not described as required.
(xxvi) To the best of such counsel's knowledge
and information, neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws and no default by the Company or
any subsidiary exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan or credit agreement, note, lease,
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them or any of their
respective properties or assets are bound, except for violations and
defaults that would not, singly or in the aggregate, result in a
Material Adverse Effect.
(xxvii) All descriptions in the Prospectus of
contracts and other documents to which the Company or any of its
subsidiaries is a party are accurate in all material respects. To the
best of such counsel's knowledge and information, there are no
franchises, contracts, indentures, mortgages, loan or credit
agreements, notes, leases or other instruments required to be described
or referred to in the Registration Statement or incorporated by
reference as exhibits thereto other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto, and
the descriptions thereof or references thereto are correct in all
material respects. No default exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in the Secured Indenture, any other contract, indenture,
mortgage, agreement, note lease or other instrument so described,
referred to, filed or incorporated by reference.
(xxviii) All legally required proceedings in
connection with the authorization, issuance and validity of the
Securities and the sale of the Securities in accordance with this
Agreement (other than the filing of post-issuance reports, the
non-filing of which would not render the Securities invalid), and in
connection with the issuance and delivery to the Trustee of the
Collateral Bonds, have been taken; and no filing with, authorization,
approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or
foreign (other than under the 1933 Act and the 1933 Act Regulations,
which have been obtained, or as may be required under the securities or
blue sky laws of the various states, as to which such counsel need
express no opinion) is necessary or required in connection with the due
authorization, execution and delivery of this Agreement, the
Remarketing Agreements or the Thirty-Fifth Supplemental Indenture, or
for the offering, issuance and sale of the Securities, the issuance and
delivery of the Collateral Bonds, or the performance by the Company of
its obligations in this Agreement, the Thirty-Fifth Supplemental
Indenture, the Indenture, the Remarketing Agreements and the
Securities.
(xxix) The Company and its subsidiaries
possess all licenses, franchises, permits, certificates,
authorizations, approvals, consents, orders and other
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<PAGE> 22
operating rights (collectively, the "Governmental Licenses") issued by
the Federal Energy Regulatory Commission; the State of Michigan, and
all other federal, state, local or foreign regulatory agencies or
bodies, governmental authorities or agencies necessary for the
ownership or lease of the material properties owned or leased by each
of them and for the operation of the business carried on by each of
them as described in the Registration Statement and the Prospectus
except where the failure to so comply would not, singly or in the
aggregate, have a Material Adverse Effect; all such licenses,
franchises, permits, certificates, authorizations, approvals, consents
and orders are in full force and effect, except when the failure of
such Governmental Licenses to be in full force and effect would not,
singly or in the aggregate, have a Material Adverse Effect; and contain
no unduly burdensome provisions that would interfere with the conduct
of the business of the Company or its subsidiaries, considered as one
enterprise and, except as otherwise set forth in the Registration
Statement or the Prospectus, there are no legal or governmental
proceedings pending or threatened that would result in a material
modification, suspension or revocation thereof.
(xxx) Each of the Company and its
subsidiaries has good and marketable title to all material real and
personal property owned by each of them, in each case, free and
clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are
described in the Registration Statement and the Prospectus or (b) do
not, singly or in the aggregate, materially affect the value of such
property and do not materially interfere with the use made and
proposed to be made of such property by the Company or any of its
subsidiaries; and any real property and buildings held under lease by
the Company, or its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of
the Company or such subsidiaries.
(xxxi) The Company is not an "investment
company" or an entity under the "control" of an "investment company" as
such terms are defined in the 1940 Act.
(xxxii) MCN and the Company are presently
exempt from the provisions of the Public Utility Holding Company Act of
1935 (except Section 9 thereof) which would otherwise require either of
them to register thereunder.
Moreover, such counsel shall confirm that
nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement, including any Rule
430A Information and Rule 434 Information (if applicable)(except for
financial statements and the notes thereto, the financial schedules
and any other financial data included or incorporated by reference
therein, as to which such counsel need express no opinion), at the time
such Registration Statement became effective or at the date of this
Agreement, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the
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<PAGE> 23
statements therein not misleading or that the Prospectus or any
amendment or supplement thereto (except for financial statements and
the notes thereto, the financial schedules, and any other financial
data included or incorporated by reference therein, as to which such
counsel need express no opinion), at the time the Prospectus were
issued, at the time of any such amended or supplemented Prospectus were
issued or at the Closing Date, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(2) The favorable opinion, dated as of the Closing Date, of
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Company, in
form and substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters,
to the effect that:
(i) The Registration Statement, including any
Rule 462(b) Registration Statement, is effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued
under the 1933 Act and no proceedings therefor have been initiated or,
to the best of such counsel's knowledge, threatened by the Commission.
(ii) The Registration Statement, including any
Rule 462(b) Registration Statement, the Rule 430A Information and the
Rule 434 Information, as applicable, the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or
supplement to the Registration Statement and Prospectus, excluding the
documents incorporated by reference therein, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations.
(iii) The statements in the Prospectus under
the captions "Description of the Senior Debt Securities" and
"Description of the First Mortgage Bonds," to the extent that they
involve matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, have been reviewed by such counsel
and are correct in all material respects.
(iv) Assuming that the Remarketing Agreements
being delivered at the Closing Date have been duly authorized, executed
and delivered by the Company under Michigan law, each of them is a
valid and legally binding agreement of the Company, enforceable against
the Company in accordance with its terms except to the extent that the
enforcement thereof may be limited by the Bankruptcy Exceptions.
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<PAGE> 24
(v) The Securities, the Indenture and the
Remarketing Agreements conform in all material respects to the
descriptions thereof contained in the Prospectus.
(vi) No authorization, approval, consent,
order, registration, qualification of or with any court or federal or
New York state governmental authority or agency is required for the
issuance and sale of the Securities by the Company to the Underwriters,
or the issuance and delivery to the Trustee by the Company of the
Collateral Bonds, or the performance by the Company of its obligations
under the Agreement, the Indenture, the Secured Indenture, the
Thirty-Fifth Supplemental Indenture, the Remarketing Agreements, the
Securities, and the Collateral Bonds except such as has been obtained
and made under the federal securities laws or such as may be required
under the securities or blue sky laws of the various states, as to
which such counsel need express no opinion.
Moreover, such counsel shall confirm that
nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement, including any Rule
430A Information and Rule 434 Information (if applicable)(except for
financial statements and the notes thereto, the financial schedules and
any other financial data included or incorporated by reference therein,
as to which such counsel need express no opinion), at the time such
Registration Statement became effective or at the date of this
Agreement, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or
any amendment or supplement thereto (except for financial statements
and the notes thereto, the financial schedules, and any other financial
data included or incorporated by reference therein, as to which such
counsel need express no opinion), at the time the Prospectus were
issued, at the time of any such amended or supplemented Prospectus were
issued or at the Closing Date, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(3) The favorable opinion, dated as of the Closing Date, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the Underwriters, in
form and substance satisfactory to the Representatives, with respect to such
matters as the Representatives may reasonably require, and the Company shall
have furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters. In giving such opinion, LeBoeuf, Lamb,
Greene & MacRae, L.L.P. may rely as to certain matters of Michigan law upon the
opinion of Ronald E. Christian, Esq., counsel for the Company, which shall be
delivered in accordance with Section 5(b)(1) hereof.
(4) The opinion, dated as of the Closing Date, of Skadden,
Arps, Slate, Meagher & Flom LLP, special counsel to the Company, generally to
the effect that, subject to the qualifications and limitations stated therein
and in the Prospectus, the statements set forth in the
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<PAGE> 25
Prospectus under the caption "Certain United States Federal Income Tax
Considerations," insofar as they purport to constitute summaries of matters of
United States federal tax law and regulations or legal conclusions with respect
thereto, constitute accurate summaries of the matters discussed therein in all
material respects.
(c) On the Closing Date, the Representatives shall have received a
certificate of the President or a Vice President of the Company and of the Chief
Financial Officer or Chief Accounting Officer of the Company, dated as of the
Closing Date, to the effect that (i) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not in the ordinary course of business, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of the Closing Date,
(iii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied on or prior to the Closing Date, and
(iv) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or
threatened by the Commission.
(d) At the time of the execution of this Agreement, the Representatives
shall have received from Deloitte & Touche LLP a letter dated such date in form
and substance satisfactory to the Representatives, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect set forth below and as to such other matters as the Representatives may
reasonably request, that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
1933 Act and the 1933 Act Regulations;
(ii) In their opinion, the consolidated financial statements
and any financial statement schedules audited by them and included or
incorporated by reference in the Registration Statement and the
Prospectus, as amended or supplemented, comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations;
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
including a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
condensed consolidated financial statements included in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the
Registration Statement and the Prospectus, as amended or supplemented,
for the periods specified in such letter, a reading of the latest
available unaudited interim consolidated financial statements of the
Company and its subsidiaries, a reading of the minutes of the Company
and its subsidiaries since the audited consolidated financial
statements set forth in the Company's Annual Report on Form 10-K for
the most recent year, inquiries of officials
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<PAGE> 26
of the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) the unaudited condensed consolidated financial
statements set forth in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Registration
Statement and the Prospectus as amended or supplemented do not
comply as to form in all material respects with the applicable
accounting requirements of the 1934 Act and the 1934 Act
Regulations as they apply to Form 10-Q or any material
modifications should be made for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements set forth in the Company's Annual Report
on Form 10-K for the most recent year ended incorporated by
reference in the Registration Statement and the Prospectus as
amended or supplemented;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus, as amended or
supplemented, do not agree with the corresponding items in the
unaudited consolidated financial statements from which such
data and items were derived;
(C) any unaudited pro forma consolidated condensed
financial statements or any unaudited pro forma consolidating
financial statements included or incorporated by reference in
the Prospectus, as amended or supplemented, do not comply as
to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations or
the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements;
(D) as of a specified date not more than five days
prior to the date of this Agreement, there has been any
decrease or increase in the capital stock or any increase or
decrease in long-term debt including capital lease obligations
and current maturities (except for sinking fund and
installment requirements under their long-term debt
agreements, terms of the preferred securities of
subsidiaries and purchases in the open market in anticipation
thereof) or any increase in short-term debt, or any decrease
in consolidated common shareholders' equity of the Company and
its consolidated subsidiaries (other than periodic dividends
declared to shareholders), in each case as compared with the
corresponding amounts shown in the latest consolidated
statement of financial position of the Company and its
subsidiaries incorporated by reference in the Registration
Statement and the Prospectus as amended or supplemented,
except in each case for increases or decreases which the
Prospectus as amended or supplemented, including financial
information incorporated by reference, discloses have occurred
or may occur or which are described in such letter; and
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<PAGE> 27
(E) for the period from the date of the latest
consolidated financial statements included or incorporated by
reference in the Prospectus, as amended or supplemented, to
the end of the latest period for which unaudited condensed
consolidated financial statements or financial information are
available there were any decreases in consolidated operating
revenues, operating income, net income or earnings available
for Common Stock of the Company and its consolidated
subsidiaries, or any increases in any items specified by the
Representatives, in each case as compared with the
corresponding period in the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each case for increases or
decreases which the Prospectus, as amended or supplemented,
including financial information incorporated by reference,
discloses have occurred or may occur or which are described in
such letter; and
(F) the unaudited condensed consolidated financial
statements referred to in Clause (E) are not stated on a basis
substantially consistent with the audited consolidated
financial statements incorporated by reference in the
Registration Statement and the Prospectus, as amended or
supplemented.
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus, as amended or supplemented, and included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most
recent fiscal year agrees with the corresponding amounts (after
restatement where applicable) in the audited consolidated financial
statements for such five fiscal years which were included or
incorporated by reference in the Company's Annual Reports on Form 10-K
for such fiscal years;
(v) In addition to the limited procedures, reading of
minutes, inquiries and other procedures referred to in clause (iii)
and (iv) above, they have carried out certain other specified
procedures,not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information which are derived from the
general accounting and financial records of the Company and its
subsidiaries, which appear in the Prospectus, as amended or
supplemented, and the Registration Statement, in The Company's Annual
Report on Form 10-K for the latest year ended and in the Company's
Quarterly Reports on Form 10-Q since the latest Annual Report on Form
10-K and which are specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with
the accounting and financial records of the Company and its
subsidiaries and have found them to be in agreement; and
(vi) If applicable and agreed to by the parties to this
Agreement, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the selected financial data, pro forma financial information,
prospective financial statements, consolidating financial statements
and/or
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<PAGE> 28
condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished
to the Representatives.
(e) On the Closing Date, the Representatives shall have received from
Deloitte & Touche LLP a letter, dated as of the Closing Date, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(d) of this Section, except that the specified date referred to shall be a date
not more than three business days prior to the Closing Date.
(f) On the Closing Date, the Securities shall be rated at least "A2" by
Moody's Investors Service Inc. and "A" by Standard & Poor's Ratings Group, a
division of McGraw- Hill, Inc.; and the Company shall have delivered to the
Representatives a letter, dated the Closing Date, from such rating agencies, in
form satisfactory to the Representatives, confirming that the Securities have
such ratings; and since the date of this Agreement there shall not have occurred
any decrease in the ratings of any of the securities of the Company or of the
Securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the 1933 Act Regulations) and no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the securities
of the Company or of the Securities.
(g) On the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by the Company in connection with the issuance and sale of
the Securities as herein contemplated shall be satisfactory in form and
substance to the Representatives and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement, may be
terminated by the Representatives by notice to the Company at any time on or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged
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<PAGE> 29
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided,
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, the fees, expenses and disbursements of counsel chosen by
Merrill Lynch), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this foregoing indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); provided,
further, that such indemnity with respect to the preliminary prospectus shall
not inure to the benefit of the Underwriters (or any person controlling such
Underwriters) from whom the person asserting any such loss, liability, claim,
damage or expense purchased any of the Securities which are the subject thereof
if such person did not receive a copy of the Prospectus (or the Prospectus as
amended or supplemented) (in each case exclusive of the documents from which
information is incorporated by reference) at or prior to the written
confirmation of the sale of such Securities to such person in any case where the
Company complied with its obligations under Sections 3(e) and 3(g) hereof and
any such untrue statement or omission or alleged untrue statement or omission of
a material fact contained in such preliminary prospectus (or any amendment or
supplement thereto) was corrected in the Prospectus (or the Prospectus as
amended or supplemented).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the
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<PAGE> 30
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through Merrill
Lynch expressly for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
-30-
<PAGE> 31
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of such Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of such Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of
-31-
<PAGE> 32
any damages which such Underwriter has otherwise been required to pay by reason
of any such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the aggregate principal amount of Securities set forth opposite
their respective names in Schedule II to this Agreement, and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of any Underwriter or controlling person,
or by or on behalf of the Company, and shall survive delivery of and payment for
the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Company at any time on or prior to the Closing Date, if (i) there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change or any
development which could reasonably be expected to result in a prospective
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) there has occurred any material adverse
change in the financial markets in the United States or any outbreak of
hostilities or escalation of hostilities or other calamity or crisis, or any
change or development involving a prospective change in national or
international political, financial or economic conditions the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company or any of its affiliates has
been suspended or limited by the Commission, the National Association of
Securities Dealers, Inc. ("NASD") or the New York Stock Exchange, or if trading
generally on either the American Stock Exchange, the New York Stock Exchange or
in the over-the-counter market has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
-32-
<PAGE> 33
securities have been required, by either of said exchanges or by such system or
by order of the Commission, NASD or any other governmental authority, or (iv) if
a banking moratorium has been declared by either Federal, New York or Michigan
authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4, and provided, further, that Sections 1, 6, 7 and 8 shall
survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Date to purchase the Securities
which it or they are obligated to purchase under this Agreement (the "DEFAULTED
SECURITIES"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone the Closing Date for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or the
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at North Tower, World
Financial Center, New York, New York 10281-1202, attention of Karl Fritz Schlopy
with a copy to LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New
York, New York 10019-5389, attention of William S. Lamb, Esq.; notices to the
Company shall be directed to it at Michigan Consolidated Gas Company, 500
Griswold Street, Detroit,
-33-
<PAGE> 34
Michigan 48226, attention of Ronald E. Christian, Esq., Vice President, General
Counsel and Secretary.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Company, and the Underwriters and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters, the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein or therein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the parties hereto and
thereto and their respective successors and legal representatives, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. SPECIFIED TIMES OF DAY REFER
TO NEW YORK CITY TIME UNLESS OTHERWISE INDICATED.
SECTION 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
-34-
<PAGE> 35
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Underwriters and the Company in accordance with its terms.
Very truly yours,
MICHIGAN CONSOLIDATED GAS
COMPANY
By: /s/ Howard L. Dow III
---------------------------
Name: Howard L. Dow III
Title: Senior Vice President
and Chief Financial
Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
FIRST CHICAGO CAPITAL MARKETS, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Anthony V. Leness
--------------------------------------
Authorized Signatory
For themselves and as Representatives of the other
Underwriters named in Schedule II hereto.
-35-
<PAGE> 36
SCHEDULE I
REPRESENTATIVES: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
First Chicago Capital Markets, Inc.
PURCHASE PRICE AND DESCRIPTION OF THE SECURITIES:
TITLE: Extendable MandatOry Par Put Remarketed Securities (sm)
("MOPPRS(sm)") due June 30, 2038.
PRINCIPAL AMOUNT: $75,000,000
PURCHASE PRICE: 101.819% of the principal amount thereof.
INDENTURE: Indenture, dated as of June 1, 1998, between Michigan
Consolidated Gas Company and Citibank, N.A., as trustee.
DATE OF MATURITY: June 30, 2038.
INTEREST RATE: 6.45%
INTEREST PAYMENT DATES: June 30 and December 30.
REDEMPTION PROVISIONS: As set forth in the Prospectus under the
caption headed "Description of the Notes -
Redemption."
AUTHORIZED DENOMINATIONS: $1,000 and integral multiples thereof.
OTHER PROVISIONS:
TIME AND DATE OF DELIVERY AND PAYMENT:
TIME: 9:00 A.M. (Eastern time)
DATE: June 23, 1998
LOCATION: LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, NY 10019-5389
<PAGE> 37
PLACE OF DELIVERY AND PAYMENT:
DELIVERY: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
c/o The Depository Trust Company
55 Water Street
New York, New York 10041
PAYMENT: Wire Transfer of same day funds.
-2-
<PAGE> 38
SCHEDULE II
<TABLE>
<CAPTION>
Principal Amount
Name of Underwriter of the Securities
------------------- -----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................. $37,500,000
First Chicago Capital Markets, Inc. ....................... $37,500,000
-----------
Total...................................................... $75,000,000
===========
</TABLE>
<PAGE> 1
EXHIBIT 4.1
================================================================================
FIRST SUPPLEMENTAL INDENTURE
FROM
MICHIGAN CONSOLIDATED GAS COMPANY
TO
CITIBANK, N.A.
TRUSTEE
--------------
Dated as of June 18, 1998
SUPPLEMENTAL TO INDENTURE
Dated as of June 1, 1998
Senior Debt Securities
================================================================================
This FIRST SUPPLEMENTAL INDENTURE is made as of the 18th day of June,
by and between MICHIGAN CONSOLIDATED GAS COMPANY, a corpora-
<PAGE> 2
tion duly organized and existing under the laws of the State of Michigan (the
"Company"), and CITIBANK, N.A., a national banking association incorporated and
existing under and by virtue of the laws of the United States of America, as
trustee (the "Trustee").
RECITALS OF THE COMPANY:
WITNESSETH: that
The Company has heretofore executed and delivered its Indenture
(hereinafter referred to as the "Indenture"), made as of June 1, 1998; and
Section 3.1 of the Indenture provides that Securities may be issued
from time to time in series pursuant to a supplemental indenture specifying the
terms of each issue of Securities; and
The Company desires to establish a series of Securities to be
designated "Extendable MandatOry Par Put Remarketed Securities(SM) due June 30,
2038" (the "Remarketed Securities") and a series of Securities to be designated
"Resetable MAndatory Putable/remarketable Securities, due June 30, 2038" (the
"Resetable Securities"); and
Section 10.1 of the Indenture provides that the Company and the Trustee
may enter into indentures supplemental thereto for the purposes, among others,
of establishing the form of Securities or establishing or reflecting any terms
of any Security and adding to the covenants of the Company; and
The execution and delivery of this First Supplemental Indenture
(herein, this "Supplemental Indenture") has been duly authorized by a Board
Resolution;
NOW, THEREFORE, this Supplemental Indenture
WITNESSETH, that, in order to set forth the terms and conditions upon
which Remarketed Securities and the Resetable Securities are, and are to be,
authenticated, issued and delivered, and in consideration of the sum of one
dollar duly paid to it by the Trustee at the execution of this Supplemental
Indenture, the receipt whereof is hereby acknowledged, the Company covenants and
agrees with the Trustee for the equal and proportionate benefit of the
respective Holders from time to time of such Securities as follows:
2
<PAGE> 3
ARTICLE I
RELATION TO INDENTURE; DEFINITIONS
SECTION 1.1
This Supplemental Indenture constitutes an integral part of the
Indenture.
SECTION 1.2
For all purposes of this Supplemental Indenture:
(a) Capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned to such terms in the Indenture;
(b) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this Supplemental
Indenture; and
(c) The terms "hereof," "herein," "hereby," "hereto," "hereunder," and
"herewith" refer to this Supplemental Indenture.
ARTICLE II
THE SECURITIES
There shall be hereby established two series of Securities, known as
and entitled "Extendable MandatOry Par Put Remarketed Securities(SM) due June
30, 2038" and "Resetable MAndatory Putable/remarketable Securities, due
June 30, 2038." The aggregate principal amount of the Remarketed Securities
shall be limited to Seventy-Five Million Dollars ($75,000,000) and the
aggregate principal amount of the Resetable Securities shall be limited to
Seventy-Five Million Dollars ($75,000,000). Such Securities shall be initially
authenticated and delivered from time to time upon delivery to the Trustee of
the documents required by Section 3.1 of the Indenture, including, among other
things, a Board Resolution and an Officer's Certificate specifying the
following with respect to each issue of the Remarketed Securities and the
Resetable Securities: (i) the form of Securities for each of the Remarketed
Securities and the Resetable Securities substantially in the forms of
Securities attached hereto as Appendix I and Appendix II with such changes
therein as may be authorized by a Board Resolution and an Officer's Certificate
as may be required to (A) conform the Remarketed Securities to the terms and
conditions of the
3
<PAGE> 4
Mandatory Tender Remarketing Agreement dated as of June 23, 1998 and the Reset
Remarketing Agreement dated as of June 23, 1998, each of which is between the
Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorpo-
rated and is attached hereto and incorporated by reference herein or (B) conform
the Resetable Securities to the terms and conditions of the Mandatory Tender
Remarketing Agreement dated as of June 23, 1998 and the Reset Remarketing
Agreement dated as of June 23, 1998, each of which is between the Company and
Salomon Brothers Inc and is attached hereto and incorporated by reference herein
and (ii) such other terms as shall be prescribed by the Company in a Board
Resolution and an Officer's Certificate as may be required by law and which
shall not be inconsistent with the terms and provisions of the Indenture or this
Supplemental Indenture.
ARTICLE III
TRANSFER OF COLLATERAL BONDS
The Company hereby issues, delivers and transfers to the Trustee (A) in
connection with the issuance of the Remarketed Securities, Seventy-Five Million
Dollars ($75,000,000) aggregate principal amount of a related issue of
Collateral Bonds of the Company designated "First Mortgage Bonds, Collateral
Series A" and (B) in connection with the issuance of the Resetable Securities,
Seventy-Five Million Dollars ($75,000,000) aggregate principal amount of a
related issue of Collateral Bonds of the Company designated "First Mortgage
Bonds, Collateral Series B" (each, a "Related Issue," as to the respective
series of Securities it secures, together, the "Collateral Bonds"), each of
which has been fully registered in the name of the Trustee in such capacity, to
be held in trust for the benefit of the Holders from time to time of the Related
Issue of Securities and, if such transfer does not constitute a sale of the
Collateral Bonds to the Trustee, the Company hereby grants a perfected security
interest in the Collateral Bonds for the benefit of such Holders, in each case
as security for any and all obligations of the Company under the Indenture, this
Supplemental Indenture and the Related Issue of Securities, including but not
limited to (1) the full and prompt payment of the interest on, principal of, and
premium, if any, on such Related Issue of Securities when and as the same shall
become due and payable in accordance with the terms and provisions of the
Indenture and this Supplemental Indenture and such Related Issue of Securities,
either at the stated maturity thereof, upon acceleration of the maturity thereof
or upon redemption, and (2) the full and prompt payment of any interest on such
Related Issue of Securities when and as the same shall become due and payable in
accordance with the terms and provisions of the Indenture and this Supplemental
Indenture and such Related
4
<PAGE> 5
Issue of Securities. The Trustee shall enforce all of its rights under the First
Mortgage Indenture as a holder of each Related Issue of Collateral Bonds
transferred to it as provided in this Article III for the benefit of the Holders
of the respective Related Issue of Securities and the proceeds of the
enforcement of such rights shall be applied by the Trustee to satisfy the
Company's obligations under the Indenture, this Supplemental Indenture, and such
Related Issue of Securities.
The Company shall make payments of the principal of, and premium or
interest on each of the Collateral Bonds to the Trustee, which payments shall be
applied by the Trustee to satisfaction of all obligations then due on the
respective Related Issue of Securities.
The Collateral Bonds shall not be sold or transferred by the Trustee
until the earlier of the Release Date or the prior retirement of the Related
Issue of Securities through redemption, repurchase or otherwise. The "Release
Date" shall be the date that all First Mortgage Bonds of the Company issued and
outstanding under the First Mortgage Indenture, other than the Collateral Bonds,
have been retired (at, before or after the maturity thereof) through payment,
redemption or otherwise provided that no Default or Event of Default has
occurred and, at such time, is continuing under the Indenture.
Copies of the forms of Collateral Bonds are attached hereto as Appendix
III and IV, respectively, and their terms are hereby incorporated by reference
herein.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1
The Trustee has accepted the amendment of the Indenture effected by
this Supplemental Indenture and agrees to execute the trust created by the
Indenture as hereby amended, but only upon the terms and conditions set forth in
the Indenture, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee, and without limiting the
generality of the foregoing, the Trustee shall not be responsible in any manner
whatsoever for or with respect of any of the recitals or statements contained
herein, all of which recitals or statements are made solely by the Company, or
for or with respect to (a) the validity or sufficiency of this Supplemental
Indenture or any of the terms or provisions hereof,
5
<PAGE> 6
(b) the proper authorization hereof by the Company by corporate action or
otherwise, and (c) the due execution hereof by the Company.
SECTION 4.2
This Supplemental Indenture shall be construed in connection with and
as a part of the Indenture.
SECTION 4.3
(a) If any provision of this Supplemental Indenture conflicts with
another provision of the Indenture required to be included in indentures
qualified under the Trust Indenture Act of 1939, as amended (as enacted prior to
the date of this Supplemental Indenture), by any of the provisions of Sections
310 to 317, inclusive, of said act, such required provision shall control.
(b) In case any one or more of the provisions contained in this
Supplemental Indenture or in the Securities issued hereunder should be invalid,
illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected, impaired, prejudiced or disturbed thereby.
SECTION 4.4
Whenever in this Supplemental Indenture either of the parties hereto is
named or referred to, such name or reference shall be deemed to include the
successors or assigns of such party, and all the covenants and agreements
contained in this Supplemental Indenture by or on behalf of the Company or by
or on behalf of the Trustee shall bind and inure to the benefit of the
respective successors and assigns of such parties, whether so expressed or not.
SECTION 4.5
(a) This Supplemental Indenture may be simultaneously executed in
several counterparts, and all such counterparts executed and delivered, each as
an original, shall constitute but one and the same instrument.
(b) The descriptive headings of the several Articles of this
Supplemental Indenture were formulated, used and inserted in this Supplemental
Indenture for
6
<PAGE> 7
convenience only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
7
<PAGE> 8
IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
Supplemental Indenture to be executed by its Chairman, Chief Executive Officer,
President, Vice Chairman or a Vice President, or any other officer selected by
the Board of Directors, and its corporate seal to be hereunto affixed, duly
attested by its Secretary or an Assistant Secretary, and CITIBANK, N.A., as
Trustee as aforesaid, has caused this Supplemental Indenture to be executed by
one of its authorized signatories, as of June 23, 1998.
MICHIGAN CONSOLIDATED GAS
COMPANY
By: /s/ Howard L. Dow III
------------------------------
Name: Howard L. Dow III
Title: Senior Vice President
and CFO
ATTEST:
/s/ Ronald E. Christian
- ------------------------
Secretary
CITIBANK, N.A., as Trustee
By: /s/ P. DeFelice
------------------------------
Name: P. DeFelice
Title: Vice President
ATTEST:
/s/ F. Mills
- ------------------------
Authorized Officer
F. Mills
Senior Trust Officer
<PAGE> 9
APPENDIX I
CUSIP: 594457 BL 6
No. R-1 $75,000,000
THIS NOTE IS IN GLOBAL FORM WITHIN THE MEANING OF THE SENIOR INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR A NOTE IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY.
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Company (as
defined below) or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as requested by an
authorized representative of DTC), 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.
MICHIGAN CONSOLIDATED GAS COMPANY
Extendable MandatOry Par Put Remarketed Securities(sm)* ("MOPPRS(sm)")
due June 30, 2038
MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and
existing under the laws of the State of Michigan (the "Company", which term
includes any successor corporation under the Senior Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co. or
registered assigns, at the office or agency of the Company in The City of New
York, New York, the principal sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000)
on June 30, 2038 (the "Stated Maturity Date"), in the coin or currency of the
United States, and to pay interest: (i) semiannually on June 30 and December 30
(x) from and including June 23, 1998 through but excluding June 30, 2008 and (y)
on and after June 30, 2008 if and so long as the Extendable MOPPRS are in
Mandatory Tender Mode (as defined on the reverse hereof); or (ii) on such dates
as determined on the Duration/Interest Mode Determination Date (as defined on
the reverse hereof) if and so long as the Extendable MOPPRS are in Reset Mode
(as defined on the reverse hereof) (each, an "Interest Payment Date"),
commencing December 30, 1998. Interest shall be paid on said principal sum at
said office or agency, in like coin or currency, at the rate per annum specified
below, from the Interest
- --------
* "MandatOry Par Put Remarketed Securities(sm)" and "MOPPRS(sm)" are service
marks owned by Merrill Lynch & Co., Inc.
<PAGE> 10
Payment Date next preceding the date of this Extendable MOPPRS to which
interest has been paid or duly provided for, unless the date hereof is a date to
which interest has been paid or duly provided for, in which case from the date
of this Extendable MOPPRS, or unless no interest has been paid or duly provided
for on this Extendable MOPPRS, in which case from June 23, 1998, until payment
of said principal sum has been made or duly provided for; provided, that payment
of interest may be made at the option of the Company by check mailed to the
address of the person entitled thereto as such address shall appear on the
Security Register of the Company as provided in the Senior Indenture.
Notwithstanding the foregoing, if the date hereof is after the 14th day of a
month in which an Interest Payment Date occurs, and before the following
Interest Payment Date, this Extendable MOPPRS shall bear interest from such
Interest Payment Date; provided, that if the Company shall default in the
payment of interest due on such Interest Payment Date, then this Extendable
MOPPRS shall bear interest from the next preceding Interest Payment Date to
which interest has been paid or duly provided for or, if no interest has been
paid or duly provided for on this Extendable MOPPRS, from June 23, 1998. The
interest so payable on any Interest Payment Date will, subject to certain
exceptions provided in the Senior Indenture, be paid to the person in whose name
this Extendable MOPPRS (or one or more Predecessor Securities) is registered at
the close of business on the fifteenth calendar day next preceding such Interest
Payment Date, whether or not such day is a Business Day (each a "Record Date").
The rate of interest on this Extendable MOPPRS shall be 6.45% per annum
to June 30, 2008 (the "First Remarketing Date"). If, pursuant to the Mandatory
Tender Remarketing Agreement, dated as of the date hereof (the "Mandatory Tender
Remarketing Agreement"), between Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Mandatory Tender Remarketing Agent (the "Mandatory Tender
Remarketing Agent"), and the Company, the Mandatory Tender Remarketing Agent
elects to exercise its option to remarket the Extendable MOPPRS (the
"Remarketing Right"), then, except as otherwise set forth on the reverse hereof,
(i) this Extendable MOPPRS shall be subject to mandatory tender to the Mandatory
Tender Remarketing Agent for remarketing on the First Remarketing Date, on the
terms and subject to the conditions set forth on the reverse hereof, and (ii)
from and after the First Remarketing Date and up to but excluding June 30, 2018
(the "Second Remarketing Date"), this Extendable MOPPRS shall bear interest from
and including June 30, 2008 to but excluding June 30, 2018 (the "Second
Remarketing Date") at the rate determined by the Mandatory Tender Remarketing
Agent in accordance with the procedures set forth in Section 2(b) on the reverse
hereof (the "Interest Rate to Second Remarketing Date").
From and after the earlier to occur of (i) the First Remarketing Date
in the event that the Mandatory Tender Remarketing Agent fails to give notice of
exercise of the Remarketing Right and (ii) the Second Remarketing Date, the
character and duration of the interest rate on the Extendable MOPPRS shall be
determined by Merrill Lynch, Pierce Fenner & Smith Incorporated, as reset
remarketing agent, or such other nationally recognized broker-dealer as may be
selected by the Company to act as such (the "Reset Remarketing Agent"), pursuant
to that certain Reset Remarketing Agreement dated as of June 23, 1998 (the
"Reset Remarketing Agreement") between the Company and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, and agreed to by the Company on each applicable
Duration/Interest Mode Determination Date, and the spread will be as agreed to
by the Company and the Reset Remarketing Agent on the
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<PAGE> 11
corresponding Spread Determination Date (as defined on the reverse
hereof), subject to certain limitations set forth on the reverse of this
Extendable MOPPRS.
UNTIL THE RELEASE DATE (AS DEFINED ON THE REVERSE HEREOF), THIS
EXTENDABLE MOPPRS SHALL BE SECURED BY FIRST MORTGAGE BONDS (THE "FIRST MORTGAGE
BONDS") ISSUED AND DELIVERED BY THE COMPANY TO THE SENIOR TRUSTEE (AS DEFINED ON
THE REVERSE HEREOF) UNDER THE COMPANY'S TWENTY-NINTH SUPPLEMENTAL INDENTURE
DATED AS OF JULY 15, 1989, PROVIDING FOR THE RESTATEMENT OF THE INDENTURE OF
MORTGAGE AND DEED OF TRUST DATED AS OF MARCH 1, 1994 BETWEEN THE COMPANY AND
CITIBANK, N.A. (THE "MORTGAGE TRUSTEE") AND ROBERT T. KIRCHNER (THE "INDIVIDUAL
TRUSTEE"), AS SUPPLEMENTED BY THE THIRTY- FIFTH SUPPLEMENTAL INDENTURE (AS SO
SUPPLEMENTED, THE "MORTGAGE INDENTURE"). ON THE RELEASE DATE, THE EXTENDABLE
MOPPRS SHALL CEASE TO BE SECURED BY SUCH FIRST MORTGAGE BONDS AND, AT THE
COMPANY'S OPTION, EITHER (i) SHALL BECOME UNSECURED GENERAL OBLIGATIONS OF THE
COMPANY OR (ii) SHALL BE SECURED BY FIRST MORTGAGE BONDS UNDER A SECURED
MORTGAGE INDENTURE OTHER THAN THE MORTGAGE INDENTURE.
Reference is made to the further provisions of this Extendable MOPPRS
set forth on the reverse hereof. Such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Extendable MOPPRS shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been manually
signed by the Senior Trustee under the Senior Indenture referred to on the
reverse hereof.
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IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
instrument to be duly executed under its corporate seal.
Dated: June 23, 1998
MICHIGAN CONSOLIDATED GAS COMPANY
By: _______________________________
Title:
Attest: [SEAL]
By: ______________________________
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Extendable MOPPRS of the series designated therein
referred to in the within-mentioned Indenture.
Dated: June 23, 1998
CITIBANK, N.A., as Trustee
By: _______________________________
Authorized Signatory
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<PAGE> 13
MICHIGAN CONSOLIDATED GAS COMPANY
Extendable MandatOry Par Put Remarketed Securities(sm) ("MOPPRS(sm)")
due June 30, 2038
1. Indenture. (a) This Extendable MOPPRS is one of the duly authorized
issue of securities of the Company (hereinafter called the "Notes") of the
series hereinafter specified, all issued or to be issued under and pursuant to
an Indenture, dated as of June 1, 1998, as supplemented by the first
supplemental Indenture, dated as of June 18, 1998 between the Company and the
Trustee (as so supplemented, the "Senior Indenture"), duly executed and
delivered by the Company to Citibank, N.A., as Trustee (herein called the
"Senior Trustee," which term includes any successor trustee under the Senior
Indenture), to which Senior Indenture reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Senior Trustee, the Company and the Holders of the Notes. The
Notes may be issued in one or more series, which different series may be issued
in various aggregate principal amounts, may mature at different times, may bear
interest, if any, at different rates, may be subject to different redemption
provisions (if any) and may be subject to different sinking, purchase or
analogous funds (if any) and may otherwise vary as provided in the Indenture.
This Note is one of the series designated as the Extendable MandatOry Par Put
Remarketed Notes(sm) ("MOPPRS(sm)") due June 30, 2038 of the Company, which
series is limited in aggregate principal amount to $75,000,000.
(b) Interest shall be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal and, to the
extent lawful, on overdue installments of interest at the rate per annum borne
by this Note. For purposes hereof, the term "Business Day" means any day other
than a Saturday or Sunday or a day on which banking institutions in The City of
New York are required or authorized to close and, in the case of Notes in Reset
Mode that are in the Floating Rate Interest Mode that is also a London Business
Day. "London Business Day" means any day on which dealings in deposits in U.S.
dollars are transacted on the London interbank market.
(c) Unless otherwise defined herein, all capitalized terms used herein
without definition shall have the meanings assigned to them in the Senior
Indenture.
2. Terms of the Notes in Mandatory Tender Mode. On the date, if any, on
which the Mandatory Tender Remarketing Agent elects to exercise the Remarketing
Right in accordance with the terms hereof, the Notes shall be deemed to be in
"Mandatory Tender Mode."
(a) Mandatory Tender on First Remarketing Date; Purchase and
Settlement. (i) Provided that the Mandatory Tender Remarketing Agent gives
notice to the Company and the Senior Trustee on a Business Day not later than
eleven Business Days prior to the First Remarketing Date of its intention to
exercise the Remarketing Right to purchase the Notes for remarketing (the
"Mandatory Tender Notification Date"), each Note shall be automatically
tendered, or deemed tendered, to the Mandatory Tender Remarketing Agent for
purchase on the Mandatory Tender Remarketing Date in accordance with Section
2(a)(ii) below, except as set forth in Sections 6 and
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<PAGE> 14
7 below. The purchase price of such tendered Notes shall be equal to
100% of the principal amount thereof. Upon such tender, the Mandatory Tender
Remarketing Agent shall have the option, in its sole discretion, to elect to
remarket the Notes in accordance with the Mandatory Tender Remarketing Agreement
for its own account at varying prices to be determined by the Mandatory Tender
Remarketing Agent at the time of each sale. If the Mandatory Tender Remarketing
Agent makes such election, the obligation of the Mandatory Tender Remarketing
Agent to purchase the Notes on the Mandatory Tender Remarketing Date shall be
subject to the conditions set forth in the Mandatory Tender Remarketing
Agreement. No Holder or actual purchaser of the Notes ("Beneficial Owner") shall
have any rights or claims under the Mandatory Tender Remarketing Agreement or
against the Company or the Mandatory Tender Remarketing Agent as a result of the
Mandatory Tender Remarketing Agent not purchasing such Notes.
(i) Following the Mandatory Tender Notification Date and assuming that
the Notes are remarketed by the Mandatory Remarketing Agent pursuant to the
exercise of the Remarketing Right, the tender and purchase of the Notes provided
for in Section 2(a)(i) above shall be effected as follows, subject to Sections 6
and 7 below:
(x) All of the tendered Notes shall be automatically delivered
to the account of the Trustee, by book-entry through DTC or any
successor thereto pending payment of the purchase price therefor, on
the Remarketing Date.
(y) The Mandatory Tender Remarketing Agent shall make or cause
the Trustee to make payment to DTC by book entry through DTC in
accordance with the procedures of DTC, by 1:00 p.m., New York City
time, on the Mandatory Tender Remarketing Date against delivery through
DTC of such Beneficial Owner's tendered Notes, of the purchase price
for tendered Notes that have been purchased for remarketing by the
Mandatory Tender Remarketing Agent. The Company shall make or cause the
Trustee to make payment of interest to DTC on the Mandatory Tender
Remarketing Date by book entry through DTC by 2:30 p.m., New York City
time, on the Mandatory Tender Remarketing Date.
(ii) In anticipation of the purchase of the Notes by the Mandatory
Tender Remarketing Agent for remarketing or the repurchase of the Notes
by the Company on the Remarketing Date, the Trustee shall notify the
Holder hereof, not less than 30 days nor more than 60 days prior to the
Remarketing Date, that all Notes will be delivered on the Mandatory
Tender Remarketing Date through the facilities of DTC against payment
of the purchase price therefor by the Mandatory Tender Remarketing
Agent or the Company, as the case may be.
(b) Determination of Interest Rate to Second Remarketing Date;
Notification Thereof. Subject to the Remarketing Dealer's election to exercise
the Remarketing Right as provided in Section 2(a)(i), by 3:30 p.m., New York
City time, on the third Business Day immediately preceding the Remarketing Date
(the "Mandatory Tender Determination Date"), the Mandatory Tender Remarketing
Agent shall determine the Interest Rate to Second Remarketing Date to the
nearest one hundred-thousandth (0.00001) of one percent per annum. The Interest
Rate to
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<PAGE> 15
Second Remarketing Date shall be equal to the sum of 5.50% (the "Base
Rate") and the Applicable Spread (as defined below), which will be based on the
Dollar Price (as defined below) of the Notes.
The "Applicable Spread" for the Notes in Mandatory Tender Mode shall be
the lowest bid indication, expressed as a spread (in the form of a percentage or
in basis points) above the Base Rate, obtained by the Mandatory Tender
Remarketing Agent on the Mandatory Tender Determination Date from the bids
quoted by five Reference Corporate Dealers (as defined below) for the full
aggregate principal amount of the Notes at the Dollar Price, but assuming (i) an
issue date that is the Mandatory Tender Remarketing Date, with settlement on
such date without accrued interest, (ii) a maturity date that is the Second
Remarketing Date of the Notes and (iii) a stated annual interest rate, payable
semiannually on each Interest Payment Date (as defined below), equal to the Base
Rate plus the spread bid by the applicable Reference Corporate Dealer Second
Remarketing Date. If fewer than five Reference Corporate Dealers bid as
described above, then the Applicable Spread shall be the lowest of such bid
indications obtained as described above. The Interest Rate to Second Remarketing
Date announced by the Mandatory Tender Remarketing Agent, absent manifest error,
shall be binding and conclusive upon the Beneficial Owners and Holders of the
Notes, the Company and the Senior Trustee.
"Dollar Price" means, with respect to the Notes in Mandatory Tender
Mode, the present value determined by the Mandatory Tender Remarketing Agent, as
of the First Remarketing Date, of the Remaining Scheduled Payments (as defined
below) discounted to the First Remarketing Date on a semiannual basis (assuming
a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as
defined below).
"Reference Corporate Dealers" means leading dealers of publicly traded
debt securities of the Company in The City of New York (which may include the
Mandatory Tender Remarketing Agent or one of its affiliates) selected by the
Mandatory Tender Remarketing Agent after consultation with the Company.
"Remaining Scheduled Payments" means, with respect to the Notes, the
remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Applicable Base Rate only, that would be due after the First
Remarketing Date to and including the Second Remarketing Date as determined by
the Mandatory Tender Remarketing Agent.
"Treasury Rate" means, with respect to the First Remarketing Date, the
rate per annum equal to the semiannual equivalent yield to maturity or
interpolated (on a day count basis) yield to maturity of the Comparable Treasury
Issues (as defined below), assuming a price for the Comparable Treasury Issues
(expressed as a percentage of its principal amount), equal to the Comparable
Treasury Price (as defined below) for such Remarketing Date.
"Comparable Treasury Issues" means the United States Treasury Security
or Securities selected by the Mandatory Tender Remarketing Agent as having an
actual or interpolated maturity or maturities comparable to the Second
Remarketing Date.
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<PAGE> 16
"Comparable Treasury Price" means, with respect to the First
Remarketing Date, (a) the offer prices for the Comparable Treasury Issues
(expressed in each case as a percentage of its principal amount) on the
Mandatory Tender Determination Date, as set forth on "Telerate Page 500" (or
such other page as may replace Telerate Page 500) or (b) if such page (or any
successor page) is not displayed or does not contain such offer prices on such
Mandatory Tender Determination Date, (i) the average of the Reference Treasury
Dealer Quotations for the First Remarketing Date, after excluding the highest
and lowest of such Reference Treasury Dealer Quotations, or (ii) if the
Mandatory Tender Remarketing Agent obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations. "Telerate Page 500" means the display designated as "Telerate Page
500" on Dow Jones Markets Limited (or such other page as may replace Telerate
Page 500 on such service) or such other service displaying the offer prices
specified in (a) above as may replace Dow Jones Markets Limited.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and the First Remarketing Date, the offer prices for
the Comparable Treasury Issues (expressed in each case as a percentage of its
principal amount) quoted to the Remarketing Dealer by such Reference Treasury
Dealer by 3:30 p.m., New York City time, on the First Determination Date.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc (or
their respective affiliates which are primary U.S. Government Notes dealers) and
their respective successors; provided, however, that if any of the foregoing or
their affiliates shall cease to be a primary U.S. Government Notes dealer in The
City of New York (a "Primary Treasury Dealer"), the Remarketing Dealer shall
substitute therefor another Primary Treasury Dealer.
Provided the Remarketing Right has been exercised, the Mandatory Tender
Remarketing Agent shall notify the Company, the Senior Trustee and DTC by
telephone, confirmed in writing, by 4:00 p.m., New York City time, on the
Mandatory Tender Determination Date, of the Interest Rate to Second Remarketing
Date. In such event, all of the tendered Notes of a series will be automatically
delivered to the account of the Senior Trustee, by book-entry through DTC
pending payment of the purchase price therefor, on the First Remarketing Date,
and the Mandatory Tender Remarketing Agent shall make or cause the Senior
Trustee to make payment to the DTC Participant of each tendering Beneficial
Owner of the Notes, by book-entry through DTC by the close of business on the
First Remarketing Date against delivery through DTC of such Beneficial Owner's
tendered Notes of 100% of the principal amount of such tendered Notes. The
transactions described above shall be executed on the First Remarketing Date
through DTC in accordance with the procedures of DTC, and the accounts of the
respective DTC Participants shall be debited and credited and the Notes
delivered by book entry as necessary to effect the purchases and sales thereof.
Transactions involving the sale and purchase of the Notes remarketed by the
Mandatory Tender Remarketing Agent on and after the First Remarketing Date shall
settle in immediately available funds through DTC's Same-Day Funds Settlement
System. The tender and settlement procedures described above, including
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<PAGE> 17
provisions for payment by purchasers of the Notes in the remarketing or
for payment to selling Beneficial Owners of tendered Notes, may be modified to
the extent required by DTC or to the extent required to facilitate the tender
and remarketing of such series of Notes in certificated form, if the book-entry
system is no longer available for the Notes at the time of the remarketing. In
addition, the Mandatory Tender Remarketing Agent may, in accordance with the
terms of the Senior Indenture, modify the tender and settlement procedures set
forth above in order to facilitate the tender and settlement process.
3. Terms of the Notes in Reset Mode. If (i) the Mandatory Tender
Remarketing Agent does not provide notification to the Company of its intention
to exercise the Remarketing Right on the eleventh Business Day prior to the
First Remarketing Date (which date may also be referred to herein as the
"Mandatory Tender Remarketing Date"), on the tenth Business Day prior to the
Mandatory Tender Remarketing Date or (ii) the Second Remarketing Date, in the
event the Remarketing Right is exercised, the Notes will be deemed to be in
"Reset Mode."
(a) Tender at Option of Beneficial Owners in Reset Mode. If the Company
and the Reset Remarketing Agent agree on the Spread on the Spread Determination
Date (as defined below) with respect to any Subsequent Spread Period, the
Company and the Reset Remarketing Agent will enter into a Reset Remarketing
Agreement Supplement (a "Reset Remarketing Agreement Supplement") under which
the Reset Remarketing Agent will agree, subject to Section 6 and 7 below and
other applicable terms and conditions set forth in such Reset Remarketing
Agreement Supplement, to purchase from tendering Holders on the Reset Tender
Date all Notes with respect to which the Reset Remarketing Agent receives a
Reset Tender Notice as described below at 100% of the principal amount thereof
(the "Purchase Price"). Except as otherwise provided in the next succeeding
paragraph, each Beneficial Owner of a Note may, at such owner's option, upon
giving notice as provided below (a "Reset Tender Notice"), tender such Note for
purchase by the Reset Remarketing Agent on the Reset Tender Date with respect to
a Spread Period at the Purchase Price. The Purchase Price shall be paid by the
Reset Marketing Agent in accordance with the standard procedures of DTC, and
accounts of the respective DTC Participants shall be debited and credited and
the Notes delivered by book-entry as necessary to effect any purchases and sales
thereof.
The Reset Tender Notice must be received by the Reset Remarketing Agent
during the period commencing at 3:00 p.m., New York City time, on the Spread
Determination Date and ending at 12:00 noon, New York City time, on the second
Business Day following such Spread Determination Date for such Subsequent Spread
Period (the "Notice Date"). Except as otherwise provided below, a Reset Tender
Notice shall be irrevocable. If a Reset Tender Notice is not received for any
reason by the Reset Remarketing Agent with respect to any Note by 12:00 noon,
New York City time, on the Notice Date, the Beneficial Owner of such Note shall
be deemed to have elected not to tender such Note for purchase by the Reset
Remarketing Agent.
(b) Determination of Duration and Interest Rate Mode. Upon each
Duration/Interest Mode Determination Date (as defined below), the mode and other
terms for the next Subsequent Spread Period shall be determined as described
below.
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<PAGE> 18
(i) Floating Rate Interest Mode. If the Notes in Reset Mode are in
Floating Rate Mode, then the following shall apply: During the Floating
Rate Interest Mode, interest on the Notes for each Subsequent Spread
Period shall be payable either monthly, quarterly or semiannually, as
specified by the Company on each Duration/Interest Mode Determination
Date. With respect to Notes in the Floating Rate Interest Mode,
interest shall be payable, in arrears, in the case of Notes which pay:
(a) monthly, on the thirtieth day of each month; (b) quarterly, on the
thirtieth day of each March, June, September and December; and (c)
semiannually, on the thirtieth day of each June and December. During
any Subsequent Spread Period during which the Reset Mode Notes are in
the Floating Rate Interest Mode, the interest rate on the Notes shall
be reset either monthly, quarterly or semiannually, and the Notes shall
bear interest at a per annum rate (computed on the basis of the actual
number of days elapsed over a 360-day year) equal to LIBOR (as defined
below) for the applicable Interest Period (as defined below), plus the
applicable Spread. Interest on the Notes shall accrue from and
including each Interest Payment Date to but excluding the next
succeeding Interest Payment Date or maturity date, as the case may be.
Each interest period during any Subsequent Spread Period (each, an
"Interest Period") shall be from and including the most recent Interest
Payment Date on which interest has been paid to but excluding the next
Interest Payment Date. The first day of an Interest Period is referred
to herein as an "Interest Reset Date".
If any Interest Payment Date (other than at maturity), redemption
date, Interest Reset Date, Duration/Interest Mode Determination Date,
Spread Determination Date (as defined below), Commencement Date or
Reset Tender Date would otherwise be a day that is not a Business Day,
such Interest Payment Date, redemption date, Interest Reset Date,
Duration/Interest Mode Determination Date, Spread Determination Date,
Commencement Date or Reset Tender Date, as the case may be, shall be
postponed to the next succeeding day that is a Business Day; provided,
however, that if such next succeeding Business Day is in the next
calendar month, such date shall occur on the immediately preceding
Business Day.
LIBOR applicable for an Interest Period shall be determined by the
Rate Agent (as defined below) as of the second London Business Day (as
defined below) preceding each Interest Reset Date (a "LIBOR
Determination Date") in accordance with the following provisions:
(x) LIBOR shall be determined on the basis of the offered rate
for deposits in U.S. Dollars of the applicable Index Maturity
commencing on the second London Business Day immediately following
such LIBOR Determination Date, which appears on Telerate Page 3750
(as defined below) as of approximately 11:00 a.m., London time, on
such LIBOR Determination Date. "Telerate Page 3750" means the
display designated on page "3750" on Dow Jones Markets Limited or
any successor thereto (or such other page as may replace the 3750
page on that service or such other service or services as may be
nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. Dollar
deposits). If no such offered rate appears on Telerate Page 3750,
LIBOR for such LIBOR Determination Date shall
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<PAGE> 19
be determined in accordance with the provisions of paragraph (y)
below. The term "London Business Day" means any day on which
dealings in deposits in U.S. Dollars are transacted in the London
interbank market.
(y) With respect to a LIBOR Determination Date on which no
rate appears on Telerate Page 3750 as of approximately 11:00 a.m.,
London time, on such LIBOR Determination Date, the Rate Agent shall
request the principal London offices of each of four major
reference banks in the London interbank market selected by the Rate
Agent (after consultation with the Company) to provide the Rate
Agent with a quotation of the rate at which deposits in U.S.
Dollars of the applicable Index Maturity commencing on the second
London Business day immediately following such LIBOR Determination
Date, are offered by it to prime banks in the London interbank
market as of approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of
not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time. If at least two such
quotations are provided, LIBOR for such LIBOR Determination Date
shall be the arithmetic mean of such quotations as calculated by
the Rate Agent. If fewer than two quotations are provided, LIBOR
for such LIBOR Determination Date shall be the arithmetic mean of
the rates quoted as of approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date by three major banks in The
City of New York selected by the Rate Agent (after consultation
with the Company) for loans in U.S. Dollars to leading European
banks, of the applicable Index Maturity commencing on the second
London Business Day immediately following such LIBOR Determination
Date and in a principal amount equal to an amount of not less than
U.S. $1,000,000 that is representative for a single transaction in
such market at such time; provided, however, that if the banks
selected as aforesaid by the Rate Agent are not quoting as
mentioned in this sentence, LIBOR for such LIBOR Determination Date
shall be LIBOR determined with respect to the immediately preceding
LIBOR Determination Date.
The Index Maturity applicable to Notes in the Floating Rate
Interest Mode shall be, in the case of Notes paying (x) monthly, one
month; (y) quarterly, three months; and (z) semiannually, six months.
The term "Rate Agent" means the entity selected by the Company as
its agent to determine (i) LIBOR and the interest rate on the Notes for
any Interest Period and/or (ii) the yield to maturity on the applicable
United States Treasury security that is used in connection with the
determination of the applicable Fixed Rate, and the ensuing applicable
Fixed Rate pursuant to the Reset Remarketing Agreement.
(ii) Fixed Rate Interest Mode. If the Notes are to be reset to the
Fixed Rate Interest Mode, as agreed to by the Company and the Reset
Remarketing Agent on a Duration/Interest Mode Determination, then the
applicable Fixed Rate for the corresponding Subsequent Spread Period
shall be determined by 1:00 p.m. on the third Business Day preceding
the Commencement Date for such Subsequent Spread Period
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<PAGE> 20
(the "Fixed Rate Determination Date"), in accordance with the following
provisions: the Fixed Rate shall be a per annum rate and shall be
determined by auditing the applicable Spread (as agreed to by the
Company and the Reset Remarketing Agent on the preceding Spread
Determination Date) to the yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the applicable United States Treasury
security, selected by the Rate Agent or its agent after consultation
with the Reset Remarketing Agent, as having a maturity comparable to
the duration selected for the following Subsequent Spread Period, which
would be used in accordance with customary financial practice in
pricing new issues of corporate debt securities of comparable maturity
to the duration selected for the following Subsequent Spread Period.
Interest in the Fixed Rate Interest Mode shall be computed on the
basis of a 360-day year of twelve 30-day months. Such interest shall be
payable semiannually in arrears on the Interest Payment Dates occurring
on each June 30 and December 30 at the applicable Fixed Rate, as
determined by the Company and the Reset Remarketing Agent on the Fixed
Rate Determination Date, beginning on the Commencement Date and for the
duration of the relevant Subsequent Spread Period. Interest on the
Notes shall accrue from and including each Interest Payment Date to but
excluding the next succeeding Interest Payment Date or maturity date,
as the case may be.
If any Interest Payment Date or any redemption date in the Fixed Rate
Interest Mode falls on a day that is not a Business Day (in either case, other
than any Interest Payment Date or redemption date that falls on a Commencement
Date, in which case each such date including the Commencement Date shall be
postponed to the next day that is a Business Day), the related payment of
principal and interest shall be made on the next succeeding Business Day as if
it were made on the date such payment was due, and no interest shall accrue on
the amounts so payable for the period from and after such dates; provided,
however, that if such next succeeding Business Day is in the next calendar year,
such Interest Payment Date shall occur on the immediately preceding Business
Day.
(c) Additional Terms of the Notes in Reset Mode. The Spread that shall
be applicable during each Subsequent Spread Period for Notes in Reset Mode shall
be the percentage (a) recommended by the Reset Remarketing Agent so as to result
in a rate that, in the opinion of the Reset Remarketing Agent, will enable
tendered Notes to be remarketed by the Reset Remarketing Agent at 100% of the
principal amount thereof, and (b) agreed to by the Company. The interest rate
mode during such Subsequent Spread Period shall be either the Floating Rate
Interest Mode or the Fixed Rate Interest Mode, as determined by the Company and
the Reset Remarketing Agent.
Unless notice of redemption of the Notes as a whole has been given, the
duration, redemption dates, redemption type, redemption prices (if applicable),
Commencement Date, Interest Payment Dates and interest rate mode (and any other
relevant terms) for each Subsequent Spread Period shall be established by 3:00
p.m., New York City time, on the tenth Business Day prior to the Commencement
Date of each Subsequent Spread Period (each a "Duration/Interest
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<PAGE> 21
Mode Determination Date"). In addition, the Spread for each Subsequent
Spread Period shall be established by 1:00 p.m., New York City time, on the
fifth Business Day prior to the Commencement Date of such Subsequent Spread
Period (each, a "Spread Determination Date"). Thirty calender days prior to the
First Remarketing Date, the Company shall request that DTC provide preliminary
notification to its Participants that, on the date that is ten Business Days
prior to the First Remarketing Date either (i) the Remarketing Right will have
been exercised and the Notes will be subject to mandatory tender on the First
Remarketing Date or (ii) the Notes will be in Reset Mode and a Duration/Interest
Mode Determination Date will occur on such date. If the Mandatory Tender
Remarketing Agent does not provide notification of its intention to exercise the
Remarketing Right on the Mandatory Tender Notification Date, on or before the
date that is ten Business Days prior to the First Remarketing Date, the Company
shall request that DTC notify its Participants of the occurrence of a
Duration/Interest Mode Determination Date and of the procedures that must be
followed if any Beneficial Owner of a Note wishes to tender such Note. With
respect to all Subsequent Spread Periods established after the First Remarketing
Date, the Company shall request not later than five nor more than ten calendar
days prior to any Duration/Interest Mode Determination Date, that DTC notify its
Participants of such Duration/Interest Mode Determination Date and of the
procedures that must be followed if any Beneficial Owner of a Notes wishes to
tender such Note. In the event that DTC or its nominee is no longer the Holder
of record of the Notes, the Company shall notify the Holders of such information
within such period of time.
In the event that the Company and the Reset Remarketing Agent do not
agree on the Spread for any Subsequent Spread Period, then the Company shall be
required unconditionally to repurchase and retire all of the Notes on the Reset
Tender Date at a price equal to 100% of the principal amount thereof, together
with accrued interest to the Reset Tender Date. In the event that the Reset
Remarketing Agent fails to purchase any Notes tendered on the Reset Tender Date,
then the Company shall be required unconditionally to repurchase and retire any
Notes tendered and not purchased by the Reset Remarketing Agent.
All percentages resulting from any calculation of any interest rate for
the Notes shall be rounded, if necessary, to the nearest one hundred thousandth
of a percentage point, with five one millionths of a percentage point rounded
upward, and all dollar amounts shall be rounded to the hearest cent, with
one-half cent being rounded upward.
4. Security; Release Date. Prior to the Release Date (as hereinafter
defined), the Notes shall be secured by First Mortgage Bonds designated as
Collateral Bonds, Series A (the "Collateral Bonds"), delivered by the Company to
the Senior Trustee for the benefit of the Holders of the Notes. Prior to the
Release Date, the Company shall make payments of the principal of, and premium,
if any, and or interest on, the Collateral Bonds to the Senior Trustee, which
payments shall be applied by the Senior Trustee to satisfaction of all
obligations then due on the Notes. Reference is made to the Mortgage Indenture
and the Senior Indenture for a description of the rights of the Senior Trustee
as holder of the Collateral Bonds, the property mortgaged and pledged under the
Mortgage Indenture and the rights of the Company and of the Mortgage Trustee in
respect thereof, the duties and immunities of the Mortgage Trustee and the
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<PAGE> 22
terms and conditions upon which the Collateral Bonds are secured and
the circumstances under which additional First Mortgage Bonds may be issued.
FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN
COLLATERAL BONDS) ISSUED UNDER THE MORTGAGE INDENTURE HAVE BEEN RETIRED THROUGH
PAYMENT, REDEMPTION OR OTHERWISE AT, BEFORE OR AFTER THE MATURITY THEREOF (THE
"RELEASE DATE"), THE COLLATERAL BONDS SHALL CEASE TO SECURE THE NOTES IN ANY
MANNER PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND AT SUCH
TIME IS CONTINUING UNDER THE SENIOR INDENTURE. IN CERTAIN CIRCUMSTANCES PRIOR TO
THE RELEASE DATE AS PROVIDED IN THE SENIOR INDENTURE, THE COMPANY IS PERMITTED
TO REDUCE THE AGGREGATE PRINCIPAL AMOUNT OF A SERIES OF COLLATERAL BONDS HELD BY
THE TRUSTEE, BUT IN NO EVENT PRIOR TO THE RELEASE DATE TO AN AMOUNT LESS THAN
THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE SERIES OF NOTES INITIALLY
ISSUED CONTEMPORANEOUSLY WITH SUCH COLLATERAL BONDS.
5. Maintenance of Book-Entry System. (a) The tender and settlement
procedures set forth in Section 2 above, including provisions for payment by
purchasers of Notes in the remarketing or for payment to selling Beneficial
Owners of tendered Notes, shall be subject to modification, notwithstanding any
provision to the contrary set forth in Article 9 of the Senior Indenture, to the
extent required by DTC or, if the book-entry system is no longer available for
the Notes at the time of the remarketing, to the extent required to facilitate
the tendering and remarketing of Notes in certificated form. In addition, either
of the Remarketing Agents may, notwithstanding any provision to the contrary set
forth in Article 9 of the Senior Indenture, modify the settlement procedures set
forth herein in order to facilitate the settlement process.
(b) The Company hereby agrees with the Senior Trustee and the holders
of Notes that at all times, notwithstanding any provision to the contrary set
forth in the Senior Indenture, (i) it shall use its best efforts to maintain the
Notes in book-entry form with DTC or any successor thereto and to appoint a
successor thereto to the extent necessary to maintain the Notes in book-entry
form and (ii) it shall waive any discretionary right that it otherwise may have
under the Senior Indenture to cause the Notes to be issued in certificated form.
6. Repurchase. If the Notes are in Mandatory Tender Mode, in the event
that (i) the Mandatory Remarketing Agent for any reason does not notify the
Company of the Interest Rate to Second Remarketing Date by 4:00 p.m., New York
City time, on the Mandatory Tender Determination Date, or (ii) prior to the
First Remarketing Date, the Mandatory Tender Remarketing Agent has resigned and
no successor has been appointed on or before the Mandatory Tender Determination
Date, or (iii) since the Mandatory Tender Notification Date, the Mandatory
Tender Remarketing Agent terminates the Mandatory Tender Remarketing Agreement
because of the occurrence of a material adverse change in the condition of the
Company and its subsidiaries, considered as one enterprise, or because an Event
of Default, or any event which, with the giving of notice or passage of time, or
both, would constitute an Event of Default, with respect to the Notes has
occurred and is continuing, or any other event
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<PAGE> 23
constituting a termination event under the Mandatory Tender Remarketing
Agreement has occurred, or (iv) the Mandatory Tender Remarketing Agent for any
reason does not purchase all tendered Notes on the First Remarketing Date, the
Company shall repurchase such Notes on the First Remarketing Date at a price
equal to 100% of the principal amount of such Notes plus all accrued and unpaid
interest, if any, to the First Remarketing Date.
If the Notes are in Reset Mode, in the event that (i) the Company and
the Reset Remarketing Agent fail for any reason to agree on a Spread for a
Subsequent Spread Period, or (ii) prior to any Commencement Date, the Reset
Remarketing Agent has resigned and no successor thereto has been appointed on or
before the Duration/Interest Mode Determination Date, or (iii) since the Spread
Determination Date, the Reset Remarketing Agent terminates the Reset Remarketing
Agreement because of the occurrence of a material adverse change in the
condition of the Company and its subsidiaries, considered as one enterprise, or
because an Event of Default, or any event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default, with respect to
the Notes has occurred and is continuing, or any other event constituting a
termination event under the Reset Remarketing Agreement has occurred, or (iv)
the Reset Remarketing Agent for any reason does not purchase any Notes tendered
on the Reset Tender Date, the Company shall repurchase any such Notes tendered
but not purchased by the Reset Remarketing Agent on the First Remarketing Date
at a price equal to 100% of the principal amount of such Notes plus all accrued
and unpaid interest, if any, to the applicable Reset Tender Date.
7. Redemption. (a) Notwithstanding any election by the Mandatory Tender
Remarketing Agent to remarket the Notes on the Mandatory Tender Remarketing
Date, the tendering of the Notes for purchase by the Mandatory Tender
Remarketing Agent on such date as set forth in Section 2(b)(ii) above shall be
subject to the right of the Company to redeem the Notes from the Mandatory
Tender Remarketing Agent as provided in Section 7(b) below.
(b) The Company, in its sole and absolute discretion, shall have the
right, upon notice to the Mandatory Tender Remarketing Agent and the Senior
Trustee not later than the close of business on the Business Day immediately
preceding the Mandatory Tender Determination Date, to irrevocably elect to
redeem the Notes, in whole but not in part, from the Mandatory Tender
Remarketing Agent on the Mandatory Tender Remarketing Date at the Optional
Redemption Price. The "Optional Redemption Price" shall be the greater of (i)
100% of the principal amount of the Notes and (ii) the sum of the present values
of the Remaining Scheduled Payments thereon, as determined by the Mandatory
Tender Remarketing Agent, discounted to the Mandatory Tender Remarketing Date on
a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate, plus in either case accrued and unpaid interest from the
Mandatory Tender Remarketing Date on the principal amount being redeemed to the
date of redemption. If the Company elects to redeem the Notes, it shall pay the
redemption price therefor in same-day funds by wire transfer to an account
designated by the Mandatory Tender Remarketing Agent on the Mandatory Tender
Remarketing Date.
(c) If the Notes are in Reset Mode, on each Commencement Date and on
those Interest Payment Dates specified as redemption dates by the Company on the
Duration/Interest Mode
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<PAGE> 24
Determination Date in connection with any Subsequent Spread Period, the
Notes may be redeemed, at the option of the Company, in whole or in part, upon
notice thereof given at any time during the 30-calendar-day period ending on the
tenth Business Day prior to the redemption date (provided that notice of any
partial redemption must be given at least 15 calendar days prior to the
redemption date), in accordance with the redemption type selected on the
Duration/Interest Mode Determination date. In the event that less than all of
the outstanding Notes are to be so redeemed, the Notes to be redeemed shall be
selected by such method as the Senior Trustee shall deem fair and appropriate.
The redemption type to be chosen by the Company and the Reset
Remarketing Agent on the Duration/Interest Mode Determination Date may be one of
the following as defined herein: (i) Par Redemption; (ii) Premium Redemption; or
(iii) Make-Whole Redemption. "Par Redemption" means redemption at a redemption
price equal to 100% of the principal amount thereof, plus accrued interest
thereon, if any, to the redemption date. "Premium Redemption" means redemption
at a redemption price or prices greater than 100% of the principal amount
thereof, plus accrued interest thereon, if any, to the redemption date, as
determined on the Duration/Interest Mode Determination date. "Make-Whole
Redemption" means redemption at a redemption price equal to the Make-Whole
Amount (as defined below), if any, with respect to such Notes. Unless otherwise
specified by the Company on any Duration/Interest Mode Determination Date, the
redemption type will be a Par Redemption.
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Note, any amount equal to the greater of (i) 100%
of the principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon from the redemption date to
the end of the applicable Subsequent Spread Period, computed by discounting such
payments, in each case, to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the applicable
Treasury Rate plus the Reinvestment Spread, plus accrued interest on the
principal amount thereof to the date of redemption.
"Reinvestment Spread" means, with respect to the Notes, a number,
expressed as a number of basis points or as a percentage, selected by the
Company and agreed to by the Reset Remarketing Agent on the Duration/Interest
Mode Determination Date.
8. Effect of Event of Default. In case an Event of Default with respect
to the Notes shall occur and be continuing, the unpaid principal of the Notes
may be declared due and payable, in the manner, with the effect and subject to
the conditions provided in the Senior Indenture.
9. Amendments and Waivers. The Senior Indenture may be modified by the
Company and the Senior Trustee without consent of any Holder with respect to
certain matters as described in the Indenture. In addition, the Senior Indenture
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of
the Holders of the Notes of each series to be affected under the Senior
Indenture at any time by the Company and the Senior Trustee with the consent of
the Holders of a majority in principal amount of the Notes at the time
Outstanding of each series to be affected.
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<PAGE> 25
The Senior Indenture also contains provisions permitting the Holders of
a majority in principal amount of the Notes of each series at the time
Outstanding, on behalf of the Holders of all Notes of such series, to waive
compliance by the Company with certain provisions of the Senior Indenture and
certain past defaults under the Senior Indenture and their consequences. Any
such consent or waiver by the Holder of this Note shall bind such Holder and all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Note.
10. Obligation of Company. No reference herein to the Senior Indenture
and no provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of and any premium, if any, and interest on this Note at the time,
place, and rate and in the coin or currency herein prescribed.
11. Denominations, Transfer and Exchange. (a) The Notes are issuable
only in registered form without coupons in denominations of $1,000 and any
integral multiple thereof. As provided in the Senior Indenture and subject to
certain limitations therein set forth, Notes of this series are exchangeable for
a like aggregate principal amount of Notes of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
(b) As provided in the Senior Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Security Register, upon surrender of this Note for registration of transfer at
the office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Note are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes of this
series, and of like tenor, of authorized denominations and for the same maturity
and aggregate principal amount, shall be issued to the designated transferee or
transferees.
(c) No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company,
the Senior Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Senior Trustee nor any such agent shall be affected by notice to the contrary.
12. No Liability of Certain Persons. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under this Note or the Senior Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder, by accepting a Note, waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of this Note.
13. Governing Law. The Senior Indenture and this Note shall for all
purposes be governed by, and construed in accordance with, the internal laws of
the State of New York.
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<PAGE> 26
----------------------------------------------------------------------------
THE FOLLOWING ABBREVIATIONS SHALL BE CONSTRUED AS THOUGH THE WORDS SET FORTH
BELOW OPPOSITE EACH ABBREVIATION WERE WRITTEN OUT IN FULL WHERE SUCH
ABBREVIATION APPEARS:
<TABLE>
<S> <C>
TEN COM--as tenants in common (Name) CUST (Name) UNIF--(Name) as Custodian
TEN ENT--as tenants by the entirety GIFT MIN ACT (state) for (Name) Under the (State)
JT TEN--as joint tenants with Uniform Gifts to
right of survivorship Minors Act
and not as tenants
in common
</TABLE>
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE
LIST.
----------------------------------------------------------------------------
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Dated: Your Signature:
--------------- ---------------------------------------
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee:
------------------------------------------------------------
(Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Transfer Agent,
which requirements will include membership or participation
in STAMP or such other "signature guarantee program" as may
be determined by the Transfer Agent in addition to, or in
substitution for, STAMP, all in accordance with the Exchange
Act.)
Social Security Number or Taxpayer Identification
Number:
-------------------------------------------
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<PAGE> 27
APPENDIX II
CUSIP: 594457 BK 8
No. R-1 $75,000,000
THIS NOTE IS IN GLOBAL FORM WITHIN THE MEANING OF THE SENIOR INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR A NOTE IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY.
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Company (as
defined below) or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as requested by an
authorized representative of DTC), 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.
MICHIGAN CONSOLIDATED GAS COMPANY
Resetable MAndatory Putable/remarketable Securities ("MAPS(sm)")*
due June 30, 2038
MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and
existing under the laws of the State of Michigan (the "Company", which term
includes any successor corporation under the Senior Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co. or
registered assigns, at the office or agency of the Company in The City of New
York, New York, the principal sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000)
on June 30, 2038 (the "Stated Maturity Date"), in the coin or currency of the
United States, and to pay interest: (i) semiannually on June 30 and December 30
(x) from and including June 23, 1998 through but excluding June 30, 2003 and (y)
on and after June 30, 2003 if and so long as the Resetable MAPS are in Mandatory
Tender Mode (as defined on the reverse hereof); or (ii) on such dates as
determined on the Duration/Interest Mode Determination Date (as defined on the
reverse hereof) if and so long as the Resetable MAPS are in Reset Mode (as
defined on the reverse hereof) (each, an "Interest Payment Date"), commencing
December 30, 1998. Interest shall be paid on said principal sum at said office
or agency, in like coin or currency, at the rate per annum specified below,
from
- -----------
*"MAPS(sm)" is a service mark of Salomon Brothers Inc
-1-
<PAGE> 28
the Interest Payment Date next preceding the date of this Resetable MAPS to
which interest has been paid or duly provided for, unless the date hereof is a
date to which interest has been paid or duly provided for, in which case from
the date of this Resetable MAPS, or unless no interest has been paid or duly
provided for on this Resetable MAPS, in which case from June 23, 1998, until
payment of said principal sum has been made or duly provided for; provided, that
payment of interest may be made at the option of the Company by check mailed to
the address of the person entitled thereto as such address shall appear on the
Security Register of the Company as provided in the Senior Indenture.
Notwithstanding the foregoing, if the date hereof is after the 14th day of a
month in which an Interest Payment Date occurs, and before the following
Interest Payment Date, this Resetable MAPS shall bear interest from such
Interest Payment Date; provided, that if the Company shall default in the
payment of interest due on such Interest Payment Date, then this Resetable MAPS
shall bear interest from the next preceding Interest Payment Date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for on this Resetable MAPS, from June 23, 1998. The interest so
payable on any Interest Payment Date will, subject to certain exceptions
provided in the Senior Indenture, be paid to the person in whose name this
Resetable MAPS (or one or more Predecessor Securities) is registered at the
close of business on the fifteenth calendar day next preceding such Interest
Payment Date, whether or not such day is a Business Day (each a "Record Date").
The rate of interest on this Resetable MAPS shall be 6.20% per annum to
June 30, 2003 (the "First Remarketing Date"). If, pursuant to the Mandatory
Tender Remarketing Agreement, dated as of the date hereof (the "Mandatory Tender
Remarketing Agreement"), between Salomon Brothers Inc, as Mandatory Tender
Remarketing Agent (the "Mandatory Tender Remarketing Agent"), and the Company,
the Mandatory Tender Remarketing Agent elects to exercise its option to remarket
the Resetable MAPS (the "Remarketing Right"), then, except as otherwise set
forth on the reverse hereof, (i) this Resetable MAPS shall be subject to
mandatory tender to the Mandatory Tender Remarketing Agent for remarketing on
the First Remarketing Date, on the terms and subject to the conditions set forth
on the reverse hereof, and (ii) from and after the First Remarketing Date and up
to but excluding June 30, 2013 (the "Second Remarketing Date"), this Resetable
MAPS shall bear interest from and including June 30, 2003 to but excluding June
30, 2013 (the "Second Remarketing Date") at the rate determined by the Mandatory
Tender Remarketing Agent in accordance with the procedures set forth in Section
2(b) on the reverse hereof (the "Interest Rate to Second Remarketing Date").
From and after the earlier to occur of (i) the First Remarketing Date in
the event that the Mandatory Tender Remarketing Agent fails to give notice of
exercise of the Remarketing Right and (ii) the Second Remarketing Date, the
character and duration of the interest rate on the Resetable MAPS shall be
determined by Salomon Brothers Inc, as reset remarketing agent, or such other
nationally recognized broker-dealer as may be selected by the Company to act as
such (the "Reset Remarketing Agent"), pursuant to that certain Reset Remarketing
Agreement dated as of June 23, 1998 (the "Reset Remarketing Agreement") between
the Company and Salomon Brothers Inc, and agreed to by the Company on each
applicable Duration/Interest Mode Determination Date, and the spread will be as
agreed to by the Company and the Reset
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<PAGE> 29
Remarketing Agent on the corresponding Spread Determination Date (as defined
on the reverse hereof), subject to certain limitations set forth on the
reverse of this Resetable MAPS.
UNTIL THE RELEASE DATE (AS DEFINED ON THE REVERSE HEREOF), THIS RESETABLE
MAPS SHALL BE SECURED BY FIRST MORTGAGE BONDS (THE "FIRST MORTGAGE BONDS")
ISSUED AND DELIVERED BY THE COMPANY TO THE SENIOR TRUSTEE (AS DEFINED ON THE
REVERSE HEREOF) UNDER THE COMPANY'S TWENTY-NINTH SUPPLEMENTAL INDENTURE DATED AS
OF JULY 15, 1989, PROVIDING FOR THE RESTATEMENT OF THE INDENTURE OF MORTGAGE AND
DEED OF TRUST DATED AS OF MARCH 1, 1994 BETWEEN THE COMPANY AND CITIBANK, N.A.
(THE "MORTGAGE TRUSTEE") AND ROBERT T. KIRCHNER (THE "INDIVIDUAL TRUSTEE"), AS
SUPPLEMENTED BY THE THIRTY-FIFTH SUPPLEMENTAL INDENTURE (AS SO SUPPLEMENTED,
THE "MORTGAGE INDENTURE"). ON THE RELEASE DATE, THE RESETABLE MAPS SHALL CEASE
TO BE SECURED BY SUCH FIRST MORTGAGE BONDS AND, AT THE COMPANY'S OPTION, EITHER
(i) SHALL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (ii) SHALL BE
SECURED BY FIRST MORTGAGE BONDS UNDER A SECURED MORTGAGE INDENTURE OTHER THAN
THE MORTGAGE INDENTURE.
Reference is made to the further provisions of this Resetable MAPS set
forth on the reverse hereof. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Resetable MAPS shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Senior Trustee under the Senior Indenture referred to on the reverse
hereof.
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<PAGE> 30
IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
instrument to be duly executed under its corporate seal.
Dated: June 23, 1998
MICHIGAN CONSOLIDATED GAS COMPANY
By: _________________________________
Title:
Attest: [SEAL]
By: ______________________________
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Resetable MAPS of the series designated therein referred
to in the within-mentioned Indenture.
Dated: June 23, 1998
CITIBANK, N.A., as Trustee
By: ____________________________
Authorized Signatory
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<PAGE> 31
MICHIGAN CONSOLIDATED GAS COMPANY
Resetable MAndatory Putable/remarketable Securities ("MAPS(sm)")
due June 30, 2038
1. Indenture. (a) This Resetable MAPS is one of the duly authorized issue
of securities of the Company (hereinafter called the "Notes") of the series
hereinafter specified, all issued or to be issued under and pursuant to an
Indenture, dated as of June 1, 1998, as supplemented by the first supplemental
Indenture, dated as of June 18, 1998 between the Company and the Trustee (as so
supplemented, the "Senior Indenture"), duly executed and delivered by the
Company to Citibank, N.A., as Trustee (herein called the "Senior Trustee," which
term includes any successor trustee under the Senior Indenture), to which Senior
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Senior Trustee,
the Company and the Holders of the Notes. The Notes may be issued in one or more
series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest, if any, at different
rates, may be subject to different redemption provisions (if any) and may be
subject to different sinking, purchase or analogous funds (if any) and may
otherwise vary as provided in the Indenture. This Note is one of the series
designated as the Resetable MAndatory Putable/remarketable Securities
("MAPS(sm)") due June 30, 2038 of the Company, which series is limited in
aggregate principal amount to $75,000,000.
(b) Interest shall be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal and, to the
extent lawful, on overdue installments of interest at the rate per annum borne
by this Note. For purposes hereof, the term "Business Day" means any day other
than a Saturday or Sunday or a day on which banking institutions in The City of
New York are required or authorized to close and, in the case of Notes in Reset
Mode that are in the Floating Rate Interest Mode that is also a London Business
Day. "London Business Day" means any day on which dealings in deposits in U.S.
dollars are transacted on the London interbank market.
(c) Unless otherwise defined herein, all capitalized terms used herein
without definition shall have the meanings assigned to them in the Senior
Indenture.
2. Terms of the Notes in Mandatory Tender Mode. On the date, if any, on
which the Mandatory Tender Remarketing Agent elects to exercise the Remarketing
Right in accordance with the terms hereof, the Notes shall be deemed to be in
"Mandatory Tender Mode."
(a) Mandatory Tender on First Remarketing Date; Purchase and Settlement.
(i) Provided that the Mandatory Tender Remarketing Agent gives notice to the
Company and the Senior Trustee on a Business Day not later than eleven Business
Days prior to the First Remarketing Date of its intention to exercise the
Remarketing Right to purchase the Notes for remarketing (the "Mandatory Tender
Notification Date"), each Note shall be automatically tendered, or deemed
tendered, to the Mandatory Tender Remarketing Agent for purchase on
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<PAGE> 32
the Mandatory Tender Remarketing Date in accordance with Section 2(a)(ii) below,
except as set forth in Sections 6 and 7 below. The purchase price of such
tendered Notes shall be equal to 100% of the principal amount thereof. Upon such
tender, the Mandatory Tender Remarketing Agent shall have the option, in its
sole discretion, to elect to remarket the Notes in accordance with the Mandatory
Tender Remarketing Agreement for its own account at varying prices to be
determined by the Mandatory Tender Remarketing Agent at the time of each sale.
If the Mandatory Tender Remarketing Agent makes such election, the obligation of
the Mandatory Tender Remarketing Agent to purchase the Notes on the Mandatory
Tender Remarketing Date shall be subject to the conditions set forth in the
Mandatory Tender Remarketing Agreement. No Holder or actual purchaser of the
Notes ("Beneficial Owner") shall have any rights or claims under the Mandatory
Tender Remarketing Agreement or against the Company or the Mandatory Tender
Remarketing Agent as a result of the Mandatory Tender Remarketing Agent not
purchasing such Notes.
(i) Following the Mandatory Tender Notification Date and assuming that the
Notes are remarketed by the Mandatory Remarketing Agent pursuant to the exercise
of the Remarketing Right, the tender and purchase of the Notes provided for in
Section 2(a)(i) above shall be effected as follows, subject to Sections 6 and 7
below:
(x) All of the tendered Notes shall be automatically delivered to the
account of the Trustee, by book-entry through DTC or any successor thereto
pending payment of the purchase price therefor, on the Remarketing Date.
(y) The Mandatory Tender Remarketing Agent shall make or cause the
Trustee to make payment to DTC by book entry through DTC in accordance with
the procedures of DTC, by 1:00 p.m., New York City time, on the Mandatory
Tender Remarketing Date against delivery through DTC of such Beneficial
Owner's tendered Notes, of the purchase price for tendered Notes that have
been purchased for remarketing by the Mandatory Tender Remarketing Agent.
The Company shall make or cause the Trustee to make payment of interest to
DTC on the Mandatory Tender Remarketing Date by book entry through DTC by
2:30 p.m., New York City time, on the Mandatory Tender Remarketing Date.
(ii) In anticipation of the purchase of the Notes by the Mandatory
Tender Remarketing Agent for remarketing or the repurchase of the Notes by
the Company on the Remarketing Date, the Trustee shall notify the Holder
hereof, not less than 30 days nor more than 60 days prior to the
Remarketing Date, that all Notes will be delivered on the Mandatory Tender
Remarketing Date through the facilities of DTC against payment of the
purchase price therefor by the Mandatory Tender Remarketing Agent or the
Company, as the case may be.
(b) Determination of Interest Rate to Second Remarketing Date; Notification
Thereof. Subject to the Remarketing Dealer's election to exercise the
Remarketing Right as provided in Section 2(a)(i), by 3:30 p.m., New York City
time, on the third Business Day immediately
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preceding the Remarketing Date (the "Mandatory Tender Determination Date"), the
Mandatory Tender Remarketing Agent shall determine the Interest Rate to Second
Remarketing Date to the nearest one hundred-thousandth (0.00001) of one percent
per annum. The Interest Rate to Second Remarketing Date shall be equal to the
sum of 5.50% (the "Base Rate") and the Applicable Spread (as defined below),
which will be based on the Dollar Price (as defined below) of the Notes.
The "Applicable Spread" for the Notes in Mandatory Tender Mode shall be the
lowest bid indication, expressed as a spread (in the form of a percentage or in
basis points) above the Base Rate, obtained by the Mandatory Tender Remarketing
Agent on the Mandatory Tender Determination Date from the bids quoted by five
Reference Corporate Dealers (as defined below) for the full aggregate principal
amount of the Notes at the Dollar Price, but assuming (i) an issue date that is
the Mandatory Tender Remarketing Date, with settlement on such date without
accrued interest, (ii) a maturity date that is the Second Remarketing Date of
the Notes and (iii) a stated annual interest rate, payable semiannually on each
Interest Payment Date (as defined below), equal to the Base Rate plus the spread
bid by the applicable Reference Corporate Dealer Second Remarketing Date. If
fewer than five Reference Corporate Dealers bid as described above, then the
Applicable Spread shall be the lowest of such bid indications obtained as
described above. The Interest Rate to Second Remarketing Date announced by the
Mandatory Tender Remarketing Agent, absent manifest error, shall be binding and
conclusive upon the Beneficial Owners and Holders of the Notes, the Company and
the Senior Trustee.
"Dollar Price" means, with respect to the Notes in Mandatory Tender Mode,
the present value determined by the Mandatory Tender Remarketing Agent, as of
the First Remarketing Date, of the Remaining Scheduled Payments (as defined
below) discounted to the First Remarketing Date on a semiannual basis (assuming
a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as
defined below).
"Reference Corporate Dealers" means leading dealers of publicly traded debt
securities of the Company in The City of New York (which may include the
Mandatory Tender Remarketing Agent or one of its affiliates) selected by the
Mandatory Tender Remarketing Agent after consultation with the Company.
"Remaining Scheduled Payments" means, with respect to the Notes, the
remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Applicable Base Rate only, that would be due after the First
Remarketing Date to and including the Second Remarketing Date as determined by
the Mandatory Tender Remarketing Agent.
"Treasury Rate" means, with respect to the First Remarketing Date, the rate
per annum equal to the semiannual equivalent yield to maturity or interpolated
(on a day count basis) yield to maturity of the Comparable Treasury Issues (as
defined below), assuming a price for the Comparable Treasury Issues (expressed
as a percentage of its principal amount), equal to the Comparable Treasury Price
(as defined below) for such Remarketing Date.
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"Comparable Treasury Issues" means the United States Treasury Security or
Securities selected by the Mandatory Tender Remarketing Agent as having an
actual or interpolated maturity or maturities comparable to the Second
Remarketing Date.
"Comparable Treasury Price" means, with respect to the First Remarketing
Date, (a) the offer prices for the Comparable Treasury Issues (expressed in each
case as a percentage of its principal amount) on the Mandatory Tender
Determination Date, as set forth on "Telerate Page 500" (or such other page as
may replace Telerate Page 500) or (b) if such page (or any successor page) is
not displayed or does not contain such offer prices on such Mandatory Tender
Determination Date, (i) the average of the Reference Treasury Dealer Quotations
for the First Remarketing Date, after excluding the highest and lowest of such
Reference Treasury Dealer Quotations, or (ii) if the Mandatory Tender
Remarketing Agent obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.
"Telerate Page 500" means the display designated as "Telerate Page 500" on Dow
Jones Markets Limited (or such other page as may replace Telerate Page 500 on
such service) or such other service displaying the offer prices specified in (a)
above as may replace Dow Jones Markets Limited.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and the First Remarketing Date, the offer prices for
the Comparable Treasury Issues (expressed in each case as a percentage of its
principal amount) quoted to the Remarketing Dealer by such Reference Treasury
Dealer by 3:30 p.m., New York City time, on the First Determination Date.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc (or
their respective affiliates which are primary U.S. Government Notes dealers) and
their respective successors; provided, however, that if any of the foregoing or
their affiliates shall cease to be a primary U.S. Government Notes dealer in The
City of New York (a "Primary Treasury Dealer"), the Remarketing Dealer shall
substitute therefor another Primary Treasury Dealer.
Provided the Remarketing Right has been exercised, the Mandatory Tender
Remarketing Agent shall notify the Company, the Senior Trustee and DTC by
telephone, confirmed in writing, by 4:00 p.m., New York City time, on the
Mandatory Tender Determination Date, of the Interest Rate to Second Remarketing
Date. In such event, all of the tendered Notes of a series will be automatically
delivered to the account of the Senior Trustee, by book-entry through DTC
pending payment of the purchase price therefor, on the First Remarketing Date,
and the Mandatory Tender Remarketing Agent shall make or cause the Senior
Trustee to make payment to the DTC Participant of each tendering Beneficial
Owner of the Notes, by book-entry through DTC by the close of business on the
First Remarketing Date against delivery through DTC of such Beneficial Owner's
tendered Notes of 100% of the principal amount of such tendered Notes. The
transactions described above shall be executed on the First Remarketing Date
through DTC in accordance with the procedures of DTC, and
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the accounts of the respective DTC Participants shall be debited and
credited and the Notes delivered by book entry as necessary to effect the
purchases and sales thereof. Transactions involving the sale and purchase of the
Notes remarketed by the Mandatory Tender Remarketing Agent on and after the
First Remarketing Date shall settle in immediately available funds through DTC's
Same-Day Funds Settlement System. The tender and settlement procedures described
above, including provisions for payment by purchasers of the Notes in the
remarketing or for payment to selling Beneficial Owners of tendered Notes, may
be modified to the extent required by DTC or to the extent required to
facilitate the tender and remarketing of such series of Notes in certificated
form, if the book-entry system is no longer available for the Notes at the time
of the remarketing. In addition, the Mandatory Tender Remarketing Agent may, in
accordance with the terms of the Senior Indenture, modify the tender and
settlement procedures set forth above in order to facilitate the tender and
settlement process.
3. Terms of the Notes in Reset Mode. If (i) the Mandatory Tender
Remarketing Agent does not provide notification to the Company of its intention
to exercise the Remarketing Right on the eleventh Business Day prior to the
First Remarketing Date (which date may also be referred to herein as the
"Mandatory Tender Remarketing Date"), on the tenth Business Day prior to the
Mandatory Tender Remarketing Date or (ii) the Second Remarketing Date, in the
event the Remarketing Right is exercised, the Notes will be deemed to be in
"Reset Mode."
(a) Tender at Option of Beneficial Owners in Reset Mode. If the Company and
the Reset Remarketing Agent agree on the Spread on the Spread Determination Date
(as defined below) with respect to any Subsequent Spread Period, the Company and
the Reset Remarketing Agent will enter into a Reset Remarketing Agreement
Supplement (a "Reset Remarketing Agreement Supplement") under which the Reset
Remarketing Agent will agree, subject to Section 6 and 7 below and other
applicable terms and conditions set forth in such Reset Remarketing Agreement
Supplement, to purchase from tendering Holders on the Reset Tender Date all
Notes with respect to which the Reset Remarketing Agent receives a Reset Tender
Notice as described below at 100% of the principal amount thereof (the "Purchase
Price"). Except as otherwise provided in the next succeeding paragraph, each
Beneficial Owner of a Note may, at such owner's option, upon giving notice as
provided below (a "Reset Tender Notice"), tender such Note for purchase by the
Reset Remarketing Agent on the Reset Tender Date with respect to a Spread Period
at the Purchase Price. The Purchase Price shall be paid by the Reset Marketing
Agent in accordance with the standard procedures of DTC, and accounts of the
respective DTC Participants shall be debited and credited and the Notes
delivered by book-entry as necessary to effect any purchases and sales thereof.
The Reset Tender Notice must be received by the Reset Remarketing Agent
during the period commencing at 3:00 p.m., New York City time, on the Spread
Determination Date and ending at 12:00 noon, New York City time, on the second
Business Day following such Spread Determination Date for such Subsequent Spread
Period (the "Notice Date"). Except as otherwise provided below, a Reset Tender
Notice shall be irrevocable. If a Reset Tender Notice is not received for any
reason by the Reset Remarketing Agent with respect to any Note
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by 12:00 noon, New York City time, on the Notice Date, the Beneficial Owner of
such Note shall be deemed to have elected not to tender such Note for purchase
by the Reset Remarketing Agent.
(b) Determination of Duration and Interest Rate Mode. Upon each
Duration/Interest Mode Determination Date (as defined below), the mode and other
terms for the next Subsequent Spread Period shall be determined as described
below.
(i) Floating Rate Interest Mode. If the Notes in Reset Mode are in
Floating Rate Mode, then the following shall apply: During the Floating
Rate Interest Mode, interest on the Notes for each Subsequent Spread
Period shall be payable either monthly, quarterly or semiannually, as
specified by the Company on each Duration/Interest Mode Determination
Date. With respect to Notes in the Floating Rate Interest Mode,
interest shall be payable, in arrears, in the case of Notes which pay:
(a) monthly, on the thirtieth day of each month; (b) quarterly, on the
thirtieth day of each March, June, September and December; and (c)
semiannually, on the thirtieth day of each June and December. During
any Subsequent Spread Period during which the Reset Mode Notes are in
the Floating Rate Interest Mode, the interest rate on the Notes shall
be reset either monthly, quarterly or semiannually, and the Notes shall
bear interest at a per annum rate (computed on the basis of the actual
number of days elapsed over a 360-day year) equal to LIBOR (as defined
below) for the applicable Interest Period (as defined below), plus the
applicable Spread. Interest on the Notes shall accrue from and
including each Interest Payment Date to but excluding the next
succeeding Interest Payment Date or maturity date, as the case may be.
Each interest period during any Subsequent Spread Period (each, an
"Interest Period") shall be from and including the most recent Interest
Payment Date on which interest has been paid to but excluding the next
Interest Payment Date. The first day of an Interest Period is referred
to herein as an "Interest Reset Date".
If any Interest Payment Date (other than at maturity), redemption
date, Interest Reset Date, Duration/Interest Mode Determination Date,
Spread Determination Date (as defined below), Commencement Date or
Reset Tender Date would otherwise be a day that is not a Business Day,
such Interest Payment Date, redemption date, Interest Reset Date,
Duration/Interest Mode Determination Date, Spread Determination Date,
Commencement Date or Reset Tender Date, as the case may be, shall be
postponed to the next succeeding day that is a Business Day; provided,
however, that if such next succeeding Business Day is in the next
calendar month, such date shall occur on the immediately preceding
Business Day.
LIBOR applicable for an Interest Period shall be determined by the
Rate Agent (as defined below) as of the second London Business Day (as
defined below) preceding each Interest Reset Date (a "LIBOR
Determination Date") in accordance with the following provisions:
(x) LIBOR shall be determined on the basis of the offered rate
for deposits
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in U.S. Dollars of the applicable Index Maturity commencing on
the second London Business Day immediately following such LIBOR
Determination Date, which appears on Telerate Page 3750 (as
defined below) as of approximately 11:00 a.m., London time, on
such LIBOR Determination Date. "Telerate Page 3750" means the
display designated on page "3750" on Dow Jones Markets Limited or
any successor thereto (or such other page as may replace the 3750
page on that service or such other service or services as may be
nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. Dollar
deposits). If no such offered rate appears on Telerate Page 3750,
LIBOR for such LIBOR Determination Date shall be determined in
accordance with the provisions of paragraph (y) below. The term
"London Business Day" means any day on which dealings in deposits
in U.S. Dollars are transacted in the London interbank market.
(y) With respect to a LIBOR Determination Date on which no
rate appears on Telerate Page 3750 as of approximately 11:00 a.m.,
London time, on such LIBOR Determination Date, the Rate Agent shall
request the principal London offices of each of four major
reference banks in the London interbank market selected by the Rate
Agent (after consultation with the Company) to provide the Rate
Agent with a quotation of the rate at which deposits in U.S.
Dollars of the applicable Index Maturity commencing on the second
London Business day immediately following such LIBOR Determination
Date, are offered by it to prime banks in the London interbank
market as of approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of
not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time. If at least two such
quotations are provided, LIBOR for such LIBOR Determination Date
shall be the arithmetic mean of such quotations as calculated by
the Rate Agent. If fewer than two quotations are provided, LIBOR
for such LIBOR Determination Date shall be the arithmetic mean of
the rates quoted as of approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date by three major banks in The
City of New York selected by the Rate Agent (after consultation
with the Company) for loans in U.S. Dollars to leading European
banks, of the applicable Index Maturity commencing on the second
London Business Day immediately following such LIBOR Determination
Date and in a principal amount equal to an amount of not less than
U.S. $1,000,000 that is representative for a single transaction in
such market at such time; provided, however, that if the banks
selected as aforesaid by the Rate Agent are not quoting as
mentioned in this sentence, LIBOR for such LIBOR Determination Date
shall be LIBOR determined with respect to the immediately preceding
LIBOR Determination Date.
The Index Maturity applicable to Notes in the Floating Rate
Interest Mode shall be, in the case of Notes paying (x) monthly, one
month; (y) quarterly, three months; and (z) semiannually, six months.
The term "Rate Agent" means the entity selected by the Company as
its agent to
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determine (i) LIBOR and the interest rate on the Notes for any
Interest Period and/or (ii) the yield to maturity on the applicable
United States Treasury security that is used in connection with the
determination of the applicable Fixed Rate, and the ensuing applicable
Fixed Rate pursuant to the Reset Remarketing Agreement.
(ii) Fixed Rate Interest Mode. If the Notes are to be reset to the
Fixed Rate Interest Mode, as agreed to by the Company and the Reset
Remarketing Agent on a Duration/Interest Mode Determination, then the
applicable Fixed Rate for the corresponding Subsequent Spread Period
shall be determined by 1:00 p.m. on the third Business Day preceding
the Commencement Date for such Subsequent Spread Period (the "Fixed
Rate Determination Date"), in accordance with the following provisions:
the Fixed Rate shall be a per annum rate and shall be determined by
auditing the applicable Spread (as agreed to by the Company and the
Reset Remarketing Agent on the preceding Spread Determination Date) to
the yield to maturity (expressed as a bond equivalent, on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the applicable United States Treasury security, selected by the Rate
Agent or its agent after consultation with the Reset Remarketing Agent,
as having a maturity comparable to the duration selected for the
following Subsequent Spread Period, which would be used in accordance
with customary financial practice in pricing new issues of corporate
debt securities of comparable maturity to the duration selected for the
following Subsequent Spread Period.
Interest in the Fixed Rate Interest Mode shall be computed on the
basis of a 360-day year of twelve 30-day months. Such interest shall be
payable semiannually in arrears on the Interest Payment Dates occurring
on each June 30 and December 30 at the applicable Fixed Rate, as
determined by the Company and the Reset Remarketing Agent on the Fixed
Rate Determination Date, beginning on the Commencement Date and for the
duration of the relevant Subsequent Spread Period. Interest on the
Notes shall accrue from and including each Interest Payment Date to but
excluding the next succeeding Interest Payment Date or maturity date,
as the case may be.
If any Interest Payment Date or any redemption date in the Fixed Rate
Interest Mode falls on a day that is not a Business Day (in either case, other
than any Interest Payment Date or redemption date that falls on a Commencement
Date, in which case each such date including the Commencement Date shall be
postponed to the next day that is a Business Day), the related payment of
principal and interest shall be made on the next succeeding Business Day as if
it were made on the date such payment was due, and no interest shall accrue on
the amounts so payable for the period from and after such dates; provided,
however, that if such next succeeding Business Day is in the next calendar year,
such Interest Payment Date shall occur on the immediately preceding Business
Day.
(c) Additional Terms of the Notes in Reset Mode. The Spread that shall be
applicable during each Subsequent Spread Period for Notes in Reset Mode shall be
the percentage (a) recommended by the Reset Remarketing Agent so as to result in
a rate that, in
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the opinion of the Reset Remarketing Agent, will enable tendered
Notes to be remarketed by the Reset Remarketing Agent at 100% of the principal
amount thereof, and (b) agreed to by the Company. The interest rate mode during
such Subsequent Spread Period shall be either the Floating Rate Interest Mode or
the Fixed Rate Interest Mode, as determined by the Company and the Reset
Remarketing Agent.
Unless notice of redemption of the Notes as a whole has been given, the
duration, redemption dates, redemption type, redemption prices (if applicable),
Commencement Date, Interest Payment Dates and interest rate mode (and any other
relevant terms) for each Subsequent Spread Period shall be established by 3:00
p.m., New York City time, on the tenth Business Day prior to the Commencement
Date of each Subsequent Spread Period (each a "Duration/Interest Mode
Determination Date"). In addition, the Spread for each Subsequent Spread Period
shall be established by 1:00 p.m., New York City time, on the fifth Business Day
prior to the Commencement Date of such Subsequent Spread Period (each, a "Spread
Determination Date"). Thirty calender days prior to the First Remarketing Date,
the Company shall request that DTC provide preliminary notification to its
Participants that, on the date that is ten Business Days prior to the First
Remarketing Date either (i) the Remarketing Right will have been exercised and
the Notes will be subject to Mandatory tender on the First Remarketing Date or
(ii) the Notes will be in Reset Mode and a Duration/Interest Mode Determination
Date will occur on such date. If the Mandatory Tender Remarketing Agent does not
provide notification of its intention to exercise the Remarketing Right on the
Mandatory Tender Notification Date, on or before the date that is ten Business
Days prior to the First Remarketing Date, the Company shall request that DTC
notify its Participants of the occurrence of a Duration/Interest Mode
Determination Date and of the procedures that must be followed if any Beneficial
Owner of a Note wishes to tender such Note. With respect to all Subsequent
Spread Periods established after the First Remarketing Date, the Company shall
request not later than five nor more than ten calendar days prior to any
Duration/Interest Mode Determination Date, that DTC notify its Participants of
such Duration/Interest Mode Determination Date and of the procedures that must
be followed if any Beneficial Owner of a Notes wishes to tender such Note. In
the event that DTC or its nominee is no longer the Holder of record of the
Notes, the Company shall notify the Holders of such information within such
period of time.
In the event that the Company and the Reset Remarketing Agent do not agree
on the Spread for any Subsequent Spread Period, then the Company shall be
required unconditionally to repurchase and retire all of the Notes on the Reset
Tender Date at a price equal to 100% of the principal amount thereof, together
with accrued interest to the Reset Tender Date. In the event that the Reset
Remarketing Agent fails to purchase any Notes tendered on the Reset Tender Date,
then the Company shall be required unconditionally to repurchase and retire any
Notes tendered and not purchased by the Reset Remarketing Agent.
All percentages resulting from any calculation of any interest rate for the
Notes shall be rounded, if necessary, to the nearest one hundred thousandth of a
percentage point, with five one millionths of a percentage point rounded upward,
and all dollar amounts shall be rounded
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to the nearest cent, with one-half cent being rounded upward.
4. Security; Release Date. Prior to the Release Date (as hereinafter
defined), the Notes shall be secured by First Mortgage Bonds designated as
Collateral Bonds, Series B (the "Collateral Bonds"), delivered by the Company to
the Senior Trustee for the benefit of the Holders of the Notes. Prior to the
Release Date, the Company shall make payments of the principal of, and premium,
if any, and or interest on, the Collateral Bonds to the Senior Trustee, which
payments shall be applied by the Senior Trustee to satisfaction of all
obligations then due on the Notes. Reference is made to the Mortgage Indenture
and the Senior Indenture for a description of the rights of the Senior Trustee
as holder of the Collateral Bonds, the property mortgaged and pledged under the
Mortgage Indenture and the rights of the Company and of the Mortgage Trustee in
respect thereof, the duties and immunities of the Mortgage Trustee and the terms
and conditions upon which the Collateral Bonds are secured and the circumstances
under which additional First Mortgage Bonds may be issued.
FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN COLLATERAL
BONDS) ISSUED UNDER THE MORTGAGE INDENTURE HAVE BEEN RETIRED THROUGH PAYMENT,
REDEMPTION OR OTHERWISE AT, BEFORE OR AFTER THE MATURITY THEREOF (THE "RELEASE
DATE"), THE COLLATERAL BONDS SHALL CEASE TO SECURE THE NOTES IN ANY MANNER
PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND AT SUCH TIME IS
CONTINUING UNDER THE SENIOR INDENTURE. IN CERTAIN CIRCUMSTANCES PRIOR TO THE
RELEASE DATE AS PROVIDED IN THE SENIOR INDENTURE, THE COMPANY IS PERMITTED TO
REDUCE THE AGGREGATE PRINCIPAL AMOUNT OF A SERIES OF COLLATERAL BONDS HELD BY
THE TRUSTEE, BUT IN NO EVENT PRIOR TO THE RELEASE DATE TO AN AMOUNT LESS THAN
THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE SERIES OF NOTES INITIALLY
ISSUED CONTEMPORANEOUSLY WITH SUCH COLLATERAL BONDS.
5. Maintenance of Book-Entry System. (a) The tender and settlement
procedures set forth in Section 2 above, including provisions for payment by
purchasers of Notes in the remarketing or for payment to selling Beneficial
Owners of tendered Notes, shall be subject to modification, notwithstanding any
provision to the contrary set forth in Article 9 of the Senior Indenture, to the
extent required by DTC or, if the book-entry system is no longer available for
the Notes at the time of the remarketing, to the extent required to facilitate
the tendering and remarketing of Notes in certificated form. In addition, either
of the Remarketing Agents may, notwithstanding any provision to the contrary set
forth in Article 9 of the Senior Indenture, modify the settlement procedures set
forth herein in order to facilitate the settlement process.
(b) The Company hereby agrees with the Senior Trustee and the holders of
Notes that at all times, notwithstanding any provision to the contrary set forth
in the Senior Indenture, (i) it shall use its best efforts to maintain the Notes
in book-entry form with DTC or any successor thereto and to appoint a successor
thereto to the extent necessary to maintain the Notes in book-entry form and
(ii) it shall waive any discretionary right that it otherwise may have under
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the Senior Indenture to cause the Notes to be issued in certificated form.
6. Repurchase. If the Notes are in Mandatory Tender Mode, in the event that
(i) the Mandatory Remarketing Agent for any reason does not notify the Company
of the Interest Rate to Second Remarketing Date by 4:00 p.m., New York City
time, on the Mandatory Tender Determination Date, or (ii) prior to the First
Remarketing Date, the Mandatory Tender Remarketing Agent has resigned and no
successor has been appointed on or before the Mandatory Tender Determination
Date, or (iii) since the Mandatory Tender Notification Date, the Mandatory
Tender Remarketing Agent terminates the Mandatory Tender Remarketing Agreement
because of the occurrence of a material adverse change in the condition of the
Company and its subsidiaries, considered as one enterprise, or because an Event
of Default, or any event which, with the giving of notice or passage of time, or
both, would constitute an Event of Default, with respect to the Notes has
occurred and is continuing, or any other event constituting a termination event
under the Mandatory Tender Remarketing Agreement has occurred, or (iv) the
Mandatory Tender Remarketing Agent for any reason does not purchase all tendered
Notes on the First Remarketing Date, the Company shall repurchase such Notes on
the First Remarketing Date at a price equal to 100% of the principal amount of
such Notes plus all accrued and unpaid interest, if any, to the First
Remarketing Date.
If the Notes are in Reset Mode, in the event that (i) the Company and the
Reset Remarketing Agent fail for any reason to agree on a Spread for a
Subsequent Spread Period, or (ii) prior to any Commencement Date, the Reset
Remarketing Agent has resigned and no successor thereto has been appointed on or
before the Duration/Interest Mode Determination Date, or (iii) since the Spread
Determination Date, the Reset Remarketing Agent terminates the Reset Remarketing
Agreement because of the occurrence of a material adverse change in the
condition of the Company and its subsidiaries, considered as one enterprise, or
because an Event of Default, or any event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default, with respect to
the Notes has occurred and is continuing, or any other event constituting a
termination event under the Reset Remarketing Agreement has occurred, or (iv)
the Reset Remarketing Agent for any reason does not purchase any Notes tendered
on the Reset Tender Date, the Company shall repurchase any such Notes tendered
but not purchased by the Reset Remarketing Agent on the First Remarketing Date
at a price equal to 100% of the principal amount of such Notes plus all accrued
and unpaid interest, if any, to the applicable Reset Tender Date.
7. Redemption. (a) Notwithstanding any election by the Mandatory Tender
Remarketing Agent to remarket the Notes on the Mandatory Tender Remarketing
Date, the tendering of the Notes for purchase by the Mandatory Tender
Remarketing Agent on such date as set forth in Section 2(b)(ii) above shall be
subject to the right of the Company to redeem the Notes from the Mandatory
Tender Remarketing Agent as provided in Section 7(b) below.
(b) The Company, in its sole and absolute discretion, shall have the
right, upon notice to the Mandatory Tender Remarketing Agent and the Senior
Trustee not later than the close of business on the Business Day immediately
preceding the Mandatory Tender Determination
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Date, to irrevocably elect to redeem the Notes, in whole but not in part,
from the Mandatory Tender Remarketing Agent on the Mandatory Tender Remarketing
Date at the Optional Redemption Price. The "Optional Redemption Price" shall be
the greater of (i) 100% of the principal amount of the Notes and (ii) the sum of
the present values of the Remaining Scheduled Payments thereon, as determined by
the Mandatory Tender Remarketing Agent, discounted to the Mandatory Tender
Remarketing Date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate, plus in either case accrued and
unpaid interest from the Mandatory Tender Remarketing Date on the principal
amount being redeemed to the date of redemption. If the Company elects to redeem
the Notes, it shall pay the redemption price therefor in same-day funds by wire
transfer to an account designated by the Mandatory Tender Remarketing Agent on
the Mandatory Tender Remarketing Date.
(c) If the Notes are in Reset Mode, on each Commencement Date and on those
Interest Payment Dates specified as redemption dates by the Company on the
Duration/Interest Mode Determination Date in connection with any Subsequent
Spread Period, the Notes may be redeemed, at the option of the Company, in whole
or in part, upon notice thereof given at any time during the 30-calendar-day
period ending on the tenth Business Day prior to the redemption date (provided
that notice of any partial redemption must be given at least 15 calendar days
prior to the redemption date), in accordance with the redemption type selected
on the Duration/Interest Mode Determination date. In the event that less than
all of the outstanding Notes are to be so redeemed, the Notes to be redeemed
shall be selected by such method as the Senior Trustee shall deem fair and
appropriate.
The redemption type to be chosen by the Company and the Reset Remarketing
Agent on the Duration/Interest Mode Determination Date may be one of the
following as defined herein: (i) Par Redemption; (ii) Premium Redemption; or
(iii) Make-Whole Redemption. "Par Redemption" means redemption at a redemption
price equal to 100% of the principal amount thereof, plus accrued interest
thereon, if any, to the redemption date. "Premium Redemption" means redemption
at a redemption price or prices greater than 100% of the principal amount
thereof, plus accrued interest thereon, if any, to the redemption date, as
determined on the Duration/Interest Mode Determination date. "Make-Whole
Redemption" means redemption at a redemption price equal to the Make-Whole
Amount (as defined below), if any, with respect to such Notes. Unless otherwise
specified by the Company on any Duration/Interest Mode Determination Date, the
redemption type will be a Par Redemption.
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any Note, any amount equal to the greater of (i) 100% of
the principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon from the redemption date to
the end of the applicable Subsequent Spread Period, computed by discounting such
payments, in each case, to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the applicable
Treasury Rate plus the Reinvestment Spread, plus accrued interest on the
principal amount thereof to the date of redemption.
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<PAGE> 43
"Reinvestment Spread" means, with respect to the Notes, a number, expressed
as a number of basis points or as a percentage, selected by the Company and
agreed to by the Reset Remarketing Agent on the Duration/Interest Mode
Determination Date.
8. Effect of Event of Default. In case an Event of Default with respect to
the Notes shall occur and be continuing, the unpaid principal of the Notes may
be declared due and payable, in the manner, with the effect and subject to the
conditions provided in the Senior Indenture.
9. Amendments and Waivers. The Senior Indenture may be modified by the
Company and the Senior Trustee without consent of any Holder with respect to
certain matters as described in the Indenture. In addition, the Senior Indenture
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of
the Holders of the Notes of each series to be affected under the Senior
Indenture at any time by the Company and the Senior Trustee with the consent of
the Holders of a majority in principal amount of the Notes at the time
Outstanding of each series to be affected. The Senior Indenture also contains
provisions permitting the Holders of a majority in principal amount of the Notes
of each series at the time Outstanding, on behalf of the Holders of all Notes of
such series, to waive compliance by the Company with certain provisions of the
Senior Indenture and certain past defaults under the Senior Indenture and their
consequences. Any such consent or waiver by the Holder of this Note shall bind
such Holder and all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Note.
10. Obligation of Company. No reference herein to the Senior Indenture and
no provision of this Note or of the Senior Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and any premium, if any, and interest on this Note at the time,
place, and rate and in the coin or currency herein prescribed.
11. Denominations, Transfer and Exchange. (a) The Notes are issuable only
in registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Senior Indenture and subject to certain
limitations therein set forth, Notes of this series are exchangeable for a like
aggregate principal amount of Notes of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
(b) As provided in the Senior Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note for registration of transfer at the office
or agency of the Company in any place where the principal of (and premium, if
any) and interest on this Note are payable, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by the Holder hereof or his attorney duly
authorized in
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<PAGE> 44
writing, and thereupon one or more new Notes of this series, and of like
tenor, of authorized denominations and for the same maturity and aggregate
principal amount, shall be issued to the designated transferee or transferees.
(c) No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Prior to
due presentment of this Note for registration of transfer, the Company, the
Senior Trustee and any agent of the Company or the Trustee may treat the Person
in whose name this Note is registered as the owner hereof for all purposes,
whether or not this Note be overdue, and neither the Company, the Senior Trustee
nor any such agent shall be affected by notice to the contrary.
12. No Liability of Certain Persons. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under this Note or the Senior Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder, by accepting a Note, waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of this Note.
13. Governing Law. The Senior Indenture and this Note shall for all
purposes be governed by, and construed in accordance with, the internal laws of
the State of New York.
-18-
<PAGE> 45
___________________________________________________________________
THE FOLLOWING ABBREVIATIONS SHALL BE CONSTRUED AS THOUGH THE WORDS SET FORTH
BELOW OPPOSITE EACH ABBREVIATION WERE WRITTEN OUT IN FULL WHERE SUCH
ABBREVIATION APPEARS:
TEN COM--as tenants in common (Name) CUST (Name) UNIF--(Name) as Custodian
TEN ENT--as tenants by the entirety GIFT MIN ACT (state) for (Name) Under the
(State)
JT TEN--as joint tenants with Uniform Gifts to
right of survivorship Minors Act
and not as tenants
in common
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
___________________________________________________________________
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________ agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Dated: _______________ Your Signature:_____________________________________
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee: ___________________________________________________
(Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Transfer Agent, which requirements will include
membership or participation in STAMP or such other
"signature guarantee program" as may be determined by
the Transfer Agent in addition to, or in substitution
for, STAMP, all in accordance with the Exchange Act.)
Social Security Number or Taxpayer Identification
Number:__________________________________
-19-
<PAGE> 46
APPENDIX III
No. R-1 Principal Amount
$75,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS, COLLATERAL SERIES A
being a series of
FIRST MORTGAGE BONDS
ORIGINAL ISSUE DATE: June 23, 1998 MATURITY DATE: June 30, 2038
THE FIRST MORTGAGE BONDS, COLLATERAL SERIES A (HEREINAFTER, "COLLATERAL BONDS"),
REPRESENTED BY THIS CERTIFICATE ARE BEING ISSUED AND DELIVERED BY THE COMPANY TO
CITIBANK, N.A., AS TRUSTEE (IN SUCH CAPACITY, THE "SENIOR TRUSTEE") UNDER AN
INDENTURE, DATED AS OF JUNE 1, 1998, BETWEEN THE COMPANY AND THE SENIOR TRUSTEE,
AS SUPPLEMENTED BY THE FIRST SUPPLEMENTAL INDENTURE THERETO DATED AS OF JUNE 18,
1998 (AS SO SUPPLEMENTED, THE "SENIOR INDENTURE"). THE COLLATERAL BONDS ARE TO
BE HELD IN TRUST AS COLLATERAL FOR THE BENEFIT OF THE HOLDERS OF $75,000,000
AGGREGATE PRINCIPAL AMOUNT OF EXTENDABLE MANDATORY PAR PUT REMARKETED SECURITIES
DUE JUNE 30, 2038 (THE "RELATED NOTES") ISSUED PURSUANT TO THE SENIOR INDENTURE.
THE COLLATERAL BONDS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED (EXCEPT TO A
SUCCESSOR TRUSTEE) UNTIL THE EARLIER OF THE RELEASE DATE (AS DEFINED BELOW) OR
THE PRIOR RETIREMENT OF THE RELATED NOTES THROUGH REDEMPTION, REPURCHASE OR
OTHERWISE.
THE INTEREST RATE ON THE COLLATERAL BONDS SHALL AT ALL TIMES BE IDENTICAL TO
THAT OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN, THE RELATED NOTES,
A FORM OF WHICH IS ANNEXED HERETO AS APPENDIX I.
THE INTEREST PAYMENT DATES IN RESPECT OF THE COLLATERAL BONDS SHALL AT ALL TIMES
BE IDENTICAL TO THOSE OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN,
THE RELATED NOTES.
THE COMPANY SHALL MAKE PAYMENTS OF THE PRINCIPAL OF, AND PREMIUM, IF ANY, AND
INTEREST ON, THE COLLATERAL BONDS, TO THE SENIOR TRUSTEE, WHICH PAYMENTS SHALL
BE APPLIED BY THE SENIOR TRUSTEE TO THE SATISFACTION OF OBLIGATIONS ON THE
RELATED NOTES.
THE MATURITY DATE SPECIFIED ABOVE IS ALSO THE MATURITY DATE OF THE RELATED
NOTES.
MICHIGAN CONSOLIDATED GAS COMPANY (hereinafter called the "Company"), a
corporation of the State of Michigan, for value received, hereby
promises to pay to CITIBANK, N.A., as trustee for the benefit of the
holders of the Related Notes, or registered assigns (in such capacity,
the "Senior Trustee"), the sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000)
-1-
<PAGE> 47
on the Maturity Date specified above, at the corporate trust office of the
Mortgage Trustee hereinafter named in the Borough of Manhattan, The City of New
York, New York, or at the principal office of any successor in trust, in lawful
money of the United States of America, and to pay interest thereon at the
Interest Rate(s) from time to time specified in or determined pursuant to the
Related Notes, in like lawful money payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York, New York on such
interest payment date(s) and on the Maturity Date (each an "Interest Payment
Date") as provided in the Related Notes, from the Original Issue Date specified
above or from the most recent Interest Payment Date to which interest has been
paid, commencing on the Interest Payment Date next succeeding the Original Issue
Date, until the Company's obligation with respect to the payment of such
principal sum shall be discharged as provided in the Secured Indenture
hereinafter mentioned and the Senior Indenture. If the date of the Collateral
Bonds represented by this certificate is after a Record Date (as defined below)
with respect to any Interest Payment Date and prior to such Interest Payment
Date, then payment of interest shall commence on the second Interest Payment
Date succeeding such date. If the Company shall default in the payment of
interest due on any Interest Payment Date, then interest shall be payable from
the next preceding Interest Payment Date to which interest has been paid, or, if
no such interest has been paid on the Collateral Bonds represented by this
certificate, from the Original Issue Date. So long as there is no existing
default in the payment of interest, the person in whose name the Collateral
Bonds represented by this certificate were registered at the close of business
on the relevant Record Date with respect to an Interest Payment Date shall be
entitled to receive the interest payable on such Interest Payment Date, except
that if the Company shall default in the payment of interest due on such
Interest Payment Date, such defaulted interest shall be paid to the person in
whose name the Collateral Bonds represented by this Certificate are registered
on the Record Date for the Interest Payment Date fixed by the Company for the
payment of such defaulted interest, provided that in no case shall such Record
Date be less than ten days after notice thereof shall have been mailed to all
registered holders of Collateral Bonds. The term "Record Date" as used herein
with respect to any Interest Payment Date shall mean the last Business Day which
is more than ten calendar days prior to such Interest Payment Date.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in the city of New York are required or authorized
to close and, in the case of Related Notes in the Floating Rate Mode (as defined
in the form of Related Note), a day that is also a London Business Day. "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
The bonds represented by this certificate, of the series hereinafter
specified, are bonds of the Company (herein called the "bonds") known as its
"First Mortgage Bonds," issued and to be issued in one or more series under, and
all equally and ratably secured by, an Indenture of Mortgage and Deed of Trust
dated as of March 1, 1944, duly executed by the Company to City Bank Farmers
Trust Company (now known as Citibank, N.A., successor trustee, as "Mortgage
Trustee") and Ralph E. Morton (Robert T. Kirchner, successor individual trustee
and, together with Citibank, N.A., the "Secured Trustees") as restated in Part
II of the Twenty-ninth Supplemental Indenture dated as of July 15, 1989, which
became effective on April 1, 1994, to which indenture and all indentures
supplemental thereto executed on and after July 15, 1989 reference is hereby
made for a description of the property mortgaged and pledged, the nature and
extent of the security, the terms and conditions upon which the bonds are, and
are to be, issued and secured, and the rights of the holders of the bonds and of
the Secured Trustees in respect of such security (which indenture and all
indentures supplemental thereto, including the Thirty-fifth Supplemental
Indenture dated as of June 18, 1998, are hereinafter collectively called the
"Secured Indenture"). As provided in the Secured Indenture, the 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 therein
provided. The bonds represented by this certificate are part of a Series
designated "Collateral Bonds," herein called Collateral Bonds, created by the
Thirty-fifth Supplemental Indenture dated as of June 18, 1998, as provided for
in the Secured Indenture.
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<PAGE> 48
With the consent of the Company and to the extent permitted by and as
provided in the Secured Indenture and the Senior Indenture, the rights and
obligations of the Company and/or the rights of the holders of the Collateral
Bonds of the Thirty-second Series and/or the terms and provisions of the Secured
Indenture may be modified or altered by such affirmative vote or votes of the
holders of the Related Notes then outstanding as are specified in the Senior
Indenture.
The Collateral Bonds shall be redeemed if and to the extent Related
Notes are redeemed, as provided in the Senior Indenture with respect to the
Related Notes and in the Related Notes.
In case an event of default as defined in the Secured Indenture or the
Senior Indenture shall occur, the principal of the Collateral Bonds may become
or be declared due and payable in the manner, with the effect, and subject to
the conditions provided in the Secured Indenture and the Senior Indenture.
The Senior Trustee has agreed pursuant to the Senior Indenture to hold
the Collateral Bonds as collateral for the benefit of the holders of the Related
Notes under all circumstances and not to transfer (except to a successor
trustee) such Collateral Bonds until the earlier of the Release Date or the
prior retirement of the Related Notes through redemption, repurchase or
otherwise. "Release Date" means the date on which all First Mortgage Bonds of
the Company issued and outstanding under the Secured Indenture, other than the
Collateral Bonds, have been retired (at, before or after the maturity thereof)
through payment, redemption or otherwise provided that no default or event of
default has occurred and is continuing under the Senior Indenture. On the
Release Date, the Senior Trustee shall deliver to the Company for cancellation
all Collateral Bonds, and the Company shall cause the Senior Trustee to provide
notice to all holders of Related Notes of the occurrence of the Release Date. As
a result, on the Release Date, the Collateral Bonds shall cease to secure the
Related Notes. Following the Release Date, the Company shall cause the Secured
Indenture to be closed, and the Company shall not issue any additional
Collateral Bonds to be issued thereunder. From and after the Release Date, the
Company's obligations in respect of the Collateral Bonds shall be satisfied and
discharged.
No recourse shall be had for the payment of the principal of, or the
interest on, the Collateral Bonds, or for any claim based hereon or otherwise in
respect of the Collateral Bonds or the Secured Indenture, Senior Indenture or
any indenture supplemental to either thereof, or against any incorporator,
stockholder, director or officer, past, present or future, of the Company, as
such, or any predecessor or successor corporation, either directly or through
the Company or any such predecessor or successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability, whether at common law,
in equity, by any constitution, statute or otherwise, of incorporators,
stockholders, directors or officers being waived and released by the owner
hereof and every owner of any Related Note by the acceptance of the Collateral
Bonds or such Related Note, as the case may be, and as part of the consideration
for the issue thereof, and being likewise waived and released pursuant to the
Secured Indenture and the Senior Indenture.
The Collateral Bonds shall not be valid or become obligatory for any
purpose unless and until the certificate of authentication hereon shall have
been manually executed by the Mortgage Trustee or its successor in trust under
the Secured Indenture.
IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
certificate to be executed under its name with the signature of its Chairman,
Chief Executive Officer, President, Vice Chairman or a Vice-President, or any
other officer selected by the Board of Directors, under its corporate seal,
which may be a facsimile, attested with the signature of its Secretary or one of
its Assistant Secretaries.
Dated: June 23, 1998
MICHIGAN CONSOLIDATED GAS COMPANY
-3-
<PAGE> 49
By
President and Chief Executive Officer
Attest:
Secretary
The bonds represented by this certificate constitute Collateral Bonds
of the series designated and described in the within-mentioned Secured
Indenture.
CITIBANK, N.A., as Mortgage Trustee
By
Authorized Officer
----------------------------------------------------------------
-4-
<PAGE> 50
APPENDIX IV
No. R-1 Principal Amount
$75,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS, COLLATERAL SERIES B
being a series of
FIRST MORTGAGE BONDS
ORIGINAL ISSUE DATE: June 23, 1998 MATURITY DATE: June 30, 2038
THE FIRST MORTGAGE BONDS, COLLATERAL SERIES A (HEREINAFTER, "COLLATERAL BONDS"),
REPRESENTED BY THIS CERTIFICATE ARE BEING ISSUED AND DELIVERED BY THE COMPANY TO
CITIBANK, N.A., AS TRUSTEE (IN SUCH CAPACITY, THE "SENIOR TRUSTEE") UNDER AN
INDENTURE, DATED AS OF JUNE 1, 1998, BETWEEN THE COMPANY AND THE SENIOR TRUSTEE,
AS SUPPLEMENTED BY THE FIRST SUPPLEMENTAL INDENTURE THERETO DATED AS OF JUNE 18,
1998 (AS SO SUPPLEMENTED, THE "SENIOR INDENTURE"). THE COLLATERAL BONDS ARE TO
BE HELD IN TRUST AS COLLATERAL FOR THE BENEFIT OF THE HOLDERS OF $75,000,000
AGGREGATE PRINCIPAL AMOUNT OF RESETABLE MANDATORY PUTABLE/REMARKETABLE
SECURITIES DUE JUNE 30, 2038 (THE "RELATED NOTES") ISSUED PURSUANT TO THE SENIOR
INDENTURE.
THE COLLATERAL BONDS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED (EXCEPT TO A
SUCCESSOR TRUSTEE) UNTIL THE EARLIER OF THE RELEASE DATE (AS DEFINED BELOW) OR
THE PRIOR RETIREMENT OF THE RELATED NOTES THROUGH REDEMPTION, REPURCHASE OR
OTHERWISE.
THE INTEREST RATE ON THE COLLATERAL BONDS SHALL AT ALL TIMES BE IDENTICAL TO
THAT OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN, THE RELATED NOTES,
A FORM OF WHICH IS ANNEXED HERETO AS APPENDIX I.
THE INTEREST PAYMENT DATES IN RESPECT OF THE COLLATERAL BONDS SHALL AT ALL TIMES
BE IDENTICAL TO THOSE OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN,
THE RELATED NOTES.
THE COMPANY SHALL MAKE PAYMENTS OF THE PRINCIPAL OF, AND PREMIUM, IF ANY, AND
INTEREST ON, THE COLLATERAL BONDS, TO THE SENIOR TRUSTEE, WHICH PAYMENTS SHALL
BE APPLIED BY THE SENIOR TRUSTEE TO THE SATISFACTION OF OBLIGATIONS ON THE
RELATED NOTES.
THE MATURITY DATE SPECIFIED ABOVE IS ALSO THE MATURITY DATE OF THE RELATED
NOTES.
MICHIGAN CONSOLIDATED GAS COMPANY (hereinafter called the "Company"), a
corporation of the State of Michigan, for value received, hereby
promises to pay to CITIBANK, N.A., as trustee for the benefit of the
holders of the Related Notes, or registered assigns (in such capacity,
the "Senior Trustee"), the sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000)
-1-
<PAGE> 51
on the Maturity Date specified above, at the corporate trust office of the
Mortgage Trustee hereinafter named in the Borough of Manhattan, The City of New
York, New York, or at the principal office of any successor in trust, in lawful
money of the United States of America, and to pay interest thereon at the
Interest Rate(s) from time to time specified in or determined pursuant to the
Related Notes, in like lawful money payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York, New York on such
interest payment date(s) and on the Maturity Date (each an "Interest Payment
Date") as provided in the Related Notes, from the Original Issue Date specified
above or from the most recent Interest Payment Date to which interest has been
paid, commencing on the Interest Payment Date next succeeding the Original Issue
Date, until the Company's obligation with respect to the payment of such
principal sum shall be discharged as provided in the Secured Indenture
hereinafter mentioned and the Senior Indenture. If the date of the Collateral
Bonds represented by this certificate is after a Record Date (as defined below)
with respect to any Interest Payment Date and prior to such Interest Payment
Date, then payment of interest shall commence on the second Interest Payment
Date succeeding such date. If the Company shall default in the payment of
interest due on any Interest Payment Date, then interest shall be payable from
the next preceding Interest Payment Date to which interest has been paid, or, if
no such interest has been paid on the Collateral Bonds represented by this
certificate, from the Original Issue Date. So long as there is no existing
default in the payment of interest, the person in whose name the Collateral
Bonds represented by this certificate were registered at the close of business
on the relevant Record Date with respect to an Interest Payment Date shall be
entitled to receive the interest payable on such Interest Payment Date, except
that if the Company shall default in the payment of interest due on such
Interest Payment Date, such defaulted interest shall be paid to the person in
whose name the Collateral Bonds represented by this Certificate are registered
on the Record Date for the Interest Payment Date fixed by the Company for the
payment of such defaulted interest, provided that in no case shall such Record
Date be less than ten days after notice thereof shall have been mailed to all
registered holders of Collateral Bonds. The term "Record Date" as used herein
with respect to any Interest Payment Date shall mean the last Business Day which
is more than ten calendar days prior to such Interest Payment Date.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in the city of New York are required or authorized
to close and, in the case of Related Notes in the Floating Rate Mode (as defined
in the form of Related Note), a day that is also a London Business Day. "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
The bonds represented by this certificate, of the series hereinafter
specified, are bonds of the Company (herein called the "bonds") known as its
"First Mortgage Bonds," issued and to be issued in one or more series under, and
all equally and ratably secured by, an Indenture of Mortgage and Deed of Trust
dated as of March 1, 1944, duly executed by the Company to City Bank Farmers
Trust Company (now known as Citibank, N.A., successor trustee, as "Mortgage
Trustee") and Ralph E. Morton (Robert T. Kirchner, successor individual trustee
and, together with Citibank, N.A., the "Secured Trustees") as restated in Part
II of the Twenty-ninth Supplemental Indenture dated as of July 15, 1989, which
became effective on April 1, 1994, to which indenture and all indentures
supplemental thereto executed on and after July 15, 1989 reference is hereby
made for a description of the property mortgaged and pledged, the nature and
extent of the security, the terms and conditions upon which the bonds are, and
are to be, issued and secured, and the rights of the holders of the bonds and of
the Secured Trustees in respect of such security (which indenture and all
indentures supplemental thereto, including the Thirty-fifth Supplemental
Indenture dated as of June 18, 1998, are hereinafter collectively called the
"Secured Indenture"). As provided in the Secured Indenture, the 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 therein
provided. The bonds represented by this certificate are part of a Series
designated "Collateral Bonds," herein called Collateral Bonds, created by the
Thirty-fifth Supplemental Indenture dated as of June 18, 1998, as provided for
in the Secured Indenture.
-2-
<PAGE> 52
With the consent of the Company and to the extent permitted by and as
provided in the Secured Indenture and the Senior Indenture, the rights and
obligations of the Company and/or the rights of the holders of the Collateral
Bonds of the Thirty-second Series and/or the terms and provisions of the Secured
Indenture may be modified or altered by such affirmative vote or votes of the
holders of the Related Notes then outstanding as are specified in the Senior
Indenture.
The Collateral Bonds shall be redeemed if and to the extent Related
Notes are redeemed, as provided in the Senior Indenture with respect to the
Related Notes and in the Related Notes.
In case an event of default as defined in the Secured Indenture or the
Senior Indenture shall occur, the principal of the Collateral Bonds may become
or be declared due and payable in the manner, with the effect, and subject to
the conditions provided in the Secured Indenture and the Senior Indenture.
The Senior Trustee has agreed pursuant to the Senior Indenture to hold
the Collateral Bonds as collateral for the benefit of the holders of the Related
Notes under all circumstances and not to transfer (except to a successor
trustee) such Collateral Bonds until the earlier of the Release Date or the
prior retirement of the Related Notes through redemption, repurchase or
otherwise. "Release Date" means the date on which all First Mortgage Bonds of
the Company issued and outstanding under the Secured Indenture, other than the
Collateral Bonds, have been retired (at, before or after the maturity thereof)
through payment, redemption or otherwise provided that no default or event of
default has occurred and is continuing under the Senior Indenture. On the
Release Date, the Senior Trustee shall deliver to the Company for cancellation
all Collateral Bonds, and the Company shall cause the Senior Trustee to provide
notice to all holders of Related Notes of the occurrence of the Release Date. As
a result, on the Release Date, the Collateral Bonds shall cease to secure the
Related Notes. Following the Release Date, the Company shall cause the Secured
Indenture to be closed, and the Company shall not issue any additional
Collateral Bonds to be issued thereunder. From and after the Release Date, the
Company's obligations in respect of the Collateral Bonds shall be satisfied and
discharged.
No recourse shall be had for the payment of the principal of, or the
interest on, the Collateral Bonds, or for any claim based hereon or otherwise in
respect of the Collateral Bonds or the Secured Indenture, Senior Indenture or
any indenture supplemental to either thereof, or against any incorporator,
stockholder, director or officer, past, present or future, of the Company, as
such, or any predecessor or successor corporation, either directly or through
the Company or any such predecessor or successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability, whether at common law,
in equity, by any constitution, statute or otherwise, of incorporators,
stockholders, directors or officers being waived and released by the owner
hereof and every owner of any Related Note by the acceptance of the Collateral
Bonds or such Related Note, as the case may be, and as part of the consideration
for the issue thereof, and being likewise waived and released pursuant to the
Secured Indenture and the Senior Indenture.
The Collateral Bonds shall not be valid or become obligatory for any
purpose unless and until the certificate of authentication hereon shall have
been manually executed by the Mortgage Trustee or its successor in trust under
the Secured Indenture.
IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
certificate to be executed under its name with the signature of its Chairman,
Chief Executive Officer, President, Vice Chairman or a Vice-President, or any
other officer selected by the Board of Directors, under its corporate seal,
which may be a facsimile, attested with the signature of its Secretary or one of
its Assistant Secretaries.
Dated: June 23, 1998
MICHIGAN CONSOLIDATED GAS COMPANY
-3-
<PAGE> 53
By
President and Chief Executive Officer
Attest:
Secretary
The bonds represented by this certificate constitute Collateral Bonds
of the series designated and described in the within-mentioned Secured
Indenture.
CITIBANK, N.A., as Mortgage Trustee
By
Authorized Officer
----------------------------------------------------------------
-4-
<PAGE> 1
EXHIBIT 4.2
================================================================================
THIRTY-FIFTH
SUPPLEMENTAL INDENTURE
TO
INDENTURE OF MORTGAGE AND
DEED OF TRUST
DATED AS OF MARCH 1, 1944
---------------
AS RESTATED IN
PART II OF THE TWENTY-NINTH
SUPPLEMENTAL INDENTURE DATED AS OF JULY 15, 1989
WHICH BECAME EFFECTIVE ON APRIL 1, 1994
---------------
MICHIGAN CONSOLIDATED GAS COMPANY
TO
CITIBANK, N.A.
AND
ROBERT T. KIRCHNER
TRUSTEES
DATED AS OF JUNE 18, 1998
---------------
CREATING AN ISSUE OF FIRST MORTGAGE BONDS,
DESIGNATED AS
COLLATERAL BONDS
================================================================================
<PAGE> 2
MICHIGAN CONSOLIDATED GAS COMPANY
THIRTY-FIFTH SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 18, 1998
SUPPLEMENTAL TO INDENTURE OF MORTGAGE
AND DEED OF TRUST
DATED AS OF MARCH 1, 1944
---------------
TABLE OF CONTENTS*
---------------
PAGE
----
ARTICLE I
CREATION OF AN ISSUE OF FIRST MORTGAGE BONDS, DESIGNATED AND
DISTINGUISHED AS "COLLATERAL BONDS".................................. 3
SECTION 1....................................................... 3
SECTION 2....................................................... 4
SECTION 3....................................................... 5
SECTION 4....................................................... 5
SECTION 5....................................................... 5
ARTICLE II
ISSUE OF COLLATERAL BONDS .............................................. 5
ARTICLE III
THE TRUSTEES............................................................ 6
ARTICLE IV
MISCELLANEOUS PROVISIONS................................................ 6
* NOTE: The Table of Contents is not part of the original Indenture as executed.
<PAGE> 3
THIS THIRTY-FIFTH SUPPLEMENTAL INDENTURE, dated as of the 18th day of
June, 1998, between MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly
organized and existing under and by virtue of the laws of the State of Michigan
(hereinafter called the "Company"), having its principal place of business at
500 Griswold Street, Detroit, Michigan, party of the first part, and CITIBANK,
N.A. (formerly First National City Bank), a national banking association
incorporated and existing under and by virtue of the laws of the United States
of America, having an office at 111 Wall Street in the Borough of Manhattan, The
City of New York, New York, successor to CITY BANK FARMERS TRUST COMPANY
(hereinafter with its predecessors as trustee called the "Mortgage Trustee"),
and ROBERT T. KIRCHNER, having an office at 120 Wall Street, 13th Floor, New
York, New York, successor to RALPH E. MORTON as individual trustee (hereinafter
with his predecessors as individual trustee called the "Individual Trustee"), as
Trustees under the Indenture hereinafter mentioned, parties of the second part
(the Mortgage Trustee and Individual Trustee being hereinafter together referred
to as the "Trustees"):
WHEREAS, the Company has heretofore executed and delivered to the
Trustees an Indenture of Mortgage and Deed of Trust (hereinafter called the
"Original Indenture"), dated as of March 1, 1944;
WHEREAS, the Twenty-ninth Supplemental Indenture, which became
effective April 1, 1994 provided for the modification and restatement of the
Original Indenture, as previously amended (the "Indenture"), and secures the
Company's First Mortgage Bonds, unlimited in aggregate principal amount except
as therein otherwise provided:
Thirtieth Supplemental Indenture, dated as of September 1, 1991;
Thirty-first Supplemental Indenture, dated as of December 15, 1991;
Thirty-second Supplemental Indenture, dated as of January 5, 1993;
Thirty-third Supplemental Indenture, dated as of May 1, 1995;
Thirty-fourth Supplemental Indenture, dated as of November 1, 1996; and
<PAGE> 4
WHEREAS, at the date hereof there were outstanding First Mortgage Bonds
of the Company issued under the Indenture, of 6 series (all outstanding bonds of
25 other series having been previously retired) in the principal amounts set
forth below:
<TABLE>
<CAPTION>
Amount
Amount Outstanding
Designation of Series Initially Issued As of 6/18/98
----------------------- ---------------- -------------
<S> <C> <C>
First Mortgage Bonds
(Secured Medium-Term Notes, Series A)
9-1/8% Series due 2004......................................... $ 55,000,000 $ 18,000,000
First Mortgage Bonds
9-1/2% Series due 2021......................................... 40,000,000 40,000,000
First Mortgage Bonds
(Secured Term Notes, Series A)
8% Series due 2002............................................. 70,000,000 17,314,000
7-1/2% Series due 2020......................................... 10,000,000 9,922,000
6-3/4% Series due 2023......................................... 20,000,000 16,967,000
First Mortgage Bonds
(Secured Term Notes, Series B)
5-3/4% Series due 2001......................................... 60,000,000 60,000,000
8-1/4% Series due 2014......................................... 80,000,000 80,000,000
7-1/2% Series due 2020......................................... 20,000,000 19,719,000
7% Series due 2025............................................. 40,000,000 40,000,000
First Mortgage Bonds
(Secured Term Notes, Series B)
6.51% Series due 1999.......................................... 30,000,000 30,000,000
6.72% Series due 2003.......................................... 4,150,000 4,150,000
6.80% Series due 2003.......................................... 15,850,000 15,850,000
7.15% Series due 2006.......................................... 40,000,000 40,000,000
7.06% Series due 2012.......................................... 40,000,000 40,000,000
First Mortgage Bonds
(Secured Medium-Term Notes, Series C)
7.21% Series due 2007.......................................... 30,000,000 30,000,000
7.60% Series due 2017.......................................... 15,000,000 14,990,000
</TABLE>
and
WHEREAS, the Company desires in and by this Thirty-fifth Supplemental
Indenture to create a Thirty-second series of bonds and certain subseries
thereunder to be issued under the Indenture, to designate or otherwise
distinguish such series, to specify the particulars necessary to describe and
define the same, and to specify such other provisions and agreements in respect
thereof as are in the Indenture provided or permitted; and
WHEREAS, all the conditions and requirements necessary to make this
Thirty-fifth Supplemental Indenture, when duly executed and delivered, a valid,
binding and legal instrument in accordance with its terms and for the purposes
herein expressed, have been done, performed and fulfilled, and the execution and
delivery of this Thirty-fifth Supplemental Indenture in the form and with the
terms hereof have been in all respects duly authorized;
2
<PAGE> 5
NOW, THEREFORE, it is agreed by and between the Company and the
Trustees as follows:
ARTICLE I
CREATION OF AN ISSUE OF FIRST MORTGAGE BONDS, DESIGNATED AND
DISTINGUISHED AS "COLLATERAL BONDS"
SECTION 1. There is hereby created a series of bonds to be issued under
and secured by the Indenture, to be known as "First Mortgage Bonds," designated
and distinguished as "Collateral Bonds" of the Company (herein collectively
sometimes called the "Collateral Bonds"). The Collateral Bonds may be issued
without limitation as to aggregate principal amount except as provided in the
Indenture and in this Thirty-fifth Supplemental Indenture. The Collateral Bonds
shall be registered bonds without coupons and shall be dated as of the date of
the authentication thereof by the Trustee.
Separate series of Collateral Bonds are being issued by the Company
contemporaneously with the issuance of separate series of senior debt securities
of the Company including, initially, those designated "Extendable Mandatory Par
Put Remarketed Securities ("MOPPRS(sm)") due June 30, 2038" and "Resetable
Mandatory Putable/remarketable Securities ("MAPS(sm)"), due June 30, 2038" and
are being issued and delivered to Citibank, N.A., as trustee (in such capacity,
together with any successor trustee(s), the "Senior Trustee") under the
Indenture dated as of June 1, 1998, governing such senior debt securities (the
"Senior Indenture"), in such capacity, as collateral for the benefit of the
holders of such securities. The series of such senior debt securities
collateralized by any Collateral Bonds shall be referred to as the "Related
Notes" with respect to such Collateral Bonds.
The Collateral Bonds shall bear interest at such rate or rates and be
payable on such date or dates, shall mature and be subject to mandatory or
optional redemption on such date or dates and shall have such other terms and
provisions not inconsistent with the Indenture as are set forth in the forms of
Collateral Bonds attached as Appendix I and II hereto (herein sometimes called
the "Bond Forms") or otherwise as the Board of Directors may determine in
accordance with a resolution filed with the Mortgage Trustee and referring to
this Thirty-fifth Supplemental Indenture (herein called an "Authorizing
Resolution"). Resolutions of the Board of Directors of the Company establishing
the terms of the Related Notes with respect to any Collateral Bonds shall
constitute Authorizing Resolutions for purposes of establishing the terms of
such Collateral Bonds. An Authorizing Resolution may alter, correct or change
the form of any of the Bond Forms prior to the issue and authentication of any
Collateral Bond provided that the substantive terms contained in any of any of
the Bond Forms is not changed in any manner adverse to the holder of any
Collateral Bonds.
So long as there is no existing default in the payment of interest on
the Collateral Bonds, all Collateral Bonds authenticated by the Trustee after
the Record Date specified for any interest payment date, and prior to such
interest payment date (unless the issue date hereinafter specified is after such
Record Date) shall be dated the date of authentication, but shall bear interest
from such interest payment date, and the person in whose name any Collateral
Bond is registered at the close of business on any Record Date with respect to
any interest payment date shall be entitled to receive the interest payable on
such interest payment date notwithstanding any transfer or exchange of such
Collateral Bond subsequent to the Record Date and on or prior to such interest
payment date, except if and to the extent the Company shall default in the
payment of the interest due on such interest payment date, in which case such
defaulted interest shall be paid to the person in whose name such Collateral
Bond is registered on the Record Date for the interest payment date fixed by the
Company for the payment of such defaulted interest, provided that in no case
shall such Record Date be less than ten days after notice thereof shall have
been mailed to all registered holders of Collateral Bonds; and provided that
interest payable on a maturity date shall be payable to the person to whom the
principal thereof is payable. If the issue date of any Collateral Bond is after
such Record Date, such Bond shall bear interest from the issue date but payment
of interest shall commence on the second interest payment date next succeeding
the issue date. Any notice which is mailed as herein provided shall be
conclusively presumed to have been properly and sufficiently given on the date
of such mailing, whether or not the holder receives notice.
3
<PAGE> 6
The terms "Record Date"and "Business Day" as used herein are defined in
the Bond Forms.
The term "issue date" as used herein with respect to Collateral Bonds
of a designated interest rate and maturity shall mean the date of first
authentication of Collateral Bonds of such designated interest rate and
maturity.
As used in this Section 1, the term "default in the payment of
interest" means failure to pay interest on the applicable interest payment date
disregarding any period of grace permitted by Section 9.01 of the Indenture.
The Company shall make payments of the principal of, and premium or
interest on, the Collateral Bonds to the Senior Trustee, which payments shall be
applied by the Senior Trustee to satisfaction of obligations on the Related
Notes in respect of such Collateral Bonds.
SECTION 2. Each series of Collateral Bonds shall be redeemed if and to
the extent the Related Notes with respect to such Collateral Bonds are redeemed,
as provided in the Senior Indenture and in such Related Notes. The redemption
price in respect of any Collateral Bonds (including principal, premium, if any,
and interest thereon) shall be the redemption price applicable to the Related
Notes with respect to such Collateral Bonds. Any notice required to be furnished
to the holders of the Collateral Bonds or the Trustees relating to the
redemption of such Collateral Bonds shall be considered furnished by the
delivery of appropriate notice to the holders of the Related Notes or the Senior
Trustee, as the case may be, as provided in the Senior Indenture and the Related
Notes with respect to such Collateral Bonds. Any redemption payment made by the
Company on the Related Notes (whether for principal, premium, if any, or
interest) shall be applied by the Senior Trustee as payment of the redemption
price in respect of the correspondingly redeemed Collateral Bonds. In the event
the Related Notes with respect to a series of Collateral Bonds are redeemed in
part, an equivalent aggregate principal amount of the corresponding series of
Collateral Bonds shall be so redeemed, the Senior Trustee, as holder of the
Collateral Bonds as collateral for such Related Notes, shall deliver to the
Mortgage Trustee for cancellation an equivalent principal amount of Collateral
Bonds of the series corresponding to the Related Notes so redeemed, and the
Company shall execute and the Mortgage Trustee shall authenticate and deliver,
without charge, to the Senior Trustee, as holder thereof, one or more new
Collateral Bonds of authorized denominations for the unredeemed balance of any
Collateral Bonds surrendered for redemption in connection with the redemption of
the Related Notes.
SECTION 3. The Collateral Bonds shall be registered bonds without
coupons. The Mortgage Trustee shall be the registrar and paying agent for the
Collateral Bonds, which duties it hereby accepts. Collateral Bonds may be issued
in the denomination of $1,000 or any integral multiple thereof.
SECTION 4. Collateral Bonds shall be exchangeable, at the option of the
registered owners thereof and upon surrender thereof at the corporate trust
office of the Trustee in the Borough of Manhattan, The City of New York, New
York, for registered bonds of the same aggregate principal amount and other
terms, but of different authorized denomination or denominations, such exchanges
to be made without service charge (except for any stamp tax or other
governmental charge).
Every bond so surrendered shall be accompanied by a proper transfer
power duly executed by the registered owner or by duly authorized attorney
transferring such bond to the Company, and the signature to such transfer power
shall be guaranteed to the satisfaction of the Trustee. All bonds so surrendered
shall be forthwith canceled and delivered to or upon the order of the Company.
All bonds executed, authenticated and delivered in exchange for bonds so
surrendered shall be valid obligations of the Company, evidencing the same debt
as the bonds surrendered, and shall be secured by the same lien and be entitled
to the same benefits and protection as the bonds in exchange for which they are
executed, authenticated and delivered.
The Company shall not be required to make any such exchange or any
registration of transfer (1) during a period of fifteen days next preceding any
interest payment date, but only if there is an existing default in the payment
of interest on the Collateral Bonds on which such payment is due or (2) after
the bond so presented for
4
<PAGE> 7
exchange or registration of transfer, or any portion thereof, has been called
for redemption and notice thereof given to the registered owner.
SECTION 5. Pending the preparation of definitive Collateral Bonds the
Company may from time to time execute, and upon its written order, the Trustee
shall authenticate and deliver, in lieu of such definitive bonds and subject to
the same provisions, limitations and conditions, one or more temporary bonds, in
registered form, of any denomination specified in the written order of the
Company for the authentication and delivery thereof, and with such omissions,
insertions and variations as may be determined by the Board of Directors of the
Company. Such temporary bonds shall be substantially of the tenor of the bonds
to be issued as herein before recited, but such temporary bonds may, in lieu of
the statement of the specific redemption prices required to be set forth in
Collateral Bonds in definitive form.
If any such temporary Collateral Bonds shall at any time be so
authenticated and delivered in lieu of definitive bonds, the Company shall upon
request at its own expense prepare, execute and deliver to the Trustee and
thereupon, upon the presentation and surrender of temporary bonds, the Trustee
shall authenticate and deliver in exchange therefor, without charge to the
holder, definitive bonds of the same series and other terms, if any, and for the
same principal sum in the aggregate as the temporary bonds surrendered. All
temporary bonds so surrendered shall be forthwith canceled by the Trustee and
delivered to or upon the order of the Company. Until exchanged for definitive
bonds the temporary bonds shall in all respects be entitled to the lien and
security of the Indenture and all supplemental indentures.
ARTICLE II
ISSUE OF COLLATERAL BONDS
Collateral Bonds, of the Thirty-second Series, in the aggregate
principal amount of $400,000,000 including, without limitation, Collateral Bonds
designated Collateral Bonds, Series A, in the aggregate principal amount of
$75,000,000 and Collateral Bonds, Series B, in the aggregate principal amount of
$75,000,000, may be executed, authenticated and delivered from time to time as
permitted by the provisions of the Indenture.
ARTICLE III
THE TRUSTEES
The Trustees shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Thirty-fifth Supplemental
Indenture or the due execution hereof by the Company, or for or in respect of
the recitals and statements contained herein, all of which recitals and
statements are made solely by the Company.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed, by the Trustees by
reason of this Thirty-fifth Supplemental Indenture other than as set forth in
the Indenture and this Thirty-fifth Supplemental Indenture is executed and
accepted on behalf of the Trustees, subject to all the terms and conditions set
forth in the Indenture, as fully to all intents as if the same were herein set
forth at length.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Except insofar as herein otherwise expressly provided, all the
provisions, terms and conditions of the Indenture shall be deemed to be
incorporated in, and made a part of, this Thirty-fifth Supplemental Indenture
and the Twenty-ninth Supplemental Indenture dated as of July 15, 1989, by the
Thirtieth Supplemental Indenture dated
5
<PAGE> 8
as of September 1, 1991, by the Thirty-first Supplemental Indenture dated as of
December 15, 1991, by the Thirty-second Supplemental Indenture dated as of
January 5, 1993, by the Thirty-third Supplemental Indenture dated as of May 1,
1995, by the Thirty-fourth Supplemental Indenture dated as of November 1, 1996,
and by this Thirty-fifth Supplemental Indenture is in all respects ratified and
confirmed; and the Indenture and said Supplemental Indentures shall be read,
taken and construed as one and the same instrument.
Nothing in this Thirty-fifth Supplemental Indenture is intended, or
shall be construed, to give to any person or corporation, other than the parties
hereto and the holders of Collateral Bonds issued and to be issued under and
secured by the Indenture, any legal or equitable right, remedy or claim under or
in respect of this Thirty-fifth Supplemental Indenture, or under any covenant,
condition or provision herein contained, all the covenants, conditions and
provisions of this Thirty-fifth Supplemental Indenture being intended to be, and
being, for the sole and exclusive benefit of the parties hereto and of the
holders of bonds issued and to be issued under the Indenture and secured
thereby.
All covenants, promises and agreements in this Thirty-fifth
Supplemental Indenture contained by or on behalf of the Company shall bind its
successors and assigns whether so expressed or not.
This Thirty-fifth Supplemental Indenture may be executed in any number
of counterparts, and each of such counterparts when so executed shall be deemed
to be an original; but all such counterparts shall together constitute but one
and the same instrument.
6
<PAGE> 9
IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
Thirty-fifth Supplemental Indenture to be executed by its Chairman, Chief
Executive Officer, President, Vice Chairman or a Vice President, or any other
officer selected by the Board of Directors, and its corporate seal to be
hereunto affixed, duly attested by its Secretary or an Assistant Secretary, and
Citibank, N.A., as Mortgage Trustee as aforesaid, has caused the same to be
executed by one of its authorized signatories and its corporate seal to be
hereunto affixed, duly attested by another one of its authorized signatories,
and Robert T. Kirchner, as Individual Trustee as aforesaid, has hereunto affixed
his signature, on the respective dates of their acknowledgments hereinafter set
forth, as of the date and year first above written.
MICHIGAN CONSOLIDATED GAS COMPANY
By /s/ Howard L. Dow III Attest: /s/ Ronald E. Christian
---------------------------------- -------------------------
Name: Howard L. Dow III Name: Ronald E. Christian
Tile: Senior Vice President and CFO Title: Vice President,
General Counsel
and Secretary
500 Griswold Street 500 Griswold Street
Detroit, Michigan Detroit, Michigan
Signed, sealed, acknowledged and
delivered by MICHIGAN CONSOLIDATED
GAS COMPANY in the presence of:
/s/ Robert A. DeGryse
---------------------------------
/s/ Michael J. Way
---------------------------------
Citibank, N.A., as Mortgage Trustee,
By /s/ Lawrence Mills Attest: /s/ Peter M. Pavlyshin
------------------------------ -----------------------
Lawrence Mills Peter M. Pavlyshin
Senior Trust Officer Trust Officer
111 Wall Street
New York, New York
/s/ Robert T. Kirchner
------------------------------
Robert T. Kirchner
as Individual Trustee
111 Wall Street, 5th Floor
New York, New York
Signed, sealed, acknowledged and
delivered by CITIBANK, N.A. and
ROBERT T. KIRCHNER, in the presence of:
/s/ Rosemary Melendez
---------------------------------
Rosemary Melendez
/s/ Doris Ware
---------------------------------
Doris Ware
<PAGE> 10
State of Michigan }
} ss.
County of Wayne }
The foregoing instrument was acknowledged before me this 18th day of
June, 1998, by Howard L. Dow III, of MICHIGAN CONSOLIDATED GAS COMPANY, a
Michigan corporation, on behalf of the corporation.
/s/ Janice Ann Beal
Notary Public, Wayne County, Michigan
My Commission Expires: February 2,001
State of New York }
} ss.
County of New York }
The foregoing instrument was acknowledged before me this 22nd day of
June, 1998, by F. Mills, Senior Trust Officer of Citibank, N.A., a national
banking association, on behalf of the association, as Trustee, and Robert T.
Kirchner, as Individual Trustee as in said instrument described.
/s/ Jeffrey Berger
Notary Public, State of New York
No. 01BE5015814
Qualified in Kings County
Commission Expires: July 26, 1999
<PAGE> 11
APPENDIX I
No. R-1 Principal Amount
$75,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS, COLLATERAL SERIES A
being a series of
FIRST MORTGAGE BONDS
ORIGINAL ISSUE DATE: June 23, 1998 MATURITY DATE: June 30, 2038
THE FIRST MORTGAGE BONDS, COLLATERAL SERIES A (HEREINAFTER, "COLLATERAL BONDS"),
REPRESENTED BY THIS CERTIFICATE ARE BEING ISSUED AND DELIVERED BY THE COMPANY TO
CITIBANK, N.A., AS TRUSTEE (IN SUCH CAPACITY, THE "SENIOR TRUSTEE") UNDER AN
INDENTURE, DATED AS OF JUNE 1, 1998, BETWEEN THE COMPANY AND THE SENIOR TRUSTEE,
AS SUPPLEMENTED BY THE FIRST SUPPLEMENTAL INDENTURE THERETO DATED AS OF JUNE 18,
1998 (AS SO SUPPLEMENTED, THE "SENIOR INDENTURE"). THE COLLATERAL BONDS ARE TO
BE HELD IN TRUST AS COLLATERAL FOR THE BENEFIT OF THE HOLDERS OF $75,000,000
AGGREGATE PRINCIPAL AMOUNT OF EXTENDABLE MANDATORY PAR PUT REMARKETED SECURITIES
DUE JUNE 30, 2038 (THE "RELATED NOTES") ISSUED PURSUANT TO THE SENIOR INDENTURE.
THE COLLATERAL BONDS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED (EXCEPT TO A
SUCCESSOR TRUSTEE) UNTIL THE EARLIER OF THE RELEASE DATE (AS DEFINED BELOW) OR
THE PRIOR RETIREMENT OF THE RELATED NOTES THROUGH REDEMPTION, REPURCHASE OR
OTHERWISE.
THE INTEREST RATE ON THE COLLATERAL BONDS SHALL AT ALL TIMES BE IDENTICAL TO
THAT OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN, THE RELATED NOTES,
A FORM OF WHICH IS ANNEXED HERETO AS APPENDIX I.
THE INTEREST PAYMENT DATES IN RESPECT OF THE COLLATERAL BONDS SHALL AT ALL TIMES
BE IDENTICAL TO THOSE OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN,
THE RELATED NOTES.
THE COMPANY SHALL MAKE PAYMENTS OF THE PRINCIPAL OF, AND PREMIUM, IF ANY, AND
INTEREST ON, THE COLLATERAL BONDS, TO THE SENIOR TRUSTEE, WHICH PAYMENTS SHALL
BE APPLIED BY THE SENIOR TRUSTEE TO THE SATISFACTION OF OBLIGATIONS ON THE
RELATED NOTES.
THE MATURITY DATE SPECIFIED ABOVE IS ALSO THE MATURITY DATE OF THE RELATED
NOTES.
MICHIGAN CONSOLIDATED GAS COMPANY (hereinafter called the "Company"), a
corporation of the State of Michigan, for value received, hereby
promises to pay to CITIBANK, N.A., as trustee for the benefit of the
holders of the Related Notes, or registered assigns (in such capacity,
the "Senior Trustee"), the sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000)
-1-
<PAGE> 12
on the Maturity Date specified above, at the corporate trust office of the
Mortgage Trustee hereinafter named in the Borough of Manhattan, The City of New
York, New York, or at the principal office of any successor in trust, in lawful
money of the United States of America, and to pay interest thereon at the
Interest Rate(s) from time to time specified in or determined pursuant to the
Related Notes, in like lawful money payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York, New York on such
interest payment date(s) and on the Maturity Date (each an "Interest Payment
Date") as provided in the Related Notes, from the Original Issue Date specified
above or from the most recent Interest Payment Date to which interest has been
paid, commencing on the Interest Payment Date next succeeding the Original Issue
Date, until the Company's obligation with respect to the payment of such
principal sum shall be discharged as provided in the Secured Indenture
hereinafter mentioned and the Senior Indenture. If the date of the Collateral
Bonds represented by this certificate is after a Record Date (as defined below)
with respect to any Interest Payment Date and prior to such Interest Payment
Date, then payment of interest shall commence on the second Interest Payment
Date succeeding such date. If the Company shall default in the payment of
interest due on any Interest Payment Date, then interest shall be payable from
the next preceding Interest Payment Date to which interest has been paid, or, if
no such interest has been paid on the Collateral Bonds represented by this
certificate, from the Original Issue Date. So long as there is no existing
default in the payment of interest, the person in whose name the Collateral
Bonds represented by this certificate were registered at the close of business
on the relevant Record Date with respect to an Interest Payment Date shall be
entitled to receive the interest payable on such Interest Payment Date, except
that if the Company shall default in the payment of interest due on such
Interest Payment Date, such defaulted interest shall be paid to the person in
whose name the Collateral Bonds represented by this Certificate are registered
on the Record Date for the Interest Payment Date fixed by the Company for the
payment of such defaulted interest, provided that in no case shall such Record
Date be less than ten days after notice thereof shall have been mailed to all
registered holders of Collateral Bonds. The term "Record Date" as used herein
with respect to any Interest Payment Date shall mean the last Business Day which
is more than ten calendar days prior to such Interest Payment Date.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in the city of New York are required or authorized
to close and, in the case of Related Notes in the Floating Rate Mode (as defined
in the form of Related Note), a day that is also a London Business Day. "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
The bonds represented by this certificate, of the series hereinafter
specified, are bonds of the Company (herein called the "bonds") known as its
"First Mortgage Bonds," issued and to be issued in one or more series under, and
all equally and ratably secured by, an Indenture of Mortgage and Deed of Trust
dated as of March 1, 1944, duly executed by the Company to City Bank Farmers
Trust Company (now known as Citibank, N.A., successor trustee, as "Mortgage
Trustee") and Ralph E. Morton (Robert T. Kirchner, successor individual trustee
and, together with Citibank, N.A., the "Secured Trustees") as restated in Part
II of the Twenty-ninth Supplemental Indenture dated as of July 15, 1989, which
became effective on April 1, 1994, to which indenture and all indentures
supplemental thereto executed on and after July 15, 1989 reference is hereby
made for a description of the property mortgaged and pledged, the nature and
extent of the security, the terms and conditions upon which the bonds are, and
are to be, issued and secured, and the rights of the holders of the bonds and of
the Secured Trustees in respect of such security (which indenture and all
indentures supplemental thereto, including the Thirty-fifth Supplemental
Indenture dated as of June 18, 1998, are hereinafter collectively called the
"Secured Indenture"). As provided in the Secured Indenture, the 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 therein
provided. The bonds represented by this certificate are part of a Series
designated "Collateral Bonds," herein called Collateral Bonds, created by the
Thirty-fifth Supplemental Indenture dated as of June 18, 1998, as provided for
in the Secured Indenture.
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<PAGE> 13
With the consent of the Company and to the extent permitted by and as
provided in the Secured Indenture and the Senior Indenture, the rights and
obligations of the Company and/or the rights of the holders of the Collateral
Bonds of the Thirty-second Series and/or the terms and provisions of the Secured
Indenture may be modified or altered by such affirmative vote or votes of the
holders of the Related Notes then outstanding as are specified in the Senior
Indenture.
The Collateral Bonds shall be redeemed if and to the extent Related
Notes are redeemed, as provided in the Senior Indenture with respect to the
Related Notes and in the Related Notes.
In case an event of default as defined in the Secured Indenture or the
Senior Indenture shall occur, the principal of the Collateral Bonds may become
or be declared due and payable in the manner, with the effect, and subject to
the conditions provided in the Secured Indenture and the Senior Indenture.
The Senior Trustee has agreed pursuant to the Senior Indenture to hold
the Collateral Bonds as collateral for the benefit of the holders of the Related
Notes under all circumstances and not to transfer (except to a successor
trustee) such Collateral Bonds until the earlier of the Release Date or the
prior retirement of the Related Notes through redemption, repurchase or
otherwise. "Release Date" means the date on which all First Mortgage Bonds of
the Company issued and outstanding under the Secured Indenture, other than the
Collateral Bonds, have been retired (at, before or after the maturity thereof)
through payment, redemption or otherwise provided that no default or event of
default has occurred and is continuing under the Senior Indenture. On the
Release Date, the Senior Trustee shall deliver to the Company for cancellation
all Collateral Bonds, and the Company shall cause the Senior Trustee to provide
notice to all holders of Related Notes of the occurrence of the Release Date. As
a result, on the Release Date, the Collateral Bonds shall cease to secure the
Related Notes. Following the Release Date, the Company shall cause the Secured
Indenture to be closed, and the Company shall not issue any additional
Collateral Bonds to be issued thereunder. From and after the Release Date, the
Company's obligations in respect of the Collateral Bonds shall be satisfied and
discharged.
No recourse shall be had for the payment of the principal of, or the
interest on, the Collateral Bonds, or for any claim based hereon or otherwise in
respect of the Collateral Bonds or the Secured Indenture, Senior Indenture or
any indenture supplemental to either thereof, or against any incorporator,
stockholder, director or officer, past, present or future, of the Company, as
such, or any predecessor or successor corporation, either directly or through
the Company or any such predecessor or successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability, whether at common law,
in equity, by any constitution, statute or otherwise, of incorporators,
stockholders, directors or officers being waived and released by the owner
hereof and every owner of any Related Note by the acceptance of the Collateral
Bonds or such Related Note, as the case may be, and as part of the consideration
for the issue thereof, and being likewise waived and released pursuant to the
Secured Indenture and the Senior Indenture.
The Collateral Bonds shall not be valid or become obligatory for any
purpose unless and until the certificate of authentication hereon shall have
been manually executed by the Mortgage Trustee or its successor in trust under
the Secured Indenture.
IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
certificate to be executed under its name with the signature of its Chairman,
Chief Executive Officer, President, Vice Chairman or a Vice-President, or any
other officer selected by the Board of Directors, under its corporate seal,
which may be a facsimile, attested with the signature of its Secretary or one of
its Assistant Secretaries.
Dated: June 23, 1998
MICHIGAN CONSOLIDATED GAS COMPANY
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<PAGE> 14
By
President and Chief Executive Officer
Attest:
Secretary
The bonds represented by this certificate constitute Collateral Bonds
of the series designated and described in the within-mentioned Secured
Indenture.
CITIBANK, N.A., as Mortgage Trustee
By
Authorized Officer
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<PAGE> 15
APPENDIX II
No. R-1 Principal Amount
$75,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS, COLLATERAL SERIES B
being a series of
FIRST MORTGAGE BONDS
ORIGINAL ISSUE DATE: June 23, 1998 MATURITY DATE: June 30, 2038
THE FIRST MORTGAGE BONDS, COLLATERAL SERIES A (HEREINAFTER, "COLLATERAL BONDS"),
REPRESENTED BY THIS CERTIFICATE ARE BEING ISSUED AND DELIVERED BY THE COMPANY TO
CITIBANK, N.A., AS TRUSTEE (IN SUCH CAPACITY, THE "SENIOR TRUSTEE") UNDER AN
INDENTURE, DATED AS OF JUNE 1, 1998, BETWEEN THE COMPANY AND THE SENIOR TRUSTEE,
AS SUPPLEMENTED BY THE FIRST SUPPLEMENTAL INDENTURE THERETO DATED AS OF JUNE 18,
1998 (AS SO SUPPLEMENTED, THE "SENIOR INDENTURE"). THE COLLATERAL BONDS ARE TO
BE HELD IN TRUST AS COLLATERAL FOR THE BENEFIT OF THE HOLDERS OF $75,000,000
AGGREGATE PRINCIPAL AMOUNT OF RESETABLE MANDATORY PUTABLE/REMARKETABLE
SECURITIES DUE JUNE 30, 2038 (THE "RELATED NOTES") ISSUED PURSUANT TO THE SENIOR
INDENTURE.
THE COLLATERAL BONDS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED (EXCEPT TO A
SUCCESSOR TRUSTEE) UNTIL THE EARLIER OF THE RELEASE DATE (AS DEFINED BELOW) OR
THE PRIOR RETIREMENT OF THE RELATED NOTES THROUGH REDEMPTION, REPURCHASE OR
OTHERWISE.
THE INTEREST RATE ON THE COLLATERAL BONDS SHALL AT ALL TIMES BE IDENTICAL TO
THAT OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN, THE RELATED NOTES,
A FORM OF WHICH IS ANNEXED HERETO AS APPENDIX I.
THE INTEREST PAYMENT DATES IN RESPECT OF THE COLLATERAL BONDS SHALL AT ALL TIMES
BE IDENTICAL TO THOSE OF, AND SHALL BE ESTABLISHED IN THE MANNER SET FORTH IN,
THE RELATED NOTES.
THE COMPANY SHALL MAKE PAYMENTS OF THE PRINCIPAL OF, AND PREMIUM, IF ANY, AND
INTEREST ON, THE COLLATERAL BONDS, TO THE SENIOR TRUSTEE, WHICH PAYMENTS SHALL
BE APPLIED BY THE SENIOR TRUSTEE TO THE SATISFACTION OF OBLIGATIONS ON THE
RELATED NOTES.
THE MATURITY DATE SPECIFIED ABOVE IS ALSO THE MATURITY DATE OF THE RELATED
NOTES.
MICHIGAN CONSOLIDATED GAS COMPANY (hereinafter called the "Company"), a
corporation of the State of Michigan, for value received, hereby
promises to pay to CITIBANK, N.A., as trustee for the benefit of the
holders of the Related Notes, or registered assigns (in such capacity,
the "Senior Trustee"), the sum of SEVENTY-FIVE MILLION DOLLARS ($75,000,000)
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<PAGE> 16
on the Maturity Date specified above, at the corporate trust office of the
Mortgage Trustee hereinafter named in the Borough of Manhattan, The City of New
York, New York, or at the principal office of any successor in trust, in lawful
money of the United States of America, and to pay interest thereon at the
Interest Rate(s) from time to time specified in or determined pursuant to the
Related Notes, in like lawful money payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York, New York on such
interest payment date(s) and on the Maturity Date (each an "Interest Payment
Date") as provided in the Related Notes, from the Original Issue Date specified
above or from the most recent Interest Payment Date to which interest has been
paid, commencing on the Interest Payment Date next succeeding the Original Issue
Date, until the Company's obligation with respect to the payment of such
principal sum shall be discharged as provided in the Secured Indenture
hereinafter mentioned and the Senior Indenture. If the date of the Collateral
Bonds represented by this certificate is after a Record Date (as defined below)
with respect to any Interest Payment Date and prior to such Interest Payment
Date, then payment of interest shall commence on the second Interest Payment
Date succeeding such date. If the Company shall default in the payment of
interest due on any Interest Payment Date, then interest shall be payable from
the next preceding Interest Payment Date to which interest has been paid, or, if
no such interest has been paid on the Collateral Bonds represented by this
certificate, from the Original Issue Date. So long as there is no existing
default in the payment of interest, the person in whose name the Collateral
Bonds represented by this certificate were registered at the close of business
on the relevant Record Date with respect to an Interest Payment Date shall be
entitled to receive the interest payable on such Interest Payment Date, except
that if the Company shall default in the payment of interest due on such
Interest Payment Date, such defaulted interest shall be paid to the person in
whose name the Collateral Bonds represented by this Certificate are registered
on the Record Date for the Interest Payment Date fixed by the Company for the
payment of such defaulted interest, provided that in no case shall such Record
Date be less than ten days after notice thereof shall have been mailed to all
registered holders of Collateral Bonds. The term "Record Date" as used herein
with respect to any Interest Payment Date shall mean the last Business Day which
is more than ten calendar days prior to such Interest Payment Date.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in the city of New York are required or authorized
to close and, in the case of Related Notes in the Floating Rate Mode (as defined
in the form of Related Note), a day that is also a London Business Day. "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
The bonds represented by this certificate, of the series hereinafter
specified, are bonds of the Company (herein called the "bonds") known as its
"First Mortgage Bonds," issued and to be issued in one or more series under, and
all equally and ratably secured by, an Indenture of Mortgage and Deed of Trust
dated as of March 1, 1944, duly executed by the Company to City Bank Farmers
Trust Company (now known as Citibank, N.A., successor trustee, as "Mortgage
Trustee") and Ralph E. Morton (Robert T. Kirchner, successor individual trustee
and, together with Citibank, N.A., the "Secured Trustees") as restated in Part
II of the Twenty-ninth Supplemental Indenture dated as of July 15, 1989, which
became effective on April 1, 1994, to which indenture and all indentures
supplemental thereto executed on and after July 15, 1989 reference is hereby
made for a description of the property mortgaged and pledged, the nature and
extent of the security, the terms and conditions upon which the bonds are, and
are to be, issued and secured, and the rights of the holders of the bonds and of
the Secured Trustees in respect of such security (which indenture and all
indentures supplemental thereto, including the Thirty-fifth Supplemental
Indenture dated as of June 18, 1998, are hereinafter collectively called the
"Secured Indenture"). As provided in the Secured Indenture, the 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 therein
provided. The bonds represented by this certificate are part of a Series
designated "Collateral Bonds," herein called Collateral Bonds, created by the
Thirty-fifth Supplemental Indenture dated as of June 18, 1998, as provided for
in the Secured Indenture.
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<PAGE> 17
With the consent of the Company and to the extent permitted by and as
provided in the Secured Indenture and the Senior Indenture, the rights and
obligations of the Company and/or the rights of the holders of the Collateral
Bonds of the Thirty-second Series and/or the terms and provisions of the Secured
Indenture may be modified or altered by such affirmative vote or votes of the
holders of the Related Notes then outstanding as are specified in the Senior
Indenture.
The Collateral Bonds shall be redeemed if and to the extent Related
Notes are redeemed, as provided in the Senior Indenture with respect to the
Related Notes and in the Related Notes.
In case an event of default as defined in the Secured Indenture or the
Senior Indenture shall occur, the principal of the Collateral Bonds may become
or be declared due and payable in the manner, with the effect, and subject to
the conditions provided in the Secured Indenture and the Senior Indenture.
The Senior Trustee has agreed pursuant to the Senior Indenture to hold
the Collateral Bonds as collateral for the benefit of the holders of the Related
Notes under all circumstances and not to transfer (except to a successor
trustee) such Collateral Bonds until the earlier of the Release Date or the
prior retirement of the Related Notes through redemption, repurchase or
otherwise. "Release Date" means the date on which all First Mortgage Bonds of
the Company issued and outstanding under the Secured Indenture, other than the
Collateral Bonds, have been retired (at, before or after the maturity thereof)
through payment, redemption or otherwise provided that no default or event of
default has occurred and is continuing under the Senior Indenture. On the
Release Date, the Senior Trustee shall deliver to the Company for cancellation
all Collateral Bonds, and the Company shall cause the Senior Trustee to provide
notice to all holders of Related Notes of the occurrence of the Release Date. As
a result, on the Release Date, the Collateral Bonds shall cease to secure the
Related Notes. Following the Release Date, the Company shall cause the Secured
Indenture to be closed, and the Company shall not issue any additional
Collateral Bonds to be issued thereunder. From and after the Release Date, the
Company's obligations in respect of the Collateral Bonds shall be satisfied and
discharged.
No recourse shall be had for the payment of the principal of, or the
interest on, the Collateral Bonds, or for any claim based hereon or otherwise in
respect of the Collateral Bonds or the Secured Indenture, Senior Indenture or
any indenture supplemental to either thereof, or against any incorporator,
stockholder, director or officer, past, present or future, of the Company, as
such, or any predecessor or successor corporation, either directly or through
the Company or any such predecessor or successor corporation, whether by virtue
of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability, whether at common law,
in equity, by any constitution, statute or otherwise, of incorporators,
stockholders, directors or officers being waived and released by the owner
hereof and every owner of any Related Note by the acceptance of the Collateral
Bonds or such Related Note, as the case may be, and as part of the consideration
for the issue thereof, and being likewise waived and released pursuant to the
Secured Indenture and the Senior Indenture.
The Collateral Bonds shall not be valid or become obligatory for any
purpose unless and until the certificate of authentication hereon shall have
been manually executed by the Mortgage Trustee or its successor in trust under
the Secured Indenture.
IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
certificate to be executed under its name with the signature of its Chairman,
Chief Executive Officer, President, Vice Chairman or a Vice-President, or any
other officer selected by the Board of Directors, under its corporate seal,
which may be a facsimile, attested with the signature of its Secretary or one of
its Assistant Secretaries.
Dated: June 23, 1998
MICHIGAN CONSOLIDATED GAS COMPANY
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<PAGE> 18
By
President and Chief Executive Officer
Attest:
Secretary
The bonds represented by this certificate constitute Collateral Bonds
of the series designated and described in the within-mentioned Secured
Indenture.
CITIBANK, N.A., as Mortgage Trustee
By
Authorized Officer
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<PAGE> 1
EXHIBIT 10.1
RESET REMARKETING AGREEMENT
RESET REMARKETING AGREEMENT, dated as of June 23, 1998 (the
"Reset Remarketing Agreement"), by and between Michigan Consolidated Gas
Company, a Michigan corporation (the "Company"), and Salomon Brothers Inc
("Salomon Brothers Inc").
WHEREAS, the Company has issued $75,000,000 aggregate
principal amount of Resetable MAndatory Putable/remarketable Securities
("MAPS(sm)") due June 30, 2038 (the "Senior Notes"), pursuant to an Indenture
dated as of June 1, 1998, as supplemented and amended (the "Indenture"), by and
between the Company and Citibank, N.A., as trustee (the "Trustee"), which Senior
Notes have been secured by the issuance and delivery to the Trustee of the
Company's First Mortgage Bonds, Collateral Series B (the "Collateral Bonds"),
issued under and ratably secured by the Indenture of Mortgage and Deed of Trust
dated as of March 1, 1944 (the "Original Secured Indenture"), as supplemented
and amended by thirty-five indentures supplemental thereto, including
specifically the Twenty-Ninth Supplemental Indenture, and the Thirty-Fifth
Supplemental Indenture creating the series in which the Collateral Bonds were
issued (the "Thirty-Fifth Supplemental Indenture") (the Original Secured
Indenture and all supplemental indentures thereto being referred to collectively
herein as the "Secured Indenture"), in a principal amount equal to that of and
having other terms that mirror those of the Senior Notes; and
WHEREAS, the Senior Notes are being sold initially pursuant to
a purchase agreement dated June 18, 1998 (the "Purchase Agreement") between the
Company and Salomon Brothers Inc;
WHEREAS, the Company has requested Salomon Brothers Inc to act
as Reset Remarketing Agent, as defined in Section 2(a) hereof, and as Rate
Agent, as defined in Section 2 hereof, in connection with the Senior Notes, and
as such to perform the services described herein; and
WHEREAS, Salomon Brothers Inc is prepared to act as Reset
Remarketing Agent and Rate Agent with respect to the remarketing of the Senior
Notes pursuant to the terms of, but subject to the conditions set forth in, this
Agreement.
NOW, THEREFORE, for and in consideration of the covenants
herein made, and subject to conditions herein set forth, the parties hereto
agree as follows:
Section 1. Definitions. Capitalized terms used and not defined
in this Agreement shall have the respective meanings assigned to them in the
Indenture (including the form of the Senior Notes).
Section 2. Appointment and Obligations of Salomon Brothers
Inc. (a) The Company hereby appoints Salomon Smith Barney, and Salomon Brothers
Inc hereby accepts such appointment, (i) as the Rate Agent for the Senior Notes,
to determine (A) LIBOR and the interest rate on the Senior Notes for any
Interest Period and/or (B) the yield to maturity on the applicable
<PAGE> 2
United States Treasury security that is used in connection with the
determination of the applicable Fixed Rate, and the ensuing applicable Fixed
Rate; and (ii) as the exclusive remarketing agent (the"Reset Remarketing Agent")
for the purpose of (x) recommending to the Company the Spread for each
Subsequent Spread Period that, in the opinion of the Reset Remarketing Agent,
will enable the Reset Remarketing Agent to remarket, for delivery on any Reset
Tender Date (as defined below), all tendered Senior Notes with respect to which
the Reset Remarketing Agent receives a Reset Tender Notice (as defined below) at
100% of the principal amount thereof, (y) if the Company and the Reset
Remarketing Agent agree on the Spread referred to in (x) above, entering into a
reset remarketing agreement supplement (each, a "Reset Remarketing Agreement
Supplement") with the Company, substantially in the form attached hereto as
Exhibit A, pursuant to which the Reset Remarketing Agent will agree to purchase
the Senior Notes tendered by the beneficial owners thereof (the "Beneficial
Owners") and, on a best efforts basis, to remarket such Senior Notes (each such
purchase and remarketing being hereinafter referred to as a "Remarketing"), and
(z) performing such other duties as are assigned to the Reset Remarketing Agent
in the Senior Notes and/or the Indenture and/or the applicable Reset Remarketing
Agreement Supplement. For purposes of this Agreement, the term "Reset Tender
Date" with respect to any Subsequent Spread Period shall mean the Business Day
immediately following any Spread Determination Date.
(b) Notwithstanding the foregoing, the obligations of the
parties hereunder, except for the obligation of the Company set forth in
paragraph (c) below, shall not commence until the earliest to occur (the
"Effective Date") of (i) the failure of Salomon Brothers Inc (the "Mandatory
Tender Remarketing Agent") by the eleventh Business Day prior to June 30, 2003
(the "First Remarketing Date") to notify the Company and the Reset Remarketing
Agent of its election to exercise its option (the "Remarketing Right") to
remarket the Senior Notes during the period from the First Remarketing Date
until June 30, 2013 (the "Second Remarketing Date") pursuant to that certain
Mandatory Tender Remarketing Agreement dated as of the date hereof between the
Company and the Mandatory Tender Remarketing Agent as in effect on the date
hereof; (ii) the receipt of notice from the Company of its desire that this
Agreement become effective notwithstanding the exercise by the Mandatory Tender
Remarketing Agent of its option to purchase the Senior Notes; and (iii) the
Second Remarketing Date.
(c) Thirty calendar days prior to the First Remarketing Date,
the Company shall request that DTC provide preliminary notification to its
Participants that, on the date that is ten Business Days prior to the First
Remarketing Date, either the Remarketing Right will be exercised and the Senior
Notes will be subject to mandatory tender or the Senior Notes will be in Reset
Mode and a Duration/Interest Mode Determination Date will have occurred.
(d) If the Mandatory Tender Remarketing Agent does not provide
notification of its intention to exercise the Remarketing Right as provided
above, then on the date that is ten Business Days prior to the First Remarketing
Date, the Company shall request that DTC notify its Participants of the
occurrence of a Duration/Interest Mode Determination Date and of the procedures
that must be followed if any Beneficial Owner of a Senior Note wishes to tender
such Senior Note for remarketing.
(e) With respect to all Subsequent Spread Periods established
after the First Remarketing Date, the Company shall request not later than five
nor more than ten calendar days
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<PAGE> 3
prior to any Duration/Interest Mode Determination Date, that DTC notify its
Participants of such Duration/Interest Mode Determination Date and of the
procedures that must be followed if any Beneficial Owner of a Senior Note wishes
to tender such Senior Note for remarketing.
(f) Unless the Company shall have notified the Reset
Remarketing Agent of its election to redeem the Senior Notes in full, on or
before the tenth Business Day prior to the commencement (the "Commencement
Date") of each Subsequent Spread Period (the "Duration/Interest Mode
Determination Date"), the Reset Remarketing Agent shall make a recommendation to
the Company with respect to the duration, redemption date(s), redemption type
(i.e., par, premium, or make-whole, including in the case of make-whole,
Reinvestment Spread), redemption prices (if applicable), Commencement Date,
Interest Payment Dates and Interest Rate Mode (i.e., Fixed Rate Interest Mode or
Floating Rate Interest Mode) and any other relevant terms (other than the
Spread) for each Subsequent Spread Period and all of such terms shall be agreed
to by the Company and the Reset Remarketing Agents by 3:00 p.m., New York City
time on such Duration/Interest Mode Determination Date.
(g) On or before the fifth Business Day prior to the
Commencement Date of each Subsequent Spread Period (the "Spread Determination
Date"), the Reset Remarketing Agent shall make a recommendation to the Company
with respect to the Spread to apply during such Subsequent Spread Period, and
the Spread shall be agreed to by the Company and the Reset Remarketing Agent by
1:00 p.m. New York City time on such Spread Determination Date, irrespective of
whether the Senior Notes shall be in the Floating Rate Interest Mode or the
Fixed Rate Interest Mode.
(h) On the third Business Day prior to the Commencement Date
of each Subsequent Spread Period for which Senior Notes will be in the Fixed
Rate Interest Mode (a "Fixed Rate Determination Date"), the Company shall cause
the Rate Agent (as defined below) to notify the Reset Remarketing Agent of the
applicable U.S. Treasury Security to be used for the calculation of the Fixed
Rate to apply to the Senior Notes for such Subsequent Spread Period, and the
Remarketing Agent and the Company shall agree on such Fixed Rate by 1:00 p.m.
New York City time, on such Fixed Rate Determination Date.
(i) On the second Business Day prior to the Commencement Date
of each Subsequent Spread Period for which Senior Notes will be in the Floating
Rate Interest Mode, and on the second Business Day prior to each Interest Reset
Date during such Subsequent Spread Period (each, a "LIBOR Determination Date"),
the Company shall cause the Rate Agent to notify the Reset Remarketing Agent of
(i) LIBOR and (ii) the applicable interest rate for the initial Interest Period
in such Subsequent Spread Period and the Reset Remarketing Agent and the Company
shall agree on such Floating Rate, Interest Rate by [3:00 p.m.,] New York City
time, on such LIBOR Determination Date.
(j) In the event that the Company and the Reset Remarketing
Agent do not agree on the Spread for any Subsequent Spread Period, then the
Company is required unconditionally to repurchase and retire all of the Notes on
the Tender Date at a price equal to 100% of the principal amount thereof,
together with accrued interest to the Reset Tender Date. In the event that the
Reset Remarketing Agent fails to purchase any Notes tendered on the Tender Date,
then the Company is required unconditionally to repurchase and retire such
Notes.
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<PAGE> 4
(k) In connection with any Remarketing, the Reset Remarketing
Agent shall make, or shall cause the Trustee to make, payment to the DTC
Participant of each tendering Beneficial Owner of Senior Notes subject to
remarketing, by book-entry through DTC by the close of business on such Reset
Tender Date against delivery through DTC of such Beneficial Owner's tendered
Senior Notes, of 100% of the principal amount of the tendered Senior Notes that
have been purchased for remarketing by the Reset Remarketing Agent. The Company
shall make, or cause the Trustee to make, payment of interest to each Beneficial
Owner of Senior Notes due on the relevant Reset Tender Date by book-entry
through DTC by the close of business on such Reset Tender Date.
"Business Day" means any day other than a Saturday or Sunday
or a day on which banking institutions in The City of New York are required or
authorized to close and, in the case of Senior Notes in the Floating Interest
Rate Mode, that is also a London Business Day.
"Fixed Rate" means a per annum rate and will be determined by
adding the applicable Spread (as agreed to by the Company and the Reset
Remarketing Agent on the preceding Spread Determination Date) to the yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the applicable United
States Treasury security, selected by the Rate Agent or its agent after
consultation with the Reset Remarketing Agent, as having a maturity comparable
to the duration selected for the following Subsequent Spread Period, which would
be used in accordance with customary financial practice in pricing new issues of
corporate debt securities of comparable maturity to the duration selected for
the following Subsequent Spread Period.
"Initial Spread Period" means the period from and including
June 23, 1998 to but excluding June 30, 2003.
"LIBOR" means the London interbank offered rate and shall be
determined by the Rate Agent as provided below:
(i) LIBOR will be determined on the basis of the
offered rate for deposits in U.S. Dollars of the applicable Index
Maturity commencing on the second London Business Day immediately
following such LIBOR Determination Date, which appears on Telerate Page
3750 (as defined below) as of approximately 11:00 a.m., London time, on
such LIBOR Determination Date. "Telerate Page 3750" means the display
designated on page "3750" on Dow Jones Markets Limited or any successor
thereto (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London
interbank offered rates for U.S. Dollar deposits). If no such offered
rate appears on Telerate Page 3750, LIBOR for such LIBOR Determination
Date will be determined in accordance with the provisions of paragraph
(ii) below. The term "London Business Day" means any day on which
dealings in deposits in U.S. Dollars are transacted in the London
interbank market.
(ii) With respect to a LIBOR Determination Date on
which no rate appears on Telerate Page 3750 as of approximately 11:00
a.m., London time, on such LIBOR Determination Date, the Rate Agent
shall request the principal London offices of each of four
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<PAGE> 5
major reference banks in the London interbank market selected by the
Rate Agent (after consultation with the Company) to provide the Rate
Agent with a quotation of the rate at which deposits in U.S. Dollars of
the applicable Index Maturity commencing on the second London Business
Day immediately following such LIBOR Determination Date, are offered by
it to prime banks in the London interbank market as of approximately
11:00 a.m., London time, on such LIBOR Determination Date and in a
principal amount equal to an amount of not less than U.S. $1,000,000
that is representative for a single transaction in such market at such
time. If at least two such quotations are provided, LIBOR for such
LIBOR Determination Date will be the arithmetic mean of such quotations
as calculated by the Rate Agent. If fewer than two quotations are
provided, LIBOR for such LIBOR Determination Date will be the
arithmetic mean of the rates quoted as of approximately 11:00 a.m., New
York City time, on such LIBOR Determination Date by three major banks
in The City of New York selected by the Rate Agent (after consultation
with the Company) for loans in U.S. Dollars to leading European banks,
of the applicable Index Maturity commencing on the second London
Business Day immediately following such LIBOR Determination Date and in
a principal amount equal to an amount of not less than U.S. $1,000,000
that is representative for a single transaction in such market at such
time; provided, however, that if the banks selected as aforesaid by the
Rate Agent are not quoting as mentioned in this sentence, LIBOR for
such LIBOR Determination Date will be LIBOR determined with respect to
the immediately preceding LIBOR Determination Date.
The Index Maturity applicable to Notes in the Floating Rate
Interest Mode will be, in the case of Notes paying (i) monthly, one month; (ii)
quarterly, three months; and (iii) semi-annually, six months.
"Reinvestment Spread" means, with respect to the Senior Notes,
a number, expressed as a number of basis points or as a percentage, selected by
the Company and agreed to by the Reset Remarketing Agent on the
Duration/Interest Mode Determination Date.
"Reset Tender Notice" means the written notice by each
Beneficial Owner to the Reset Remarketing Agent of a Senior Note of its
intention to tender Senior Notes for purchase and remarketing, which notice must
be received by the Reset Remarketing Agent during the period commencing at 3:00
p.m., New York City time, on the Spread Determination Date and ending at 12:00
noon, New York City time, on the second Business Day following such Spread
Determination Date for such Subsequent Spread Period (the "Notice Date").
"Subsequent Spread Period" means any period either (i) after
the Initial Spread Period, if the Remarketing Right has not been exercised or
(ii) after the Second Remarketing Date, if the Remarketing Right is exercised.
Section 3. Fees and Expenses. The obligations of the Company
to pay to the Reset Remarketing Agent on each Reset Tender Date the fees and
expenses set forth in the applicable Reset Remarketing Agreement Supplement
shall survive the termination of this Agreement and remain in full force and
effect until all such payments shall have been made in full.
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<PAGE> 6
Section 4. Removal of the Reset Remarketing Agent. With
respect to any Subsequent Spread Period, the Company may in its absolute
discretion remove the Reset Remarketing Agent by giving notice to the Reset
Remarketing Agent prior to 3:00 p.m., New York City time, on the Duration/Mode
Determination Date applicable thereto, such removal to be effective upon the
Company's appointment of a successor Reset Remarketing Agent. In such case, the
Company will use its best efforts to appoint a successor Reset Remarketing Agent
and enter into such a reset remarketing agreement with such persons as soon as
reasonably practicable.
Section 5. Covenants of the Company. The Company covenants
with the Reset Remarketing Agent as follows:
(a) The Company will provide prompt notice by telephone,
confirmed in writing (which may include facsimile or other electronic
transmission), to the Reset Remarketing Agent of (i) any notification or
announcement by a "nationally recognized statistical rating organization" (as
defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act)
with regard to the ratings of any securities of the Company, including, without
limitation, notification or announcement of a downgrade in or withdrawal of the
rating of any security of the Company or notification or announcement of the
placement of any rating of any securities of the Company under surveillance or
review, including placement on CreditWatch or on Watch List with negative
implications, or (ii) the occurrence at any time of any event set forth in
Section 8(b) of this Agreement.
(b)(i) The Company shall furnish to the Reset Remarketing
Agent if the Reset Remarketing Agent determines, based on advice of counsel,
that changes in applicable law, regulations or interpretations of the Securities
and Exchange Commission make it necessary or advisable to deliver a current
prospectus in connection with a Remarketing, a then currently effective
registration statement under the 1933 Act and a then current prospectus relating
to the Senior Notes (and Collateral Bonds, if applicable) to be used by the
Reset Remarketing Agent for remarketing and resale of the Senior Notes (such
registration statement (whether consisting of the registration statement
relating to the initial issuance of the Senior Notes and Collateral Bonds, or
any amendment thereto or a new registration statement) and any amendments
thereto, including any such prospectus (whether consisting of the prospectus
relating to the initial issuance of the Senior Notes and Collateral Bonds or any
amendment or supplement thereto or a new prospectus) relating to the Senior
Notes (and Collateral Bonds, if applicable) constituting a part thereof, and all
documents incorporated therein by reference, as from time to time amended or
supplemented pursuant to the 1934 Act, the 1933 Act, or otherwise, are referred
to herein as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus shall be provided to the Reset Remarketing
Agent by the Company for use in connection with the remarketing of the Senior
Notes which differs from the Prospectus on file at the Commission at the time
the Registration Statement becomes effective, the term "Prospectus" shall refer
to such revised prospectus from and after the time it is first provided to the
Reset Remarketing Agent for such use); and
(ii) The Company shall also furnish to the Reset
Remarketing Agent in connection with the remarketing of Senior Notes,
such other information as the Reset Remarketing Agent may reasonably
request from time to time.
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<PAGE> 7
The Company agrees, at its expense, to provide the Reset Remarketing
Agent with as many copies of the foregoing written materials and other Company
approved information as the Reset Remarketing Agent may reasonably request for
use in connection with the remarketing of Senior Notes and consents to the use
thereof for such purpose.
(c) If, at any time during which the Reset Remarketing Agent
would be obligated to take any action under this Agreement, any event or
condition known to the Company relating to or affecting the Company, any
subsidiary thereof or the Senior Notes shall occur which could reasonably be
expected to cause any of the reports, documents, materials or information
referred to in paragraph (b) above or any document incorporated therein by
reference (collectively, the "Reset Remarketing Materials") to contain an untrue
statement of a material fact or omit to state a material fact, the Company shall
promptly notify the Reset Remarketing Agent in writing of the circumstances and
details of such event or condition.
(d) So long as the Senior Notes are outstanding, the Company
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(e) Except as otherwise provided herein, the Company agrees
that neither it nor any of its subsidiaries or affiliates shall defease,
purchase or otherwise acquire, or enter into any agreement to defease, purchase
or otherwise acquire, any of the Senior Notes prior to the remarketing thereof
by the Reset Remarketing Agent.
(f) Notwithstanding any provision to the contrary set forth in
the Indenture, the Company shall (i) use its best efforts to maintain the Senior
Notes in book-entry form with The Depository Trust Company ("DTC") or any
successor thereto and to appoint a successor depositary to the extent necessary
to maintain the Senior Notes in book-entry form, and (ii) waive any
discretionary right it otherwise has under the Indenture to cause the Senior
Notes to be issued in certificated form.
Section 6. Dealing in the Senior Notes; Purchase of Senior
Notes by the Company. (a) Salomon Brothers Inc, when acting as Reset Remarketing
Agent or in its individual or any other capacity, may, to the extent permitted
by law, buy, sell, hold and deal in any of the Senior Notes. Salomon Brothers
Inc, as Holder or Beneficial Owner of the Senior Notes may exercise any vote or
join as a Holder or Beneficial Owner, as the case may be, in any action which
any Holder or Beneficial Owner of Senior Notes may be entitled to exercise or
take pursuant to the Indenture with like effect as if it did not act in any
capacity hereunder. Salomon Brothers Inc, in its individual capacity, either as
principal or agent, may also engage in or have an interest in any financial or
other transaction with the Company as freely as if it did not act in any
capacity hereunder.
(b) The Company may purchase Senior Notes in the remarketing,
provided that the Interest Rate established with respect to the Senior Notes in
any such Remarketing is not different from the Interest Rate that would have
been established if the Company had not purchased such Senior Notes.
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<PAGE> 8
Section 7. Representations and Warranties by the Company. The
Company represents and warrants to the Reset Remarketing Agent, as of the date
hereof, as of the Effective Date, and as of each Reset Tender Date (each, a
"Representation Date") as follows:
(a) It has made all the filings with the Commission that it is
required to make under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the rules and regulations thereunder (the "1934 Act
Regulations") (collectively, the "1934 Act Documents"), (ii) each 1934 Act
Document complies in all material respects with the requirements of the 1934 Act
and 1934 Act Regulations, and each 1934 Act Document did not at the time of
filing with the Commission, and as of each Representation Date, as modified or
superseded by any subsequently filed 1934 Act Document on or prior to such
Representation Date, will not, include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (iii) the applicable Reset Remarketing
Materials (as defined herein), as of each Representation Date after the date
hereof, as modified or superseded by any subsequently filed 1934 Act Document on
or prior to such Representation Date (or, if applicable, by any document filed
pursuant to the 1933 Act and the rules and regulations thereunder (the "1933 Act
Regulations")), will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) The Company further represents and warrants to the Reset
Remarketing Agent as of each Representation Date as follows:
(i) The accountants who certified the financial
statements and supporting schedules included or incorporated by
reference in the 1934 Act Documents are independent public accountants
as required by the 1933 Act and the 1933 Act Regulations.
(ii) The financial statements included or
incorporated by reference in the 1934 Act Documents, together with the
related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries at the dates indicated
and the statement of operations, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries for the periods
specified; such financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules, if any, included or incorporated by reference in the 1934
Act Documents present fairly in accordance with GAAP the information
required to be stated therein. The pro forma financial statements and
the related notes thereto, if any, included or incorporated by
reference in the 1934 Act Documents present fairly the information
shown therein, have been prepared in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements and
have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(iii) Since the respective dates as of which
information is given in the 1934 Act Documents, except as otherwise
stated therein, (A) there has been no material adverse
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<PAGE> 9
change and no development which could reasonably be expected to result
in a material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) except for
regular quarterly dividends on the Company's common stock in amounts
per share that are consistent with past practice, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(iv) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
the State of Michigan, with corporate power and authority to own, lease
and operate its properties and to conduct its business as presently
conducted and as described in the 1934 Act Documents and to enter into
and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(v) The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive
or other similar rights arising by operation of law, under the charter
or by-laws of the Company, under any agreement to which the Company or
any of its subsidiaries is a party or otherwise.
(vi) Each subsidiary of the Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with corporate
power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the
1934 Act Documents and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the 1934 Act
Documents, all of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and is owned by the Company, as the case may be,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock of any such subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such subsidiary.
(vii) This Reset Remarketing Agreement and the Reset
Remarketing Agreement Supplement have been duly authorized, executed
and delivered by the Company.
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<PAGE> 10
(viii) The Indenture has been duly authorized,
executed and delivered by the Company and duly qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act"), and, assuming
it has been duly executed and delivered by the Trustee, constitutes a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers, reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law) (the "Bankruptcy Exceptions").
(ix) The issuance and delivery by the Company of the
Collateral Bonds to the Trustee constitute a sale by the Company of the
Collateral Bonds to the Trustee as of the Closing Date or, if not a
sale, the grant by the Company to the Trustee of a perfected security
interest in the Collateral Bonds for the benefit of the holders of the
Senior Notes.
(x) The Secured Indenture constitutes a legally valid
and direct enforceable first mortgage lien, except as the same may be
limited by the laws of the State of Michigan (where all of the property
covered thereby is located) affecting the remedies for the enforcement
of the security provided for therein, which laws do not make inadequate
the remedies necessary for the realization of the benefits of such
security, or as the same may be limited by the Bankruptcy Exceptions,
upon substantially all of the Company's properties and franchises, now
owned or hereafter acquired, free from all prior liens, charges or
encumbrances, except as set forth in subparagraph (xviii) below, and
except, in the case of property hereafter acquired, any thereof
existing at the time of acquisition.
(xi) The Senior Notes have been duly authorized and
executed by the Company and authenticated, issued and delivered in the
manner provided for in the Indenture, and constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law), and are in the form contemplated by, and entitled
to the benefits of, the Indenture.
(xii) The Collateral Bonds have been duly authorized
and executed by the Company and authenticated, issued, and delivered in
the manner provided for in the Secured Indenture and have been issued
and delivered to the Trustee as provided for in the Thirty-Fifth
Supplemental Indenture as security for the Senior Notes, and constitute
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except to the extent
that enforcement thereof may be limited by the Bankruptcy Exceptions.
The Collateral Bonds are in the form contemplated by, and entitled to
the benefits of, the Secured Indenture.
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<PAGE> 11
(xiii) Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its respective
subsidiaries is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company or any subsidiary
is subject (collectively, "Agreements and Instruments") or in violation
of any applicable law, rule or regulation or any judgment, order, writ
or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets, which
violation or default would singly or in the aggregate, have a Material
Adverse Effect.
(xiv) The execution, delivery and performance of the
Purchase Agreement, this Agreement, the Mandatory Tender Remarketing
Agreement, the Indenture, the Senior Notes, the Thirty-Fifth
Supplemental Indenture, the Collateral Bonds and any other agreement or
instrument entered into or issued or to be entered into or issued by
the Company in connection with the transactions contemplated hereby or
thereby; and the consummation of the transactions contemplated herein
and therein and compliance by the Company with its obligations
hereunder and under the Indenture, the Secured Indenture, the
Thirty-Fifth Supplemental Indenture, the Senior Notes, and the
Collateral Bonds have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any subsidiary pursuant to
(other than the lien of the Indenture on the Collateral Bonds), the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
(xv) There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the 1934 Act Documents
(other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not
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<PAGE> 12
described in the 1934 Act Documents, including ordinary routine
litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
(xvi) No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or required for
the performance by the Company of its obligations hereunder, in
connection with the remarketing of the Senior Notes hereunder or the
consummation of the transactions contemplated by this Agreement or for
the due execution, delivery or performance of the Indenture by the
Company, except such as have or shall have been already obtained.
(xvii) No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent, and neither the Company is aware of any existing
or imminent labor disturbance by the employees of any of its or any of
its subsidiary's principal suppliers, manufacturers, customers or
contractors which, in either case, may reasonably be expected to result
in a Material Adverse Effect.
(xviii) There are no contracts or documents which are
required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as
exhibits thereto which have not been so described and/or filed as
required.
(xix) The Company has good and marketable title to
the properties specifically described in and conveyed by the Secured
Indenture (except such property as may have been disposed of or
released from the lien thereof in accordance with the terms thereof)
subject only to the lien of the Secured Indenture, to permissible
encumbrances as defined in the Secured Indenture, as to property
acquired by the Company subsequent to the execution of the Original
Secured Indenture, to any liens existing thereon or purchase money
liens placed thereon at the time of such acquisition as permitted by
the Secured Indenture, and to certain other reservations, rights of
grantors under revocable permits, easements, licenses, zoning laws and
ordinances and restrictions and minor defects or irregularities of
title which do not materially impair the use of the property affected
thereby in the operation of the business of the Company; the Company
and its subsidiaries have good and marketable title to all personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects except the liens of the Secured Indenture and
such liens, encumbrances and defects as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries; the
pipeline, distribution main and underground gas storage easements
enjoyed by the Company and its subsidiaries are valid, subsisting and
enforceable easements with such exceptions as are not material and do
not interfere with the conduct of the business of the Company and its
subsidiaries.
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<PAGE> 13
(xx) The Company and its subsidiaries possess all
licenses, franchises, permits, certificates, authorizations, approvals,
consents, orders and other operating rights (collectively, the
"Governmental Licenses") issued by the Federal Energy Regulatory
Commission, the State of Michigan, and all other federal, state, local
or foreign regulatory agencies or bodies, governmental authorities or
agencies necessary for the ownership or lease of the material
properties owned or leased by each of them and to conduct the business
now operated by each of them; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure to so comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect and contain no unduly
burdensome provisions that would interfere with the conduct of the
business of the Company and its subsidiaries, considered as one
enterprise and, except as otherwise set forth in the Registration
Statement and the Prospectus, there are no legal or governmental
proceedings pending or threatened that would result in a material
modification, suspension or revocation thereof.
(xxi) Except as described in any Reset Remarketing
Materials and except as would not, singly or in the aggregate, result
in a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance or code, including any
judicial or administrative order, consent, decree or judgment, relating
to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, the "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are in compliance with their requirements, and
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries.
(xxii) The Company is a "public utility company" and
a "subsidiary company" of MCN Energy Group, a "holding company," as
such terms are defined in the Public Utility Holding Company Act of
1935 (the "1935 Act"), and such "holding company" and the Company are
presently exempt from the provisions of the 1935 Act (except Section 9
thereof).
(xxiii) The Company has complied with, and is and
will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
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<PAGE> 14
(xxiv) None of the Company and its subsidiaries or
any of their respective directors, officers or controlling persons, has
taken or will take, directly or indirectly, any action resulting in a
violation of Regulation M under the 1934 Act, or designed to cause or
result in, or that has constituted or that reasonably might be expected
to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the remarketing of the Senior
Notes.
(xxv) No "forward looking statement" (as defined in
Rule 175 under the 1933 Act) contained in the Registration Statement,
any preliminary prospectus or the Prospectus was made or reaffirmed
without a reasonable basis or was disclosed other than in good faith.
(xxvi) The Company is not an "investment company" or
an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
(xxvii) The Senior Notes are rated "A2" by Moody's
Investors Service, Inc. and "A" by Standard & Poor's Rating Services, a
division of the McGraw-Hill Companies, Inc. or such other rating as to
which the Company shall have most recently notified the Reset
Remarketing Agent pursuant to Section 3(a) hereof.
References in the foregoing representations and warranties to the 1934
Act Documents shall be deemed to refer to the Registration Statement (as defined
in Section 5(b) below) and Prospectus (as defined in Section 5(b) above), in
each case including the documents incorporated by reference therein, if such are
required pursuant to such Section 5(b).
Section 8. Conditions to the Reset Remarketing Agent's
Obligations. The obligations of the Reset Remarketing Agent under this Agreement
have been undertaken in reliance on, and shall be subject to,
(a) the due performance by the Company of its obligations and
agreements as set forth in this Agreement and the accuracy of the
representations and warranties in this Agreement and any certificate delivered
pursuant hereto, and
(b) the further condition that none of the following events
shall have occurred at any time:
(i) the rating of any securities of the Company shall
have been down-graded or put under surveillance or review, including
being put on CreditWatch or Watch List with negative implications, or
withdrawn by a nationally recognized statistical rating organization;
(ii) without the prior written consent of the Reset
Remarketing Agent, neither the Indenture (including the Senior Notes)
nor the Secured Indenture (including the Collateral Bonds) shall have
been amended in any manner, or otherwise contain any provision not
contained therein as of the date hereof, that in either case in the
judgment of
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<PAGE> 15
the Reset Remarketing Agent materially and adversely changes the nature
of the Senior Notes or the Collateral Bonds, as the case may be, or the
remarketing procedures (it being understood that, notwithstanding the
provisions of this clause (ii), the Company shall not be prohibited
from amending the Indenture);
(iii) trading in any securities of the Company or any
of its affiliates shall have been suspended or materially limited by
the Commission or the New York Stock Exchange, or if trading generally
on the American Stock Exchange or the New York Stock Exchange or in the
Nasdaq National Market shall have been suspended or materially limited,
or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices shall have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Agents, Inc. or any other governmental
authority, or if a banking moratorium shall have been declared by
either Federal or New York authorities;
(iv) there shall have occurred any material adverse
change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of
which is such as to make it, in the judgment of the Reset Remarketing
Agent, impracticable to remarket the Senior Notes or to enforce
contracts for the sale of the Senior Notes;
(v) an Event of Default (as defined in the
Indenture), or any event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default, with respect to
the Senior Notes shall have occurred and be continuing;
(vi) a material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, shall have occurred;
(vii) the Senior Notes are not maintained in
book-entry form with DTC or any successor thereto; provided, that the
Reset Remarketing Agent, in its sole discretion and subject to receipt
of an opinion of counsel for the Company reasonably satisfactory to the
Reset Remarketing Agent, may waive the foregoing condition if in the
Reset Remarketing Agent's judgment the Indenture and the Senior Notes
can be amended, and they are amended, so as to permit the remarketing
of the Senior Notes in certificated form and otherwise as contemplated
herein;
(c) The obligations of the Reset Remarketing Agent to purchase
and remarket the Senior Notes shall also be subject to the terms and conditions
of the applicable Reset Remarketing Agreement Supplement.
Section 9. Indemnification. (a) The Company agrees to
indemnify and hold harmless the Reset Remarketing Agent and its officers,
directors and employees and each person,
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<PAGE> 16
if any, who controls the Reset Remarketing Agent within the meaning of Section
20 of the 1934 Act as follows:
(i) against any loss, liability, claim, damage or
expense whatsoever (collectively, "Damages"), as incurred, arising out
of, (A) the failure to have an effective Registration Statement under
the 1933 Act relating to the Senior Notes, if required, or the failure
to satisfy the prospectus delivery requirements of the 1933 Act because
the Company failed to provide the Reset Remarketing Agent with a
Prospectus for delivery, as required by Section 5 hereof, or (B) any
untrue statement or alleged untrue statement of a material fact
contained in any of the Reset Remarketing Materials (including any
incorporated documents), or (C) the omission or alleged omission
therefrom of a material fact necessary to make the statements therein,
in the light of the circumstances in which they were made, not
misleading, or (D) any violation by the Company of, or any failure by
the Company to perform any of its obligations under, this Agreement, or
(E) the acts or omissions of the Reset Remarketing Agent in connection
with its duties and obligations to determine the Interest Rate or other
terms with respect to any Subsequent Spread Period, as provided
hereunder, except Damages that are finally judicially determined to be
due to its gross negligence or willful misconduct;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or investigation
or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever arising out of, or based upon,
any of items (A) through (E) in clause (i) above; provided that
(subject to clause (d) below) such settlement is effected with the
written consent of the Company, which consent shall not be unreasonably
withheld; and
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by the
Reset Remarketing Agent), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever arising out of, or based upon, any of items (A)
through (E) in clause (i) above to the extent that any such expense is
not paid under (i) or (ii) above;
provided, however, that the foregoing indemnity shall not apply to any losses,
liabilities, claims, damages and expenses to the extent arising out of any
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by the Reset Remarketing Agent
expressly for use in the Reset Remarketing Materials.
(b) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to clause (a) above, counsel to the indemnified
parties shall be selected by Salomon Brothers Inc, and, in the case
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<PAGE> 17
of parties indemnified pursuant to clause (b) above, counsel to the indemnified
parties shall be selected by the Company. An indemnifying party may participate
at its own expense in the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 9 or Section 10 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission or fault, culpability or a failure to act by or on behalf of any
indemnified party.
(c) If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by clause 9 (a) (ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(d) The indemnity agreements contained in this Section 10
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Reset Remarketing Agent, and shall
survive the termination or cancellation of this Agreement and the remarketing of
any Senior Notes hereunder.
Section 10. Contribution. If the indemnification provided for
in Section 9 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Reset Remarketing Agent on the other hand from
the remarketing of the Senior Notes pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Reset Remarketing Agent on the other hand in connection with the
acts, failures to act, statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand
and the Reset Remarketing Agent on the other hand in connection with the
remarketing of the Senior Notes
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<PAGE> 18
pursuant to this Agreement shall be deemed to be in the same respective
proportions as (i) the aggregate principal amount of the Senior Notes, and (ii)
the aggregate positive difference, if any, between the price at which the Senior
Notes are sold by the Reset Remarketing Agent in the remarketing and the price
paid by the Reset Remarketing Agent for the Senior Notes tendered on any Reset
Tender Date.
The relative fault of the Company on the one hand and the
Reset Remarketing Agent on the other hand shall be determined by reference to,
among other things, the responsibility hereunder of the applicable party for any
act or failure to act relating to the losses, liabilities, claims, damages or
expenses incurred or, in the case of any losses, liabilities, claims, damages or
expenses arising out of any untrue or alleged untrue statement of a material
fact contained in any of the Reset Remarketing Materials or the omission or
alleged omission to state a material fact therefrom, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Reset Remarketing Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Reset Remarketing Agent agree that it
would not be just and equitable if contribution pursuant to this Section 10 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 10. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
10 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such act
or failure to act or untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 10, the Reset
Remarketing Agent shall not be required to contribute any amount in excess of
the amount by which the total price at which the Senior Notes remarketed by it
and resold to the public were sold to the public exceeds the amount of any
damages which the Reset Remarketing Agent has otherwise been required to pay by
reason of any act or failure to act for which it is responsible hereunder or any
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 10, each person, if any, who
controls the Reset Remarketing Agent within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Reset Remarketing Agent, and each officer and director of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
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<PAGE> 19
Section 11. Termination of this Reset Remarketing Agreement.
Subject to Section 3 hereof relating to the payment of fees and expenses, this
Agreement shall terminate as to the Reset Remarketing Agent on the effective
date of the removal of such Reset Remarketing Agent pursuant to Section 4
hereof.
Section 12. Reset Remarketing Agent's Performance: Duty of
Care. The duties and obligations of the Reset Remarketing Agent hereunder shall
be determined solely by the express provisions of this Agreement, the
Senior Notes and the Indenture, the Secured Indenture and the Collateral Bonds
and the applicable Reset Remarketing Agreement Supplement. No implied covenants
or obligations of or against the Reset Remarketing Agent shall be read into
this Agreement, the Indenture or the Secured Indenture. In the absence of bad
faith on the part of the Reset Remarketing Agent, the Reset Remarketing Agent
may conclusively rely upon any document furnished to it, which purports to
conform to the requirements of this Agreement, the Indenture, or the Secured
Indenture, as to the truth of the statements expressed in any of such
documents. The Reset Remarketing Agent shall be protected in acting upon any
document or communication reasonably believed by it to have been signed,
presented or made by the proper party or parties. The Reset Remarketing Agent
shall incur no liability hereunder to any Beneficial Owner or Holder of Senior
Notes in its individual capacity or as Reset Remarketing Agent for any action
or failure to act in connection with the remarketing or otherwise. The Reset
Remarketing Agent shall incur no liability to the Company with respect to
calculation of the Interest Rate applicable to any Interest Period, except as a
result of gross negligence or willful misconduct on its part.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN
SUCH STATE.
Section 14. Term of Agreement. Unless otherwise terminated in
accordance with the provisions hereof, this Agreement shall remain in full force
and effect from the date hereof until the first day thereafter on which no
Senior Notes are outstanding.
Section 15. Successors and Assigns. The rights and obligations
of the Company hereunder may not be assigned or delegated to any other person
without the prior written consent of Salomon Brothers Inc, the rights and
obligations of Salomon Brothers Inc hereunder may not be assigned or delegated
to any other person without the prior written consent of the Company, and any
attempt by either party to do so will be unenforceable. This Agreement shall
inure to the benefit of and be binding upon the Company and Salomon Brothers Inc
and their respective permitted successors and assigns. The terms "successors"
and "assigns" shall not include any purchaser of any Senior Notes merely because
of such purchase.
Section 16. Headings. Section headings have been inserted in
this Agreement as a matter of convenience of reference only, and it is agreed
that such section headings are not a part of this Agreement and will not be used
in the interpretation of any provisions of this Agreement.
Section 17. Severability. If any provision of this Agreement
shall be held or deemed to be or shall, in fact, be invalid, inoperative or
unenforceable as applied in any particular case in any or all jurisdictions
because it conflicts with any provision of any constitution, statute, rule
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<PAGE> 20
or public policy or for any other reason, such circumstances shall not have the
effect of rendering the provision in question invalid, inoperative or
unenforceable in any other case, circumstances or jurisdiction, or of rendering
any other provision or provisions of this Agreement invalid, inoperative or
unenforceable to any extent whatsoever.
Section 18. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute one and the same document.
Section 19. Amendments. This Agreement may be amended by any
instrument in writing signed by each of the parties hereto.
Section 20. Notices. Unless otherwise specified, any notices,
requests, consents or other communications given or made hereunder or pursuant
hereto shall be made in writing or transmitted by any standard form of
telecommunication or by telephone and confirmed in writing. All written notices
shall be deemed to be validly given or made, if delivered by hand, when so
delivered, of if mailed, when mailed registered or certified mail, return
receipt requested and postage prepaid. All notices by telecommunication
(including telephone) shall be deemed to be validly given or made when received.
All such notices, requests, consents or other communications shall be addressed
as follows: if to the Company, to 500 Griswold Street, Detroit, Michigan 48226,
Attn: Ronald E. Christian, Esq., Vice President, General Counsel and Secretary,
Facsimile No.: (313) 965-0009; and if to Salomon Brothers Inc, to Salomon
Brothers Inc, 388 Greenwich Street, New York, NY 10013, Attention: Legal
Department (Marianne Spinelli, Esq.), or to such other address as either of the
above shall specify to the other in writing.
Section 21. Benefit. (a) Nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon or give any person
other than the parties hereto any remedy or claim under or by reason of this
Agreement or any term, covenant or condition hereof, all of which shall be for
the sole and exclusive benefit of the parties.
(b) No beneficial owner of any Note shall have any rights or
claims under this Agreement or any Remarketing Agreement Supplement or against
the Company or the Remarketing Agent as a result of the Remarketing Agent's not
purchasing such Notes.
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<PAGE> 21
IN WITNESS WHEREOF, each of the Company and Salomon Brothers
Inc has caused this Agreement to be executed in its name and on its behalf by
one of its duly authorized officers as of the date first above written.
MICHIGAN CONSOLIDATED GAS COMPANY
By: /s/ Howard L. Dow III
-----------------------------------
Name: Howard L. Dow III
Title: Senior Vice President and
Chief Financial Officer
SALOMON BROTHERS INC
By: /s/ John W. Dickey
-----------------------------------
Name: John W. Dickey
Title: Authorized Signatory
-21-
<PAGE> 22
EXHIBIT A
RESET REMARKETING AGREEMENT SUPPLEMENT
Salomon Brothers Inc, (the "Reset Remarketing Agent") hereby
agrees to purchase the Senior Notes described below (the "Senior Notes") that
have been tendered by the holders thereof for sale on _____________, _____ (the
"Reset Tender Date").
It is acknowledged and agreed that the Senior Notes need not
be further registered under the Securities Act of 1933, as amended (the "Act"),
and that, in connection with the remarketing of the Senior Notes by the Reset
Remarketing Agent in accordance with the terms of the Reset Remarketing
Agreement dated as of June 23, 1998, no prospectus meeting the requirements of
Section 10 of the Act need be delivered, or filed pursuant to Rule 424 under the
Act.
It is understood that the Reset Remarketing Agent will deliver
to purchasers and prospective purchasers, in connection with the remarketing,
one or more forms of written communication describing the terms of the Senior
Notes (each, a "Reset Remarketing Memorandum"), the form of each of which shall
be delivered to Michigan Consolidated Gas Company, a Michigan corporation (the
"Company"), not less than two Business Days prior to its use and subject to the
approval of the Company prior to its use by the Reset Remarketing Agent, which
approval shall not be unreasonably withheld or delayed.
The Reset Remarketing Agent shall offer to purchase Senior
Notes and purchase validly tendered Senior Notes on the Reset Tender Date in
accordance with all applicable laws and regulations and interpretations of the
Securities and Exchange Commission.
The representations and warranties made pursuant to the
above-referenced Reset Remarketing Agreement (other than paragraphs (b)(viii),
(x), (xi) and (xii) of Section 7); Section 3(o) of the attached Purchase
Agreement (which date shall be the date of the Reset Remarketing Agreement
Supplement and the relevant Reset Tender Date); Section 8 of the attached
Purchase Agreement (except that Section 8 is amended to allow termination of
this Agreement by the Agent if the Company's representations and warranties
therein are not accurate and correct); paragraphs (c) and (f) of Section 5 of
the attached Purchase Agreement; and Section 7 and the last paragraph of Section
5 of the attached Purchase Agreement are incorporated in their entirety into
this Agreement and made applicable to the obligations of the Reset Remarketing
Agent to the extent applicable to any remarketing of the Senior Notes, except as
explicitly amended hereby. The terms "Registration Statement" and "Prospectus"
shall be deemed to refer to each such document as amended to the date hereof and
the Tender Date, and the term "Incorporated Documents" shall similarly be deemed
to include those filed and incorporated by reference through such dates.
If the Reset Remarketing Agent determines, based on advice of
counsel, that changes in applicable law, regulations or interpretations of the
Securities and Exchange Commission make it necessary or advisable to deliver a
current prospectus in connection with this Remarketing, the attached Purchase
Agreement shall apply in its entirety. All references in such Purchase Agreement
to (i) the "Agent" shall be deemed to refer to the Reset Remarketing Agent, (ii)
the "Securities" shall be deemed to refer to the Senior Notes, (iii) the
Purchase Agreement shall be deemed to refer to the
<PAGE> 23
Reset Remarketing Agreement Supplement, and (iv) "Closing Date" shall be deemed
to refer to the Reset Tender Date. To the extent the provisions of such Purchase
Agreement refer to the "Prospectus" or the "Registration Statement," such
references shall be deemed to refer to any Remarketing Memorandum or
registration statement, if any, that the Company is required to prepare or file
pursuant to applicable law, regulations or interpretations of the Securities and
Exchange Commission in effect at the time of such remarketing of the Senior
Notes, including all documents incorporated by reference therein. For the
purposes of Section 6 of the attached Purchase Agreement, the relative benefit
received by the Company on the one hand and the Reset Remarketing Agent on the
other in connection with the remarketing of the Senior Notes pursuant to this
Agreement shall be deemed to be in the same respective proportions as the
aggregate public offering price of the Senior Notes bears to the remarketing fee
received by the Reset Remarketing Agent pursuant to this Agreement.
All capitalized terms not otherwise defined in this Agreement
have the respective meanings assigned thereto in the Senior Notes, the form of
which is attached hereto.
Company: Michigan Consolidated Gas Company
500 Griswold Street
Detroit, Michigan 48226
Reset Remarketing Agent and Address: Salomon Brothers Inc
388 Greenwich Street
New York, New York 10013
Title of Senior Notes: Resetable MAndatory Putable/remarketable
Securities, due June 30, 2038
Principal Amount of Senior Notes to be Purchased:
Title of Indenture: Indenture dated as of June 1, 1998,
as supplemented and amended, by and
between the Company and the Trustee
Trustee: Citibank, N.A.
Current Ratings: Moody's Investors Service Inc.: "A2"
Standard & Poor's Corporation: "A"
Certain Terms of the Senior Notes:
Maturity: June 30, 2038
Spread Determination Date:
Duration/Mode Determination Date:
-2-
<PAGE> 24
Tender Notice Date:
Interest Reset Dates:
Tender Date:
New Interest Rate: As determined by application of the
provisions set forth in the attached
form of the Senior Notes on the LIBOR
Determination Date or the Fixed Rate
Determination Date, as applicable.
Spread:
Interest Payment Dates: June 30 and December 30.
Subsequent Spread Period:
Redemption Provisions: As set forth in the Prospectus under the
caption headed "Description of the
Notes -- Redemption."
Beneficial Owner Tender Provisions: As set forth in the attached Prospectus
Supplement dated June 17, 1998. In the
event that the Reset Remarketing Agent
fails to purchase all Senior Notes
validly tendered for purchase on the
Reset Tender Date, then the Reset
Remarketing Agent shall promptly notify
the Company and the Trustee of such
failure.
Shorter Subsequent Spread Period: In the event that (A) the Reset
Remarketing Agent fails to purchase all
Senior Notes validly tendered for
purchase on the Reset Tender Date for
any reason, and (B) the Company has not
given notice of redemption of all of the
Senior Notes then outstanding in
accordance with the provisions described
in the attached form of the Senior
Notes, then the Subsequent Spread Period
shall be a period of one year, which
Subsequent Spread Period shall be deemed
to have commenced upon the Commencement
Date that coincides with the Reset
Tender Date.
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<PAGE> 25
Legal Opinion: If required to be delivered pursuant to
this Reset Remarketing Agreement
Supplement, the opinion to be delivered
pursuant to Section 5(b)(1)(v) of the
attached Purchase Agreement shall be
delivered by counsel satisfactory to the
Reset Remarketing Agent and shall be
modified to read as follows: "the Senior
Notes are in the form contemplated by
the Indenture and have been duly and
validly authorized; a single global Note
registered in the name of CEDE & Co., a
nominee of The Depository Trust Company
("DTC"), has been duly authenticated in
accordance with the provisions of the
Indenture, paid for and delivered to
DTC, and constitutes a legal, valid and
binding obligation of the Company. The
Reset Remarketing Agent will acquire a
"securities entitlement" (within the
meaning of Section 8-501 of the Uniform
Commercial Code as in effect in the
State of New York (the "UCC")) with
respect to any Senior Notes which a
prior owner causes DTC or a securities
intermediary to credit to the Reset
Remarketing Agent's securities account.
Assuming that the Reset Remarketing
Agent acquires such security entitlement
for value and without notice of an
adverse claim, then pursuant to Section
8-502 of the UCC an action based on an
adverse claim to the Senior Notes,
whether framed in conversion, replevin,
constructive trust, equitable lien or
other theory, may not be asserted
against the Reset Remarketing Agent, or
such other opinion as shall be
appropriate under the law then in effect
to the effect that no other person may
assert rights in the Senior Notes
against the Reset Remarketing Agent.
If required to be delivered pursuant to
this Reset Remarketing Purchase
Agreement, the opinion to be delivered
pursuant to Section 5(b)(3) of the
attached Purchase Agreement may be
delivered by any counsel designated by
the Reset Remarketing Agent and
reasonably acceptable to the Company.
-4-
<PAGE> 26
Form of Senior Notes: Global certificate registered in the
name of the nominee, which currently is
CEDE & Co., of the depository of the
Senior Notes, which is DTC. The
beneficial owners of the Senior Notes
("Beneficial Owners") are not entitled
to receive definitive certificates
representing their Senior Notes, except
under limited circumstances. A
Beneficial Owner's ownership of a Note
currently is recorded on or through the
records of the brokerage firm or other
entity that is a participant in DTC and
that maintains such Beneficial Owner's
account.
Purchase Price: 100% of the principal amount of the
Senior Notes. Payable to DTC for the
Beneficial Owners of Tendered Senior
Notes.
Remarketing Fee: _____% of the principal amount of the
Senior Notes outstanding on each Reset
Tender Date.
Closing:
-5-
<PAGE> 27
The foregoing terms are hereby confirmed and agreed to as of this ___
day of _________.
MICHIGAN CONSOLIDATED GAS COMPANY
By:
--------------------------------
Name:
Title:
SALOMON BROTHERS INC
By:
--------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 10.2
RESET REMARKETING AGREEMENT
RESET REMARKETING AGREEMENT, dated as of June 23, 1998 (the
"Reset Remarketing Agreement"), by and between Michigan Consolidated Gas
Company, a Michigan corporation (the "Company"), and Merrill Lynch & Co./
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch").
WHEREAS, the Company has issued $75,000,000 aggregate
principal amount of Extendable MandatOry Par Put Remarketed Securities(sm)
("MOPPRS(sm)") due June 30, 2038 (the "Senior Notes"), pursuant to an Indenture
dated as of June 1, 1998, as supplemented and amended (the "Indenture"), by and
between the Company and Citibank, N.A., as trustee (the "Trustee"), which Senior
Notes have been secured by the issuance and delivery to the Trustee, on behalf
of the holders of the Senior Notes, of the Company's First Mortgage Bonds,
Collateral Series A (the "Collateral Bonds"), issued under and ratably secured
by the Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 (the
"Original Secured Indenture"), as supplemented and amended by thirty-five
indentures supplemental thereto, including specifically the Twenty-Ninth
Supplemental Indenture, and the Thirty-Fifth Supplemental Indenture creating the
series in which the Collateral Bonds were issued (the "Thirty-Fifth Supplemental
Indenture") (the Original Secured Indenture and all supplemental indentures
thereto being referred to collectively herein as the "Secured Indenture"), in a
principal amount equal to that of and having other terms that mirror those of
the Senior Notes; and
WHEREAS, the Senior Notes are being sold initially pursuant to
a purchase agreement dated June 18, 1998 (the "Purchase Agreement") between the
Company and Merrill Lynch;
WHEREAS, the Company has requested Merrill Lynch to act as
Reset Remarketing Agent, as defined in Section 2(a) hereof, and as Rate Agent,
as defined in Section 2 hereof, in connection with the Senior Notes, and as such
to perform the services described herein; and
WHEREAS, Merrill Lynch is prepared to act as Reset Remarketing
Agent and Rate Agent with respect to the remarketing of the Senior Notes
pursuant to the terms of, but subject to the conditions set forth in, this
Agreement.
NOW, THEREFORE, for and in consideration of the covenants
herein made, and subject to conditions herein set forth, the parties hereto
agree as follows:
Section 1. Definitions. Capitalized terms used and not defined
in this Agreement shall have the respective meanings assigned to them in the
Indenture (including the form of the Senior Notes).
Section 2. Appointment and Obligations of Merrill Lynch. (a)
The Company hereby appoints Merrill Lynch, and Merrill Lynch hereby accepts such
appointment, (i) as the Rate Agent for the Senior Notes, to determine (A) LIBOR
and the interest rate on the Senior Notes for
<PAGE> 2
any Interest Period and/or (B) the yield to maturity on the applicable United
States Treasury security that is used in connection with the determination of
the applicable Fixed Rate, and the ensuing applicable Fixed Rate; and (ii) as
the exclusive remarketing agent (the"Reset Remarketing Agent") for the purpose
of (x) recommending to the Company the Spread for each Subsequent Spread Period
that, in the opinion of the Reset Remarketing Agent, will enable the Reset
Remarketing Agent to remarket, for delivery on any Reset Tender Date (as defined
below), all tendered Senior Notes with respect to which the Reset Remarketing
Agent receives a Reset Tender Notice (as defined below) at 100% of the principal
amount thereof, (y) if the Company and the Reset Remarketing Agent agree on the
Spread referred to in (x) above, entering into a reset remarketing agreement
supplement (each, a "Reset Remarketing Agreement Supplement") with the Company,
substantially in the form attached hereto as Exhibit A, pursuant to which the
Reset Remarketing Agent will agree to purchase the Senior Notes tendered by the
beneficial owners thereof (the "Beneficial Owners") and , on a best-efforts
basis, to remarket such Senior Notes (each such purchase and remarketing being
hereinafter referred to as a "Remarketing"), and (z) performing such other
duties as are assigned to the Reset Remarketing Agent in the Senior Notes and/or
the Indenture and/or the applicable Reset Remarketing Agreement Supplement. For
purposes of this Agreement, the term "Reset Tender Date" with respect to any
Subsequent Spread Period shall mean the Business Day immediately following any
Spread Determination Date.
(b) Notwithstanding the foregoing, the obligations of the
parties hereunder, except for the obligation of the Company set forth in
paragraph (c) below, shall not commence until the earlier to occur (the
"Effective Date") of: (i) the failure of Merrill Lynch & Co./Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Mandatory Tender Remarketing Agent")
by the eleventh Business Day prior to June 30, 2008 (the "First Remarketing
Date") to notify the Company and the Reset Remarketing Agent of its election to
exercise its option (the "Remarketing Right") to remarket the Senior Notes
during the period from the First Remarketing Date until June 30, 2018 (the
"Second Remarketing Date") pursuant to that certain Mandatory Tender Remarketing
Agreement dated as of the date hereof between the Company and the Mandatory
Tender Remarketing Agent as in effect on the date hereof; and (ii) the Second
Remarketing Date.
(c) Thirty calendar days prior to the First Remarketing Date,
the Company shall request that DTC provide preliminary notification to its
Participants that, on the date that is ten Business Days prior to the First
Remarketing Date, either the Remarketing Right will be exercised and the Senior
Notes will be subject to mandatory tender or the Senior Notes will be in Reset
Mode and a Duration/Interest Mode Determination Date will have occurred.
(d) If the Mandatory Tender Remarketing Agent does not provide
notification of its intention to exercise the Remarketing Right as provided
above, then on the date that is ten Business Days prior to the First Remarketing
Date, the Company shall request that DTC notify its Participants of the
occurrence of a Duration/Interest Mode Determination Date and of the procedures
that must be followed if any Beneficial Owner of a Senior Note wishes to tender
such Senior Note for remarketing.
(e) With respect to all Subsequent Spread Periods established
after the First Remarketing Date, the Company shall request not later than five
nor more than ten calendar days prior to any Duration/Interest Mode
Determination Date, that DTC notify its Participants of such
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<PAGE> 3
Duration/Interest Mode Determination Date and of the procedures that must be
followed if any Beneficial Owner of a Senior Note wishes to tender such Senior
Note for remarketing.
(f) Unless the Company shall have notified the Reset
Remarketing Agent of its election to redeem the Senior Notes in full, on or
before the tenth Business Day prior to the commencement (the "Commencement
Date") of each Subsequent Spread Period (the "Duration/Interest Mode
Determination Date"), the Reset Remarketing Agent shall make a recommendation to
the Company with respect to the duration, redemption date(s), redemption type
(i.e., par, premium, or make-whole, including in the case of make-whole,
Reinvestment Spread), redemption prices (if applicable), Commencement Date,
Interest Payment Dates and Interest Rate Mode (i.e., Fixed Rate Interest Mode or
Floating Rate Interest Mode) and any other relevant terms (other than the
Spread) for each Subsequent Spread Period and all of such terms shall be agreed
to by the Company and the Reset Remarketing Agents by 3:00 p.m., New York City
time, on such Duration/Interest Mode Determination Date.
(g) On or before the fifth Business Day prior to the
Commencement Date of each Subsequent Spread Period (the "Spread Determination
Date"), the Reset Remarketing Agent shall make a recommendation to the Company
with respect to the Spread to apply during such Subsequent Spread Period, and
the Spread shall be agreed to by the Company and the Reset Remarketing Agent by
1:00 p.m., New York City time, on such Spread Determination Date, irrespective
of whether the Senior Notes shall be in the Floating Rate Interest Mode or the
Fixed Rate Interest Mode.
(h) On the third Business Day prior to the Commencement Date
of each Subsequent Spread Period for which Senior Notes will be in the Fixed
Rate Interest Mode (a "Fixed Rate Determination Date"), the Rate Agent shall
notify the Reset Remarketing Agent of the applicable U.S. Treasury Security to
be used for the determination of the Fixed Rate to apply to the Senior Notes for
such Subsequent Spread Period, and the Remarketing Agent and the Company shall
agree on such Fixed Rate by 1:00 p.m., New York City time, on such Fixed Rate
Determination Date.
(i) On the second Business Day prior to the Commencement Date
of each Subsequent Spread Period for which Senior Notes will be in the Floating
Rate Interest Mode, and on the second Business Day prior to each Interest Reset
Date during such Subsequent Spread Period (each, a "LIBOR Determination Date"),
the Rate Agent shall notify the Reset Remarketing Agent of (i) LIBOR and (ii)
the applicable interest rate for the initial Interest Period in such Subsequent
Spread Period.
(j) In the event that the Company and the Reset Remarketing
Agent do not agree on the Spread for any Subsequent Spread Period, then the
Company is required unconditionally to repurchase and retire all of the Notes on
the relevant Reset Tender Date at a price equal to 100% of the principal amount
thereof, together with accrued interest to the Reset Tender Date. In the event
that the Reset Remarketing Agent fails to purchase any Notes tendered on such
Reset Tender Date, then the Company is required unconditionally to repurchase
and retire such Notes.
(k) In connection with any Remarketing, the Reset Remarketing
Agent shall make, or shall cause the Trustee to make, payment to the DTC
Participant of each tendering
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<PAGE> 4
Beneficial Owner of Senior Notes subject to remarketing, by book-entry through
DTC by the close of business on such Reset Tender Date against delivery through
DTC of such Beneficial Owner's tendered Senior Notes, of 100% of the principal
amount of the tendered Senior Notes that have been purchased for remarketing by
the Reset Remarketing Agent. The Company shall make, or cause the Trustee to
make, payment of interest to each Beneficial Owner of Senior Notes due on the
relevant Reset Tender Date by book-entry through DTC by the close of business on
such Reset Tender Date.
"Business Day" means any day other than a Saturday or Sunday
or a day on which banking institutions in The City of New York are required or
authorized to close and, in the case of Senior Notes in the Floating Interest
Rate Mode, that is also a London Business Day.
"Fixed Rate" means a per annum rate and will be determined by
adding the applicable Spread (as agreed to by the Company and the Reset
Remarketing Agent on the preceding Spread Determination Date) to the yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the applicable United
States Treasury security, selected by the Rate Agent or its agent after
consultation with the Reset Remarketing Agent, as having a maturity comparable
to the duration selected for the following Subsequent Spread Period, which would
be used in accordance with customary financial practice in pricing new issues of
corporate debt securities of comparable maturity to the duration selected for
the following Subsequent Spread Period.
"Initial Spread Period" means the period from and including
June 23, 1998 to but excluding June 30, 2008.
"LIBOR" means the London interbank offered rate and shall be
determined by the Rate Agent as provided below:
(i) LIBOR will be determined on the basis of the
offered rate for deposits in U.S. Dollars of the applicable Index
Maturity commencing on the second London Business Day immediately
following such LIBOR Determination Date, which appears on Telerate Page
3750 (as defined below) as of approximately 11:00 a.m., London time, on
such LIBOR Determination Date. "Telerate Page 3750" means the display
designated on page "3750" on Dow Jones Markets Limited or any successor
thereto (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London
interbank offered rates for U.S. Dollar deposits). If no such offered
rate appears on Telerate Page 3750, LIBOR for such LIBOR Determination
Date will be determined in accordance with the provisions of paragraph
(ii) below. The term "London Business Day" means any day on which
dealings in deposits in U.S. Dollars are transacted in the London
interbank market.
(ii) With respect to a LIBOR Determination Date on
which no rate appears on Telerate Page 3750 as of approximately 11:00
a.m., London time, on such LIBOR Determination Date, the Rate Agent
shall request the principal London offices of each of four major
reference banks in the London interbank market selected by the Rate
Agent (after consultation with the Company) to provide the Rate Agent
with a quotation of the rate at which deposits in U.S. Dollars of the
applicable Index Maturity commencing on the second
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<PAGE> 5
London Business Day immediately following such LIBOR Determination
Date, are offered by it to prime banks in the London interbank market
as of approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not
less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time. If at least two such
quotations are provided, LIBOR for such LIBOR Determination Date will
be the arithmetic mean of such quotations as calculated by the Rate
Agent. If fewer than two quotations are provided, LIBOR for such LIBOR
Determination Date will be the arithmetic mean of the rates quoted as
of approximately 11:00 a.m., New York City time, on such LIBOR
Determination Date by three major banks in The City of New York
selected by the Rate Agent (after consultation with the Company) for
loans in U.S. Dollars to leading European banks, of the applicable
Index Maturity commencing on the second London Business Day immediately
following such LIBOR Determination Date and in a principal amount equal
to an amount of not less than U.S. $1,000,000 that is representative
for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid by the Rate Agent are
not quoting as mentioned in this sentence, LIBOR for such LIBOR
Determination Date will be LIBOR determined with respect to the
immediately preceding LIBOR Determination Date.
The Index Maturity applicable to Notes in the Floating Rate
Interest Mode will be, in the case of Notes paying (i) monthly, one month; (ii)
quarterly, three months; and (iii) semi-annually, six months.
"Reinvestment Spread" means, with respect to the Senior Notes,
a number, expressed as a number of basis points or as a percentage, selected by
the Company and agreed to by the Reset Remarketing Agent on the
Duration/Interest Mode Determination Date.
"Reset Tender Notice" means the written notice by each
Beneficial Owner to the Reset Remarketing Agent of a Senior Note of its
intention to tender Senior Notes for purchase and remarketing, which notice must
be received by the Reset Remarketing Agent during the period commencing at 3:00
p.m., New York City time, on the Spread Determination Date and ending at 12:00
noon, New York City time, on the second Business Day following such Spread
Determination Date for such Subsequent Spread Period (the "Notice Date").
"Subsequent Spread Period" means any Spread Period either (i)
after the Initial Spread Period, if the Remarketing Right has not been exercised
or (ii) after the Second Remarketing Date, if the Remarketing Right is
exercised.
Section 3. Fees and Expenses. The obligations of the Company
to pay to the Reset Remarketing Agent on each Reset Tender Date the fees and
expenses set forth in the applicable Reset Remarketing Agreement Supplement
shall survive the termination of this Agreement and remain in full force and
effect until all such payments shall have been made in full.
Section 4. Removal of the Reset Remarketing Agent. With
respect to any Subsequent Spread Period, the Company may in its absolute
discretion remove the Reset Remarketing Agent by giving notice to the Reset
Remarketing Agent prior to 3:00 p.m., New York City time, on the Duration/Mode
Determination Date applicable thereto, such removal to be effective
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<PAGE> 6
upon the Company's appointment of a successor Reset Remarketing Agent. In such
case, the Company will use its best efforts to appoint a successor Reset
Remarketing Agent and enter into such a reset remarketing agreement with such
persons as soon as reasonably practicable.
Section 5. Covenants of the Company. The Company covenants
with the Reset Remarketing Agent as follows:
(a) The Company will provide prompt notice by telephone,
confirmed in writing (which may include facsimile or other electronic
transmission), to the Reset Remarketing Agent of (i) any notification or
announcement by a "nationally recognized statistical rating organization" (as
defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act)
with regard to the ratings of any securities of the Company, including, without
limitation, notification or announcement of a downgrade in or withdrawal of the
rating of any security of the Company or notification or announcement of the
placement of any rating of any securities of the Company under surveillance or
review, including placement on CreditWatch or on Watch List with negative
implications, or (ii) the occurrence at any time of any event set forth in
Section 8(b) of this Agreement.
(b) (i) The Company shall furnish to the Reset Remarketing
Agent, if the Reset Remarketing Agent determines, based on advice of
counsel, that changes in applicable law, regulations or interpretations
of the Securities and Exchange Commission make it necessary or
advisable to deliver a current prospectus in connection with a
Remarketing, a then currently effective registration statement under
the 1933 Act and a then current prospectus relating to the Senior Notes
(and Collateral Bonds, if applicable) to be used by the Reset
Remarketing Agent for remarketing and resale of the Senior Notes (such
registration statement (whether consisting of the registration
statement relating to the initial issuance of the Senior Notes and
Collateral Bonds, or any amendment thereto or a new registration
statement) and any amendments thereto, including any such prospectus
(whether consisting of the prospectus relating to the initial issuance
of the Senior Notes and Collateral Bonds or any amendment or supplement
thereto or a new prospectus) relating to the Senior Notes (and
Collateral Bonds, if applicable) constituting a part thereof, and all
documents incorporated therein by reference, as from time to time
amended or supplemented pursuant to the 1934 Act, the 1933 Act, or
otherwise, are referred to herein as the "Registration Statement" and
the "Prospectus," respectively, except that if any revised prospectus
shall be provided to the Reset Remarketing Agent by the Company for use
in connection with the remarketing of the Senior Notes which differs
from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, the term "Prospectus" shall
refer to such revised prospectus from and after the time it is first
provided to the Reset Remarketing Agent for such use); and
(ii) The Company shall also furnish to the Reset
Remarketing Agent in connection with the remarketing of Senior Notes
such other information as the Reset Remarketing Agent may reasonably
request from time to time.
The Company agrees, at its expense, to provide the Reset Remarketing
Agent with as many copies of the foregoing written materials and other Company
approved information as the Reset
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<PAGE> 7
Remarketing Agent may reasonably request for use in connection with the
remarketing of Senior Notes and consents to the use thereof for such purpose.
(c) If, at any time during which the Reset Remarketing Agent
would be obligated to take any action under this Agreement, any event or
condition known to the Company relating to or affecting the Company, any
subsidiary thereof or the Senior Notes shall occur which could reasonably be
expected to cause any of the reports, documents, materials or information
referred to in paragraph (b) above or any document incorporated therein by
reference (collectively, the "Reset Remarketing Materials") to contain an untrue
statement of a material fact or omit to state a material fact, the Company shall
promptly notify the Reset Remarketing Agent in writing of the circumstances and
details of such event or condition.
(d) So long as the Senior Notes are outstanding, the Company
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(e) Except as otherwise provided herein, the Company agrees
that neither it nor any of its subsidiaries or affiliates shall defease,
purchase or otherwise acquire, or enter into any agreement to defease, purchase
or otherwise acquire, any of the Senior Notes prior to the remarketing thereof
by the Reset Remarketing Agent.
(f) Notwithstanding any provision to the contrary set forth in
the Indenture, the Company shall (i) use its best efforts to maintain the Senior
Notes in book-entry form with The Depository Trust Company ("DTC") or any
successor thereto and to appoint a successor depositary to the extent necessary
to maintain the Senior Notes in book-entry form, and (ii) waive any
discretionary right it otherwise has under the Indenture to cause the Senior
Notes to be issued in certificated form.
Section 6. Dealing in the Senior Notes; Purchase of Senior
Notes by the Company. (a) Merrill Lynch, when acting as Reset Remarketing Agent
or in its individual or any other capacity, may, to the extent permitted by law,
buy, sell, hold and deal in any of the Senior Notes. Merrill Lynch, as Holder or
Beneficial Owner of the Senior Notes may exercise any vote or join as a Holder
or Beneficial Owner, as the case may be, in any action which any Holder or
Beneficial Owner of Senior Notes may be entitled to exercise or take pursuant to
the Indenture with like effect as if it did not act in any capacity hereunder.
Merrill Lynch, in its individual capacity, either as principal or agent, may
also engage in or have an interest in any financial or other transaction with
the Company as freely as if it did not act in any capacity hereunder.
(b) The Company may purchase Senior Notes in the remarketing,
provided that the Interest Rate established with respect to the Senior Notes in
any such Remarketing is not different from the Interest Rate that would have
been established if the Company had not purchased such Senior Notes.
Section 7. Representations and Warranties by the Company. The
Company represents and warrants to the Reset Remarketing Agent, as of the date
hereof, as of the Effective Date, and as of each Reset Tender Date (each, a
"Representation Date") as follows:
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<PAGE> 8
(a) It has made all the filings with the Commission that it is
required to make under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the rules and regulations thereunder (the "1934 Act
Regulations") (collectively, the "1934 Act Documents"), (ii) each 1934 Act
Document complies in all material respects with the requirements of the 1934 Act
and 1934 Act Regulations, and each 1934 Act Document did not at the time of
filing with the Commission, and as of each Representation Date, as modified or
superseded by any subsequently filed 1934 Act Document on or prior to such
Representation Date, will not, include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (iii) the applicable Reset Remarketing
Materials (as defined herein), as of each Representation Date after the date
hereof, as modified or superseded by any subsequently filed 1934 Act Document on
or prior to such Representation Date (or, if applicable, by any document filed
pursuant to the 1933 Act and the rules and regulations thereunder (the "1933 Act
Regulations")), will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) The Company further represents and warrants to the Reset
Remarketing Agent as of each Representation Date as follows:
(i) The accountants who certified the financial
statements and supporting schedules included or incorporated by
reference in the 1934 Act Documents are independent public accountants
as required by the 1933 Act and the 1933 Act Regulations.
(ii) The financial statements included or
incorporated by reference in the 1934 Act Documents, together with the
related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries at the dates indicated
and the statement of operations, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries for the periods
specified; such financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules, if any, included or incorporated by reference in the 1934
Act Documents present fairly in accordance with GAAP the information
required to be stated therein. The pro forma financial statements and
the related notes thereto, if any, included or incorporated by
reference in the 1934 Act Documents present fairly the information
shown therein, have been prepared in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements and
have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(iii) Since the respective dates as of which
information is given in the 1934 Act Documents, except as otherwise
stated therein, (A) there has been no material adverse change and no
development which could reasonably be expected to result in a material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse
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<PAGE> 9
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) except for
regular quarterly dividends on the Company's common stock in amounts
per share that are consistent with past practice, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(iv) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of
the State of Michigan, with corporate power and authority to own, lease
and operate its properties and to conduct its business as presently
conducted and as described in the 1934 Act Documents and to enter into
and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(v) The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive
or other similar rights arising by operation of law, under the charter
or by-laws of the Company, under any agreement to which the Company or
any of its subsidiaries is a party or otherwise.
(vi) Each subsidiary of the Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with corporate
power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the
1934 Act Documents and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the 1934 Act
Documents, all of the issued and outstanding capital stock of each such
subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and is owned by the Company, as the case may be,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock of any such subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such subsidiary.
(vii) This Reset Remarketing Agreement and the Reset
Remarketing Agreement Supplement have been duly authorized, executed
and delivered by the Company.
(viii) The Indenture has been duly authorized,
executed and delivered by the Company and duly qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act"), and, assuming
it has been duly executed and delivered by the Trustee,
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<PAGE> 10
constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law)(the "Bankruptcy Exceptions").
(ix) The issuance and delivery by the Company of the
Collateral Bonds to the Trustee constitute a sale by the Company of the
Collateral Bonds to the Trustee as of the Closing Date or, if not a
sale, the grant by the Company to the Trustee of a perfected security
interest in the Collateral Bonds for the benefit of the holders of the
Senior Notes.
(x) The Secured Indenture constitutes a legally valid
and direct enforceable first mortgage lien, except as the same may be
limited by the laws of the State of Michigan (where all of the property
covered thereby is located) affecting the remedies for the enforcement
of the security provided for therein, which laws do not make inadequate
the remedies necessary for the realization of the benefits of such
security, or as the same may be limited by the Bankruptcy Exceptions,
upon substantially all of the Company's properties and franchises, now
owned or hereafter acquired, free from all prior liens, charges or
encumbrances, except as set forth in subparagraph (xviii) below, and
except, in the case of property hereafter acquired, any thereof
existing at the time of acquisition.
(xi) The Senior Notes have been duly authorized and
executed by the Company and authenticated, issued and delivered in the
manner provided for in the Indenture, and constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law), and are in the form contemplated by, and entitled
to the benefits of, the Indenture.
(xii) The Collateral Bonds have been duly authorized
and executed by the Company and authenticated, issued, and delivered in
the manner provided for in the Secured Indenture and have been issued
and delivered to the Trustee as provided for in the Thirty-Fifth
Supplemental Indenture as security for the Senior Notes, and constitute
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except to the extent
that enforcement thereof may be limited by the Bankruptcy Exceptions.
The Collateral Bonds are in the form contemplated by, and entitled to
the benefits of, the Secured Indenture.
(xiii) Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the
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<PAGE> 11
Company or any of its respective subsidiaries is a party or by which it
or any of them may be bound, or to which any of the property or assets
of the Company or any subsidiary is subject (collectively, "Agreements
and Instruments") or in violation of any applicable law, rule or
regulation or any judgment, order, writ or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or assets, which violation or default
would, singly or in the aggregate, have a Material Adverse Effect.
(xiv) The execution, delivery and performance of the
Purchase Agreement, this Agreement, the Mandatory Tender Remarketing
Agreement, the Indenture, the Senior Notes, the Thirty-Fifth
Supplemental Indenture, the Collateral Bonds and any other agreement or
instrument entered into or issued or to be entered into or issued by
the Company in connection with the transactions contemplated hereby or
thereby; and the consummation of the transactions contemplated herein
and therein and compliance by the Company with its obligations
hereunder and under the Indenture, the Secured Indenture, the
Thirty-Fifth Supplemental Indenture, the Senior Notes, and the
Collateral Bonds have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any subsidiary pursuant to
(other than the lien of the Indenture on the Collateral Bonds), the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
(xv) There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the 1934 Act Documents
(other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the 1934 Act Documents, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
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<PAGE> 12
(xvi) No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or required for
the performance by the Company of its obligations hereunder, in
connection with the remarketing of the Senior Notes hereunder or the
consummation of the transactions contemplated by this Agreement or for
the due execution, delivery or performance of the Indenture by the
Company, except such as have or shall have been already obtained.
(xvii) No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the
Company, is imminent, and neither the Company is aware of any existing
or imminent labor disturbance by the employees of any of its or any of
its subsidiary's principal suppliers, manufacturers, customers or
contractors which, in either case, may reasonably be expected to result
in a Material Adverse Effect.
(xviii) There are no contracts or documents which are
required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as
exhibits thereto which have not been so described and/or filed as
required.
(xix) The Company has good and marketable title to
the properties specifically described in and conveyed by the Secured
Indenture (except such property as may have been disposed of or
released from the lien thereof in accordance with the terms thereof)
subject only to the lien of the Secured Indenture, to permissible
encumbrances, as defined in the Secured Indenture, as to property
acquired by the Company subsequent to the execution of the Original
Secured Indenture, to any liens existing thereon or purchase money
liens placed thereon at the time of such acquisition as permitted by
the Secured Indenture, and to certain other reservations, rights of
grantors under revocable permits, easements, licenses, zoning laws and
ordinances and restrictions and minor defects or irregularities of
title which do not materially impair the use of the property affected
thereby in the operation of the business of the Company; the Company
and its subsidiaries have good and marketable title to all personal
property owned by them, in each case free and clear of all liens,
encumbrances and defects except the liens of the Secured Indenture and
such liens, encumbrances and defects as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries; the
pipeline, distribution main and underground gas storage easements
enjoyed by the Company and its subsidiaries are valid, subsisting and
enforceable easements with such exceptions as are not material and do
not interfere with the conduct of the business of the Company and its
subsidiaries.
(xx) The Company and its subsidiaries possess all
licenses, franchises, permits, certificates, authorizations, approvals,
consents, orders and other operating rights (collectively, the
"Governmental Licenses") issued by the Federal Energy Regulatory
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<PAGE> 13
Commission, the State of Michigan, and all other federal, state, local
or foreign regulatory agencies or bodies, governmental authorities or
agencies necessary for the ownership or lease of the material
properties owned or leased by each of them and to conduct the business
now operated by each of them; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure to so comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect and contain no unduly
burdensome provisions that would interfere with the conduct of the
business of the Company and its subsidiaries, considered as one
enterprise and, except as otherwise set forth in the Registration
Statement and the Prospectus, there are no legal or governmental
proceedings pending or threatened that would result in a material
modification, suspension or revocation thereof.
(xxi) Except as described in any Reset Remarketing
Materials and except as would not, singly or in the aggregate, result
in a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance or code, including any
judicial or administrative order, consent, decree or judgment, relating
to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, the "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are in compliance with their requirements, and
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries.
(xxii) The Company is a "public utility company" and
a "subsidiary company" of MCN Energy Group, a "holding company," as
such terms are defined in the Public Utility Holding Company Act of
1935 (the "1935 Act"), and such "holding company" and the Company are
presently exempt from the provisions of the 1935 Act (except Section 9
thereof).
(xxiii) The Company has complied with, and is and
will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xxiv) None of the Company and its subsidiaries or
any of their respective directors, officers or controlling persons, has
taken or will take, directly or indirectly, any action resulting in a
violation of Regulation M under the 1934 Act, or designed to cause or
result in, or that has constituted or that reasonably might be expected
to constitute, the
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<PAGE> 14
stabilization or manipulation of the price of any security of the
Company to facilitate the remarketing of the Senior Notes.
(xxv) No "forward looking statement" (as defined in
Rule 175 under the 1933 Act) contained in the Registration Statement,
any preliminary prospectus or the Prospectus was made or reaffirmed
without a reasonable basis or was disclosed other than in good faith.
(xxvi) The Company is not an "investment company" or
an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
(xxvii) The Senior Notes are rated "A2" by Moody's
Investors Service, Inc. and "A" by Standard & Poor's Rating Services, a
division of the McGraw-Hill Companies, Inc. or such other rating as to
which the Company shall have most recently notified the Reset
Remarketing Agent pursuant to Section 3(a) hereof.
References in the foregoing representations and warranties to the 1934
Act Documents shall be deemed to refer to the Registration Statement (as defined
in Section 5(b) below) and Prospectus (as defined in Section 5(b) above), in
each case including the documents incorporated by reference therein, if such are
required pursuant to such Section 5(b).
Section 8. Conditions to the Reset Remarketing Agent's
Obligations. The obligations of the Reset Remarketing Agent under this Agreement
have been undertaken in reliance on, and shall be subject to,
(a) the due performance by the Company of its obligations and
agreements as set forth in this Agreement and the accuracy of the
representations and warranties in this Agreement and any certificate delivered
pursuant hereto, and
(b) the further condition that none of the following events
shall have occurred at any time:
(i) the rating of any securities of the Company shall
have been down-graded or put under surveillance or review, including
being put on CreditWatch or Watch List with negative implications, or
withdrawn by a nationally recognized statistical rating organization;
(ii) without the prior written consent of the Reset
Remarketing Agent, neither the Indenture (including the Senior Notes)
nor the Secured Indenture (including the Collateral Bonds) shall have
been amended in any manner, or otherwise contain any provision not
contained therein as of the date hereof, that in either case in the
judgment of the Reset Remarketing Agent materially and adversely
changes the nature of the Senior Notes or the Collateral Bonds, as the
case may be, or the remarketing procedures (it being understood that,
notwithstanding the provisions of this clause (ii), the Company shall
not be prohibited from amending the Indenture);
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<PAGE> 15
(iii) trading in any securities of the Company or any
of its affiliates shall have been suspended or materially limited by
the Commission or the New York Stock Exchange, or if trading generally
on the American Stock Exchange or the New York Stock Exchange or in the
Nasdaq National Market shall have been suspended or materially limited,
or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices shall have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Agents, Inc. or any other governmental
authority, or if a banking moratorium shall have been declared by
either Federal or New York authorities;
(iv) there shall have occurred any material adverse
change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of
which is such as to make it, in the judgment of the Reset Remarketing
Agent, impracticable to remarket the Senior Notes or to enforce
contracts for the sale of the Senior Notes;
(v) an Event of Default (as defined in the
Indenture), or any event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default, with respect to
the Senior Notes shall have occurred and be continuing;
(vi) a material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, shall have occurred; or
(vii) the Senior Notes are not maintained in
book-entry form with DTC or any successor thereto; provided, that the
Reset Remarketing Agent, in its sole discretion and subject to receipt
of an opinion of counsel for the Company reasonably satisfactory to the
Reset Remarketing Agent, may waive the foregoing condition if in the
Reset Remarketing Agent's judgment the Indenture and the Senior Notes
can be amended, and they are amended, so as to permit the remarketing
of the Senior Notes in certificated form and otherwise as contemplated
herein;
(c) The obligations of the Reset Remarketing Agent to purchase
and remarket the Senior Notes shall also be subject to the terms and conditions
of the applicable Reset Remarketing Agreement Supplement.
Section 9. Indemnification. (a) The Company agrees to
indemnify and hold harmless the Reset Remarketing Agent and its officers,
directors and employees and each person, if any, who controls the Reset
Remarketing Agent within the meaning of Section 20 of the 1934 Act as follows:
(i) against any loss, liability, claim, damage or
expense whatsoever (collectively, "Damages"), as incurred, arising out
of, (A) the failure to have an effective
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<PAGE> 16
Registration Statement under the 1933 Act relating to the Senior Notes,
if required, or the failure to satisfy the prospectus delivery
requirements of the 1933 Act because the Company failed to provide the
Reset Remarketing Agent with a Prospectus for delivery, as required by
Section 5 hereof, or (B) any untrue statement or alleged untrue
statement of a material fact contained in any of the Reset Remarketing
Materials (including any incorporated documents), or (C) the omission
or alleged omission therefrom of a material fact necessary to make the
statements therein, in the light of the circumstances in which they
were made, not misleading, or (D) any violation by the Company of, or
any failure by the Company to perform any of its obligations under,
this Agreement, or (E) the acts or omissions of the Reset Remarketing
Agent in connection with its duties and obligations to determine the
Interest Rate or other terms with respect to any Subsequent Spread
Period, as provided hereunder, except Damages that are finally
judicially determined to be due to its gross negligence or willful
misconduct;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or investigation
or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever arising out of, or based upon,
any of items (A) through (E) in clause (i) above; provided that
(subject to clause (d) below) such settlement is effected with the
written consent of the Company, which consent shall not be unreasonably
withheld; and
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by the
Reset Remarketing Agent), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever arising out of, or based upon, any of items (A)
through (E) in clause (i) above to the extent that any such expense is
not paid under (i) or (ii) above;
provided, however, that the foregoing indemnity shall not apply to any losses,
liabilities, claims, damages and expenses to the extent arising out of any
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by the Reset Remarketing Agent
expressly for use in the Reset Remarketing Materials.
(b) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to clause (a) above, counsel to the indemnified
parties shall be selected by Merrill Lynch, and, in the case of parties
indemnified pursuant to clause (b) above, counsel to the indemnified parties
shall be selected by the Company. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any
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<PAGE> 17
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 9 or Section 10 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
or fault, culpability or a failure to act by or on behalf of any indemnified
party.
(c) If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by clause 9 (a) (ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(d) The indemnity agreements contained in this Section 10
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Reset Remarketing Agent, and shall
survive the termination or cancellation of this Agreement and the remarketing of
any Senior Notes hereunder.
Section 10. Contribution. If the indemnification provided for
in Section 9 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Reset Remarketing Agent on the other hand from
the remarketing of the Senior Notes pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Reset Remarketing Agent on the other hand in connection with the
acts, failures to act, statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand
and the Reset Remarketing Agent on the other hand in connection with the
remarketing of the Senior Notes pursuant to this Agreement shall be deemed to be
in the same respective proportions as (i) the aggregate principal amount of the
Senior Notes, and (ii) the aggregate positive difference, if any, between the
price at which the Senior Notes are sold by the Reset Remarketing Agent in the
remarketing and the price paid by the Reset Remarketing Agent for the Senior
Notes tendered on any Reset Tender Date.
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<PAGE> 18
The relative fault of the Company on the one hand and the
Reset Remarketing Agent on the other hand shall be determined by reference to,
among other things, the responsibility hereunder of the applicable party for any
act or failure to act relating to the losses, liabilities, claims, damages or
expenses incurred or, in the case of any losses, liabilities, claims, damages or
expenses arising out of any untrue or alleged untrue statement of a material
fact contained in any of the Reset Remarketing Materials or the omission or
alleged omission to state a material fact therefrom, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Reset Remarketing Agent and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Reset Remarketing Agent agree that it
would not be just and equitable if contribution pursuant to this Section 10 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 10. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
10 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such act
or failure to act or untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 10, the Reset
Remarketing Agent shall not be required to contribute any amount in excess of
the amount by which the total price at which the Senior Notes remarketed by it
and resold to the public were sold to the public exceeds the amount of any
damages which the Reset Remarketing Agent has otherwise been required to pay by
reason of any act or failure to act for which it is responsible hereunder or any
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 11, each person, if any, who
controls the Reset Remarketing Agent within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Reset Remarketing Agent, and each officer and director of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
Section 11. Termination of this Reset Remarketing Agreement.
Subject to Section 3 hereof relating to the payment of fees and expenses, this
Agreement shall terminate as to the Reset Remarketing Agent on the effective
date of the removal of such Reset Remarketing Agent pursuant to Section 4
hereof.
Section 12. Reset Remarketing Agent's Performance: Duty of
Care. The duties and obligations of the Reset Remarketing Agent hereunder shall
be determined solely by the express
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<PAGE> 19
provisions of this Agreement, the Senior Notes and the Indenture, the Secured
Indenture and the Collateral Bonds and the applicable Reset Remarketing
Agreement Supplement. No implied covenants or obligations of or against the
Reset Remarketing Agent shall be read into this Agreement, the Indenture or the
Secured Indenture. In the absence of bad faith on the part of the Reset
Remarketing Agent, the Reset Remarketing Agent may conclusively rely upon any
document furnished to it, which purports to conform to the requirements of this
Agreement, the Indenture, or the Secured Indenture, as to the truth of the
statements expressed in any of such documents. The Reset Remarketing Agent shall
be protected in acting upon any document or communication reasonably believed by
it to have been signed, presented or made by the proper party or parties. The
Reset Remarketing Agent shall incur no liability hereunder to any Beneficial
Owner or Holder of Senior Notes in its individual capacity or as Reset
Remarketing Agent for any action or failure to act in connection with the
remarketing or otherwise. The Reset Remarketing Agent shall incur no liability
to the Company with respect to calculation of the Interest Rate applicable to
any Interest Period, except as a result of gross negligence or willful
misconduct on its part.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.
Section 14. Term of Agreement. Unless otherwise terminated in
accordance with the provisions hereof, this Agreement shall remain in full force
and effect from the date hereof until the first day thereafter on which no
Senior Notes are outstanding.
Section 15. Successors and Assigns. The rights and obligations
of the Company hereunder may not be assigned or delegated to any other person
without the prior written consent of Merrill Lynch, the rights and obligations
of Merrill Lynch hereunder may not be assigned or delegated to any other person
without the prior written consent of the Company, and any attempt by either
party to do so will be unenforceable. This Agreement shall inure to the benefit
of and be binding upon the Company and Merrill Lynch and their respective
permitted successors and assigns. The terms "successors" and "assigns" shall not
include any purchaser of any Senior Notes merely because of such purchase.
Section 16. Headings. Section headings have been inserted in
this Agreement as a matter of convenience of reference only, and it is agreed
that such section headings are not a part of this Agreement and will not be used
in the interpretation of any provisions of this Agreement.
Section 17. Severability. If any provision of this Agreement
shall be held or deemed to be or shall, in fact, be invalid, inoperative or
unenforceable as applied in any particular case in any or all jurisdictions
because it conflicts with any provision of any constitution, statute, rule or
public policy or for any other reason, such circumstances shall not have the
effect of rendering the provision in question invalid, inoperative or
unenforceable in any other case, circumstances or jurisdiction, or of rendering
any other provision or provisions of this Agreement invalid, inoperative or
unenforceable to any extent whatsoever.
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<PAGE> 20
Section 18. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute one and the same document.
Section 19. Amendments. This Agreement may be amended by any
instrument in writing signed by each of the parties hereto.
Section 20. Notices. Unless otherwise specified, any notices,
requests, consents or other communications given or made hereunder or pursuant
hereto shall be made in writing or transmitted by any standard form of
telecommunication or by telephone and confirmed in writing. All written notices
shall be deemed to be validly given or made, if delivered by hand, when so
delivered, of if mailed, when mailed registered or certified mail, return
receipt requested and postage prepaid. All notices by telecommunication
(including telephone) shall be deemed to be validly given or made when received.
All such notices, requests, consents or other communications shall be addressed
as follows: if to the Company, to 500 Griswold Street, Detroit, Michigan 48226,
Attn: Ronald E. Christian, Esq., Vice President, General Counsel and Secretary,
Facsimile No.: (313) 965-0009; and if to Merrill Lynch, to Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Merrill Lynch World Headquarters, World
Financial Center, North Tower, New York, New York 10281-1209, Attention: Debt
Syndicate, or to such other address as either of the above shall specify to the
other in writing.
Section 21. Benefit. (a) Nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon or give any person
other than the parties hereto any remedy or claim under or by reason of this
Agreement or any term, covenant or condition hereof, all of which shall be for
the sole and exclusive benefit of the parties.
(b) No beneficial owner of any Note shall have any rights or
claims under this Agreement or any Remarketing Agreement Supplement or against
the Company or the Remarketing Agent as a result of the Remarketing Agent's not
purchasing such Notes.
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<PAGE> 21
IN WITNESS WHEREOF, each of the Company and Merrill Lynch has
caused this Agreement to be executed in its name and on its behalf by one of its
duly authorized officers as of the date first above written.
MICHIGAN CONSOLIDATED GAS COMPANY
By:/s/ Howard L. Dow III
-------------------------------
Name: Howard L. Dow III
Title: Senior Vice President and
Chief Financial Officer
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:/s/ Anthony V. Leness
-------------------------------
Name: Anthony V. Leness
Title: Managing Director
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<PAGE> 22
EXHIBIT A
RESET REMARKETING AGREEMENT SUPPLEMENT
Merrill Lynch & Co./ Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Reset Remarketing Agent") hereby agrees to purchase the
Senior Notes described below (the "Senior Notes") that have been tendered by the
holders thereof for sale on _____________, _____ (the "Reset Tender Date").
It is acknowledged and agreed that the Senior Notes need not
be further registered under the Securities Act of 1933, as amended (the "Act"),
and that, in connection with the remarketing of the Senior Notes by the Reset
Remarketing Agent in accordance with the terms of the Reset Remarketing
Agreement dated as of June 23, 1998, no prospectus meeting the requirements of
Section 10 of the Act need be delivered, or filed pursuant to Rule 424 under the
Act.
It is understood that the Reset Remarketing Agent will deliver
to purchasers and prospective purchasers, in connection with the remarketing,
one or more forms of written communication describing the terms of the Senior
Notes (each, a "Reset Remarketing Memorandum"), the form of each of which shall
be delivered to Michigan Consolidated Gas Company, a Michigan corporation (the
"Company"), not less than two Business Days prior to its use and subject to the
approval of the Company prior to its use by the Reset Remarketing Agent, which
approval shall not be unreasonably withheld or delayed.
The Reset Remarketing Agent shall offer to purchase Senior
Notes and purchase validly tendered Senior Notes on the Reset Tender Date in
accordance with all applicable laws and regulations and interpretations of the
Securities and Exchange Commission.
The representations and warranties made pursuant to the
above-referenced Reset Remarketing Agreement (other than paragraphs (b)(viii),
(x), (xi) and (xii) of Section 7); Section 3(o) of the attached Purchase
Agreement (which date shall be the date of the Reset Remarketing Agreement
Supplement and the relevant Reset Tender Date); Section 9 of the attached
Purchase Agreement (except that Section 9 is amended to allow termination of
this Agreement by the Agent if the Company's representations and warranties
therein are not accurate and correct); paragraphs (c) and (f) of Section 5 of
the attached Purchase Agreement; and Section 8 and the last paragraph of Section
5 of the attached Purchase Agreement are incorporated in their entirety into
this Agreement and made applicable to the obligations of the Reset Remarketing
Agent to the extent applicable to any remarketing of the Senior Notes, except as
explicitly amended hereby. The terms "Registration Statement" and "Prospectus"
shall be deemed to refer to each such document as amended to the date hereof and
the Reset Tender Date, and the term "Incorporated Documents" shall similarly be
deemed to include those filed and incorporated by reference through such dates.
If the Reset Remarketing Agent determines, based on advice of
counsel, that changes in applicable law, regulations or interpretations of the
Securities and Exchange Commission make it necessary or advisable to deliver a
current prospectus in connection with this Remarketing, the attached Purchase
Agreement shall apply in its entirety. All references in such Purchase Agreement
to (i) the "Agent" shall be deemed to refer to the Reset Remarketing Agent, (ii)
the "Securities" shall
<PAGE> 23
be deemed to refer to the Senior Notes, (iii) the Purchase Agreement shall be
deemed to refer to the Reset Remarketing Agreement Supplement, and (iv) "Closing
Date" shall be deemed to refer to the Reset Tender Date. To the extent the
provisions of such Purchase Agreement refer to the "Prospectus" or the
"Registration Statement," such references shall be deemed to refer to any
Remarketing Memorandum or registration statement, if any, that the Company is
required to prepare or file pursuant to applicable law, regulations or
interpretations of the Securities and Exchange Commission in effect at the time
of such remarketing of the Senior Notes, including all documents incorporated by
reference therein. For the purposes of Section 7 of the attached Purchase
Agreement, the relative benefit received by the Company on the one hand and the
Reset Remarketing Agent on the other in connection with the remarketing of the
Senior Notes pursuant to this Agreement shall be deemed to be in the same
respective proportions as the aggregate public offering price of the Senior
Notes bears to the remarketing fee received by the Reset Remarketing Agent
pursuant to this Agreement.
All capitalized terms not otherwise defined in this Agreement
have the respective meanings assigned thereto in the Senior Notes, the form of
which is attached hereto.
Company: Michigan Consolidated Gas Company
500 Griswold Street
Detroit, Michigan 48226
Reset Remarketing Agent and Address: Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower, 26th Floor
New York, New York 10281-1209
Title of Senior Notes: Extendable MandatOry Par Put Remarketed
Securities(sm) due June 30, 2038
Principal Amount of Senior Notes to be Purchased:
Title of Indenture: Indenture dated as of June 1, 1998,
as supplemented and amended, by and
between the Company and the Trustee
Trustee: Citibank, N.A.
Current Ratings: Moody's Investors Service Inc.: "A2"
Standard & Poor's Corporation: "A"
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<PAGE> 24
Certain Terms of the Senior Notes:
Maturity: June 30, 2038
Spread Determination Date:
Duration/Mode Determination Date:
Tender Notice Date:
Interest Reset Dates:
Reset Tender Date:
New Interest Rate: As determined by application of the
provisions set forth in the attached
form of the Senior Notes on the LIBOR
Determination Date or the Fixed Rate
Determination Date, as applicable.
Spread:
Interest Payment Dates: June 30 and December 30.
Subsequent Spread Period:
Redemption Provisions: As set forth in the Prospectus under
the caption headed "Description of
the Notes--Redemption."
Beneficial Owner Tender Provisions: As set forth in the attached
Prospectus Supplement dated June 17,
1998. In the event that the Reset
Remarketing Agent fails to purchase
all Senior Notes validly tendered for
purchase on the Reset Tender Date,
then the Reset Remarketing Agent
shall promptly notify the Company and
the Trustee of such failure.
Shorter Subsequent Spread Period: In the event that (A) the Reset
Remarketing Agent fails to purchase
all Senior Notes validly tendered for
purchase on the Reset Tender Date for
any reason, and (B) the Company has
not given notice of redemption of all
of the Senior Notes then outstanding
in
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<PAGE> 25
accordance with the provisions
described in the attached form of the
Senior Notes, then the Subsequent
Spread Period shall be a period of
one year, which Subsequent Spread
Period shall be deemed to have
commenced upon the Commencement Date
that coincides with the Reset Tender
Date.
Legal Opinion: If required to be delivered pursuant
to this Reset Remarketing Agreement
Supplement, the opinion to be
delivered pursuant to Section
5(b)(1)(v) of the attached Purchase
Agreement shall be delivered by
counsel satisfactory to the Reset
Remarketing Agent and shall be
modified to read as follows: "the
Senior Notes are in the form
contemplated by the Indenture and
have been duly and validly
authorized; a single global Note
registered in the name of CEDE & Co.,
a nominee of The Depository Trust
Company ("DTC"), has been duly
authenticated in accordance with the
provisions of the Indenture, paid for
and delivered to DTC, and constitutes
a legal, valid and binding obligation
of the Company. The Reset Remarketing
Agent will acquire a "securities
entitlement" (within the meaning of
Section 8-501 of the Uniform
Commercial Code as in effect in the
State of New York (the "UCC")) with
respect to any Senior Notes which a
prior owner causes DTC or a
securities intermediary to credit to
the Reset Remarketing Agent's
securities account. Assuming that the
Reset Remarketing Agent acquires such
security entitlement for value and
without notice of an adverse claim,
then pursuant to Section 8-502 of the
UCC an action based on an adverse
claim to the Senior Notes, whether
framed in conversion, replevin,
constructive trust, equitable lien or
other theory, may not be asserted
against the Reset Remarketing Agent,
or such other opinion as shall be
appropriate under the law then in
effect to the effect that no other
person may assert rights in the
Senior Notes against the Reset
Remarketing Agent.
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<PAGE> 26
If required to be delivered pursuant
to this Reset Remarketing Purchase
Agreement, the opinion to be
delivered pursuant to Section 5(b)(3)
of the attached Purchase Agreement
may be delivered by any counsel
designated by the Reset Remarketing
Agent and reasonably acceptable to
the Company.
Form of Senior Notes: Global certificate registered in the
name of the nominee, which currently
is CEDE & Co., of the depository of
the Senior Notes, which is DTC. The
beneficial owners of the Senior Notes
("Beneficial Owners") are not
entitled to receive definitive
certificates representing their
Senior Notes, except under limited
circumstances. A Beneficial Owner's
ownership of a Note currently is
recorded on or through the records of
the brokerage firm or other entity
that is a participant in DTC and that
maintains such Beneficial Owner's
account.
Purchase Price: 100% of the principal amount of the
Senior Notes. Payable to DTC for the
Beneficial Owners of Tendered Senior
Notes.
Remarketing Fee: _____% of the principal amount of the
Senior Notes outstanding on each
Reset Tender Date.
Closing:
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<PAGE> 27
The foregoing terms are hereby confirmed and agreed to as of this ___
day of __________, ____.
MICHIGAN CONSOLIDATED GAS COMPANY
By:
---------------------------------
Name:
Title:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
--------------------------------
Name:
Title:
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