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As filed with the Securities and Exchange Commission on June 17, 1998
REGISTRATION NO. 333-56333
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MICHIGAN CONSOLIDATED GAS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
MICHIGAN 38-0478040
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
500 GRISWOLD STREET
DETROIT, MICHIGAN 48226
(313) 965-2430
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
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RONALD E. CHRISTIAN, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
MICHIGAN CONSOLIDATED GAS COMPANY
500 GRISWOLD STREET
DETROIT, MICHIGAN 48226
(313) 965-2430
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies To:
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<S> <C>
JOHN W. OSBORN, ESQ. WILLIAM S. LAMB, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP LEBOEUF, LAMB, GREENE & MACRAE, L.L.P.
919 THIRD AVENUE 125 WEST 55TH STREET
NEW YORK, NEW YORK 10022-3897 NEW YORK, NEW YORK 10019-5389
(212) 735-3000 (212) 424-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=============================================================================================================================
AMOUNT PROPOSED PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(2) PRICE PER UNIT(1) OFFERING PRICE FEE(2)
<S> <C> <C> <C> <C>
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Senior Debt Securities.................. $185,000,000 100% $185,000,000 $54,575(3)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Does not include certain debt securities of Michigan Consolidated Gas
Company covered by Registration Statement No. 333-16285 which are being
carried over to this Registration Statement. Also does not include the
Registration Fee of $78,788 which was previously paid with respect to such
debt securities.
(3) Previously paid.
Pursuant to the provisions of Rule 429 under the Securities Act of 1933, the
Prospectus contained herein constitutes a combined Prospectus relating also to
$215,000,000 of unsold debt securities registered pursuant to the Registration
Statement on Form S-3 (Registration No. 333-16285) which are being carried
forward in connection with this Registration Statement. In the event that any of
such previously registered debt securities are offered prior to the effective
date of this Registration Statement, the amount of such debt securities will not
be included in any Prospectus hereunder. The amount of Senior Debt Securities
being registered hereunder, together with the remaining debt securities
previously registered under Registration Statement No. 333-16285, represents the
maximum amount of the registrant's debt securities which are expected to be
offered for sale.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
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EXPLANATORY NOTE
The Registration Statement includes two forms of Prospectus Supplement to
be used in connection with the marketing of any offering of Senior Debt
Securities that may occur immediately after the effectiveness of this
Registration Statement.
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION DATED JUNE 17, 1998
PROSPECTUS
$400,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
SENIOR DEBT SECURITIES
------------------------
Michigan Consolidated Gas Company ("MichCon" or the "Company") from time to
time may offer, in an aggregate principal amount not to exceed $400,000,000, in
one or more series, its senior debt securities (the "Senior Debt Securities").
Prior to the Release Date (as defined below), the Senior Debt Securities will be
secured by the issuance and delivery to the Senior Trustee (as defined below) in
trust for the benefit of the holders of Senior Debt Securities first mortgage
bonds (the "First Mortgage Bonds") issued under the Company's Mortgage Indenture
(as defined below). The Senior Debt Securities will be issued under the
indenture (the "Senior Indenture") to be entered into between MichCon and
Citibank, N.A., as trustee (the "Senior Trustee"). The Senior Debt Securities
may be offered in amounts, at prices and on terms to be determined at the time
of sale. Certain terms of the Senior Debt Securities including, where
applicable, the specific designation, aggregate principal amount, interest rate,
interest payment dates, maturity, public offering price, any redemption terms or
other specific terms of each series of the Senior Debt Securities in respect of
which this Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement or Supplements (a "Prospectus Supplement").
MichCon may sell the Senior Debt Securities to or through underwriters,
through dealers, directly to purchasers or through agents. See "Plan of
Distribution". The Prospectus Supplement will set forth the names of such
underwriters, dealers or agents, if any, any applicable commissions or discounts
and the proceeds to MichCon from such sale.
This Prospectus may not be used to consummate sales of the Senior Debt
Securities unless accompanied by a Prospectus Supplement applicable to the
Senior Debt Securities being sold.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1998.
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AVAILABLE INFORMATION
MichCon is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "SEC"). Such reports and other information can be inspected and copied at
the SEC's Public Reference Room; Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as the following Regional Offices of the SEC: 7
World Trade Center, Suite 1300, New York, New York 10048; and Northwestern
Atrium Center, 5000 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can be obtained from the Public Reference
Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission also maintains a Web Site on the
Internet that contains reports and other information regarding registrants that
file electronically with the Commission (http://www.sec.gov).
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by MichCon with the SEC under the Securities Act of 1933, as
amended (the "1933 Act"), with respect to the Senior Debt Securities. This
Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Reference is made to such Registration
Statement and to the exhibits relating thereto for further information with
respect to MichCon and the Senior Debt Securities. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the SEC or incorporated by
reference herein are not necessarily complete, and in each instance reference is
made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus and made a
part hereof the following documents heretofore filed with the SEC pursuant to
the 1934 Act:
1. MichCon's Annual Report on Form 10-K for the year ended December
31, 1997 ("Form 10-K").
2. MichCon's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998.
3. MichCon's Current Report on Form 8-K dated June 2, 1998.
All documents filed by MichCon pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference in this Prospectus or in any Prospectus Supplement
shall be deemed to be modified or superseded for purposes of this Prospectus or
any Prospectus Supplement to the extent that a statement contained in this
Prospectus or in any Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus or in any Prospectus Supplement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus or any
Prospectus Supplement.
MichCon hereby undertakes to provide without charge to each person to whom
a copy of this Prospectus has been delivered, on the written or oral request of
any such person, a copy of any or all of the documents referred to above which
have been or may be incorporated by reference in this Prospectus, other than
exhibits to such documents. Requests for such copies should be directed to:
Investor Relations, MCN Energy Group Inc., 500 Griswold Street, Detroit,
Michigan 48226; telephone 1-800-548-4655.
2
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
FORWARD-LOOKING STATEMENTS
Statements contained in or incorporated by reference into this Prospectus
which are not historical in nature are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve certain risks and uncertainties that may cause actual future
results to differ materially from those contemplated, projected, estimated or
budgeted in such forward-looking statements. Factors that may impact
forward-looking statements include, but are not limited to, the following: (i)
the effects of weather and other natural phenomena; (ii) increased competition
from other energy suppliers as well as alternative forms of energy; (iii) the
capital intensive nature of the Company's business; (iv) the economic climate
and growth in the geographic areas in which the Company does business; (v) the
uncertainty of gas reserve estimates; (vi) the timing and extent of changes in
prices for natural gas, electricity and crude oil; (vii) conditions of capital
markets and equity markets; and (viii) the effects of changes in governmental
policies and regulatory actions, including income taxes, environmental
compliance and authorized rates. See "Incorporation of Certain Documents by
Reference" above.
3
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THE COMPANY
MichCon is a Michigan corporation that was organized in 1898 and, with its
predecessors, has been in business for nearly 150 years. The Company is a public
utility engaged in the distribution and transmission of natural gas in the State
of Michigan. The Company serves 1.2 million residential, commercial and
industrial customers in the Detroit, Grand Rapids, Ann Arbor, Traverse City and
Muskegon metropolitan areas and in various other communities throughout the
state of Michigan. MichCon's gas sales and transportation markets were
approximately 937 billion cubic feet (Bcf) for the twelve months ended December
31, 1997. MichCon is a wholly-owned subsidiary of MCN Energy Group Inc., a
Michigan corporation.
At December 31, 1997, MichCon and its subsidiaries employed 2,867 persons.
The mailing address of MichCon's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226, and its telephone number is (313) 965-2430.
USE OF PROCEEDS
Except as otherwise stated in the applicable Prospectus Supplement, net
proceeds from the sale of the Senior Debt Securities offered hereby will be used
for the acquisition of property; the construction, completion, extension or
improvement of facilities; working capital requirements; the improvement or
maintenance of service; the discharge or lawful retirement of short or long-term
debt and borrowings made or expected to be made; and for other corporate
purposes. Specific allocations of proceeds for such purposes have not been made
at this time. Funds may be borrowed in anticipation of future requirements.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth MichCon's ratio of earnings to fixed charges
for the periods indicated.
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<CAPTION>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------
1998 1997 1996 1995 1994 1993
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)(2)......... 3.17 3.17 3.27 3.47 3.26 3.58
</TABLE>
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(1) The Company is a guarantor of certain other debt. Fixed charges related to
such debt, deemed to be immaterial, have been excluded in computing the
above ratios.
(2) For the purpose of computing these ratios, earnings consists of net income
plus income taxes and fixed charges. Fixed charges consist of total
interest, amortization of debt discount, premium and expense and the
estimated portion of interest implicit in rentals.
SECURITIES
The Senior Debt Securities may be issued, from time to time, in one or more
series (i) secured by the Company's First Mortgage Bonds issued and delivered to
the Senior Trustee under the 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, 1944 between the Company and Citibank, N.A.
("Citibank" or the "Mortgage Trustee") and Robert T. Kirchner (the "Individual
Trustee" and, together with Citibank, the "Secured Trustees") which became
effective on April 1, 1994, as supplemented and amended by the supplemental
indentures thereto (collectively, the "Mortgage Indenture") or (ii) following
the Release Date (as defined below), as either unsecured senior notes or as
senior notes secured by first mortgage bonds issued under a mortgage indenture
other than the Mortgage Indenture. On the Release Date, any outstanding Senior
Debt Securities secured by the Company's First Mortgage Bonds when issued will
cease to be secured by First Mortgage Bonds issued under the Company's Mortgage
Indenture and, at the Company's option, either (a) will become unsecured general
obligations of the Company or (b) will be secured by first mortgage bonds issued
under a mortgage indenture other than the Mortgage Indenture.
4
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Senior Debt Securities will be issued under the Senior Indenture, the form
of which is an exhibit to the Registration Statement, and are described below
under the caption "Description of the Senior Debt Securities." Prior to the
Release Date, First Mortgage Bonds securing the Senior Debt Securities (the
"Collateral Bonds") will be issued under the Mortgage Indenture.
There is no requirement, under either the Senior Indenture or the Mortgage
Indenture (collectively, the "Indentures"), that future issues of debt
securities of the Company be issued under the Indentures, and, subject to
certain restrictions following the Release Date which are described in
"Description of the Senior Debt Securities--Restrictions," the Company will be
free to employ other indentures or documentation, containing provisions
different from those included in the Indentures or applicable to one or more
issues of Senior Debt Securities, in connection with future issues of such other
debt securities. Certain capitalized terms herein are defined in the Indentures.
DESCRIPTION OF THE SENIOR DEBT SECURITIES
GENERAL
Until the Release Date (as defined below), the Senior Debt Securities will
be secured by one or more series of Collateral Bonds issued and delivered to the
Senior Trustee under the Mortgage Indenture. See "-- Security; Release Date." ON
THE RELEASE DATE (AS DEFINED BELOW), THE SENIOR DEBT SECURITIES WILL CEASE TO BE
SECURED BY THE COLLATERAL BONDS AND, AT THE COMPANY'S OPTION, EITHER (I) WILL
BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (II) WILL BE SECURED BY
FIRST MORTGAGE BONDS (THE "SUBSTITUTED COLLATERAL BONDS") ISSUED UNDER A
MORTGAGE INDENTURE OTHER THAN THE MORTGAGE INDENTURE. The Senior Indenture
provides that, in addition to the Senior Debt Securities offered hereby,
additional Senior Debt Securities may be issued thereunder, without limitation
as to aggregate principal amount, from time to time, in one or more series,
provided that, prior to the Release Date, the amount of Senior Debt Securities
that may be issued cannot exceed the aggregate principal amount of First
Mortgage Bonds that the Company is able to issue under its Mortgage Indenture.
The Senior Indenture does not contain any debt covenants or provisions
which would afford holders of Senior Debt Securities protection in the event of
a highly leveraged transaction.
Reference is made to the Prospectus Supplement relating to the Senior Debt
Securities being offered (the "Offered Senior Debt Securities") for, among other
things, the following terms thereof: (1) the title of the Offered Senior Debt
Securities; (2) any limit on the aggregate principal amount of the Offered
Senior Debt Securities; (3) the date or dates on which the Offered Senior Debt
Securities will mature; (4) the rate or rates (which may be fixed or variable)
per annum at which the Offered Senior Debt Securities will bear interest or the
method by which such rate or rates shall be determined and the date from which
such interest will accrue or the method by which such date or dates shall be
determined; (5) the dates on which such interest will be payable and the Regular
Record Dates for such Interest Payment Dates; (6) the dates, if any, on which,
and the price or prices at which, the Offered Senior Debt Securities may,
pursuant to any mandatory or optional sinking fund provisions, be redeemed by
the Company and other detailed terms and provisions of such sinking funds; (7)
the date, if any, after which, and the price or prices at which, the Offered
Senior Debt Securities may, pursuant to any optional redemption provisions, be
redeemed at the option of the Company or of the Holder thereof and other
detailed terms and provisions of such optional redemption; and (8) any other
terms of the Offered Senior Debt Securities (which terms shall not be
inconsistent with the Senior Indenture). For a description of the terms of the
Offered Senior Debt Securities, reference must be made to both the Prospectus
Supplement relating thereto and to the description of Senior Debt Securities set
forth herein.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of, and any premium or interest on, the Offered Senior Debt
Securities will be payable, and the Offered Senior Debt Securities will be
exchangeable and transfers thereof will be registrable, at the Place of Payment,
provided that, at the option of the Company, payment of interest may be made by
check mailed or wire transferred to the address of the person entitled thereto
as it appears in the Security Register.
5
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Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Senior Debt Securities will be issued in United States dollars in
fully registered form, without coupons, in denominations of $1,000 or any
integral multiple thereof. No service charge will be made for any transfer or
exchange of the Offered Senior Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
For purposes of the descriptions of the Senior Debt Securities, certain
defined terms have the following meanings:
"Indebtedness" of any Person means, without duplication, (i) the principal
of and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capitalized Lease Obligations of such Person; (iii) all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following payment
on the letter of credit); (v) all obligations of the type referred to in clauses
(i) through (iv) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable as
obligor, guarantor or otherwise; and (vi) all obligations of the type referred
to in clauses (i) through (v) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured.
"Significant Subsidiary" means a Subsidiary or Subsidiaries of the Company
possessing assets (including the assets of its own Subsidiaries but without
regard to the Company or any other Subsidiary) having a book value, in the
aggregate, equal to not less than 10% of the book value of the aggregate assets
of the Company and its Subsidiaries calculated on a consolidated basis.
"Capitalized Lease Obligations" means an obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with such
principles.
"Project Finance Indebtedness" means Indebtedness of a Subsidiary secured
by a Lien on any property, acquired, constructed or improved by such Subsidiary
after the date of the Indenture which Lien is created or assumed
contemporaneously with, or within 120 days after, such acquisition or completion
of such construction or improvement, or within six months thereafter pursuant to
a firm commitment for financing arranged with a lender or investor within such
120-day period, to secure or provide for the payment of all or any part of the
purchase price of such property or the cost of such construction or improvement,
or on any property existing at the time of acquisition thereof; provided that
such a Lien shall not apply to any property theretofore owned by any such
Subsidiary other than, in the case of any such construction or improvement, any
theretofore unimproved real property on which the property so constructed or the
improvement is located; and provided further that such Indebtedness, by its
terms, shall limit the recourse of any holder of such Indebtedness (or trustee
on such holder's behalf) in the event of any default in such Indebtedness to the
assets subject to such Liens and the capital stock of the Subsidiary issuing
such Indebtedness. Notwithstanding the foregoing, Project Finance Indebtedness
shall include all Indebtedness that would constitute Project Finance
Indebtedness but for the fact that such Indebtedness was issued prior to the
date of the Indenture and taking into account the fact that the property subject
to the Lien may have been acquired prior to the date of the Indenture.
The Senior Debt Securities may be issued under the Senior Indenture as
Original Issue Discount Securities to be offered and sold at a substantial
discount below their principal amount. Special federal income tax, accounting
and other considerations applicable to any such Original Issue Discount
Securities will be
6
<PAGE> 9
described in any Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof as a result of the occurrence of an Event
of Default and the continuation thereof.
SECURITY; RELEASE DATE
Until the Release Date (as defined below), the Senior Debt Securities will
be secured by one or more series of the Collateral Bonds issued and delivered by
the Company to the Senior Trustee. See "Description of the First Mortgage
Bonds." Upon the issuance of Senior Debt Securities prior to the Release Date,
the Company will simultaneously issue and deliver Collateral Bonds to the Senior
Trustee, as security for such Senior Debt Securities. Such Collateral Bonds will
have the same stated rate or rates of interest (or interest calculated in the
same manner), interest payment dates, stated maturity date and redemption
provisions, and will be in the same aggregate principal amount as the Senior
Debt Securities being issued. The Company has agreed to issue a related series
of Collateral Bonds in the name of the Senior Trustee in its capacity as trustee
under the Senior Indenture concurrently with the issuance of each series of
Senior Debt Securities and the Senior Trustee has agreed to hold each series of
Collateral Bonds in such capacity under all circumstances and not transfer such
Collateral Bonds until the earlier of the Release Date or the prior retirement
of the related series of Senior Debt Securities through redemption, repurchase
or otherwise. Prior to the Release Date, the Company shall make payments of the
principal of, and premium or interest on, each series of Collateral Bonds to the
Senior Trustee, which payments shall be applied by the Senior Trustee to
satisfaction of all obligations then due on the related series of Senior Debt
Securities.
THE "RELEASE DATE" WILL BE THE DATE THAT ALL FIRST MORTGAGE BONDS OF THE
COMPANY ISSUED AND OUTSTANDING UNDER THE MORTGAGE INDENTURE, OTHER THAN THE
COLLATERAL BONDS, HAVE BEEN RETIRED (AT, BEFORE OR AFTER THE MATURITY THEREOF)
THROUGH PAYMENT, REDEMPTION OR OTHERWISE. ON THE RELEASE DATE, THE SENIOR
TRUSTEE WILL DELIVER TO THE COMPANY FOR CANCELLATION ALL COLLATERAL BONDS, AND
THE COMPANY WILL CAUSE THE SENIOR TRUSTEE TO PROVIDE NOTICE TO ALL HOLDERS OF
SENIOR DEBT SECURITIES OF THE OCCURRENCE OF THE RELEASE DATE. AS A RESULT, ON
THE RELEASE DATE, THE COLLATERAL BONDS WILL CEASE TO SECURE THE SENIOR DEBT
SECURITIES, AND, AT THE OPTION OF THE COMPANY, THE SENIOR DEBT SECURITIES,
EITHER (I) WILL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (II) WILL
BE SECURED BY SUBSTITUTED COLLATERAL BONDS. Each issue of Collateral Bonds will
be secured by a lien on certain property owned by the Company. In certain
circumstances prior to the Release Date, the Company is permitted to reduce the
aggregate principal amount of an issue of Collateral Bonds held by the Senior
Trustee, but in no event to an amount lower than the aggregate outstanding
principal amount of the Senior Debt Securities initially issued
contemporaneously with such Collateral Bonds. Following the Release Date, the
Company will cause the Mortgage Indenture to be closed, and the Company will not
issue any additional bonds under such Mortgage Indenture.
RESTRICTIONS
The Senior Indenture provides that the Company shall not consolidate with,
merge with or into any other corporation (whether or not the Company shall be
the surviving corporation), or sell, assign, transfer or lease all or
substantially all of its properties and assets as an entirety or substantially
as an entirety to any Person or group of affiliated Persons, in one transaction
or a series of related transactions, unless: (1) either the Company shall be the
continuing Person or the Person (if other than the Company) formed by such
consolidation or with which or into which the Company is merged or the Person
(or group of affiliated Persons) to which all or substantially all the
properties and assets of the Company are sold, assigned, transferred or leased
is a corporation (or constitute corporations) organized under the laws of the
United States or any State thereof or the District of Columbia and expressly
assumes, by an indenture supplemental to the Senior Indenture, all the
obligations of the Company under the Senior Debt Securities and the Senior
Indenture, executed and delivered to the Trustee in form satisfactory to the
Trustee; (2) immediately before and after giving effect to such transaction or
series of transactions, no Event of Default, and no Default, with respect to the
Senior Debt Securities shall have occurred and be continuing; and (3) the
Company shall have
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delivered to the Trustee an Officer's Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indentures comply with the Senior Indenture.
The Senior Indenture also provides that, except as described below and
unless Substituted Pledged Bonds are issued to secure the Senior Debt Securities
from and after the Release Date, the Company will not, nor will it permit any
Significant Subsidiary to, issue, assume or guarantee any Indebtedness that is
secured by any Lien in, of or on the property of the Company or any of its
Subsidiaries, without effectively securing all Senior Debt Securities (other
than such Senior Debt Securities, if any, which by their terms, are expressly
excluded from this provision), equally and ratably with such Indebtedness;
except that this restriction shall not apply to: (i) Liens for taxes,
assessments or governmental charges or levies on its property if the same shall
not at the time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings; (ii) Liens imposed
by law, such as carriers', warehousemen's and mechanics' liens and other similar
liens arising in the ordinary course of business which secure payment of
obligations not more than 60 days past due or which are being contested in good
faith by appropriate proceedings; (iii) Liens arising out of pledges or deposits
under worker's compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar legislation; (iv)
utility easements, rights of way, exceptions, agreements for the joint or common
use of property, restrictions and such other encumbrances or charges against
property as are of a nature generally existing with respect to properties of a
similar character and which do not in any material way affect the marketability
of the same or interfere with the use thereof in the business of the Company or
its Subsidiaries; (v) Liens on the capital stock, partnership interest, or other
evidence of ownership of any Subsidiary or such Subsidiary's assets that secure
project financing for such Subsidiary; (vi) purchase money liens upon or in
property now owned or hereafter acquired in the ordinary course of business
(consistent with the Company's business practices) to secure (A) the purchase
price of such property or (B) Indebtedness incurred solely for the purpose of
financing the acquisition, construction, or improvement of any such property to
be subject to such liens, or Liens existing on any such property at the time of
acquisition, or extensions, renewals, or replacements of any of the foregoing
for the same or a lesser amount, provided that no such lien shall extend to or
cover any property other than the property being acquired, constructed, or
improved and replacements, modifications, and proceeds of such property, and no
such extension, renewal, or replacement shall extend to or cover any property
not theretofore subject to the Lien being extended, renewed, or replaced; (vii)
Liens existing on the date the Senior Debt Securities are first issued; (viii)
Liens for no more than 90 days arising from a transaction involving accounts
receivable of the Company (including the sale of such accounts receivable),
where such accounts receivable arose in the ordinary course of the Company's
business; (ix) the right reserved to, or vested in, any municipality or public
authority by the terms of any franchise, grant, license or permit, or by any
provision of law, to terminate such franchise, grant, license or permit or to
purchase or appropriate or recapture or to designate a purchaser of any of the
mortgaged property, or to demand and collect from the Company any tax or other
compensation for the use of streets, alleys or other public places; (x) rights
reserved to, or vested in, any municipality or public authority to use, control,
remove or regulate any property of the Company; (xi) zoning laws and ordinances;
(xii) possible adverse rights or interests and inconsequential defects or
irregularities in title which, in the opinion of counsel, may be properly
disregarded; and (xiii) rights reserved to or vested in others to take or
receive any part of the gas, power, oil or other minerals or timber generated,
developed, manufactured or produced by, or grown on, or acquired with, any
property of the Company.
The Senior Indenture provides that, from and after the Release Date, the
Company will not, nor will it permit any Subsidiary to, enter into any
arrangement with any lender or investor (other than the Company or a
Subsidiary), or to which such lender or investor (other than the Company or a
Subsidiary) is a party, providing for the leasing by the Company or such
Subsidiary for a period, including renewals, in excess of three years of any
real property located within the United States which has been owned by the
Company or such Subsidiary for more than six months and which has been or is to
be sold or transferred by the Company or such Subsidiary to such lender or
investor or to any person to whom funds have been or are to be advanced by such
lender or investor on the security of such real property unless either (a) the
Company or such Subsidiary could create Indebtedness secured by a lien
consistent with the restrictions set forth in the foregoing paragraph on the
real property to be leased in an amount equal to the Value of such transaction
without equally and ratably securing the Senior Debt Securities or (b) the
Company, within six months after
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the sale or transfer shall have been made, applies an amount equal to the
greater of (i) the net proceeds of the sale of the real property leased pursuant
to such arrangement or (ii) the fair market value of the real property so leased
to the retirement of the Senior Debt Securities and other obligations of the
Company ranking on a parity with the Senior Debt Securities.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Senior Indenture with respect
to the Senior Debt Securities of any series; (1) failure to pay interest on any
Senior Debt Security of that series when due, continued for 30 days; (2) failure
to pay the principal of (or premium, if any, on) any Senior Debt Security of
that series when due and payable at Maturity, upon redemption or otherwise; (3)
failure to observe or perform any other covenant, warranty or agreement
contained in the Senior Debt Securities of that series or in the Senior
Indenture (other than a covenant, agreement or warranty included in the Senior
Indenture solely for the benefit of Senior Debt Securities other than that
series), continued for a period to 60 days after notice has been given to the
Company by the Trustee or Holders of at least 25% in aggregate principal amount
of the Outstanding Senior Debt Securities of that series; (4) failure to pay at
final maturity, or acceleration of, Indebtedness of the Company having an
aggregate principal amount of more than 1% of the Company's consolidated total
assets (determined as of its most recent fiscal year-end), unless cured within
10 days after notice has been given to the Company by the Trustee or Holders of
at least 10% in aggregate principal amount of the Outstanding Senior Debt
Securities of that series; (5) prior to the Release Date, the occurrence of a
default under the Mortgage Indenture, of which default the Mortgage Trustee or
the Holders of a majority in aggregate principal amount of the outstanding
Senior Debt Securities have given written notice to the Mortgage Trustee; (6) if
any Substituted Collateral Bonds are outstanding, the occurrence of a default
under the Substituted Mortgage, of which default the trustee under such
Substituted Mortgage or the Holders of a majority in aggregate principal amount
of the outstanding Senior Debt Securities have given written notice to the
Senior Trustee; (7) certain events of bankruptcy, insolvency or reorganization
relating to the Company; and (8) any other Event of Default with respect to the
Senior Debt Securities of that series specified in the Prospectus Supplement
relating thereto or Supplemental Indenture under which such series of Senior
Debt Securities is issued.
The Senior Indenture provides that the Trustee shall, within 30 days after
the occurrence of any Default or Event of Default with respect to Senior Debt
Securities of any series, give the Holders of Senior Debt Securities of that
series notice of all uncured Defaults or Events of Default known to it (the term
"Default" includes any event which after notice or passage of time or both would
be an Event of Default); provided, however, that, except in the case of an Event
of Default or a Default in payment on any Senior Debt Securities of any series,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or directors or responsible officers
of the Trustee in good faith determine that the withholding of such notice is in
the interest of the Holders of Senior Debt Securities of that series.
If an Event of Default with respect to Senior Debt Securities of any series
(other than due to events of bankruptcy, insolvency or reorganization) occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Outstanding Senior Debt Securities of that series, by
notice in writing to the Company (and to the Trustee if given by the Holders of
at least 25% in aggregate principal amount of the Senior Debt Securities of that
series), may declare the unpaid principal of and accrued interest to the date of
acceleration on all the Outstanding Senior Debt Securities of that series to be
due and payable immediately and, upon any such declaration, the Senior Debt
Securities of that series shall become immediately due and payable.
If an Event of Default occurs due to bankruptcy, insolvency or
reorganization, all unpaid principal of and accrued interest on the Outstanding
Senior Debt Securities of any series will become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder of
any Senior Debt Security of that series. Upon any acceleration of the Senior
Debt Securities prior to the Release Date, the Senior Trustee is empowered to
cause the mandatory redemption of the Collateral Bonds or Substituted Collateral
Bonds, as the case may be.
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Any such declaration with respect to Senior Debt Securities of any series
may be annulled and past Events of Default and Defaults (except, unless
theretofore cured, an Event of Default or a Default in payment of principal of
or interest on the Senior Debt Securities of that series) may be waived by the
Holders of a majority of the principal amount of the Outstanding Senior Debt
Securities, upon the conditions provided in the Senior Indenture. For purposes
of the provisions described herein, the Company may cure an Event of Default or
Default in payment of principal or interest on the Senior Debt Securities at any
time after an acceleration of the Senior Debt Securities has been declared, but
before a judgment or decree for the immediate payment of the principal amount of
the Senior Debt Securities has been obtained, and, prior to the Release Date, so
long as all first mortgage bonds have not been accelerated, if the Company pays
or deposits with the Trustee a sum sufficient to pay all matured installments of
interest, the principal and any premium which has become due otherwise than by
acceleration and any other amounts due the Trustee, and all defaults shall have
been cured or waived, then such payment or deposit will cause an automatic
rescission and annulment of the acceleration of the Senior Debt Securities.
The Senior Indenture provides that the Company shall periodically file
statements with the Trustee regarding compliance by the Company with certain of
the respective covenants thereof and shall specify any Event of Default or
Defaults with respect to Senior Debt Securities of any series, in performing
such covenants, of which the signers may have knowledge.
MODIFICATION OF THE SENIOR INDENTURE; WAIVER
The Senior Indenture may be modified by the Company and the Trustee without
the consent of any Holders with respect to certain matters, including (i) to
cure any ambiguity, defect or inconsistency or to correct or supplement any
provision which may be inconsistent with any other provision of the Senior
Indenture and (ii) to make any change that does not materially adversely affect
the interests of any Holder of Senior Debt Securities of any series. In
addition, under the Senior Indenture, certain rights and obligations of the
Company and the rights of Holders of the Senior Debt Securities may be modified
by the Company and the Trustee with the written consent of the Holders of at
least a majority in aggregate principal amount of the Outstanding Senior Debt
Securities of each series affected thereby; but no extension of the maturity of
any Senior Debt Securities of any series, reduction in the interest rate or
extension of the time for payment of interest, change in the optional redemption
or repurchase provisions in a manner adverse to any Holder of Senior Debt
Securities of any series, modification that would adversely impair the interest
of the Senior Trustee in the Collateral Bonds held by it or, prior to the
Release Date, reduce the principal amount of any issue of Collateral Bonds
securing the Senior Debt Securities to an amount less than the principal amount
of the related issue of Senior Debt Securities or alter the payment provisions
of such Collateral Bonds in a manner adverse to the holders of the Senior Debt
Securities, other modification in the terms of payment of the principal of, or
interest on, any Senior Debt Securities of any series, or reduction of the
percentage required for modification, will be effective against any Holder of
any Outstanding Senior Debt Security of any series affected thereby without the
Holder's consent. The Senior Indenture does not limit the aggregate amount of
Senior Debt Securities of the Company which may be issued thereunder.
The Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities of any series may on behalf of the Holders of all Senior
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain restrictive covenants of the Senior
Indenture. The Holders of not less than a majority in aggregate principal amount
of the Outstanding Senior Debt Securities of any series may on behalf of the
Holders of all Senior Debt Securities of that series waive any past Event of
Default or Default under the Senior Indenture with respect to that series,
except an Event of Default or a Default in the payment of the principal of, or
premium, if any, or any interest on any Senior Debt Security of that series or
in respect of a provision which under the Senior Indenture cannot be modified or
amended without the consent of the Holder of each Outstanding Senior Debt
Security of that series affected.
DEFEASANCE
The Company may terminate its substantive obligations in respect of the
Senior Debt Securities of any series (except for its obligations to pay the
principal of (and premium, if any, on) and the interest on the
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Senior Debt Securities of that series) by (i) depositing with the Trustee, under
the terms of an irrevocable trust agreement, money or U.S. Government
Obligations sufficient to pay all remaining indebtedness on the Senior Debt
Securities of that series, (ii) delivering to the Trustee either an Opinion of
Counsel or a ruling directed to the Trustee from the Internal Revenue Service to
the effect that the Holders of the Senior Debt Securities of that series will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit and termination of obligations, and (iii) complying with certain
other requirements set forth in the Senior Indenture.
VOTING OF COLLATERAL BONDS HELD BY SENIOR TRUSTEE
The Senior Trustee, as holder of Collateral Bonds, will attend any meeting
of holders of First Mortgage Bonds under the Mortgage Indenture, as to which it
receives due notice, or, at its option, will deliver its proxy in connection
therewith. Either at such meeting, or otherwise where the consent of holders of
First Mortgage Bonds is sought without a meeting, the Senior Trustee will vote
all of the Collateral Bonds held by it, or will consent with respect thereto, as
directed by the holders of a majority in aggregate principal amount of the
outstanding Senior Debt Securities; provided, however, that the Senior Trustee
shall not be required to vote the Collateral Bonds of any particular issue in
favor of, or give consent to, any action except upon notification by the Senior
Trustee to the holders of the related issue of Senior Debt Securities of such
proposal and consent thereto of the holders of a majority in principal amount of
the outstanding Senior Debt Securities of such issue.
CONCERNING THE SENIOR TRUSTEE
Citibank is the Senior Trustee under the Senior Indenture. Citibank is also
Trustee under the Mortgage Indenture and a depositary of funds of the Company.
See "Description of the First Mortgage Bonds -- Concerning the Secured
Trustees."
BOOK-ENTRY SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Senior Debt Securities of a series may be issued in whole or in part in the form
of one or more Global Securities (as such term is defined below) that will be
deposited with, or on behalf of, a depositary ("Depositary") or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denomination
equal to the portion of the aggregate principal amount of outstanding Senior
Debt Securities of the series to be represented by such Global Security or
Global Securities. Unless and until it is exchanged in whole or in part for
Senior Debt Securities in registered form, a Global Security may not be
registered for transfer or exchange except as a whole by the Depositary for such
Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any nominee to a successor Depositary or a nominee of such
successor Depositary and except in the circumstances described in the applicable
Prospectus Supplement. The term "Global Security", when used with respect to any
series of Senior Debt Securities, means a Security that is executed by the
Company and authenticated and delivered by the Trustee to the Depositary or
pursuant to the Depositary's instruction, which shall be registered in the name
of the Depositary or its nominee and which shall represent, and shall be
denominated in an amount equal to the aggregate principal amount of, all of the
Outstanding Securities of such series or any portion thereof, in either case
having the same terms, including, without limitation, the same original issue
date, date or dates on which principal is due, and interest rate or method of
determining interest.
The specific terms of the depositary arrangement with respect to any
portion of a series of Senior Debt Securities to be represented by a Global
Security will be described in the applicable Prospectus Supplement. The Company
expects that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Senior
Debt Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary or its nominee. Upon the issuance of
such Global
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Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Senior Debt Securities represented by such Global Security to the accounts
of institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Senior Debt Securities or, if such Senior Debt
Securities are offered and sold directly by the Company, by the Company.
Ownership of beneficial interests in such Global Security will be limited to
participants or Persons that may hold interests through participants. Ownership
of beneficial interests by participants in such Global Security will be shown
on, and the transfer of that ownership interest will be effected only through,
records maintained by the Depositary or its nominee for such Global Security.
Ownership of beneficial interests in such Global Security by Persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as the Depositary for a Global Security, or its nominee, is the registered owner
of such Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole owner or Holder of the Senior Debt Securities
represented by such Global Security for all purposes under the Senior Indenture.
Unless otherwise specified in the applicable Prospectus Supplement, owners of
beneficial interests in such Global Security will not be entitled to have Senior
Debt Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Senior Debt Securities of such series in certificated form and will not be
considered the Holders thereof for any purposes under the Senior Indenture.
Accordingly, each Person owning a beneficial interest in such Global Security
must rely on the procedures of the Depositary and, if such Person is not a
participant, on the procedures of the participant through which such Person owns
its interest, to exercise any rights of a Holder under the Senior Indenture. The
Company understands that under existing industry practices, if the Company
requests any action of Holders or an owner of a beneficial interest in such
Global Security desires to give any notice or take any action a Holder is
entitled to give or take under the Senior Indenture, the Depositary would
authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such participants
to give such notice or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
DESCRIPTION OF THE FIRST MORTGAGE BONDS
The following summaries of certain provisions of the First Mortgage Bonds
and the Mortgage Indenture do not purport to be complete and are subject to, and
are qualified in their entirety by express reference to, all the provisions of
the Mortgage Indenture, including the definitions therein of certain terms.
Certain capitalized terms herein are defined in the Mortgage Indenture.
GENERAL
Prior to the Release Date, any series of First Mortgage Bonds issued as
Collateral Bonds will be issued to the Senior Trustee. Each issue of such
Collateral Bonds to the Senior Trustee will be in a principal amount equal to
the principal amount of the Senior Debt Securities issued contemporaneously with
such Collateral Bonds. Prior to the Release Date, the Company shall make
payments of the principal of, and premium or interest on, each series of
Collateral Bonds to the Senior Trustee, which payments shall be applied by the
Senior Trustee to satisfaction of all obligations then due on the related series
of Senior Debt Securities. The Collateral Bonds will be exchangeable for a like
aggregate principal amount of Collateral Bonds of the same series of other
authorized denominations at the office of the Secured Trustees in New York, New
York.
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SECURITY AND PRIORITY
The Mortgage Indenture constitutes a first mortgage lien (subject to
exceptions and reservations set forth therein, to "permissible encumbrances,"
and to various matters specified under "Business; Franchises" and "Properties"
in MichCon's Form 10-K) upon substantially all of the fixed property and
franchises of MichCon, consisting principally of gas distribution and
transmission lines and systems, underground storage fields and buildings,
including property of the character initially mortgaged which has been or may be
acquired by MichCon subsequent to the execution and delivery of the Mortgage
Indenture. It prohibits creation of prior liens upon the mortgaged property,
other than "permissible encumbrances," but, within specified limitations in
certain cases, property may be acquired subject to preexisting liens or purchase
money and other liens created at the time or in connection with the acquisition
of such property. The property excepted from the lien of the Mortgage Indenture
consists principally of cash (unless deposited with the Mortgage Trustee under
the Mortgage Indenture), accounts receivable, gas stored in reservoirs except to
the extent specially pledged, materials and supplies, securities, vehicles and
leases.
The Mortgage Indenture does not contain any debt covenants or provisions
which would afford holders of First Mortgage Bonds protection in the event of a
highly leveraged transaction.
The First Mortgage Bonds will rank equally and ratably (except as to
sinking fund and other analogous funds established for the exclusive benefit of
a particular series) with all First Mortgage Bonds, regardless of series, from
time to time issued and outstanding under the Indenture.
RELEASE OF PROPERTY
Unless an event of default shall have occurred and be continuing, the
Company is entitled to possess, use and enjoy all the property and
appurtenances, franchise and rights conveyed by the Mortgage Indenture. Subject
to various limitations and requirements, the Company may obtain a release of any
part of the mortgaged property, except prior lien bonds, upon receipt by
Citibank of cash, as adjusted, equal to the consideration, if any, received or
to be received from the sale, surrender or other disposition of the property to
be released or the then fair value thereof (whichever shall be greater).
ISSUANCE OF ADDITIONAL FIRST MORTGAGE BONDS
Additional First Mortgage Bonds may be issued under the Mortgage Indenture
in principal amounts (unlimited except as provided by law) equal to:
(1) 70% of the cost or fair value to the Company, whichever is less,
of unbonded net property additions made after December 31, 1943 (subject to
deductions in certain cases, if such net property additions secure prior
lien bonds);
(2) the sum of the principal amount of First Mortgage Bonds previously
issued under the Indenture, and of prior lien bonds theretofore deducted
under the Indenture, which have been retired or are then being retired and
have not theretofore been bonded; and
(3) the amount of cash deposited with Citibank for such purpose.
First Mortgage Bonds may be issued on the basis of net property additions
which include substantially all utility property subject to the Mortgage
Indenture or deposit of cash only if net earnings available for interest and
depreciation (before deduction for income taxes) for any specified 12
consecutive calendar months within the preceding 15 months equal 2 1/2 times
annual interest charges on the First Mortgage Bonds and any prior lien bonds.
Such earnings requirement need not be met where First Mortgage Bonds are to be
issued against First Mortgage Bonds or prior lien bonds which have been or are
being retired as described in (2) above if the First Mortgage Bonds to be issued
bear interest at a lower rate than the First Mortgage Bonds or prior lien bonds
which have been or are to be retired, or if the proceeds from the First Mortgage
Bonds to be issued are used to refund First Mortgage Bonds or prior lien bonds
which have been retired within two years prior to such issuance unless
additional First Mortgage Bonds requiring an earnings certificate have been
issued in the
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period between the retirement of the retired First Mortgage Bonds and the
issuance of the First Mortgage Bonds.
As of March 31, 1998, MichCon had approximately $1.235 billion of unbonded
net property additions, which would entitle it to issue approximately $864
million principal amount of additional First Mortgage Bonds on the basis of
unbonded net property additions as discussed under (1) in the second preceding
paragraph.
WITHDRAWAL OF CERTAIN CASH
Cash deposited with the Mortgage Trustee as a basis for the issuance of
additional First Mortgage Bonds may be withdrawn by MichCon in amounts described
in (1) and (2) under "Issuance of Additional Bonds".
DEFEASANCE
The Company may require the discharge of the Mortgage Indenture or treat a
series of First Mortgage Bonds as no longer outstanding thereunder if: (1) the
Company deposits with Citibank monies or certain obligations of the United
States of America or certain securities which are guaranteed by, or backed by
obligations of, the United States of America, in an amount sufficient to pay,
when due, the principal, premium if any, and any interest due and to become due;
and (2) the Company delivers an opinion of counsel to the effect that
registration is not required under the Investment Company Act of 1940, as
amended, applicable laws are not violated, and such discharge will not result in
a taxable event with respect to the First Mortgage Bonds the payment of which is
being provided for. In such event, the obligation of the Company duly and
punctually to pay and cause to be paid the principal, premium, if any, and
interest in respect of such First Mortgage Bonds shall be completely discharged.
Thereafter, the holders of such First Mortgage Bonds shall be entitled to
payment only out of funds on deposit with Citibank as aforesaid for their
payment.
MODIFICATION OF MORTGAGE INDENTURE
In general, modifications or alterations of the Mortgage Indenture and of
the rights or obligations of the Company and of the holders of First Mortgage
Bonds, as well as waivers of compliance with the Mortgage Indenture, may be made
with the consent of holders of 60% of the First Mortgage Bonds, or, if less than
all series of the First Mortgage Bonds are adversely affected, the consent of
the holders of 60% of the First Mortgage Bonds adversely affected. No such
modification, alteration or waiver may be made which will (1) permit the
extension of the time or times of payment of the principal of, or the interest
or the premium (if any) on, any First Mortgage Bond, or a reduction in the rate
of interest thereon, or otherwise affect the terms of payment of the principal
of, or the interest or the premium (if any) on, any First Mortgage Bond, or
affect the right of any holder of First Mortgage Bonds to institute suit for the
enforcement of any such payment on or after the due date thereof, (2) otherwise
than as permitted by the Mortgage Indenture, permit the creation of any lien
ranking prior or equal to the lien of the Mortgage Indenture with respect to any
of the mortgaged properties or (3) permit the reduction of the percentage of
First Mortgage Bonds required for the making of any such modification,
alteration or waiver.
CONCERNING THE SECURED TRUSTEES
Citibank is the Mortgage Trustee under the Mortgage Indenture. Citibank has
acted as paying agent on the outstanding First Mortgage Bonds and will act in
the same capacity with respect to any additional First Mortgage Bonds issued
under the Mortgage Indenture. It is also a depositary of funds of the Company.
Robert T. Kirchner, Individual Trustee under the Mortgage Indenture, is an
Officer of Citibank. Citibank also serves as trustee for the Senior Debt
Securities.
DEFAULT AND NOTICE THEREOF TO HOLDERS OF FIRST MORTGAGE BONDS
The Mortgage Indenture provides that, in case of an event of default as
defined therein, Citibank or the holders of not less than 25% in principal
amount of the First Mortgage Bonds may declare the principal and all accrued and
unpaid interest of all First Mortgage Bonds, if not already due, to be
immediately due and
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payable. Citibank, upon request of the holders of a majority in principal amount
of the outstanding First Mortgage Bonds, shall waive such default and rescind
any such declaration if such default is cured. The holders of a majority in
principal amount of the First Mortgage Bonds shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Secured Trustees and of exercising any power or trust conferred upon the
Secured Trustees, but under certain circumstances, the Secured Trustees may
decline to follow such directions or to exercise certain of their powers.
Holders of First Mortgage Bonds have no right to enforce any remedy under
the Mortgage Indenture unless the Secured Trustees have first had a reasonable
opportunity to do so following notice of default to Citibank and request by the
holders of 25% in principal amount of the First Mortgage Bonds for action by the
Secured Trustees with offer of indemnity satisfactory to the Secured Trustees
against cost, expenses and liabilities that may be incurred thereby, but this
provision does not impair the absolute right of any holder of First Mortgage
Bonds to enforce payment of the principal of and interest on his First Mortgage
Bond when due.
The Mortgage Indenture provides that the following shall constitute events
of default: failure to pay any installment of interest on any First Mortgage
Bond when due and payable, and continuance of such failure for 60 days; failure
to pay the principal of any First Mortgage Bond when due and payable, whether at
maturity, in connection with any sinking fund payment, or otherwise; failure to
pay any installment of interest on any prior lien bonds, and continuance of such
failure for the period of grace, if any, specified in the prior lien securing
such bonds; failure to pay any installment applied to the purchase or redemption
of any First Mortgage Bond, and continuance of such failure for 60 days; failure
to pay the principal of any prior lien bond when due and payable, whether at
maturity or otherwise; failure on the part of the Company to perform or observe
any other covenant, agreement or condition contained in the Mortgage Indenture
or in the First Mortgage Bonds or any prior lien bonds, continuance of such
failure for 90 days after written notice to the Company by Citibank or by the
holders of not less than 25% in principal amount of the First Mortgage Bonds;
and insolvency or bankruptcy, receivership or similar proceedings initiated by
the Company, or initiated against the Company and not dismissed or stayed within
45 days; and failure to renew or extend its corporate charter upon or prior to
the expiration of such under the provision of its Articles of Incorporation or
of law.
The Mortgage Indenture provides that the Secured Trustees shall give to the
holders of First Mortgage Bonds notice of the happening of a default known to
them within 90 days after the occurrence thereof (disregarding any period of
grace in the defaults referred to above) unless such default shall have been
cured, but except in case of default in the payment of principal, premium, if
any, or interest on the First Mortgage Bonds or in the payment of any sinking
fund installment, the Secured Trustees may withhold such notice if and so long
as the board of directors, the executive committee or a trust committee of
directors or responsible officers of Citibank in good faith determine that the
withholding of such notice is in the interest of the holders of First Mortgage
Bonds.
PLAN OF DISTRIBUTION
The Company may sell any series of the Senior Debt Securities (i) to or
through underwriters; (ii) to or through dealers; (iii) directly to purchasers;
or (iv) through agents. A Prospectus Supplement will set forth the terms of the
offering of the Senior Debt Securities; including the name or names of any
underwriters, dealers or agents, the purchase price of such Senior Debt
Securities and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' or agents' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchange on which such Senior
Debt Securities may be listed. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time. Only firms named in the Prospectus Supplement or a related
pricing supplement, if applicable, will be deemed to be underwriters, dealers or
agents in connection with the Senior Debt Securities offered thereby, and if any
of the firms expressly referred to below is not named in such Prospectus
Supplement or a related pricing supplement, then such firm will not be a party
to the underwriting or distribution agreement in respect of such Senior Debt
Securities, will not be purchasing any such Senior Debt Securities from the
Company and will have no direct
15
<PAGE> 18
or indirect participation in the underwriting or other distribution of such
Senior Debt Securities, although it may participate in the distribution of such
Senior Debt Securities under circumstances entitling it to a dealer's
commission.
If underwriters are used in the sale, the Senior Debt Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Senior Debt Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Senior Debt Securities will be
named in the Prospectus relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Senior Debt Securities offered thereby will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all of such Senior
Debt Securities if any are purchased.
The Senior Debt Securities may be sold directly by the Company or through
agents designated by the Company, from time to time. The Prospectus Supplement
will set forth the name of any agent involved in the offer or sale of the Senior
Debt Securities in respect of which the Prospectus Supplement is delivered and
any commissions payable by the Company to such agent. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
The Senior Debt Securities may be sold directly by the Company to investors
or others who may be deemed to be underwriters within the meaning of the 1933
Act with respect to any resale thereof. The terms of any such sales will be
described in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase the Senior Debt Securities from the Company at the
public offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the 1933 Act, or to contribution with
respect to payments which such underwriters, dealers or agents may be required
to make in respect thereof. Underwriters, dealers and agents may engage in
transactions with, or perform services for the Company in the ordinary course of
business.
The Senior Debt Securities may or may not be listed on a national
securities exchange. No assurance can be given that there will be a market for
the Senior Debt Securities.
VALIDITY OF SECURITIES
The validity of the Senior Debt Securities offered hereby will be passed
upon for the Company by Ronald E. Christian, Esq., Vice President, General
Counsel and Secretary of MichCon and for any agents or underwriters by LeBoeuf,
Lamb, Greene & MacRae, L.L.P., a limited liability partnership including
professional corporations, 125 West 55th Street, New York, New York. LeBoeuf,
Lamb, Greene & MacRae, L.L.P. from time to time renders legal services to
MichCon and its affiliates. Certain legal matters with respect to the Senior
Debt Securities will be passed upon for the Company by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this prospectus by reference from MichCon's Form 10-K
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
16
<PAGE> 19
======================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN
CONNECTION WITH AN OFFER MADE BY THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OTHER PERSON,
UNDERWRITER, DEALER OR AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THEREOF. THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Forward-Looking Statements............ 3
The Company........................... 4
Use of Proceeds....................... 4
Ratio of Earnings to Fixed Charges.... 4
Securities............................ 4
Description of the Senior Debt
Securities.......................... 5
Description of the First Mortgage
Bonds............................... 12
Plan of Distribution.................. 15
Validity of Securities................ 16
Experts............................... 16
</TABLE>
======================================================
======================================================
MICHIGAN CONSOLIDATED
GAS COMPANY
SENIOR DEBT SECURITIES
---------------------------
PROSPECTUS
---------------------------
======================================================
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation are:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 54,575
Printing and Engraving...................................... 40,000*
Trustee Fees................................................ 10,000*
Legal Fees.................................................. 300,000*
Accounting Fees............................................. 25,000*
Rating Agency Fees.......................................... 125,000*
Miscellaneous............................................... 20,425*
--------
Total.................................................. $575,000*
========
</TABLE>
- - -------------------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of Michigan Consolidated Gas Company ("MichCon" or the
"Company") and the Michigan Business Corporation Act ("MBCA") permit the
Company's officers and directors to be indemnified under certain circumstances
for expenses and, in some instances, for judgments, fines or amounts paid in
settlement of civil, criminal, administrative and investigative suits or
proceedings, including those involving alleged violations of the Securities Act
of 1933 (the "1933 Act"). There is directors' and officers' liability insurance
presently outstanding which insures the directors and officers of the Company
against claims arising out of the performance of their duties. Any agreement
relating to the issuance and sale of the Senior Debt Securities may provide for
indemnification by the underwriters, dealers or agents of the directors and
officers of the Company against certain civil liabilities, including liabilities
under the 1933 Act.
MichCon has entered into indemnification contracts with each officer and
director of MichCon that contain provisions similar to the provisions of the
MBCA referred to above.
II-1
<PAGE> 21
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
<S> <C>
1-1 Form of Distribution Agreement (to be filed on a subsequent
Form 8-K).
4-1 Form of Indenture between MichCon and Citibank, N.A. related
to Senior Debt.*
4-2 Indentures defining the rights of the holders of the
Company's First Mortgage Bonds: MichCon's Indenture of
Mortgage and Deed of Trust dated March 1, 1944 (Exhibit 7-D
to Registration Statement No. 2-5252); Twenty-ninth
Supplemental Indenture, dated July 15, 1989 (Exhibit 4-1 to
July 27, 1989 Form 8-K); Thirtieth Supplemental Indenture,
dated September 1, 1991 (Exhibit 4-1 to September 27, 1991
Form 8-K); Thirty-first Supplemental Indenture, dated
December 15, 1991 (Exhibit 4-1 to February 28, 1992 Form
8-K); Thirty-second Supplemental Indenture, dated January 1,
1993 (Exhibit 4-1 to 1992 Form 10-K); Thirty-third
Supplemental Indenture, dated May 5, 1995 (Exhibit 4-2 to
Registration Statement No. 33-59093); and Thirty-fourth
Supplemental Indenture, dated November 1, 1996 (Exhibit 4-2
to Registration Statement No. 333-16285); Note -- MichCon
hereby agrees to furnish to the SEC, upon request, a copy of
any instruments defining the rights of holders of long-term
debt issued by MichCon.
4-3 Form of Supplemental Indenture related to Senior Debt
Securities (to be filed on a subsequent Form 8-K).
4-4 Form of Supplemental Indenture related to Collateral Bonds
(to be filed on a subsequent Form 8-K).
5-1 Opinion of Ronald E. Christian, Esq., Vice President,
General Counsel and Secretary for MichCon.+
8-1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding certain tax matters.+
12-1 Computation of Ratio of Earnings to Fixed Charges.+
23-1 Independent Auditors' Consent -- Deloitte & Touche LLP.+
23-2 Consent of Ronald E. Christian, Esq., Vice President,
General Counsel and Secretary for MichCon. (included in
Exhibit 5-1).
23-3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 8-1).
24-1 Powers of Attorney.+
24-2 Board Resolution authorizing issuance of the Senior Debt
Securities.+
25-1 Statement of Eligibility of Citibank, N.A.+
</TABLE>
- - -------------------------
* Indicates documents filed herein.
+ Indicates documents previously filed.
References are to MichCon (File No. 1-7310) for documents incorporated by
reference.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(a) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
1933 Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any
II-2
<PAGE> 22
deviation from the low or high end of the estimated maximum offering
range may be reflected in the Form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Company
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 (the "1934 Act") that are incorporated by reference in this
Registration Statement;
(b) That, for the purpose of determining any liability under the 1933
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(d) That, for purposes of determining any liability under the 1933
Act, each filing of the Company's annual report pursuant to Section 13(a)
or Section 15(d) of the 1934 Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof; and
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions of the Company's By-Laws, the Michigan
Business Corporation Act or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action suit or proceeding) is asserted by such director, officer,
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be covered by the final adjudication of such
issue.
II-3
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Detroit, State of Michigan, on June
17, 1998.
MICHIGAN CONSOLIDATED GAS COMPANY
By: /s/ HOWARD L. DOW III
-----------------------------------
HOWARD L. DOW III
Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities indicated on the date indicated.
<TABLE>
<CAPTION>
TITLE DATE
----- ----
<C> <C> <S>
Director, Chairman
- - ------------------------------------------------
Alfred R. Glancy III
* Director, President and June 17, 1998
- - ------------------------------------------------ Chief Executive Officer
Stephen E. Ewing
/s/ HOWARD L. DOW III Director, Senior Vice President June 17, 1998
- - ------------------------------------------------ and Chief Financial Officer
Howard L. Dow III
* Director, Senior Vice President, June 17, 1998
- - ------------------------------------------------ Business Development
Carl J. Croskey
* Controller June 17, 1998
- - ------------------------------------------------
Robert Kaslik
* Director June 17, 1998
- - ------------------------------------------------
William K. McCrackin
* Director June 17, 1998
- - ------------------------------------------------
Daniel L. Schiffer
*By: /s/ HOWARD L. DOW III
--------------------------------------------
Howard L. Dow III
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
<C> <S>
1-1 Form of Distribution Agreement (to be filed on a subsequent
Form 8-K).
4-1 Form of Indenture between MichCon and Citibank, N.A. related
to Senior Debt Securities.*
4-2 Indentures defining the rights of the holders of the
Company's First Mortgage Bonds: MichCon's Indenture of
Mortgage and Deed of Trust dated March 1, 1944 (Exhibit 7-D
to Registration Statement No. 2-5252); Twenty-ninth
Supplemental Indenture, dated July 15, 1989 (Exhibit 4-1 to
July 27, 1989 Form 8-K); Thirtieth Supplemental Indenture,
dated September 1, 1991 (Exhibit 4-1 to September 27, 1991
Form 8-K); Thirty-first Supplemental Indenture, dated
December 15, 1991 (Exhibit 4-1 to February 28, 1992 Form
8-K); Thirty-second Supplemental Indenture, dated January 1,
1993 (Exhibit 4-1 to 1992 Form 10-K); Thirty-third
Supplemental Indenture, dated May 5, 1995 (Exhibit 4-2 to
Registration Statement No. 33-59093); and Thirty-fourth
Supplemental Indenture, dated November 1, 1996 (Exhibit 4-2
to Registration Statement No. 333-16285); Note -- MichCon
hereby agrees to furnish to the SEC, upon request, a copy of
any instruments defining the rights of holders of long-term
debt issued by MichCon.
4-3 Form of Supplemental Indenture related to Senior Debt
Securities (to be filed on a subsequent Form 8-K).
4-4 Form of Supplemental Indenture related to Collateral Bonds
(to be filed on a subsequent Form 8-K).
5-1 Opinion of Ronald E. Christian, Esq., Vice President,
General Counsel and Secretary for MichCon.+
8-1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding certain tax matters.+
12-1 Computation of Ratio of Earnings to Fixed Charges.+
23-1 Independent Auditors' Consent -- Deloitte & Touche LLP.+
23-2 Consent of Ronald E. Christian, Esq., Vice President,
General Counsel and Secretary for MichCon. (included in
Exhibit 5-1).
23-3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 8-1).
24-1 Powers of Attorney.+
24-2 Board Resolution authorizing issuance of the Senior Debt
Securities.+
25-1 Statement of Eligibility of Citibank, N.A.+
</TABLE>
- - -------------------------
* Indicates documents filed herein.
+ Indicates documents previously filed.
References are to MichCon (File No. 1-7310) for documents incorporated by
reference.
II-5
<PAGE> 25
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 17, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE , 1998)
$
MICHIGAN CONSOLIDATED
GAS COMPANY
RESETABLE MANDATORY PUTABLE/REMARKETABLE SECURITIES
("MAPSSM"), DUE JUNE , 2038
------------------
The Resetable MAndatory Putable/remarketable Securities ("MAPSSM"), due
June , 2038 (the "Notes") offered hereby (the "Notes Offering") are being
issued by Michigan Consolidated Gas Company ("MichCon" or the "Company"). During
the period from and including June , 1998 to but excluding June , 2003 (the
"Initial Spread Period"), interest on the Notes will accrue at a per annum rate
equal to %. THE NOTES ARE SUBJECT TO MANDATORY OR OPTIONAL TENDER ON JUNE ,
2003 (THE "FIRST REMARKETING DATE"). (continued on next page)
UNTIL THE RELEASE DATE (AS DEFINED HEREIN), THE NOTES WILL BE SECURED BY
THE COMPANY'S FIRST MORTGAGE BONDS (THE "FIRST MORTGAGE BONDS") ISSUED AND
DELIVERED TO THE SENIOR TRUSTEE (AS DEFINED HEREIN) UNDER ITS MORTGAGE INDENTURE
(AS DEFINED HEREIN). ON THE RELEASE DATE, THE NOTES WILL CEASE TO BE SECURED BY
SUCH FIRST MORTGAGE BONDS AND, AT THE COMPANY'S OPTION, EITHER (i) WILL BECOME
UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (ii) WILL BE SECURED BY FIRST
MORTGAGE BONDS UNDER A SECURED MORTGAGE INDENTURE OTHER THAN THE MORTGAGE
INDENTURE. SEE "DESCRIPTION OF THE NOTES -- SECURITY; RELEASE DATE."
Concurrently with the Notes Offering, the Company is offering (the
"Separate Notes Offering") pursuant to a separate Prospectus Supplement,
$ aggregate principal amount of its senior debt securities (the
"Separate Notes"). Consummation of the Notes Offering is not a condition to
consummation of the Separate Notes Offering, and consummation of the Separate
Notes Offering is not a condition to consummation of the Notes Offering.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=============================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE COMPANY(3)(4)
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Resetable MAPS % % %
- - -------------------------------------------------------------------------------------------------------------
Total $ $ $
=============================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from , 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at
$ .
(4) The proceeds to the Company include a premium paid by the Mandatory
Tender Remarketing Agent for the right to require the mandatory tender
of all outstanding Resetable MAPS. See "Underwriting."
------------------
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if issued by the Company and delivered to and accepted by the Underwriters
and subject to certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Notes will be made through the book-entry
facilities of The Depository Trust Company ("DTC") on or about June , 1998.
------------------
"MAPSSM" is a service mark of Salomon Brothers Inc
SALOMON SMITH BARNEY A.G. EDWARDS & SONS, INC.
June , 1998.
<PAGE> 26
(continued from previous page)
If Salomon Brothers Inc, as mandatory tender remarketing agent (the
"Mandatory Tender Remarketing Agent"), has elected to exercise its option to
remarket the Notes (the "Remarketing Right") upon the terms described herein,
except in certain circumstances, (i) the Notes will be subject to mandatory
tender to the Mandatory Tender Remarketing Agent at 100% of the principal amount
thereof for remarketing on the First Remarketing Date and (ii) the Notes will
bear interest from and after the First Remarketing Date to but excluding June
, 2013 (the "Second Remarketing Date") at the rate determined by the Mandatory
Tender Remarketing Agent in accordance with the procedures set forth herein. On
the date of such an election by the Mandatory Tender Remarketing Agent, the
Notes will be deemed to be in "Mandatory Tender Mode". If the Remarketing Right
is exercised, but the Mandatory Tender Remarketing Agent fails for any reason to
purchase any or all of the tendered Notes, the Company will be required to
repurchase the entire aggregate principal amount of such Notes from the
beneficial owners (the "Beneficial Owners") thereof, on the First Remarketing
Date at 100% of the principal amount thereof plus accrued interest, if any. From
and after the earlier to occur of (i) the First Remarketing Date in the event
that the Mandatory Tender Remarketing Agent elects not to remarket the Notes
pursuant to the Remarketing Right and (ii) the Second Remarketing Date, the
character and duration of the interest rate on the Notes will be determined by
the Reset Remarketing Agent (as defined herein) and agreed to by the Company on
each applicable Duration/Interest Mode Determination Date (as defined herein)
and the spread will be as agreed to by the Company and the Reset Remarketing
Agent on the corresponding Spread Determination Date (as defined herein),
subject to certain limitations. The Notes will be deemed to be in "Reset Mode"
from and after the date that is ten Business Days prior to (i) the First
Remarketing Date in the event that the Mandatory Tender Remarketing Agent fails
to give notice of exercise of the Remarketing Right or (ii) the Second
Remarketing Date if the Remarketing Right is exercised. If the Company and the
Reset Remarketing Agent are unable to agree on the Spread for any Spread Period
either (i) after the Initial Spread Period, if the Remarketing Right has not
been exercised or (ii) or after the Second Remarketing Date, if the Remarketing
Right is exercised (in either case, a "Subsequent Spread Period"), the Company
will be required unconditionally to repurchase and retire all of the Notes on
the date immediately following the end of the Initial Spread Period or the prior
Subsequent Spread Period, as the case may be (a "Reset Tender Date"), at a price
equal to 100% of the principal amount thereof, together with accrued interest to
the Reset Tender Date. In addition, if the Reset Remarketing Agent does not
purchase any of the Notes that are tendered on the Reset Tender Date, the
Company will be required unconditionally to repurchase and retire any such Notes
that were tendered but not repurchased by the Reset Remarketing Agent 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. The initial Reset
Remarketing Agent shall be Salomon Brothers Inc.
During the Initial Spread Period, interest on the Notes will be payable
semiannually on June and December of each year commencing December , 1998.
If the Notes are in Mandatory Tender Mode, interest will be payable semiannually
on June and December of each year, commencing December , 2003. If the
Notes are in Reset Mode, interest on the Notes during each Subsequent Spread
Period will be payable, as applicable, either (i) at a floating interest rate
(such Notes being in the "Floating Rate Interest Mode", and such interest rate
being a "Floating Rate") or (ii) at a fixed interest rate (such Notes being in
the "Fixed Rate Interest Mode" and such interest rate being a "Fixed Rate"), in
each case as determined on the applicable Duration/Interest Mode Determination
Date by the Reset Remarketing Agent and the Company in accordance with a
remarketing agreement between the Reset Remarketing Agent and the Company (the
"Reset Remarketing Agreement"). In Reset Mode, the Spread used in determining
the interest rate for the Notes during each Subsequent Spread Period will be
determined on each subsequent Spread Determination Date which precedes the
beginning of the corresponding Subsequent Spread Period, pursuant to agreement
between the Company and the Reset Remarketing Agent (except as otherwise
provided below). In Reset Mode, (i) if the Notes are in the Floating Rate
Interest Mode, interest on the Notes will be payable in arrears, as specified on
the applicable Duration/Interest Mode Determination Date, either monthly,
quarterly or semiannually, or (ii) if the Notes are in the Fixed Rate Interest
Mode, interest on the Notes will be payable semiannually in arrears on each June
and December during the applicable Subsequent Spread Period. "Interest
Payment Dates" as used herein shall mean each June and December except if
the Notes are in
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Reset Mode and the interest rate is a Floating Rate, in which case the Interest
Payment Dates shall be the first day of the month, quarter or semiannual period
established as interest payment dates on the applicable Duration/Interest Mode
Determination Date. See "Description of the Notes."
The Notes are not redeemable prior to the First Remarketing Date and, if
the Notes are remarketed pursuant to the Remarketing Right, they may not be
redeemed prior to the Second Remarketing Date; provided, however that the Notes
may be redeemed, at the option of the Company, on the First Remarketing Date at
the Optional Redemption Price described herein. Thereafter, if the Notes are in
Reset Mode, they may be redeemable, at the option of the Company, on any date of
commencement of a Subsequent Spread Period and on those Interest Payment Dates
that are specified as redemption dates by the Company on the applicable
Duration/Interest Mode Determination Date, 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 to the holders ("Holders") at least 15 Business Days
prior to the redemption date), in accordance with the redemption type selected
on the Duration/Interest Mode Determination Date. Unless previously redeemed or
repurchased, the Notes will mature on June , 2038. See "Description of the
Notes -- Redemption of the Notes".
The obligations of the Mandatory Tender Remarketing Agent and the Reset
Remarketing Agent to purchase the Notes on the relevant tender date are each
subject to certain conditions and termination events customary in the Company's
public offerings. No Beneficial Owner of any Note shall have any rights or
claims against the Company or the Reset Remarketing Agent as a result of the
Reset Remarketing Agent not purchasing such Notes. The Company will agree to
indemnify the Mandatory Tender Remarketing Agent against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the "Act"),
arising out of or in connection with its duties under the Mandatory Tender
Remarketing Agreement (as defined below). See "Description of the Notes --
Tender at Option of Beneficial Owners in Reset Mode," "-- Mandatory Tender" and
"-- Concerning the Mandatory Tender Remarketing Agent and the Reset Remarketing
Agent".
The Notes will be represented by a single Global Note registered in the
name of DTC or its nominee. Beneficial interests in the Global Note will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described herein, Notes in
definitive form will not be issued.
-------------------------
THE UNDERWRITERS MAY ENGAGE IN TRANSACTIONS THAT MAINTAIN OR OTHERWISE
AFFECT THE PRICE OF THE NOTES. SUCH TRANSACTIONS MAY INCLUDE OVERALLOTMENT
TRANSACTIONS AND THE PURCHASE OF NOTES TO COVER THE UNDERWRITERS' SHORT
POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
FORWARD-LOOKING STATEMENTS
Statements contained in or incorporated by reference into this Prospectus
Supplement or the accompanying Prospectus include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements involve certain risks and uncertainties that may cause future results
to differ materially from those contemplated, projected, estimated or budgeted
in such forward-looking statements. Factors that may impact forward-looking
statements include, but are not limited to, the following: (i) the effects of
weather and other natural phenomena; (ii) increased competition from other
energy suppliers as well as alternative forms of energy; (iii) the capital
intensive nature of the Company's businesses; (iv) economic climate and growth
in the geographic areas in which the Company does business; (v) the uncertainty
of gas and oil reserve estimates; (vi) the timing and extent of changes in
commodity prices for natural gas, electricity and crude oil; (vii) conditions of
capital markets and equity markets; and (viii) the effects of changes in
governmental policies and regulatory actions, including income taxes,
environmental compliance and authorized rates.
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus, and by the more detailed information and the financial
statements and notes appearing in the incorporated documents.
THE COMPANY
MichCon is a Michigan corporation that was organized in 1898 and, with its
predecessors, has been in business for nearly 150 years. MichCon is a natural
gas utility primarily engaged in the distribution and transmission of natural
gas in the state of Michigan. MichCon also has subsidiaries involved in the
gathering and transmission of natural gas in northern Michigan. MichCon operates
one of the largest natural gas distribution and transmission systems in the
United States and the largest in Michigan.
MichCon serves 1.2 million customers in the Detroit, Grand Rapids, Ann
Arbor, Traverse City and Muskegon metropolitan areas and in various other
communities throughout the state of Michigan. The following services are
provided by MichCon:
- Gas Sales -- Includes the sale and delivery of natural gas to
residential and small-volume commercial customers.
- End User Transportation -- Through this service, large-volume
commercial and industrial customers that purchase natural gas
directly from producers or brokerage companies utilize the Company's
network to transport the gas to their facilities.
- Intermediate Transportation -- Provides transportation service
through the Company's gathering and high pressure transmission
system to producers, brokers and other local distribution companies
that own the natural gas, but are not the ultimate consumer.
MichCon is a wholly-owned subsidiary of MCN Energy Group, Inc. ("MCN"), a
New York Stock Exchange-listed company (ticker symbol: MCN). MCN's other
principal operating subsidiary is MCN Investment Corporation, a subsidiary
holding company for various diversified energy businesses.
THE NOTES OFFERING
SECURITIES OFFERED............ $ aggregate principal amount of Resetable
MAPS, due June , 2038.
MATURITY DATE................. The stated maturity of the Notes is June ,
2038.
INITIAL SPREAD PERIOD......... The Notes offered hereby will initially bear
interest at a per annum rate of % for the
period from and including June , 1998, to but
excluding June , 2003.
MANDATORY TENDER MODE AND
MANDATORY TENDER............ On the First Remarketing Date, the Mandatory
Tender Remarketing Agent will have the option,
if elected, to purchase the Notes following a
mandatory tender at 100% of the principal
amount thereof for subsequent remarketing. If
the Remarketing Right is exercised, such Notes
will be in "Mandatory Tender Mode" and will,
except in certain circumstances bear interest
at a rate determined in accordance with the
procedures set forth herein from the First
Remarketing Date to but excluding the Second
Remarketing Date.
RESET MODE AND OPTIONAL
TENDER........................ From and after the earlier to occur of ten
Business Days prior to (i) the First
Remarketing Date if the Mandatory Tender
Remarketing Agent does not exercise the
Remarketing Right and
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(ii) the Second Remarketing Date, the Notes
will be in Reset Mode. While in Reset Mode, the
Notes will be subject to optional tender by the
Holders thereof at the end of each Spread
period following the Initial Spread Period, if
the Remarketing Right is not exercised or the
Second Remarketing Date, if the Remarketing
Right is exercised, under each case, thereafter
following each Subsequent Spread Period. If the
Company and the Reset Remarketing Agent agree
on a subsequent Spread, except in certain
circumstances, the Notes will bear interest
either in a Floating Rate Interest Mode or a
Fixed Rate Interest Mode, as determined by the
Company and the Reset Remarketing Agent.
REDEMPTION AND REPURCHASE..... The Notes may not be redeemed prior to the
First Remarketing Date and, if the Notes are
remarketed pursuant to the Remarketing Right,
they may not be redeemed prior to the Second
Remarketing Date. The Notes will be subject to
optional redemption by the Company (i) on the
First Remarketing Date at the Optional
Redemption Price or (ii) if the Notes are in
Reset Mode, on each Commencement Date and such
other dates as established by the Company on
the applicable Duration/Interest Mode
Determination Date. In the event that (i) the
Mandatory Tender Remarketing Agent fails for
any reason to purchase the Notes in Mandatory
Tender Mode following exercise of the
Remarketing Right, (ii) the Company and the
Reset Remarketing Agent fail for any reason to
agree on a subsequent Spread for Reset Mode
Notes or (iii) the Reset Remarketing Agent
fails for any reason to purchase any Notes in
Reset Mode that are tendered on the Reset
Tender Date, the Company is required to
repurchase and retire the full aggregate
principal amount of any such Notes, in the case
of (i) and (ii) above, and any Notes tendered
but not purchased by the Reset Remarketing
Agent in the case of (iii) above, at 100% of
the principal amount thereof plus accrued
interest.
SECURITY...................... Until the Release Date, the Notes will be
secured by the Company's First Mortgage Bonds
and thereafter will either (i) become unsecured
general obligations of the Company or (ii) be
secured by Substituted Collateral Bonds.
USE OF PROCEEDS............... Proceeds from the sale of the Notes, in respect
of which this Prospectus Supplement is being
delivered, will be used to repay short-term
debt used for the retirement of First Mortgage
Bonds pursuant to a fixed-spread tender offer,
to fund capital expenditures and for general
corporate purposes.
SEPARATE NOTES OFFERING....... Concurrently with the Notes Offering, the
Company is offering $ aggregate
principal amount of the Separate Notes.
Consummation of the Notes Offering is not a
condition to consummation of the Separate Notes
Offering, and consummation of the Separate
Notes Offering is not a condition to the
consummation of the Notes Offering.
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USE OF PROCEEDS
Proceeds from the sale of the Notes, in respect of which this Prospectus
Supplement is being delivered, will be used to repay short-term debt used for
the retirement of First Mortgage Bonds pursuant to a fixed-spread tender offer,
to fund capital expenditures and for general corporate purposes.
DESCRIPTION OF THE NOTES
The following information concerning the Notes supplements and, to the
extent inconsistent, replaces the description of the general terms and
provisions of Senior Debt Securities set forth in the accompanying Prospectus.
Reference is also made to the remarketing agreement between the Company and the
Mandatory Tender Remarketing Agent (the "Mandatory Tender Remarketing
Agreement"), the Reset Remarketing Agreement and any Reset Remarketing Agreement
Supplement, as defined below. The forms of Reset Remarketing Agreement and any
Reset Remarketing Agreement Supplement are or will be filed with the Commission
and incorporated into the Registration Statement of which the Prospectus forms a
part. The Mandatory Tender Remarketing Agreement and the Reset Remarketing
Agreement, as it may be supplemented, are referred jointly herein as the
"Remarketing Agreements". Wherever a defined term is referred to and not herein
defined, the definition thereof is contained in the accompanying Prospectus or
the Indenture referred to therein.
GENERAL
The Notes will be issued as a new series of Senior Debt Securities under an
Indenture, dated as of June 1, 1998 (the "Senior Indenture"), between the
Company and Citibank, N.A., as trustee (the "Senior Trustee"), which is more
fully described in the accompanying Prospectus.
MATURITY
The Notes will mature on June 1, 2038 (the "Stated Maturity Date") unless
previously redeemed and will be issued only in fully registered, book-entry
form. See "-- Book-Entry Only -- The Depository Trust Company" below. If the
Stated Maturity Date or other redemption date of the Notes falls on a day that
is not a Business Day, the related payment of principal and interest will be
made on the next succeeding Business Day as if it were made on the date such
payment was due, and no interest will accrue on the amounts so payable for the
period from and after such date.
SECURITY; RELEASE DATE
Upon the issuance of the Notes, the Company will simultaneously issue and
deliver to the Senior Trustee, as security for such Notes, First Mortgage Bonds,
Collateral Series B (the "Collateral Bonds"), under the 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, 1944 between
the Company and Citibank, N.A. ("Citibank" or the "Mortgage Trustee") and Robert
T. Kirchner (the "Individual Trustee" and, together with Citibank, the "Secured
Trustees"), as supplemented by the Thirty-Fifth Supplemental Indenture to be
entered into relating to the Collateral Bonds (as so supplemented, the "Mortgage
Indenture") in an aggregate principal amount of $ . The Company has agreed
to issue the Collateral Bonds in the name of the Senior Trustee in its capacity
as trustee under the Senior Indenture and the Senior Trustee has agreed to hold
the Collateral Bonds in such capacity under all circumstances and not transfer
the Collateral Bonds until the earlier of the Release Date or the prior
retirement of the Notes through redemption, repurchase or otherwise. The
interest rates, Interest Payment Dates, method of paying interest, stated
maturity date and redemption provisions for the Collateral Bonds will
automatically mirror those of the Notes.
Prior to the Release Date, 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 all
obligations then due on the related Notes.
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Reference is made to "Description of Senior Debt Securities -- Security;
Release Date" in the accompanying Prospectus for a description of the
circumstances under which all or part of the Collateral Bonds will cease to be
held by the Senior Trustee as security for the Notes. As explained in the
Prospectus, the Notes will cease to be secured by the Collateral Bonds on the
Release Date and, at the option of the Company either (i) will become unsecured
general obligations of the Company or (ii) will be secured by first mortgage
bonds issued under a mortgage indenture other than the Mortgage Indenture (the
"Substituted Collateral Bonds"). If the Company does not elect to have the Notes
become unsecured on the Release Date, upon the issuance of any of the Notes on
or after the Release Date, the Company will simultaneously issue and deliver to
the Senior Trustee, as security for such Notes, Substituted Collateral Bonds.
The Substituted Collateral Bonds will have the same interest rate, interest
payment dates, Stated Maturity Date and redemption provisions, and will be in
the same aggregate principal amount, as the Notes then issued. The Company will
be required to give notice to the Holders, the Mandatory Tender Remarketing
Agent and the Reset Remarketing Agent of the occurrence of the Release Date.
In the event the Company elects to have the Notes become unsecured on the
Release Date, the Company's ability to create, assume or incur certain liens or
to enter into certain financing transactions will be restricted as described in
"Description of the Senior Debt Securities -- Restrictions" in the accompanying
Prospectus.
INITIAL INTEREST PERIOD
For the period from and including June , 1998 to but excluding June ,
2003 (the "Initial Spread Period"), interest on the Notes will accrue at a per
annum rate equal to % (computed on the basis of a 360-day year of twelve 30-day
months) and will be payable semiannually on June and December of each year
commencing December , 1998 to the persons in whose names the Notes are
registered at the close of business on the fifteenth calendar day (whether or
not a Business Day) immediately preceding the related Interest Payment Date. If
any Interest Payment Date during the Initial Spread Period falls on a day that
is not a Business Day, the payment shall be made on the next Business Day with
the same force and effect as if it were on the date such payment was due and no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date.
MANDATORY TENDER MODE INTEREST
If the Remarketing Right is exercised by the Mandatory Tender Remarketing
Agent, the Notes will bear interest from the First Remarketing Date to but
excluding the Second Remarketing Date at the rate determined by the Mandatory
Tender Remarketing Agent in accordance with the procedures set forth below
("Interest Rate to Second Remarketing"), except in certain circumstances. See
"-- Tenders -- Mandatory Tender". Such Interest Rate to Second Remarketing shall
be payable semiannually on June and December of each year, commencing
December , 2003, to the persons in whose name the Mandatory Tender Mode Notes
are registered on the fifteenth calendar day (whether or not a Business Day)
immediately preceding the related Interest Payment Date. Interest on such Notes
will be computed on the basis of a 360-day year of twelve 30-day months. If any
Interest Payment Date or date of redemption or repurchase of the Notes in
Mandatory Tender Mode falls on a day that is not a Business Day, the payment
shall be made on the next Business Day with the same force and effect as if it
were on the date such payment was due and no interest shall accrue on the amount
so payable for the period from and after such Interest Payment Date or date of
earlier redemption or repurchase, as the case may be.
RESET MODE INTEREST
The Notes will be in Reset Mode from and after the date that is ten
Business Days prior to (i) the First Remarketing Date in the event the Mandatory
Tender Remarketing Agent fails to give notice of exercise of the Remarketing
Right and (ii) the Second Remarketing Date if the Remarketing Right is
exercised. If the Notes are in Reset Mode, the interest rate will be determined
in the manner described below for each Subsequent Spread Period which will be a
period of at least six months and not extending beyond the maturity date,
designated by the Company. Each Subsequent Spread Period will commence on a June
or December , as applicable (a "Commencement Date"), and will end on or
before June , 2038.
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Floating Rate Interest Mode. During the Floating Rate Interest Mode,
interest on the Reset Mode Notes for each Subsequent Spread Period will 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 will be payable, in arrears, in the case
of Notes which pay: (i) monthly, on the first day of each month; (ii) quarterly,
on the first day of each March, June, September and December; and (iii)
semiannually, on the first 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 will be reset either monthly,
quarterly or semiannually, and the Notes will 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 will 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") will 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 will be
postponed to the next succeeding day that is a Business Day.
LIBOR applicable for an Interest Period will be determined by the Rate
Agent (as defined under "-- Tenders -- Tender at Option of Beneficial Owners in
Reset Mode" 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:
(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 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
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<PAGE> 33
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) semiannually, six months.
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 Date, then the applicable Fixed Rate for
the corresponding Subsequent Spread Period will 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 will be 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.
Interest in the Fixed Rate Interest Mode will be computed on the basis of a
360-day year of twelve 30-day months. Such interest will be payable semiannually
in arrears on the Interest Payment Dates occurring on each June and December
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 will 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. See "-- Additional Terms of the Notes in Reset Mode" for other
provisions applicable to Notes in the Fixed Rate Interest Mode.
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, will be
postponed to the next day that is a Business Day), the related payment of
principal and interest will be made on the next succeeding Business Day as if it
were made on the date such payment was due, and no interest will accrue on the
amounts so payable for the period from and after such dates.
TENDERS
Mandatory Tender. The following description sets forth the terms and
conditions of the Mandatory Tender in the event the Mandatory Tender Remarketing
Agent elects to exercise the Remarketing Right and remarkets the Notes on the
First Remarketing Date.
Provided that the Mandatory Tender Remarketing Agent gives notice to the
Company and the Senior Trustee on a Business Day not later than 4:00 p.m. New
York City time on the eleventh Business Day prior to the First Remarketing Date
of its intention to exercise the Remarketing Right (the "Mandatory Tender
Notification Date"), the Notes will be automatically tendered, or deemed
tendered, to the Mandatory Tender Remarketing Agent for purchase on the First
Remarketing Date, except in the circumstances described under "-- Redemption of
the Notes" below. Thirty calender days prior to the First Remarketing Date, the
Company will 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 provides
notification of its intention to exercise the Remarketing Right on the Mandatory
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<PAGE> 34
Tender Notification Date, on the date that is ten Business Days prior to the
First Remarketing Date, the Company will request that DTC notify its
Participants that the Notes are in Mandatory Tender Mode and are subject to
mandatory tender on the First Remarketing Date. The purchase price for the
tendered Notes to be paid by the Mandatory Tender Remarketing Agent will equal
100% of the principal amount thereof. When the Notes are tendered for
remarketing pursuant to the Remarketing Right, the Mandatory Tender Remarketing
Agent may remarket such Notes for its own account at varying prices to be
determined by the Mandatory Tender Remarketing Agent at the time of each sale.
If the Remarketing Right is exercised, from and after the First Remarketing
Date, such Notes will bear interest at the Interest Rate to Second Remarketing
Date. If the Mandatory Tender Remarketing Agent exercises the Remarketing Right,
the obligation of the Mandatory Tender Remarketing Agent to purchase such Notes
on the First Remarketing Date is subject, among other things, to the conditions
that, since the Mandatory Tender Notification Date, no material adverse change
in the condition of the Company and its subsidiaries, considered as one
enterprise, shall have occurred and that no Event of Default (as defined in the
Senior 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 Notes
shall have occurred and be continuing. If for any reason the Mandatory Tender
Remarketing Agent does not purchase all tendered Notes on the First Remarketing
Date after providing notice of its intention to exercise the Remarketing Right,
the Company will be required to repurchase such Notes from the Beneficial Owners
thereof at a price equal to the principal amount thereof plus all accrued and
unpaid interest, if any, on such Notes to the First Remarketing Date. If the
Mandatory Tender Remarketing Agent does not provide notice of its intention to
exercise the Remarketing Right on the Mandatory Tender Notification Date, the
Notes will be in Reset Mode ten business days prior to the First Remarketing
Date.
Provided that the Remarketing Right is exercised, the Interest Rate to
Second Remarketing Date for the Notes will be determined by the Mandatory Tender
Remarketing Agent by 3:30 p.m., New York City time, on the third Business Day
immediately preceding the First Remarketing Date (the "Mandatory Tender
Determination Date") to the nearest one hundred-thousandth of one percent
(0.00001) per annum and will be equal to % (the "Base Rate"), plus the
Applicable Spread for the Notes (as defined below).
The "Applicable Spread" for the Notes in Mandatory Tender Mode is the
lowest bid indication, expressed as a spread (in the form of a percentage or in
basis points) above the Base Rate for such Notes, 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 such Notes at the Dollar Price, but assuming (i)
an issue date equal to the First Remarketing Date, with settlement on such date
without accrued interest, (ii) a maturity date equal to the Second Remarketing
Date, and (iii) a stated annual interest rate, payable semiannually on each
Interest Payment Date, equal to the Base Rate plus the spread bid by the
applicable Reference Corporate Dealer to the 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, will 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" mean 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.
"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
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<PAGE> 35
(expressed as a percentage of its principal amount), equal to the Comparable
Treasury Price (as defined below) for the First 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.
"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 Business Day, (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 or be
the successor to 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 Mandatory Tender Remarketing Agent by such
Reference Treasury Dealer by 3:30 p.m., New York City time, on the Mandatory
Tender 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 that are primary U.S. Government securities
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
securities dealer in The City of New York (a "Primary Treasury Dealer"), the
Mandatory Tender Remarketing Agent shall substitute therefor another Primary
Treasury Dealer.
"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. For purposes of this calculation only,
it shall be assumed that the Notes will mature on the Second Remarketing Date.
Provided the Remarketing Right has been exercised, the Mandatory Tender
Remarketing Agent will 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 will 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 will be executed on the First Remarketing Date
through DTC in accordance with the procedures of DTC, and the accounts of the
respective DTC Participants will 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 will
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
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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.
Tender at Option of Beneficial Owners in Reset Mode. If the Remarketing
Right is not exercised with respect to the First Remarketing Date or ten
Business Days prior to the Second Remarketing Date, the Notes will be in Reset
Mode. If the Notes are in Reset Mode because the Remarketing Right is not
exercised on the First Remarketing Date, the Second Remarketing Date will have
no effect on such Notes and no remarketing will be required on the Second
Remarketing Date. When the Notes are in Reset Mode, if the Company and the Reset
Remarketing Agent agree on the Spread on the Spread Determination Date 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 the terms and conditions set forth therein, 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 Subsequent Spread Period at the Purchase
Price. The Purchase Price will be paid by the Reset Remarketing Agent in
accordance with the standard procedures of DTC, which currently provide for
payments in same-day funds. Interest accrued on the Notes with respect to the
preceding interest period will be paid in the manner described under "--
Book-Entry Only -- The Depository Trust Company" and "-- Additional Terms of the
Notes in Reset Mode" below. If such Beneficial Owner has an account at the Reset
Remarketing Agent and tenders such Note through such account, such Beneficial
Owner will not be required to pay any fee or commission to the Reset Remarketing
Agent. If such Note is tendered through a broker, dealer, commercial bank, trust
company or other institution other than the Reset Remarketing Agent, such
Beneficial Owner may be required to pay fees or commissions to such other
institution. It is currently anticipated that Notes so purchased by the Reset
Remarketing Agent will be remarketed by it.
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"). In order to ensure that a Reset Tender Notice is
received on a particular day, the Beneficial Owner of Notes must direct his
broker or other designated Participant or Indirect Participant to give such
Reset Tender Notice before the broker's cut-off time for accepting instructions
for that day. Different firms may have different cut-off times for accepting
instructions from their customers. Accordingly, Beneficial Owners should consult
the brokers or other Participants or Indirect Participants through which they
own their interests in the Notes for the cut-off times for such brokers, other
Participants or Indirect Participants. See "-- Book-Entry Only -- The Depository
Trust Company" below. 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.
The Reset Remarketing Agent will attempt, on a best efforts basis, to
remarket the tendered Notes at a price equal to 100% of the aggregate principal
amount so tendered. There is no assurance that the Reset Remarketing Agent will
be able to remarket the entire principal amount of Notes tendered in a
remarketing. The Reset Remarketing Agent will also have the option, but not the
obligation, to purchase any tendered Notes at such price. The obligation of the
Reset Remarketing Agent to purchase tendered Notes from the tendering Holders
and to remarket such Notes will be subject to certain conditions and termination
events customary in the Company's public offerings, including a condition that
no material adverse change in the condition of the Company and its subsidiaries,
taken as a whole, shall have occurred since the Spread Determination Date. In
the event that the Reset Remarketing Agent is unable to remarket some or all of
the tendered Notes and chooses not to purchase such tendered Notes, the Company
is obligated unconditionally to purchase and retire on the Reset Tender Date the
remaining unsold tendered Notes at a price equal to 100%
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of the principal amount, plus accrued interest, if any, to the applicable Reset
Tender Date. If the Reset Remarketing Agent does not purchase all Notes tendered
for purchase on any Reset Tender Date, it will promptly notify the Company and
the Senior Trustee.
No Beneficial Owner of any Note will have any rights or claims under the
Reset Remarketing Agreement Supplement or against the Company or the Reset
Remarketing Agent as a result of the Reset Remarketing Agent's not purchasing
such Notes.
The term "Reset Remarketing Agent" means the nationally recognized
broker-dealer selected by the Company to act as Reset Remarketing Agent. 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. The Company, in its sole discretion, will appoint a Rate
Agent and may change the Reset Remarketing Agent and the Rate Agent for any
Subsequent Spread Period at any time on or prior to 3:00 p.m., New York City
time, on the Duration/Interest Mode Determination Date relating thereto.
ADDITIONAL TERMS OF THE NOTES IN RESET MODE
The Spread that will be applicable during each Subsequent Spread Period for
Notes in Reset Mode will 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, as described under
"-- Tenders -- Tender at Option of Beneficial Owners in Reset Mode" above, and
(b) agreed to by the Company. The interest rate mode during each 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 (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) for each Subsequent Spread Period will 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
will 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 will 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 the date that is ten Business Days prior
to the First Remarketing Date, the Company will 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 as described under "Tenders -- Tender at Option of
Beneficial Owners in Reset Mode" above. With respect to all Subsequent Spread
Periods established after the First Remarketing Date, the Company will 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 Note wishes to tender such Note as
described under "Tenders -- Tender at Option of Beneficial Owners in Reset Mode"
above. In the event that DTC or its nominee is no longer the Holder of record of
the Notes, the Company will notify the Holders of such information within such
period of time. These will be the only notices given by the Company or the Reset
Remarketing Agent with respect to such Duration/Interest Mode Determination Date
and procedures for tendering Notes. 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
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<PAGE> 38
or authorized to close and, in the case of Notes in the Floating Rate Interest
Mode, that is also a London Business Day.
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 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 is 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 will 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 will be rounded to the nearest cent, with one-half cent
being rounded upward.
REPURCHASE OF THE NOTES
If the Notes are in Mandatory Tender Mode, in the event that (i) the
Mandatory Tender 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
due to the occurrence of a material adverse change in the condition of the
Company and its subsidiaries, considered as one enterprise, shall have occurred
or 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 shall have occurred and be continuing, or any other event constituting a
termination event under the Mandatory Tender Remarketing Agreement shall have
occurred, or (iv) the Mandatory Tender Remarketing Agent for any reason does not
purchase all tendered Notes on the First Remarketing Date, the Company will
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 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 due to the occurrence of a material adverse change in the condition of
the Company and its subsidiaries, considered as one enterprise, shall have
occurred or 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 shall have occurred and be continuing, or any other event
constituting a termination event under the Reset Remarketing Agreement shall
have occurred, or (iv) the Reset Remarketing Agent for any reason does not
purchase any Notes tendered on the Reset Tender Date, the Company will
repurchase any such tendered but not purchased by the Reset Remarketing Agent
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
applicable Reset Tender Date.
REDEMPTION OF THE NOTES
The Notes may not be redeemed prior to the First Remarketing Date. On that
date, if the Mandatory Tender Remarketing Agent exercises the Remarketing Right,
the Notes will be subject to mandatory tender to the Mandatory Tender
Remarketing Agent for remarketing on such date, subject to the conditions
described above under "-- Tenders -- Mandatory Tender" and to the Company's
right to redeem the Notes as described in the next sentence. The Company will
notify the Mandatory Tender Remarketing Agent and the Senior Trustee, not later
than the Business Day immediately preceding the Mandatory Tender Determination
Date, if the Company irrevocably elects to exercise its right to redeem the
Notes, in whole but not in part,
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from the Mandatory Tender Remarketing Agent on the First Remarketing Date at the
Optional Redemption Price. If the Remarketing Right is exercised and the Notes
are remarketed, they then may not be redeemed prior to the Second Remarketing
Date.
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 First 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 First
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 Option
Redemption Price therefor in same-day funds by wire transfer to an account
designated by the Mandatory Tender Remarketing Agent on the First Remarketing
Date.
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
will be selected by such method as the Senior Trustee shall deem fair and
appropriate. So long as the Global Note is held by DTC, the Company will give
notice to DTC, whose nominee is the record holder of all of the Notes, and DTC
will determine the principal amount to be redeemed from the account of each
Participant. This will be the only notice given by the Company or the Reset
Remarketing Agent with respect to redemption of the Notes. A Participant may
determine to redeem from some Beneficial Owners (which may include a Participant
holding Notes for its own account) without redeeming from the accounts of other
Beneficial Owners.
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, an 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.
BOOK-ENTRY ONLY -- THE DEPOSITORY TRUST COMPANY.
DTC will act as securities depositary for the Notes. The Notes will be
issued only as fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global Note
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certificates, representing the total aggregate principal amount of the Notes,
will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Direct Participants and
Indirect Participants are on file with the Securities and Exchange Commission.
Purchases of Notes within the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each Beneficial Owner of Notes is in turn to be recorded
on the Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Participants through which the
Beneficial Owners purchased Notes. Transfers of ownership interests in the Notes
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Notes, except in the event that
use of the book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all the Notes deposited by Direct
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Notes with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect only the identity of the
Direct Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Notes are being redeemed, DTC's practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will itself consent or vote with respect to
Notes. Under its usual procedures, DTC would mail an Omnibus Proxy to the
Company as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co. consenting or voting rights to those Direct Participants to whose
accounts the Notes are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Principal and interest payments on the Notes will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in "street name," and such
payments will be the responsibility of such Participant and not of DTC or the
Company, subject to any statutory or regulatory requirements to the contrary
that may be in effect from time to time.
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Payment of principal and interest to DTC is the responsibility of the Company,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants.
Except as provided herein, a Beneficial Owner will not be entitled to
receive physical delivery of Notes. Accordingly, each Beneficial Owner must rely
on the procedures of DTC to exercise any rights under the Notes.
DTC may discontinue providing its services as securities depositary with
respect to the Notes at any time by giving reasonable notice to the Company.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Note certificates are required to be printed and delivered.
Additionally, the Company may decide to discontinue use of the system of
book-entry transfers through DTC (or any successor depositary) with respect to
the Notes. In that event, certificates for the Notes will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company does not take responsibility for the accuracy thereof.
CONCERNING THE MANDATORY TENDER REMARKETING AGENT AND THE RESET REMARKETING
AGENT
Both of the Mandatory Tender Remarketing Agent and the Reset Remarketing
Agent, in their respective individual or any other capacities, may buy, sell,
hold and deal in any of the Notes and may exercise any vote or join in any
action which any Beneficial Owner of Notes may be entitled to exercise or take
with like effect as if it did not act in any capacity under the applicable
Remarketing Agreement. Both of the Mandatory Tender Remarketing Agent and the
Reset Remarketing Agent, in their respective individual capacities, 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 under the applicable Remarketing Agreement.
No Holder or Beneficial Owner of the Notes shall have any rights or claims
under the Reset Remarketing Agreement or against the Reset Remarketing Agent as
a result of the Reset Remarketing Agent not purchasing such Notes. The Company
will agree to indemnify the Mandatory Tender Remarketing Agent and the Reset
Remarketing Agent against certain liabilities, including liabilities under the
Securities Act arising out of or in connection with its duties under the
applicable Remarketing Agreement. Salomon Brothers Inc is the Mandatory Tender
Remarketing Agent and will also serve as the initial Reset Remarketing Agent and
Rate Agent. The Mandatory Tender Remarketing Agent and the Reset Remarketing
Agent may resign at any time, such resignation to be effective 10 days after
delivery to the Company and the Senior Trustee of notice of such resignation. In
such case, it shall be the sole obligation of the Company to appoint a successor
Mandatory Tender Remarketing Agent or a Reset Remarketing Agent, as the case may
be. The Company, in its sole discretion may change the Reset Remarketing Agent
for any Subsequent Spread Period at any time on or prior to 3:00 p.m., New York
City time, on the Duration/Interest Mode Determination Date relating thereto.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), regulations
promulgated under the Code (the "Treasury Regulations"), rulings and decisions
now in effect, all of which are subject to change (prospectively or
retroactively) or possible differing interpretations. The following discussion
deals only with Notes held as capital assets and does not purport to deal with
persons in special tax situations, such as financial institutions, banks,
insurance companies, regulated investment companies, dealers in securities or
currencies, persons holding Notes as a hedge against currency risks or as a
position in a "straddle" for tax purposes, or persons whose functional currency
is not the United States dollar. It also does not deal with holders other than
original purchasers (except where otherwise specifically noted). Persons
considering the purchase of the Notes should consult their own tax advisors
concerning the application of United States federal income tax laws to their
particular situations as well as any consequences of the purchase, ownership and
disposition of the Notes arising under the laws of any other taxing
jurisdiction.
U.S. HOLDERS
As used herein, the term "U.S. Holder" means a Beneficial Owner of a Note
that is for United States federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any state thereof,
(iii) an estate the income of which is subject to United States federal income
taxation regardless of its source, or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. As used herein, the term "Non-U.S. Holder"
means a Beneficial Owner of a Note that is not a U.S. Holder.
The Notes should constitute variable rate debt instruments ("VRDI") and the
interest payments received should be considered "qualified stated interest"
under section 1.1275-5 of the Treasury Regulations. Based on this treatment, the
interest received will be taxable to a U.S. Holder as ordinary interest income
at the time such payments are accrued or received in accordance with the U.S.
Holder's regular method of tax accounting.
Based on the foregoing treatment, upon the sale, exchange or retirement of
a Note, a U.S. Holder generally will recognize taxable gain or loss in an amount
equal to the difference, if any, between the amount realized upon the sale,
exchange or retirement (other than amounts representing accrued and unpaid
interest which will be taxable as interest income) and such U.S. Holder's
adjusted tax basis in its Note. A U.S. Holder's adjusted tax basis in a Note is
generally equal to such U.S. Holder's initial investment in such Note. In the
case of a noncorporate U.S. Holder, any gain recognized upon the sale, exchange
or retirement of a Note generally will be taxable at a maximum rate of 20% if
the U.S. Holder's holding period for the Note is more than 18 months or at a
maximum rate of 28% if such holding period is more than one year but not more
than 18 months. The deduction of capital losses is subject to certain
limitations.
While the Company intends to treat the Notes as VRDI's issued without
original issue discount ("OID"), it is possible that the Internal Revenue
Service ("IRS") will take the position that the Notes are either (i) VRDI's
issued with OID, or (ii) contingent payment debt instruments. In the event the
IRS were successful in either assertion, Holders could experience U.S. federal
income tax consequences significantly different from those discussed herein. The
Treasury Regulations governing VRDI's issued with OID and contingent payment
debt instruments are complex, and prospective purchasers of Notes are urged to
consult their tax advisors as to the potential application of, and the
consequences of applying, those regulations.
In general, information reporting requirements will apply to certain
payments of principal and interest and to the proceeds of sales of Notes made to
U.S. Holders other than certain exempt recipients (such as corporations). A 31%
backup withholding tax will apply to such payments if the U.S. Holder (i) fails
to provide a taxpayer identification number ("TIN"), (ii) furnishes an incorrect
TIN, (iii) is notified by the IRS that it has failed to properly report payments
of interest and dividends or (iv) under certain circumstances, fails to certify,
under penalty of perjury, that it has furnished a correct TIN and has not been
S-18
<PAGE> 43
notified by the IRS that it is subject to backup withholding. In the case of
interest paid after December 31, 1998, a U.S. Holder generally will be subject
to backup withholding at a 31% rate unless certain IRS certification procedures
are complied with directly or through an intermediary.
The Company will furnish annually to the IRS and to record holders of the
Notes (other than with respect to certain exempt holders) information relating
to the interest accruing and paid on the Notes during the calendar year.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such U.S. Holder's U.S. federal income tax
liability provided the required information is furnished to the IRS.
NON-U.S. HOLDERS
Subject to the discussion below concerning backup withholding, no
withholding of United States federal income tax will be required with respect to
the payment by the Company or any paying agent of principal or interest on a
Note owned by a Non-U.S. Holder, provided that the Beneficial Owner (i) does not
actually or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote within the meaning of
Section 871(h)(3) of the Code, and the regulations thereunder, (ii) is not a
controlled foreign corporation related, directly or indirectly, to the Company
through stock ownership, (iii) is not a bank whose receipt of interest on a Note
is described in Section 881(c)(3)(A) of the Code and (iv) satisfies the
statement requirement (described generally below) set forth in Section 871(h)
and Section 881(c) of the Code and the regulations thereunder.
To satisfy the requirement referred to in (iv) above, the Beneficial Owner
of such Note, or a financial institution holding the Note on behalf of such
owner, must provide, in accordance with specified procedures, the Company or its
paying agent with a statement to the effect that the Beneficial Owner is not a
U.S. person. These requirements will be met if (1) the Beneficial Owner provides
his name and address, and certifies, under penalties of perjury, that he is not
a U.S. person (which certification may be made on an IRS Form W-8 (or successor
form)) or (2) a financial institution holding the Note on behalf of the
Beneficial Owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy thereof.
In the event that any of the above requirements are not satisfied, the
Company will nonetheless not withhold federal income tax on interest paid to a
Non-U.S. Holder if it receives IRS Form 4224 (or, after December 31, 1998, a
Form W-8) from that Non-U.S. Holder, establishing that such income is
effectively connected with the conduct of a trade or business in the United
States, unless the Company has knowledge to the contrary. Interest or any
redemption premium paid to a Non-U.S. Holder (other than a partnership) that is
effectively connected with the conduct by the Holder of a trade or business in
the United States is generally taxed at the graduated rates that are applicable
to United States persons. In the case of a Non-U.S. Holder that is a
corporation, such effectively connected income may also be subject to the United
States federal branch profits tax (which is generally imposed on a foreign
corporation on the deemed repatriation from the United States of effectively
connected earnings and profits) at a 30% rate (unless the rate is reduced or
eliminated by an applicable income tax treaty and the Holder is a qualified
resident of the treaty country). In the case of a partnership that has foreign
partners (i.e., persons who would be Non-U.S. Holders if they held the Notes
directly), such effectively connected income allocable to the foreign partner
would generally be subject to United States federal withholding tax (regardless
of whether such income is, in fact, distributed to such foreign partner) at a
35% rate, if the foreign partner is a corporation, or at a 39.6% rate, if the
foreign partner is not a corporation. Any foreign partner of such a partnership
would be entitled to a credit against his United States federal income tax for
his share of the withholding tax paid by the partnership.
A Non-U.S. Holder will generally not be subject to United States federal
income tax with respect to gain recognized on a sale, exchange, redemption or
other disposition of Notes unless (i) the gain is effectively connected with a
trade or business of the Non-U.S. Holder in the United States, (ii) in the case
of a Non-U.S. Holder who is an individual and holds the Notes as a capital
asset, such Holder is present in the United States for 183 or more days in the
taxable year of the sale or other disposition and certain other conditions are
S-19
<PAGE> 44
met, or (iii) the Non-U.S. Holder is subject to tax pursuant to certain
provisions of the Code applicable to United States expatriates.
Gains derived by a Non-U.S. Holder (other than a partnership) from the sale
or other disposition of Notes that are effectively connected with the conduct by
the Holder of a trade or business in the United States are generally taxed at
the graduated rates that are applicable to United States persons. In the case of
a Non-U.S. Holder that is a corporation, such effectively connected income may
also be subject to the United States branch profits tax. In the case of a
partnership that has foreign partners (i.e., persons who would be Non-U.S.
Holders if they held the Notes directly), such effectively connected income
allocable to the foreign partner would generally be subject to United States
federal withholding tax (regardless of whether such income is, in fact,
distributed to such foreign partner) at a 35% rate, if the foreign partner is a
corporation, or at a 39.6% rate, if the foreign partner is not a corporation.
Any foreign partner of such a partnership would be entitled to a credit against
his United States federal income tax for his share of the withholding tax paid
by the partnership. If an individual Non-U.S. Holder falls under clause (ii)
above, he will be subject to a flat 30% tax on the gain derived from the sale or
other disposition, which may be offset by United States capital losses
recognized within the same taxable year as such sale or other disposition
(notwithstanding the fact that he is not considered a resident of the United
States).
A Note beneficially owned by an individual who at the time of death is a
Non-U.S. Holder will not be subject to United States federal estate tax as a
result of such individual's death, provided that such individual does not
actually or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote within the meaning of
Section 871(h)(3) of the Code and provided that the interest payments with
respect to such Note would not have been, if received at the time of such
individual's death, effectively connected with the conduct of a United States
trade or business by such individual.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-U.S. Holders
if a statement described in clause (iv) of the first paragraph hereunder has
been received and the payor does not have actual knowledge that the Beneficial
Owner is a United States person.
Information reporting and backup withholding will not apply if payments of
interest on a Note are paid or collected by a custodian, nominee, or agent on
behalf of the Beneficial Owner of such Note if such custodian, nominee, or agent
has documentary evidence in its records that the Beneficial Owner is not a U.S.
person and certain other conditions are met, or the Beneficial Owner otherwise
establishes an exemption.
Payments on the sale, exchange or other disposition of a Note made to or
through a foreign office of a broker generally will not be subject to backup
withholding. However, payments made by a broker that is a United States person,
a controlled foreign corporation for United States federal income tax purposes,
a foreign person 50 percent or more of whose gross income is effectively
connected with a United States trade or business for a specified three year
period, or (with respect to payments after December 31, 1998) a foreign
partnership with certain connections to the United States, will be subject to
information reporting unless the broker has in its records documentary evidence
that the Beneficial Owner is not a United States person and certain other
conditions are met, or the Beneficial Owner otherwise establishes an exemption.
Backup withholding may apply to any payment that such broker is required to
report if the broker has actual knowledge that the payee is a United States
person. Payments to or through the United States office of a broker will be
subject to information reporting and backup withholding unless the Holder
certifies, under penalties of perjury, that it is not a United States person or
otherwise establishes an exemption.
For payments made after December 31, 1998, with respect to Notes held by
foreign partnerships, IRS regulations require that the certification described
in clause (iv) of the first paragraph hereunder above be provided by the
partners, rather than by the foreign partnership, and that the partnership
provide certain information, including a United States TIN. A look-through rule
will apply in the case of tiered partnerships.
Non-U.S. Holders should consult their tax advisors regarding the
application of information reporting and backup withholding in their particular
situations, the availability of an exemption therefrom, and the procedures for
obtaining such an exemption, if available. Any amounts withheld under the backup
withholding
S-20
<PAGE> 45
rules will be allowed as a refund or credit against the Non-U.S. Holder's U.S.
federal income tax liability and may entitle such Holder to a refund, provided
the required information is furnished to the IRS.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), should consider the fiduciary obligation requirements imposed
under ERISA, in the context of the plan's particular circumstances, before
authorizing an investment in the Notes with assets of the plan. Accordingly,
among other factors, the fiduciary should consider whether such an investment
would satisfy the prudence and diversification requirements of ERISA, whether
such an investment would constitute an unauthorized delegation of fiduciary
authority and whether such an investment would be consistent with the documents
and instruments governing the plan.
Section 406 of ERISA and Section 4975 of the Code prohibit certain employee
benefit plans, as well as individual retirement accounts and Keogh plans subject
to Section 4975 of the Code (collectively, "Plans") from engaging in a wide
range of transactions ("Prohibited Transactions") involving the assets of a Plan
and persons who have certain specified relationships to the Plan ("parties in
interest," as defined in Section 3(14) of ERISA ("Parties in Interest"), and
"disqualified persons," as defined in Section 4975(e) (2) of the Code
("Disqualified Persons")). A violation of the Prohibited Transaction rules may
cause Plan fiduciaries, Parties in Interest and/or Disqualified Persons to be
subject to excise taxes or to incur other liabilities under ERISA and/or Section
4975 of the Code.
The Company, the Mandatory Tender Remarketing Agent and the Reset
Remarketing Agent, because of their activities or the activities of their
respective affiliates, may be considered to be Parties in Interest or
Disqualified Persons with respect to certain Plans. If the Notes are acquired by
a Plan with respect to which the Company or the Remarketing Dealer is, or
subsequently becomes, a Party in Interest or Disqualified Person, the purchase,
holding and/or sale of the Notes to the Remarketing Dealer could be deemed to be
a direct or indirect violation of the Prohibited Transaction rules unless an
applicable statutory or administrative exemption from the Prohibited Transaction
rules was available. Consequently, before investing in the Notes, any Plan
fiduciary or other person who is using the assets of a Plan to acquire the Notes
should determine whether any of the Company, the Mandatory Tender Remarketing
Agent or the Reset Remarketing Agent is a Party in Interest or Disqualified
Person with respect to such Plan and, if so, whether exemptive relief from the
Prohibited Transaction rules is available. Included among the available
administrative exemptions from the Prohibited Transaction rules that may be
applicable are: U.S. Department of Labor Prohibited Transaction Class Exemption
("PTCE") 90-1, regarding transactions involving insurance company pooled
separate accounts: PTCE 91-38, regarding transactions involving bank collective
investment funds; PTCE 84-14, regarding transactions effected by qualified
professional asset managers; PTCE 96-23, regarding transactions effected by
in-house asset managers; and PTCE 95-60, regarding transactions involving
insurance company general accounts. There can be no assurance, however, that any
of these exemptions, even if all of the conditions specified therein are
satisfied.
Insurance companies considering an investment in the Notes should note that
the Small Business Job Protection Act of 1996 added new Section 401(c) of ERISA
relating to the status of the assets of insurance company general accounts under
ERISA and Section 4975 of the Code. Pursuant to Section 401(c), the Department
of Labor issued proposed regulations (the "Proposed General Account
Regulations") in December, 1997, with respect to insurance policies issued on or
before December 31, 1998 that are supported by an insurer's general account. The
Proposed General Account Regulations are intended to provide guidance on which
assets held by the insurer constitute "plan assets" of an ERISA Plan for
purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of
the Code. The "plan assets" status of insurance company separate accounts is
unaffected by new Section 401(c) of ERISA, and separate account assets continue
to be treated as the "plan assets" of an ERISA Plan invested in a separate
account.
The discussion herein of ERISA is general in nature and is not intended to
be complete. Any fiduciary of a Plan considering an investment in the Notes
should consult with its legal advisors regarding the consequences and
advisability of such an investment.
S-21
<PAGE> 46
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement
(the "Purchase Agreement"), between the Company and Salomon Brothers Inc and
A.G. Edwards & Sons, Inc. (the "Underwriters"), the Company has agreed to sell
to each of the Underwriters, and each of the Underwriters has severally agreed
to purchase from the Company, the respective principal amount of the Notes set
forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Salomon Brothers Inc........................................
A.G. Edwards & Sons, Inc. ..................................
--------
Total..................................................
========
</TABLE>
In the Purchase Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Notes offered
hereby if any Notes are purchased. The Underwriters have advised the Company
that the Underwriters propose to offer the Notes from time to time for sale in
negotiated transactions or otherwise, at prices relating to prevailing market
prices determined at the time of sale. The Underwriters may effect such
transactions by selling Notes to or through dealers and such dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Underwriters and any purchasers of Notes for whom they may act as
agent. The Underwriters and any dealers that participate with the Underwriters
in the distribution of the Notes may be deemed to be underwriters, and any
discounts or commissions received by them and any profit on the resale of Notes
by them may be deemed to be underwriting compensation.
The Notes are new issues of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes, but they are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Notes.
The Underwriters are permitted to engage in certain transactions that
maintain or otherwise affect the price of the Notes. Such transactions may
include over-allotment transactions and purchases to cover short positions
created by the Underwriters in connection with the offering. If the Underwriters
create a short position in the notes in connection with the offering, i.e., if
they sell Notes in an aggregate principal amount exceeding that set forth on the
cover page of this Prospectus Supplement, the Underwriters may reduce that short
position by purchasing Notes in the open market.
In general, purchases of a security to reduce a short position could cause
the price of the security to be higher than it might be in the absence of such
purchases.
Neither the Company nor the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition, neither the
Company nor the Underwriters makes any representation that the Underwriters will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
In the ordinary course of business, the Underwriters and their affiliates
have engaged and may in the future engage in investment banking and general
financing and banking transactions with the Company and certain of its
affiliates.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Act, or to make contribution to
certain payments in respect thereof.
S-22
<PAGE> 47
LEGAL OPINIONS
The validity of the Indentures and the Notes will be passed upon for the
Company by Ronald E. Christian, Vice President, General Counsel and Secretary of
MichCon. Certain matters will be passed upon for the Company by Skadden, Arps,
Slate, Meagher & Flom, LLP, New York, New York. Certain legal matters will be
passed upon for the Underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a
limited liability partnership including professional corporations, 125 West 55th
Street, New York, New York 10019-5389. LeBoeuf, Lamb, Greene & MacRae, L.L.P.
from time to time renders legal services to MichCon and its affiliates.
S-23
<PAGE> 48
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OF SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Forward-Looking Statements........... S-3
Summary.............................. S-4
Use of Proceeds...................... S-6
Description of the Notes............. S-6
Certain Federal Income Tax
Considerations..................... S-18
Erisa Considerations................. S-21
Underwriting......................... S-22
Legal Opinions....................... S-23
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Forward-Looking Statements........... 3
The Company.......................... 4
Use of Proceeds...................... 4
Ratio of Earnings to Fixed Charges... 4
Securities........................... 4
Description of the Senior Debt
Securities......................... 5
Description of the First Mortgage
Bonds.............................. 12
Plan of Distribution................. 15
Validity of Securities............... 16
Experts.............................. 16
</TABLE>
======================================================
======================================================
$
MICHIGAN CONSOLIDATED
GAS COMPANY
RESETABLE
MANDATORY PUTABLE/REMARKETABLE
SECURITIES ("MAPSSM")
DUE JUNE , 2038
------------------
PROSPECTUS SUPPLEMENT
JUNE , 1998
------------------
SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
"MAPSSM" is a service mark of
Salomon Brothers Inc
======================================================
<PAGE> 49
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 17, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE , 1998)
$
MICHIGAN CONSOLIDATED GAS COMPANY
EXTENDABLE MANDATORY PAR PUT REMARKETED SECURITIESSM
("MOPPRSSM") DUE JUNE , 2038
------------------------
The Extendable MandatOry Par Put Remarketed SecuritiesSM("MOPPRSSM"), due
June , 2038 (the "Notes") offered hereby (the "Notes Offering") are being
issued by Michigan Consolidated Gas Company ("MichCon" or the "Company"). During
the period from and including June , 1998 to but excluding June , 2008 (the
"Initial Spread Period"), interest on the Notes will accrue at a per annum rate
equal to %. THE NOTES ARE SUBJECT TO MANDATORY OR OPTIONAL TENDER ON JUNE ,
2008 (THE "FIRST REMARKETING DATE").
(continued on next page)
UNTIL THE RELEASE DATE (AS DEFINED HEREIN), THE NOTES WILL BE SECURED BY
THE COMPANY'S FIRST MORTGAGE BONDS (THE "FIRST MORTGAGE BONDS") ISSUED AND
DELIVERED TO THE SENIOR TRUSTEE (AS DEFINED HEREIN) UNDER ITS MORTGAGE INDENTURE
(AS DEFINED HEREIN). ON THE RELEASE DATE, THE NOTES WILL CEASE TO BE SECURED BY
SUCH FIRST MORTGAGE BONDS AND, AT THE COMPANY'S OPTION, EITHER (i) WILL BECOME
UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (ii) WILL BE SECURED BY FIRST
MORTGAGE BONDS UNDER A SECURED MORTGAGE INDENTURE OTHER THAN THE MORTGAGE
INDENTURE. SEE "DESCRIPTION OF THE NOTES -- SECURITY; RELEASE DATE."
Concurrently with the Notes Offering, the Company is offering (the
"Separate Notes Offering"), pursuant to a separate Prospectus Supplement,
$ aggregate principal amount of its senior debt securities (the
"Separate Notes"). Consummation of the Notes Offering is not a condition to
consummation of the Separate Notes Offering, and consummation of the Separate
Notes Offering is not a condition to consummation of the Notes Offering.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Notes will be sold to the public at varying prices to be determined by
the Underwriters at the time of each sale. The net proceeds to the Company,
before deducting expenses payable by the Company (estimated to be $ ),
will be % of the principal amount of the Notes sold, and the aggregate net
proceeds will be $ . For further information with respect to the plan
of distribution and any discounts, commissions or profits on resales of Notes
that may be deemed underwriting discounts or commissions, see "Underwriting."
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if issued by the Company and delivered to and accepted by the Underwriters
and subject to certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Notes will be made through the book-entry
facilities of The Depository Trust Company ("DTC") on or about June , 1998.
------------------------
MERRILL LYNCH & CO. FIRST CHICAGO CAPITAL MARKETS, INC.
------------------------
The date of this Prospectus Supplement is June , 1998.
- - ------------------------
"MandatOry Par Put Remarketed SecuritiesSM" and "MOPPRSSM" are service marks
owned by Merrill Lynch & Co., Inc.
<PAGE> 50
(continued from previous page)
If Merrill Lynch, Pierce, Fenner & Smith Incorporated, as mandatory tender
remarketing agent (the "Mandatory Tender Remarketing Agent"), has elected to
exercise its option to remarket the Notes (the "Remarketing Right") upon the
terms described herein, except in certain circumstances, (i) the Notes will be
subject to mandatory tender to the Mandatory Tender Remarketing Agent at 100% of
the principal amount thereof for remarketing on the First Remarketing Date and
(ii) the Notes will bear interest from and after the First Remarketing Date to
but excluding June , 2018 (the "Second Remarketing Date") at the rate
determined by the Mandatory Tender Remarketing Agent in accordance with the
procedures set forth herein. On the date of such an election by the Mandatory
Tender Remarketing Agent, the Notes will be deemed to be in "Mandatory Tender
Mode". If the Remarketing Right is exercised, but the Mandatory Tender
Remarketing Agent fails for any reason to purchase any or all of the tendered
Notes, the Company will be required to repurchase the entire aggregate principal
amount of such Notes from the beneficial owners (the "Beneficial Owners")
thereof, on the First Remarketing Date at 100% of the principal amount thereof
plus accrued interest, if any. From and after the earlier to occur of (i) the
First Remarketing Date in the event that the Mandatory Tender Remarketing Agent
elects not to remarket the Notes pursuant to the Remarketing Right and (ii) the
Second Remarketing Date, the character and duration of the interest rate on the
Notes will be determined by the Reset Remarketing Agent (as defined herein) and
agreed to by the Company on each applicable Duration/Interest Mode Determination
Date (as defined herein) and the spread will be as agreed to by the Company and
the Reset Remarketing Agent on the corresponding Spread Determination Date (as
defined herein), subject to certain limitations. The Notes will be deemed to be
in "Reset Mode" from and after the date that is ten Business Days prior to (i)
the First Remarketing Date in the event that the Mandatory Tender Remarketing
Agent fails to give notice of exercise of the Remarketing Right or (ii) the
Second Remarketing Date if the Remarketing Right is exercised. If the Company
and the Reset Remarketing Agent are unable to agree on the Spread for any Spread
Period either (i) if the Remarketing Rights not exercised, after the Initial
Spread Period or, (ii) if the Remarketing Right is exercised, after the Second
Remarketing Date (in either case, a "Subsequent Spread Period"), the Company
will be required unconditionally to repurchase and retire all of the Notes on
the date immediately following the end of the Initial Spread Period or the prior
Subsequent Spread Period, as the case may be (a "Reset Tender Date"), at a price
equal to 100% of the principal amount thereof, together with accrued interest to
the Reset Tender Date. In addition, if the Reset Remarketing Agent does not
purchase any of the Notes that are tendered on the Reset Tender Date, the
Company will be required unconditionally to repurchase and retire any such Notes
that are tendered but not purchased by the Reset Remarketing Agent 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. The initial Reset Remarketing
Agent shall be Merrill Lynch, Pierce, Fenner & Smith Incorporated.
During the Initial Spread Period, interest on the Notes will be payable
semiannually on June and December of each year commencing December , 1998.
If the Notes are in Mandatory Tender Mode, interest will be payable semiannually
on June and December of each year, commencing December , 2008. If the
Notes are in Reset Mode, interest on the Notes during each Subsequent Spread
Period will be payable, as applicable, either (i) at a floating interest rate
(such Notes being in the "Floating Rate Interest Mode", and such interest rate
being a "Floating Rate") or (ii) at a fixed interest rate (such Notes being in
the "Fixed Rate Interest Mode" and such interest rate being a "Fixed Rate"), in
each case as determined, on the applicable Duration/Interest Mode Determination
Date, by the Reset Remarketing Agent and the Company in accordance with a
remarketing agreement between the Reset Remarketing Agent and the Company (the
"Reset Remarketing Agreement"). In Reset Mode, the Spread used in determining
the interest rate for the Notes during each Subsequent Spread Period will be
determined on each subsequent Spread Determination Date which precedes the
beginning of the corresponding Subsequent Spread Period, pursuant to agreement
between the Company and the Reset Remarketing Agent (except as otherwise
provided below). In Reset Mode, (i) if the Notes are in the Floating Rate
Interest Mode, interest on the Notes will be payable in arrears, as specified on
the applicable Duration/Interest Mode Determination Date, either monthly,
quarterly or semi-annually, or (ii) if the Notes are in the Fixed Rate Interest
Mode, interest on the Notes will be payable semiannually in arrears on each June
and December during the applicable Subsequent Spread Period. "Interest
Payment Dates" as used herein shall mean each June and December except if
the Notes are in
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Reset Mode and the interest rate is a Floating Rate, in which case the Interest
Payment Dates shall be the first day of the month, quarter or semiannual period
established as interest payment dates on the applicable Duration/Interest Mode
Determination Date. See "Description of the Notes."
The Notes are not redeemable prior to the First Remarketing Date and, if
the Notes are remarketed pursuant to the Remarketing Right, they may not be
redeemed prior to the Second Remarketing Date; provided, however, that the Notes
may be redeemed, at the option of the Company, on the First Remarketing Date at
the Optional Redemption Price described herein. Thereafter, if the Notes are in
Reset Mode, they may be redeemable, at the option of the Company, on any date of
commencement of a Subsequent Spread Period and on those Interest Payment Dates
that are specified as redemption dates by the Company on the applicable
Duration/Interest Mode Determination Date, 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 to the holders ("Holders") at least 15 Business Days
prior to the redemption date), in accordance with the redemption type selected
on the Duration/Interest Mode Determination Date. Unless previously redeemed or
repurchased, the Notes will mature on June , 2038. See "Description of the
Notes -- Redemption of the Notes".
The obligations of the Mandatory Tender Remarketing Agent and the Reset
Remarketing Agent to purchase the Notes on the relevant tender date are each
subject to certain conditions and termination events customary in the Company's
public offerings. No Beneficial Owner of any Note shall have any rights or
claims against the Company or the Reset Remarketing Agent as a result of the
Reset Remarketing Agent not purchasing such Notes. The Company will agree to
indemnify the Mandatory Tender Remarketing Agent against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the "Act"),
arising out of or in connection with its duties under the Mandatory Tender
Remarketing Agreement (as defined below). See "Description of the Notes --
Tender at Option of Beneficial Owners in Reset Mode," "-- Mandatory Tender" and
"-- Concerning the Mandatory Tender Remarketing Agent and the Reset Remarketing
Agent".
The Notes will be represented by a single Global Note registered in the
name of DTC or its nominee. Beneficial interests in the Global Note will be
shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described herein, Notes in
definitive form will not be issued.
-------------------------
THE UNDERWRITERS MAY ENGAGE IN TRANSACTIONS THAT MAINTAIN OR OTHERWISE
AFFECT THE PRICE OF THE NOTES. SUCH TRANSACTIONS MAY INCLUDE OVERALLOTMENT
TRANSACTIONS AND THE PURCHASE OF NOTES TO COVER THE UNDERWRITERS' SHORT
POSITIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
FORWARD-LOOKING STATEMENTS
Statements contained in or incorporated by reference into this Prospectus
Supplement or the accompanying Prospectus include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements involve certain risks and uncertainties that may cause future results
to differ materially from those contemplated, projected, estimated or budgeted
in such forward-looking statements. Factors that may impact forward-looking
statements include, but are not limited to, the following: (i) the effects of
weather and other natural phenomena; (ii) increased competition from other
energy suppliers as well as alternative forms of energy; (iii) the capital
intensive nature of the Company's businesses; (iv) economic climate and growth
in the geographic areas in which the Company does business; (v) the uncertainty
of gas and oil reserve estimates; (vi) the timing and extent of changes in
commodity prices for natural gas, electricity and crude oil; (vii) conditions of
capital markets and equity markets; and (viii) the effects of changes in
governmental policies and regulatory actions, including income taxes,
environmental compliance and authorized rates.
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus, and by the more detailed information and the financial
statements and notes appearing in the incorporated documents.
THE COMPANY
MichCon is a Michigan corporation that was organized in 1898 and, with its
predecessors, has been in business for nearly 150 years. MichCon is a natural
gas utility primarily engaged in the distribution and transmission of natural
gas in the state of Michigan. MichCon also has subsidiaries involved in the
gathering and transmission of natural gas in northern Michigan. MichCon operates
one of the largest natural gas distribution and transmission systems in the
United States and the largest in Michigan.
MichCon serves 1.2 million customers in the Detroit, Grand Rapids, Ann
Arbor, Traverse City and Muskegon metropolitan areas and in various other
communities throughout the state of Michigan. The following services are
provided by MichCon:
- Gas Sales -- Includes the sale and delivery of natural gas to
residential and small-volume commercial customers.
- End User Transportation -- Through this service, large-volume
commercial and industrial customers that purchase natural gas
directly from producers or brokerage companies utilize the Company's
network to transport the gas to their facilities.
- Intermediate Transportation -- Provides transportation service
through the Company's gathering and high pressure transmission
system to producers, brokers and other local distribution companies
that own the natural gas, but are not the ultimate consumer.
MichCon is a wholly-owned subsidiary of MCN Energy Group, Inc. ("MCN"), a
New York Stock Exchange-listed company (ticker symbol: MCN). MCN's other
principal operating subsidiary is MCN Investment Corporation, a subsidiary
holding company for various diversified energy businesses.
THE NOTES OFFERING
SECURITIES OFFERED............ $ aggregate principal amount of
Extendable MOPPRS due June , 2038.
MATURITY DATE................. The stated maturity of the Notes is June ,
2038.
INITIAL SPREAD PERIOD......... The Notes offered hereby will initially bear
interest at a per annum rate of % for the
period from and including June , 1998, to but
excluding June , 2008.
MANDATORY TENDER MODE AND
MANDATORY TENDER............ On the First Remarketing Date, the Mandatory
Tender Remarketing Agent will have the option,
if elected, to purchase the Notes following a
mandatory tender at 100% of the principal
amount thereof for subsequent remarketing. If
the Remarketing Right is exercised, such Notes
will be in "Mandatory Tender Mode" and will,
except in certain circumstances, bear interest
at a rate determined in accordance with the
procedures set forth herein from the First
Remarketing Date to but excluding the Second
Remarketing Date.
RESET MODE AND OPTIONAL
TENDER........................ From and after the earlier to occur of ten
Business Days prior to (i) the First
Remarketing Date if the Mandatory Tender
Remarketing Agent does not exercise the
Remarketing Right and
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(ii) the Second Remarketing Date, the Notes
will be in Reset Mode. While in Reset Mode, the
Notes will be subject to optional tender by the
Holders thereof at the end of each Spread
period following the Initial Spread Period, if
the Remarketing Right is not exercised or the
Second Remarketing Date, if the Remarketing
Right is exercised, and in each case,
thereafter following each Subsequent Spread
Period. If the Company and the Reset
Remarketing Agent agree on a subsequent Spread,
except in certain circumstances the Notes will
bear interest either in a Floating Rate
Interest Mode or a Fixed Rate Interest Mode, as
determined by the Company and the Reset
Remarketing Agent.
REDEMPTION AND REPURCHASE..... The Notes may not be redeemed prior to the
First Remarketing Date and, if the Notes are
remarketed pursuant to the Remarketing Right,
they may not be redeemed prior to the Second
Remarketing Date. The Notes will be subject to
optional redemption by the Company (i) on the
First Remarketing Date at the Optional
Redemption Price or (ii) if the Notes are in
Reset Mode, on each Commencement Date and such
other dates as established by the Company on
the applicable Duration/Interest Mode
Determination Date. In the event that (i) the
Mandatory Tender Remarketing Agent fails for
any reason to purchase the Notes in Mandatory
Tender Mode following exercise of the
Remarketing Right, (ii) the Company and the
Reset Remarketing Agent fail for any reason to
agree on a subsequent Spread for Reset Mode
Notes or (iii) the Reset Remarketing Agent
fails for any reason to purchase any Notes in
Reset Mode that are tendered on the Reset
Tender Date, the Company is required to
repurchase and retire the full aggregate
principal amount of such Notes, in the case of
(i) and (ii) above, and any Notes tendered but
not purchased by the Reset Remarketing Agent in
the case of (iii) above, at 100% of the
principal amount thereof plus accrued interest.
SECURITY...................... Until the Release Date, the Notes will be
secured by the Company's First Mortgage Bonds
and thereafter will either (i) become unsecured
general obligations of the Company or (ii) be
secured by Substituted Collateral Bonds.
USE OF PROCEEDS............... Proceeds from the sale of the Notes, in respect
of which this Prospectus Supplement is being
delivered, will be used to repay short-term
debt used for the retirement of First Mortgage
Bonds pursuant to a fixed-spread tender offer,
to fund capital expenditures and for general
corporate purposes.
SEPARATE NOTES OFFERING....... Concurrently with the Notes Offering, the
Company is offering $ aggregate
principal amount of the Separate Notes.
Consummation of the Notes Offering is not a
condition to consummation of the Separate Notes
Offering, and consummation of the Separate
Notes Offering is not a condition to the
consummation of the Notes Offering.
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USE OF PROCEEDS
Proceeds from the sale of the Notes, in respect of which this Prospectus
Supplement is being delivered, will be used to repay short-term debt used for
the retirement of First Mortgage Bonds pursuant to a fixed-spread tender offer,
to fund capital expenditures and for general corporate purposes.
DESCRIPTION OF THE NOTES
The following information concerning the Notes supplements and, to the
extent inconsistent, replaces the description of the general terms and
provisions of Senior Debt Securities set forth in the accompanying Prospectus.
Reference is also made to the remarketing agreement between the Company and the
Mandatory Tender Remarketing Agent (the "Mandatory Tender Remarketing
Agreement"), the Reset Remarketing Agreement and any Reset Remarketing Agreement
Supplement, as defined below. The forms of Reset Remarketing Agreement and any
Reset Remarketing Agreement Supplement are or will be filed with the Commission
and incorporated into the Registration Statement of which the Prospectus forms a
part. The Mandatory Tender Remarketing Agreement and the Reset Remarketing
Agreement, as it may be supplemented, are referred jointly herein as the
"Remarketing Agreements". Wherever a defined term is referred to and not herein
defined, the definition thereof is contained in the accompanying Prospectus or
the Indenture referred to therein.
GENERAL
The Notes will be issued as a new series of Senior Debt Securities under an
Indenture, dated as of June 1, 1998 (the "Senior Indenture"), between the
Company and Citibank, N.A., as trustee (the "Senior Trustee"), which is more
fully described in the accompanying Prospectus.
MATURITY
The Notes will mature on June 1, 2038 (the "Stated Maturity Date") unless
previously redeemed and will be issued only in fully registered, book-entry
form. See "-- Book-Entry Only -- The Depository Trust Company" below. If the
Stated Maturity Date or other redemption date of the Notes falls on a day that
is not a Business Day, the related payment of principal and interest will be
made on the next succeeding Business Day as if it were made on the date such
payment was due, and no interest will accrue on the amounts so payable for the
period from and after such date.
SECURITY; RELEASE DATE
Upon the issuance of the Notes, the Company will simultaneously issue and
deliver to the Senior Trustee, as security for such Notes, First Mortgage Bonds,
Collateral Series A (the "Collateral Bonds"), under the 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, 1944 between
the Company and Citibank, N.A. ("Citibank" or the "Mortgage Trustee") and Robert
T. Kirchner (the "Individual Trustee" and, together with Citibank, the "Secured
Trustees"), as supplemented by the Thirty-Fifth Supplemental Indenture to be
entered into relating to the Collateral Bonds (as so supplemented, the "Mortgage
Indenture") in an aggregate principal amount of $ . The Company has agreed
to issue the Collateral Bonds in the name of the Senior Trustee in its capacity
as trustee under the Senior Indenture and the Senior Trustee has agreed to hold
the Collateral Bonds in such capacity under all circumstances and not transfer
the Collateral Bonds until the earlier of the Release Date or the prior
retirement of the Notes through redemption, repurchase or otherwise. The
interest rates, Interest Payment Dates, method of paying interest, stated
maturity date and redemption provisions for the Collateral Bonds will
automatically mirror those of the Notes.
Prior to the Release Date, 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 all
obligations then due on the related Notes.
Reference is made to "Description of Senior Debt Securities -- Security;
Release Date" in the accompanying Prospectus for a description of the
circumstances under which all or part of the Collateral
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Bonds will cease to be held by the Senior Trustee as security for the Notes. As
explained in the Prospectus, the Notes will cease to be secured by the
Collateral Bonds on the Release Date and, at the option of the Company either
(i) will become unsecured general obligations of the Company or (ii) will be
secured by first mortgage bonds issued under a mortgage indenture other than the
Mortgage Indenture (the "Substituted Collateral Bonds"). If the Company does not
elect to have the Notes become unsecured on the Release Date, upon the issuance
of any of the Notes on or after the Release Date, the Company will
simultaneously issue and deliver to the Senior Trustee, as security for such
Notes, Substituted Collateral Bonds. The Substituted Collateral Bonds will have
the same interest rate, interest payment dates, Stated Maturity Date and
redemption provisions, and will be in the same aggregate principal amount, as
the Notes then issued. The Company will be required to give notice to the
Holders, the Mandatory Tender Remarketing Agent and the Reset Remarketing Agent
of the occurrence of the Release Date.
In the event the Company elects to have the Notes become unsecured on the
Release Date, the Company's ability to create, assume or incur certain liens or
to enter into certain financing transactions will be restricted as described in
"Description of the Senior Debt Securities -- Restrictions" in the accompanying
Prospectus.
INITIAL INTEREST PERIOD
For the period from and including June , 1998 to but excluding June ,
2008 (the "Initial Spread Period"), interest on the Notes will accrue at a per
annum rate equal to % (computed on the basis of a 360-day year of twelve 30-day
months) and will be payable semiannually on June and December of each year
commencing December , 1998, to the persons in whose names the Notes are
registered at the close of business on the fifteenth calendar day (whether or
not a Business Day) immediately preceding the related Interest Payment Date. If
any Interest Payment Date during the Initial Spread Period falls on a day that
is not a Business Day, the payment shall be made on the next Business Day with
the same force and effect as if it were on the date such payment was due and no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date.
MANDATORY TENDER MODE INTEREST
If the Remarketing Right is exercised by the Mandatory Tender Remarketing
Agent, the Notes will bear interest from the First Remarketing Date to but
excluding the Second Remarketing Date at the rate determined by the Mandatory
Tender Remarketing Agent in accordance with the procedures set forth below
("Interest Rate to Second Remarketing"), except in certain circumstances. See
"-- Tenders -- Mandatory Tender". Such Interest Rate to Second Remarketing shall
be payable semiannually on June and December of each year, commencing
December , 2008, to the persons in whose name the Mandatory Tender Mode Notes
are registered on the fifteenth calendar day (whether or not a Business Day)
immediately preceding the related Interest Payment Date. Interest on such Notes
will be computed on the basis of a 360-day year of twelve 30-day months. If any
Interest Payment Date or date of redemption or repurchase of the Notes in
Mandatory Tender Mode falls on a day that is not a Business Day, the payment
shall be made on the next Business Day with the same force and effect as if it
were on the date such payment was due and no interest shall accrue on the amount
so payable for the period from and after such Interest Payment Date or date of
earlier redemption or repurchase, as the case may be.
RESET MODE INTEREST
The Notes will be in Reset Mode from and after the date that is ten
Business Days prior to (i) the First Remarketing Date in the event the Mandatory
Tender Remarketing Agent fails to give notice of exercise of the Remarketing
Right and (ii) the Second Remarketing Date if the Remarketing Right is
exercised. If the Notes are in Reset Mode, the interest rate will be determined
in the manner described below for each Subsequent Spread Period which will be a
period of at least six months and not extending beyond the maturity date,
designated by the Company. Each Subsequent Spread Period will commence on a June
or December , as applicable (a "Commencement Date"), and will end on or
before June , 2038.
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Floating Rate Interest Mode. During the Floating Rate Interest Mode,
interest on the Reset Mode Notes for each Subsequent Spread Period will 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 will be payable, in arrears, in the case
of Notes which pay: (i) monthly, on the first day of each month; (ii) quarterly,
on the first day of each March, June, September and December; and (iii)
semiannually, on the first 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 will be reset either monthly,
quarterly or semiannually, and the Notes will 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 will 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") will 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 will be
postponed to the next succeeding day that is a Business Day.
LIBOR applicable for an Interest Period will be determined by the Rate
Agent (as defined under "-- Tenders -- Tender at Option of Beneficial Owners in
Reset Mode" 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:
(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 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
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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) semiannually, six months.
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 Date, then the applicable Fixed Rate for
the corresponding Subsequent Spread Period will 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 will be 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.
Interest in the Fixed Rate Interest Mode will be computed on the basis of a
360-day year of twelve 30-day months. Such interest will be payable semiannually
in arrears on the Interest Payment Dates occurring on each June and December
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 will 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. See "-- Additional Terms of the Notes in Reset Mode" for other
provisions applicable to Notes in the Fixed Rate Interest Mode.
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 will be
postponed to the next day that is a Business Day), the related payment of
principal and interest will be made on the next succeeding Business Day as if it
were made on the date such payment was due, and no interest will accrue on the
amounts so payable for the period from and after such dates.
TENDERS
Mandatory Tender. The following description sets forth the terms and
conditions of the Mandatory Tender in the event the Mandatory Tender Remarketing
Agent elects to exercise the Remarketing Right and remarkets the Notes on the
First Remarketing Date.
Provided that the Mandatory Tender Remarketing Agent gives notice to the
Company and the Senior Trustee on a Business Day not later than 4:00 p.m. New
York City time on the eleventh Business Day prior to the First Remarketing Date
of its intention to exercise the Remarketing Right (the "Mandatory Tender
Notification Date"), the Notes will be automatically tendered, or deemed
tendered, to the Mandatory Tender Remarketing Agent for purchase on the First
Remarketing Date, except in the circumstances described under "-- Redemption of
the Notes" below. Thirty calender days prior to the First Remarketing Date, the
Company will 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 provides
notification of its intention to exercise the Remarketing Right on the Mandatory
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Tender Notification Date, on the date that is ten Business Days prior to the
First Remarketing Date, the Company will request that DTC notify its
Participants that the Notes are in Mandatory Tender Mode and are subject to
mandatory tender on the First Remarketing Date. The purchase price for the
tendered Notes to be paid by the Mandatory Tender Remarketing Agent will equal
100% of the principal amount thereof. When the Notes are tendered for
remarketing pursuant to the Remarketing Right, the Mandatory Tender Remarketing
Agent may remarket such Notes for its own account at varying prices to be
determined by the Mandatory Tender Remarketing Agent at the time of each sale.
If the Remarketing Right is exercised, from and after the First Remarketing
Date, such Notes will bear interest at the Interest Rate to Second Remarketing
Date. If the Mandatory Tender Remarketing Agent exercises the Remarketing Right,
the obligation of the Mandatory Tender Remarketing Agent to purchase such Notes
on the First Remarketing Date is subject, among other things, to the conditions
that, since the Mandatory Tender Notification Date, no material adverse change
in the condition of the Company and its subsidiaries, considered as one
enterprise, shall have occurred and that no Event of Default (as defined in the
Senior 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 Notes
shall have occurred and be continuing. If for any reason the Mandatory Tender
Remarketing Agent does not purchase all tendered Notes on the First Remarketing
Date after providing notice of its intention to exercise the Remarketing Right,
the Company will be required to repurchase such Notes from the Beneficial Owners
thereof at a price equal to the principal amount thereof plus all accrued and
unpaid interest, if any, on such Notes to the First Remarketing Date. If the
Mandatory Tender Remarketing Agent does not provide notice of its intention to
exercise the Remarketing Right on the Mandatory Tender Notification Date, the
Notes will be in Reset Mode ten business days prior to the First Remarketing
Date.
Provided that the Remarketing Right is exercised, the Interest Rate to
Second Remarketing Date for the Notes will be determined by the Mandatory Tender
Remarketing Agent by 3:30 p.m., New York City time, on the third Business Day
immediately preceding the First Remarketing Date (the "Mandatory Tender
Determination Date") to the nearest one hundred-thousandth of one percent
(0.00001) per annum and will be equal to % (the "Base Rate"), plus the
Applicable Spread for the Notes (as defined below).
The "Applicable Spread" for the Notes in Mandatory Tender Mode is the
lowest bid indication, expressed as a spread (in the form of a percentage or in
basis points) above the Base Rate for such Notes, 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 such Notes at the Dollar Price, but assuming (i)
an issue date equal to the First Remarketing Date, with settlement on such date
without accrued interest, (ii) a maturity date equal to the Second Remarketing
Date, and (iii) a stated annual interest rate, payable semiannually on each
Interest Payment Date, equal to the Base Rate plus the spread bid by the
applicable Reference Corporate Dealer to the 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, will 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" mean 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.
"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
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(expressed as a percentage of its principal amount), equal to the Comparable
Treasury Price (as defined below) for the First 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.
"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 Business Day, (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 or be
the successor to 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 Mandatory Tender Remarketing Agent by such
Reference Treasury Dealer by 3:30 p.m., New York City time, on the Mandatory
Tender 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 that are primary U.S. Government securities
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
securities dealer in The City of New York (a "Primary Treasury Dealer"), the
Mandatory Tender Remarketing Agent shall substitute therefor another Primary
Treasury Dealer.
"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. For purposes of this calculation only,
it shall be assumed that the Notes will mature on the Second Remarketing Date.
Provided the Remarketing Right has been exercised, the Mandatory Tender
Remarketing Agent will 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 will 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 will be executed on the First Remarketing Date
through DTC in accordance with the procedures of DTC, and the accounts of the
respective DTC Participants will 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 will
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
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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.
Tender at Option of Beneficial Owners in Reset Mode. If the Remarketing
Right is not exercised with respect to the First Remarketing Date or ten
Business Days prior to the Second Remarketing Date, the Notes will be in Reset
Mode. If the Notes are in Reset Mode because the Remarketing Right is not
exercised on the First Remarketing Date, the Second Remarketing Date will have
no effect on such Reset Mode Notes and no remarketing will be required on the
Second Remarketing Date. When the Notes are in Reset Mode, if the Company and
the Reset Remarketing Agent agree on the Spread on the Spread Determination Date
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 the terms and conditions set forth therein, 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 Subsequent Spread Period at the Purchase
Price. The Purchase Price will be paid by the Reset Remarketing Agent in
accordance with the standard procedures of DTC, which currently provide for
payments in same-day funds. Interest accrued on the Notes with respect to the
preceding interest period will be paid in the manner described under "--
Book-Entry Only -- The Depository Trust Company" and "-- Additional Terms of the
Notes in Reset Mode" below. If such Beneficial Owner has an account at the Reset
Remarketing Agent and tenders such Note through such account, such Beneficial
Owner will not be required to pay any fee or commission to the Reset Remarketing
Agent. If such Note is tendered through a broker, dealer, commercial bank, trust
company or other institution other than the Reset Remarketing Agent, such
Beneficial Owner may be required to pay fees or commissions to such other
institution. It is currently anticipated that Notes so purchased by the Reset
Remarketing Agent will be remarketed by it.
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"). In order to ensure that a Reset Tender Notice is
received on a particular day, the Beneficial Owner of Notes must direct his
broker or other designated Participant or Indirect Participant to give such
Reset Tender Notice before the broker's cut-off time for accepting instructions
for that day. Different firms may have different cut-off times for accepting
instructions from their customers. Accordingly, Beneficial Owners should consult
the brokers or other Participants or Indirect Participants through which they
own their interests in the Notes for the cut-off times for such brokers, other
Participants or Indirect Participants. See "-- Book-Entry Only -- The Depository
Trust Company" below. 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.
The Reset Remarketing Agent will attempt, on a best efforts basis, to
remarket the tendered Notes at a price equal to 100% of the aggregate principal
amount so tendered. There is no assurance that the Reset Remarketing Agent will
be able to remarket the entire principal amount of Notes tendered in a
remarketing. The Reset Remarketing Agent will also have the option, but not the
obligation, to purchase any tendered Notes at such price. The obligation of the
Reset Remarketing Agent to purchase tendered Notes from the tendering Holders
and to remarket such Notes will be subject to certain conditions and termination
events customary in the Company's public offerings, including a condition that
no material adverse change in the condition of the Company and its subsidiaries,
taken as a whole, shall have occurred since the Spread Determination Date. In
the event that the Reset Remarketing Agent is unable to remarket some or all of
the tendered Notes and chooses not to purchase such tendered Notes, the Company
is obligated unconditionally to purchase and retire on the Reset Tender Date the
remaining unsold tendered Notes at a price equal to 100%
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of the principal amount, plus accrued interest, if any, to the applicable Reset
Tender Date. If the Reset Remarketing Agent does not purchase all Notes tendered
for purchase on any Reset Tender Date, it will promptly notify the Company and
the Senior Trustee.
No Beneficial Owner of any Note will have any rights or claims under the
Reset Remarketing Agreement Supplement or against the Company or the Reset
Remarketing Agent as a result of the Reset Remarketing Agent's not purchasing
such Notes.
The term "Reset Remarketing Agent" means the nationally recognized
broker-dealer selected by the Company to act as Reset Remarketing Agent. 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. The Company, in its sole discretion, will appoint a Rate
Agent and may change the Reset Remarketing Agent and the Rate Agent for any
Subsequent Spread Period at any time on or prior to 3:00 p.m., New York City
time, on the Duration/Interest Mode Determination Date relating thereto.
ADDITIONAL TERMS OF THE NOTES IN RESET MODE
The Spread that will be applicable during each Subsequent Spread Period for
Notes in Reset Mode will 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, as described under
"-- Tenders -- Tender at Option of Beneficial Owners in Reset Mode" above, and
(b) agreed to by the Company. The interest rate mode during each 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 (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) for each Subsequent Spread Period will 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
will 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 will 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 the date that is ten Business Days prior
to the First Remarketing Date, the Company will 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 as described under "Tenders -- Tender at Option of
Beneficial Owners in Reset Mode" above. With respect to all Subsequent Spread
Periods established after the First Remarketing Date, the Company will 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 Note wishes to tender such Note as
described under "Tenders -- Tender at Option of Beneficial Owners in Reset Mode"
above. In the event that DTC or its nominee is no longer the Holder of record of
the Notes, the Company will notify the Holders of such information within such
period of time. These will be the only notices given by the Company or the Reset
Remarketing Agent with respect to such Duration/Interest Mode Determination Date
and procedures for tendering Notes. 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
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or authorized to close and, in the case of Notes in the Floating Rate Interest
Mode, that is also a London Business Day.
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 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 is 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 will 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 will be rounded to the nearest cent, with one-half cent
being rounded upward.
REPURCHASE OF THE NOTES
If the Notes are in Mandatory Tender Mode, in the event that (i) the
Mandatory Tender 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
due to the occurrence of a material adverse change in the condition of the
Company and its subsidiaries, considered as one enterprise, shall have occurred
or 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 shall have occurred and be continuing, or any other event constituting a
termination event under the Mandatory Tender Remarketing Agreement shall have
occurred, or (iv) the Mandatory Tender Remarketing Agent for any reason does not
purchase all tendered Notes on the First Remarketing Date, the Company will
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 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 due to the occurrence of a material adverse change in the condition of
the Company and its subsidiaries, considered as one enterprise, shall have
occurred or 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 shall have occurred and be continuing, or any other event
constituting a termination event under the Reset Remarketing Agreement shall
have occurred, or (iv) the Reset Remarketing Agent for any reason does not
purchase any Notes tendered on the Reset Tender Date, the Company will
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.
REDEMPTION OF THE NOTES
The Notes may not be redeemed prior to the First Remarketing Date. On that
date, if the Mandatory Tender Remarketing Agent exercises the Remarketing Right,
the Notes will be subject to mandatory tender to the Mandatory Tender
Remarketing Agent for remarketing on such date, subject to the conditions
described above under "-- Tenders -- Mandatory Tender" and to the Company's
right to redeem the Notes as described in the next sentence. The Company will
notify the Mandatory Tender Remarketing Agent and the Senior Trustee, not later
than the Business Day immediately preceding the Mandatory Tender Determination
Date, if the Company irrevocably elects to exercise its right to redeem the
Notes, in whole but not in part,
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from the Mandatory Tender Remarketing Agent on the First Remarketing Date at the
Optional Redemption Price. If the Remarketing Right is exercised and the Notes
are remarketed, they then may not be redeemed prior to the Second Remarketing
Date.
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 First 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 First
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 Option
Redemption Price therefor in same-day funds by wire transfer to an account
designated by the Mandatory Tender Remarketing Agent on the First Remarketing
Date.
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
will be selected by such method as the Senior Trustee shall deem fair and
appropriate. So long as the Global Note is held by DTC, the Company will give
notice to DTC, whose nominee is the record holder of all of the Notes, and DTC
will determine the principal amount to be redeemed from the account of each
Participant. This will be the only notice given by the Company or the Reset
Remarketing Agent with respect to redemption of the Notes. A Participant may
determine to redeem from some Beneficial Owners (which may include a Participant
holding Notes for its own account) without redeeming from the accounts of other
Beneficial Owners.
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, an 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.
BOOK-ENTRY ONLY -- THE DEPOSITORY TRUST COMPANY.
DTC will act as securities depositary for the Notes. The Notes will be
issued only as fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global Note
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certificates, representing the total aggregate principal amount of the Notes,
will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Direct Participants and
Indirect Participants are on file with the Securities and Exchange Commission.
Purchases of Notes within the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each Beneficial Owner of Notes is in turn to be recorded
on the Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Participants through which the
Beneficial Owners purchased Notes. Transfers of ownership interests in the Notes
are to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the Notes, except in the event that
use of the book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all the Notes deposited by Direct
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Notes with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect only the identity of the
Direct Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Notes are being redeemed, DTC's practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will itself consent or vote with respect to
Notes. Under its usual procedures, DTC would mail an Omnibus Proxy to the
Company as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co. consenting or voting rights to those Direct Participants to whose
accounts the Notes are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Principal and interest payments on the Notes will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in "street name," and such
payments will be the responsibility of such Participant and not of DTC or the
Company, subject to any statutory or regulatory requirements to the contrary
that may be in effect from time to time.
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Payment of principal and interest to DTC is the responsibility of the Company,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants.
Except as provided herein, a Beneficial Owner will not be entitled to
receive physical delivery of Notes. Accordingly, each Beneficial Owner must rely
on the procedures of DTC to exercise any rights under the Notes.
DTC may discontinue providing its services as securities depositary with
respect to the Notes at any time by giving reasonable notice to the Company.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Note certificates are required to be printed and delivered.
Additionally, the Company may decide to discontinue use of the system of
book-entry transfers through DTC (or any successor depositary) with respect to
the Notes. In that event, certificates for the Notes will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company does not take responsibility for the accuracy thereof.
CONCERNING THE MANDATORY TENDER REMARKETING AGENT AND THE RESET REMARKETING
AGENT
Both of the Mandatory Tender Remarketing Agent and the Reset Remarketing
Agent, in their respective individual or any other capacities, may buy, sell,
hold and deal in any of the Notes and may exercise any vote or join in any
action which any Beneficial Owner of Notes may be entitled to exercise or take
with like effect as if it did not act in any capacity under the applicable
Remarketing Agreement. Both of the Mandatory Tender Remarketing Agent and the
Reset Remarketing Agent, in their respective individual capacities, 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 under the applicable Remarketing Agreement.
No Holder or Beneficial Owner of the Notes shall have any rights or claims
under the Reset Remarketing Agreement or against the Reset Remarketing Agent as
a result of the Reset Remarketing Agent not purchasing such Notes. The Company
will agree to indemnify the Mandatory Tender Remarketing Agent and the Reset
Remarketing Agent against certain liabilities, including liabilities under the
Securities Act arising out of or in connection with its duties under the
applicable Remarketing Agreement. Merrill Lynch, Pierce, Fenner & Smith
Incorporated is the Mandatory Tender Remarketing Agent and will also serve as
the initial Reset Remarketing Agent and Rate Agent. The Mandatory Tender
Remarketing Agent and the Reset Remarketing Agent may resign at any time, such
resignation to be effective 10 days after delivery to the Company and the Senior
Trustee of notice of such resignation. In such case, it shall be the sole
obligation of the Company to appoint a successor Mandatory Tender Remarketing
Agent or a Reset Remarketing Agent, as the case may be. The Company, in its sole
discretion may change the Reset Remarketing Agent for any Subsequent Spread
Period at any time on or prior to 3:00 p.m., New York City time, on the
Duration/Interest Mode Determination Date relating thereto.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), regulations
promulgated under the Code (the "Treasury Regulations"), rulings and decisions
now in effect, all of which are subject to change (prospectively or
retroactively) or possible differing interpretations. The following discussion
deals only with Notes held as capital assets and does not purport to deal with
persons in special tax situations, such as financial institutions, banks,
insurance companies, regulated investment companies, dealers in securities or
currencies, persons holding Notes as a hedge against currency risks or as a
position in a "straddle" for tax purposes, or persons whose functional currency
is not the United States dollar. It also does not deal with holders other than
original purchasers (except where otherwise specifically noted). Persons
considering the purchase of the Notes should consult their own tax advisors
concerning the application of United States federal income tax laws to their
particular situations as well as any consequences of the purchase, ownership and
disposition of the Notes arising under the laws of any other taxing
jurisdiction.
U.S. HOLDERS
As used herein, the term "U.S. Holder" means a Beneficial Owner of a Note
that is for United States federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any state thereof,
(iii) an estate the income of which is subject to United States federal income
taxation regardless of its source, or (iv) a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. As used herein, the term "Non-U.S. Holder"
means a Beneficial Owner of a Note that is not a U.S. Holder.
The Notes should constitute variable rate debt instruments ("VRDI") and the
interest payments received should be considered "qualified stated interest"
under section 1.1275-5 of the Treasury Regulations. Based on this treatment, the
interest received will be taxable to a U.S. Holder as ordinary interest income
at the time such payments are accrued or received in accordance with the U.S.
Holder's regular method of tax accounting.
Based on the foregoing treatment, upon the sale, exchange or retirement of
a Note, a U.S. Holder generally will recognize taxable gain or loss in an amount
equal to the difference, if any, between the amount realized upon the sale,
exchange or retirement (other than amounts representing accrued and unpaid
interest which will be taxable as interest income) and such U.S. Holder's
adjusted tax basis in its Note. A U.S. Holder's adjusted tax basis in a Note is
generally equal to such U.S. Holder's initial investment in such Note. In the
case of a noncorporate U.S. Holder, any gain recognized upon the sale, exchange
or retirement of a Note generally will be taxable at a maximum rate of 20% if
the U.S. Holder's holding period for the Note is more than 18 months or at a
maximum rate of 28% if such holding period is more than one year but not more
than 18 months. The deduction of capital losses is subject to certain
limitations.
While the Company intends to treat the Notes as VRDI's issued without
original issue discount ("OID"), it is possible that the Internal Revenue
Service ("IRS") will take the position that the Notes are either (i) VRDI's
issued with OID, or (ii) contingent payment debt instruments. In the event the
IRS were successful in either assertion, Holders could experience U.S. federal
income tax consequences significantly different from those discussed herein. The
Treasury Regulations governing VRDI's issued with OID and contingent payment
debt instruments are complex, and prospective purchasers of Notes are urged to
consult their tax advisors as to the potential application of, and the
consequences of applying, those regulations.
In general, information reporting requirements will apply to certain
payments of principal and interest and to the proceeds of sales of Notes made to
U.S. Holders other than certain exempt recipients (such as corporations). A 31%
backup withholding tax will apply to such payments if the U.S. Holder (i) fails
to provide a taxpayer identification number ("TIN"), (ii) furnishes an incorrect
TIN, (iii) is notified by the IRS that it has failed to properly report payments
of interest and dividends or (iv) under certain circumstances, fails to certify,
under penalty of perjury, that it has furnished a correct TIN and has not been
S-18
<PAGE> 67
notified by the IRS that it is subject to backup withholding. In the case of
interest paid after December 31, 1998, a U.S. Holder generally will be subject
to backup withholding at a 31% rate unless certain IRS certification procedures
are complied with directly or through an intermediary.
The Company will furnish annually to the IRS and to record holders of the
Notes (other than with respect to certain exempt holders) information relating
to the interest accruing and paid on the Notes during the calendar year.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such U.S. Holder's U.S. federal income tax
liability provided the required information is furnished to the IRS.
NON-U.S. HOLDERS
Subject to the discussion below concerning backup withholding, no
withholding of United States federal income tax will be required with respect to
the payment by the Company or any paying agent of principal or interest on a
Note owned by a Non-U.S. Holder, provided that the Beneficial Owner (i) does not
actually or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote within the meaning of
Section 871(h)(3) of the Code, and the regulations thereunder, (ii) is not a
controlled foreign corporation related, directly or indirectly, to the Company
through stock ownership, (iii) is not a bank whose receipt of interest on a Note
is described in Section 881(c)(3)(A) of the Code and (iv) satisfies the
statement requirement (described generally below) set forth in Section 871(h)
and Section 881(c) of the Code and the regulations thereunder.
To satisfy the requirement referred to in (iv) above, the Beneficial Owner
of such Note, or a financial institution holding the Note on behalf of such
owner, must provide, in accordance with specified procedures, the Company or its
paying agent with a statement to the effect that the Beneficial Owner is not a
U.S. person. These requirements will be met if (1) the Beneficial Owner provides
his name and address, and certifies, under penalties of perjury, that he is not
a U.S. person (which certification may be made on an IRS Form W-8 (or successor
form)) or (2) a financial institution holding the Note on behalf of the
Beneficial Owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy thereof.
In the event that any of the above requirements are not satisfied, the
Company will nonetheless not withhold federal income tax on interest paid to a
Non-U.S. Holder if it receives IRS Form 4224 (or, after December 31, 1998, a
Form W-8) from that Non-U.S. Holder, establishing that such income is
effectively connected with the conduct of a trade or business in the United
States, unless the Company has knowledge to the contrary. Interest or any
redemption premium paid to a Non-U.S. Holder (other than a partnership) that is
effectively connected with the conduct by the Holder of a trade or business in
the United States is generally taxed at the graduated rates that are applicable
to United States persons. In the case of a Non-U.S. Holder that is a
corporation, such effectively connected income may also be subject to the United
States federal branch profits tax (which is generally imposed on a foreign
corporation on the deemed repatriation from the United States of effectively
connected earnings and profits) at a 30% rate (unless the rate is reduced or
eliminated by an applicable income tax treaty and the Holder is a qualified
resident of the treaty country). In the case of a partnership that has foreign
partners (i.e., persons who would be Non-U.S. Holders if they held the Notes
directly), such effectively connected income allocable to the foreign partner
would generally be subject to United States federal withholding tax (regardless
of whether such income is, in fact, distributed to such foreign partner) at a
35% rate, if the foreign partner is a corporation, or at a 39.6% rate, if the
foreign partner is not a corporation. Any foreign partner of such a partnership
would be entitled to a credit against his United States federal income tax for
his share of the withholding tax paid by the partnership.
A Non-U.S. Holder will generally not be subject to United States federal
income tax with respect to gain recognized on a sale, exchange, redemption or
other disposition of Notes unless (i) the gain is effectively connected with a
trade or business of the Non-U.S. Holder in the United States, (ii) in the case
of a Non-U.S. Holder who is an individual and holds the Notes as a capital
asset, such Holder is present in the United States for 183 or more days in the
taxable year of the sale or other disposition and certain other conditions are
S-19
<PAGE> 68
met, or (iii) the Non-U.S. Holder is subject to tax pursuant to certain
provisions of the Code applicable to United States expatriates.
Gains derived by a Non-U.S. Holder (other than a partnership) from the sale
or other disposition of Notes that are effectively connected with the conduct by
the Holder of a trade or business in the United States are generally taxed at
the graduated rates that are applicable to United States persons. In the case of
a Non-U.S. Holder that is a corporation, such effectively connected income may
also be subject to the United States branch profits tax. In the case of a
partnership that has foreign partners (i.e., persons who would be Non-U.S.
Holders if they held the Notes directly), such effectively connected income
allocable to the foreign partner would generally be subject to United States
federal withholding tax (regardless of whether such income is, in fact,
distributed to such foreign partner) at a 35% rate, if the foreign partner is a
corporation, or at a 39.6% rate, if the foreign partner is not a corporation.
Any foreign partner of such a partnership would be entitled to a credit against
his United States federal income tax for his share of the withholding tax paid
by the partnership. If an individual Non-U.S. Holder falls under clause (ii)
above, he will be subject to a flat 30% tax on the gain derived from the sale or
other disposition, which may be offset by United States capital losses
recognized within the same taxable year as such sale or other disposition
(notwithstanding the fact that he is not considered a resident of the United
States).
A Note beneficially owned by an individual who at the time of death is a
Non-U.S. Holder will not be subject to United States federal estate tax as a
result of such individual's death, provided that such individual does not
actually or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote within the meaning of
Section 871(h)(3) of the Code and provided that the interest payments with
respect to such Note would not have been, if received at the time of such
individual's death, effectively connected with the conduct of a United States
trade or business by such individual.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-U.S. Holders
if a statement described in clause (iv) of the first paragraph hereunder has
been received and the payor does not have actual knowledge that the Beneficial
Owner is a United States person.
Information reporting and backup withholding will not apply if payments of
interest on a Note are paid or collected by a custodian, nominee, or agent on
behalf of the Beneficial Owner of such Note if such custodian, nominee, or agent
has documentary evidence in its records that the Beneficial Owner is not a U.S.
person and certain other conditions are met, or the Beneficial Owner otherwise
establishes an exemption.
Payments on the sale, exchange or other disposition of a Note made to or
through a foreign office of a broker generally will not be subject to backup
withholding. However, payments made by a broker that is a United States person,
a controlled foreign corporation for United States federal income tax purposes,
a foreign person 50 percent or more of whose gross income is effectively
connected with a United States trade or business for a specified three year
period, or (with respect to payments after December 31, 1998) a foreign
partnership with certain connections to the United States, will be subject to
information reporting unless the broker has in its records documentary evidence
that the Beneficial Owner is not a United States person and certain other
conditions are met, or the Beneficial Owner otherwise establishes an exemption.
Backup withholding may apply to any payment that such broker is required to
report if the broker has actual knowledge that the payee is a United States
person. Payments to or through the United States office of a broker will be
subject to information reporting and backup withholding unless the Holder
certifies, under penalties of perjury, that it is not a United States person or
otherwise establishes an exemption.
For payments made after December 31, 1998, with respect to Notes held by
foreign partnerships, IRS regulations require that the certification described
in clause (iv) of the first paragraph hereunder above be provided by the
partners, rather than by the foreign partnership, and that the partnership
provide certain information, including a United States TIN. A look-through rule
will apply in the case of tiered partnerships.
Non-U.S. Holders should consult their tax advisors regarding the
application of information reporting and backup withholding in their particular
situations, the availability of an exemption therefrom, and the procedures for
obtaining such an exemption, if available. Any amounts withheld under the backup
withholding
S-20
<PAGE> 69
rules will be allowed as a refund or credit against the Non-U.S. Holder's U.S.
federal income tax liability and may entitle such Holder to a refund, provided
the required information is furnished to the IRS.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), should consider the fiduciary obligation requirements imposed
under ERISA, in the context of the plan's particular circumstances, before
authorizing an investment in the Notes with assets of the plan. Accordingly,
among other factors, the fiduciary should consider whether such an investment
would satisfy the prudence and diversification requirements of ERISA, whether
such an investment would constitute an unauthorized delegation of fiduciary
authority and whether such an investment would be consistent with the documents
and instruments governing the plan.
Section 406 of ERISA and Section 4975 of the Code prohibit certain employee
benefit plans, as well as individual retirement accounts and Keogh plans subject
to Section 4975 of the Code (collectively, "Plans") from engaging in a wide
range of transactions ("Prohibited Transactions") involving the assets of a Plan
and persons who have certain specified relationships to the Plan ("parties in
interest," as defined in Section 3(14) of ERISA ("Parties in Interest"), and
"disqualified persons," as defined in Section 4975(e) (2) of the Code
("Disqualified Persons")). A violation of the Prohibited Transaction rules may
cause Plan fiduciaries, Parties in Interest and/or Disqualified Persons to be
subject to excise taxes or to incur other liabilities under ERISA and/or Section
4975 of the Code.
The Company, the Mandatory Tender Remarketing Agent and the Reset
Remarketing Agent, because of their activities or the activities of their
respective affiliates, may be considered to be Parties in Interest or
Disqualified Persons with respect to certain Plans. If the Notes are acquired by
a Plan with respect to which the Company or the Remarketing Dealer is, or
subsequently becomes, a Party in Interest or Disqualified Person, the purchase,
holding and/or sale of the Notes to the Remarketing Dealer could be deemed to be
a direct or indirect violation of the Prohibited Transaction rules unless an
applicable statutory or administrative exemption from the Prohibited Transaction
rules was available. Consequently, before investing in the Notes, any Plan
fiduciary or other person who is using the assets of a Plan to acquire the Notes
should determine whether any of the Company, the Mandatory Tender Remarketing
Agent or the Reset Remarketing Agent is a Party in Interest or Disqualified
Person with respect to such Plan and, if so, whether exemptive relief from the
Prohibited Transaction rules is available. Included among the available
administrative exemptions from the Prohibited Transaction rules that may be
applicable are: U.S. Department of Labor Prohibited Transaction Class Exemption
("PTCE") 90-1, regarding transactions involving insurance company pooled
separate accounts: PTCE 91-38, regarding transactions involving bank collective
investment funds; PTCE 84-14, regarding transactions effected by qualified
professional asset managers; PTCE 96-23, regarding transactions effected by
in-house asset managers; and PTCE 95-60, regarding transactions involving
insurance company general accounts. There can be no assurance, however, that any
of these exemptions, even if all of the conditions specified therein are
satisfied.
Insurance companies considering an investment in the Notes should note that
the Small Business Job Protection Act of 1996 added new Section 401(c) of ERISA
relating to the status of the assets of insurance company general accounts under
ERISA and Section 4975 of the Code. Pursuant to Section 401(c), the Department
of Labor issued proposed regulations (the "Proposed General Account
Regulations") in December, 1997, with respect to insurance policies issued on or
before December 31, 1998 that are supported by an insurer's general account. The
Proposed General Account Regulations are intended to provide guidance on which
assets held by the insurer constitute "plan assets" of an ERISA Plan for
purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of
the Code. The "plan assets" status of insurance company separate accounts is
unaffected by new Section 401(c) of ERISA, and separate account assets continue
to be treated as the "plan assets" of an ERISA Plan invested in a separate
account.
The discussion herein of ERISA is general in nature and is not intended to
be complete. Any fiduciary of a Plan considering an investment in the Notes
should consult with its legal advisors regarding the consequences and
advisability of such an investment.
S-21
<PAGE> 70
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement
(the "Purchase Agreement"), between the Company and Merrill Lynch, Pierce,
Fenner & Smith Incorporated and First Chicago Capital Markets, Inc. (the
"Underwriters"), the Company has agreed to sell to each of the Underwriters, and
each of the Underwriters has severally agreed to purchase from the Company, the
respective principal amount of the Notes set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $
First Chicago Capital Markets, Inc. ........................
--------
Total.......................................... $
========
</TABLE>
In the Purchase Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Notes offered
hereby if any Notes are purchased. The Underwriters have advised the Company
that the Underwriters propose to offer the Notes from time to time for sale in
negotiated transactions or otherwise, at prices relating to prevailing market
prices determined at the time of sale. The Underwriters may effect such
transactions by selling Notes to or through dealers and such dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Underwriters and any purchasers of Notes for whom they may act as
agent. The Underwriters and any dealers that participate with the Underwriters
in the distribution of the Notes may be deemed to be underwriters, and any
discounts or commissions received by them and any profit on the resale of Notes
by them may be deemed to be underwriting compensation.
The Notes are new issues of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes, but they are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Notes.
The Underwriters are permitted to engage in certain transactions that
maintain or otherwise affect the price of the Notes. Such transactions may
include over-allotment transactions and purchases to cover short positions
created by the Underwriters in connection with the offering. If the Underwriters
create a short position in the notes in connection with the offering, i.e., if
they sell Notes in an aggregate principal amount exceeding that set forth on the
cover page of this Prospectus Supplement, the Underwriters may reduce that short
position by purchasing Notes in the open market.
In general, purchases of a security to reduce a short position could cause
the price of the security to be higher than it might be in the absence of such
purchases.
Neither the Company nor the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition, neither the
Company nor the Underwriters makes any representation that the Underwriters will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
In the ordinary course of business, the Underwriters and their affiliates
have engaged and may in the future engage in investment banking and general
financing and banking transactions with the Company and certain of its
affiliates.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Act, or to make contribution to
certain payments in respect thereof.
S-22
<PAGE> 71
LEGAL OPINIONS
The validity of the Indentures and the Notes will be passed upon for the
Company by Ronald E. Christian, Vice President, General Counsel and Secretary of
MichCon. Certain matters will be passed upon for the Company by Skadden, Arps,
Slate, Meagher & Flom, LLP, New York, New York. Certain legal matters will be
passed upon for the Underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a
limited liability partnership including professional corporations, 125 West 55th
Street, New York, New York 10019-5389. LeBoeuf, Lamb, Greene & MacRae, L.L.P.
from time to time renders legal services to MichCon and its affiliates.
S-23
<PAGE> 72
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OF SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Forward-Looking Statements........... S-3
Summary.............................. S-4
Use of Proceeds...................... S-6
Description of the Notes............. S-6
Certain Federal Income Tax
Considerations..................... S-18
Erisa Considerations................. S-21
Underwriting......................... S-22
Legal Opinions....................... S-23
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Forward-Looking Statements........... 3
The Company.......................... 4
Use of Proceeds...................... 4
Ratio of Earnings to Fixed Charges... 4
Securities........................... 4
Description of the Senior Debt
Securities......................... 5
Description of the First Mortgage
Bonds.............................. 12
Plan of Distribution................. 15
Validity of Securities............... 16
Experts.............................. 16
</TABLE>
======================================================
======================================================
$
MICHIGAN CONSOLIDATED
GAS COMPANY
EXTENDABLE MANDATORY PAR PUT
REMARKETED SECURITIESSM
("MOPPRSSM"),
DUE JUNE , 2038
------------------------------
PROSPECTUS SUPPLEMENT
------------------------------
MERRILL LYNCH & CO.
FIRST CHICAGO CAPITAL
MARKETS, INC.
JUNE , 1998
"MANDATORY PAR PUT REMARKETED SECURITIESSM" AND "MOPPRSSM" ARE SERVICE MARKS
OWNED BY MERRILL LYNCH & CO., INC.
======================================================
<PAGE> 1
EXHIBIT 4.1
[FORM OF INDENTURE]
- - --------------------------------------------------------------------------
MICHIGAN CONSOLIDATED GAS COMPANY,
AS ISSUER
TO
CITIBANK, N.A.,
AS TRUSTEE
--------------------
INDENTURE
SENIOR DEBT SECURITIES
DATED AS OF JUNE 1, 1998
--------------------
- - --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions and Other Provisions
of General Application
RECITALS OF THE COMPANY....................................................... 1
Definitions and Other Provisions
of General Application............................................... 2
Definitions.......................................................... 2
Act......................................................... 2
Affiliate................................................... 2
Authenticating Agent........................................ 3
Bankruptcy Law.............................................. 3
Board of Directors.......................................... 3
Board Resolution............................................ 3
Business Day................................................ 3
Capital Stock............................................... 3
Capitalized Lease Obligation................................ 3
Collateral Bonds............................................ 8
Commission.................................................. 3
Common Depositary........................................... 4
Company..................................................... 4
Company Request or Company Order............................ 4
Corporate Trust............................................. 4
Covenant Defeasance......................................... 4
Custodian................................................... 4
Default..................................................... 4
Defaulted Interest.......................................... 4
Defeasance.................................................. 4
Dollars and $............................................... 4
Event of Default............................................ 4
Exchange Act................................................ 5
First Mortgage Bonds........................................ 5
First Mortgage Indenture.................................... 5
Holder or Securityholder.................................... 5
Indebtedness................................................ 5
Indenture................................................... 6
Initial Securities.......................................... 6
interest ................................................... 6
Interest Payment Date....................................... 6
Lien........................................................ 6
Maturity.................................................... 6
Mortgage.................................................... 6
Mortgage Trustee............................................ 6
Officer..................................................... 6
Officer's Certificate....................................... 6
Opinion of Counsel.......................................... 7
-i-
<PAGE> 3
PAGE
Original Issue Discount Security............................ 7
Outstanding................................................. 7
Paying Agent................................................ 8
Person...................................................... 8
Place of Payment............................................ 8
Project Finance Indebtedness................................ 8
Redemption Date............................................. 9
Project Finance Indebtedness................................ 9
Redemption Price............................................ 9
Regular Record Date......................................... 9
Related Issue of Pledged First Mortgage Bonds............... 9
Related Issue of Pledged Substituted Mortgage Bonds......... 9
Release Date............................................... 10
Responsible Officer ....................................... 10
Securities................................................. 10
Security Register and Security Registrar................... 10
Significant Subsidiary..................................... 10
Special Record Date........................................ 10
Stated Maturity............................................ 10
Subsidiary................................................. 11
Substituted Collateral Bonds................................ 8
Substituted Mortgage Indenture............................. 11
Trust Indenture Act........................................ 11
Trustee.................................................... 11
U.S. Depositary............................................ 11
U.S. Government Obligations................................ 11
Value...................................................... 12
Vice President............................................. 12
SECTION 102. Compliance Certificates and Opinions.............. 12
SECTION 103. Form of Documents Delivered to Trustee............ 13
SECTION 104. Acts of Holders................................... 14
SECTION 105. Notices, Etc., to Trustee and Company............. 15
SECTION 106. Notice to Holders; Waiver......................... 15
SECTION 107. Conflict with Trust Indenture Act................. 16
SECTION 108. Effect of Headings and Table of Contents.......... 16
SECTION 109. Successors and Assigns............................ 17
SECTION 110. Separability Clause............................... 17
SECTION 111. Benefits of Indenture............................. 17
SECTION 112. Governing Law..................................... 17
SECTION 113. Legal Holidays.................................... 17
SECTION 114. No Recourse Against Others........................ 17
ARTICLE II
Security Forms
SECTION 201. Forms Generally................................... 18
-ii-
<PAGE> 4
PAGE
SECTION 202. Form of Face of Security.......................... 18
SECTION 203. Form of Reverse of Security....................... 22
SECTION 204. Form of Trustee's Certificate of
Authentication.................................... 27
SECTION 205. Securities in Global Form......................... 28
SECTION 206. CUSIP Number...................................... 29
SECTION 207. Form of Legend for the Securities in Global
Form.............................................. 29
ARTICLE III
The Securities
SECTION 301. Amount Unlimited; Issuable in Series.............. 30
SECTION 302. Denominations..................................... 32
SECTION 303. Execution, Authentication, Delivery and
Dating............................................ 32
SECTION 304. Temporary Securities.............................. 36
SECTION 305. Registration, Registration of Transfer and
Exchange.......................................... 37
SECTION 306. Mutilated, Destroyed, Lost and Stolen
Securities........................................ 39
SECTION 307. Payment of Interest; Interest Rights
Preserved......................................... 40
SECTION 308. Persons Deemed Owners............................. 41
SECTION 309. Cancellation...................................... 42
SECTION 310. Computation of Interest........................... 42
ARTICLE IV
Collateral First Mortgage Bonds;
Substituted Collateral Bonds
SECTION 401. Collateral Bonds Held by the Trustee.............. 43
SECTION 402. No Transfer of Collateral Bonds; Exception........ 43
SECTION 403. Delivery to the Company of All Collateral Bonds... 43
SECTION 404. Further Assurances................................ 43
SECTION 405. Exchange and Surrender of Collateral Bonds........ 44
SECTION 406. Acceptance of Additional Collateral Bonds......... 45
SECTION 407. Terms of Collateral Bonds......................... 45
SECTION 408. Collateral Bonds as Security for Securities....... 45
SECTION 409. Substituted Collateral Bonds...................... 46
-iii-
<PAGE> 5
PAGE
ARTICLE V
Satisfaction and Discharge
SECTION 501. Satisfaction and Discharge of Indenture........... 47
SECTION 502. Application of Trust Money........................ 49
ARTICLE VI
Remedies
SECTION 601. Events of Default................................. 49
SECTION 602. Acceleration of Maturity; Rescission and
Annulment......................................... 52
SECTION 603. Collection of Indebtedness and Suits for
Enforcement by Trustee............................ 53
SECTION 604. Trustee May File Proofs of Claim.................. 54
SECTION 605. Trustee May Enforce Claims Without Possession
of Securities..................................... 55
SECTION 606. Application of Money Collected.................... 55
SECTION 607. Limitation on Suits............................... 56
SECTION 608. Unconditional Right of Holders to Receive
Principal, Premium and Interest................... 56
SECTION 609. Restoration of Rights and Remedies................ 57
SECTION 610. Rights and Remedies Cumulative.................... 57
SECTION 611. Delay or Omission Not Waiver...................... 57
SECTION 612. Control by Holders................................ 57
SECTION 613. Waiver of Past Defaults........................... 58
SECTION 614. Undertaking for Costs............................. 58
ARTICLE VII
The Trustee
SECTION 701. Certain Duties and Responsibilities of the
Trustee........................................... 59
SECTION 702. Notice of Defaults................................ 59
SECTION 703. Certain Rights of Trustee......................... 60
SECTION 704. Not Responsible for Recitals or Issuance of
Securities........................................ 61
SECTION 705. May Hold Securities............................... 61
SECTION 706. Money Held in Trust............................... 62
SECTION 707. Compensation and Reimbursement.................... 62
SECTION 708. Disqualification; Conflicting Interests........... 63
SECTION 709. Corporate Trustee Required; Eligibility........... 63
SECTION 710. Resignation and Removal; Appointment of
Successor......................................... 63
SECTION 711. Acceptance of Appointment by Successor............ 65
SECTION 712. Merger, Conversion, Consolidation or
Succession to Business............................ 67
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<PAGE> 6
PAGE
SECTION 713. Preferential Collection of Claims Against
Company........................................... 67
SECTION 714. Appointment of Authenticating Agent............... 67
ARTICLE VIII
Holders' Lists And Reports By Trustee And Company
SECTION 801. Company to Furnish Trustee Names and
Addresses of Holders.............................. 69
SECTION 802. Preservation of Information; Communications
to Holders........................................ 70
SECTION 803. Reports by Trustee................................ 71
SECTION 804. Reports by Company................................ 71
ARTICLE IX
Consolidation, Merger, Lease, Sale or Transfer
SECTION 901. When Company May Merge, Etc....................... 73
SECTION 902. Opinion of Counsel................................ 73
SECTION 903. Successor Corporation Substituted................. 73
ARTICLE X
Supplemental Indentures
SECTION 1001. Supplemental Indentures Without Consent of
Holders........................................... 74
SECTION 1002. Supplemental Indentures with Consent of
Holders........................................... 75
SECTION 1003. Execution of Supplemental Indentures.............. 77
SECTION 1004. Effect of Supplemental Indentures................. 77
SECTION 1005. Conformity with Trust Indenture Act............... 77
SECTION 1006. Reference in Securities to Supplemental
Indentures........................................ 77
ARTICLE XI
Covenants
SECTION 1101. Payments of Securities............................ 78
SECTION 1102. Maintenance of Office or Agency................... 78
SECTION 1103. Corporate Existence............................... 79
SECTION 1104. Payment of Taxes and Other Claims................. 79
SECTION 1105. Maintenance of Properties......................... 79
SECTION 1106. Compliance Certificates........................... 80
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<PAGE> 7
PAGE
SECTION 1107. Commission Reports................................ 80
SECTION 1108. Waiver of Stay, Extension or Usury Laws........... 81
SECTION 1109. Money for Securities Payments to Be Held in
Trust............................................. 81
SECTION 1110. Limitation on Liens............................... 83
SECTION 1111. Limitation on Sale and Leaseback
Transactions...................................... 84
SECTION 1112. Waiver of Certain Covenants....................... 85
ARTICLE XII
Redemption of Securities
SECTION 1201. Applicability of Article.......................... 86
SECTION 1202. Election to Redeem; Notice to Trustee............. 86
SECTION 1203. Selection by Trustee of Securities to Be
Redeemed.......................................... 86
SECTION 1204. Notice of Redemption.............................. 87
SECTION 1205. Deposit of Redemption Price....................... 88
SECTION 1206. Securities Payable on Redemption Date............. 88
SECTION 1207. Securities Redeemed in Part....................... 88
ARTICLE XIII
Sinking Funds
SECTION 1301. Applicability of Article.......................... 89
SECTION 1302. Satisfaction of Sinking Fund Payments with
Securities........................................ 89
SECTION 1303. Redemption of Securities for Sinking
Fund.............................................. 89
ARTICLE XIV
Defeasance and Covenant Defeasance
SECTION 1401. Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance.......... 90
SECTION 1402. Defeasance and Discharge.......................... 90
SECTION 1403. Covenant Defeasance............................... 91
SECTION 1404. Conditions to Defeasance or Covenant
Defeasance........................................ 92
SECTION 1405. Deposited Money and Government Obligations
To Be Held In Trust............................... 94
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<PAGE> 8
PAGE
ARTICLE XV
Miscellaneous
SECTION 1501. Miscellaneous..................................... 94
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<PAGE> 9
MICHIGAN CONSOLIDATED GAS COMPANY
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of June 1, 1998
Trust Indenture
Indenture Section
Act Section
Section 310(a)(1)....................................... 709
(a)(2)....................................... 709
(a)(3)....................................... Not Applicable
(a)(4)....................................... Not Applicable
(b) ........................................ 708, 710
Section 311(a) ........................................ 713
(b) ........................................ 713
Section 312(a) ........................................ 801, 802(a)
(b) ........................................ 802(b)
(c) ........................................ 802(c)
Section 313(a) ........................................ 803(a)
(b) ........................................ Not Applicable
(c) ........................................ 803(a), 803(b)
(d) ........................................ 803(b)
Section 314(a) ........................................ 804
(b) ........................................ Not Applicable
(c)(1)....................................... 102
(c)(2)....................................... 102
(c)(3)....................................... Not Applicable
(d) ........................................ Not Applicable
(e) ........................................ 102
Section 315(a) ........................................ 701(a)
(b) ........................................ 702
(c) ........................................ 701(b)
(d) ........................................ 701(c)
(d)(1)....................................... 701(a), 701(c)
(d)(2)....................................... 701(c)
(d)(3)....................................... 701(c)
(e) ........................................ 614
Section 316(a)(1)(A).................................... 612
(a)(1)(B).................................... 602, 613
(a)(2)....................................... Not Applicable
(b) ........................................ 608
Section 317(a)(1)....................................... 603
(a)(2)....................................... 604
(b) ........................................ 1109
Section 318(a) ........................................ 107
- - --------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
-viii-
<PAGE> 10
INDENTURE, dated as of June 1, 1998, between MICHIGAN
CONSOLIDATED GAS COMPANY, a corporation duly organized and existing under the
laws of the State of Michigan (herein called the "COMPANY"), having its
principal office at 500 Griswold Street, Detroit, Michigan 48226, 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 (herein called
the "TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its senior
debentures, notes or other evidences of indebtedness (herein called the
"SECURITIES"), to be issued in one or more series as in this Indenture provided.
Subject to the provisions of Section 408 hereof, the Company has
issued First Mortgage Bonds (as hereinafter defined) and has issued and
delivered Collateral Bonds to the Trustee to hold in trust for the benefit of
the respective Holders (as hereinafter defined) from time to time of the
related issue of Securities. Any payment by the Company of principal of,
premium, if any, and interest on, a series of First Mortgage Bonds will be
applied by the Trustee to satisfy the Company's obligations with respect to the
principal of, premium, if any, and interest on, the related issue of Securities.
Pursuant to the terms and provisions hereof, the Company may issue and deliver
to the Trustee additional First Mortgage Bonds for such purpose or require the
Trustee to deliver to the Company for cancellation any and all Collateral Bonds
held by the Trustee.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
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<PAGE> 11
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(4) the word "INCLUDING" (and with correlative meaning "INCLUDE") means
including, without limiting the generality of, any description preceding
such term; and
(5) the words "HEREIN," "HEREOF" and "HEREUNDER" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Seven, are defined in that
Article.
"ACT," when used with respect to any Holder, has the meaning
specified in Section 104.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
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<PAGE> 12
"AUTHENTICATING AGENT" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Securities.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means the board of directors of the Company;
provided, however, that when the context refers to actions or resolutions of
the Board of Directors, then the term "Board of Directors" shall also mean any
duly authorized committee of the Board of Directors of the Company or Officer
authorized to act with respect to any particular matter to exercise the power
of the Board of Directors of the Company.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment are authorized or obligated
by law or regulation to close.
"CAPITAL STOCK" of any Person shall mean any and all shares, interests,
participations or other equivalents of or interests in (however designated)
equity of such Person, including any preferred stock, but excluding any debt
securities convertible into such equity.
"CAPITALIZED LEASE OBLIGATION" means an obligation under a lease that
is required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligation shall
be the capitalized amount of such obligation determined in accordance with such
principles.
"COLLATERAL BONDS," shall mean any First Mortgage Bonds issued by the
Company under the First Mortgage Indenture and issued and delivered to the
Trustee pursuant to Section 406.
"COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
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<PAGE> 13
"COMMON DEPOSITARY" has the meaning specified in Section 304.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President
or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Controller, an Assistant Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 111 Wall Street, 5th Floor, New York,
New York 10043, Attention: Corporate Agency and Trust Department, or such other
address as the Trustee may designate from time to time by notice to the Holders
and the Company, or the principal corporate trust office of any successor
Trustee (or such other address as a successor Trustee may designate from time
to time by notice to the Holders and the Company).
"COVENANT DEFEASANCE" has the meaning specified in Section 1403.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEFAULT" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DEFEASANCE" has the meaning specified in Section 1402.
"DOLLARS" and "$" means lawful money of the United States of America.
"EVENT OF DEFAULT" has the meaning specified in Section 601.
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<PAGE> 14
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated
thereunder.
"FIRST MORTGAGE BONDS" shall mean all First Mortgage Bonds issued by
the Company and outstanding under the First Mortgage Indenture, including in
all events any Collateral Bonds issued and delivered to and held by the Trustee.
"FIRST MORTGAGE INDENTURE" shall mean the 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, 1944 between the
Company and the Trustee and Robert T. Kirchner which became effective on April
1, 1994, as supplemented and amended by the supplemental indentures thereto.
"HOLDER" or "SECURITYHOLDER" means a Person in whose name a Security is
registered in the Security Register.
"INDEBTEDNESS" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such Person is
responsible or liable; (ii) all Capitalized Lease Obligations of such Person;
(iii) all obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all obligations under
any title retention agreement (but excluding trade accounts payable arising in
the ordinary course of business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit); (v) all obligations of the type referred to
in clauses (i) through (iv) of other Persons and all dividends of other Persons
for the payment of which, in either case, such Person is responsible or liable
as obligor, guarantor or otherwise; and (vi) all obligations of the type
referred to in clauses (i) through (v) of other Persons secured by any Lien on
any property or asset of such Person (whether or not such obligation is assumed
by such Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured.
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<PAGE> 15
"INDENTURE" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 301.
"INITIAL SECURITIES" shall mean Securities in an aggregate principal
amount of $_______ authenticated and delivered upon the execution of this
Indenture.
"INTEREST," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"INTEREST PAYMENT DATE," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"LIEN," means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
"MATURITY," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"MORTGAGE," shall mean and include any mortgage, pledge, lien or
security interest.
"MORTGAGE TRUSTEE," shall mean the Person serving as trustee at the
time under the First Mortgage Indenture.
"OFFICER" means the Chairman of the Board, the Vice Chairman of the
Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Assistant Secretary of the
Company.
"OFFICER'S CERTIFICATE" means a certificate signed by an Officer and
delivered to the Trustee.
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<PAGE> 16
"OPINION OF COUNSEL" means a written opinion of counsel, who may be an
employee of or counsel for the Company, and who shall be reasonably acceptable
to the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 602.
"OUTSTANDING," when used with respect to Securities or Securities of
any series, means, as of the date of determination, all such Securities
theretofore authenticated and delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made;
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; and
(iv) Securities which have been defeased pursuant to Section 1402;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (a) the
principal amount of an Original Issue Discount Security that shall be deemed
to be Outstanding for such purposes shall be that portion of the principal
amount thereof that could be declared to be due and
-7-
<PAGE> 17
payable upon the occurrence of an Event of Default and the continuation thereof
pursuant to the terms of such Original Issue Discount Security as of the date of
such determination and (b) Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company. The Company may act as Paying Agent with respect to any Securities
issued hereunder.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLACE OF PAYMENT," when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"PROJECT FINANCE INDEBTEDNESS" means Indebtedness of a Subsidiary
secured by a Lien on any property acquired, constructed or improved by such
Subsidiary after the date of this Indenture which Lien is created or assumed
contemporaneously with, or within 120 days after, such acquisition or
completion of such construction or improvement, or within six months thereafter
-8-
<PAGE> 18
pursuant to a firm commitment for financing arranged with a lender or investor
within such 120-day period, to secure or provide for the payment of all or any
part of the purchase price of such property or the cost of such construction or
improvement, or on any property existing at the time of acquisition thereof;
provided that such a Lien shall not apply to any property theretofore owned by
any such Subsidiary other than, in the case of any such construction or
improvement, any theretofore unimproved real property on which the property so
constructed or the improvement is located; and provided further that such
Indebtedness, by its terms, shall limit the recourse of any holder of such
Indebtedness (or trustee on such holder's behalf) in the event of any default in
such Indebtedness to the assets subject to such Liens and the capital stock of
the Subsidiary issuing such Indebtedness. Notwithstanding the foregoing, Project
Finance Indebtedness shall include all Indebtedness that would constitute
Project Finance Indebtedness but for the fact that such Indebtedness was issued
prior to the date of this Indenture and taking into account the fact that the
property subject to the Lien may have been acquired prior to the date of this
Indenture.
"REDEMPTION DATE," when used with respect to any Security of any series
to be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE," when used with respect to any Security of any
series to be redeemed, means the price at which it is to be redeemed pursuant
to this Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"RELATED ISSUE OF COLLATERAL BONDS," shall mean, when used
in reference to an issue of Notes, the issue of Collateral Bonds,
having the same stated rate or rates of interest (or interest calculated in the
same manner), Interest Payment Dates, stated maturity date and redemption
provisions, and in the same aggregate principal amount, delivered to the
Trustee pursuant to Section 406 in connection with the initial authentication
and issuance of such Notes pursuant to Section 303.
"RELATED ISSUE OF SUBSTITUTED COLLATERAL BONDS," shall mean, when used
in reference to an issue of Notes, the issue of Substituted Collateral Bonds,
having the same stated rate or rates of interest (or interest calculated in the
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<PAGE> 19
same manner), Interest Payment Dates, stated maturity date and redemption
provisions, and in the same aggregate principal amount, delivered to the Trustee
pursuant to Section 409.
"RELEASE DATE," shall mean the date as of which all First Mortgage
Bonds, other than Collateral Bonds, have been retired through payment,
redemption, or otherwise (including those First Mortgage Bonds the payment for
which has been provided for in accordance with the First Mortgage Indenture)
at, before or after the maturity thereof [provided that no Default or Event of
Default has occurred and is continuing.]
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means
any vice president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any senior trust officer, any trust officer or assistant trust
officer, the controller or any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SIGNIFICANT SUBSIDIARY" means a Subsidiary or Subsidiaries of the
Company possessing assets (including the assets of its own Subsidiaries but
without regard to the Company or any other Subsidiary) having a book value, in
the aggregate, equal to not less than 10% of the book value of the aggregate
assets of the Company and its Subsidiaries calculated on a consolidated basis.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"STATED MATURITY," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
-10-
<PAGE> 20
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall
mean a Subsidiary of the Company.
"SUBSTITUTED COLLATERAL BONDS," shall mean any mortgage bonds
issued by the Company under a Substituted Mortgage Indenture and delivered to
the Trustee pursuant to Section 409 hereof.
"SUBSTITUTED MORTGAGE INDENTURE" shall mean a mortgage indenture of
the Company designated by the Company to the Trustee as a Substituted Mortgage
Indenture pursuant to Section 409.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was executed;
provided, however, that in the event that such Act is amended after such date,
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as so amended.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"U.S. DEPOSITARY" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more permanent
global Securities, the Person designated as U.S. Depositary by the Company
pursuant to Section 301, which must be a clearing agency registered under the
Exchange Act until a successor U.S. Depositary shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "U.S.
Depositary" shall mean or include each Person who is then a U.S. Depositary
hereunder, and if at any time there is more than one such Person, "U.S.
Depositary" shall mean the U.S. Depositary with respect to the Securities of
that series.
"U.S. GOVERNMENT OBLIGATIONS" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
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<PAGE> 21
America the timely payment of which is unconditionally guaranteed by the full
faith and credit of the United States of America which, in either case, are not
callable or redeemable at the option of the issuer thereof or otherwise subject
to prepayment, and shall also include a depository receipt issued by a New York
Clearing House bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment or interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt or from any amount held by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"VALUE" means, with respect to a Sale and Leaseback Transaction, as of
any particular time, the amount equal to the greater of (i) the net proceeds
of the sale and transfer of the real property leased pursuant to such Sale and
Leaseback Transaction or (ii) the fair market value, in the good faith opinion
of the Board of Directors of the Company, of such real property at the time of
entering into such Sale and Leaseback transaction, in either case divided first
by the number of full years of the term of the lease and then multiplied by the
number of full years of such term remaining at the time of determination,
without regard to any renewal or extension options contained in the lease.
"VICE PRESIDENT," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, other than as action
permitted by Sections 205 and 804, the Company shall furnish to the Trustee an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating
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to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
a. a statement that each individual signing such
certificate or opinion has read such covenant or condition and
the definitions herein relating thereto;
b. a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
c. a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
d. a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such Officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Officer or Officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care
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<PAGE> 23
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
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<PAGE> 24
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(e) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Company
shall have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
a. the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee and received by the Trustee at its Corporate Trust
Office, Attention: [Waffaa Orfy] or
b. the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this Indenture, attention: Secretary, or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
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Where this Indenture or any Security provides for notice to Holders of
any event, such notice shall be deemed sufficiently given (unless otherwise
herein or in such Security expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders or the validity of the proceedings to which such notice relates.
Where this Indenture or any Security provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or shall be
excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
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<PAGE> 26
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws (other than the choice of law provisions) of the
State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day or on such other day as may be set out in the Officer's
Certificate pursuant to Section 301 at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
SECTION 114. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or
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<PAGE> 27
their creation. Each Securityholder, by accepting a Security, waives and
releases all such liability. Such waivers and releases are part of the
consideration for the issuance of the Securities.
ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The Trustee's certificates of authentication shall be in substantially
the form set forth in this Article.
The definitive Securities shall be photocopied, printed, lithographed
or engraved on steel engraved borders or may be produced in any other manner,
all as determined by the Officers executing such Securities, as evidenced by
their execution of such Securities.
SECTION 202. Form of Face of Security.
[If the Security is an Original Issue Discount Security, insert--FOR
PURPOSES OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), THE AMOUNT OF ORIGINAL ISSUE DISCOUNT (AS DEFINED IN SECTION 1273(a)(1)
OF THE CODE AND TREASURY REGULATION SECTION 1.1273-1(a) WITH RESPECT TO THIS
SECURITY IS , THE ISSUE PRICE (AS DEFINED IN TREASURY REGULATION SECTION
1.1273-2) OF THIS SECURITY IS
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<PAGE> 28
_________, THE ISSUE DATE (AS DEFINED IN SECTION 1275(a)(2) OF THE CODE AND
TREASURY REGULATION SECTION 1.1273-2) OF THIS SECURITY IS ________ AND THE YIELD
TO MATURITY OF THIS SECURITY IS ________.
MICHIGAN CONSOLIDATED GAS COMPANY
.........................
No._________ [$]_________
MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and
existing under the laws of Michigan (herein called the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to ___________, or registered
assigns, the principal sum of ___________ [Dollars] on ___________________ [If
the Security is to bear interest prior to Maturity, insert--, and to pay
interest thereon from __________ ______________________ or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
[semi-annually] [quarterly] [monthly] on _______ and ________ in each year,
commencing _____________, at the rate of _____% per annum, until the principal
hereof is paid or made available for payment [If applicable insert--, and (to
the extent that the payment of such interest shall be legally enforceable) at
the rate of % per annum on any overdue principal and premium and on any overdue
installment of interest]. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the _____ of _____ (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be
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<PAGE> 29
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity,
insert--The principal of this Security shall not bear interest except in the
case of a default in payment of principal upon acceleration, upon redemption or
at Stated Maturity and in such case the overdue principal of this Security shall
bear interest at the rate of ____% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date of
such default in payment to the date payment of such principal has been made or
duly provided for. Interest on any overdue principal shall be payable on demand.
Any such interest on any overdue principal that is not so paid on demand shall
bear interest at the rate of ____% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date of
such demand for payment to the date payment of such interest has been made or
duly provided for, and such interest shall also be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert--any such] interest on this Security will be made at the office or agency
of the Company maintained for that purpose in ______, in Dollars [if applicable,
insert--; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register].
Prior to the Release Date (as hereinafter defined), the Notes will be
secured by First Mortgage Bonds (the "Collateral Bonds") issued and delivered
by the Company to the Trustee for the benefit of the Holders of the Securities
(as defined herein), issued under the 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, 1944 between the Company, and Citibank,
N.A. and Robert T. Kirchner (together, the "Mortgage Trustee") which became
effective on April 1, 1994, as supplemented and amended by the supplemental
indentures thereto (the "First Mortgage Indenture"). Reference is made to the
First Mortgage Indenture and the Indenture for a description of the rights of
the Trustee as holder of the Collateral Bonds, the property
mortgaged and pledged under the First Mortgage Indenture, the rights of the
Company and of the Mortgage Trustee in respect thereof, the duties and
immunities of the applicable Mortgage Trustee, the terms and conditions upon
which the Collateral Bonds are held by the Trustee for the benefit of the
Holders of Securities, and the circumstances under which additional First
Mortgage Bonds may be issued.
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<PAGE> 30
FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN
COLLATERAL BONDS) ISSUED UNDER THE FIRST MORTGAGE INDENTURE HAVE BEEN RETIRED
THROUGH PAYMENT, REDEMPTION OR OTHERWISE (INCLUDING THOSE FIRST MORTGAGE BONDS
THE PAYMENT FOR WHICH HAS BEEN PROVIDED FOR IN ACCORDANCE WITH THE FIRST
MORTGAGE INDENTURE) AT, BEFORE OR AFTER THE MATURITY THEREOF PROVIDED THAT NO
DEFAULT OR EVENT OF DEFAULT UNDER THE INDENTURE HAS OCCURRED AND IS CONTINUING
(THE "RELEASE DATE"), THE COLLATERAL BONDS SHALL CEASE TO SECURE THE SECURITIES
IN ANY MANNER, AND, AT THE OPTION OF THE COMPANY, THE SECURITIES EITHER (A)
WILL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (B) WILL BE SECURED
BY FIRST MORTGAGE BONDS ISSUED UNDER AN INDENTURE OTHER THAN THE FIRST MORTGAGE
INDENTURE. IN CERTAIN CIRCUMSTANCES PRIOR TO THE RELEASE DATE AS PROVIDED IN
THE INDENTURE, THE COMPANY IS PERMITTED TO REDUCE THE AGGREGATE PRINCIPAL
AMOUNT OF AN ISSUE OF COLLATERAL BONDS HELD BY THE TRUSTEE, BUT IN NO EVENT
PRIOR TO THE RELEASE DATE TO AN AMOUNT LESS THAN THE AGGREGATE PRINCIPAL AMOUNT
OF THE RELATED ISSUE OF NOTES INITIALLY ISSUED CONTEMPORANEOUSLY WITH SUCH
COLLATERAL BONDS.
[Include the following paragraph if the Company elects to issue
Substituted Collateral Bonds (as defined in the Indenture): The Securities will
be secured by First Mortgage Bonds (the "Collateral Bonds") delivered by the
Company to the Trustee for the benefit of the Holders of the Securities, issued
under [the Substituted Mortgage Indenture (as defined in the Indenture)] from
the Company to ________________, as trustee (the "Mortgage Trustee"). Reference
is made to the Substituted Mortgage Indenture and the Indenture for a
description of the rights of the Trustee as holder of the Substituted
Collateral Bonds, the property mortgaged and pledged under the Substituted
Mortgage Indenture, the rights of the Company and of the Mortgage Trustee in
respect thereof, the duties and immunities of the Mortgage Trustee, the terms
and conditions upon which the Substituted Collateral Bonds are secured and the
circumstances under which additional Substituted Collateral Bonds may be
issued.]
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE> 31
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
MICHIGAN CONSOLIDATED GAS COMPANY
By___________________________
Attest:
___________________ [SEAL]
SECTION 201. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of June 1, 1998 (herein called the
"Indenture"), between the Company and Citibank, N.A., as Trustee (herein called
the "Trustee," which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [, limited in aggregate principal amount to $ ].
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 nor more than 45 days' notice by first class
mail, [if applicable, insert--(1) on ______ in any year commencing with the year
______ and ending with the year _____ through operation of the sinking fund for
this series at a Redemption Price equal to 100% of the principal amount, and
(2)] at any time [on or after ________, ________], as a whole or in part, at the
election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount):
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<PAGE> 32
If redeemed [on or before ________________, ____%, and if redeemed]
during the 12-month period beginning _________________ of the years indicated,
Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
and thereafter at a Redemption Price equal to %____ of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued and unpaid
interest to the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 nor more than 45 days' notice by first class
mail, (1) on ____________ in any year commencing with the year ________________
and ending with the year ____ through operation of the sinking fund for this
series at the Redemption Prices for redemption through operation of the sinking
fund (expressed as percentages of the principal amount) set forth in the table
below, and (2) at any time [on or after ], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below:
If redeemed during a 12-month period beginning _________________ of the
years indicated,
Redemption Price
For Redemption Redemption Price for
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
- - ---- ----------------- ----------------------
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<PAGE> 33
and thereafter at a Redemption Price equal to __% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued and unpaid interest to the Redemption
Date, but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to _______,
redeem any Securities of this series as contemplated by [clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any refunding operation
by the application, directly or indirectly, of moneys borrowed having an
interest cost to the Company (calculated in accordance with generally accepted
financial practice) of less than __% per annum.]
[The sinking fund for this series provides for the redemption on
_______ in each year beginning with the year _____ and ending with the year
_______ of [not less than] $____________ [("mandatory sinking fund") and not
more than $____________] aggregate principal amount of Securities of this
series.] [Securities of this series acquired or redeemed by the Company
otherwise than through [mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to be made--in
the [inverse] order in which they become due.]
[In the event of redemption of this Security in part only, a new
Security or Securities of this series for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
[If the Security is not an Original Issue Discount Security, insert --
If any Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.] [If the Security is an Original Issue Discount Security, insert --
If an Event of Default with respect to Securities of this series shall occur and
be continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal--insert formula for determining the
amount.] Upon payment (i) of the amount of principal so declared due and payable
and (ii) of
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<PAGE> 34
interest on any overdue principal and overdue interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall terminate.
[This Security is subject to Defeasance as described in the Indenture.]
The Indenture may be modified by the Company and the Trustee without
consent of any Holder with respect to certain matters as described in the
Indenture. In addition, the Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of a majority in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall bind such Holder and all future Holders of this
Security and of any Security 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 Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security 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 Security 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 Securities of
this series, of authorized denominations and for the same Stated Maturity and
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<PAGE> 35
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
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 Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture imposes certain limitations on the ability of the Company
to, among other things, merge or consolidate with any other Person or sell,
assign, transfer or lease all or substantially all of its properties or assets
[If other covenants are applicable pursuant to the provisions of Section 301,
insert here]. All such covenants and limitations are subject to a number of
important qualifications and exceptions. The Company must report periodically to
the Trustee on compliance with the covenants in the Indenture.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under this
Security or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder, by accepting a Security,
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Security.
[If applicable, insert -- Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures ("CUSIP"), the
Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the Holders of the Securities of this series. No
representation is made as to the correctness or accuracy of such numbers as
printed on the Securities of this series and reliance may be placed only on the
other identification numbers printed hereon.]
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<PAGE> 36
All capitalized terms used in this Security without definition which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
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(Insert assignee's social security or tax I.D. number)
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(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
agent to transfer this Security 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 Security)
Signature Guaranty: __________________________________________________
[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:__________________________________________
SECTION 204. Form of Trustee's Certificate of Authentication.
Dated: ________________
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This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
-----------------------------------
As Trustee
By
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Authorized Signatory
SECTION 205. Securities in Global Form.
If Securities of a series are issuable in global form, as contemplated
by Section 301, then, notwithstanding the provisions of Section 302, any such
Security shall represent such of the Outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the
aggregate amount of Outstanding Securities from time to time endorsed thereon
and that the aggregate amount of Outstanding Securities represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of a
Security in global form to reflect the amount, or any increase or decrease in
the amount, of Outstanding Securities represented thereby shall be made in such
manner and upon instructions given by such Person or Persons as shall be
specified therein or in the Company Order to be delivered to the Trustee
pursuant to Section 303 or Section 304. Subject to the provisions of Section
303 and, if applicable, Section 304, the Trustee shall deliver and redeliver
any Security in permanent global form in the manner and upon instructions given
by the Person or Persons specified therein or in the applicable Company Order.
If a Company Order pursuant to Section 303 or 304 has been, or simultaneously
is, delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Security in global form shall be in writing but
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel.
The provisions of Section 309 shall apply to any Security represented
by a Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 102 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby.
Notwithstanding the provisions of Sections 201 and 307, unless
otherwise specified as contemplated by Section 301,
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payment of principal of, premium, if any, and interest on any Security in
permanent global form shall be made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided in
the preceding paragraph, the Company, the Trustee and any agent of the Company
and the Trustee shall treat a Person as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security as shall be
specified in a written statement of the Holder of such permanent global
Security.
SECTION 206. CUSIP Number
The Company in issuing Securities of any series may use a "CUSIP"
number, and, if so, the Trustee may use the CUSIP number in notices of
redemption or exchange as a convenience to Holders of such series; provided,
that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed on the notice or on the
Securities of such series, and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP number of any series of
Securities.
SECTION 207. Form of Legend for the Securities in Global Form.
Any Security in global form authenticated and delivered hereunder shall
bear a legend in substantially the following form:
"This Security is in global form within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Common Depositary or
a U.S. Depositary. Unless and until it is exchanged in whole or in part for
Securities in certificated form, this Security may not be transferred except as
a whole by the Common Depositary or a U.S. Depositary or by a nominee of the
Common Depositary or a nominee of the U.S. Depositary as the case may be."
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ARTICLE III
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or more series.
There shall be established in or pursuant to a Board Resolution, and set forth
in an Officer's Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Sections 304, 305, 306, 1006 or 1207);
(3) whether any Securities of the series are to be issuable in
permanent global form with or without coupons and, if so, (i) whether
beneficial owners of interests in any such permanent global Security may
exchange such interests for Securities of such series and of like tenor of
any authorized form and denomination and the circumstances under which any
such exchanges may occur, if other than in the manner provided in Section
305, and (ii) the name of the Common Depositary (as defined in Section 304)
or the U.S. Depositary, as the case may be, with respect to any global
Security;
(4) the date or dates on which the principal of the Securities of
the series is payable;
(5) the rate or rates at which the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall accrue,
the Interest Payment Dates on which such interest shall be payable and the
Regular Record Date for the interest payable on any Interest Payment Date
and, if applicable to such series of Securities, the
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basis points and United States Treasury rate(s) and any other rates to be
used in calculating the reset rate;
(6) the place or places where the principal of (and premium, if any)
and interest on Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company, pursuant to any
sinking fund or otherwise;
(8) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation, and, where applicable, the
obligation of the Company to select the Securities to be redeemed;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(10) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 602;
(11) additional Events of Default with respect to Securities of the
series, if any, other than those set forth herein;
(12) if either or both of Section 1402 and Section 1403 shall be
inapplicable to the Securities of the series (provided that if no such
inapplicability shall be specified, then both Section 1402 and Section 1403
shall be applicable to the Securities of the series);
(13) if other than U.S. dollars, the currency or currencies or units
based on or related to currencies in which the Securities of such series
shall be denominated and in which payments or principal of, and any
premium and interest on, such Securities shall or may by payable;
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(14) additional covenants with respect to Securities of the series, if
any, other than those set forth herein;
(15) if prior to the Release Date, the designation of the Related Issue
of Collateral Bonds being delivered to the Trustee in connection with the
issuance of such Securities,
(16) if on or after the Release Date, the designation of the Related
Issue of Substituted Collateral Bonds, if any,
(17) if other than the Trustee, the identity of the Registrar and
any Paying Agent; and
(18) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or
pursuant to such Board Resolution and set forth in such Officer's Certificate
or in any such Indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee at or prior to the delivery of the Officer's
Certificate setting forth, or providing the manner for determining, the terms
of the Securities of such series.
SECTION 302. Denominations.
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by
its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Securities may be manual or facsimile. The seal of the
Company may be in the form of a facsimile thereof and may
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be impressed, affixed, imprinted or otherwise reproduced on the Securities.
Typographical and other minor errors or defects in any such reproduction of the
seal or any such signature shall not affect the validity or enforceability of
any Security that has been duly authenticated and delivered by the Trustee.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and make such Securities
available for delivery. If the form or terms of the Securities of the series
have been established in or pursuant to one or more Board Resolutions as
permitted by Sections 201 and 301, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Sections 315(a) through (d) of the Trust Indenture Act) shall be fully
protected in relying upon, an Opinion of Counsel stating,
(a) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, except to the extent enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and
by the effect of general principles of equity
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(regardless of whether enforceability is considered in a proceeding in
equity or at law); and
(d) if prior to the Release Date, that the Related Issue of Collateral
Bonds being delivered to the Trustee in connection with the issuance of such
Securities when authenticated and delivered by the Mortgage Trustee and
issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and binding obligations of
the Company, enforceable in accordance with their terms, except to the
extent enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement
of creditors' rights generally and by the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding
in equity or at law) and except as enforcement of provisions thereof may be
limited by state laws affecting the remedies for the enforcement of the
security provided for in the First Mortgage Indenture; and that such
Collateral Bonds are entitled to the benefit of the applicable First
Mortgage Indenture, equally and ratably, with all First Mortgage Bonds and
other Collateral Bonds (if any) outstanding under the applicable First
Mortgage Indenture, except as to sinking fund provisions;
(e) if any Collateral Bonds are to be delivered, that the Related Issue
of Collateral Bonds being delivered to the Trustee in connection with the
issuance of such Securities when authenticated and delivered by the Mortgage
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
binding obligations of the Company, enforceable in accordance with their
terms, except to the extent enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and by the effect
of general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and except as enforcement of
provisions thereof may be limited by state laws affecting the remedies for
the enforcement of the security provided for in the Substituted Mortgage
Indenture; and that such Substituted Collateral Bonds are entitled to the
benefit of the Substituted Mortgage Indenture, equally and ratably, with all
Substituted Collateral Bonds (if any) outstanding thereunder, except as to
sinking fund provisions;
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(f) that no consent, approval, authorization, order, registration or
qualification of or with any court or any governmental agency or body
having jurisdiction over the Company is required for the execution and
delivery of such Securities by the Company, except such as have been
obtained (except that no opinion need be expressed as to state securities
or Blue Sky laws).
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonable acceptable to the Trustee, or in the written
opinion of counsel to the Trustee (which counsel may be an employee of the
Trustee) such authentication may not lawfully be made or would involve the
Trustee in personal liability.
Notwithstanding the provisions of Section 301 and of the immediately
preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officer's
Certificate otherwise required pursuant to Section 301 or the Company
Order and Opinion of Counsel otherwise required pursuant to the immediately
preceding paragraph at or prior to the time of authentication of each
Security of such series if such documents are delivered at or prior to the
authentication upon original issuance of the first Security of such series
to be issued.
If the Company shall establish pursuant to Section 301 that the
Securities of a series are to be issued in the form of one or more global
Securities, then the Company shall execute and the Trustee shall, in
accordance with this Section and the Company Order with respect to the
authentication and delivery of such series, authenticate and deliver one or
more global Securities that (i) shall be in an aggregate amount equal to
the aggregate principal amount specified in such Company Order, (ii) shall
be registered in the name of the Common Depositary or U.S. Depositary, as
the case may be, therefor or its nominee, and (iii) shall be made available
for delivery by the Trustee to such depositary or pursuant to such
depositary's instruction.
Each depositary designated pursuant to Section 301 must, at the time
of its designation and at all times while it serves as depositary, be a
clearing agency registered under the Exchange Act and any other applicable
statute or regulation.
Unless otherwise provided for in the form of Security, each Security
shall be dated the date of its authentication.
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No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided
for herein executed by the Trustee by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate
and make available for delivery, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of
such Securities.
In the case of Securities of any series, such temporary Securities
may be in global form, representing all or a portion of the Outstanding
Securities of such series.
Except in the case of temporary Securities in global form (which
shall be exchanged in accordance with the provisions of Section 305), if
temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of
such series at the office or agency of the Company in a Place of Payment
for that series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series, the
Company shall execute and the Trustee shall authenticate and make available
for delivery in exchange therefor a like principal amount of definitive
Securities of the same series of authorized denominations and of like
tenor. Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
If temporary Securities of any series are issued in global form, any
such temporary global Security shall, unless otherwise provided
therein, be delivered to the office of a
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depositary or common depositary (the "COMMON DEPOSITARY") for credit to the
respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
SECTION 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any
other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "SECURITY REGISTER") in which,
subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Securities and of registration of
transfers of Securities. The Trustee is hereby appointed "SECURITY
REGISTRAR" for the purpose of registering Securities and transfers of
Securities as herein provided.
Upon surrender for registration of transfer of any Security of any
series at the office or agency of the Company in Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
make available for delivery, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any
authorized denominations and of a like aggregate principal amount and
Stated Maturity.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and Stated Maturity, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled
to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be
exchangeable only as provided in this paragraph. If the beneficial owners
of interests in a permanent global Security are entitled to exchange such
interests for Securities of such series and of like tenor and principal
amount of another authorized form and denomination, as specified and as
subject to the conditions contemplated by Section 301, then without
unnecessary delay but in any event not later than the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of that series in aggregate principal amount
equal to the principal
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amount of such permanent global Security, executed by the Company. On or
after the earliest date on which such interests may be so exchanged, such
permanent global Securities shall be surrendered from time to time by the
Common Depositary or the U.S. Depositary, as the case may be, and in
accordance with instructions given to the Trustee and the Common Depositary
or the U.S. Depositary, as the case may be (which instructions shall be in
writing but need not comply with Section 102 or be accompanied by an
Opinion of Counsel), as shall be specified in the Company Order with
respect thereto to the Trustee, as the Company's agent for such purpose, to
be exchanged, in whole or in part, for definitive Securities of the same
series without charge. The Trustee shall authenticate and make available
for delivery, in exchange for each portion of such surrendered permanent
global Security, a like aggregate principal amount of definitive Securities
of the same series of authorized denominations and of like tenor as the
portion of such permanent global Security to be exchanged which shall be in
the form of the Securities of such series; provided, however, that no such
exchanges may occur during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Securities
of that series selected for redemption under Section 1203 and ending at the
close of business on the day of such mailing. Promptly following any such
exchange in part, such permanent global Security shall be returned by the
Trustee to the Common Depositary or the U.S. Depositary, as the case may
be, or such other Common Depositary or U.S. Depositary referred to above in
accordance with the written instructions of the Company referred to above.
If a Security in the form specified for such series is issued in exchange
for any portion of a permanent global Security after the close of business
at the office or agency where such exchange occurs on (i) any Regular
Record Date and before the opening of business at such office or agency on
the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related
proposed date for payment of interest or Defaulted Interest, as the case
may be, such interest or Defaulted Interest will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of such Security in the form specified for such series, but will be
payable on such Interest Payment Date or proposed date for payment, as the
case may be, only to the Person to whom interest in respect of such portion
of such permanent global Security is payable in accordance with the
provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same
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benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed,
by the Holder thereof or his attorney duly authorized in writing.
Unless otherwise provided in the Securities to be transferred or
exchanged, no service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 1006 or 1207 not
involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under
Section 1203 and ending at the close of business on the day of such
mailing, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion
of any Security being redeemed in part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of the same series and
of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of that series duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Security of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date
(herein called "DEFAULTED INTEREST") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of
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such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Section 307 provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of
Securities of such series at his address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not inconsistent
with the requirements of any securities exchange on which such Securities
may be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this Section 307, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such
other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name such Security is registered as the owner of
such Security for the
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purpose of receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall
be affected by notice to the contrary.
None of the Company, the Trustee or any agent of the Company or the
Trustee shall have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interest of a Security in global form, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
Notwithstanding the foregoing, with respect to any Security in global form,
nothing herein shall prevent the Company or the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by any Common Depositary (or its nominee), as
a Holder, with respect to such Security in global form or impair, as between
such Common Depositary and owners of beneficial interests in such Security in
global form, the operation of customary practices governing the exercise of the
right of such Common Depositary (or its nominee) as holder of such Security in
global form.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver
to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities shall be held by the Trustee and
may be destroyed (and, if so destroyed, certification of their destruction
shall be delivered to the Company, unless, by a Company Order, the Company
shall direct that cancelled Securities be returned to it).
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall
be computed on the basis of a year of twelve 30-day months.
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ARTICLE IV
COLLATERAL BONDS; PLEDGED
SUBSTITUTED COLLATERAL BONDS
SECTION 401. Collateral Bonds Held by the Trustee
The Trustee, as a Holder of Collateral Bonds, shall attend any meeting
of Bondholders under the First Mortgage Indenture as to which it receives due
notice, or, at its option, shall deliver its proxy in connection therewith.
Either at such meeting, or otherwise where consent of Holders of First Mortgage
Bonds issued under the First Mortgage Indenture is sought without a meeting, the
Trustee shall vote all of the Collateral Bonds held by it, or shall consent or
withhold its consent with respect thereto, as directed by the Holders of not
less than a majority in the aggregate principal amount of the outstanding Notes;
provided, however, that the Trustee shall not be required to vote as such
Holders of any particular issue of Collateral Bonds in favor of, or give its
consent to, any action except upon notification by the Trustee to the Holders of
the related issue of Securities of such proposal and consent thereto of the
Holders of not less than a majority in aggregate principal amount of the
outstanding Securities of such issue.
SECTION 402. No Transfer of Collateral Bonds; Exception.
Except as required to effect an assignment to a successor trustee under
this Indenture or pursuant to Section 403 or Section 405, the Trustee shall not
sell, assign or transfer the Collateral Bonds and the Company shall issue stop
transfer instructions to the Mortgage Trustee and any transfer agent under the
First Mortgage Indenture to effect compliance with this Section 402.
SECTION 403. Delivery to the Company of All Collateral Bonds.
When the obligation of the Company to make payment with respect to the
principal of and premium, if any, and interest on any series of Collateral Bonds
shall cease and be discharged pursuant to Section 408 or Section 501, the
Trustee shall, upon written request of the Company, deliver to the Company all
of such Collateral Bonds, together with such appropriate instruments of transfer
or release as may be reasonably requested by the Company. All Collateral
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Bonds delivered to the Company in accordance with this Section 403 shall be
delivered by the Company to the Mortgage Trustee for cancellation.
SECTION 404. Further Assurances.
The Company, at its own expense, shall do such further lawful acts and
things, and execute and deliver such additional conveyances, assignments,
assurances, agreements and instruments, as may be necessary in order to better
assign, assure and confirm to the Trustee its interest in the Collateral Bonds
and for maintaining, protecting and preserving such interest 407 and the First
Mortgage Indenture. The Trustee may petition any courts of competent
jurisdiction to seek any relief it considers necessary or advisable in order to
maintain, protect and preserve such interest.
SECTION 405. Exchange and Surrender of Collateral Bonds.
At any time at the written direction of the Company, the Trustee shall
surrender to the Company all or part of the Collateral Bonds in exchange for
Collateral Bonds equal in aggregate outstanding principal amounts to, in
different denominations than, but of the same series and with all other terms
identical to, the Collateral Bonds so surrendered to the Company. In addition,
at any time a Security shall cease to be entitled to any benefit or security
under this Indenture pursuant to Section 501, the Trustee shall surrender an
equal principal amount of the Related Issue of Collateral, subject to the
limitations of this Section 405, to the Company for cancellation. The Trustee
shall, together with such Collateral Bonds, deliver to the Company such
appropriate instruments of transfer, and such appropriate instruments for
releasing the Company of its obligations under such surrendered Collateral
Bonds, as the Company may reasonably request. Prior to the surrender required by
this paragraph, the Trustee shall receive from the Company, and (subject to
Section 901) shall be fully protected in relying upon, an Officers' Certificate
stating (i) the aggregate outstanding principal amount of the Collateral Bonds
of the issue surrendered by the Trustee, after giving effect to such surrender,
(ii) the aggregate outstanding principal amount of the related issue of
Securities, (iii) that the surrender of the Collateral Bonds will not result in
any default under this Indenture, and (iv) that any Collateral Bonds to be
received in exchange for the Collateral Bonds being surrendered comply with the
provisions of this Section 407 and the First Mortgage Indenture.
The Company shall not be permitted to cause the surrender or exchange of
all or any part of an issue of Collateral Bonds contemplated in this Section
405, if after such surrender or exchange, the aggregate outstanding principal
amount of the related issue of Securities would exceed the aggregate outstanding
principal amount of such issue of
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Collateral Bonds held by the Trustee. Any Collateral Bonds received by the
Company pursuant to this Section 405 shall be delivered to the Mortgage Trustee
for cancellation.
SECTION 406. Acceptance of Additional Collateral Bonds.
Upon the issuance of Securities hereunder at any time prior to the Release
Date, the Company shall issue and deliver to the Trustee to hold in trust for
the benefit of the Holders of the Securities as described in Section 408, and
the Trustee shall accept therefor, a Related Issue of Collateral Bonds
registered in the name of the Trustee conforming to the requirements of Section
407.
SECTION 407. Terms of Collateral Bonds.
Each issue of Collateral Bonds delivered to the Trustee pursuant to Section
406 shall have the same stated rate or rates of interest (or interest calculated
in the same manner), Interest Payment Dates, stated maturity date and redemption
provisions, and shall be in the same aggregate principal amount, as the issue of
Securities in connection with which such Collateral Bonds shall have been issued
and delivered.
SECTION 408. Collateral Bonds as Security for Securities; Application of
Payment on Collateral Bonds.
Until the Release Date and subject to Article Five, the Related Issue of
Collateral Bonds delivered to the Trustee, in trust for the benefit of the
Holders of the applicable issue of Securities shall pay principal of, interest
and premium, if any, in accordance with their respective terms and shall serve
as security for any and all obligations of the Company under such Securities,
including, but not limited to (1) the full and prompt payment of the 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 this
Indenture or such related issue of Securities, either at the stated maturity
thereof upon acceleration of the maturity thereof or upon redemption (any such
payment with respect to such related issue of Securities to be made by the
Company through payment on the related issue of Collateral Bonds and applied by
the Trustee to satisfy the Company's corresponding obligations under such
Securities), 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 this Indenture or such related issue
of Securities. Any payment by the Company of principal of, premium, if any,
and interest on, a series of First Mortgage Bonds will be applied by the
Trustee to satisfy the Company's obligations with respect to the principal of,
premium, if any, and interest on, the related issue of Securities.
Notwithstanding anything in this Indenture to the contrary, from and after
the Release Date, the obligation of the Company to make payment with respect to
the principal of and premium, if any, and interest on the Collateral Bonds shall
cease and be discharged as provided in the supplemental
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trust indenture or indentures to the First Mortgage Indenture creating such
Collateral Bonds and the Collateral Bonds shall cease to secure in any manner
Securities theretofore or subsequently issued. From and after the Release
Date, any conditions to the issuance of Securities that refer or relate to
Collateral Bonds or the First Mortgage Indenture shall be inapplicable.
Following the Release Date, the Company shall cause the First Mortgage
Indenture to be closed and the Company shall not issue any additional First
Mortgage Bonds or Collateral Bonds under the First Mortgage Indenture. Notice
of the occurrence of the Release Date shall be given by the Trustee to the
Holders of the Securities in the manner provided in Section 106 not later than
30 days after the Company notifies the Trustee of the occurrence of the Release
Date.
SECTION 409. Substituted Collateral Bonds.
(a) The Company shall notify the Trustee not less than 90 days prior to
the Release Date that the Company has determined to deliver to the Trustee
on the Release Date Pledged Substituted Mortgage Bonds in an aggregate
principal amount equal to the aggregate principal amount of Securities
outstanding on the Release Date in trust for the benefit of the Holders
from time to time of the Securities issued under this Indenture as security
for any and all obligations of the Company under the Securities, including
but not limited to, (1) the full and prompt payment of the principal of and
premium, if any, on the Securities when and as the same shall become due
and payable in accordance with the terms and provisions of this Indenture
or the 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 the Securities when and as the same shall become
due and payable in accordance with the terms and provisions of this
Indenture or the Securities.
(b) The Pledged Substituted Mortgage Bonds to be delivered pursuant to
the notice described in Section 409(a) shall be delivered in separate
series and issues corresponding to the series and issues of Securities
outstanding on the Release Date, each issue of Pledged Substituted Mortgage
Bonds having the same stated rate or rates of interest (or interest
calculated in the same manner), Interest Payment Dates, stated maturity
date and redemption provisions, and in the same aggregate principal amount,
as the related issue of Securities outstanding on the Release Date.
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(c) The notice described in Section 409(a) shall also state that on
the Release Date the Company shall deliver to the Trustee a supplemental
indenture to this Indenture that will provide, among other things, that
upon the issuance of Securities hereunder on or after the Release Date, the
Company shall deliver to the Trustee in trust for the benefit of the
Holders as described in Section 409(a), and the Trustee shall accept
therefor, a Related Issue of Substituted Collateral Bonds registered
in the name of the Trustee and conforming to the requirements therein
specified.
(d) The determination whether to issue and deliver Substituted
Collateral Bonds shall be made in the Company's sole discretion and without
any obligation to do so.
(e) In the event that the Company does not deliver the notice
described in Section 409(a), the Securities outstanding on the Release Date
shall, as of the Release Date, no longer be entitled to the benefit of the
security of the Collateral Bonds and shall thereafter be general
unsecured obligations of the Company.
ARTICLE V
SATISFACTION AND DISCHARGE
SECTION 501. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities
herein expressly provided for or in the form of Security for such series),
when the Trustee, upon Company Request and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge
of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1109) have been delivered to the Trustee for
cancellation; or
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(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited with the
Trustee as trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which have
become due and payable) or the Stated Maturity or Redemption Date, as the case
may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
Upon a Security ceasing to be entitled to any lien, benefit or security
under this Indenture, the obligation of the Company to make payment with respect
to principal of and premium, if any, and interest on a principal amount of the
Related Issue of Collateral Bonds or the Related Issue of Substituted Collateral
Bonds equal to the principal amount of such Note shall be satisfied and
discharged and such portion of the principal amount of such Pledged First Note
Mortgage Bonds or Substituted Collateral Bonds shall cease to secure the
Securities in any manner.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 707, the obligations of
the Company to any Authenticating Agent under Section 714 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section 501, the obligations of the Trustee under Section 502 and the last
paragraph of Section 1109 shall survive.
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SECTION 502. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1109, all
money deposited with the Trustee pursuant to Section 501 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with or
received by the Trustee.
ARTICLE VI
REMEDIES
SECTION 601. Events of Default.
"EVENT OF DEFAULT," wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or to be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(1) the Company defaults in the payment of interest on any Security of
that series when such interest becomes due and payable and the default
continues for a period of 30 days; or
(2) the Company defaults in the payment of the principal of (or
premium, if any, on) any Security of that series when the same becomes due
and payable at Maturity, upon redemption (including redemptions under
Article Twelve), or otherwise; or
(3) the Company fails to observe or perform any of its other
covenants, warranties or agreements in the Securities of that series or this
Indenture (other than a covenant, agreement or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with or which has expressly been included in this Indenture solely for the
benefit of series of Securities other than that series), and the failure to
observe or perform continues for the period and after the notice specified
in the last paragraph of this Section; or
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(4) prior to the Release Date, a default (as defined in the First
Mortgage Indenture under which Collateral Bonds are outstanding) has
occurred and is continuing, and the Mortgage Trustee or Holders of at
least a majority in aggregate principal amount of the Securities at the time
outstanding shall have given written notice thereof to the Trustee; or
(5) if any Substituted Collateral Bonds are outstanding, a default
(as defined in the Substituted Mortgage Indenture) has occurred and
is continuing, and the Mortgage Trustee or Holders of at least a majority
in aggregate principal amount of the Securities at the time outstanding
shall have given written notice thereof to the Trustee; or
(6) any Event of Default under any series of Securities issued
pursuant to this Indenture or any event of default, as defined in any other
indenture, mortgage or instrument under which there may be issued, or by
which there may be secured or evidenced, any Indebtedness of the Company
(whether such Indebtedness now exists or shall hereafter be created or
incurred), but excluding Project Finance Indebtedness, shall occur and shall
consist of default in the payment of such Indebtedness at the maturity
thereof (after giving effect to any applicable grace period) or shall result
in Indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise become due and payable, and such default in
payment is not cured or such acceleration shall not be rescinded or annulled
within 10 days after written notice to the Company from the Trustee or to
the Company and to the Trustee from the Holders of at least 10% in aggregate
principal amount of the Securities of that series at the time outstanding;
provided that it shall not be an Event of Default if the principal amount of
Indebtedness (other than Indebtedness represented by Securities issued
pursuant to this Indenture) which is not paid at maturity or the maturity of
which is accelerated is less than the amount equal to 1% of the Company's
consolidated total assets (determined as of its most recent fiscal
year-end); provided further that if, prior to a declaration of acceleration
of the maturity of the Securities of that series or the entry of judgment in
favor of the Trustee in a suit pursuant to Section 603, such default shall
be remedied or cured by the Company or waived by the holders of such
Indebtedness, then the Event of Default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or
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waived without further action upon the part of either the Trustee or any of
the Holders of the Securities of that series, and provided further, that,
subject to Sections 701 and 702, the Trustee shall not be charged with
knowledge of any such default unless written notice of such default shall
have been given to the Trustee by the Company, by a holder or an agent of a
holder of any such Indebtedness, by the trustee then acting under any
indenture or other instrument under which such default shall have occurred,
or by the Holders of at least five percent in aggregate principal amount of
the Securities of that series at the time outstanding; or
(7) the Company pursuant to or within the meaning of any Bankruptcy
Law (A) commences a voluntary case or proceeding under any Bankruptcy Law
with respect to itself, (B) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to or acquiesces in the institution of
bankruptcy or insolvency proceedings against it, (D) applies for, consents
to or acquiesces in the appointment of or taking possession by a Custodian
of the Company or for any material part of its property, (E) makes a general
assignment for the benefit of its creditors or (F) takes any corporate
action in furtherance of or to facilitate, conditionally or otherwise, any
of the foregoing; or
(8) (i) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company in an involuntary case or
proceeding under any Bankruptcy Law which shall (A) approve as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition in respect of the Company, (B) appoint a Custodian of the
Company or for any material part of its property or (C) order the winding-up
or liquidation of its affairs, and such judgment, decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or (ii)
any bankruptcy or insolvency petition or application is filed, or any
bankruptcy or insolvency proceeding is commenced against the Company and
such petition, application or proceeding is not dismissed within 60 days; or
(iii) a warrant of attachment is issued against any material portion of the
property of the Company which is not released within 60 days of service; or
(9) any other Event of Default provided with respect to Securities of
that series.
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A Default under clause (3) above is not an Event of Default until the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series notify the Company of the Default and the
Company does not cure the Default within 60 days after receipt of the notice.
The notice must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default." When a Default under clause (3) above is
cured within such 60-day period, it ceases.
SECTION 602. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default with respect to Securities of any series (other
than an Event of Default specified in clause (7) or (8) of Section 601) occurs
and is continuing, the Trustee by notice in writing to the Company, or the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series by notice in writing to the Company and the Trustee,
may declare the unpaid principal of and accrued interest to the date of
acceleration (or, if the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) on all the Outstanding Securities of that series to be due
and payable immediately and, upon any such declaration, the Outstanding
Securities of that series (or specified principal amount) shall become and be
immediately due and payable.
If an Event of Default specified in clause (7) or (8) of Section 601
occurs, all unpaid principal of and accrued interest on the Outstanding
Securities of that series (or specified principal amount) shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder of any Security of that series. In
addition, the Trustee shall immediately file with the Mortgage Trustee a
written demand for redemption of all Collateral Bonds pursuant to the
applicable provisions of the First Mortgage Indenture or, if applicable, a
written demand for redemption of all Substituted Collateral Bonds pursuant to
the applicable provisions of the Substituted Mortgage Indenture.
Upon payment of all such principal and interest, all of the Company's
obligations under the Securities of that series and (upon payment of the
Securities of all series) this Indenture shall terminate, except obligations
under Section 707.
The Holders of a majority in principal amount of the Outstanding
Securities of that series by notice to the Trustee may rescind an acceleration
and its consequences (including, if
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given, the written demand for redemption of all Collateral Bonds or, if
applicable, all Substituted Collateral Bonds), if (i) all existing Events of
Default, other than the nonpayment of the principal and interest of the
Securities of that series that has become due solely by such declaration of
acceleration, have been cured or waived, (ii) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal that has become due otherwise than by such declaration of
acceleration have been paid, (iii) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction and (iv) all payments
due to the Trustee and any predecessor Trustee under Section 607 have been
made.
SECTION 603. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if:
(1) default is made in the payment of any interest on any Security of
any series when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security of any series at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
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If an Event of Default hereunder occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights, including its
rights as holder of the Collateral Bonds or the Substituted Collateral Bonds,
and the rights of the Holders of Securities by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
secure any other proper remedy.
SECTION 604. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel) and of the Holders allowed in such judicial
proceedings, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
707.
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Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 605. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 606. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article in respect
of the Securities of any series shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Securities in respect of which moneys have been collected
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section
707 applicable to such series;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities of such
series in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities of such series for principal
(and premium, if any) and interest, respectively; and
Third: To the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 606. At least fifteen (15) days before such
record date, the Trustee shall mail
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to each Holder and the Company a notice that states the record date, the payment
date and the amount to be paid.
SECTION 607. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of Holders of Securities of
any series shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or prejudice the
rights of any other of such Holders, or to obtain or to seek to obtain priority
or preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all Holders of Securities of the affected series.
SECTION 608. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on
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such Security on the Stated Maturity or Maturities expressed in such Security
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
SECTION 609. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding has been instituted.
SECTION 610. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 611. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 612. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust
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or power conferred on the Trustee, with respect to the Securities of such
series, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to Section 701, the Trustee need not take any action
which might involve the Trustee in personal liability or be unduly
prejudicial to the Holders not joining therein.
SECTION 613. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may by written notice to the Trustee on
behalf of the Holders of all the Securities of such series waive any Default or
Event of Default with respect to such series and its consequences, except a
Default or Event of Default
(1) in respect of the payment of the principal of (or premium, if
any) or interest on any Security of such series, or
(2) in respect of a covenant or other provision hereof which under
Article Ten cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected.
Upon any such waiver, such Default or Event of Default shall cease to
exist and shall be deemed to have been cured, for every purpose of this
Indenture and the Securities of such series; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
SECTION 614. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and
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that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the Outstanding Securities of any series, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Security on or after the
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE VII
THE TRUSTEE
SECTION 701. Certain Duties and Responsibilities of the
Trustee.
(a) Except during the continuance of an Event of Default, the
Trustee's duties and responsibilities under this Indenture shall be governed by
Section 315(a) of the Trust Indenture Act.
(b) In case an Event of Default has occurred and is continuing, and is
known to the Trustee, the Trustee shall exercise the rights and powers vested
in it by this Indenture, and shall use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(c) None of the provisions of Section 315(d) of the Trust Indenture
Act shall be excluded from this Indenture.
SECTION 702. Notice of Defaults.
Within 30 days after the occurrence of any Default or Event of Default
with respect to the Securities of any series, the Trustee shall give to all
Holders of Securities of such series, as their names and addresses appear in
the Security Register, notice of such Default or Event of Default known to the
Trustee, unless such Default or Event of Default shall have been cured or
waived; provided, however, that, except in the case of a Default or Event of
Default in the payment of the principal of (or premium, if any) or interest on
any Security of such series
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or in the payment of any sinking fund installment with respect to Securities of
such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or directors or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interest of the Holders of Securities of such series.
SECTION 703. Certain Rights of Trustee.
Subject to the provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity to its reasonable satisfaction
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) prior to the occurrence of an Event of Default with respect to the
Securities of any series and after the curing or waiving of all such Events of
Default which may have occurred,
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the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, approval or other paper or
document, or the books and records of the Company, unless requested in writing
to do so by the Holders of a majority in principal amount of the Outstanding
Securities of any series; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is not, in the opinion of
the Trustee, reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require reasonable indemnity
against such costs, expenses or liabilities as a condition to so proceeding; the
reasonable expense of every such investigation shall be paid by the Company or,
if paid by the Trustee, shall be repaid by the Company upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 704. Not Responsible for Recitals or Issuance of Securities.
The recitals herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and the Trustee or any Authenticating Agent assumes no responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 705. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company,
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in its individual or any other capacity, may become the owner or pledgee of
Securities and, subject to Sections 708 and 713, may otherwise deal with the
Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 706. Money Held in Trust.
Money held by the Trustee in trust hereunder (including amounts held by
the Trustee as Paying Agent) need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed upon
in writing with the Company.
SECTION 707. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability, damage, claim or expense, including taxes (other than taxes
based upon or determined or measured by the income of the Trustee), incurred
without gross negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any
of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 501(5) or Section 601(7), the
expenses (including the reasonable charges and expenses of its counsel)
and the compensation for the services are intended to constitute expenses of
administration
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under any applicable federal or state bankruptcy, insolvency or other similar
law.
The provisions of this Section 707 shall survive this Indenture.
SECTION 708. Disqualification; Conflicting Interests.
The Trustee shall be disqualified only where such disqualification is
required by Section 310(b) of the Trust Indenture Act, provided that, to the
extent permitted by law, Citibank, N.A. shall not be deemed to have a
conflicting interest for purposes of Section 310(b) of the TIA because of its
capacity as trustee under the First Mortgage Indenture or the Substituted
Mortgage Indenture. Nothing shall prevent the Trustee from filing with the
Commission the application referred to in the second to last paragraph of
Section 310(b) of the Trust Indenture Act.
SECTION 709. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be eligible
to act as Trustee under Section 310(a)(1) of the Trust Indenture Act having a
combined capital and surplus of at least $50,000,000 subject to supervision or
examination by federal or State authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published. Neither the Company nor any Person directly or
indirectly controlling, controlled by, or under common control with the Company
may serve as Trustee. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 710. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 711.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 711 shall
not have been
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delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee
and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310(b) of the Trust
Indenture Act after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at least six months; or
(2) the Trustee shall cease to be eligible under Section 709 and shall
fail to resign after written request therefor by the Company or by any such
Holder of a Security who has been a bona fide Holder of a Security for at
least six months; or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 315(e) of the
Trust Indenture Act, any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the
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applicable requirements of Section 711. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
711, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company with
respect to such Securities. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company or the
Holders and accepted appointment in the manner required by Section 711, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mail, postage prepaid,
to all Holders of Securities of such series as their names and addresses appear
in the Security Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 711. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
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(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under the Trust Indenture Act.
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SECTION 712. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 713. Preferential Collection of Claims Against Company.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.
SECTION 714. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding the Trustee
may appoint an Authenticating Agent or Agents with respect to one or more
series of Securities which shall be authorized to act on behalf of, and subject
to the direction of, the Trustee to authenticate Securities of such series
issued upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of
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not less than $50,000,000 and subject to supervision or examination by federal
or State authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may
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have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
Form of Authenticating Agent's
Certificate of Authentication
Dated:
-----------------
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
-------------------------
As Trustee
By
--------------------------------
As Authenticating Agent
By
--------------------------------
Authorized Signatory
ARTICLE VIII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 801. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than January 1 and July 1 in each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of the preceding December 15 or June 15, as the
case may be; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
provided, however, that so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
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SECTION 802. Preservation of Information; Communications to
Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 801 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 801 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Security for a period of at least six
months preceding the date of such application, and such application states that
the applicants desire to communicate with other Holders with respect to their
rights under this Indenture or under the Securities and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall, within five Business Days after the
receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 802(a); or
(ii) inform such applicants as to the approximate number of Holders
whose names and addresses appear in the information preserved at the time
by the Trustee in accordance with Section 802(a), and as to the approximate
cost of mailing to such Holders the form of proxy or other communication,
if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appears in the
information preserved at the time by the Trustee in accordance with Section
802(a) a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interest of the Holders or would be in violation of applicable law. Such
written statement shall
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specify the basis of such opinion. If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, the Commission shall
find, after notice and opportunity for hearing, that all objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Holders in accordance with Section 802(b), regardless of the source from which
such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 802(b).
SECTION 803. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the year
1999, the Trustee shall transmit by mail to all Holders of Securities as
provided in Section 313(c) of the Trust Indenture Act, a brief report dated as
of May 15, if required by and in compliance with Section 313(a) of the Trust
Indenture Act.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 804. Reports by Company.
The Company shall:
(1) file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is
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not required to file information, documents or reports pursuant to either
of said Sections, then it shall file with the Trustee and the Commission,
in accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, (a) concurrently with furnishing the same
to its stockholders, the Company's annual report to stockholders,
containing certified financial statements, and any other financial reports
which the Company generally furnishes to its stockholders, and (b) within
30 days after the filing thereof with the Trustee, such summaries of any
other information, documents and reports required to be filed by the
Company pursuant to paragraphs (1) and (2) of this Section as may be
required by rules and regulations prescribed from time to time by the
Commission; and
(4) furnish to the Trustee, on or before May 1 of each year, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this
Indenture. For purposes of this paragraph, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture. Such certificate need not comply with
Section 102.
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ARTICLE IX
CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER
SECTION 901. When Company May Merge, Etc.
The Company shall not consolidate with, or merge with or into any
other corporation (whether or not the Company shall be the surviving
corporation), or sell, assign, transfer or lease all or substantially all of
its properties and assets as an entirety or substantially as an entirety to any
Person or group of affiliated Persons, in one transaction or a series of
related transactions, unless:
(1) either the Company shall be the continuing Person or the Person
(if other than the Company) formed by such consolidation or with which or
into which the Company is merged or the Person (or group of affiliated
Persons) to which all or substantially all the properties and assets of
the Company as an entirety or substantially as an entirety are sold,
assigned, transferred or leased shall be a corporation (or constitute
corporations) organized and existing under the laws of the United States of
America or any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this Indenture; and
(2) immediately before and after giving effect to such transaction
or series of related transactions, no Event of Default, and no Default,
shall have occurred and be continuing.
SECTION 902. Opinion of Counsel.
The Company shall deliver to the Trustee prior to the proposed
transaction(s) covered by Section 901 an Officer's Certificate and an Opinion of
Counsel stating that the transaction(s) and such supplemental indenture comply
with this Indenture and that all conditions precedent to the consummation of the
transaction(s) under this Indenture have been met.
SECTION 903. Successor Corporation Substituted.
Upon any consolidation by the Company with or merger by the Company
into any other corporation or any lease, sale, assignment, or transfer of all
or substantially all of the
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property and assets of the Company in accordance with Section 801, the successor
corporation formed by such consolidation or into which the Company is merged or
the successor corporation or affiliated group of corporations to which such
lease, sale, assignment, or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation or
corporations had been named as the Company herein, and thereafter, except in the
case of a lease, the predecessor corporation or corporations shall be relieved
of all obligations and covenants under this Indenture and the Securities and in
the event of such conveyance or transfer, except in the case of a lease, any
such predecessor corporation may be dissolved and liquidated.
ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 1001. Supplemental Indentures Without Consent of
Holders.
Without notice to or the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default with respect to all or
any series of Securities; or
(4) to add or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form,
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registrable or not registrable as to principal, and with or without
interest coupons; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(6) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 711(b); or
(8) to cure any ambiguity, defect or inconsistency or to correct or
supplement any provision herein which may be inconsistent with any other
provision herein; or
(9) to make any change that does not materially adversely affect the
interests of the Holders of Securities of any series.
Upon request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon receipt
by the Trustee of the documents described in (and subject to the last sentence
of) Section 903, the Trustee shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture.
SECTION 1002. Supplemental Indentures with Consent of Holders.
With the written consent of the Holders of a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
shall, subject to Section 1003, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall,
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without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof or extend the time for payment thereof, or reduce
the amount of the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 602, or change any Place of Payment where, or
the coin or currency in which, any Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date), or impair
the interest hereunder of the Trustee in the Collateral Bonds or
Substituted Collateral Bonds, or reduce the principal amount of any issue
of Collateral Bonds (except, as provided in this Indenture, upon the
Release Date) or Substituted Collateral Bonds to an amount less
than the principal amount of the related issue of Notes or alter the
payment provisions of such Collateral Bonds or Substituted Collateral Bonds
in a manner adverse to the Holders of the Notes, in each case without the
consent of the Holder of each Note so affected; or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver of compliance with certain provisions of this Indenture or
Defaults or Events of Default hereunder and their consequences provided for
in this Indenture; or
(3) change the redemption provisions (including Article Twelve) hereof
in a manner adverse to such Holder; or
(4) modify any of the provisions of this Section or Section 613,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby;
provided, however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 711(b) and 1001(8).
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A supplemental indenture which changes or eliminates any covenant or other
provisions of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 1003. Execution of Supplemental Indentures.
The Trustee shall sign any supplemental indenture authorized pursuant
to this Article, subject to the last sentence of this Section 1003. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 701) shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 1004. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 1005. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 1006. Reference in Securities to Supplemental
Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter
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provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE XI
COVENANTS
SECTION 1101. Payments of Securities.
With respect to each series of Securities, the Company will duly and
punctually pay the principal of (and premium, if any) and interest on such
Securities in accordance with their terms and this Indenture, and will duly
comply with all the other terms, agreements and conditions contained in, or made
in the Indenture for the benefit of, the Securities of such series.
SECTION 1102. Maintenance of Office or Agency.
The Company will maintain an office or agency in each Place of Payment
where Securities may be surrendered for registration of transfer or exchange or
for presentation for payment, where notices and demands to or upon the Company
in respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee as set forth in Section 105.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
Unless otherwise set forth in, or pursuant to, a Board Resolution or
Indenture supplemental hereto with respect to a series of Securities, the
Company hereby initially designates the office of Citibank, N.A., Corporate
Trust Department located in 111 Wall Street, 5th Floor, New York, NY 10043, as
such office of the Company.
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SECTION 1103. Corporate Existence.
Subject to Article 9, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each of its Subsidiaries and the rights (charter and
statutory) of the Company and its Subsidiaries; provided, however, that (a) the
Company shall not be required to preserve any such right, license or franchise
or the corporate existence of any of its Subsidiaries if the Board of Directors,
or the board of directors of the Subsidiary concerned, as the case may be, shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or any of its Subsidiaries and that the loss thereof
is not materially disadvantageous to the Holders, and (b) nothing herein
contained shall prevent any Subsidiary of the Company from liquidating or
dissolving, or merging into, or consolidating with the Company (provided that
the Company shall be the continuing or surviving corporation) or with any one or
more Subsidiaries if the Board of Directors or the board of directors of the
Subsidiary concerned, as the case may be, shall so determine.
SECTION 1104. Payment of Taxes and Other Claims.
The Company will pay or discharge, or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a material lien upon the property of the Company or any Subsidiary;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which adequate provision has been made.
SECTION 1105. Maintenance of Properties.
The Company will cause all material properties used or useful in the
conduct of its business or the business of any of its Subsidiaries to be
maintained and kept in good condition, repair and working order (normal wear and
tear excepted) and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary, so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or
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maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors or of
the board of directors of the Subsidiary concerned, as the case may be,
desirable in the conduct of the business of the Company or any Subsidiary of the
Company and not materially disadvantageous to the Holders.
SECTION 1106. Compliance Certificates.
(a) The Company shall deliver to the Trustee within 90 days after the
end of each fiscal year of the Company (which fiscal year currently ends on
December 31), an Officer's Certificate stating whether or not the signer
knows of any Default or Event of Default by the Company that occurred prior
to the end of the fiscal year and is then continuing. If the signer does
know of such a Default or Event of Default, the certificate shall describe
each such Default or Event of Default and its status and the specific
section or sections of this Indenture in connection with which such Default
or Event of Default has occurred. The Company shall also promptly notify the
Trustee in writing should the Company's fiscal year be changed so that the
end thereof is on any date other than the date on which the Company's fiscal
year currently ends. The certificate need not comply with Section 102.
(b) The Company shall deliver to the Trustee, within 10 days after the
occurrence thereof, notice of any acceleration which with the giving of
notice and the lapse of time would be an Event of Default within the meaning
of Section 501(4).
(c) The Company shall deliver to the Trustee forthwith upon becoming
aware of a Default or Event of Default (but in no event later than 10 days
after the occurrence of each Default or Event of Default that is
continuing), an Officer's Certificate setting forth the details of such
Default or Event of Default and the action that the Company proposes to take
with respect thereto and the specific section or sections of this Indenture
in connection with which such Default or Event of Default has occurred.
SECTION 1107. Commission Reports.
(a) So long as the Securities remain outstanding, the Company shall
cause its annual report to stockholders and any other financial reports
furnished by it to stockholders generally, to be mailed to the Holders at
their addresses appearing in the register of Securities maintained by the
Security Registrar in each case at the time of such mailing or furnishing to
stockholders. If the Company is not
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required to furnish annual or quarterly reports to its stockholders pursuant
to the Exchange Act, the Company shall cause its financial statements,
including any notes thereto and, with respect to annual reports, an
auditors' report by an accounting firm of established national reputation
and a "Management's Discussion and Analysis of Financial Condition and
Results of Operations," to be so filed with the Trustee and mailed to the
Holders within 90 days after the end of each of the Company's fiscal years
and within 45 days after the end of each of the first three quarters of each
fiscal year.
(b) The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information that the Company
may be required to deliver to the Holders under this Section 1107.
SECTION 1108. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim, and will actively resist any and all efforts to be compelled to take the
benefit or advantage of, any stay or extension law or any usury law or other
law, which would prohibit or forgive the Company from paying all or any portion
of the principal of and/or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 1109. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of (and
premium, if any) or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest
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so becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure to so act.
The Company will cause each Paying Agent for any series of Securities
(other than the Trustee) to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal (and premium, if any) or interest on the Securities of
that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security of any series and remaining unclaimed for two
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee of such
Paying Agent, before being
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required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in New York, New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1110. Limitation on Liens.
Neither the Company will, nor will it permit any Significant Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the property of the
Company or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies on
its property if the same shall not at the time be delinquent or thereafter
can be paid without penalty, or are being contested in good faith and by
appropriate proceedings.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due
or which are being contested in good faith by appropriate proceedings.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.
(iv) Utility easements, rights of way, exceptions, agreement for the
joint or common use of property, restrictions and such other encumbrances or
charges against property as are of a nature generally existing with respect
to properties of a similar character and which do not in any material way
affect the marketability of the same or interfere with the use thereof in
the business of the Company or its Subsidiaries.
(v) Liens on the capital stock, partnership interest, or other
evidence of ownership of any Subsidiary or such Subsidiary's assets that
secure project financing for such Subsidiary.
(vi) Purchase money liens upon or in property now owned or hereafter
acquired in the ordinary course of business (consistent with the Company's
business
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practices) to secure (A) the purchase price of such property or (B)
Indebtedness incurred solely for the purpose of financing the acquisition,
construction, or improvement of any such property to be subject to such
liens, or Liens existing on any such property at the time of acquisition, or
extensions, renewals, or replacements of any of the foregoing for the same
or a lesser amount; provided that no such lien shall extend to or cover any
property other than the property being acquired, constructed, or improved
and replacements, modifications, and proceeds of such property, and no such
extension, renewal, or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed, or replaced.
(vii) Liens existing on the date the Securities are first issued
hereunder.
(viii) Liens for no more than 90 days arising from a transaction
involving accounts receivable of the Company (including the sale of such
accounts receivable), where such accounts receivable arose in the ordinary
course of the Company's business.
(ix) The right reserved to, or vested in, any municipality or public
authority by the terms of any franchise, grant, license or permit, or by any
provision of law, to terminate such franchise, grant, license or permit or
to purchase or appropriate or recapture or to designate a purchaser of any
of the mortgaged property, or to demand and collect from the Company any tax
or other compensation for the use of streets, alleys or other public places.
(x) Rights reserved to, or vested in, any municipality or public
authority to use, control, remove or regulate any property of the Company.
(xi) Zoning laws and ordinances.
(xii) Possible adverse rights or interests and inconsequential defects
or irregularities in title which, in the opinion of counsel, may be properly
disregarded.
(xiii) Rights reserved to or vested in others to take or receive any
part of the gas, power, oil or other minerals or timber generated,
developed, manufactured or produced by, or grown on, or acquired with, any
property of the Company.
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SECTION 1111. Limitation on Sale and Leaseback Transactions.
The Company will not itself, and will not permit any Subsidiary to,
enter into any arrangement with any bank, insurance company or other lender or
investor (not including the Company or any Subsidiary), or to which such lender
or investor (other than the Company or a Subsidiary) is a party, providing for
the leasing by the Company or such Subsidiary for a period, including renewals,
in excess of three years of any real property located within the United States
of America which has been owned by the Company or such Subsidiary for more than
six months and which has been or is to be sold or transferred by the Company or
such Subsidiary to such lender or investor or to any person to whom funds have
been or are to be advanced by such lender or investor on the security of such
real property (a "Sale and Leaseback Transaction") unless either:
(a) the Company or such Subsidiary could create indebtedness secured
by a lien pursuant to Section 1110 on the real property to be leased, in an
amount equal to the Value of such Sale and Leaseback Transaction, without
equally and ratably securing the Securities; or
(b) the Company, within six months after the sale or transfer shall
have been made, applies an amount equal to the greater of (i) the net
proceeds of the sale of the real property leased pursuant to such
arrangement or (ii) the fair market value of the real property so leased at
the time of entering into such arrangement (as determined by the Board of
Directors of the Company) to the retirement of the Securities and other
obligations of the issuer ranking on a parity with the Securities. No
retirement referred to in this paragraph (b) may be effected by payment at
maturity or pursuant to any mandatory sinking fund or prepayment provision.
SECTION 1112. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1110 or 1111, if before or after the
time for such compliance the Holders of not less than a majority in principal
amount of the Securities at the time Outstanding of each series which is
affected thereby, shall, by consent in writing of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or conditions except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
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ARTICLE XII
REDEMPTION OF SECURITIES
SECTION 1201. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.
SECTION 1202. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series, the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities of such series to be redeemed. In
the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officer's Certificate evidencing compliance with such restriction.
SECTION 1203. Election by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 90 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, substantially pro rata, by lot
or by any other method as the Trustee considers fair and appropriate and that
complies with the requirements of the principal national securities exchange, if
any, on which such Securities are listed, and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series; provided that
in case the Securities of such series have different terms and maturities, the
Securities to be redeemed shall be selected by the Company and the Company shall
give notice thereof to the Trustee.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the
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case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of the Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in part,
to the portion of the principal amount of such Securities which has been or is
to be redeemed.
SECTION 1204. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 45 days prior to the Redemption
Date, unless otherwise provided in an indenture supplemental hereto, to each
Holder of Securities to be redeemed, at his address appearing in the Security
Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date;
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price;
(6) that the redemption is for a sinking fund, if such is the case;
(7) the CUSIP number, if any, of the Securities to be redeemed; and
(8) unless otherwise provided as to a particular series of Securities,
if at the time of publication or mailing of any notice of redemption the
Company shall not have deposited with the Trustee or Paying Agent and/or
irrevocably directed the Trustee or Paying Agent to apply, from money held
by it available to be used for the redemption of Securities, an amount in
cash sufficient to redeem all of the Securities called for redemption,
including accrued interest to the Redemption Date, such
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notice shall state that it is subject to the receipt of the redemption
moneys by the Trustee or Paying Agent before the Redemption Date (unless
such redemption is mandatory) and such notice shall be of no effect unless
such moneys are so received before such date.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1205. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1109) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1206. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Regular or Special Record Dates
according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
SECTION 1207. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company at a Place of Payment therefor (with, if
the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed
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by, the Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities of
the same series and Stated Maturity, of any authorized denomination as requested
by such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE XIII
SINKING FUNDS
SECTION 1301. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series, except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "MANDATORY SINKING
FUND PAYMENT," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "OPTIONAL
SINKING FUND PAYMENT." If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 1302. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
SECTION 1302. Satisfaction of Sinking Fund Payments with
Securities.
The Company (1) may deliver Securities of a series (other than any
Securities previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for
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redemption through operation of the sinking fund and the amount of such sinking
fund payment shall be reduced accordingly.
SECTION 1303. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officer's
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1302 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1203 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1204. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 1206 and 1207.
ARTICLE XIV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance.
Unless pursuant to Section 301 provision is made for the
inapplicability of either or both of (a) Defeasance of the Securities of a
series under Section 1402 or (b) Covenant Defeasance of the Securities of a
series under Section 1403, then the provisions of such Section or Sections, as
the case may be, together with the other provisions of this Article, shall be
applicable to the Securities of such series, and the Company may at its option
by Board Resolution, at any time, with respect to the Securities of such series,
elect to have either Section 1402 (unless inapplicable) or Section 1403 (unless
inapplicable) be applied to the Outstanding Securities of such series upon
compliance with the applicable conditions set forth below in this Article.
SECTION 1402. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section 1401 to
defease the Outstanding Securities of a particular series, the Company shall be
discharged from its
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obligations with respect to the Outstanding Securities of such series on the
date the applicable conditions set forth in Section 1404 are satisfied
(hereinafter, "DEFEASANCE"). Defeasance shall mean that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities of such series and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same); provided, however, that the
following rights, obligations, powers, trusts, duties and immunities shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities of such series to receive, solely from the
trust fund provided for in Section 1404, payments in respect of the principal of
(and premium, if any) and interest on such Securities when such payments are
due, (B) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1102 and 1109, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (D) this Article. Subject to
compliance with this Article, the Company may exercise its option with respect
to Defeasance under this Section 1402 notwithstanding the prior exercise of its
option with respect to Covenant Defeasance under Section 1403 in regard to the
Securities of such series.
SECTION 1403. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section 1301 to
obtain a Covenant Defeasance with respect to the Outstanding Securities of a
particular series, the Company shall be released from its obligations under this
Indenture (except its obligations under Sections 304, 305, 306, 606, 609, 710,
1101, 1102, 1106, 1108 and 1109) with respect to the Outstanding Securities of
such series on and after the date the applicable conditions set forth in Section
1404 are satisfied (hereinafter, "COVENANT DEFEASANCE"). Covenant Defeasance
shall mean that, with respect to the Outstanding Securities of such series, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in this Indenture (except its
obligations under Sections 304, 305, 306, 606, 609, 710, 1101, 1102, 1106, 1108
and 1109), whether directly or indirectly by reason of any reference elsewhere
herein or by reason of any reference to any other provision herein or in any
other document, and such omission to comply shall not constitute an Event of
Default under Section 601(4) with respect to Outstanding Securities of such
series, and the remainder of this Indenture and of the Securities of such series
shall be unaffected thereby.
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SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to Defeasance under Section 1402
and Covenant Defeasance under Section 1403 with respect to the Outstanding
Securities of a particular series:
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 709 who shall agree to comply with the provisions of this Article
applicable to it), under the terms of an irrevocable trust agreement in form
and substance reasonably satisfactory to such Trustee, as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities, (A) Dollars in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment, money in an amount,
or (C) a combination thereof, in each case sufficient, after payment of
all federal, state and local taxes or other charges or assessments in
respect thereof payable by the Trustee, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, (i) the principal of (and premium, if any, on) and each
installment of principal of (and premium, if any) and interest on the
Outstanding Securities of such series on the Stated Maturity of such
principal or installment of principal or interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to the Outstanding
Securities of such series on the day on which such payments are due and
payable in accordance with the terms of this Indenture and of such
Securities.
(2) No Default or Event of Default with respect to the Securities of
such series shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit, and no Default or
Event of Default under clause (5) or (6) of Section 601 shall occur and be
continuing, at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(3) Such deposit, Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it is
bound.
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(4) Such Defeasance or Covenant Defeasance shall not cause any
Securities of such series then listed on any national securities exchange
registered under the Exchange Act to be delisted.
(5) In the case of an election with respect to Section 1402, the
Company shall have delivered to the Trustee either (A) a ruling directed
to the Trustee received from the Internal Revenue Service to the effect
that the Holders of the Outstanding Securities of such series will not
recognize income, gain or loss for federal income tax purposes as a result
of such Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Defeasance had not occurred or (B) an Opinion of Counsel,
based on such ruling or on a change in the applicable federal income tax
law since the date of this Indenture, in either case to the effect that,
and based thereon such opinion shall confirm that, the Holders of the
Outstanding Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Defeasance had not occurred.
(6) In the case of an election with respect to Section 1403, the
Company shall have delivered to the Trustee an Opinion of Counsel or a
ruling directed to the Trustee received from the Internal Revenue Service
to the effect that the Holders of the Outstanding Securities of such series
will not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred.
(7) Such Defeasance or Covenant Defeasance shall be effected in
compliance with any additional terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 301.
(8) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Defeasance under Section 1402
or the Covenant Defeasance under Section 1403 (as the case may be) have been
complied with.
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SECTION 1405. Deposited Money and Government Obligations To Be
Held In Trust.
Subject to the provisions of the last paragraph of Section 1109, all
money and Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee--collectively for purposes of
this Section 1405, the "Trustee") pursuant to Section 1404 in respect of the
Outstanding Securities of a particular series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof, other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding Securities of such series.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver to pay to the Company from time to time upon Company Request any
money or Government Obligations held by it as provided in Section 1404 which,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited for the purpose for which such money or Government Obligations were
deposited.
ARTICLE XV
MISCELLANEOUS
SECTION 1501. Miscellaneous.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
MICHIGAN CONSOLIDATED
GAS COMPANY
By:
-------------------------------
Name:
Title:
Attest:
- - -----------------------------
Name:
Title:
CITIBANK, N.A., as Trustee
By:
-------------------------------
Name:
Title:
Attest:
- - -----------------------------
Name:
Title:
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