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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) May 6, 1996
MCN CORPORATION
(Exact name of registrant as specified in its charter)
MICHIGAN 1-10070 38-2820658
State of Incorporation (Commission File (I.R.S. Employer
Number) Identification No.)
500 GRISWOLD STREET, DETROIT, MICHIGAN 48226
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(313) 256-5500
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ITEM 5. OTHER EVENTS
The registrant is filing herewith the following in connection with the
offering by MCN Investment Corporation ("MCN Investment") of up to $500,000,000
of its unsecured notes, designated as Medium-Term Notes, Series B ("Offered
Notes") pursuant to the registration statement of the registrant and MCN
Investment on Form S-3 (No. 333-01523) filed with the Securities and Exchange
Commission under the Securities Act of 1933.
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
1-1 Distribution Agreement dated May 6, 1996 with respect to
the Offered Notes.
12-1 Computation of Ratio of Earnings to Fixed Charges for
MCN Investment.
12-2 Computation of Ratio of Earnings to Fixed Charges for
MCN Corporation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MCN CORPORATION
By /s/ Sebastian Coppola
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Sebastian Coppola
Vice President and Treasurer
Date: May 7, 1996
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EXHIBIT 1-1
MCN INVESTMENT CORPORATION
MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
ENTITLED TO THE BENEFIT OF A SUPPORT AGREEMENT BY
MCN CORPORATION
DISTRIBUTION AGREEMENT
May 6, 1996
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower, 10th Floor
World Financial Center
New York, New York 10281-1310
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Smith Barney Inc.
390 Greenwich Street -- 4th Floor
New York, New York 10013
Ladies and Gentlemen:
MCN Investment Corporation (the "Company"), a Michigan
corporation and a wholly-owned subsidiary of MCN Corporation, a Michigan
corporation ("MCN"), confirms its agreement with each of you (individually, an
"Agent" and collectively, the "Agents") with respect to the issue and sale by
the Company of up to an aggregate principal amount of $500,000,000 of its
Medium-Term Notes, Series B, Due Nine Months or More from Date of Issue (the
"Notes"). The Notes will be issued from time to time by the Company under an
Indenture dated as of September 1, 1995 (the "Indenture") between the Company
and NBD Bank, as trustee. The Notes will mature nine months or more from the
date of issue and
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will bear interest at rates to be specified in a pricing supplement to the Note
Prospectus referred to below. It is understood, however, that the Company may
from time to time authorize the issuance of additional Notes and that such
additional Notes may be sold to or through the Agents pursuant to the terms of
this Agreement, as though the issuance of such Notes were authorized as of the
date hereof. The Notes will have the benefit of a Support Agreement dated as
of September 1, 1995 (the "Support Agreement") between the Company and MCN.
1. Solicitations as Agents; Purchases as Principal.
(a) Appointment. Subject to the terms and conditions stated
herein, the Company hereby agrees that the Notes will be sold to or through the
Agents; provided, however, that the Company reserves the right to sell and may
accept offers to purchase the Notes directly on its own behalf. In addition,
the Company may from time to time offer Notes for sale otherwise than through
an Agent; provided, however, that so long as this Agreement shall be in effect
the Company shall not solicit offers to purchase Notes through any agent
without amending this Agreement to appoint such agent as an additional Agent
hereunder on the same terms and conditions as provided herein for the Agents
and without giving the Agents prior notice of such appointment. The Company
may accept offers to purchase Notes through an agent other than an Agent,
provided that (i) the Company shall not have solicited such offers, (ii) the
Company and such agent shall have executed an agreement with respect to such
purchases having terms and conditions (including, without limitation,
commission rates) with respect to such purchases substantially the same as the
terms and conditions that would apply to such purchases under this Agreement if
such agent was an Agent (which may be accomplished by incorporating by
reference in such agreement the terms and conditions of this Agreement) and
(iii) the Company shall provide the Agents with a copy of such agreement
promptly following the execution thereof. On the basis of the representations
and warranties herein contained, but subject to the terms and conditions herein
set forth, each Agent agrees, as an agent of the Company, to use its reasonable
efforts to solicit offers to purchase the Notes during each Offering Period
(defined below) upon the terms and conditions set forth in the Note Prospectus
(defined below) as then amended and supplemented. Each Agent may also purchase
Notes from the Company as principal for purposes of resale, as more fully
described in subsection (g) of this Section.
(b) Solicitation Period. Following the Commencement Date
(defined below), the Company shall notify each Agent from time to time as to
the commencement of a period during which the Notes may be offered and sold by
such Agent (each period, commencing with such a notification and ending at such
time as the authorization for offers and sales through such Agent shall
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have been suspended by the Company or such Agent as provided hereunder, being
herein referred to as an "Offering Period").
(c) Agent's Commission. The Company agrees to pay each
Agent, as consideration for soliciting the sale of the Notes, a commission in
the form of a discount, equal to the percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by an Agent as set
forth on Schedule I hereto.
(d) Solicitation of Offers. Each Agent is authorized to
solicit orders for the Notes only in denominations of $1,000 or any larger
amount that is an integral multiple of $1,000, at a purchase price equal to
100% of their principal amount (unless otherwise specified in the applicable
pricing supplement). Each Agent shall communicate to the Company, orally, each
reasonable offer or indication of interest received by it to purchase Notes.
The Company shall have the sole right to accept offers to purchase the Notes
and may reject any such offer in whole or in part. Each Agent shall have the
right to reject, in its discretion reasonably exercised, any offer received by
it to purchase the Notes, without advising the Company, in whole or in part,
and any such rejection shall not be deemed a breach of its agreements contained
herein. In soliciting offers to purchase the Notes hereunder, each Agent is
acting solely as agent for the Company, and not as principal. Each Agent shall
make reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Notes has been solicited by such Agent and
accepted by the Company, but such Agent shall not have any liability to the
Company in the event any such purchase is not consummated for any reason.
Under no circumstances will an Agent be obligated to purchase any Notes for its
own account. If the Company shall default in its obligations to deliver Notes
to a purchaser whose offer it has accepted, the Company shall (a) hold the
Agents harmless against any loss, claim or damage arising from or as a result
of such default by the Company and (b) notwithstanding such default, pay to the
Agents any commission to which they would be entitled in connection with such
sale.
(e) Administrative Procedures. The purchase price, interest
rate or formula, maturity date and other terms of the Notes (as applicable)
shall be agreed upon by the Company and the Agent and set forth in a pricing
supplement to be prepared in connection with each sale of the Notes. Each
Agent and the Company agree to perform the respective duties and obligations
specifically provided to be performed by it in the Administrative Procedures
attached hereto as Exhibit A (the "Procedures"). The Procedures may be amended
only by written agreement from time to time of the Company and the Agents.
(f) Delivery of Documents. The documents required to be
delivered by Section 4 of this Agreement shall be delivered at
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the offices of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the Agents,
125 West 55th Street, New York, N.Y. 10019-5389, on such date as may be
mutually agreed to by the Company and the Agents, which in no event shall be
later than the time at which the Agents commence solicitation of offers to
purchase Notes hereunder (the "Commencement Date").
(g) Purchases as Principal. Subject to the terms and
conditions stated herein, the Company agrees that, whenever the Company
determines to sell Notes directly to any of the Agents as principal for resale
to others and such Agent agrees to purchase Notes as principal, it will enter
into a Terms Agreement (defined below) relating to such sale in accordance with
the provisions of this Section 1(g). Each sale of Notes to any of the Agents
as principal shall be made in accordance with the terms of this Agreement and a
supplemental agreement which will provide for the sale of such Notes to, and
the purchase and reoffering thereof by, such Agent. Each such supplemental
agreement, whether oral (and confirmed in writing by such Agent to the Company,
which may be by facsimile transmission) or in writing is herein referred to as
a "Terms Agreement". Each such Terms Agreement, whether oral or in writing,
shall be with respect to such information (as applicable) as is specified in
Exhibit B hereto. Each Agent's commitment to purchase Notes pursuant to any
Terms Agreement shall be deemed to have been made on the basis of the
representations and warranties of the Company herein contained and shall be
subject to the terms and conditions herein set forth. Each Terms Agreement
shall describe the Notes to be purchased by any of the Agents pursuant thereto,
specify the principal amount of such Notes, the price to be paid to the Company
for such Notes, the rate at which interest will be paid on the Notes, the date,
time and place of delivery of the Notes and payment therefor (the "Purchase
Date"), the method of payment and any modification of the requirements for the
delivery of the opinions of counsel, the certificates from the Company, and the
comfort letter from Deloitte & Touche LLP, pursuant to Section 4. Such Terms
Agreement shall also specify the period of time referred to in Section 3(k).
Delivery of the certificates for Notes sold to any of the
Agents pursuant to any Terms Agreement shall be made as agreed to between the
Company and such Agent as set forth in the Terms Agreement, no later than the
Purchase Date set forth in such Terms Agreement, against payment of funds to
the Company in the net amount due to the Company for such Notes by the method
and in the form set forth in the Terms Agreement.
Unless otherwise indicated in the applicable pricing
supplement, any Note sold to an Agent as principal shall be at a discount from
the principal amount of each such Note equivalent to the applicable commission
set forth in Schedule I hereto, and may be resold by such Agent to investors
and other purchasers from time to time in one or more transactions at varying
prices
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determined at the time of sale, or at a fixed public offering price, if so
agreed. In addition, such Agent may engage the services of any other broker or
dealer in connection with the resale of the Notes purchased by it as principal
and may allow any portion of the discount received in connection with such
purchases from the Company to such brokers or dealers.
(h) Other Activities of Agents. The Company acknowledges
that nothing in this Agreement shall prohibit any Agent from (i) acting as
broker for the sale of Notes by customers other than the Company, (ii)
soliciting the sale of Notes through the Agent as broker for the seller,
soliciting the sale of Notes to the Agent as principal and soliciting offers to
buy Notes, (iii) purchasing Notes, and (iv) offering and selling as principal
for its own account Notes which the Agent has purchased.
(i) Reliance. The Company and each Agent agree that any
Notes purchased by the Agents shall be purchased, and any Notes the placement
of which an Agent arranges shall be placed by such Agent, in reliance on the
representations, warranties, covenants and agreements of the Company contained
herein and on the terms and conditions and in the manner provided herein.
2. Representations and Warranties of the Company and MCN.
Each of the Company and MCN jointly and severally represents and warrants to,
and agrees with, each of the Agents that:
(a) Each of the Company and MCN meets the requirements for
use of Form S-3 under the Securities Act of 1933, as amended (the "Act") and
have filed with the Securities and Exchange Commission (the "Commission"), as
co-registrants, a registration statement on such form (File No. 333-01523) for
the registration under the Act of the Company's debt securities, including the
Notes, and the obligations pursuant to the Support Agreement which registration
statement was declared effective on March 27, 1996. The Company may from time
to time file with the Commission additional registration statements for the
registration of additional amounts of debt securities. At the time of the
offer and sale of any Note pursuant to this Agreement, such Note shall be
registered pursuant to an effective registration statement under the Act. Each
registration statement under which Notes are offered or sold pursuant to this
Agreement at the date hereof and at the date of such offer and sale meets and
will meet the requirements set forth in Rule 415(a)(1)(x) under the Act and
complies and will comply in all other material respects with said Rule.
"Registration Statement" shall mean, as of any date, each effective
registration statement relating to debt securities pursuant to which Notes are
or may then be offered or sold, including incorporated documents, exhibits and
financial statements, as amended at such date. "Prospectus" shall mean the
form of prospectus relating to debt securities contained in the
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Registration Statement. The term "Preliminary Prospectus" as used herein means
a prospectus filed as part of any post-effective amendment to the Registration
Statement prior to the effective date of such post-effective amendment, as
contemplated in Rule 430 under the Act. The Company has included and will
include in each such Registration Statement, or has filed or will file with the
Commission pursuant to the applicable paragraph of Rule 424(b) under the Act, a
supplement to the form of Prospectus included in each such Registration
Statement relating to the Notes and prior to any such filing will advise each
Agent of all further information (financial and other) with respect to the
Company to be set forth therein. The Prospectus so supplemented from time to
time is hereinafter called the "Note Prospectus". Any reference herein to the
Registration Statement, any Preliminary Prospectus, the Prospectus, or the Note
Prospectus, as amended and supplemented, shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 that were filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") on or before the effective date of the Registration
Statement, or the issue date of such Preliminary Prospectus, the Prospectus, or
the Note Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement, any Preliminary Prospectus, the Prospectus, or the Note Prospectus
shall be deemed to refer to and include (i) the filing of any document under
the Exchange Act after the effective date of the Registration Statement or the
issue date of any Preliminary Prospectus, the Prospectus, or the Note
Prospectus, as the case may be, deemed to be incorporated therein by reference
and (ii) with respect to the Registration Statement, the filing of any
additional registration statement relating to debt securities if Notes are to
be offered or sold under such additional registration statement.
(b) When the Registration Statement became effective, when
any amendment to the Registration Statement becomes effective (including the
filing of any document incorporated by reference in the Registration
Statement), when any supplement to the Prospectus (other than a supplement
specifying the terms of the debt securities other than the Notes) or the Note
Prospectus is filed with the Commission pursuant to Rule 424(b) under the Act,
on each day during an Offering Period, and at the time of each delivery of
Notes to (i) any purchaser or his Agent whose offer to purchase such Notes was
delivered to the Company during an Offering Period and (ii) any Agent
purchasing such Notes as principal pursuant to a Terms Agreement (each such
time referenced above being referred to herein as a "Representation Date"):
(i) No stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceeding for such
purpose has been initiated or, to the knowledge of the Company or MCN,
threatened by the Commission;
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(ii) The Company and MCN meet the requirements for the use
of Form S-3 under the Act. The Registration Statement and the Note
Prospectus comply, and any amendments or supplements thereto will
comply, in all material respects to the requirements of the Act and
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and the rules and regulations of the Commission thereunder and
do not and will not, as of the applicable effective date in the case
of the Registration Statement and any amendment thereto and as of the
applicable filing date in the case of the Note Prospectus and any
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company or MCN by the Agents
expressly for use in the Registration Statement or Note Prospectus as
amended or supplemented to relate to a particular issuance of the
Notes;
(iii) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement or the Note
Prospectus, or any amendment or supplement thereto, at the time they
were or hereafter are filed with the Commission or last amended, as
the case may be, complied and will comply in all material respects
with the requirements of the Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder, and none
of such documents contained or will contain an untrue statement of a
material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company or MCN by the Agents expressly for
use in the Note Prospectus as amended or supplemented to relate to a
particular issuance of the Notes;
(iv) The financial statements included or incorporated by
reference in the Registration Statement and the Note Prospectus,
together with the related schedules and notes, present fairly the
financial position of MCN and its consolidated subsidiaries as of the
dates indicated and the results of their operations for the periods
specified. Except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis. The supporting schedules included or incorporated by reference
in the Registration Statement present fairly the information required
to be stated therein. The ratio of earnings to fixed charges included
in
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the Note Prospectus has been calculated in compliance with Item 503(d)
of Regulation S-K of the Commission. The selected financial
information and the summary financial data included in the Note
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement;
(v) Neither the Company, MCN nor any of their respective
subsidiaries has sustained since the date of the latest audited
financial statements included or incorporated by reference in the Note
Prospectus any material loss or any material adverse change and no
development which could reasonably be expected to result in a material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company or MCN
and their respective subsidiaries considered as one enterprise,
otherwise than as set forth in the Note Prospectus; and, since the
respective dates as of which information is given in the Registration
Statement and the Note Prospectus, except as otherwise stated therein,
(A) there has not been any change in the capital stock or long-term
debt including capital lease obligations (other than changes resulting
from sinking fund and installment provisions under any long-term debt
agreement (scheduled payments on lease obligations) to which the
Company, MCN or any of their respective subsidiaries is a party, the
terms of the preferred redeemable increased dividend equity securities
of MCN, terms of the preferred securities of MCN Michigan Limited
Partnership ("MCN Michigan") and purchases in the open market in
anticipation thereof or any other changes which changes are not, in
the aggregate, material) of the Company or any of its subsidiaries,
(B) there have been no transactions entered into by the Company, MCN
or any of their respective subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company or MCN and their respective subsidiaries considered as one
enterprise, (C) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company or MCN and their
respective subsidiaries considered as one enterprise, (D) except for
regular quarterly dividends on common stock of MCN in amounts per
share that are consistent with past practice and except for the yield
enhancement payments on the 8-3/4% Preferred Redeemable Increased
Dividend Equity Securities of MCN in amounts consistent with the terms
of such securities, there has been no dividend or distribution of any
kind declared, paid or made by MCN on any class of its capital stock
and (E) except for monthly dividends on the 9 3/8% Cumulative
Preferred Securities, Series A of MCN Michigan in amounts per
preferred security that are consistent with past practice, there has
been no dividend or distribution of any
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kind declared, paid or made by MCN Michigan on any series of its
preferred securities;
(vi) Each of the Company and MCN has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own, lease and operate its properties
and conduct its business as presently conducted and as described in
the Registration Statement and the Note Prospectus and to execute and
deliver this Agreement and to perform their obligations hereunder; and
neither the Company nor MCN owns or leases property or conducts any
business so as to require qualification as a foreign corporation for
the transaction of business in any jurisdiction where it is not
qualified to transact business, except where the failure to so qualify
would not have a material adverse effect on the condition, financial
or otherwise, or on the earnings, business affairs or business
prospects of the Company or MCN and their respective subsidiaries
considered as one enterprise;
(vii) Each subsidiary of the Company and MCN has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the
Registration Statement and the Note Prospectus, and is duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company or MCN and their respective subsidiaries
considered as one enterprise; all of the issued and outstanding shares
of capital stock of each such subsidiary has been duly authorized and
validly issued, are fully paid and non-assessable and all such shares
are owned by the Company or MCN, as the case may be, directly or
through its subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity;
(viii) Each of the Company and MCN has an authorized
capitalization as set forth in the Note Prospectus, and all of the
issued and outstanding shares of capital stock of the Company and MCN
have been duly and validly authorized and issued and are fully paid
and non-assessable;
(ix) Each of the Company, MCN and their respective
subsidiaries has good and marketable title to all material
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real and personal property owned by each of them, in each case free
and clear of all liens, encumbrances and defects except such as are
described in the Registration Statement or Note Prospectus or such as
do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such
property by the Company, MCN or their respective subsidiaries,
respectively; and any real property and buildings held under lease by
the Company or MCN and their respective subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed
to be made of such property and buildings by the Company, MCN or their
respective subsidiaries, respectively; the pipeline, distribution main
and underground gas storage easements enjoyed by the subsidiaries of
Company and MCN, respectively, are valid, subsisting and enforceable
easements with such exceptions as are not material and do not
interfere with the conduct of the business of the subsidiaries of
Company or MCN, respectively; the Company, MCN and their respective
subsidiaries possess all licenses, franchises, indeterminate permits,
certificates, other permits, authorizations, approvals, consents and
orders of all governmental authorities or agencies which are necessary
for the ownership or lease of the properties owned or leased by each
of them and for the operation of the business carried on by each of
them with such exceptions and any burdensome provisions which, singly
or in the aggregate, are not material and do not materially adversely
affect the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company or MCN and their
respective subsidiaries considered as one enterprise; all such
licenses, franchises, indeterminate permits, certificates, other
permits, orders, authorizations, approvals and consents are in full
force and effect and except as otherwise set forth in the Registration
Statement or Note Prospectus, there are no legal or governmental
proceedings pending or threatened that would result in a material
modification, suspension or revocation thereof;
(x) The Notes have been duly and validly authorized for
issuance, offer and sale pursuant to this Agreement, and when issued,
authenticated and delivered pursuant to the provisions of this
Agreement and the Indenture against payment of the consideration
therefor, will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms and entitled to the
benefits provided by (i) the Support Agreement and (ii) the Indenture;
the Indenture has been duly and validly authorized, executed and
delivered by the Company and qualified under the Trust Indenture Act
and constitutes, and the Support Agreement has been duly and validly
authorized, executed and delivered by each of MCN and the Company and
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constitutes, a valid and legally binding instrument, enforceable
against MCN or the Company, as the case may be, in accordance with its
terms; the Notes and Indenture will be substantially in the form
heretofore delivered to the Agents and conform to the descriptions
thereof in the Prospectus as originally filed with the Commission and
will conform to the descriptions thereof in the Note Prospectus; the
Support Agreement conforms to the description thereof in the
Prospectus as originally filed and will conform to the descriptions
thereof in the Note Prospectus;
(xi) None of the Company, MCN or any of their respective
subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it
is a party or by which it or any of them or their properties may be
bound; the issue and sale of the Notes, the compliance by the Company
with all of the provisions of the Notes, the execution, delivery and
performance by the Company and MCN of this Agreement, the execution,
delivery and performance by the Company of the Indenture, the
execution, delivery and performance by the Company and MCN of the
Support Agreement, the consummation of the transactions herein and
therein contemplated, and the compliance by the Company and MCN with
their obligations hereunder and thereunder have been duly authorized
by all necessary corporate action of the Company and MCN and will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of
the property or assets of the Company or MCN or any of their
respective subsidiaries pursuant to the terms of, any statute,
indenture, mortgage, deed of trust, loan agreement, note, lease, or
other agreement or instrument to which the Company or MCN or any of
their respective subsidiaries is a party or by which the Company or
MCN or any of their respective subsidiaries is bound or to which any
of the properties or assets of the Company or MCN or any of their
respective subsidiaries is subject, nor will such action result in a
violation of the provisions of the charter or by-laws of the Company
or MCN, the charter or by-laws of any of their respective
subsidiaries, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or
MCN or any of their respective subsidiaries or any of its or their
properties; and all consents, approvals, authorizations, orders,
registrations or qualifications of or with any court or any such
regulatory authority or other governmental body required for the
solicitation of offers to purchase the Notes, the issue and sale of
the Notes or the consummation of the other transactions contemplated
by this Agreement,
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the Support Agreement or the Indenture including the registration
under the Act of the Notes and the qualification of the Indenture
under the Trust Indenture Act have been, or will have been prior to
the Commencement Date, obtained and are, or will be at the
Commencement Date, in full force and effect, except such consents,
approvals, authorizations, orders, registrations or qualifications as
may be required under state securities or blue sky laws of any
jurisdiction in connection with the solicitation by the Agents of
offers to purchase the Notes from the Company and with purchases of
the Notes by the Agents as principal, as the case may be, in each case
in the manner contemplated hereby;
(xii) This Agreement has been duly and validly authorized,
executed and delivered by each of the Company and MCN and, upon
execution and delivery by the Agents, will constitute a valid and
legally binding obligation of the Company and MCN enforceable against
the Company and MCN in accordance with its terms;
(xiii) MCN's obligations under the Support Agreement will
rank prior to the equity securities and subordinated indebtedness of
MCN and equal with all other unsecured and unsubordinated indebtedness
of MCN, whether now or hereafter outstanding;
(xiv) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company or MCN, threatened,
against or affecting the Company or MCN or any of their respective
subsidiaries, which is required to be disclosed in the Registration
Statement or the Note Prospectus (other than as disclosed therein), or
which might result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company or MCN and their respective
subsidiaries considered as one enterprise, or which might materially
and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of any transaction
contemplated by this Agreement; all pending legal or governmental
proceedings to which the Company or MCN or any of their respective
subsidiaries is a party or to which any of their respective properties
or assets is the subject which are not described in the Registration
Statement or the Note Prospectus, including ordinary routine
litigation incidental to the business of the Company or MCN or any of
their respective subsidiaries, are, considered in the aggregate, not
material; and there are no contracts or documents of the Company or
MCN or any of their respective subsidiaries which are required to be
filed as exhibits to the Registration Statement, or to any documents
incorporated by reference
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<PAGE> 13
therein, by the Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder, which have not been so
filed;
(xv) No labor dispute with the employees of the Company or
MCN or any of their respective subsidiaries exists or, to the
knowledge of the Company or MCN is imminent; and neither the Company
or MCN is aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or
contractors which might be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company or MCN and their
respective subsidiaries considered as one enterprise;
(xvi) Deloitte & Touche LLP are independent public
accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(xvii) MCN is presently exempt from the provisions of the
Public Utility Holding Company Act of 1935 (the "1935 Act") (except
Section 9(a)(2) thereof) which would otherwise require it to register
thereunder;
(xviii) Immediately after the sale of the Notes by the
Company hereunder, the aggregate amount of the Notes which shall have
been issued and sold by the Company hereunder and of any debt
securities of the Company (other than the Notes) that shall have been
issued and sold pursuant to the Registration Statement will not exceed
the amount of debt securities registered under the Registration
Statement;
(xix) None of the Company, MCN or any of their respective
subsidiaries is an "investment company" or under the "control" of an
"investment company" as such terms are defined under the Investment
Company Act of 1940, as amended (the "1940 Act");
(xx) The Company and MCN are in compliance with all
provisions of Section 1 of the Laws of Florida, Chapter 92-198, An Act
Relating to Disclosure of Doing Business with Cuba; and
(xxi) The Notes, when issued, authenticated and delivered
pursuant to the provisions of this Agreement and the Indenture, will
be excluded or exempted under the provisions of the Commodity Exchange
Act.
(c) Any certificate signed by any director or officer of the
Company or MCN and delivered to any Agent or to counsel for the Agents in
connection with an offering of Notes through such Agent as agent, or the sale
of Notes to such Agent as
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<PAGE> 14
principal shall be deemed a representation and warranty by the Company or MCN,
as the case may be, to such Agent as to the matters covered thereby on the date
of such certificate and at each Representation Date subsequent thereto.
3. Covenants of the Company and MCN. Each of the Company and
MCN agrees with each Agent that:
(a) The Company or MCN will give each Agent advance notice of
its intention to file or prepare any additional registration statement with
respect to the registration of additional Notes, any amendment to the
Registration Statement, any amendment or supplement to the Prospectus which
would create a Note Prospectus, or any amendment or supplement to the Note
Prospectus (other than an amendment or supplement providing solely for a change
in the interest rate of the Notes and other than a pricing supplement except
with respect to the Agent which made or presented the offer to purchase the
applicable Note), whether by filing of documents pursuant to the Act, the
Exchange Act or otherwise, and will furnish each Agent with copies thereof for
its review a reasonable time in advance of such proposed filing or preparation,
as the case may be, and will not file any such proposed amendment or supplement
or other documents in a form to which any Agent or counsel for the Agents shall
reasonably object. Subject to the foregoing sentence, the Company and MCN will
promptly cause the Prospectus together with each supplement thereto which would
create a Note Prospectus, and each Note Prospectus together with each
supplement thereto, to be filed with the Commission pursuant to Rule 424(b)
under the Act.
(b) The Company and MCN will promptly advise the Agents (i)
when any amendment to the Registration Statement shall have become effective,
(ii) of the filing of any amendment or supplement to the Prospectus which
creates a Note Prospectus, including the filing of documents incorporated
therein by reference, (iii) of the filing of any amendment or supplement to the
Note Prospectus, including the filing of documents incorporated therein by
reference, (iv) of any request by the Commission for any amendment of the
Registration Statement or amendment or supplement to the Prospectus which would
create a Note Prospectus, or any amendment of or supplement to the Note
Prospectus, or for any additional information or any comments with respect
thereto, (v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening
of any proceeding for such purpose and (vi) of the receipt by the Company or
MCN of any notification with respect to the suspension of the qualification of
the Notes for sale in any state or jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company and MCN will use
their best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof. The Company will
inform you promptly, upon your request, of the aggregate offering price or
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<PAGE> 15
purchase price of debt securities registered under the Registration Statement
that remain unissued, and will promptly advise you to suspend solicitations of
orders to purchase Notes at any time when all securities registered under the
Registration Statement have been issued.
(c) If, at any time when a prospectus relating to the Notes
is required to be delivered under the Act, any event occurs as a result of
which the Registration Statement or the Note Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it shall be
necessary to amend or supplement the Registration Statement or the Note
Prospectus to comply with the Act or the Exchange Act or the rules and
regulations of the Commission thereunder, the Company or MCN will immediately
notify each Agent, such notice to be confirmed in writing, and, if so notified
by the Company or MCN, each Agent shall forthwith suspend solicitation of
offers to purchase Notes in the Agents' capacities as agent and cease sales of
any Notes any Agent may then own as principal; the Company and MCN promptly
will prepare and file with the Commission, subject to subsections (a) and (b)
of this Section 3, an amendment or supplement to the Registration Statement or
Note Prospectus which will correct such statement or omission or an amendment
which will effect such compliance and will supply such amended or supplemented
Note Prospectus to each Agent in such quantities as such Agent may reasonably
request. If such amendment or supplement, and any documents, certificates and
opinions furnished to each Agent pursuant to Section 3(i) below in connection
with the preparation or filing of such amendment or supplement, are
satisfactory in all respects to each Agent, each Agent will, upon the filing of
such amendment or supplement with the Commission or effectiveness of an
amendment to the Registration Statement, resume its obligations to solicit
offers to purchase Notes hereunder.
(d) MCN will make generally available to its security holders
and deliver to each of the Agents as soon as practicable, but not later than 15
months after the end of a fiscal quarter of MCN during which any Notes are sold
through or purchased by any of the Agents, a consolidated earnings statement
(which need not be audited) of MCN and its subsidiaries for the 12-month period
within such 15 months, which earnings statements shall satisfy the provisions
of Section 11(a) of the Act and the rules and regulations of the Commission
thereunder (including Rule 158 under the Act).
(e) The Company and MCN will deliver to (i) each Agent and
counsel for the Agents as many signed and conformed copies of the Registration
Statement as originally filed and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein and documents incorporated
or
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<PAGE> 16
deemed to be incorporated by reference therein) as the Agents may reasonably
request and (ii) as many copies of the Note Prospectus (as amended or
supplemented) as the Agents may reasonably request so long as the Agents are
required to deliver a Note Prospectus in connection with sales or solicitations
of offers to purchase the Notes.
(f) The Company and MCN will prepare, with respect to any
Notes to be sold through or to the Agent pursuant to this Agreement, a pricing
supplement with respect to such Notes in a form previously approved by the
Agent and will file such pricing supplement pursuant to Rule 424(b) under the
Act not later than the close of business of the Commission on the fifth
business day after the date on which such pricing supplement is first used or
such earlier time as such pricing supplement may be required to be filed with
the Commission.
(g) The Company and MCN will use their best efforts to
arrange for the qualification of the Notes for sale under the laws of such
jurisdictions as the Agents may designate (provided, however, that neither the
Company nor MCN shall be obligated to qualify as a foreign corporation in, or
to execute or file any general consent to service of process under the laws of
any jurisdiction), will maintain such qualifications in effect so long as
required for the distribution of the Notes and will arrange for the
determination of the legality of the Notes for purchase by institutional
investors.
(h) In the event that the Company exercises its right to sell
Notes directly on its own behalf, such sales shall be made in compliance with
Federal and state securities laws, including those relating to broker-dealer
and salesperson registration.
(i) The Company and MCN shall furnish to each Agent such
documents, certificates of officers of the Company or MCN, and opinions of
counsel for the Company or MCN, relating to the business, operations and
affairs of the Company or MCN, the Registration Statement and the Note
Prospectus, any amendments or supplements thereto, the Indenture, the Notes,
this Agreement, the Support Agreement, the Procedures and the performance by
the Company, MCN and the Agents of their respective obligations hereunder and
thereunder as any of the Agents may from time to time prior to the termination
of this Agreement reasonably request.
(j) The Company and MCN, during the period when the Note
Prospectus is required to be delivered under the Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of
the Exchange Act within the time periods required by the Exchange Act and the
rules and regulations of the Commission thereunder.
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<PAGE> 17
(k) During the period, if any, specified in the Terms
Agreement, the Company will not offer, sell, contract to sell or otherwise
dispose of any debt securities of the Company, other than the Notes, without
the prior written consent of the Agents.
(l) On or prior to the date on which there shall be released
to the general public interim financial statement information related to MCN
with respect to each of the first three quarters of any fiscal year or
preliminary financial statement information with respect to any fiscal year,
the Company and MCN shall furnish such information to the Agents, confirmed in
writing, and shall cause the Note Prospectus to be amended or supplemented to
include or incorporate by reference financial information with respect thereto
and corresponding information for the comparable period of the preceding fiscal
year, as well as such other information and explanations as shall be necessary
for an understanding thereof or as shall be required by the Act or the Exchange
Act and the rules and regulations of the Commission thereunder.
(m) On or prior to the date on which there shall be released
to the general public financial information included in or derived from the
audited financial statements of MCN for the preceding fiscal year, the Company
and MCN shall cause the Registration Statement and the Note Prospectus to be
amended, whether by the filing of documents pursuant to the Exchange Act, the
Act or otherwise, to include or incorporate by reference such audited financial
statements and the report or reports, and consent or consents to such inclusion
or incorporation by reference, of the independent accountants with respect
thereto, as well as such other information and explanations as shall be
necessary for an understanding of such financial statements or as shall be
required by the Act or the Exchange Act and the rules and regulations of the
Commission thereunder.
(n) The Company will use the net proceeds received by it
from the sale of the Notes in the manner specified in the Note Prospectus under
the caption "Use of Proceeds".
4. Conditions to the Obligations of the Agents. The
obligations of each Agent to solicit offers to purchase the Notes as agent of
the Company and to purchase Notes as principal shall be subject to the accuracy
of the representations and warranties on the part of the Company and MCN
contained herein and to the accuracy of the statements of the Company and MCN
made in any certificates pursuant to the provisions hereof, to the performance
by the Company and MCN of their respective obligations hereunder and to the
following additional conditions precedent:
(a) No stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for
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<PAGE> 18
that purpose shall then be pending before or, threatened by the Commission.
(b) Each Agent shall have received the opinion of Daniel L.
Schiffer, Esq., Senior Vice President, General Counsel and Secretary for MCN,
and Vice President, General Counsel and Secretary of the Company, dated the
Commencement Date, in form and substance satisfactory to the Agents and their
counsel, to the effect that:
(i) each of the Company and MCN has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of Michigan, with corporate power and authority to
own, lease and operate its properties and conduct its business as
described in the Registration Statement and the Note Prospectus and to
execute and deliver this Agreement and to perform its obligations
hereunder; and neither the Company nor MCN owns or leases property or
conducts any business so as to require qualification as a foreign
corporation for the transaction of business in any jurisdiction where
it is not qualified to transact business, except where the failure to
so qualify would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs or
business prospects of the Company or MCN and their respective
subsidiaries considered as one enterprise;
(ii) Each subsidiary of the Company and MCN has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the
Registration Statement and the Note Prospectus and is duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or be in good
standing would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs or
business prospects of the Company or MCN and their respective
subsidiaries considered as one enterprise; all of the issued and
outstanding shares of capital stock of each such subsidiary has been
duly authorized and validly issued, are fully paid and non- assessable
and, to the best of such counsel's knowledge all such shares are owned
by the Company or MCN, as the case may be, directly or through its
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity;
(iii) None of the Company, MCN nor any of their respective
subsidiaries is in violation of its charter or in
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<PAGE> 19
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it
is a party or by which it or any of them or their properties may be
bound; the issue and sale of the Notes, the compliance by the Company
with all of the provisions of the Notes, the execution, delivery and
performance by the Company and MCN of this Agreement, the execution,
delivery and performance by the Company of the Indenture, the
execution, delivery and performance by the Company and MCN of the
Support Agreement, the consummation of the transactions herein and
therein contemplated, and the compliance by the Company and MCN with
their obligations hereunder and thereunder have been duly authorized
by all necessary corporate action of the Company and MCN and will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of
the property or assets of the Company or MCN or any of their
respective subsidiaries pursuant to the terms of, any statute,
indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which the Company or MCN or any of
their respective subsidiaries is a party or by which the Company or
MCN or any of their respective subsidiaries is bound or to which any
of the property or assets of the Company or MCN or any of their
respective subsidiaries is subject, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company
or MCN, the charter or by-laws of any of their respective
subsidiaries, or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction over
the Company or MCN or any of their respective subsidiaries or any of
its or their properties; and all consents, approvals, authorizations,
orders, registrations or qualifications of or with any court or any
such regulatory authority or other governmental body required for the
solicitation of offers to purchase the Notes, the issue and sale of
the Notes or the consummation of the other transactions contemplated
by this Agreement, the Support Agreement or the Indenture, including
the registration under the Act of the Notes and the qualification of
the Indenture under the Trust Indenture Act have been obtained and are
in full force and effect, except such consents, approvals,
authorizations, orders, registrations or qualifications as may be
required under state securities or blue sky laws or any jurisdiction
in connection with the solicitation by the Agents of offers to
purchase the Notes from the Company and with purchases of the Notes by
the Agents as principal, as the case may be, in each case in the
manner contemplated hereby;
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<PAGE> 20
(iv) To the best of such counsel's knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments or documents required to be described or referred to
in the Registration Statement or to be filed as exhibits thereto other
than those described or referred to therein or filed or incorporated
by reference as exhibits thereto; the descriptions thereof or
references thereto are correct, and no default exists in the due
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument so described, referred
to, filed or incorporated by reference;
(v) The Company, MCN and their respective subsidiaries
possess all licenses, franchises, indeterminate permits, certificates,
other permits, authorizations, approvals, consents and orders of all
governmental authorities or agencies necessary for the ownership or
lease of the properties owned or leased by each of them and for the
operation of the business carried on by each of them with such
exceptions and any burdensome provisions which, singly or in the
aggregate, are not material and do not materially adversely affect the
condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company or MCN and their respective
subsidiaries considered as one enterprise; all such licenses,
franchises, indeterminate permits, certificates, other permits,
orders, authorizations, approvals and consents are in full force and
effect and except as otherwise set forth in the Registration Statement
and the Note Prospectus, there are no legal or governmental
proceedings pending or threatened that would result in a material
modification, suspension or revocation thereof;
(vi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now
pending, or, to such counsel's knowledge, threatened, against or
affecting the Company or MCN or any of their respective subsidiaries,
which is required to be disclosed in the Registration Statement or the
Note Prospectus (other than as disclosed therein), or which might
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company or MCN and their respective subsidiaries considered as
one enterprise, or which might materially and adversely affect the
properties or assets thereof or which might materially and adversely
affect the consummation of any transaction contemplated by this
Agreement; all pending legal or governmental proceedings to which the
Company or MCN or any of their respective subsidiaries is a party or
to which any of their respective property or assets is the subject
which are not
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<PAGE> 21
described in the Registration Statement or the Note Prospectus,
including ordinary routine litigation incidental to the business of
the Company or MCN or any of their respective subsidiaries, are,
considered in the aggregate, not material; and there are no contracts
or documents of the Company or MCN or any of their respective
subsidiaries which are required to be filed as exhibits to the
Registration Statement, or to any documents incorporated by reference
therein, by the Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder, which have not been so
filed;
(vii) Each of the Company and MCN has an authorized capitalization
as set forth in the Note Prospectus and all of the issued and
outstanding shares of capital stock of the Company and MCN have been
duly and validly authorized and issued and are fully paid and
nonassessable;
(viii) Each of the Company, MCN and their respective subsidiaries
has good and marketable title to all material real and personal
property owned by each of them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Registration Statement or Note Prospectus or such as do not materially
affect the value of such property and do not materially interfere with
the use made or proposed to be made of such property by the Company,
MCN or their respective subsidiaries, respectively; and any real
property and buildings held under lease by the Company, MCN and their
respective subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property
and buildings by the Company, MCN or their respective subsidiaries,
respectively;
(ix) The information in the Note Prospectus under "Use of
Proceeds", "Description of the Offered Notes", "MCN Corporation", "MCN
Investment Corporation", "Description of Debt Securities" and "Support
Agreement", to the extent that they constitute matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects; such counsel has no reason to believe that, as of
the effective date of the Registration Statement, either the
Registration Statement or the Note Prospectus (or, as of its date, any
amendment or supplement thereto made by the Company or MCN prior to
the date of such opinion) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that, as
of the date of such opinion, either the Registration Statement or the
Note Prospectus (or any such amendment or supplement thereto) contains
an untrue statement of a material fact or
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<PAGE> 22
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(x) The Registration Statement is effective under the Act and
no stop order suspending the effectiveness of the Registration
Statement has been issued under the Act or, proceedings therefor
instituted or, to the best of such counsel's knowledge, threatened by
the Commission; the Registration Statement and the Note Prospectus and
any further amendments and supplements thereto prior to the date of
such opinion (other than financial statements and related schedules
and other financial or statistical data included or incorporated by
reference therein, as to which such counsel need express no opinion),
comply as to form in all material respects with the requirements of
the Act and the Trust Indenture Act and the rules and regulations of
the Commission thereunder;
(xi) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement or Note Prospectus, or any
amendment or supplement thereto, at the time they were filed with the
Commission or amended (other than the financial statements and related
schedules and other financial or statistical data included or
incorporated by reference therein, as to which such counsel need
express no opinion), complied as to form in all material respects with
the requirements of the Act and the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder; and such
counsel has no reason to believe that any of such documents, when such
documents became effective or were so filed, as the case may be,
contained, in the case of the Registration Statement, an untrue
statement of a material fact, or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and, in the case of other documents which were
filed under the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein not misleading;
(xii) The Indenture has been duly and validly authorized, executed
and delivered by the Company and qualified under the Trust Indenture
Act and constitutes a valid and legally binding instrument,
enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or
other similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles;
(xiii) All taxes and fees required to be paid by the laws of the
State of Michigan and jurisdictional subdivisions thereof with respect
to the execution of the Indenture and the issuance of the Notes have
been paid;
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<PAGE> 23
(xiv) The Notes, in the form(s) certified by the Company as of
the date hereof, have been duly and validly authorized for issuance,
offer and sale pursuant to this Agreement, and when issued,
authenticated and delivered pursuant to the provisions of this
Agreement and the Indenture against payment of the consideration
therefor, will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles, and each holder of Notes will be entitled to the
benefits provided by the Support Agreement and the Indenture; and the
Notes, the Indenture and the Support Agreement conform to the
descriptions thereof in the Note Prospectus;
(xv) Each of this Agreement and the Support Agreement has been
duly and validly authorized, executed and delivered by each of the
Company and MCN;
(xvi) The Notes, in the form(s) certified by the Company as of the
date hereof, when issued, authenticated and delivered pursuant to the
provisions of this Agreement and the Indenture, will be excluded or
exempted from the provisions of the Commodity Exchange Act, assuming
the accuracy of any certifications of factual matters furnished by the
Agents or the Company in connection with the issuance thereof;
(xvii) MCN is presently exempt from the provisions of the 1935 Act
(except Section 9(a)(2) thereof) which would otherwise require it to
register thereunder;
(xviii) None of the Company, MCN or any of their respective
subsidiaries is an "investment company" or under the "control" of an
"investment company" as such terms are defined under the 1940 Act; and
(xix) The Company and MCN are in compliance with all provisions
of Section 1 of the Laws of Florida, Chapter 92-198, An Act Relating
to Disclosure of Doing Business with Cuba.
(c) Each Agent shall have received from LeBoeuf, Lamb, Greene
& MacRae, L.L.P., counsel for the Agents, an opinion, dated the Commencement
Date, with respect to the issuance and sale of the Notes, the Indenture, the
Registration Statement, the Note Prospectus and other related matters as any of
the Agents may reasonably require, and the Company and MCN shall have furnished
to such counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
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<PAGE> 24
(d) In giving their opinions required by subsections (b) and
(c), respectively, of this Section, Daniel L. Schiffer, Esq. and LeBoeuf, Lamb,
Greene & MacRae, L.L.P. shall each additionally state that nothing has come to
their attention that would lead them to believe that the Registration Statement
(other than the financial statements and related schedules and other financial
or statistical data included or incorporated by reference therein, as to which
counsel need express no opinion), at the time it became effective or at the
Commencement Date, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Note Prospectus (other than the
financial statements and related schedules and other financial or statistical
data included or incorporated by reference therein, as to which counsel need
express no opinion), at the Commencement Date, or if such opinion is being
delivered in connection with the purchase of Notes by the Agent as principal
pursuant to Section 1(g) hereof at the date of any Terms Agreement and at the
Purchase Date with respect thereto, as the case may be, included (or includes)
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In giving their
opinion, LeBoeuf, Lamb, Greene & MacRae, L.L.P. may rely as to matters of
Michigan law upon the opinion of Daniel L. Schiffer, Esq. which opinion shall
be in form and substance satisfactory to counsel for the Agents.
(e) At the Commencement Date, there shall not have been,
since the respective dates as of which information is given in the Registration
Statement and the Note Prospectus, as amended and supplemented, or since the
date of any agreement by any Agent to purchase Notes as principal, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company or MCN and their
respective subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Company and MCN shall have each
furnished to you a certificate of its Chairman of the Board, President or a
Vice President, and by its chief financial or accounting officer, dated the
Commencement Date, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties contained in this
Agreement are true and correct with the same force and effect as though
expressly made at and as of the Commencement Date, (iii) the Company and MCN,
respectively, have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to the Commencement Date
and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or, to his or her knowledge, threatened by the Commission.
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<PAGE> 25
(f) At the Commencement Date, each Agent shall have received
from Deloitte & Touche LLP a letter dated the Commencement Date in form and
substance satisfactory to each Agent, to the effect set forth below and as to
such other matters as the Agents may reasonably request, that:
(i) They are independent certified public accountants with
respect to MCN and its respective subsidiaries within the meaning of
the Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements and
any supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma
financial information examined) by them and included or incorporated
by reference in the Registration Statement or the Note Prospectus
comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related published rules and regulations thereunder; and if applicable,
they have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the
consolidated interim financial statements, selected financial data,
pro forma financial information, prospective financial statements
and/or condensed financial statements derived from audited financial
statements of MCN for the periods specified in such letter, as
indicated in their reports thereon;
(iii) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of MCN
for the five most recent fiscal years included in the Note Prospectus
and included or incorporated by reference in MCN's Annual Report on
Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement and eliminations where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
MCN's Annual Reports on Form 10-K for such fiscal years;
(iv) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
including a reading of the unaudited consolidated financial statements
and other information referred to below, a reading of the latest
available unaudited interim consolidated financial statements of MCN
and its subsidiaries, inspection of the minute books of MCN and its
subsidiaries since the audited consolidated financial statements set
forth in MCN's Annual Report on Form 10-K for the most recent year,
inquiries of officials of MCN and its subsidiaries responsible for
financial and accounting matters and such other inquiries and
procedures
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as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) any unaudited consolidated financial statements
set forth in MCN's Quarterly Reports on Form 10-Q incorporated
by reference in the Registration Statement and the Note
Prospectus as amended or supplemented do not comply as to form
in all material respects with the applicable accounting
requirements of the Exchange Act as they apply to Form 10-Q
and the published rules and regulations thereunder or are not
presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with
that of the audited consolidated financial statements set
forth in MCN's Annual Report on Form 10-K for the most recent
year ended incorporated by reference in the Registration
Statement and the Note Prospectus as amended or supplemented;
(B) any other unaudited income statement data and
balance sheet items included in the Note Prospectus do not
agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
consolidated financial statements included or incorporated by
reference in the Registration Statement and the Note
Prospectus as amended or supplemented;
(C) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Note Prospectus as amended or supplemented do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments or
eliminations have not been properly applied to the historical
amounts in the compilation of those statements;
(D) as of a specified date not more than five days
prior to the date of delivery of such letter, there have been
any decrease or increase in the common stock (except for any
increases in connection with any employee benefit, dividend
reinvestment or stock purchase plan of the Company) or any
increase or decrease in redeemable cumulative preferred
securities or long-term debt including capital lease
obligations (except for sinking fund and installment
requirements under their long- term debt agreements, terms of
the preferred securities of MCN Michigan and purchases in the
open market in anticipation thereof) or any
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increase in short-term debt, or any decrease in consolidated
common shareholder's equity of MCN and its consolidated
subsidiaries (other than periodic dividends declared to
stockholders and any decreases pursuant to the terms of the
preferred redeemable increase dividend equity securities of
MCN), in each case as compared with the corresponding amounts
shown in the latest consolidated statement of financial
position incorporated by reference in the Registration
Statement and the Note Prospectus as amended or supplemented,
except in all instances for increases or decreases which the
Note Prospectus as amended or supplemented, including
financial information incorporated by reference, discloses
have occurred or may occur or which are described in such
letter;
(E) for the period from the date of the latest
consolidated financial statements or consolidating financial
statements included or incorporated by reference in the Note
Prospectus to the end of the latest period for which
consolidated financial statements are available there were any
decreases in consolidated operating revenues, operating
income, net income or earnings available for common stock of
MCN and its consolidated subsidiaries, or any increases in any
items specified by the Agents, in each case as compared with
the corresponding period in the preceding year and with any
other period of corresponding length specified by the Agents,
except in each case for increases or decreases which the Note
Prospectus as amended or supplemented, including financial
information incorporated by reference, discloses have occurred
or may occur or which are described in such letter; and
(F) The unaudited consolidated financial statements
referred to in Clause (E) are not stated on a basis
substantially consistent with the audited consolidated
financial statements, incorporated by reference in the
Registration Statement and the Note Prospectus as amended or
supplemented.
(v) In addition to the limited procedures, inspection of
minute books, inquiries and other procedures referred to in clause
(iii) and (iv) above, they have carried out certain other specified
procedures, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information which are derived from the
general accounting records of MCN and its subsidiaries, which appear
in the Note Prospectus as amended or supplemented and the Registration
Statement, in MCN's Annual Report on Form 10-K for the latest year
ended and in any MCN Quarterly Report on
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<PAGE> 28
Form 10-Q since the latest Annual Report on Form 10-K and which are
specified by the Agents, and have compared certain of such amounts,
percentages and financial information with the accounting records of
MCN and its subsidiaries and have found them to be in agreement.
(g) Other than as set forth or contemplated in the
Registration Statement and the Note Prospectus as amended or supplemented (i)
neither the Company, MCN nor any of their respective subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Registration Statement and the Note Prospectus
as amended or supplemented any material loss or interference with its business;
and (ii) since the respective dates as of which information is given in the
Registration Statement and the Note Prospectus as amended or supplemented there
shall not have been any change in the capital stock or long-term debt including
capital lease obligations (other than changes resulting from sinking fund and
installment provisions under any long-term debt agreement (scheduled payments
on lease obligations) to which the Company, MCN or any of their respective
subsidiaries is a party, terms of the preferred securities of MCN Michigan and
purchases in the open market in anticipation thereof) or any change, or any
development involving a prospective change, in or affecting the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company or MCN and their respective subsidiaries, the effect
of which in any such case described in clause (i) or (ii) of this subsection
(g) is in the judgment of the Agents so material and adverse as to make it
impracticable or inadvisable to commence or continue the offering of the Notes
as contemplated by the Registration Statement or the Note Prospectus.
(h) Subsequent to the date of this Agreement (1) no
downgrading shall have occurred in the rating accorded the debt securities of
the Company or MCN by any "nationally recognized securities rating
organization" as that term is defined by the Commission for the purposes of
Rule 436(g) of Regulation C, or (2) no review of the rating assigned to any
debt securities of the Company or MCN with a view to possible downgrading or
with negative implications for the Company or MCN, as the case may be, shall
have been announced.
(i) The Company and MCN shall have furnished to the Agents
and counsel for the Agents, such further information, certificates and
documents as the Agents may reasonably request from time to time; and all
proceedings taken by the Company in connection with the issuance and sale of
Notes as herein contemplated shall be satisfactory in form and substance to the
Agents and counsel for the Agents.
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If any of the conditions specified in this Section 4 shall not
have been fulfilled when and as provided in this Agreement (or, at the option
of the Agent, any applicable Terms Agreement by the Agent to purchase Notes as
principal), or if any of the opinions or certificates mentioned above or
elsewhere in this Agreement (or any applicable Terms Agreement) shall not be in
all material respects reasonably satisfactory in form and substance to an Agent
and its counsel, this Agreement (or any applicable Terms Agreement) with
respect to such Agent, and all obligations of such Agent hereunder or
thereunder, as the case may be, may be terminated by such Agent by notice to
the Company and MCN at any time and any such termination shall be without
liability of any party to any other party, except that the covenant regarding
provision of an earnings statement set forth in Section 3(d) hereof, the
provisions concerning payment of expenses under Section 10 hereof, the
indemnity and contribution agreement set forth in Sections 8 and 9 hereof, the
provisions concerning the representations and indemnities to survive set forth
in Section 12 hereof, the provisions relating to governing law set forth in
Section 16 and the provisions relating to successors set forth in Section 14
hereof shall remain in full force and effect.
5. Delivery of and Payment for Notes Sold through the Agents.
Delivery of Notes sold through the Agent as agent shall be made by the Company
to the Agent for the account of any purchaser only against payment therefor in
immediately available funds. In the event that a purchaser shall fail either
to accept delivery of or to make payment for a Note on the date fixed for
settlement, the Agent shall promptly notify the Company and deliver the Note to
the Company, and, if the Agent has theretofore paid the Company for such Note,
the Company will promptly return such funds to the Agent. If such failure
occurred for any reason other than default by the Agent in the performance of
its obligations hereunder, the Company will reimburse the Agent for its loss of
the use of the funds for the period such funds were credited to the Company's
account.
6. Additional Covenants of the Company and MCN. Each of the
Company and MCN covenants and agrees with each Agent that:
(a) Each acceptance by it of an offer for the purchase of
Notes (whether to the Agent as principal or through the Agent as agent), and
each delivery of Notes to the Agent (whether to the Agent as principal or
through the Agent as agent), shall be deemed to be an affirmation that the
representations and warranties of the Company and MCN contained in this
Agreement and in any certificate theretofore delivered to the Agent pursuant
hereto are true and correct at the time of such acceptance or sale, as the case
may be, and an undertaking that such representations and warranties will be
true and correct at the time of delivery to the purchaser or its agent, or to
the Agent, of the Note or Notes relating to such acceptance or sale, as the
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case may be, as though made at and as of each such time (and it is understood
that such representations and warranties shall relate to the Registration
Statement and Note Prospectus as amended and supplemented to each such time).
(b) Each time that (i) the Registration Statement or the Note
Prospectus is amended (which for the purposes of this Section 6 shall include
the filing by the Company or MCN of materials incorporated by reference in the
Registration Statement or the Note Prospectus) or supplemented (other than by
an amendment or supplement relating to any offering of securities other than
the Notes or providing solely for the terms of any Notes or for a change deemed
immaterial in the reasonable opinion of the Agents), (ii) the Prospectus is
supplemented to create a Note Prospectus, (iii) (if required in connection with
the purchase of the Notes by the Agent as principal) the Company sells Notes to
an Agent as principal or (iv) if the Company issues and sells Notes in a form
not previously certified to the Agents by the Company, the Company and MCN will
each deliver or cause to be delivered forthwith to each Agent a certificate
signed by its Chairman of the Board, President or a Vice President, and by its
chief financial or accounting officer, dated the date of the effectiveness of
such amendment, the date of filing of such supplement or materials, or the date
of such sale, as the case may be, in form and substance satisfactory to each
Agent, to the effect that the statements contained in the certificate referred
to in Section 4(e) that was last furnished to each Agent (either pursuant to
Section 4(e) or pursuant to this Section 6(b)) are true and correct at the time
of the effectiveness of such amendment (which for the purposes of this
Agreement in the case of the filing of materials incorporated by reference
shall be the date of the filing of such materials), the filing of such
supplement or the date of sale, as the case may be, as though made at and as of
such time (except that such statements shall be deemed to relate to the
Registration Statement, as amended at the time of effectiveness of such
amendment, and to the Prospectus or the Note Prospectus (as the case may be),
as amended and supplemented at the date of such certificate) or, in lieu of
such certificate, a certificate of the same tenor as the certificate referred
to in Section 4(e) but modified, as necessary, to relate to the Registration
Statement, as amended at the time of the effectiveness of such amendment, and
to the Prospectus or the Note Prospectus (as the case may be), as amended and
supplemented at the date of delivery of such certificate.
(c) Each time that (i) the Registration Statement or the Note
Prospectus is amended or supplemented (which for the purposes of this Section 6
shall include the filing by the Company or MCN of materials incorporated by
reference in the Registration Statement or the Note Prospectus) or supplemented
(other than by an amendment or supplement relating to any offering of
securities other than the Notes or providing solely
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<PAGE> 31
for the terms of any Notes or for a change deemed immaterial in the reasonable
opinion of the Agents), (ii) the Prospectus is supplemented to create a Note
Prospectus, (iii) (if required in connection with the purchase of the Notes by
the Agent as principal) the Company sells Notes to an Agent as principal, or
(iv) if the Company issues and sells Notes in a form not previously certified
to the Agents by the Company, the Company and MCN shall furnish to or cause to
be furnished forthwith to each Agent a written opinion of Daniel L. Schiffer,
Esq., Senior Vice President, General Counsel and Secretary of MCN, and Vice
President, General Counsel and Secretary of the Company to the effect set forth
in Sections 4(b) but modified as necessary to relate to the Registration
Statement and the Note Prospectus as amended and supplemented to the time of
delivery of such opinion. Any such opinion shall be dated the date of the
effectiveness of such amendment, the date of filing of such supplement or
materials or the date of such sale, as the case may be, in form and substance
satisfactory to each Agent. In lieu of such opinion, such counsel may furnish
to each Agent a letter to the effect that each Agent may rely on such counsel's
last opinion to the same extent as though it were dated the date of such letter
authorizing reliance on such last opinion (except that statements in such last
opinion will be deemed to relate to the Registration Statement, as amended at
the time of the effectiveness of such amendment, and to the Prospectus or the
Note Prospectus (as the case may be), as amended and supplemented at the date
of delivery of such letter).
(d) Each time that (i) the Registration Statement or the Note
Prospectus is amended or supplemented to set forth additional financial
information or there is filed with the Commission any document incorporated by
reference into the Note Prospectus which contains additional financial
information or (ii) (if required in connection with the purchase of the Notes
by the Agent as principal) the Company sells Notes to an Agent as principal,
the Company and MCN shall cause Deloitte & Touche LLP, its independent
auditors, forthwith to furnish each Agent with a letter, dated the date of the
effectiveness of such amendment, the date of filing of such supplement or
document or the date of such sale, as the case may be, in form and substance
satisfactory to each Agent, of the same tenor as the portions of the letter
referred to in subsections (i), (ii) and (iii) of Section 4(f), but modified to
relate to the Registration Statement and Note Prospectus, as amended and
supplemented to the date of such letter, and of the same tenor as the portions
of the letter referred to in subsections (iv) and (v) of Section 4(f), with
such changes as may be necessary to reflect changes in the financial statements
and other information derived from the accounting records of the Company.
7. Right of Agent Who Agreed to Purchase as Principal to
Refuse to Purchase. The Company and MCN agree that any Agent who has agreed to
purchase and pay for any Note as principal,
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<PAGE> 32
shall have the right to refuse to purchase such Note if, at the date of
delivery of such Note, either (a) any condition set forth in Section 4 shall
not be satisfied or (b) subsequent to the agreement to purchase such Note, any
change, or any development involving a prospective change, in or affecting the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company or MCN and their respective subsidiaries, in
each case, considered as one enterprise, shall have occurred the effect of
which is, in the judgment of such Agent, so material and adverse as to make it
impractical or inadvisable to proceed with the delivery of such Note.
Notwithstanding the foregoing, under no circumstances shall any such Agent have
any duty or obligation to exercise the judgment permitted to be exercised under
this Section 7.
8. Indemnification. (a) The Company and MCN jointly and
severally agree to indemnify and hold harmless each Agent and each person, if
any, who controls such Agent within the meaning of Section 15 of the Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, Prospectus or
Note Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; unless such
untrue statement or omission or such alleged untrue statement or
omission was made in reliance upon and in conformity with written
information furnished to the Company or to MCN by the Agents expressly
for use in the Registration Statement (or any amendment thereto) or
any Preliminary Prospectus, Prospectus or Note Prospectus (or any
amendment or supplement thereto);
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company and MCN; and
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<PAGE> 33
(iii) against any and all expense whatsoever, as incurred
(including, the fees and disbursements of counsel chosen by the
Agents), reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above.
(b) Each Agent severally agrees to indemnify and hold
harmless the Company, MCN, their directors, each of their officers who signed
the Registration Statement, and each person, if any, who controls the Company
or MCN within the meaning of Section 15 of the Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Preliminary
Prospectus, Prospectus or Note Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company or to MCN by the Agents expressly for use in the Registration
Statement (or any amendment thereto) or such Preliminary Prospectus, Prospectus
or Note Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of any such action. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 8 is for any reason held to be unavailable to or insufficient to hold
harmless the indemnified parties although applicable in accordance with its
terms, the Company and MCN, on the one hand, and the Agents, on the other hand,
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and MCN, on the one hand, and one or more of the Agents, on the other
hand, as incurred, in such proportion so that each Agent is responsible for
that portion represented by the percentage that the total
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<PAGE> 34
commissions and underwriting discounts received by such Agent to the date of
such liability, and the Company and MCN are responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each person, if any, who
controls an Agent within the meaning of Section 15 of the Act shall have the
same rights to contribution as such Agent, and each director of the Company,
each officer of the Company who signed the Registration Statement, each
director of MCN, each officer of MCN who signed the Registration Statement, and
each person, if any, who controls the Company or MCN within the meaning of
Section 15 of the Act shall have the same rights to contribution as the
Company.
10. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated, the
Company and MCN will pay all costs and expenses incident to the performance of
its obligations under this Agreement, including, without limiting the
generality of the foregoing:
(a) The preparation, printing and filing of the Registration
Statement (including all exhibits thereto) and any amendments and supplements
thereto, and any Preliminary Prospectus, Prospectus or Note Prospectus, and any
amendments or supplements thereto;
(b) The preparation, filing and reproduction of this
Agreement;
(c) The preparation, printing, issuance and delivery of the
Notes, including fees and expenses relating to the use of book-entry notes;
(d) The fees and disbursements of the Company's and MCN's
accountants and counsel, of the Trustee and its counsel, and of any Calculation
Agent;
(e) The reasonable fees and disbursements of counsel to the
Agents incurred heretofore or hereafter in connection with the offering,
purchase and sale of the Notes;
(f) The qualification of the Notes under state securities
laws, including filing fees and the reasonable fees and disbursements of
counsel for the Agents in connection therewith and in connection with the
preparation of any Blue Sky Survey and any Legal Investment Survey;
(g) The printing and delivery to the Agents in quantities as
hereinabove stated of copies of the Registration Statement and any amendments
thereto, and of the Note Prospectus
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<PAGE> 35
and any amendments or supplements thereto, and the delivery by the Agents of
the Note Prospectus and any amendments or supplements thereto in connection
with solicitation or confirmations of sales of the Notes;
(h) The preparation, printing, reproducing and delivery to
the Agents of copies of the Indenture relating to the Notes;
(i) Any fees charged by rating agencies for the rating of the
Notes;
(j) The fees and expenses incurred in connection with the
listing of the Notes on any securities exchange;
(k) The fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc.;
(l) Any advertising and other out-of-pocket expenses of the
Agents incurred with the approval of the Company;
(m) The cost of providing any CUSIP or other identification
numbers for the Notes; and
(n) The fees and expenses of any Depositary and any nominees
thereof in connection with the Notes.
11. Termination. (a) This Agreement (excluding any Terms
Agreement hereunder by an Agent to purchase Notes as principal) may be
terminated for any reason, at any time either by the Company or by such Agent
upon the giving of thirty days' written notice of such termination to such
Agent or the Company, as the case may be.
(b) Each Terms Agreement shall be subject to termination in
the absolute discretion of the Agent purchasing thereunder, immediately upon
notice given to the Company and MCN prior to the close of business on the
Purchase Date relating thereto (i) if there has been, since the date of the
Terms Agreement or since the respective dates as of which information is given
in the Registration Statement, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company or MCN and their respective subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there shall have occurred any material adverse change in the financial
markets in the United States or any outbreak or escalation of hostilities or
other national or international calamity or crisis the effect of which is such
as to make it, in the judgment of such Agent, impracticable to market the Notes
or to enforce contracts for the sale of the Notes, or (iii) if trading in the
Common Stock of MCN has been
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<PAGE> 36
suspended by the Commission, or if trading generally on either the American
Stock Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either Federal, New York or Michigan authorities or (iv) if
the rating assigned by any nationally recognized securities rating agency to
any debt securities of the Company or MCN as of the date of any applicable
principal purchase shall have been lowered since that date or if any such
rating agency shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any debt securities
of the Company or MCN, or (v) if there shall have come to the Agent's attention
any facts that would cause the Agent to believe that the Note Prospectus, at
the time it was required to be delivered to a purchaser of Notes, included an
untrue statement or a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances existing at the time of such delivery, not misleading.
(c) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except that (i) each Agent shall be entitled to any commission earned in
accordance with Section 1(c) hereof, (ii) if at the time of termination (A) any
Agent shall own any Notes purchased by it as principal with the intention of
reselling them or (B) an offer to purchase any of the Notes has been accepted
by the Company but the time of delivery to the purchaser or his agent of the
Note or Notes relating thereto has not occurred, the covenants set forth in
Sections 3 and 6 hereof shall remain in effect until such Notes are so resold
or delivered, as the case may be, and (iii) the covenant set forth in Section
3(d) hereof, the provisions of Sections 8, 9, 10, 12, 14 and 16 hereof shall
remain in full force and effect.
12. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
certificates of officers of the Company and MCN set forth in or made pursuant
hereto or thereto will remain in full force and effect, regardless of any
investigation made by or on behalf of any Agent or the Company or MCN or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for any of the Notes.
13. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Agents, will be mailed,
delivered, telecopied or telegraphed and confirmed to it at the address
specified in Schedule II hereto, or, if sent to the Company or MCN, will be
mailed, delivered or telegraphed and confirmed to it, at 500 Griswold Street,
Detroit,
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<PAGE> 37
Michigan 48226, attention of the Secretary with a copy to the Treasurer.
14. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns and the officers and directors and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder. The term "successors and assigns" as used in this Agreement shall
not include any purchaser, as such purchaser, of any of the Notes from the
Agents.
15. Counterparts. This Agreement may be executed in
counterparts all of which, taken together, shall constitute a single agreement
among the parties to such counterparts.
16. Governing Law; Forum. This Agreement will be governed by
and construed in accordance with the laws of the State of New York. Any suit,
action or proceeding brought by the Company against any Agent in connection
with or arising under this Agreement shall be brought solely in the state or
federal court of appropriate jurisdiction located in the Borough of Manhattan,
The City of New York.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and each Agent.
Very truly yours,
MCN INVESTMENT CORPORATION
By: /s/ Sebastian Coppola
------------------------------
Name: Sebastian Coppola
Title: Vice President and
Treasurer
MCN CORPORATION
By: /s/ Sebastian Coppola
------------------------------
Name: Sebastian Coppola
Title: Vice President and
Treasurer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: /s/ Anthony V. Leness
--------------------------------
Name: Anthony V. Leness
Title: Managing Director
-38-
<PAGE> 39
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Saundra L. Gulley
----------------------------------
Name: Saundra L. Gulley
Title: Senior Vice President
SALOMON BROTHERS INC
By: /s/ Pamela Kendall
---------------------------------
Name: Pamela Kendall
Title: Vice President
SMITH BARNEY INC.
By: /s/ Michael P. Hynes
---------------------------------
Name: Michael P. Hynes
Title: Managing Director
-39-
<PAGE> 40
SCHEDULE I
MCN INVESTMENT CORPORATION
Medium-Term Notes, Series B
Commission Schedule
<TABLE>
<CAPTION>
Maturity Ranges Commission Rate
- --------------- ---------------
<S> <C>
More than 9 months to less than 1 year .125%
1 year to less than 18 months .150
18 months to less than 2 years .200
2 years to less than 3 years .250
3 years to less than 4 years .350
4 years to less than 5 years .450
5 years to less than 6 years .500
6 years to less than 7 years .550
7 years to less than 8 years .600
8 years to less than 9 years .600
9 years to less than 10 years .600
10 years to less than 15 years .625
15 years to less than 20 years .700
20 years to 30 years .750
Beyond 30 years To be negotiated
</TABLE>
<PAGE> 41
SCHEDULE II
ADDRESS FOR NOTICES TO AGENTS
Notices to Merrill Lynch & Co. shall be directed to it at:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center, North Tower
10th Floor
New York, New York 10281-1310
Attn: MTN Product Management
Telephone: (212) 449-7476
Telecopy: (212) 449-2234
Notices to Donaldson, Lufkin & Jenrette Securities Corporation shall be
directed to it at:
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Attn: Syndicate Department
Telephone: (212) 892-4807
Telecopy: (212) 892-4298
Notices to Salomon Brothers Inc shall be directed to it at:
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Attn: MTN Documentation
Telephone: (212) 783-5897
Telecopy: (212) 783-2274
Notices to Smith Barney Inc. shall be directed to it at:
Smith Barney Inc.
390 Greenwich Street -- 4th Floor
New York, New York 10013
Attn: MTN Product Management/Origination -- Mark R. Meyer
Telephone: (212) 723-5123
Telecopy: (212) 723-8854
<PAGE> 42
EXHIBIT A
MCN INVESTMENT CORPORATION
ADMINISTRATIVE PROCEDURES
MEDIUM-TERM NOTES, SERIES B
MAY 6, 1996
Medium-Term Notes, Series B, Due Nine Months or More from Date
of Issue (the "Notes") are to be offered on a continuing basis by MCN
Investment Corporation, a Michigan corporation (the "Company"), to or through
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Smith
Barney Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Salomon
Brothers Inc (each an "Agent" and, collectively, the "Agents"), pursuant to a
Distribution Agreement dated May 6, 1996 (the "Distribution Agreement") between
the Company, MCN Corporation ("MCN") and the Agents. The Distribution
Agreement provides both for the sale of Notes by the Company to one or more of
the Agents as principal for resale to investors and other purchasers and for
the sale of Notes by the Company directly to investors (as may from time to
time be agreed to by the Company and the related Agent or Agents) in which case
the Agents will act as agents of the Company in soliciting Note purchases. The
Notes will have the benefit of a Support Agreement dated as of September 1,
1995 between the Company and MCN.
Unless otherwise agreed by the related Agent or Agents and the
Company, Notes will be purchased by the related Agent or Agents as principal.
Such purchases will be made in accordance with terms agreed upon by the related
Agent or Agents and the Company (which terms shall be agreed upon orally, with
written confirmation prepared by the related Agent or Agents and mailed to the
Company). If agreed upon by any Agent or Agents and the Company, such Agent or
Agents, acting solely as agent or agents for the Company and not as principal,
will use reasonable efforts to solicit offers to purchase the Notes. Only
those provisions in these Administrative Procedures that are applicable to the
particular role that an Agent will perform shall apply.
The Notes will be issued as a series of securities pursuant to
an Indenture, dated as of September 1, 1995 (the "Indenture"), between the
Company and NBD Bank, as trustee, with respect to the Notes (the "Trustee").
In accordance with the provisions of the Indenture, NBD Bank has been duly
appointed by the Company as Transfer Agent and Paying Agent, in each case with
respect to the Notes.
A Registration Statement (the "Registration Statement", which
term shall include any additional registration statements
<PAGE> 43
or amendments thereto filed in connection with the Notes as provided in the
Distribution Agreement) with respect to the Notes has been filed with the
Securities and Exchange Commission (the "Commission"). The most recent base
Prospectus included in the Registration Statement, as supplemented with respect
to the Notes, is herein referred to as the "Prospectus". The most recent
supplement to the Prospectus setting forth the purchase price, interest rate,
maturity date and other terms of the Notes (as applicable) is herein referred
to as the "Pricing Supplement".
The Notes will either be issued (a) in book-entry form and
represented by one or more fully registered Notes (each, a "Book-Entry Note")
delivered to the Trustee, as agent for The Depository Trust Company ("DTC"),
and recorded in the book-entry system maintained by DTC, or (b) in certificated
form (each, a "Certificated Note") delivered to the investor or other purchaser
thereof or a person designated by such investor or other purchaser. Owners of
beneficial interests in Notes issued in book-entry form will be entitled to
physical delivery of Notes in certificated form equal in principal amount to
their respective beneficial interests only upon certain limited circumstances
described in the Prospectus.
General procedures relating to the issuance of all Notes are
set forth in Part I hereof. Additionally, Notes issued in book- entry form
will be issued in accordance with the procedures set forth in Part II hereof
and Notes issued in certificated form will be issued in accordance with the
procedures set forth in Part III hereof. Capitalized terms used herein that
are not otherwise defined shall have the meanings ascribed thereto in the
Indenture or the Notes, as the case may be.
-2-
<PAGE> 44
PART I: PROCEDURES OF GENERAL
APPLICABILITY
Date of Issuance/Authentication: Each Note will be dated as of
the date of its
authentication by the
Trustee. Each Note shall
also bear an original issue
date (the "Original Issue
Date"). The Original Issue
Date shall remain the same
for all Notes subsequently
issued upon transfer,
exchange or substitution of
an original Note regardless
of their dates of
authentication.
Maturities: Each Note will mature on a
date selected by the investor
or other purchaser and
agreed to by the Company, or
selected by the Company and
agreed to by the investor or
other purchaser from nine
months or more from its
Original Issue Date.
Registration: Unless otherwise provided in
the applicable Pricing
Supplement, Notes will be
issued only in fully
registered form.
Denominations: Unless otherwise provided in
the applicable Pricing
Supplement, Notes will be
issued in denominations of
$1,000 or any integral
multiple of $1,000 in excess
thereof.
Base Rates applicable
to Floating Rate
Notes: Unless otherwise provided in
the applicable Pricing
Supplement, Floating Rate
Notes (except for certain
Original Issue Discount
Notes) will bear interest at
a rate or rates determined by
reference to the CD Rate ("CD
Rate Notes"), the Commercial
Paper Rate ("Commercial Paper
Rate Notes"), LIBOR ("LIBOR
Notes"), the Prime Rate
("Prime Rate Notes"), the
Federal Funds Rate ("Federal
Funds Rate Notes"), the
Treasury Rate ("Treasury Rate
Notes"), or such other
interest
-3-
<PAGE> 45
rate basis or formula as may
be set forth in applicable
Pricing Supplement, or by
reference to two or more such
rates, as adjusted by the
Spread and/or Spread
Multiplier, if any,
applicable to such Floating
Rate Notes.
Redemption/Repayment: The Notes will be subject to
repayment at the option of
the Holders thereof in
accordance with the terms of
the Notes on their respective
Repayment Dates, if any.
Repayment Dates, if any, will
be fixed at the time of sale
and set forth in the
applicable Pricing Supplement
and in the applicable Note.
If no Repayment Dates are
indicated with respect to a
Note, such Note will not be
repayable at the option of
the Holder prior to its
Stated Maturity.
The Notes will be subject to
redemption by the Company on
and after their respective
Redemption Dates, if any.
Redemption Dates, if any,
will be fixed at the time of
sale and set forth in the
applicable Pricing Supplement
and in the applicable
Note. If no Redemption Dates
are indicated with respect to
a Note, such Note will not be
redeemable prior to its
Stated Maturity.
Calculation of
Interest: In case of Fixed Rate Notes,
interest (including payments
for partial periods) will
be calculated and paid on the
basis of a 360-day year of
twelve 30-day months.
The interest rate on each
Floating Rate Note will be
calculated by reference to
the specified Base Rate or
Rates in either case plus or
minus the applicable Spread,
if any, and/or multiplied by
the applicable Spread
Multiplier, if any.
-4-
<PAGE> 46
Unless otherwise provided in
the applicable Pricing
Supplement, interest on each
Floating Rate Note will be
calculated by multiplying its
face amount by an accrued
interest factor. Such
accrued interest factor is
computed by adding the
interest factor calculated
for each day in the period
for which accrued interest is
being calculated.
Unless otherwise specified in
the applicable Pricing
Supplement, the interest
factor for each such day is
computed by dividing the
interest rate applicable to
such day by 360 in the case
of CD Rate Notes, Commercial
Paper Rate Notes, Federal
Funds Rate Notes, LIBOR Notes
or Prime Rate Notes, or by
the actual number of days in
the year in the case of
Treasury Rate Notes. Unless
otherwise specified in an
applicable Pricing
Supplement, the interest
factor for Notes for which
the interest rate is
calculated with reference to
two or more Base Rates will
be calculated in each period
in the same manner as if only
the lowest of the applicable
Base Rates applied.
Interest: General. Each Note will bear
interest in accordance with
its terms. Unless otherwise
provided in an applicable
Pricing Supplement, interest
on each Note will accrue from
the Original Issue Date of
such Note for the first
interest period and from the
most recent Interest Payment
Date to which interest has
been paid for all subsequent
interest periods. Each
payment of interest will
include interest accrued
through the day preceding, as
the case may be, the Interest
Payment Date (provided that
in the case of Floating Rate
Notes which reset daily or
weekly, unless otherwise
specified on the applicable
Note,
-5-
<PAGE> 47
interest payments will
include interest accrued from
and including the date of
issue or from but excluding
the last Record Date to which
interest has been paid, as
the case may be, through and
including the Record Date
next preceding the related
Interest Payment Date), the
Stated Maturity, any
Redemption Date or any
Repayment Date (each Stated
Maturity, Redemption Date or
Repayment Date is referred to
herein as "Maturity").
Interest payable at Maturity
will be payable to the Person
to whom the principal of such
Note is payable. If an
Interest Payment Date with
respect to any Fixed Rate
Note falls on a day that is
not a Business Day, the
payment of interest required
to be made on such Interest
Payment Date need not be made
on such day, but may be made
on the next succeeding
Business Day with the same
force and effect as if made
on such Interest Payment Date
and no interest shall accrue
on such payment for the
period from and after such
Interest Payment Date. If an
Interest Payment Date (other
than at Maturity) with
respect to any Floating Rate
Note would otherwise fall on
a day that is not a Business
Day, such Interest Payment
Date will be the following
day that is a Business Day,
except that in the case of a
LIBOR Note (or a Note for
which LIBOR is an applicable
Base Rate), if such day falls
in the next succeeding
calendar month, such Interest
Payment Date will be the
preceding day that is a
Business Day. If the date of
Maturity of a Note is not a
Business Day, the payment of
principal and interest due on
such day shall be made on the
next succeeding Business Day
and no interest shall accrue
on such payment for the
period from and after such
Maturity. For additional
special provisions
-6-
<PAGE> 48
relating to Floating Rate
Notes, see the Prospectus and
the applicable Pricing
Supplement.
Record Dates. Unless
otherwise indicated in an
applicable Pricing
Supplement, the Record Date
with respect to any Interest
Payment Date for a Floating
Rate Note shall be the date
15 calendar days (whether or
not a Business Day) preceding
such Interest Payment Date.
Unless otherwise
indicated in an applicable
Pricing Supplement, the
Record Date with respect to
any Interest Payment Date for
a Fixed Rate Note will be the
close of business on February
15 next preceding a March 1
Interest Payment Date or
August 15 next preceding a
September 1 Interest Payment
Date.
Interest Payment Dates.
Interest payments will be
made on each Interest Payment
Date commencing with the
first Interest Payment Date
following the Original Issue
Date; provided, however, the
first payment of interest on
any Note originally issued
between a Record Date and an
Interest Payment Date will
occur on the Interest Payment
Date following the next
Record Date.
Fixed Rate Notes. Unless
otherwise provided in an
applicable Fixed Rate
Note, interest payments on
Fixed Rate Notes will be made
semiannually on March 1 and
September 1 of each year and
at Maturity.
Floating Rate Notes.
Interest payments on Floating
Rate Notes will be made as
specified in the related
Floating Rate Note and
Pricing Supplement.
-7-
<PAGE> 49
Acceptance and
Rejection of Offers
from Solicitation
as Agents: If agreed upon by any Agent
and the Company, such Agent
acting solely as agent for
the Company and not as
principal will solicit
purchases of the Notes. Each
Agent will communicate to
the Company, orally or in
writing, each reasonable
offer to purchase Notes
solicited by such Agent on an
agency basis, other than
those offers rejected by such
Agent. Each Agent has the
right, in its discretion
reasonably exercised, to
reject any proposed purchase
of Notes, as a whole or in
part, and any such rejection
is not deemed a breach of the
Agent's agreement contained
in the Distribution
Agreement. The Company has
the sole right to accept or
reject any proposed purchase
of the Notes, in whole or in
part, and any such rejection
is not deemed a breach of the
Company's agreement contained
in the Distribution
Agreement. Each Agent has
agreed to make reasonable
efforts to assist the Company
in obtaining performance by
each purchaser whose offer to
purchase Notes has been
solicited by such Agent and
accepted by the Company.
Preparation of
Pricing Supplement: If any offer to purchase a
Note is accepted by the
Company, the Company will
promptly prepare a
Pricing Supplement reflecting
the terms of such Note and
will arrange to file it with
the Commission in accordance
with Rule 424 under the
Securities Act of 1933, as
amended. Information to be
included in the Pricing
Supplement shall include:
1. the name of the Company;
2. the title of the
securities, including
series designation, if
any;
-8-
<PAGE> 50
3. the date of the Pricing
Supplement and the dates
of the Prospectus and
Prospectus Supplement to
which the Pricing
Supplement relates;
4. the name of the Offering
Agent (as hereinafter
defined);
5. whether such Notes are
being sold to the Offering
Agent as principal or to
an investor or other
purchaser through the
Offering Agent acting
as agent for the Company;
6. with respect to Notes
sold to the Offering
Agent as principal,
whether such Notes will
be resold by the
Offering Agent to
investors and other
purchasers (i) at a fixed
public offering price of
a specified percentage of
their Principal Amount,
(ii) at varying prices
related to prevailing
market prices at the time
of resale to be
determined by the
Offering Agent or (iii)
at 100% of their
Principal Amount;
7. with respect to Notes
sold to an investor or
other purchaser through
the Offering Agent
acting as agent for the
Company, whether such
Notes will be sold at
(i) 100% of their
Principal Amount or (ii)
at a specified percentage
of their Principal
Amount;
8. the Offering Agent's
commission or underwriting
discount;
9. net proceeds to the
Company;
10. the Principal Amount,
Original Issue Date,
Stated Maturity, Initial
Redemption Date, if
any, Initial Redemption
Percentage, if any,
Annual
-9-
<PAGE> 51
Redemption Percentage
Reduction, if any, and
Optional Repayment Date
or Dates, if any, and, in
the case of Fixed Rate
Notes, the Interest Rate,
the Interest Payment Date
or Dates (if other than
March 1 and September 1
of each year) and the
Record Date or Dates (if
other than February 15
and August 15 of each
year), and, in the case
of Floating Rate Notes,
the Base Rate or Rates,
the Index Maturity (if
applicable), the Initial
Interest Rate, the
Maximum Interest Rate, if
any, the Minimum Interest
Rate, if any, the
Interest Payment Date or
Dates, the Record Date or
Dates, the Interest Reset
Date or Dates, the Spread
and/or Spread Multiplier,
if any, and the
Calculation Agent;
11. the information with
respect to the terms of
the Notes set forth below
(whether or not the
applicable Note is a
Book-Entry Note or a
Certificated Note) under
"Procedures for Notes
Issued in Book-Entry Form
-- Settlement
Procedures", Part A,
items 1, 2, 6, 7 and 8;
and
12. any other provisions of
the Notes material to
investors or other
purchasers of the Notes
not otherwise specified
in the Prospectus or
Pricing Supplement.
One copy of such filed
document will be sent by
telecopy, or overnight,
express or special delivery
(for delivery as soon as
practicable following the
sale, but in no event later
than 11:00 a.m. on the
Business Day following the
applicable sale date) to the
Agent which made or presented
the offer
-10-
<PAGE> 52
to purchase the applicable
Note (in such capacity, the
"Offering Agent") and the
Trustee at the following
applicable address: if to
Merrill Lynch & Co. via
overnight, express or special
delivery packages only, to:
Tritech Services, 40 Colonial
Drive, Piscataway, New Jersey
08854, Attention: Prospectus
Operations/Nachman Kimerling,
telephone: (908) 885-2768,
telecopier: (908) 885-2774/
2775/2776; if to Merrill
Lynch & Co. via all other
types of deliveries, to:
Tritech Services, #4
Corporate Place, Corporate
Park 287, Piscataway, New
Jersey 08854, Attention:
Prospectus Operations/Nachman
Kimerling, telephone: (908)
885-6526, telecopier: (908)
878-9815; if to Donaldson,
Lufkin & Jenrette Securities
Corporation, to: 277 Park
Avenue, New York, New York
10172, Attention: Syndicate
Department, telephone: (212)
892-3000, telecopier: (212)
892-7272; if to Salomon
Brothers Inc, to: 8800 Hidden
River Parkway, Tampa,
Florida, 33673, Attention:
Enrique Castro, telephone:
(813) 558-7165, telecopier:
(813) 558-4123; if to Smith
Barney Inc., to: 388
Greenwich Street, 34th Floor,
New York, New York 10013,
Attention: Andrea Lall,
telephone: (212) 816-7664,
telecopier: (212) 816-7912;
and if to the Trustee, to:
NBD Bank, 611 Woodward
Avenue, Detroit, Michigan
48226, Attention: Joseph
Weidenbach, telephone: (313)
225-2211, telecopier: (313)
225-3420. For record keeping
purposes, one copy of each
Pricing Supplement, as so
filed, shall also be mailed
or telecopied to Merrill
Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith
Incorporated, World Financial
Center, North Tower, 10th
Floor, New York, New York,
10281-1310, Attention: MTN
Product Management,
telephone: (212) 449-7476,
-11-
<PAGE> 53
telecopier: (212) 449-2234
and Smith Bareny Inc., 390
Greenwich Street -- 4th
Floor, New York, New York
10013, Attention: MTN Product
Management/Origination --
Mark R. Meyer, telephone:
(212) 723-5123, telecopier:
(212) 723-8854. One copy of
each such Pricing Supplement
shall also be mailed or
telecopied to the Agents'
counsel at LeBoeuf, Lamb,
Greene & MacRae, L.L.P., 125
West 55th Street, New York,
New York 10019- 5389,
Attention: William S. Lamb,
Esq., telephone: (212)
424-8170, telecopier: (212)
424-8500.
Outdated Pricing Supplements,
and the supplemented
Prospectuses to which
they are attached (other than
those retained for files)
will be destroyed.
Settlement: The receipt of immediately
available funds by the
Company in payment for a Note
and the authentication and
delivery of such Note shall,
with respect to such Note,
constitute "settlement".
Offers accepted by the
Company will be settled in
three Business Days, unless
the purchaser and the Company
agree to settlement on
another day to the extent
permitted by Rule 15c6-1
under the Securities Exchange
Act of 1934 (the "Exchange
Act"), pursuant to the
timetable for settlement set
forth in Parts II and III
hereof under "Settlement
Procedures" with respect to
Book- Entry Notes and
Certificated Notes,
respectively (each such date
fixed for settlement is
hereinafter referred to as a
"Settlement Date"). If
procedures A and B of the
applicable Settlement
Procedures with respect to a
particular offer are not
completed on or before the
time set forth under the
applicable "Settlement
Procedures Timetable", such
offer shall not be settled
until the Business Day
following the
-12-
<PAGE> 54
completion of settlement
procedures A and B or such
later date as the
purchaser and the Company
shall agree to the extent
permitted by Rule 15c6-1 the
Exchange Act.
The foregoing settlement
procedures may be modified,
with respect to any purchase
of Notes by an Agent
as principal, if so agreed by
the Company and such Agent.
Procedure for Changing
Rates or Other
Variable Terms: When a decision has been
reached to change the
interest rate or any other
variable term on any Notes
being sold by the Company,
the Company will promptly
advise the Agents and the
Trustee by facsimile
transmission and the Agents
will forthwith suspend
solicitation of offers to
purchase such Notes. The
Agents will telephone the
Company with recommendations
as to the changed interest
rates or other variable
terms. At such time as the
Company advises the Agents
and the Trustee by facsimile
transmission of the new
interest rates or other
variable terms, the Agents
may resume solicitation of
offers to purchase such
Notes. Until such time only
"indications of interest" may
be recorded. Immediately
after acceptance by the
Company of an offer to
purchase Notes at a new
interest rate or new variable
term, the Company, the
Offering Agent and the
Trustee shall follow the
procedures set forth under
the applicable "Settlement
Procedures".
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the
Agents to suspend
solicitation of offers
to purchase Notes at any
time. Upon receipt of such
instructions,
-13-
<PAGE> 55
the Agents will forthwith
suspend solicitation of
offers to purchase from the
Company until such time as
the Company has advised them
that solicitation of offers
to purchase may be resumed.
If the Company decides to
amend or supplement the
Registration Statement or the
Prospectus (other than to
establish or change interest
rates, maturities, prices or
other similar variable terms
with respect to the Notes),
it will promptly advise the
Agents and will furnish the
Agents and their counsel with
copies of the proposed
amendment or supplement. One
copy of such filed document,
along with a copy of the
cover letter sent to the
Commission, will be delivered
or mailed to the Agents,
their counsel and the Trustee
at the following respective
addresses: to Merrill Lynch
& Co. at MTN Product
Management, Merrill Lynch &
Co., Merrill Lynch World
Headquarters, North Tower,
World Financial Center, 10th
Floor, New York, New York
10281- 1310, telephone: (212)
449-7476, telecopier: (212)
449- 2234; to Donaldson,
Lufkin & Jenrette Securities
Corporation at 277 Park
Avenue, New York, New York
10172, Attention: Syndicate
Department, telephone: (212)
892-3000, telecopier: (212)
892-7272 to Salomon Brothers
Inc, Seven World Trade
Center, New York, New York
10048, Attention: MTN
Documentation, telephone:
(212) 783-5897, telecopier:
(212) 783-2274; to Smith
Barney Inc., at 390 Greenwich
Street -- 4th Floor, New
York, New York 10013,
Attention: MTN Product
Management/Origination --
Mark R. Meyer, telephone:
(212) 723-5123, telecopier:
(212) 723-8854; and the
Trustee at NBD Bank, 611
Woodward Avenue, Detroit,
Michigan 48226, Attention:
Joseph Weidenbach, telephone:
(313) 225-2211, telecopier:
(313) 225-3420. For record
keeping purposes, one
-14-
<PAGE> 56
copy of each such document,
as so filed, shall also be
mailed or telecopied to the
Agents' counsel at LeBoeuf,
Lamb, Greene & MacRae,
L.L.P., 125 West 55th Street,
New York, New York
10019-5389, Attention:
William S. Lamb, Esq.,
telephone: (212) 424-8170,
telecopier: (212) 424-8500.
In the event that at the time
the solicitation of offers to
purchase from the Company is
suspended (other than to
establish or change interest
rates, maturities, prices or
other similar variable terms
with respect to the Notes)
there shall be any offers to
purchase Notes that have been
accepted by the Company which
have not been settled, the
Company will promptly advise
the Agents and the Trustee
whether such offers may be
settled and whether copies of
the Prospectus as theretofore
amended and/or supplemented
as in effect at the time of
the suspension may be
delivered in connection with
the settlement of such
offers. The Company will
have the sole responsibility
for such decision and for any
arrangements which may be
made in the event that the
Company determines that such
offers may not be settled or
that copies of such
Prospectus may not be so
delivered.
Delivery of Prospectus
and applicable
Pricing Supplement: A copy of the most recent
Prospectus and applicable
Pricing Supplement must
accompany or precede the
earlier of (a) the written
confirmation of a sale sent
to an investor or other
purchaser or its agent and
(b) the delivery of Notes
to an investor or other
purchaser or its agent.
Authenticity of
Signatures: The Agents will have no
obligations or liability to
the Company or the
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Trustee in respect of the
authenticity of the
signature of any officer,
employee or agent of the
Company or the Trustee on
any Note.
Documents Incorporated
by Reference: The Company shall supply the
Agents with an adequate
supply of all documents
incorporated by reference in
the Registration Statement.
Business Day: As used herein, "Business
Day" means, unless otherwise
specified in the applicable
Pricing Supplement, any day
other than a Saturday or
Sunday which is not a day on
which banking institutions or
trust companies in The City
of New York are authorized or
required by law or regulation
or executive order to close
and, with respect to Notes as
to which LIBOR is an
applicable Interest Rate
Basis, is also a London
Business Day. As used
herein, "London Business Day"
means any day on which
dealings in deposits in U.S.
dollars are transacted in the
London interbank market.
PART II: PROCEDURES FOR NOTES ISSUED
IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in
book-entry form for eligibility in the book-entry system maintained by DTC, the
Trustee will perform the custodial, document control and administrative
functions described below, in accordance with its respective obligations under
a Letter of Representations from the Company and the Trustee to DTC, dated May
6, 1996, and a Certificate Agreement, dated March 28, 1990, between the
Trustee and DTC, as amended (the "Certificate Agreement"), and its obligations
as a participant in DTC, including DTC's Same-Day Funds Settlement System
("SDFS").
Issuance: All Fixed Rate Notes issued in
book-entry form having the
same Original Issue Date,
Interest Rate, Day Count
Convention, redemption and/or
repayment terms, if any, and
Stated Maturity
(collectively, the
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"Fixed Rate Terms") will be
represented initially by a
single global security in
fully registered form without
coupons (each, a "Book-Entry
Note"); and all Floating Rate
Notes issued in book-entry
form having the same Original
Issue Date, formula for the
calculation of interest, and
specifying the Base Rate,
which may be the CD Rate, the
Commercial Paper Rate, the
Federal Funds Rate, LIBOR,
the Prime Rate or the
Treasury Rate or any other
interest rate basis or
formula set forth by the
Company, Initial Interest
Rate, Index Maturity, Spread
and/or Spread Multiplier, if
any, Minimum Interest Rate,
if any, Maximum Interest
Rate, if any, redemption
and/or repayment terms, if
any, and Stated Maturity
(collectively, "Floating Rate
Terms") will be represented
initially by a single
Book-Entry Note.
Each Book-Entry Note will be
dated and issued as of the
date of its authentication by
the Trustee. The date from
which interest will begin to
accrue with respect to each
Book-Entry Note will be (a)
with respect to an
original Book-Entry Note (or
any portion thereof), its
Original Issue Date and (b)
with respect to any
Book-Entry Note (or portion
thereof) issued subsequently
upon exchange of a Book-Entry
Note or in lieu of a
destroyed, lost or stolen
Book-Entry Note, the most
recent Interest Payment Date
to which interest has been
paid or duly provided for on
the predecessor Book-Entry
Note or Notes (or if no such
payment or provision has been
made, the Original Issue Date
of the predecessor Book-Entry
Note or Notes), regardless of
the date of authentication of
such subsequently issued
Book- Entry Note. No
Book-Entry Note shall
represent any Note issued in
certificated form.
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For other variable terms with
respect to the Fixed Rate
Notes and Floating Rate
Notes, see the Prospectus and
the applicable Pricing
Supplement.
Except as provided in the
Prospectus, no owner of a
beneficial interest in a
Book-Entry Note shall
be entitled to receive any
Note issued in certificated
form with respect to such
beneficial interest.
Identification: The Company has arranged with
the CUSIP Service Bureau of
Standard & Poor's Corporation
(the "CUSIP Service Bureau")
for the reservation of one
series of CUSIP numbers,
which series consists of
approximately 900 CUSIP
numbers which have been
reserved for and relating to
Book-Entry Notes and the
Company has delivered to each
of the Trustee and DTC such
list of such CUSIP numbers.
The Company will assign CUSIP
numbers to Book-Entry Notes
as described below under
Settlement Procedure B. DTC
will notify the CUSIP Service
Bureau periodically of the
CUSIP numbers that the
Company has assigned to
Book-Entry Notes. The
Trustee will notify the
Company at any time when
fewer than 100 of the
reserved CUSIP numbers remain
unassigned to Book-Entry
Notes, and, if it deems
necessary, the Company will
reserve and obtain additional
CUSIP numbers for assignment
to Book-Entry Notes. Upon
obtaining such additional
CUSIP numbers, the Company
will deliver a list of such
additional numbers to the
Trustee and DTC. Book-Entry
Notes having an aggregate
principal amount in excess of
$150,000,000 and otherwise
required to be represented by
the same Global Certificate
will instead be represented
by two or more Global
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Certificates which shall all
be assigned the same CUSIP
number.
Registration: Unless otherwise specified by
DTC, each Book-Entry Note
will be registered in the
name of Cede & Co., as
nominee for DTC, on the
register maintained by the
Trustee under the Indenture.
The beneficial owner of a
Note issued in book-entry
form (i.e., an owner of a
beneficial interest in a
Book-Entry Note) (or one or
more indirect participants in
DTC designated by such owner)
will designate one or more
participants in DTC (with
respect to such Note issued
in book-entry form, the
"Participants") to act as
agent for such beneficial
owner in connection with the
book-entry system maintained
by DTC, and DTC will record
in book-entry form, in
accordance with instructions
provided by such
Participants, a credit
balance with respect to such
Note issued in book-entry
form in the account of such
Participants. The ownership
interest of such beneficial
owner in such Note issued in
book-entry form will be
recorded through the records
of such Participants or
through the separate records
of such Participants and one
or more indirect participants
in DTC.
Transfers: Transfers of beneficial
ownership interests in a
Book-Entry Note will be
accomplished by book entries
made by DTC and, in turn, by
Participants (and in
certain cases, one or more
indirect participants in DTC)
acting on behalf of
beneficial transferors and
transferees of such
Book-Entry Note.
Exchanges: The Trustee
may deliver to DTC and the
CUSIP Service Bureau at any
time a written notice
specifying (a) the CUSIP
numbers of two or more
Book-Entry Notes outstanding
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on such date that represent
Book-Entry Notes having the
same Fixed Rate Terms or
Floating Rate Terms, as the
case may be (other than
Original Issue Dates), and
for which interest has been
paid to the same date; (b) a
date, occurring at least 30
days after such written
notice is delivered and at
least 30 days before the next
Interest Payment Date for the
related Notes issued in
book-entry form, on which
such Book-Entry Notes shall
be exchanged for a single
replacement Book-Entry Note;
and (c) a new CUSIP number,
obtained from the Company, to
be assigned to such
replacement Book-Entry Note.
Upon receipt of such a
notice, DTC will send to its
Participants (including the
Trustee) a written
reorganization notice to the
effect that such exchange
will occur on such date.
Prior to the specified
exchange date, the Trustee
will deliver to the CUSIP
Service Bureau written notice
setting forth such exchange
date and the new CUSIP number
and stating that, as of such
exchange date, the CUSIP
numbers of the Book-Entry
Notes to be exchanged will no
longer be valid. On the
specified exchange date, the
Trustee will exchange such
Book-Entry Notes for a single
Book-Entry Note bearing the
new CUSIP number and the
CUSIP numbers of the
exchanged Book-Entry Notes
will, in accordance with
CUSIP Service Bureau
procedures, be canceled and
not immediately reassigned.
Notwithstanding the
foregoing, if the Book- Entry
Notes to be exchanged exceed
$150,000,000 in aggregate
principal amount, one
replacement Book-Entry Note
will be authenticated and
issued to represent each
$150,000,000 of principal
amount of the exchanged Book-
Entry Notes and an additional
Book-Entry Note or Notes will
be authenticated and issued
to represent any remaining
principal
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amount of such Book-Entry
Notes (See "Denominations"
below).
Denominations: Notes issued in book-entry
form will be issued in
denominations of $1,000 and
integral multiples of $1,000
in excess thereof. Book-Entry
Notes will be denominated in
principal amounts not in
excess of $150,000,000. If
one or more Notes issued in
book-entry form having an
aggregate principal amount in
excess of $150,000,000 would,
but for the preceding
sentence, be represented by a
single Book-Entry Note,
then one Book-Entry Note will
be issued to represent each
$150,000,000 principal amount
of such Note or Notes issued
in book-entry form and an
additional Book-Entry Note
or Notes will be issued to
represent any remaining
principal amount of such Note
or Notes issued in book-entry
form. In such a case, each
of the Book-Entry Notes
representing such Note or
Notes issued in book-entry
form shall be assigned the
same CUSIP number.
Payments of Principal
and Interest: Payments of Interest Only.
Promptly after each Record
Date, the Trustee will
deliver to the Company and
DTC a written notice
specifying by CUSIP number
the amount of interest
to be paid on each Book-Entry
Note on the following
Interest Payment Date (other
than an Interest Payment Date
coinciding with Maturity) and
the total of such amounts.
DTC will confirm the amount
payable on each Book-Entry
Note on such Interest Payment
Date by reference to the
daily bond reports published
by Standard & Poor's
Corporation. On such
Interest Payment Date, the
Company will pay to the
Trustee in immediately
available funds an amount
sufficient to pay the
interest then due and owing,
and upon receipt of such
funds from the
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Company, the Trustee in
turn will pay to DTC, such
total amount of interest due
(other than at Maturity), at
the times and in the manner
set forth below under
"Manner of Payment".
Notice of Interest Payments
and Record Dates. Promptly
after each Interest
Determination Date for
Floating Rate Notes issued in
book-entry form, the Trustee
will notify each of Moody's
Investors Services, Inc. and
Standard & Poor's Corporation
of the interest rates
determined on such Interest
Determination Date.
Payments at Maturity. On or
about the first Business Day
of each month, the Trustee
will deliver to the Company
and DTC a written list of
principal, interest and
premium, if any, to be paid
on each Book-Entry Note
maturing either at Stated
Maturity, on a Redemption
Date in, or for which an
Option to Elect Repayment has
been received with respect
to, the following month. The
Trustee, the Company and DTC
will confirm the amounts of
such principal, premium, if
any, and interest payments
with respect to a Book-Entry
Note on or about the fifth
Business Day preceding the
Maturity of such Book-Entry
Note. At such Maturity, the
Company will pay to the
Trustee in immediately
available funds an amount
sufficient to make such
Maturity payment, and upon
receipt of such funds the
Trustee in turn will pay to
DTC, the principal amount of
such Note, together with
interest and premium, if any,
due at such Maturity, at the
times and in the manner set
forth below under "Manner of
Payment". Promptly after
payment to DTC of the
principal, interest and
premium, if any, due at the
Maturity of such Book-Entry
Note, the Trustee will cancel
such Book-Entry Note and
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<PAGE> 64
deliver it to the Company
with an appropriate debit
advice. On the first
Business Day of each month,
the Trustee will deliver to
the Company a written
statement indicating the
total principal amount of
outstanding Book- Entry Notes
as of the close of business
on the immediately preceding
Business Day.
Manner of Payment. The total
amount of any principal,
premium, if any, and interest
due on Book-Entry Notes on
any Interest Payment Date or
at Maturity shall be paid by
the Company to the Trustee
in funds available for use by
the Trustee no later than
1:00 p.m., New York City
time, on such date. The
Company will make such
payment on such Book-Entry
Notes to an account specified
by the Trustee. Upon receipt
of such funds, the Trustee
will pay by separate wire
transfer (using Fedwire
message entry instructions in
a form previously specified
by DTC) to an account at the
Federal Reserve Bank of New
York previously specified by
DTC, in funds available for
immediate use by DTC, each
payment of interest,
principal and premium, if
any, due on a Book-Entry Note
on such date. Thereafter on
such date, DTC will pay, in
accordance with its SDFS
operating procedures then in
effect, such amounts in funds
available for immediate use
to the respective
Participants in whose names
such Notes are recorded in
the book-entry system
maintained by DTC. Neither
the Company nor the Trustee
shall have any responsibility
or liability for the payment
by DTC of the principal of,
premium, if any, or interest
on, the Book-Entry Notes to
such Participants.
Withholding Taxes. The
amount of any taxes required
under applicable law to be
withheld from any
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<PAGE> 65
interest payment on a Note
will be determined and
withheld by the Participant,
indirect participant in DTC
or other Person responsible
for forwarding payments and
materials directly to the
beneficial owner of such
Note.
Settlement
Procedures: Settlement Procedures with
regard to each Note in book-
entry form purchased by each
Agent, as principal, or
sold by each Agent, as agent
of the Company, will be as
follows:
A. The Offering Agent will
advise the Company by
telephone, confirmed by
facsimile, of the
following Settlement
information:
1. Principal Amount of
the Note.
2. (a) Fixed Rate Notes:
(i) Interest
Rate; and
(ii) Interest
Payment
Dates.
(b) Floating Rate
Notes:
(i) Base Rate
or Rates;
(ii) Initial
Interest
Rate;
(iii) Spread
and/or
Spread
Multiplier,
if any;
(iv) Interest
Reset Date
or Dates;
(v) Interest
Reset
Period;
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(vi) Interest
Payment
Dates;
(vii) Record
Dates;
(viii) Index
Maturity;
(ix) Maximum and
Minimum
Interest
Rates, if
any; and
(x) Calculation
Agent.
3. Price to public, if
any, of the Note (or
whether the Note is
being offered at
varying prices
relating to
prevailing market
prices at time of
resale as determined
by the Offering
Agent).
4. Sale Date.
5. Settlement Date
(Original Issue Date).
6. Stated Maturity.
7. Redemption
provisions, if any,
including: Initial
Redemption Date,
Initial Redemption
Percentage and Annual
Redemption Percentage
Reduction.
8. Optional Repayment
Date(s), if any.
9. Net proceeds to the
Company.
10. The Offering Agent's
commission or
underwriting discount.
11. Whether such Notes
are being sold to
the Offering Agent as
principal or to an
investor or other
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<PAGE> 67
purchaser through
the Offering Agent
acting as agent for
the Company.
12. Whether such Note is
being issued with
Original Issue
Discount and the
terms thereof.
13. Such other information
specified with
respect to the Notes
(whether by Addendum
or otherwise).
B. The Company will assign a
CUSIP number to the
Book-Entry Note
representing such Note
and then advise the
Trustee by facsimile
transmission or other
electronic transmission
of the above settlement
information received from
the Offering Agent, such
CUSIP number and the name
of the Offering Agent.
C. The Trustee will
communicate to DTC and
the Offering Agent
through DTC's Participant
Terminal System, a
pending deposit message
specifying the following
settlement information:
1. The information set
forth in the
Settlement Procedure
A.
2. Identification
numbers of the
participant accounts
maintained by DTC on
behalf of the Trustee
and the Offering
Agent.
3. Identification of the
Book-Entry Note as a
Fixed Rate Book-Entry
Note or Floating Rate
Book-Entry Note.
4. Initial Interest
Payment Date for
such Note, number of
days by which
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such date succeeds
the related Record
Date for DTC purposes
(or, in the case of
Floating Rate Notes
which reset daily or
weekly, the date five
calendar days
preceding the
Interest Payment
Date) and, if then
calculable, the
amount of interest
payable on such
Interest Payment Date
(which amount shall
have been confirmed
by the Trustee).
5. CUSIP number of the
Book-Entry Note
representing such
Note.
6. Whether such
Book-Entry Note
represents any other
Notes issued or to be
issued in book-entry
form.
DTC will arrange for each
pending deposit message
described above to be
transmitted to Standard &
Poor's Corporation, which
will use the information
in the message to
include certain terms of
the related Book-Entry
Note in the appropriate
daily bond report
published by Standard &
Poor's Corporation.
D. The Trustee will
complete and authenticate
the Book-Entry Note
representing such Note.
E. DTC will credit such
Note to the participant
account of the Trustee
maintained by DTC.
F. The Trustee will enter
an SDFS deliver order
through DTC's
Participant Terminal
System instructing DTC
(i) to debit such Note to
the Trustee's participant
account and credit such
Note to the participant
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<PAGE> 69
account of the Offering
Agent maintained by DTC
and (ii) to debit the
settlement account of the
Offering Agent and credit
the settlement account of
the Trustee maintained by
DTC, in an amount equal
to the price of such Note
less such Offering
Agent's discount or
underwriting commission,
as applicable. Any entry
of such a deliver order
shall be deemed to
constitute a
representation and
warranty by the Trustee
to DTC that (i) the Book-
Entry Note representing
such Note has been
issued and authenticated
and (ii) the Trustee is
holding such Book-Entry
Note pursuant to the
Certificate Agreement.
G. In the case of Notes sold
through the Offering
Agent, as agent, the
Offering Agent will enter
an SDFS deliver order
through DTC's Participant
Terminal System
instructing DTC (i) to
debit such Note to the
Offering Agent's
participant account and
credit such Note to the
participant account of
the Participants
maintained by DTC and
(ii) to debit the
settlement accounts of
such Participants and
credit the settlement
account of the Offering
Agent maintained by DTC
in an amount equal to the
initial public offering
price of such Note.
H. Transfers of funds in
accordance with SDFS
deliver orders described
in Settlement
Procedures F and G will
be settled in accordance
with SDFS operating
procedures in effect on
the Settlement Date.
I. Upon receipt, the Trustee
will pay the Company, by
wire
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<PAGE> 70
transfer of immediately
available funds to an
account specified by the
Company to the Trustee
from time to time, in the
amount transferred to the
Trustee in accordance
with Settlement Procedure
F.
J. The Trustee will send a
copy of the Book-Entry
Note by first class mail
to the Company together
with a statement
setting forth the
principal amount of Notes
Outstanding as of the
related Settlement Date
after giving effect to
such transaction and all
other offers to purchase
Notes of which the
Company has advised the
Trustee but which have
not yet been settled.
K. If the Note was sold
through the Offering
Agent, as agent, the
Offering Agent will
confirm the purchase of
such Note to the investor
or other purchaser
either by transmitting to
the Participant with
respect to such Note a
confirmation order
through DTC's Participant
Terminal System or by
mailing a written
confirmation to such
investor or other
purchaser.
Settlement Procedures
Timetable: For offers to purchase Notes
accepted by the Company for
settlement on the first
Business Day after the sale
date, Settlement Procedures
"A" through "K" set forth
above shall be completed as
soon as possible but not
later than the respective
times (New York City time)
set forth below:
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<PAGE> 71
SETTLEMENT
PROCEDURE TIME
A 11:00 a.m. on the sale
date
B As soon as practicable
following the sale,
but in no event later
than 12:00 noon on the
sale date
C As soon as practicable
following the sale, but
in no event later than
2:00 p.m. on the sale
date
D 9:00 a.m. on Settlement
Date E 10:00 a.m. on
Settlement Date
F-G No later than 2:00 p.m.
on Settlement Date
H 4:45 p.m. on Settlement
Date
I-J 5:00 p.m. on
Settlement Date
If a sale is to be settled
more than one Business Day
after the sale date,
Settlement Procedures A,
B, and C may, if necessary,
be completed at any time
prior to the specified times
on the first Business Day
after such sale date.
Settlement Procedure H is
subject to extension in
accordance with any extension
of Fedwire closing deadlines
and in the other events
specified in the SDFS
operating procedures in
effect on the Settlement
Date.
If settlement of a Note
issued in book-entry form is
rescheduled or canceled, the
Trustee will deliver to DTC,
through DTC's Participant
Terminal System, a
cancellation message to such
effect by no later than 2:00
p.m., New York City time, on
the Business Day immediately
preceding the scheduled
Settlement Date.
Failure to Settle: If the Trustee fails to
enter an
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<PAGE> 72
SDFS deliver order with
respect to a Book-Entry Note
issued in book-entry form
pursuant to Settlement
Procedure F, the Trustee may
deliver to DTC, through DTC's
Participant Terminal System,
as soon as practicable a
withdrawal message
instructing DTC to debit such
Note to the participant
account of the Trustee
maintained at DTC. DTC will
process the withdrawal
message, provided that such
participant account contains
a principal amount of the
Book-Entry Note representing
such Note that is at least
equal to the principal amount
to be debited. If withdrawal
messages are processed with
respect to all the Notes
represented by a Book-Entry
Note, the Trustee will mark
such Book-Entry Note
"canceled", make appropriate
entries in its records and
send certification of
destruction of such canceled
Book-Entry Note to the
Company. The CUSIP number
assigned to such Book-Entry
Note shall, in accordance
with CUSIP Service Bureau
procedures, be canceled and
not immediately reassigned.
If withdrawal messages are
processed with respect to a
portion of the Notes
represented by a Book-Entry
Note, the Trustee will
exchange such Book-Entry Note
for two Book-Entry Notes, one
of which shall represent the
Book-Entry Notes for which
withdrawal messages are
processed and shall be
canceled immediately after
issuance, and the other of
which shall represent the
other Notes previously
represented by the
surrendered Book-Entry Note
and shall bear the CUSIP
number of the surrendered
Book-Entry Note.
In the case of any Note sold
through the Offering Agent,
as agent, if the purchase
price for any Book-Entry Note
is not timely paid to the
Participants with respect to
such Note by the
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<PAGE> 73
beneficial investor or other
purchaser thereof (or a
person, including an indirect
participant in DTC, acting on
behalf of such investor or
other purchaser), such
Participants and, in turn,
the related Offering Agent
may enter SDFS deliver orders
through DTC's Participant
Terminal System reversing the
orders entered pursuant to
Settlement Procedures F and
G, respectively. Thereafter,
the Trustee will deliver the
withdrawal message and take
the related actions described
in the preceding paragraph.
If such failure shall have
occurred for any reason other
than default by the
applicable Offering Agent to
perform its obligations
hereunder or under the
Distribution Agreement, the
Company will reimburse such
Offering Agent for its loss
of the use of funds during
the period when the funds
were credited to the account
of the Company.
Notwithstanding the
foregoing, upon any failure
to settle with respect to a
Book-Entry Note, DTC may take
any actions in accordance
with its SDFS operating
procedures then in effect.
In the event of a failure
to settle with respect to a
Note that was to have been
represented by a Book-Entry
Note also representing other
Notes, the Trustee will
provide, in accordance with
Settlement Procedure D, for
the authentication and
issuance of a Book-Entry Note
representing such remaining
Notes and will make
appropriate entries in its
records.
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<PAGE> 74
PART III: PROCEDURES FOR NOTES ISSUED
IN CERTIFICATED FORM
Denominations: The Certificated Notes will be
issued in denominations of
$1,000 and integral multiples
of $1,000 in excess thereof.
Payments of Principal Upon presentment and delivery
and Interest: of the Certificated Note, the
Trustee upon receipt of
immediately available funds
from the Company will pay the
principal amount of each
Certificated Note at Maturity
and the final installment of
interest in immediately
available funds. All
interest payments on a
Certificated Note, other than
interest due at Maturity,
will be made at the Corporate
Trust Office of the Trustee
or, at the option of the
Company, may be made by check
mailed to the address of the
person entitled thereto as
such address shall appear in
the Security Register or by
wire transfer of immediately
available funds if
appropriate wire transfer
instructions have been
received in writing by the
Trustee not less than 15 days
prior to the applicable
Interest Payment Date.
The Trustee will provide
monthly to the Company a list
of the principal, premium, if
any, and interest to be paid
on Certificated Notes
maturing in the next
succeeding month. The Trustee
will be responsible for
withholding taxes on interest
paid as required by
applicable law, but shall be
relieved from any such
responsibility if it acts in
good faith and in reliance
upon an opinion of counsel.
Certificated Notes presented
to the Trustee at Maturity
for payment will be canceled
by the Trustee. All canceled
Certificated Notes
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<PAGE> 75
held by the Trustee shall be
destroyed, and the Trustee
shall furnish to the Company
a certificate with respect to
such destruction.
Settlement
Procedures: Settlement Procedures with
regard to each Certificated
Note purchased by any Agent,
as principal, or through any
Agent, as agent, shall be as
follows:
A. The Offering Agent will
advise the Company by
telephone of the
following Settlement
information with regard
to each Note:
1. Exact name in which
the Certificated
Note(s) is to be
registered (the
"Registered Owner").
2. Exact address or
addresses of the
Registered Owner for
delivery, notices and
payments of principal
and interest.
3. Taxpayer
identification number
of the Registered
Owner.
4. Principal Amount of
the Certificated Note.
5. Denomination of the
Certificated Note.
6. (a) Fixed Rate Notes:
(i) Interest
Rate; and
(ii) Interest
Payment
Dates.
(b) Floating Rate
Notes:
(i) Base Rate
or Rates;
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<PAGE> 76
(ii) Initial
Interest
Rate;
(iii) Spread
and/or
Spread
Multiplier,
if any;
(iv) Interest
Reset Date
or Dates;
(v) Interest
Reset Period;
(vi) Interest
Payment
Dates;
(vii) Record Dates;
(viii) Index
Maturity;
(ix) Maximum and
Minimum
Interest
Rates, if
any; and
(x) Calculation
Agent.
7. Price to public of the
Certificated Note (or
whether the Note is
being offered at
varying prices
relating to
prevailing market
prices at time of
resale as determined
by the Offering
Agent).
8. Sale Date.
9. Settlement Date
(Original Issue Date).
10. Stated Maturity.
11. Net proceeds to the
Company.
12. The Offering Agent's
commission or
underwriting discount.
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<PAGE> 77
13. Whether such Notes
are being sold to
the Offering Agent as
principal or to an
investor or other
purchaser through the
Offering Agent acting
as agent for the
Company.
14. Redemption provisions,
if any, including:
Initial Redemption
Date, Initial
Redemption Percentage
and Annual Redemption
Percentage Reduction.
15. Optional Repayment
Date(s), if any.
16. Whether such Note is
being issued with
Original Issue
Discount and the
terms thereof.
17. Such other information
specified with
respect to the Notes
(whether by Addendum
or otherwise).
B. After receiving such
settlement information
from the Offering Agent,
the Company will advise
the Trustee of the above
settlement information by
facsimile transmission
confirmed by telephone.
The Company will prepare
a Pricing Supplement to
the Prospectus and
deliver copies to the
Agent and will cause the
Trustee to issue,
authenticate and deliver
Notes.
C. The Trustee will
complete the Certificated
Note in the form approved
by the Company, the
Offering Agent and the
Trustee, and will make
three copies thereof
(herein called "Stub 1",
"Stub 2" and "Stub 3"):
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<PAGE> 78
1. Certificated Note
with the Offering
Agent's confirmation,
if traded on a
principal basis, or
the Offering Agent's
customer
confirmation, if
traded on an agency
basis.
2. Stub 1 for Trustee.
3. Stub 2 for Offering
Agent.
4. Stub 3 for the
Company.
D. With respect to each
sale, the Trustee will
deliver the Certificated
Notes and Stub 2 thereof
to the Offering Agent at
the following applicable
address: if to Merrill
Lynch & Co., to Merrill
Lynch Money Market
Clearance, 55 Water
Street, Concourse Level,
N.S.C.C. Window, New
York, New York 10041,
Attention: Al
Mitchell, telephone:
(212) 558-2405,
telecopier: (212)
558-2457; if to
Donaldson, Lufkin &
Jenrette Securities
Corporation, to Chemical
Bank, Four New York
Plaza, First Floor
Receiving Window for the
Account of Donaldson,
Lufkin & Jenrette, New
York, New York, Contact
Person: Carrie Labarbera,
telephone: (212)
504-3145; and if to
Salomon Brothers Inc, to
Bank of New York, One
Wall Street, 3rd Floor,
Dealer Clearance, New
York, New York 10005; if
to Smith Barney Inc., to
390 Greenwich Street --
3rd Floor, New York, New
York 10013, Attention:
Syndicate Operations --
Rich Muszel, telephone:
(212) 723-4850,
telecopier: (212)
723-8832. The Trustee
will keep Stub 1. The
Offering Agent will
acknowledge receipt of
the
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<PAGE> 79
Certificated Note
through a broker's
receipt and will keep
Stub 2. Delivery of the
Certificated Note will be
made only against such
acknowledgment of
receipt. Upon
determination that the
Certificated Note has
been authorized,
delivered and completed
as aforementioned, the
Offering Agent will wire
the net proceeds of the
Certificated Note after
deduction of its
applicable commission to
the Company pursuant to
standard wire
instructions given by the
Company.
E. In the case of Notes sold
through the Offering
Agent, as agent, the
Offering Agent will
deliver the Certificated
Note (with
confirmations), as well
as a copy of the
Prospectus and any
applicable Pricing
Supplement or Supplements
received from the Trustee
to the purchaser against
payment in immediately
available funds.
F. The Trustee will send
Stub 3 to the Company.
Settlement For offers to purchase
Procedures Certificated Notes accepted
Timetable: by the Company, Settlement
Procedures "A" through "F"
set forth above shall be
completed as soon as
possible but not later than
the respective times (New York
City time) set forth below:
SETTLEMENT
PROCEDURE TIME
A 11:00 a.m. on the sale
date
B 3:00 p.m. on Business Day
prior to Settlement Date
C-D 2:15 p.m. on Settlement
Date
E 3:00 p.m. on Settlement
Date
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<PAGE> 80
F 5:00 p.m. on Settlement
Date
Failure to Settle: In the case of Notes sold
through the Offering Agent,
as agent, if an investor or
other purchaser of a
Certificated Note from the
Company shall either fail to
accept delivery of or make
payment for a Certificated
Note on the date fixed for
settlement, the Offering
Agent will forthwith notify
the Trustee and the Company
by telephone, confirmed in
writing, and return the
Certificated Note to the
Trustee.
The Trustee, upon receipt of
the Certificated Note from
the Offering Agent, will
immediately advise the
Company and the Company will
promptly arrange to credit
the account of the Offering
Agent in an amount of
immediately available funds
equal to the amount
previously paid to the
Company by such Offering
Agent in settlement for the
Certificated Note. Such
credits will be made on the
Settlement Date if possible,
and in any event not later
than the Business Day
following the Settlement
Date; provided that the
Company has received notice
on the same day. If such
failure shall have occurred
for any reason other than
failure by such Offering
Agent to perform its
obligations hereunder or
under the Distribution
Agreement, the Company will
reimburse such Offering Agent
for its loss of the use of
funds during the period when
the funds were credited to
the account of the Company.
Immediately upon receipt of
the Certificated Note in
respect of which the failure
occurred, the Trustee will
cancel and destroy the
Certificated Note, make
appropriate entries in its
records to reflect the fact
that the Note was never
issued, and accordingly
notify in writing the
Company.
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<PAGE> 81
EXHIBIT B
MCN INVESTMENT CORPORATION
Medium-Term Notes, Series B
Due Nine Months or more from Date of Issue
TERMS AGREEMENT
May __, 1996
MCN Investment Corporation
150 W. Jefferson Avenue, Suite 1800
Detroit, Michigan 48226
Attention:
Subject in all respects to the terms and conditions of the Distribution
Agreement dated May 6, 1996 (the "Agreement"), among you and MCN Investment
Corporation (the "Company") and MCN Corporation, the undersigned agrees to
purchase the following Medium-Term Notes, Series B of the Company:
Aggregate Principal Amount:
Interest Rate:
Interest Reset Period:
Maximum or Minimum Interest Rates:
Spread and/or Spread Multiplier:
Date of Maturity:
Interest Payment Dates:
Record Dates:
Redemption/Repayment:
Price to Public:
Purchase Price: % of Principal Amount [plus accrued
interest from ______, 199_]
Purchase Date and Time:
Other Provisions:
Place for Delivery of Notes and Payment Therefor:
<PAGE> 82
Form:
Method of Payment:
Modification, if any, in the requirements to deliver the documents specified in
Section 6 of the Agreement:
Period during which additional debt securities of the Company may not be sold
pursuant to Section 3(k) of the Agreement:
During the period beginning from the date of this Terms Agreement and
continuing to and including May __, 1996.
[ ]
By: _______________________
Name:
Title:
Accepted:
MCN INVESTMENT CORPORATION
By: _____________________________
Name:
Title:
<PAGE> 1
EXHIBIT 12-1
MCN INVESTMENT CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED(1)(4)
Pre-tax income(2) $ 13,163 $ 6,696 $ 5,003 $ 6,495 $ (1,736)
Fixed charges(3) 24,748 13,640 4,612 2,419 3,142
-------- -------- -------- -------- --------
Earnings as defined $ 37,911 $ 20,336 $ 9,615 $ 8,914 $ 1,406
======== ======== ======== ======== ========
FIXED CHARGES AS DEFINED(1)(4)
Interest, expensed $ 24,151 $ 13,365 $ 4,507 $ 2,327 $ 3,094
Interest, capitalized 5,895 2,089 1,579 211 -
Amortization of debt discounts, premium
and expense 520 275 94 67 21
Interest implicit in rentals 77 - 11 25 27
-------- -------- -------- -------- --------
Fixed charges as defined $ 30,643 $ 15,729 $ 6,191 $ 2,630 $ 3,142
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 1.24 1.29 1.55 3.39 0.45(5)
======== ======== ======== ======== ========
</TABLE>
(1) Earnings and fixed charges are defined and computed in accordance with
Item 503 of Regulation S-K.
(2) This amount represents the aggregate of (a) the pre-tax income from
continuing operations of MCN Investment and its majority-owned
subsidiaries, (b) MCN Investment's share of pre-tax income of its 50% owned
companies, and (c) any income actually received from less than 50% owned
companies.
(3) Fixed charges added to earnings are adjusted to exclude interest
capitalized during the period and, therefore, may differ from fixed charges
as defined.
(4) In April 1996, MCN announced its intention to sell The Genix Group, its
computer services subsidiary. For purposes of calculating the Ratio of
Earnings to Fixed Charges, it has been classified as a discontinued
operation and therefore excluded from the ratio for all periods presented.
(5) Earnings for the year ended December 31, 1991 were not adequate to cover
fixed charges. The amount of the coverage deficiency was $1,736,000.
<PAGE> 1
EXHIBIT 12-2
MCN CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31,
--------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED (1)(5)
Pre-tax income (2) $ 128,997 $ 100,143 $ 102,402 $ 81,861 $ 52,906
Fixed charges (3) 72,895 55,197 44,262 43,878 43,978
--------- --------- --------- --------- ---------
Earnings as defined $ 201,892 $ 155,340 $ 146,664 $ 125,739 $ 96,884
========= ========= ========= ========= =========
FIXED CHARGES AS DEFINED (1)(4)(5)
Interest, expensed $ 57,675 $ 49,104 $ 38,771 $ 38,860 $ 39,657
Interest, capitalized 7,926 2,928 3,966 1,650 737
Amortization of debt discounts, premium
and expense 1,641 1,332 1,153 830 629
Interest implicit in rentals 2,325 1,904 1,614 1,776 1,735
Preferred securities dividend requirements
of subsidiaries 9,699 2,194 1,079 1,464 1,879
--------- --------- --------- -------- ---------
Fixed charges as defined $ 79,266 $ 57,462 $ 46,583 $ 44,580 $ 44,637
========= ========= ========= ======== =========
Ratio of Earnings to Fixed Charges 2.55 2.70 3.15 2.82 2.17
========= ========= ========= ======== =========
</TABLE>
(1) Earnings and fixed charges are defined and computed in accordance with
Item 503 of Regulation S-K.
(2) This amount represents the aggregate of (a) the pre-tax income from
continuing operations of MCN and its majority-owned subsidiaries, (b)
MCN's share of pre-tax income of its 50% owned companies, and (c) any
income actually received from less than 50% owned companies.
(3) Fixed charges added to earnings are adjusted to exclude interest
capitalized during the period for nonutility companies and the preferred
securities dividend requirements of MichCon included in fixed charges but
not deducted in the determination of pre-tax income.
(4) Fixed charges represent (a) interest, whether expensed or capitalized, (b)
amortization of debt discount, premium and expense, (c) an estimate of
interest implicit in rentals, and (d) preferred securities dividend
requirements of subsidiaries (MichCon and MCN Limited Partnership),
increased to reflect the pre-tax earnings requirement for MichCon.
(5) In April 1996, MCN announced its intention to sell The Genix Group, its
computer services subsidiary. For purposes of calculating the Ratio of
Earnings to Fixed Charges, it has been classified as a discontinued
operation and therefore excluded from the ratio for all periods presented.
