<PAGE> 1
As filed with the Securities and Exchange Commission on March 7, 1996.
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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MCN CORPORATION
MCN Financing I
MCN Financing II
(Exact Name of Registrant as
Specified in Its Charter)
Michigan
Delaware
Delaware
(State or Other Jurisdiction of Incorporation
or Organization)
38-2820658
To Be Applied For
To Be Applied For
(I.R.S. Employer Identification No.)
------------------------
500 Griswold Street, Detroit, Michigan 48226, (313) 256-5500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------
DANIEL L. SCHIFFER, ESQ.
Senior Vice President, General Counsel and Secretary
MCN CORPORATION
500 Griswold Street, Detroit, Michigan 48226, (313) 256-5500
(Name, Address, Including Zip Code, and Telephone Number, Area Code, of Agent
for Service for Each Registrant)
Copies to:
VINCENT J. PISANO, ESQ.
JOHN W. OSBORN, ESQ.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue, New York, New York 10022
(212) 735-2718
WILLIAM S. LAMB, ESQ.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street, New York, New York 10019-5389
(212) 424-8000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: /X/
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CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
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AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
TO BE REGISTERED (1)(6) UNIT(1)(2)(3) PRICE(1)(2)(3) (2)(6)
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Preferred Securities of MCN Financing I...
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Preferred Securities of MCN Financing
II......................................
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Subordinated Debt Securities of MCN
Corporation.............................
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Guarantees of Preferred Securities of MCN
Financing I and MCN Financing II by MCN
Corporation(4)..........................
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Stock Purchase Contracts of MCN
Corporation.............................
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Stock Purchase Units of MCN Corporation...
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Common Stock, $.01 par value of MCN
Corporation(5)..........................
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Senior Debt Securities of MCN
Corporation.............................
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Total................................. $302,781,250 100% $302,781,250 $104,408
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</TABLE>
(1) Such indeterminate number of Preferred Securities of MCN Financing I and MCN
Financing II and such indeterminate principal amount of Subordinated Debt
Securities, Stock Purchase Contracts, Stock Purchase Units, Common Stock and
Senior Debt Securities of MCN Corporation as may from time to time be issued
at indeterminate prices. Subordinated Debt Securities may be issued and sold
to MCN Financing I and MCN Financing II, in which event such Subordinated
Debt Securities may later be distributed to the holders of Preferred
Securities upon a dissolution of MCN Financing I or MCN Financing II and the
distribution of the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate public offering price of the Preferred
Securities of MCN Financing I and MCN Financing II, and the Subordinated
Debt Securities, Stock Purchase Contracts, Stock Purchase Units, Common
Stock and Senior Debt Securities of MCN Corporation registered hereby will
not exceed $302,781,250.
(3) Exclusive of accrued interest and distributions, if any.
(4) Includes the rights of holders of the Preferred Securities under the
Guarantees of Preferred Securities and back-up undertakings, consisting of
obligations by MCN Corporation to provide certain indemnities in respect of,
and pay and be responsible for certain expenses, costs, liabilities, and
debts of, as applicable, MCN Financing I and MCN Financing II, as set forth
in the Amended and Restated Declaration of Trust, the Subordinated Debt
Securities Indenture and Supplemental Indentures thereto, in each case as
further described in the Registration Statement. No separate consideration
will be received for any Guarantees or any back-up undertakings.
(5) Includes Preferred Share Purchase Rights ("Rights"). The Rights are
associated with and trade with the Common Stock. The value, if any,
attributed to the Rights is reflected in the market price of the Common
Stock.
(6) Does not include certain securities of MCN Corporation covered by
Registration Statement No. 33-55665 which are being carried over to this
Registration Statement. Also does not include the Registration Fee of
$33,524 which was previously paid with respect to such securities.
Pursuant to the provisions of Rule 429 under the Securities Act of 1933, the
Prospectus contained in this Registration Statement also relates to $97,218,750
of unsold securities covered by the Registration Statement on Form S-3
(Registration No. 33-55665) of MCN Corporation and MCN Michigan Limited
Partnership which are being carried forward in connection with this Registration
Statement. Such Registration Statement is accordingly amended to reflect the
information contained herein, including the addition of MCN Financing I and MCN
Financing II as registrants in place of MCN Michigan Limited Partnership. In the
event that any of such previously registered Securities are offered prior to the
effective date of this Registration Statement, the amount of such Securities
will not be included in any Prospectus hereunder. The amount of Securities being
registered, together with the remaining Securities registered under Registration
statement No. 33-55665, represents the maximum amount of Securities which are
expected to be offered for sale.
------------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains three forms of prospectus, a
prospectus supplement covering Preferred Redeemable Increased Dividend Equity
Securities(SM) ("PRIDES(SM)") to be issued by MCN Corporation, a prospectus
supplement covering Trust Originated Preferred Securities(SM) ("TOPrS(SM)") to
be issued by MCN Financing I and guaranteed to the extent set forth therein by
MCN Corporation and a base prospectus for MCN Corporation, MCN Financing I and
MCN Financing II.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 7, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1996)
,000,000 SECURITIES
% PRIDES(SM)
The securities offered hereby are ,000,000 Preferred Redeemable
Increased Dividend Equity Securities % PRIDESSM (the "Securities") of MCN
Corporation ("MCN" or the "Company"). Each Security has a Stated Amount of
$ . Payments of % of the Stated Amount per annum will be made on each
Security on June 30 and December 31 of each year, commencing , 1996,
until the Final Settlement Date of , 1999. These payments will
consist of interest on Treasury Notes payable by the United States Government at
the rate of % per annum and unsecured, subordinated yield enhancement
payments ("Yield Enhancement Payments") payable by the Company at the rate of
% per annum. On the Final Settlement Date, the Stated Amount will
automatically be applied to the purchase of between of a share and one
share of Common Stock of the Company (depending on the Applicable Market Value
of the Common Stock on the Final Settlement Date, as described herein), subject
to adjustment under certain circumstances. The last reported per share sale
price of the Common Stock on the New York Stock Exchange on , 1996
was equal to the Stated Amount. See "Price Range of Common Stock and Dividends".
Each Security will consist of (a) a Purchase Contract under which (i) the
holder will purchase from the Company on the Final Settlement Date, for an
amount in cash equal to the Stated Amount, a number of shares of Common Stock
equal to the Settlement Rate described herein and (ii) the Company will pay the
holder the Yield Enhancement Payments described herein, and (b) % United
States Treasury Notes having a principal amount equal to the Stated Amount and
maturing on the Final Settlement Date. The Treasury Notes will be pledged with
the Collateral Agent to secure the holder's obligation to purchase Common Stock
under the Purchase Contract. Unless a holder of Securities settles the
underlying Purchase Contracts early through the delivery of cash to the Purchase
Contract Agent in the manner described herein, or upon certain termination
events, as described herein, principal of the Treasury Notes underlying such
Securities, when paid at maturity, will automatically be applied to satisfy in
full the holder's obligation to purchase Common Stock under the Purchase
Contracts. For so long as a Purchase Contract remains in effect, such Purchase
Contract and the Treasury Notes securing it will not be separable and may be
transferred only as an integrated Security. See "Description of Securities".
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE SECURITIES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE
SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF SUCH DEFERRAL.
Prior to the offering made hereby there has been no public market for the
Securities. Application will be made to list the Securities on the New York
Stock Exchange ("NYSE") under the symbol " ". On March 1, 1996, the last
reported sale price of the Common Stock on the NYSE was $24.50 per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
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PRICE TO UNDERWRITING PURCHASE PRICE OF PROCEEDS (DEFICIT) TO
PUBLIC DISCOUNT(1) TREASURY NOTES THE COMPANY(2)
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Per Security............ $ $ $ $
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Total(3)................ $ $ $ $
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</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, under the Securities Act of 1933, as amended. See
"Underwriting".
(2) Before deducting estimated expenses payable by the Company estimated at
$ . Does not include proceeds per Security and total proceeds of
$ and $ , respectively ($ and $ , respectively, if
the Underwriters' over-allotment option is exercised in full), receivable by
the Company upon settlement of Purchase Contracts.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional Securities, to cover over-allotments, if any. If
such option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds (Deficit) to the Company will be $ , $ and
$( ), respectively. See "Underwriting".
------------------------
The Securities are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, and subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Securities offered hereby will be made in New York, New York on
or about , 1996.
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MERRILL LYNCH & CO.
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The date of this Prospectus Supplement is , 1996.
(SM)Service Mark of Merrill Lynch & Co. Inc.
<PAGE> 4
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES, THE
COMMON STOCK OR OTHER SECURITIES OF THE COMPANY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NYSE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
S-2
<PAGE> 5
PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and consolidated financial
statements, including the notes thereto, appearing elsewhere in the Prospectus,
this Prospectus Supplement or in the documents incorporated herein by reference.
Except as otherwise noted, all information in this Prospectus Supplement assumes
that the over-allotment option granted to the Underwriters will not be
exercised. All financial information in this Prospectus Supplement, the
Prospectus or in the documents incorporated herein by reference is presented in
accordance with generally accepted accounting principles ("GAAP"), unless
otherwise specified. Unless the context otherwise requires, references in this
Prospectus Supplement to the "Company" include the Company and its consolidated
subsidiaries and affiliates. Capitalized terms used in this Prospectus
Supplement but not defined herein shall have the meanings set forth in the
Prospectus unless otherwise provided herein.
MCN Corporation ("MCN" or the "Company") is a $2.9 billion (assets)
diversified natural gas holding company with gas markets and investments in
various regions of North America. Its principal operating subsidiaries are
Michigan Consolidated Gas Company ("MichCon"), a natural gas distribution and
intrastate transmission company, and MCN Investment Corporation ("MCN
Investment"), a holding company with subsidiaries involved in exploration and
production, gas gathering and processing, gas storage, gas marketing and
cogeneration and computer operations services.
MCN's major business segments are Gas Distribution and, within MCN
Investment's Diversified Energy group, Gas Services and Computer Operations
Services.
MCN's strategy is to aggressively invest in a diverse portfolio of domestic
and international natural gas-related projects. MCN's intent is:
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion;
- to invest in a portfolio of energy-related projects including
investments in exploration and production, power generation, gas
gathering and processing systems, and gas storage; and
- to pursue new opportunities in other areas of expertise.
Accordingly, MCN's capital investments could range between $2.5 billion and
$3.3 billion from 1996 through 2000. This proposed level of investment will
increase capital requirements materially in excess of internally generated funds
and require the issuance of additional debt and equity securities. MCN's capital
requirements and general market conditions will affect the timing and amount of
future issuances. As it expands its business, MCN's capitalization objective is
to maintain its solid credit ratings through a strong balance sheet.
Gas Distribution operates the largest natural gas distribution and
intrastate transmission system in Michigan and one of the largest in the United
States. For the twelve months ended December 31, 1995, operating revenues in the
Gas Distribution segment exceeded $1.1 billion. In addition, at December 31,
1995, the segment had total assets of approximately $1.9 billion. Gas
Distribution serves approximately 1.2 million customers in more than 500
communities throughout Michigan with gas sales and transportation markets of
about 730 billion cubic feet (Bcf). Gas Distribution continues to increase its
markets by reaching customers in new communities, offering new services to
current customers and expanding its intrastate gas transportation network.
Gas Services is an integrated energy group with investments in exploration
and production, cogeneration, gas gathering and processing, and gas storage
fields. It also markets natural gas to large-volume users and utilities. For the
twelve months ended December 31, 1995, operating revenues for the segment were
approximately $400 million and, at December 31, 1995, assets totalled
approximately $1.1 billion, including Gas Services' interest in the assets of
joint ventures. During 1995, MCN Investment invested over $400 million in
various projects, of which $300 million were for exploration and production
projects.
S-3
<PAGE> 6
Expanding opportunities throughout North America should enable Gas Services to
continue to grow its 180 Bcf markets and asset-based investments.
At December 31, 1995, MCN Investment owned 858 Bcf of proved gas reserves
and proved oil reserves totaled 4.7 million barrels, or the equivalent of
another 28 Bcf of natural gas. Producing oil and gas wells totaled 1,972 at
December 31, 1995.
Computer Operations Services is a leading provider of computer outsourcing
services in the United States. The Genix Group provides computer operations
management, data processing and related services to approximately 100 corporate
clients, including thirteen Fortune 500 companies, in more than a dozen
industries. For 1995, Computer Operations Services had revenues at $105.2
million and operating income of $8.0 million, up 19% and 21%, respectively, over
1994.
As MCN continues to pursue its focused strategy of investments in
energy-related projects, it will periodically evaluate the value and strategic
fit of staying in the computer services business.
S-4
<PAGE> 7
SUMMARY FINANCIAL DATA
The following table sets forth selected historical financial information
with respect to the Company for the periods indicated. This information should
be read in conjunction with the Company's Consolidated Financial Statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, which is incorporated by reference into this Prospectus
Supplement. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus. The selected historical financial information for each
of the five years in the period ended December 31, 1995, has been derived from
the audited consolidated financial statements of the Company.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1995 1994 1993 1992 1991
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(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Operating Revenues........................... $1,584,940 $1,545,800 $1,479,654 $1,447,252 $1,284,551
Operating Income............................. 196,225 154,531 143,886 125,493 98,641
Net Income................................... 96,756 77,768 72,790 57,118 35,078
Earnings Per Share........................... 1.49 1.31 1.24 1.05 .71
Average Number of Common Shares Outstanding
(000's).................................... 64,743 59,394 58,642 54,216 49,386
GAS MARKET (VOLUME IN MMCF*)(1)
Gas Distribution
Gas sales.................................. 209,816 204,384 205,372 203,110 192,770
End user transportation.................... 145,761 140,020 128,643 129,722 119,846
Intermediate transportation(2)............. 374,428 322,969 302,662 209,360 130,831
---------- ---------- ---------- ---------- ----------
Total.................................... 730,005 667,373 636,677 542,192 443,497
========== ========== ========== ========== ==========
Diversified Energy
Gas sales
Gas Marketing and Cogeneration........... 170,668 142,352 122,782 112,263 91,968
Exploration and Production(3)............ 16,193 7,459 67 -- --
Transportation(2).......................... 1,091 1,194 294 -- --
---------- ---------- ---------- ---------- ----------
Total.................................... 187,952 151,005 123,143 112,263 91,968
========== ========== ========== ========== ==========
GAS DISTRIBUTION CUSTOMERS..................... 1,172,527 1,141,491 1,129,752 1,120,740 1,112,651
CAPITAL INVESTMENTS(4)
Gas Distribution............................. $ 241,494 $ 153,059 $ 143,120 $ 130,776 $ 122,428
Diversified Energy........................... 394,494 208,488 65,989 40,092 17,454
MCN's Share of Joint Venture................. 52,850 40,422 36,502 31,203 5,139
---------- ---------- ---------- ---------- ----------
Total.................................... $ 688,838 $ 401,969 $ 245,611 $ 202,071 $ 145,021
========== ========== ========== ========== ==========
TOTAL ASSETS................................... $2,898,640 $2,240,973 $1,881,900 $1,648,989 $1,517,387
========== ========== ========== ========== ==========
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(5)............................... $ 993,407 $ 685,519 $ 494,821 $ 379,811 $ 328,052
========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED SECURITIES OF
SUBSIDIARIES(5).............................. $ 96,449 $ 98,967 $ 5,618 $ 9,000 $ 12,000
========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of period)....... $ 23.25 $ 18.00 $ 17.38 $ 15.44 $ 12.19
Dividends Paid Per Share..................... $ .9000 $ .8675 $ .8450 $ .8250 $ .8200
</TABLE>
- -------------------------
* MMcf -- One million cubic feet.
(1) Includes intercompany volumes.
(2) In January 1996, MCN consolidated its Michigan pipeline operations by
transferring its gathering and transportation network operations to Gas
Distributions. The segment information included herein is presented as
though the combined intrastate pipeline operations was a part of Gas
Distribution for all periods presented.
(3) Represents gas sales made directly to third parties by E&P operations. Other
E&P production is sold to affiliated companies for marketing.
(4) Capital investments represent consolidated capital expenditures,
acquisitions, and MCN's share of capital expenditures of joint ventures,
less the minority partners' share of consolidated capital expenditures.
(5) Excludes current requirements. Includes a $100 million term loan, due 2000,
at Supply Development Group, Inc., a wholly-owned subsidiary of MCN
Investment, with recourse to MCN Corporation limited to certain events,
including the realization of tax credits and performance under swap
contracts.
S-5
<PAGE> 8
THE OFFERING
Securities.................... ,000,000 % PRIDES
Stated Amount................. $ per Security
Payments...................... % of the Stated Amount per annum, payable
semi-annually in arrears. These payments will
consist of interest on the Treasury Notes (as
defined below) payable by the United States
Government at the rate of % of the Stated
Amount per annum and unsecured, subordinated
yield enhancement payments ("Yield Enhancement
Payments") payable semi-annually by the Company
at the rate of % of the Stated Amount per
annum. The Company's obligations with respect
to Yield Enhancement Payments are subordinated
and junior in right of payment to all
liabilities of the Company and pari passu with
the most senior preferred stock issued, from
time to time, if any, by the Company. The Yield
Enhancement Payments payable on the first
Payment Date (as defined below) will be
adjusted so that the aggregate of the Yield
Enhancement Payments and interest on Treasury
Notes payable on such date will be the
equivalent of % of the Stated Amount per
annum accruing from , 1996. See
"Risk Factors -- Right to Defer Yield
Enhancement Payments".
Payment Dates................. June 30 and December 31 of each year,
commencing , 1996, through and
including the Final Settlement Date referred to
below (each, a "Payment Date").
Final Settlement Date......... , 1999 (the "Final Settlement
Date"). On the Final Settlement Date, the
Stated Amount per Security will automatically
be applied to the purchase of between
of a share and one share of Common
Stock, par value $.01 per share ("Common
Stock"), of the Company (depending on the
Applicable Market Value of the Common Stock on
the Final Settlement Date, as described below),
subject to adjustment under certain
circumstances.
Components of the
Securities.................... The Securities will be issued under a Purchase
Contract Agreement, dated as of ,
1996 (the "Purchase Contract Agreement"),
between the Company and The First National Bank
of Chicago, as agent for the holders of the
Securities (together with any successor thereto
in such capacity, the "Purchase Contract
Agent").
Each Security offered hereby (each, a
"Security" and collectively, the "Securities")
will consist of (a) a purchase contract
("Purchase Contract") under which (i) the
holder will purchase from the Company on the
Final Settlement Date, for an amount in cash
equal to the Stated Amount, a number of shares
of Common Stock equal to the Settlement Rate
described below, and (ii) the Company will pay
Yield Enhancement Payments to the holder, and
(b) % United States Treasury Notes due
, 1999 ("Treasury Notes")
having a principal amount equal to the Stated
Amount and maturing on the Final Settlement
Date. The Treasury Notes will be pledged with
Chemical Bank, as collateral agent for the
Company (together
S-6
<PAGE> 9
with any successor thereto in such capacity,
the "Collateral Agent"), to secure the holder's
obligation to purchase Common Stock under the
Purchase Contract. Unless a holder of
Securities settles the underlying Purchase
Contracts early through the delivery of cash to
the Purchase Contract Agent in the manner
described below, principal of the Treasury
Notes underlying such Securities, when paid at
maturity, will automatically be applied to
satisfy in full the holder's obligation to
purchase Common Stock under the Purchase
Contracts. For so long as a Purchase Contract
remains in effect, such Purchase Contract and
the Treasury Notes securing it will not be
separable and may be transferred only as an
integrated Security. See "Risk Factors" and
"Description of the Securities".
Settlement Rate............... The number of shares of Common Stock issuable
upon settlement of each Purchase Contract (the
"Settlement Rate") will be calculated as
follows (subject to adjustment under certain
circumstances): (a) if the Applicable Market
Value (as defined below) is greater than $
(the "Threshold Appreciation Price"), the
Settlement Rate will be , (b) if the
Applicable Market Value is less than or equal
to the Threshold Appreciation Price but greater
than the Stated Amount, the Settlement Rate
will equal the Stated Amount divided by the
Applicable Market Value and (c) if the
Applicable Market Value is less than or equal
to the Stated Amount, the Settlement Rate will
be one. "Applicable Market Value" means the
average of the Closing Prices (as defined) per
share of Common Stock on each of the twenty
consecutive Trading Days (as defined) ending on
the last Trading Day immediately preceding the
Final Settlement Date.
Early Settlement.............. A holder of Securities may settle the
underlying Purchase Contracts prior to the
Final Settlement Date in the manner described
herein, but only in integral multiples of
Securities. Upon such early settlement, (a) the
holder will purchase, for an amount in cash
equal to the Stated Amount per Security minus
any deferred Yield Enhancement Payments payable
thereon, of a share of Common Stock per
Security (regardless of the market price of the
Common Stock on the date of purchase), subject
to adjustment under certain circumstances, (b)
the Treasury Notes underlying such Securities
will thereupon be transferred to the holder
free and clear of the Company's security
interest therein, (c) the holder's right to
receive Deferred Yield Enhancement Payments (as
defined below), if any, on the Purchase
Contracts being settled will be forfeited, and
(d) the holder's right to receive additional
Yield Enhancement Payments will terminate and,
except as contemplated by clause (a) above, no
payment or adjustment will be made to or for
the holder on account of current or deferred
amounts accrued in respect thereof.
Termination................... The Purchase Contracts (including the right to
receive accrued or deferred Yield Enhancement
Payments and the obligation to purchase Common
Stock) will automatically terminate upon the
occurrence of certain events of bankruptcy,
insolvency or reorganization with respect to
the Company. Upon such termination, the
S-7
<PAGE> 10
Collateral Agent will release the Treasury
Notes held by it to the Purchase Contract Agent
for distribution to the holders, although there
may be a limited delay before such release and
distribution.
Relationship to Common
Stock......................... The aggregate of the Yield Enhancement Payments
and interest payments on the Treasury Notes
will be paid at a rate per annum that is
greater than the current dividend yield on the
Common Stock. However, since the number of
shares of Common Stock issuable upon settlement
of each Purchase Contract may decline by up to
% as the Applicable Market Value
increases, the opportunity for equity
appreciation afforded by an investment in the
Securities is less than that afforded by a
direct investment in the Common Stock.
Voting Rights................. Holders of the Securities will have no voting
rights.
Listing of the Securities..... Application will be made to list the Securities
on the New York Stock Exchange, under the
symbol " ".
NYSE Symbol of Common Stock... MCN
Federal Income Tax
Consequences.................. Holders will include interest on the Treasury
Notes in income when received or accrued, in
accordance with the holder's method of
accounting. The Company intends to report the
Yield Enhancement Payments as income to
holders, but holders should consult their tax
advisors concerning the possibility that the
Yield Enhancement Payments may be treated as a
reduction in the holders' basis in the
Securities rather than included in income on a
current basis. Additional income, gain or loss
may be realized on maturity of the Treasury
Notes to the extent that the Treasury Notes are
purchased at a premium or discount, and certain
elections should be considered in this regard.
See "Certain Federal Income Tax Consequences".
Use of Proceeds............... Substantially all of the proceeds from the sale
of the Securities offered hereby will be used
by the Underwriters to purchase the underlying
Treasury Notes, and the Company will receive no
proceeds from such sale. Amounts received by
the Company upon settlement of Purchase
Contracts are expected to be used for general
corporate purposes including capital
expenditures, investment in subsidiaries,
working capital, repayment of debt and other
business opportunities. See "Use of Proceeds".
S-8
<PAGE> 11
RISK FACTORS
Prospective purchasers of Securities should consider, in addition to the
other information contained or incorporated by reference in this Prospectus
Supplement or the accompanying Prospectus, the following characteristics of the
Securities.
INVESTMENT IN THE SECURITIES WILL BECOME INVESTMENT IN COMMON STOCK
Although holders of the Securities will be the beneficial owners of the
underlying Treasury Notes prior to the Final Settlement Date, principal of the
Treasury Notes, when paid at maturity, will automatically be applied to the
purchase of a specified number of shares of Common Stock on behalf of such
holders. Thus, following the Final Settlement Date, holders will own shares of
Common Stock rather than a beneficial interest in Treasury Notes. See
"Description of the Securities". There can be no assurance that such amount
receivable by the holder on the Final Settlement Date will be equal to or
greater than the Stated Amount of the Securities. If the Applicable Market Value
of the Common Stock is less than the Stated Amount, such amount receivable by
the holder on the Final Settlement Date will be less than the Stated Amount paid
for the Securities, in which case an investment in the Securities will result in
a loss. Accordingly, a holder of the Securities assumes the risk that the market
value of the Common Stock may decline, and that such decline could be
substantial.
LIMITATIONS ON OPPORTUNITY FOR EQUITY APPRECIATION
The opportunity for equity appreciation afforded by an investment in the
Securities is less than the opportunity for equity appreciation afforded by a
direct investment in the Common Stock, because the amount receivable by a holder
of Securities on the Final Settlement Date will only exceed the Stated Amount of
such Securities if the Applicable Market Value of the Common Stock exceeds the
Threshold Appreciation Price (which represents an appreciation of % over
the Stated Amount). Moreover, holders of the Securities will only be entitled to
receive on the Final Settlement Date % (the percentage equal to the Stated
Amount divided by the Threshold Appreciation Price) of any appreciation of the
value of Common Stock in excess of the Threshold Appreciation Price.
FACTORS AFFECTING TRADING PRICES
The trading prices of the Securities in the secondary market will be
directly affected by the trading prices of the Common Stock in the secondary
market. It is impossible to predict whether the price of Common Stock will rise
or fall. Trading prices of Common Stock will be influenced by MCN's operating
results and prospects and by economic, financial and other factors and market
conditions that can affect the capital markets generally, including the level
of, and fluctuations in, the trading prices of stocks generally and sales of
substantial amounts of Common Stock in the market subsequent to the offering of
the Securities or the perception that such sales could occur.
NO SHAREHOLDER RIGHTS
Holders of the Securities will not be entitled to any rights with respect
to the Common Stock (including, without limitation, voting rights and rights to
receive any dividends or other distributions in respect thereof) unless and
until such time as the Company shall have delivered shares of Common Stock for
Securities on the Final Settlement Date and, unless the applicable record date,
if any, for the exercise of such rights occurs after such date. For example, in
the event that an amendment is proposed to the Articles of Incorporation or By-
Laws of MCN and the record date for determining the stockholders of record
entitled to vote on such amendment occurs prior to such delivery, holders of the
Securities will not be entitled to vote on such amendment.
DILUTION OF COMMON STOCK
The number of shares of Common Stock that holders of the Securities are
entitled to receive on the Final Settlement Date is subject to adjustment for
certain events arising from stock splits and combinations, stock
S-9
<PAGE> 12
dividends and certain other actions of MCN that modify its capital structure.
See "Description of the Securities -- Anti-Dilution Adjustments." Such number of
shares of Common Stock to be received by such holders on the Final Settlement
Date will not be adjusted for other events, such as offerings of Common Stock
for cash or in connection with acquisitions. MCN is not restricted from issuing
additional Common Stock during the term of the Securities and has no obligation
to consider the interests of the holders of the Securities for any reason.
Additional issuances may materially and adversely affect the price of the Common
Stock and, because of the relationship of the number of shares to be received on
the Final Settlement Date to the price of the Common Stock, such other events
may adversely affect the trading price of the Securities.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
It is not possible to predict how the Securities will trade in the
secondary market or whether such market will be liquid or illiquid. The
Securities are novel securities and there is currently no secondary market for
the Securities. Application will be made to list the Securities on the NYSE.
However, there can be no assurance that an active trading market for the
Securities will develop or that such listing will provide the holders of the
Securities with liquidity of investment.
TREASURY NOTES ENCUMBERED
Although holders of Securities will be beneficial owners of the underlying
Treasury Notes, those Treasury Notes will be pledged with the Collateral Agent
to secure the obligations of the holders under the Purchase Contracts. Thus,
rights of the holders to their Treasury Notes will be subject to the Company's
security interest and no holder will be permitted to withdraw Treasury Notes
except in connection with the early settlement or termination of the related
Purchase Contracts. Additionally, upon the automatic termination of the Purchase
Contracts in the event that the Company becomes the subject of a case under the
United States Bankruptcy Code (the "Bankruptcy Code"), the delivery of the
Treasury Notes to holders of the Securities may be delayed by the imposition of
the automatic stay of Section 362 of the Bankruptcy Code. During the period of
any such delay, the Treasury Notes will continue to accrue interest at the rate
of % per annum payable by the United States Government.
SUBORDINATION OF YIELD ENHANCEMENT PAYMENTS
The Company's obligations with respect to Yield Enhancement Payments are
subordinate and junior in right of payment to all liabilities of the Company and
pari passu with the most senior preferred stock issued from time to time, if
any, by the Company. There are no terms in the Purchase Contract Agreement or
the Purchase Contracts that limit the Company's ability to incur obligations
that rank senior to the Yield Enhancement Payments.
RIGHT TO DEFER YIELD ENHANCEMENT PAYMENTS
The Company may, at its option, defer the payment of Yield Enhancement
Payments on the Purchase Contracts until the Final Settlement Date or, with
respect to any particular Purchase Contract, earlier settlement. However,
deferred installments of Yield Enhancement Payments will bear additional Yield
Enhancement Payments at the rate of % per annum (compounding on each
succeeding Payment Date) until paid (such deferred installments of Yield
Enhancement Payments together with the additional Yield Enhancement Payments
shall be referred to herein as the "Deferred Yield Enhancement Payments"). If
the Purchase Contracts are settled early or terminated (upon the occurrence of
certain events of bankruptcy, insolvency or reorganization with respect to the
Company), the right to receive Yield Enhancement Payments, and Deferred Yield
Enhancement Payments, will terminate.
In the event that the Company elects to defer the payment of Yield
Enhancement Payments on the Purchase Contracts until the Final Settlement Date,
each holder will receive on the Final Settlement Date, in lieu of a cash
payment, a number of shares of Common Stock (in addition to a number of shares
of Common Stock equal to the Settlement Rate) equal to (x) the aggregate amount
of Deferred Yield Enhancement Payments payable to a holder of Securities divided
by (y) the Applicable Market Value.
S-10
<PAGE> 13
PURCHASE CONTRACT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED
OBLIGATIONS OF PURCHASE CONTRACT AGENT
The Purchase Contract Agreement will not be qualified as an indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
Purchase Contract Agent will not be required to qualify as a trustee thereunder.
Accordingly, holders of the Securities will not have the benefits of the
protections of the Trust Indenture Act. Under the terms of the Purchase Contract
Agreement, the Purchase Contract Agent will have only limited obligations to the
holders of the Securities. See "Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement -- Information Concerning the Purchase
Contract Agent".
THE COMPANY
MCN is a $2.9 billion (assets) diversified natural gas holding company with
gas markets and investments in various regions in North America. Its principal
operating subsidiaries are MichCon, a natural gas distribution and intrastate
transmission company, and MCN Investment, a holding company with subsidiaries
involved in exploration and production, gas gathering and processing, gas
storage, gas marketing and cogeneration and computer operations services.
MCN's major business segments are Gas Distribution and, within MCN
Investment's Diversified Energy group, Gas Services and Computer Operations
Services.
MCN's strategy is to aggressively invest in a diverse portfolio of domestic
and international natural gas-related projects. MCN's intent is:
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion;
- to invest in a portfolio of energy-related projects including
investments in exploration and production, power generation, gas
gathering and processing systems, and gas storage; and
- to pursue new opportunities in other areas of expertise.
Accordingly, MCN's capital investments could range between $2.5 billion and
$3.3 billion from 1996 through 2000. This proposed level of investment will
increase capital requirements materially in excess of internally generated funds
and require the issuance of additional debt and equity securities. MCN's capital
requirements and general market conditions will affect the timing and amount of
future issuances. As it expands its business, MCN's capitalization objective is
to maintain its solid credit ratings through a strong balance sheet.
Gas Distribution operates the largest natural gas distribution and
intrastate transmission system in Michigan and one of the largest in the United
States. For the twelve months ended December 31, 1995, operating revenues in the
Gas Distribution segment exceeded $1.1 billion. In addition, at December 31,
1995, the segment had total assets of approximately $1.9 billion. Gas
Distribution serves approximately 1.2 million customers in more than 500
communities throughout Michigan with gas sales and transportation markets of
about 730 billion cubic feet (Bcf). Gas Distribution continues to increase its
markets by reaching customers in new communities, offering new services to
current customers and expanding its intrastate gas transportation network.
Gas Services is an integrated energy group with investments in exploration
and production, cogeneration, gas gathering and processing, and gas storage
fields. It also markets natural gas to large-volume users and utilities. For the
twelve months ended December 31, 1995, operating revenues for the segment were
approximately $400 million and, at December 31, 1995, assets totalled
approximately $1.1 billion, including Gas Services' interest in the assets of
joint ventures. During 1995, MCN Investment invested over $400 million in
various projects, of which $300 million were for exploration and production
projects. Expanding opportunities throughout North America should enable Gas
Services to continue to grow its 180 Bcf markets and asset-based investments.
S-11
<PAGE> 14
At December 31, 1995, MCN Investment owned 858 Bcf of proved gas reserves
and proved oil reserves totaled 4.7 million barrels, or the equivalent of
another 28 Bcf of natural gas. Producing oil and gas wells totaled 1,972 at
December 31, 1995.
Computer Operations Services is a leading provider of computer outsourcing
services in the United States. The Genix Group provides computer operations
management, data processing and related services to approximately 100 corporate
clients, including thirteen Fortune 500 companies, in more than a dozen
industries. For 1995, Computer Operations Services had revenues of $105.2
million and operating income of $8.0 million, up 19% and 21%, respectively, over
1994.
As MCN continues to pursue its focused strategy of investments in
energy-related projects, it will periodically evaluate the value and strategic
fit of staying in the computer services business.
The mailing address of MCN's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226, and its telephone number is (313) 256-5500.
S-12
<PAGE> 15
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Securities offered
hereby will be used by the Underwriters to purchase the underlying Treasury
Notes, and the Company will receive no proceeds from the sale of the Securities.
The proceeds to be received by the Company upon settlement of the Purchase
Contracts are expected to be used for general corporate purposes, which may
include capital expenditures, investment in subsidiaries, working capital,
repayment of debt and other business opportunities.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
MCN Common Stock began trading on the NYSE on January 4, 1989, following
the effective date of the restructuring of MichCon and subsequent formation of
MCN as its holding company. The high and low sales prices of the Common Stock of
MCN, as reported on the NYSE Composite Tape, and the dividends declared on the
Common Stock have been as follows:
<TABLE>
<CAPTION>
CASH DIVIDENDS
PAID PER
HIGH* LOW* SHARE*
----- ---- --------------
<S> <C> <C> <C>
1994
First Quarter.......................................... $20 $16 7/8 $.2150
Second Quarter......................................... 20 1/8 17 5/8 .2150
Third Quarter.......................................... 20 1/4 17 1/4 .2150
Fourth Quarter......................................... 19 1/16 17 1/8 .2225
1995
First Quarter.......................................... 18 5/8 16 3/8 .2225
Second Quarter......................................... 19 7/8 18 .2225
Third Quarter.......................................... 20 17 7/8 .2225
Fourth Quarter......................................... 23 1/2 19 3/8 .2325
1996
First Quarter (through March 1, 1996).................. 25 1/2 21 5/8 .2325
</TABLE>
- -------------------------
* Adjusted for a 2:1 stock split in November 1994.
For a recent closing sales price for the Common Stock, as reported on the
NYSE, see the cover page of this Prospectus Supplement. As of December 31, 1995,
the approximate number of holders of record of Common Stock was 24,100.
The timing and amount of future cash dividends will depend on the financial
condition of MCN, the income from its subsidiaries, internal cash requirements
and other factors deemed relevant by the MCN's Board of Directors.
MCN sponsors a dividend reinvestment and stock purchase plan under which
holders of record of MCN Common Stock may purchase a limited amount of MCN
Common Stock without paying brokerage fees and other expenses. Under this plan,
the MCN Common Stock may be purchased in the open market at prevailing prices or
purchased from MCN at the average of the high and low sales prices on the NYSE
for the trading day immediately preceding the purchase.
S-13
<PAGE> 16
CAPITALIZATION
The following table sets forth the unaudited summary capitalization at
December 31, 1995 of the Company and its consolidated subsidiaries on a
historical basis and on a pro forma basis after giving effect to the sale by the
Company of the ,000,000 Securities offered hereby and the application of the
net proceeds therefrom. See "Use of Proceeds." The table should be read in
conjunction with MCN's consolidated financial statements and notes thereto and
other financial data incorporated by reference herein. See "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term debt (includes notes payable and current portion of
long-term debt and capital leases).................................. $ 252,635
========== ========
Company-obligated mandatorily redeemable preferred securities of MCN
Financing I(1)...................................................... -- $
Long-Term Debt (including capital leases)(2).......................... 993,407
Redeemable Cumulative Preferred Securities of Subsidiaries............ 96,449
Common Stockholders' Equity........................................... 664,776
----------
Total Capitalization.................................................. $1,754,632 $
========== ========
</TABLE>
- -------------------------
(1) The sole assets of MCN Financing I will be the % Junior Subordinated
Debt Securities due , 2016 of MCN with a principal amount of
approximately $ , and upon redemption of such debt, the Preferred
Securities will be mandatorily redeemable.
(2) Includes a $100 million term loan, due 2000, at Supply Development Group,
Inc., a wholly-owned subsidiary of MCN Investment, with recourse to MCN
Corporation limited to certain events, including the realization of tax
credits and performance under swap contracts.
S-14
<PAGE> 17
DESCRIPTION OF THE SECURITIES
The following description of certain terms of the Securities offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Securities set forth in the
accompanying Prospectus, to which reference is hereby made. The summaries of
certain provisions of documents described below do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all of
the provisions of such documents (including the definitions therein of certain
terms), forms of which are on file with the Commission. Wherever particular
Sections of, or terms defined in, such documents are referred to herein, such
Sections or defined terms are incorporated by reference herein. Capitalized
terms not defined herein have the meanings assigned to such terms in the
accompanying Prospectus.
GENERAL
Each Security will have a Stated Amount of $ and will be issued under
the Purchase Contract Agreement between the Company and the Purchase Contract
Agent. Each Security will consist of (a) a Purchase Contract under which (i) the
holder will purchase from the Company on the Final Settlement Date of
, 1999, for an amount in cash equal to the Stated Amount, a number of shares
of Common Stock equal to the Settlement Rate described below and (ii) the
Company will pay Yield Enhancement Payments to the holder, and (b) Treasury
Notes having a principal amount equal to the Stated Amount and maturing on the
Final Settlement Date. The Treasury Notes will be pledged with the Collateral
Agent to secure the holder's obligation to purchase Common Stock under the
Purchase Contract. Unless a holder of Securities settles the underlying Purchase
Contracts early through the delivery of cash to the Purchase Contract Agent in
the manner described below, or unless the Purchase Contracts are terminated
(upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company), principal of the Treasury Notes
underlying such Securities, when paid at maturity, will automatically be applied
to satisfy in full the holder's obligation to purchase Common Stock under the
Purchase Contracts. For so long as a Purchase Contract remains in effect, such
Purchase Contract and the Treasury Notes securing it will not be separable and
may be transferred only as an integrated Security.
The semi-annual payments on the Securities set forth on the cover page of
this Prospectus Supplement will consist of interest on the Treasury Notes
payable by the United States Government at the rate of % of the Stated
Amount per annum and unsecured, subordinated Yield Enhancement Payments payable
semi-annually on each Payment Date by the Company at the rate of % of the
Stated Amount per annum. The Company's obligations with respect to Yield
Enhancement Payments are subordinated and junior in right of payment to all
liabilities of the Company and pari passu with the most senior preferred stock
issued, from time to time, if any, by the Company. The Yield Enhancement
Payments payable on the first Payment Date will be adjusted so that the
aggregate of the Yield Enhancement Payments and interest on Treasury Notes
payable on such date will be the equivalent of % of the Stated Amount per
annum accruing from , 1996. The Company may, at its option, defer
the payment of Yield Enhancement Payments on the Purchase Contracts until the
Final Settlement Date or, with respect to any particular Purchase Contract,
earlier settlement thereof. However, deferred installments of Yield Enhancement
Payments will bear additional Yield Enhancement Payments at the rate of %
per annum (compounding on each succeeding Payment Date) until paid. See
"Description of the Purchase Contracts -- Yield Enhancement Payments."
DESCRIPTION OF THE PURCHASE CONTRACTS
GENERAL
Each Purchase Contract underlying a Security (unless earlier terminated or
settled at the holder's option) will obligate the holder of the Security to
purchase, and the Company to sell, on the Final Settlement Date, for an amount
in cash equal to the Stated Amount, a number of shares of Common Stock equal to
the Settlement Rate. The Settlement Rate will be calculated as follows (subject
to adjustment under certain circumstances): (a) if the Applicable Market Value
is greater than the Threshold Appreciation Price of
S-15
<PAGE> 18
$ , the Settlement Rate will be , (b) if the Applicable Market
Value is less than or equal to the Threshold Appreciation Price but greater than
the Stated Amount, the Settlement Rate will equal the Stated Amount divided by
the Applicable Market Value and (c) if the Applicable Market Value is less than
or equal to the Stated Amount, the Settlement Rate will be one. "Applicable
Market Value" means the average of the Closing Prices (as defined) per share of
Common Stock on each of the twenty consecutive Trading Days (as defined) ending
on the last Trading Day immediately preceding the Final Settlement Date.
No fractional shares of Common Stock will be issued by the Company pursuant
to the Purchase Contracts. In lieu of fractional shares otherwise issuable in
respect of Purchase Contracts being settled by a holder of Securities, the
holder will be entitled to receive an amount of cash equal to the value of such
fractional shares at the Closing Price per share on the Trading Day immediately
preceding the date of purchase.
Unless a holder of Securities settles the underlying Purchase Contracts
prior to the Final Settlement Date through the delivery of cash to the Purchase
Contract Agent in the manner described under "-- Early Settlement" below or an
event described under "-- Termination" below occurs, principal of the Treasury
Notes underlying such Securities, when paid at maturity, will automatically be
transferred to the Company to satisfy in full the holder's obligation to
purchase Common Stock under the Purchase Contracts. Such stock will then be
issued and delivered to such holder or such holder's designee, upon presentation
and surrender of the certificate evidencing such Securities (a "Security
Certificate") and payment by the holder of any transfer or similar taxes payable
in connection with the issuance of the stock to any person other than such
holder.
Prior to the date on which shares of Common Stock are issued in settlement
of a Purchase Contract, the Common Stock underlying the related Security will
not be deemed to be outstanding for any purpose and the holder thereof will not
have any voting rights, rights to dividends or other distributions or other
rights or privileges of a stockholder by virtue of holding such Security.
Each holder of Securities, by acceptance thereof, will under the terms of
the Purchase Contract Agreement and the Securities be deemed to have (a)
irrevocably agreed to be bound by the terms of the related Purchase Contracts
for so long as such holder remains a holder of such Securities and (b)
irrevocably appointed the Purchase Contract Agent as such holder's
attorney-in-fact to enter into and perform the related Purchase Contracts on
behalf of and in the name of such holder.
EARLY SETTLEMENT
A holder of Securities may settle the underlying Purchase Contracts prior
to the Final Settlement Date by presenting and surrendering the Security
Certificate evidencing such Securities at the offices of the Purchase Contract
Agent with the form of "Election to Settle Early" on the reverse side of the
certificate completed and executed as indicated, accompanied by payment (in the
form of a certified or cashier's check payable to the order of the Company in
immediately available funds) of an amount equal to the Stated Amount times the
number of Purchase Contracts being settled. So long as the Securities are
evidenced by one or more global security certificates deposited with the
Depositary (as defined below), procedures for early settlement will also be
governed by standing arrangements between the Depositary and the Purchase
Contract Agent. HOLDERS MAY SETTLE SECURITIES EARLY ONLY IN INTEGRAL MULTIPLES
OF SECURITIES.
Upon early settlement of Purchase Contracts underlying any Securities, (a)
the holder will receive
of a share of Common Stock per Security (regardless of the market price of the
Common Stock on the date of purchase), subject to adjustment under certain
circumstances, (b) the Treasury Notes underlying such Securities will thereupon
be transferred to the holder free and clear of the Company's security interest
therein, (c) the holder's right to receive Deferred Yield Enhancement Payments,
if any, on the Purchase Contracts being settled will be forfeited and (d) the
holder's right to receive additional Yield Enhancement Payments will terminate
and, except as contemplated by the first sentence of the preceding paragraph, no
payment or adjustment will be made to or for the holder on account of current or
deferred amounts accrued in respect thereof.
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<PAGE> 19
If the Purchase Contract Agent receives the Security Certificate,
accompanied by the completed Election to Settle Early and requisite check, from
a holder of Securities by 5:00 p.m., New York City time, on a Business Day, that
day will be considered the settlement date. If the Purchase Contract Agent
receives the foregoing after 5:00 p.m., New York City time, on a Business Day or
at any time on a day that is not a Business Day, the next Business Day will be
considered the settlement date.
Upon early settlement of Purchase Contracts in the manner described above,
presentation and surrender of the Security Certificate evidencing the related
Securities and payment of any transfer or similar taxes payable by the holder in
connection with the issuance of the stock to any person other than the holder of
such Securities, the Company will cause the shares of Common Stock being
purchased to be issued, and the Treasury Notes securing such Purchase Contracts
to be released from the pledge under the Pledge Agreement described below and
transferred, within three Business Days following the settlement date, to the
purchasing holder or such holder's designee.
YIELD ENHANCEMENT PAYMENTS
Yield Enhancement Payments will be payable semi-annually on each Payment
Date to the persons in whose names the related Securities are registered at the
close of business on the Business Day (as defined below) immediately preceding
such Payment Date (the "Record Date"). Yield Enhancement Payments will be
computed on the basis of actual days elapsed in a year of 365 or 366 days, as
the case may be. If a Payment Date falls on a day that is not a Business Day,
the Yield Enhancement Payment may be paid on the next succeeding Business Day
with the same force and effect as if made on such Payment Date, and no
additional amounts will accrue as a result of such delayed payment. "Business
Day" means any day that is not a Saturday, a Sunday or a day on which the New
York Stock Exchange or banking institutions or trust companies in The City of
New York are authorized or obligated by law or executive order to be closed.
The Company's obligations with respect to Yield Enhancement Payments are
subordinate and junior in right of payment to all liabilities of the Company and
pari passu with the most senior preferred stock issued, from time to time, if
any, by the Company.
The Company may, at its option and upon prior written notice to the holders
of Securities and the Purchase Contract Agent, defer the payment of Yield
Enhancement Payments on the Purchase Contracts until the Final Settlement Date
or, with respect to any particular Purchase Contract, earlier settlement
thereof. However, deferred installments of Yield Enhancement Payments will bear
additional Yield Enhancement Payments at the rate of % per annum
(compounding on each succeeding Payment Date) until paid. If the Purchase
Contracts are terminated (upon the occurrence of certain events of bankruptcy,
insolvency or reorganization with respect to the Company), the right to receive
Yield Enhancement Payments and Deferred Yield Enhancement Payments will
terminate.
In the event that the Company elects to defer the payment of Yield
Enhancement Payments on the Purchase Contracts until the Final Settlement Date,
each holder will receive on the Final Settlement Date, in lieu of a cash
payment, a number of shares of Common Stock (in addition to a number shares of
Common Stock equal to the Settlement Rate) equal to (x) the aggregate amount of
Deferred Yield Enhancement Payments payable to a holder of Securities divided by
(y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by the Company with
respect to the payment of Deferred Yield Enhancement Payments on the Final
Settlement Date. In lieu of fractional shares otherwise issuable with respect to
such payment of Deferred Yield Enhancement Payments, the holder will be entitled
to receive an amount in cash equal to the value of such fractional shares at the
Closing Price per share on the Trading Day immediately preceding the date of
purchase.
In the event the Company exercises its option to defer the payment of Yield
Enhancement Payments, then (a) the Company shall not declare or pay dividends
on, make distributions with respect to, or redeem, purchase or acquire, or make
a liquidation payment with respect to, any of its capital stock (other than
S-17
<PAGE> 20
(i) purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security requiring the Company to purchase shares of Common Stock, (ii) as a
result of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) or make any guarantee payments with respect to the
foregoing), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company that rank pari passu with or junior
to such Yield Enhancement Payments and (c) the Company shall not make any
guarantee payments with respect to the foregoing (other than pursuant to a
preferred securities guarantee relating to Trust Originated Preferred
Securities, if any, issued by the Company.
ANTI-DILUTION ADJUSTMENTS
The formula for determining the Settlement Rate will be subject to
adjustment upon the occurrence of certain events, including: (a) the payment of
dividends (and other distributions) of Common Stock on Common Stock; (b) the
issuance to all holders of Common Stock of rights, warrants or options entitling
them, for a period of up to 45 days, to subscribe for or purchase Common Stock
at less than the Current Market Price (as defined) thereof; (c) subdivisions,
splits and combinations of Common Stock; (d) distributions to all holders of
Common Stock of evidences of indebtedness of the Company, shares of capital
stock, securities, cash or property (excluding any dividend or distribution
covered by clause (a) or (b) above and any dividend or distribution paid
exclusively in cash); (e) distributions consisting exclusively of cash to all
holders of Common Stock in an aggregate amount that, together with (i) other
all-cash distributions made within the preceding 12 months and (ii) any cash and
the fair market value, as of the expiration of the tender or exchange offer
referred to below, of consideration payable in respect of any tender or exchange
offer by the Company or a subsidiary for the Common Stock concluded within the
preceding 12 months, exceeds 10% of the Company's aggregate market
capitalization (such aggregate market capitalization being the product of the
Current Market Price (as defined) of the Common Stock multiplied by the number
of shares of Common Stock then outstanding) on the date of such distribution;
and (f) the successful completion of a tender or exchange offer made by the
Company or any subsidiary for the Common Stock which involves an aggregate
consideration that, together with (i) any cash and the fair market value of
other consideration payable in respect of any tender or exchange offer by the
Company or a subsidiary for the Common Stock concluded within the preceding 12
months and (ii) the aggregate amount of any all-cash distributions to all
holders of the Company's Common Stock made within the preceding 12 months,
exceeds 10% of the Company's aggregate market capitalization on the expiration
of such tender or exchange offer.
In the case of certain reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions pursuant to which the Common Stock is
converted into the right to receive other securities, cash or property, each
Purchase Contract then outstanding would, without the consent of the holders of
Securities, become a contract to purchase only the kind and amount of
securities, cash and other property receivable upon consummation of the
transaction by a holder of the number of shares of Common Stock which would have
been received by the holder of the related Security immediately prior to the
date of consummation of such transaction if such holder had then settled such
Purchase Contract.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (i.e., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends or rights to subscribe
to capital stock) and, pursuant to the Settlement Rate adjustment provisions of
the Purchase Contract Agreement, the Settlement Rate is increased, such increase
may be deemed to be the receipt of taxable income to holders of Securities. See
"Certain Federal Income Tax Consequences -- Adjustment of Settlement Rate."
In addition, the Company may make such increases in the Settlement Rate as
the Board of Directors of the Company deems advisable to avoid or diminish any
income tax to holders of shares of Common Stock
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resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes or for any
other reasons.
Adjustments to the Settlement Rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the Settlement Rate shall be required
unless such adjustment would require an increase or decrease of at least one
percent in the Settlement Rate; provided, however, that any adjustments which by
reason of the foregoing are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
The Company will be required, within ten Business Days following the
occurrence of an event that requires or permits an adjustment in the Settlement
Rate, to provide written notice to the Purchase Contract Agent of the occurrence
of such event and a statement in reasonable detail setting forth the method by
which the adjustment to the Settlement Rate was determined and setting forth the
revised Settlement Rate.
Each adjustment to the Settlement Rate will result in a corresponding
adjustment to the number of shares of Common Stock issuable upon early
settlement of a Purchase Contract.
TERMINATION
The Purchase Contracts, and the rights and obligations of the Company and
of the holders of the Securities thereunder (including the right to receive
accrued or deferred Yield Enhancement Payments and the right and obligation to
purchase Common Stock), will automatically terminate upon the occurrence of
certain events of bankruptcy, insolvency or reorganization with respect to the
Company. Upon such termination, the Collateral Agent will release the Treasury
Notes held by it to the Purchase Contract Agent for distribution to the holders.
Upon such termination, however, such release and termination may be subject to a
limited delay. In the event that the Company becomes the subject of a case under
the Bankruptcy Code, such delay may occur as a result of the automatic stay
under the Bankruptcy Code and continue until such automatic stay has been
lifted. During such delay, the Treasury Notes will continue to accrue interest
at the rate of % per annum payable by the United States Government.
TREASURY NOTES AND PLEDGE AGREEMENT; INTEREST ON TREASURY NOTES
The Treasury Notes underlying the Securities will be pledged to the
Collateral Agent, for the benefit of the Company, pursuant to a pledge
agreement, to be dated as of , 1996 (the "Pledge Agreement"), to
secure the obligations of the holders to purchase Common Stock under the
Purchase Contracts. The rights of holders of Securities to the underlying
Treasury Notes will be subject to the Company's security interest therein
created by the Pledge Agreement; no holder of Securities will be permitted to
withdraw the Treasury Notes underlying such Securities from the pledge
arrangement except upon the termination or early settlement of the related
Purchase Contracts. Subject to such security interest, however, holders of
Securities will have full beneficial ownership of the underlying Treasury Notes.
The Company will have no interest in the Treasury Notes other than its security
interest.
The Collateral Agent will, upon receipt of interest payments on the
Treasury Notes, distribute such payments to the Purchase Contract Agent who will
in turn distribute those payments to the persons in whose names the related
Securities are registered at the close of business on the Record Date
immediately preceding the date of such distribution.
THE TREASURY NOTES WILL BE OBLIGATIONS OF THE UNITED STATES GOVERNMENT AND
NOT OF THE COMPANY.
BOOK-ENTRY SYSTEM
The Depositary Trust Company (the "Depositary") will act as securities
depositary for the Securities. The Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global security certificates
("Global Security Certificates"), representing the total aggregate number of
Securities, will be issued and will be deposited with the Depositary and will
bear a legend regarding the restrictions on exchanges and registration of
transfer thereof referred to below.
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<PAGE> 22
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the Securities so
long as such Securities are represented by Global Security Certificates.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Depositary holds
securities that its participants ("Participants") deposit with the Depositary.
The Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
The Depositary is owned by a number of its Direct Participants and by the New
York Stock Exchange, the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the Depositary system is also
available to others, such as securities brokers and dealers, banks and trust
companies that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant either directly or indirectly
("Indirect Participants"). The rules applicable to the Depositary and its
Participants are on file with the Securities and Exchange Commission.
No Securities represented by Global Security Certificates may be exchanged
in whole or in part for Securities registered, and no transfer of Global
Security Certificates in whole or in part may be registered, in the name of any
person other than the Depositary or any nominee of the Depositary unless the
Depositary has notified the Company that it is unwilling or unable to continue
as depositary for such Global Security Certificates or has ceased to be
qualified to act as such as required by the Purchase Contract Agreement or there
shall have occurred and be continuing a default by the Company in respect of its
obligations under one or more Purchase Contracts. All Securities represented by
one or more Global Security Certificates or any portion thereof will be
registered in such names as the Depositary may direct.
As long as the Depositary, or its nominee, is the registered owner of the
Global Security Certificates, such Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the Global Security
Certificates and all Securities represented thereby for all purposes under the
Securities and the Purchase Contract Agreement. Except in the limited
circumstances referred to above, owners of beneficial interests in Global
Security Certificates will not be entitled to have such Global Security
Certificates or the Securities represented thereby registered in their names,
will not receive or be entitled to receive physical delivery of Security
Certificates in exchange therefor and will not be considered to be owners or
holders of such Global Security Certificates or any Securities represented
thereby for any purpose under the Securities or the Purchase Contract Agreement.
All payments on the Securities represented by the Global Security Certificates
and all transfers and deliveries of Treasury Notes and Common Stock with respect
thereto will be made to the Depositary or its nominee, as the case may be, as
the holder thereof.
Ownership of beneficial interests in the Global Security Certificates will
be limited to Participants or persons that may hold beneficial interests through
institutions that have accounts with the Depositary or its nominee. Ownership of
beneficial interests in Global Security Certificates will be shown only on, and
the transfer of those ownership interests will be effected only through, records
maintained by the Depositary or its nominee (with respect to Participants'
interests) or any such Participant (with respect to interests of persons held by
such Participants on their behalf). Procedures for settlement of Purchase
Contracts on the Final Settlement Date or upon Early Settlement will be governed
by arrangements among the Depositary, Participants and persons that may hold
beneficial interests through Participants designed to permit such settlement
without the physical movement of certificates. Payments, transfers, deliveries,
exchanges and other matters relating to beneficial interests in Global Security
Certificates may be subject to various policies and procedures adopted by the
Depositary from time to time. None of the Company, the Purchase Contract Agent
or any agent of the Company or the Purchase Contract Agent will have any
responsibility or liability for any aspect of the Depositary's or any
Participant's records relating to, or for payments made on account of,
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beneficial interests in Global Security Certificates, or for maintaining,
supervising or reviewing any of the Depositary's records or any participant's
records relating to such beneficial ownership interests.
CERTAIN PROVISIONS OF THE PURCHASE CONTRACT AGREEMENT
AND THE PLEDGE AGREEMENT
PAYMENT OF INTEREST AND YIELD ENHANCEMENT PAYMENTS; TRANSFER OF SECURITIES;
DELIVERY OF COMMON STOCK OR TREASURY NOTES
Interest on the Treasury Notes and Yield Enhancement Payments will be
payable, Purchase Contracts (and documents related thereto) will be settled and
transfers of the Securities will be registrable at the office of the Purchase
Contract Agent in the Borough of Manhattan, The City of New York. In addition,
in the event that the Securities do not remain in book-entry form, payment of
interest on the Treasury Notes and Yield Enhancement Payments may be made, at
the option of the Company, by check mailed to the address of the person entitled
thereto as shown on the Security Register.
Payments in respect of principal of the Treasury Notes on the Final
Settlement Date will be applied in satisfaction of the obligations of the
holders of the Securities under the Purchase Contracts and shares of Common
Stock will be delivered, or, if the Purchase Contracts have terminated, Treasury
Notes will be delivered potentially after a limited delay (see "Description of
the Purchase Contracts -- Termination"), in each case upon presentation and
surrender of the Security Certificates evidencing the related Securities at the
office of the Purchase Contract Agent.
If a holder of outstanding Securities fails to present and surrender the
Security Certificate evidencing such Securities to the Purchase Contract Agent
on the Final Settlement Date, the shares of Common Stock issuable in settlement
of the applicable Purchase Contract will be registered in the name of the
Purchase Contract Agent and, together with any distributions thereon, shall be
held by the Purchase Contract Agent in trust for the benefit of such holder,
until such Security Certificate is presented and surrendered or the holder
provides satisfactory evidence that such certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Purchase
Contract Agent and the Company.
If the Purchase Contracts have terminated prior to the Final Settlement
Date, the Treasury Notes have been transferred to the Purchase Contract Agent
for distribution to the holders entitled thereto and a holder fails to present
and surrender the Security Certificate evidencing such holder's Securities to
the Purchase Contract Agent, the Treasury Notes delivered to the Purchase
Contract Agent and payments thereon shall be held by the Purchase Contract Agent
in trust, for the benefit of such holder, until such Security Certificate is
presented or the holder provides the evidence and indemnity described above.
The Purchase Contract Agent will have no obligation to invest or to pay
interest on any amounts held by the Purchase Contract Agent pending
distribution, as described above.
No service charge will be made for any registration of transfer or exchange
of the Securities, except for any tax or other governmental charge that may be
imposed in connection therewith.
MODIFICATION
The Purchase Contract Agreement and the Pledge Agreement will contain
provisions permitting the Company and the Purchase Contract Agent or Collateral
Agent, as the case may be, with the consent of the holders of not less than
66 2/3% of the Securities at the time outstanding, to modify the terms of the
Purchase Contracts, the Purchase Contract Agreement and the Pledge Agreement,
except that no such modification may, without the consent of the holder of each
outstanding Security affected thereby, (a) change any Payment Date, (b) change
the amount or type of Treasury Notes underlying a Security, impair the right of
the holder of any Security to receive interest payments on the underlying
Treasury Notes or otherwise adversely affect the holder's rights in or to such
Treasury Notes, (c) change the place or currency of payment or reduce any Yield
Enhancement Payments, (d) impair the right to institute suit for the enforcement
of any Purchase Contract, (e) reduce the amount of Common Stock purchasable
under any Purchase Contract,
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<PAGE> 24
increase the price to purchase Common Stock on settlement of any Purchase
Contract, change the Final Settlement Date or otherwise adversely affect the
holder's rights under any Purchase Contract or (f) reduce the above-stated
percentage of outstanding Securities, the consent of whose holders is required
for the modification or amendment of the provisions of the Purchase Contracts,
the Purchase Contract Agreement or the Pledge Agreement.
NO CONSENT TO ASSUMPTION
Each holder of Securities, by acceptance thereof, will under the terms of
the Purchase Contract Agreement and the Securities be deemed expressly to have
withheld any consent to the assumption (i.e., affirmance) of the Purchase
Contracts by the Company or its trustee in the event that the Company becomes
the subject of a case under the Bankruptcy Code.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Company will covenant in the Purchase Contract Agreement that it will
not merge or consolidate with any other entity or sell or convey all or
substantially all of its assets to any person, firm or corporation unless the
Company is the continuing corporation or the successor corporation is a
corporation organized under the laws of the United States of America or a state
thereof and such corporation expressly assumes the obligations of the Company
under the Purchase Contracts, the Purchase Contract Agreement and the Pledge
Agreement, and the Company or such successor corporation is not, immediately
after such merger, consolidation, sale or conveyance, in default in the
performance of any of its obligations thereunder.
TITLE
The Company, the Purchase Contract Agent and the Collateral Agent may treat
the registered owner of any Security as the absolute owner thereof for the
purpose of making payment and settling the Purchase Contracts and for all other
purposes.
REPLACEMENT OF SECURITY CERTIFICATES
Any mutilated Security Certificate will be replaced by the Company at the
expense of the holder upon surrender of such certificate to the Purchase
Contract Agent. Security Certificates that become destroyed, lost or stolen will
be replaced by the Company at the expense of the holder upon delivery to the
Company and the Purchase Contract Agent of evidence of the destruction, loss or
theft thereof satisfactory to the Company and the Purchase Contract Agent. In
the case of a destroyed, lost or stolen Security Certificate, an indemnity
satisfactory to the Purchase Contract Agent and the Company may be required at
the expense of the holder of the Securities evidenced by such certificate before
a replacement will be issued.
Notwithstanding the foregoing, the Company will not be obligated to issue
any Security on or after the Final Settlement Date or after the Purchase
Contracts have terminated. The Purchase Contract Agreement will provide that, in
lieu of the delivery of a replacement Security Certificate following the Final
Settlement Date, the Purchase Contract Agent, upon delivery of the evidence and
indemnity described above, will deliver the Common Stock issuable pursuant to
the Purchase Contracts included in the Securities evidenced by such certificate,
or, if the Purchase Contracts have terminated prior to the Final Settlement
Date, transfer the principal amount of the Treasury Notes included in the
Securities evidenced by such certificate.
GOVERNING LAW
The Purchase Contract Agreement, the Pledge Agreement and the Purchase
Contracts will be governed by, and construed in accordance with, the laws of the
State of New York.
INFORMATION CONCERNING THE PURCHASE CONTRACT AGENT
The First National Bank of Chicago will be the Purchase Contract Agent. The
Purchase Contract Agent will act as the agent for the holders of Securities from
time to time. The Purchase Contract Agreement will
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<PAGE> 25
not obligate the Purchase Contract Agent to exercise any discretionary actions
in connection with a default under the terms of the Securities or the Purchase
Contract Agreement.
The Purchase Contract will contain provisions limiting the liability of the
Purchase Contract Agent. The Purchase Contract Agreement will contain provisions
under which the Purchase Contract Agent may resign or be replaced. Such
resignation or replacement would be effective upon the appointment of a
successor.
INFORMATION CONCERNING THE COLLATERAL AGENT
Chemical Bank will be the Collateral Agent. The Collateral Agent will act
solely as the agent of the Company and will not assume any obligation or
relationship of agency or trust for or with any of the holders of the Securities
except for the obligations owed by a pledgee of property to the owner thereof
under the Pledge Agreement and applicable law.
The Pledge Agreement will contain provisions limiting the liability of the
Collateral Agent. The Pledge Agreement will contain provisions under which the
Collateral Agent may resign or be replaced. Such resignation or replacement
would be effective upon the appointment of a successor.
VOTING RIGHTS
Holders of the Securities will have no voting rights.
LISTING OF THE SECURITIES
Application will be made to list the Securities on the NYSE.
NYSE SYMBOL OF COMMON STOCK
The Common Stock of the Company is listed on the NYSE under the symbol
"MCN".
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<PAGE> 26
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal U.S. federal income tax
consequences of the purchase, ownership and disposition of Securities. The
summary represents the opinion of Skadden, Arps, Slate, Meagher & Flom, special
tax counsel to the Company, insofar as it relates to matters of law and legal
conclusions. The summary deals only with Securities held as capital assets by
purchasers who or which are (i) citizens or residents of the United States, (ii)
domestic corporations or (iii) otherwise subject to U.S. federal income taxation
on a net income basis in respect of income and gain from securities. It does not
deal with Securities held by specially treated classes of holders, such as
dealers in securities or life insurance companies. Prospective purchasers of
Securities should consult their respective tax advisors concerning the U.S.
federal income tax consequences to Security holders in their particular
situations, as well as any consequences under the laws of any other taxing
jurisdiction.
The following summary assumes that the Treasury Notes will be purchased on,
or approximately on, an interest payment date for such Treasury Notes and will,
therefore, not include any right to accrued interest.
INCOME FROM SECURITIES
A holder will include interest on the Treasury Notes in income when
received or accrued, in accordance with the holder's method of accounting.
There is no authority for the treatment of the Yield Enhancement Payments
or Deferred Yield Enhancement Payments, if any, under current law, but the
Company intends to file information returns on the basis that the Yield
Enhancement Payments are taxable income to holders when received or accrued, in
accordance with the holder's method of accounting. Holders should consult their
respective tax advisors concerning the treatment of Yield Enhancement Payments,
including the possibility that Yield Enhancement Payments may be treated as a
reduction in the holders' basis in the Securities, rather than included in
income upon receipt, by analogy to the treatment of rebates or of option
premiums. In addition, if the Company elects to defer a Yield Enhancement
Payment in a taxable year, the Company may determine to report the amount of
such Deferred Yield Enhancement Payment as constructive taxable income to
holders for such taxable year, and such Deferred Yield Enhancement Payment may
result in holders recognizing taxable income or gain for such taxable year prior
to the receipt of cash or additional shares of Common Stock. Accordingly,
holders should consult their respective tax advisors as to whether or not
Deferred Yield Enhancement Payments should be treated as constructive taxable
distributions and, if taxable, whether such income would be recognized prior to
the receipt of cash or additional shares of Common Stock or upon the Final
Settlement Date. The Company does not intend to deduct the Yield Enhancement
Payments or any Deferred Yield Enhancement Payments for federal income tax
purposes because it views them as a cost of issuing the Common Stock.
SALE OR DISPOSITION OF SECURITIES
If a holder sells, exchanges or otherwise disposes of a Security before the
maturity of the Treasury Notes, the holder will generally recognize capital gain
or loss equal to the difference between the holder's tax basis in the Security
(generally equal to the amount paid for the Security, increased by the amount of
any constructive dividend included in such holder's income as a result of an
adjustment of the Settlement Rate (see "Adjustment of Settlement Rate") plus the
amount of any Deferred Yield Enhancement Payments not paid in cash previously
included in such holder's taxable income reduced by the sum of any Yield
Enhancement Payments received by the holder and not previously included in
income) and the amount realized from the disposition of the Security, except to
the extent of any non-de minimis market discount, which, if the holder does not
have an election to amortize such discount currently in effect, would be treated
as ordinary interest income (see "Gain or Loss on Maturity of the Treasury
Notes"). If a holder sells a Security between interest payment dates, a portion
of the proceeds of the sale will be treated as a receipt of interest accrued
since the last interest payment date, rather than as an amount realized from the
sale of the Security, consistent with the general treatment of proceeds from the
sale of debt instruments such as Treasury Notes.
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<PAGE> 27
GAIN OR LOSS ON MATURITY OF THE TREASURY NOTES
The tax basis of the Treasury Notes will equal the fair market value of the
Treasury Notes at the time of purchase of a Security. If such fair market value
equals the amount payable at maturity of the Treasury Notes, the holder will not
realize gain or loss upon payment of the Treasury Notes at maturity. If such
fair market value is less than the amount payable at maturity of the Treasury
Notes, the holder will generally realize gain equal to the difference upon
payment of the Treasury Notes at maturity. This gain will be treated as ordinary
interest income (i.e., market discount) unless it is "de minimis", in which case
it will be treated as capital gain. The gain will be "de minimis" if it is less
than 1/4 of one percent of the amount payable at maturity of the Treasury Notes
multiplied by the number of complete years remaining to maturity of the Treasury
Notes. A holder may instead elect to accrue market discount into income on a
current basis over the remaining life of the Treasury Notes. An election to
amortize market discount may apply to other debt instruments acquired with
market discount by the holder, and a holder should consult a tax advisor before
making such an election.
If such fair market value is greater than the amount payable at maturity of
the Treasury Notes, the excess will be "bond premium". A holder may either
recognize the bond premium as a capital loss upon payment of the Treasury Notes
at maturity or make an election to amortize it over the term of the Treasury
Notes. If the election is made, the bond premium will generally reduce the
interest income on the Treasury Notes on a constant yield basis over the
remaining term of the Treasury Notes and will reduce the basis of the Treasury
Notes by the amount of the amortization. An election to amortize bond premium
may apply to other debt instruments acquired at a premium by the holder, and a
holder should consult a tax advisor before making such an election.
TAX BASIS OF COMMON STOCK ACQUIRED UNDER THE PURCHASE CONTRACT
The tax basis of the Common Stock acquired by a holder of Securities under
the Purchase Contract will equal the amount paid for the Security (a) increased
by the amount of any gain recognized on receipt of principal of the Treasury
Notes, or market discount included in income, as set forth above, (b) increased
by the amount of any constructive dividend included in such holder's income as a
result of an adjustment of the Settlement Rate (see "Adjustment of Settlement
Rate") plus the amount of any Deferred Yield Enhancement Payments not paid in
cash included in such holder's taxable income (c) reduced by the amount of any
loss recognized on receipt of principal of the Treasury Notes, or bond premium
amortized over the term of the Treasury Notes, as set forth above, (d) reduced
by the amount of any Yield Enhancement Payments received by the holder and not
previously included in income, and (e) reduced by the amount of any cash
received in lieu of fractional shares of Common Stock.
OWNERSHIP OF COMMON STOCK ACQUIRED UNDER THE PURCHASE CONTRACT
Except as described below under the caption "Adjustment of Settlement
Rate," a holder of Securities who does not otherwise own Common Stock, will not
include in income dividends paid on the Common Stock for periods prior to such
holder's acquisition of Common Stock under the Purchase Contracts. Assuming that
the Company has current or accumulated earnings and profits at least equal to
the amount of the dividends, a holder of Common Stock acquired under the
Purchase Contract will include a dividend on the Common Stock in income when
paid, and the dividend will be eligible for the dividends received deduction if
received by an otherwise qualifying corporate holder which meets the holding
period and other requirements for the dividends received deduction.
Upon the sale, exchange or other disposition of Common Stock, the holder
will recognize gain or loss equal to the difference between the holder's tax
basis in the Common Stock and the amount realized on the disposition. The gain
or loss will be capital gain or loss, and will be long-term capital gain or loss
if the holder has held the stock for more than one year at the time of
disposition.
ADJUSTMENT OF SETTLEMENT RATE
Holders of Securities might be treated as receiving a constructive
distribution from the Company if (i) the Settlement Rate is adjusted and as a
result of such adjustment, the proportionate interest of holders of
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<PAGE> 28
Securities in the assets or earnings and profits of the Company is increased,
and (ii) the adjustment is not made pursuant to a bona fide, reasonable
antidilution formula. An adjustment in the Settlement Rate would not be
considered made pursuant to such a formula if the adjustment were made to
compensate for certain taxable distributions with respect to Common Stock. Thus,
under certain circumstances, an increase in the Settlement Rate is likely to be
taxable to holders of Securities as a dividend to the extent of the current or
accumulated earnings and profits of the Company. Holders of Securities would be
required to include their allocable share of such constructive dividend in gross
income but would not receive any cash related thereto.
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UNDERWRITING
Subject to the terms and conditions set forth in a Purchase Agreement (the
"Purchase Agreement") between the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, and , who are acting as
representatives (the "Representatives") for the underwriters named below (the
"Underwriters"), the Company has agreed to sell to the Underwriters, and each of
the Underwriters severally has agreed to purchase from the Company, the number
of Securities set forth opposite each Underwriter's name. In the Purchase
Agreement, the several Underwriters severally have agreed, subject to the terms
and conditions set forth therein, to purchase all of the Securities offered
hereby if any of the Securities are purchased. In the event of default by an
Underwriter, the Purchase Agreement provides that, in certain circumstances, the
purchase commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SECURITIES
------------------------------------------------------------------ ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................................
---------
Total......................................................
=========
</TABLE>
The Representatives have advised the Company that they propose initially to
offer the Securities to the public at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession not in excess of $. per Security. The Underwriters may
allow, and such dealers may reallow, a discount not in excess of $ per
Security on sales to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
The Company has granted to the Underwriters an option, exercisable for 30
days following the date of this Prospectus Supplement, to purchase up to an
aggregate of additional Securities at the price to the public set
forth on the cover page of this Prospectus Supplement, less the underwriting
discount. The Underwriters may exercise this option only to cover
over-allotments, if any, made on the sale of the Securities offered hereby. If
Purchase Contracts underlying any such additional Securities are entered into,
the Underwriters would purchase and pledge under the Pledge Agreement the
Treasury Notes underlying such Securities and the Company or the Underwriters,
as appropriate, would pay a net amount equal to the proceeds (deficit) to the
Company in respect of such Securities as set forth on the cover page of this
Prospectus Supplement. If the Underwriters exercise their over-allotment option,
each of the Underwriters has severally agreed, subject to certain conditions, to
effect the foregoing transactions with respect to approximately the same
percentage of such Securities that the respective number of Securities set forth
opposite its name in the foregoing table bears to the Securities offered hereby.
The price to the Underwriters of the Treasury Notes underlying Securities with
respect to which an over-allotment option is exercised may be different from
that set forth on the cover page of this Prospectus Supplement. Any such
difference will be for the account of the Underwriters and will not affect the
amount of the proceeds (deficit) to the Company in respect of such Securities as
shown on the cover page of this Prospectus Supplement. The Underwriters may
enter into certain hedge transactions for their own account to reduce or
eliminate their risk in this regard.
The Company has agreed, for a period of 90 days after the date of this
Prospectus Supplement, to not, without the prior written consent of the
Representatives, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any shares of the capital stock of the
Company or securities
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<PAGE> 30
convertible into or exchangeable for capital stock of the Company other than to
the Underwriters pursuant to the Purchase Agreement, other than shares of Common
Stock or options for shares of Common Stock issued pursuant to or sold in
connection with qualified employee benefit, dividend reinvestment and stock
option and stock purchase plans and other than shares of Common Stock issuable
upon conversion of existing convertible securities, including the Securities or
exercise of stock options.
Prior to this offering, there has been no public market for the Securities.
The initial public offering price for the Securities was determined in
negotiations between the Company and the Representatives. In determining the
terms of the Securities, including the public offering price, the Company and
the Representatives considered the market price of the Company's Common Stock
and also considered the Company's recent results of operations, the future
prospects of the Company and the industry in general, market prices and terms
of, and yields on, securities of other companies considered to be comparable to
the Company and prevailing conditions in the securities markets. There can be no
assurance that an active trading market will develop for the Securities or that
the Securities will trade in the public market subsequent to the offering at or
above the initial public offering price.
The Company has agreed to indemnify the Underwriters against, or to
contribute to payments that the Underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, MCN and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
The validity of the Purchase Contracts and the Common Stock issuable upon
settlement thereof will be passed upon for MCN by Daniel L. Schiffer, Esq.,
Senior Vice President, General Counsel and Secretary of MCN Corporation. Certain
matters will be passed upon for the Company by Skadden, Arps, Slate, Meagher &
Flom, New York, New York, which has also acted as special tax counsel for the
Company in connection with the Securities. Certain legal matters will be passed
upon for the Underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., New York,
New York. Mr. Schiffer is a full-time employee and officer of MCN and owns
24,491 shares of MCN Common Stock as of February 26, 1996. Skadden, Arps, Slate,
Meagher & Flom has represented certain of the Underwriters in various legal
matters from time to time. LeBoeuf, Lamb, Greene & MacRae, L.L.P. from time to
time renders legal services to the Company.
S-28
<PAGE> 31
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary.............. S-3
Risk Factors............................... S-9
The Company................................ S-11
Use of Proceeds............................ S-13
Price Range of Common Stock and
Dividends................................ S-13
Capitalization............................. S-14
Description of the Securities.............. S-15
Description of the Purchase Contracts...... S-15
Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement....... S-21
Certain Federal Income Tax Consequences.... S-24
Underwriting............................... S-27
Legal Matters.............................. S-28
PROSPECTUS
Available Information...................... 2
Incorporation of Certain Documents by
Reference................................ 3
MCN Corporation............................ 4
The MCN Trusts............................. 4
Use of Proceeds............................ 5
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends................ 5
Description of MCN Debt Securities......... 6
Particular Terms of the Senior Debt
Securities............................... 9
Particular Terms of the Subordinated Debt
Securities............................... 12
Description of MCN Capital Stock........... 17
Description of the MCN Trust Preferred
Securities............................... 19
Description of the Preferred Securities
Guarantees............................... 20
Description of Stock Purchase Contracts and
Stock Purchase Units..................... 22
Plan of Distribution....................... 23
Validity of Securities..................... 24
Experts.................................... 24
</TABLE>
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[MCN LOGO]
% PRIDES(SM)
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
, 1996
(SM)SERVICE MARK OF MERRILL LYNCH & CO. INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 32
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 7, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1996)
PREFERRED SECURITIES
MCN FINANCING I
% TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
The % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial interests in the assets
of MCN Financing I, a statutory business trust formed under the laws of the
State of Delaware ("MCN Financing" or the "Trust"). MCN Corporation, a Michigan
corporation ("MCN" or the "Company"), will directly or indirectly own all the
common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of MCN Financing. MCN Financing exists for the sole purpose of
issuing the Preferred Securities and Common Securities and investing the
proceeds thereof in an equivalent amount of % Junior Subordinated Debentures
due (the "Junior Subordinated Debentures") of MCN. The Junior
Subordinated Debentures and the Preferred Securities in respect of which this
Prospectus Supplement is being delivered shall be referred to herein as the
"Offered Securities." The Junior Subordinated Debentures when issued will be
unsecured obligations of MCN and will be subordinate and junior in right to
certain other indebtedness of the Company, as described herein. Upon an event of
a default under the Declaration (as defined herein), the holders of Preferred
Securities will have a preference over the holders of the Common Securities with
respect to payments in respect of distributions and payments upon redemption,
liquidation and otherwise.
(Continued on next page.)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-6 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMA-
TION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD
AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE
PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
Application will be made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "New York Stock Exchange"). If so approved, trading of
the Preferred Securities on the New York Stock Exchange is expected to commence
within a 30-day period after the initial delivery of the Preferred Securities.
See "Underwriting."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
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INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
- -----------------------------------------------------------------------------------------------------------
Per Preferred Security...................... $25.00 (3) $25.00
- -----------------------------------------------------------------------------------------------------------
Total....................................... $ (3) $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from , 1996.
(2) MCN Financing and MCN have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Junior Subordinated Debentures, MCN has
agreed to pay to the Underwriters as compensation (the "Underwriters'
Compensation") for their arranging the investment therein of such proceeds
$ per Preferred Security (or $ in the aggregate); provided,
that such compensation for sales of 10,000 or more Preferred Securities to a
single purchaser will be $ per Preferred Security. Therefore, to the extent
of such sales, the actual amount of Underwriters' Compensation will be less
than the aggregate amount specified in the preceding sentence. See
"Underwriting."
(4) Expenses of the offering which are payable by MCN are estimated to be
$ .
------------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and
acceptance by them and subject to their right to reject any order in whole or in
part. It is expected that delivery of the Preferred Securities will be made only
in book-entry form through the facilities of The Depository Trust Company, on or
about 1996.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is , 1996.
(SM)"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE> 33
(Continued from previous page)
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing , 1996 ("distributions"). The payment of
distributions out of moneys held by MCN Financing and payments on liquidation of
MCN Financing or the redemption of Preferred Securities, as set forth below, are
guaranteed by MCN (the "Guarantee") to the extent described herein and under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. The Guarantee covers payments of distributions and other payments on
the Preferred Securities only if and to the extent that MCN has made a payment
of interest or principal or other payments on the Junior Subordinated Debentures
held by MCN Financing as its sole asset. The Guarantee, when taken together with
MCN's obligations under the Junior Subordinated Debentures and the Indenture (as
defined below) and its obligations under the Declaration (as defined below),
including its liabilities to pay costs, expenses, debts and liabilities of MCN
Financing (other than with respect to the Trust Securities), provide a full and
unconditional guarantee of amounts due on the Preferred Securities. See "Risk
Factors -- Rights Under the Guarantee" herein. The obligations of MCN under the
Guarantee are subordinate and junior in right of payment to all other
liabilities of MCN and pari passu with the most senior preferred stock issued,
from time to time, if any, by MCN. The obligations of MCN under the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined herein) of MCN, which
aggregated approximately $ at December 31, 1995, and rank pari passu
with MCN's other general unsecured creditors. The Junior Subordinated Debentures
purchased by MCN Financing may be subsequently distributed pro rata to holders
of the Preferred Securities and Common Securities in connection with the
dissolution of MCN Financing, upon the occurrence of certain events.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment date and other payment dates on the Junior Subordinated
Debentures, which will be the sole assets of MCN Financing. As a result, if
principal or interest is not paid on the Junior Subordinated Debentures, no
amounts will be paid on the Preferred Securities. If MCN does not make principal
or interest payments on the Junior Subordinated Debentures, MCN Financing will
not have sufficient funds to make distributions on the Preferred Securities, in
which event, the Guarantee will not apply to such distributions until MCN
Financing has sufficient funds available therefor.
MCN has the right to defer payments of interest on the Junior Subordinated
Debentures by extending the interest payment period on the Junior Subordinated
Debentures at any time for up to 20 consecutive quarters (each, an "Extension
Period"). If interest payments are so deferred, distributions on the Preferred
Securities will also be deferred. During such Extension Period, distributions
will continue to accrue with interest thereon (to the extent permitted by
applicable law) at an annual rate of % per annum compounded quarterly, and
during any Extension Period, holders of Preferred Securities will be required to
include deferred interest income in their gross income for United States federal
income tax purposes in advance of receipt of the cash distributions with respect
to such deferred interest payments. There could be multiple Extension Periods of
varying lengths throughout the term of the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures -- Option to Extend Interest
Payment Period." See "Risk Factors -- Option to Extend Interest Payment Period"
and "United States Federal Income Taxation -- Original Issue Discount."
The Junior Subordinated Debentures are redeemable by MCN, in whole or in
part, from time to time, on or after , 2001, or at any time in certain
circumstances upon the occurrence of a Tax Event (as defined herein). If MCN
redeems Junior Subordinated Debentures, MCN Financing must redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debentures so redeemed at $25 per
Preferred Security plus accrued and unpaid distributions thereon (the
"Redemption Price") to the date fixed for redemption. See "Description of the
Preferred Securities -- Mandatory Redemption." The Preferred Securities will be
redeemed upon maturity of the Junior Subordinated Debentures. The Junior
Subordinated Debentures mature on , 2016. In addition, upon the
occurrence of a Special Event (as defined herein), unless the Junior
Subordinated Debentures are redeemed in the limited circumstances described
herein, MCN Financing shall be dissolved, with the result that the Junior
Subordinated Debentures will be distributed to the holders of the Preferred
Securities, on a pro rata basis, in lieu of any cash distribution. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution." In the case of the occurrence of a Special Event that is a Tax
Event, MCN will have the right in certain circumstances to redeem the Junior
Subordinated Debentures, which would result in the redemption by MCN Financing
of Trust Securities in the same amount on a pro rata basis. If the Junior
Subordinated Debentures are distributed to the holders of the Preferred
Securities, MCN will use its best efforts to have the Junior Subordinated
Debentures listed on the New York Stock Exchange or on such other exchange as
the Preferred Securities are then listed. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution" and "Description of the
Junior Subordinated Debentures."
In the event of the involuntary or voluntary dissolution, winding up or
termination of MCN Financing, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, winding up or
termination the Junior Subordinated Debentures are distributed to the holders of
the Preferred Securities. See "Description of the Preferred Securities --
Liquidation Distribution Upon Dissolution."
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 34
SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth selected historical financial information
with respect to the Company for the periods indicated. This information should
be read in conjunction with the Company's Consolidated Financial Statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, which is incorporated by reference into this Prospectus
Supplement. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus. The selected historical financial information for each
of the five years in the period ended December 31, 1995, has been derived from
the audited consolidated financial statements of the Company.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Operating Revenues..................... $1,584,940 $1,545,800 $1,479,654 $1,447,252 $1,284,551
Operating Income....................... 196,225 154,531 143,886 125,493 98,641
Net Income............................. 96,756 77,768 72,790 57,118 35,078
Earnings Per Share..................... 1.49 1.31 1.24 1.05 .71
Average Number of Common Shares
Outstanding (000's).................. 64,743 59,394 58,642 54,216 49,386
GAS MARKET (VOLUME IN MMCF*)(1)
Gas Distribution
Gas sales............................ 209,816 204,384 205,372 203,110 192,770
End user transportation.............. 145,761 140,020 128,643 129,722 119,846
Intermediate transportation(2)....... 374,428 322,969 302,662 209,360 130,831
---------- ---------- ---------- ---------- ----------
Total........................... 730,005 667,373 636,677 542,192 443,497
========== ========== ========== ========== ==========
Diversified Energy
Gas sales
Gas Marketing and Cogeneration.... 170,668 142,352 122,782 112,263 91,968
Exploration and Production(3)..... 16,193 7,459 67 -- --
Transportation(2).................... 1,091 1,194 294 -- --
---------- ---------- ---------- ---------- ----------
Total........................... 187,952 151,005 123,143 112,263 91,968
========== ========== ========== ========== ==========
GAS DISTRIBUTION CUSTOMERS............... 1,172,527 1,141,491 1,129,752 1,120,740 1,112,651
CAPITAL INVESTMENTS(4)
Gas Distribution....................... $ 241,494 $ 153,059 $ 143,120 $ 130,776 $ 122,428
Diversified Energy..................... 394,494 208,488 65,989 40,092 17,454
MCN's Share of Joint Venture........... 52,850 40,422 36,502 31,203 5,139
---------- ---------- ---------- ---------- ----------
Total........................... $ 688,838 $ 401,969 $ 245,611 $ 202,071 $ 145,021
========== ========== ========== ========== ==========
TOTAL ASSETS............................. $2,898,640 $2,240,973 $1,881,900 $1,648,989 $1,517,387
========== ========== ========== ========== ==========
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(5)......................... $ 993,407 $ 685,519 $ 494,821 $ 379,811 $ 328,052
========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED
SECURITIES
OF SUBSIDIARIES(5)..................... $ 96,449 $ 98,967 $ 5,618 $ 9,000 $ 12,000
========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of
period).............................. $ 23.25 $ 18.00 $ 17.38 $ 15.44 $ 12.19
Dividends Paid Per Share............... $ .9000 $ .8675 $ .8450 $ .8250 $ .8200
</TABLE>
- -------------------------
* MMcf -- One million cubic feet.
(1) Includes intercompany volumes.
(2) In January 1996, MCN consolidated its Michigan pipeline operations by
transferring its gathering and transportation network operations to Gas
Distributions. The segment information included herein is presented as
though the combined intrastate pipeline operations was a part of Gas
Distribution for all periods presented.
(3) Represents gas sales made directly to third parties by E&P operations. Other
E&P production is sold to affiliated companies for marketing.
(4) Capital investments represent consolidated capital expenditures,
acquisitions, and MCN's share of capital expenditures of joint ventures,
less the minority partners' share of consolidated capital expenditures.
(5) Excludes current requirements. Includes a $100 million term loan, due 2000,
at Supply Development Group, Inc., a wholly-owned subsidiary of MCN
Investment, with recourse to MCN Corporation limited to certain events,
including the realization of tax credits and performance under swap
contracts.
S-3
<PAGE> 35
MCN CORPORATION
MCN is a $2.9 billion (assets) diversified natural gas holding company with
gas markets and investments in various regions in North America. Its principal
operating subsidiaries are Michigan Consolidated Gas Company ("MichCon"), a
natural gas distribution and intrastate transmission company, and MCN Investment
Corporation ("MCN Investment"), a holding company with subsidiaries involved in
exploration and production, gas gathering and processing, gas storage, gas
marketing and cogeneration and computer operations services.
MCN's major business segments are Gas Distribution and, within MCN
Investment's Diversified Energy group, Gas Services and Computer Operations
Services.
MCN's strategy is to aggressively invest in a diverse portfolio of domestic
and international natural gas-related projects. MCN's intent is:
- to continue the growth of its Gas Distribution business through
investments and acquisition of assets leading to business and market
expansion;
- to invest in a portfolio of energy-related projects including
investments in exploration and production, power generation, gas
gathering and processing systems, and gas storage; and
- to pursue new opportunities in other areas of expertise.
Accordingly, MCN's capital investments could range between $2.5 billion and
$3.3 billion from 1996 through 2000. This proposed level of investment will
increase capital requirements materially in excess of internally generated funds
and require the issuance of additional debt and equity securities. MCN's capital
requirements and general market conditions will affect the timing and amount of
future issuances. As it expands its business, MCN's capitalization objective is
to maintain its solid credit ratings through a strong balance sheet.
Gas Distribution operates the largest natural gas distribution and
intrastate transmissions system in Michigan and one of the largest in the United
States. For the twelve months ended December 31, 1995, operating revenues in the
Gas Distribution segment exceeded $1.1 billion. In addition, at December 31,
1995, the segment had total assets of approximately $1.9 billion. Gas
Distribution serves approximately 1.2 million customers in more than 500
communities throughout Michigan with gas sales and transportation markets of
about 730 billion cubic feet (Bcf). Gas Distribution continues to increase its
markets by reaching customers in new communities, offering new services to
current customers and expanding its intrastate gas transportation network.
Gas Services is an integrated energy group with investments in exploration
and production, cogeneration, gas gathering and processing, and gas storage
fields. It also markets natural gas to large-volume users and utilities. For the
twelve months ended December 31, 1995, operating revenues for the segment were
approximately $400 million and, at December 31, 1995, assets totalled
approximately $1.1 billion, including Gas Services' interest in the assets of
joint ventures. During 1995, MCN Investment invested over $400 million in
various projects, of which $300 million were for exploration and production
projects. Expanding opportunities throughout North America should enable Gas
Services to continue to grow its 180 Bcf markets and asset-based investments.
At December 31, 1995, MCN Investment owned 858 Bcf of proved gas reserves
and proved oil reserves totaled 4.7 million barrels, or the equivalent of
another 28 Bcf of natural gas. Producing oil and gas wells totaled 1,972 at
December 31, 1995.
Computer Operations Services is a leading provider of computer outsourcing
services in the United States. The Genix Group provides computer operations
management, data processing and related services to approximately 100 corporate
clients, including thirteen Fortune 500 companies, in more than a dozen
industries. For 1995, Computer Operations Services had revenues at $105.2
million and operating income of $8.0 million, up 19% and 21%, respectively, over
1994.
S-4
<PAGE> 36
As MCN continues to pursue its focused strategy of investments in
energy-related projects, it will periodically evaluate the value and strategic
fit of staying in the computer services business.
The mailing address of MCN's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226, and its telephone number is (313) 256-5500.
MCN FINANCING I
MCN Financing is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of March 6, 1996, executed by
MCN, as sponsor (the "Sponsor"), and the trustees of MCN Financing (the "MCN
Trustees") and (ii) the filing of a certificate of trust with the Secretary of
State of the State of Delaware on March 6, 1996. Such declaration will be
amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part. The Declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of
the Preferred Securities, the purchasers thereof will own all of the Preferred
Securities. See "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." MCN will directly or indirectly
acquire Common Securities in an aggregate liquidation amount equal to 3% of the
total capital of MCN Financing. MCN Financing exists for the exclusive purposes
of (i) issuing the Trust Securities representing undivided beneficial interests
in the assets of the Trust, (ii) investing the gross proceeds of the Trust
Securities in the Junior Subordinated Debentures and (iii) engaging in only
those other activities necessary or incidental thereto MCN Financing has a term
of approximately 25 years, but may terminate earlier as provided in the
Declaration.
Pursuant to the Declaration, the number of MCN Trustees will initially be
three. Two of the MCN Trustees (the "Regular Trustees") will be persons who are
employees or officers of or who are affiliated with MCN. The third trustee will
be a financial institution that is unaffiliated with MCN, which trustee will
serve as institutional trustee under the Declaration and as indenture trustee
for the purposes of compliance with the provisions of the Trust Indenture Act
(the "Institutional Trustee"). Initially, Wilmington Trust Company, a Delaware
banking corporation, will be the Institutional Trustee until removed or replaced
by the holder of the Common Securities. For the purpose of compliance with the
provisions of the Trust Indenture Act, Wilmington Trust Company will also act as
trustee (the "Guarantee Trustee") under the Guarantee and as Delaware Trustee
for the purposes of the Trust Act, until removed or replaced by the holder of
the Common Securities. See "Description of the Preferred Securities Guarantees"
in the accompanying Prospectus. See "Description of the Preferred Securities --
Voting Rights."
The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and the
Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined herein) as the holder of the Junior
Subordinated Debentures. In addition, the Institutional Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Junior
Subordinated Debentures for the benefit of the holders of the Trust Securities.
The Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Preferred Securities. MCN, as
the direct or indirect holder of all the Common Securities, will have the right
to appoint, remove or replace any MCN Trustee and to increase or decrease the
number of MCN Trustees; provided, that the number of MCN Trustees shall be at
least three, a majority of which shall be Regular Trustees. MCN will pay all
fees and expenses related to MCN Financing and the offering of the Trust
Securities. See "Description of the Junior Subordinated
Debentures -- Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
S-5
<PAGE> 37
The trustee in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890. The
principal place of business of the Trust shall be c/o MCN Corporation, 500
Griswold Street, Detroit, Michigan 48226, and its telephone number is (313)
256-5500.
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE, AND JUNIOR SUBORDINATED
DEBENTURES
MCN's obligations under the Guarantee are subordinate and junior in right
of payment to all liabilities of MCN and pari passu with the most senior
preferred stock issued, from time to time, if any, by MCN. The obligations of
MCN under the Junior Subordinated Debentures are subordinate and junior in right
of payment to all present and future Senior Indebtedness of MCN and pari passu
with obligations to or rights of MCN's other general unsecured creditors. No
payment of principal of (including redemption payments, if any), premium, if
any, or interest on the Junior Subordinated Debentures may be made if (i) any
Senior Indebtedness of MCN is not paid when due and any applicable grace period
with respect to such default has ended with such default not having been cured
or waived or ceasing to exist, or (ii) the maturity of any Senior Indebtedness
has been accelerated because of a default. As of December 31, 1995, Senior
Indebtedness aggregated approximately $1,463 million. There are no terms in the
Preferred Securities, the Junior Subordinated Debentures or the Guarantee that
limit MCN's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Junior Subordinated Debentures and the Guarantee. See
"Description of the Preferred Securities Guarantees -- Status of the Preferred
Securities Guarantees" and "Description of the Junior Subordinated Debentures"
in the accompanying Prospectus, and "Description of the Junior Subordinated
Debentures -- Subordination" herein.
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. Wilmington Trust Company will act as indenture trustee under the Guarantee
for the purposes of compliance with the provisions of the Trust Indenture Act
(the "Guarantee Trustee"). The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent the Trust has funds available
therefor, (ii) the Redemption Price, including all accrued and unpaid
distributions with respect to Preferred Securities called for redemption by the
Trust, to the extent the Trust has funds available therefor, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated
Debentures to the holders of Preferred Securities or a redemption of all the
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities to the date
of the payment to the extent the Trust has funds available therefor or (b) the
amount of assets of the Trust remaining available for distribution to holders of
the Preferred Securities in liquidation of the Trust. The holders of a majority
in liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails
to enforce the Guarantee, any holder of Preferred Securities may institute a
legal proceeding directly against MCN to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity. If MCN were to default on its obligation
to pay amounts payable on the Junior Subordinated Debentures, the Trust would
lack available funds for the payment of distributions or amounts payable on
redemption of the Preferred Securities or otherwise, and, in such event, holders
of the Preferred Securities would not be able to rely upon the Guarantee for
payment of such amounts. Instead, holders of the
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<PAGE> 38
Preferred Securities would rely on the enforcement (1) by the Institutional
Trustee of its rights as registered holder of the Junior Subordinated Debentures
against MCN pursuant to the terms of the Junior Subordinated Debentures or (2)
by such holder of its right against MCN to enforce payments on Junior
Subordinated Debentures. See "Description of the Preferred Securities
Guarantees" and "Description of the Subordinated Debt Securities" in the
accompanying Prospectus. The Declaration provides that each holder of Preferred
Securities, by acceptance thereof, agrees to the provisions of the Guarantee,
including the subordination provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If (i) MCN Financing fails to pay distributions in full on the Preferred
Securities for six consecutive quarterly distribution periods or (ii) a
Declaration Event of Default (as defined herein) occurs and is continuing, then
the holders of Preferred Securities would rely on the enforcement by the
Institutional Trustee of its rights as a holder of the Junior Subordinated
Debentures against MCN. In addition, the holders of a majority in liquidation
amount of the Preferred Securities will have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee or to direct the exercise of any trust or power conferred
upon the Institutional Trustee under the Declaration, including the right to
direct the Institutional Trustee to exercise the remedies available to it as a
holder of the Junior Subordinated Debentures. If the Institutional Trustee fails
to enforce its rights under the Junior Subordinated Debentures, a holder of
Preferred Securities may institute a legal proceeding directly against MCN to
enforce the Institutional Trustee's rights under the Junior Subordinated
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of MCN to pay interest or principal on
the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Junior Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder (a "Direct
Action") on or after the respective due date specified in the Junior
Subordinated Debentures. In connection with such Direct Action, MCN will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by MCN to such holders of
Preferred Securities in such Direct Action. The holders of Preferred Securities
will not be able to exercise directly any other remedy available to the holders
of the Junior Subordinated Debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
MCN has the right under the Indenture (as such term is defined in
"Description of Junior Subordinated Debentures" herein) to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period at any time, and from time to time, on the Junior Subordinated
Debentures. As a consequence of such an extension, quarterly distributions on
the Preferred Securities would be deferred (but despite such deferral would
continue to accrue with interest thereon compounded quarterly) by MCN Financing
during any such extended interest payment period. Such right to extend the
interest payment period for the Junior Subordinated Debentures is limited to a
period not exceeding 20 consecutive quarters. In the event that MCN exercises
this right to defer interest payments, then (a) MCN shall not declare or pay
dividends on, or make a distribution with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of shares of MCN Common Stock in
connection with the satisfaction by MCN of its obligations under any employee
benefit plans or the satisfaction by MCN of its obligations pursuant to any
contract or security requiring MCN to purchase shares of MCN Common Stock, (ii)
as a result of a reclassification of MCN capital stock or the exchange or
conversion of one class or series of MCN's capital stock for another class or
series of MCN capital stock or (iii) the purchase of fractional interests in
shares of MCN's capital stock pursuant to the conversion or exchange provisions
of such MCN capital stock or the security being converted or exchanged (or make
any guarantee payments with respect to the foregoing), (b) MCN shall not make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities (including
S-7
<PAGE> 39
guarantees) issued by MCN that rank pari passu with or junior to the Junior
Subordinated Debentures and (c) MCN shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Preferred Securities
Guarantee). Prior to the termination of any such extension period, MCN may
further extend the interest payment period; provided, that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed 20 consecutive quarters or extend beyond the maturity date of the Junior
Subordinated Debenture. Upon the termination of any Extension Period and the
payment of all amounts then due, MCN may commence a new Extension Period,
subject to the above requirements. See "Description of the Preferred
Securities -- Distributions" and "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period."
Should MCN exercise its right to defer payments of interest by extending
the interest payment period, each holder of Preferred Securities will continue
to accrue income (as original issue discount ("OID")) in respect of the deferred
interest allocable to its Preferred Securities for United States federal income
tax purposes, which will be allocated but not distributed, to holders of record
of Preferred Securities. As a result, each such holder of Preferred Securities
will recognize income for United States federal income tax purposes in advance
of the receipt of cash and will not receive the cash from MCN Financing related
to such income if such holder disposes of its Preferred Securities prior to the
record date for the date on which distributions of such amounts are made. MCN
has no current intention of exercising its right to defer payments of interest
by extending the interest payment period on the Junior Subordinated Debentures.
However, should MCN determine to exercise such right in the future, the market
price of the Preferred Securities is likely to be affected. A holder that
disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence of
MCN's right to defer interest payments, the market price of the Preferred
Securities (which represent an undivided beneficial interest in the Junior
Subordinated Debentures) may be more volatile than other securities on which OID
accrues that do not have such rights. See "United States Federal Income
Taxation -- Original Issue Discount."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event (as defined herein), MCN Financing
shall be dissolved, except in the limited circumstance described below, with the
result that the Junior Subordinated Debentures would be distributed to the
holders of the Trust Securities in connection with the liquidation of the Trust.
In the case of a Special Event that is a Tax Event, in certain circumstances,
MCN shall have the right to redeem the Junior Subordinated Debentures, in whole
or in part, in lieu of a distribution of the Junior Subordinated Debentures by
the Trust; in which event the Trust will redeem the Trust Securities on a pro
rata basis to the same extent as the Junior Subordinated Debentures are redeemed
by MCN. See "Description of the Preferred Securities -- Special Event Redemption
or Distribution."
Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of MCN Financing would not
be a taxable event to holders of the Preferred Securities. Upon occurrence of a
Special Event, however, a dissolution of MCN Financing in which holders of the
Preferred Securities receive cash would be a taxable event to such holders. See
"United States Federal Income Taxation -- Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of MCN Financing."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that a holder of Preferred Securities may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Junior Subordinated
Debentures upon the occurrence of a Special Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein and in the
accompanying Prospectus. See "Description of the Preferred
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<PAGE> 40
Securities -- Special Event Redemption or Distribution" and "Description of the
Junior Subordinated Debentures -- General."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, MCN Trustees, which voting rights are vested exclusively
in the holder of the Common Securities. See "Description of the Preferred
Securities -- Voting Rights."
TRADING PRICE
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income (i.e., OID), and to
add such amount to his adjusted tax basis in his pro rata share of the
underlying Junior Subordinated Debentures deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "United States Federal Income Taxation -- Original Issue Discount" and
"Sales of Preferred Securities."
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<PAGE> 41
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends
for MCN on a historical basis for each of the five years in the period ended
December 31, 1995.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
MCN(1)(2)..................................................... 2.51 2.64 3.04 2.74 2.08
</TABLE>
- -------------------------
(1) MCN has authority to issue up to 25,000,000 shares of preferred stock, no
par value, however, there are currently no shares outstanding and MCN
currently does not have a preferred stock dividend obligation. Therefore,
the Ratio of Earnings to Fixed Charges and Preferred Stock Dividends is
equal to the Ratio of Earnings to Fixed Charges and is not disclosed
separately.
(2) The Ratio of Earnings to Fixed Charges is based on earnings from operations.
"Earnings" consist of the pre-tax income of majority-owned and 50%-owned
companies adjusted to include any income actually received from less than
50%-owned companies, plus fixed charges, less interest capitalized during
the period for nonutility companies and less the preferred stock dividend
requirements of MichCon included in fixed charges but not deducted in the
determination of pre-tax income. "Fixed Charges" represent (a) interest
(whether expensed or capitalized), (b) amortization of debt discount,
premium and expense, (c) as estimate of interest implicit in rentals, and
(d) in the case of MCN, the preferred securities dividend requirements of
subsidiaries (MichCon and MCN Michigan Limited Partnership), increased to
reflect the pre-tax earnings requirement for MichCon.
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<PAGE> 42
CAPITALIZATION
The following table sets forth the unaudited summary capitalization at December
31, 1995 of the Company and its consolidated subsidiaries on a historical basis
and on a pro forma basis after giving effect to the sale by the Company of the
,000,000 Preferred Securities offered hereby and the application of the net
proceeds therefrom. See "Use of Proceeds". The table should be read in
conjunction with MCN's consolidated financial statements and notes thereto and
other financial data incorporated by reference herein. See "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term debt (includes notes payable and current portion of
long-term debt and capital leases)................................. $ 252,635 $
========== ==========
Company-obligated mandatorily redeemable preferred securities of MCN
Financing I(1)..................................................... --
Long-Term Debt (including capital leases)(2)......................... $ 993,407 $
Redeemable Cumulative Preferred Securities of Subsidiaries........... 96,449
Common Stockholders' Equity.......................................... 664,776
----------
Total Capitalization................................................. $1,754,632 $
========== ==========
</TABLE>
- -------------------------
(1) The sole assets of MCN Financing I will be the % Junior Subordinated
Debt Securities due , 2016 of MCN with a principal amount of
approximately $ , and upon redemption of such debt, the Preferred
Securities will be mandatorily redeemable.
(2) Includes a $100 million term loan, due 2000, at Supply Development Group,
Inc., a wholly-owned subsidiary of MCN Investment, with recourse to MCN
Corporation limited to certain events, including the realization of tax
credits and performance under swap contracts.
ACCOUNTING TREATMENT
The financial statements of MCN Financing will be reflected in MCN's
consolidated financial statements with the Preferred Securities shown as
Company-obligated mandatorily-redeemable preferred securities of the Trust
holding solely $ principal amount of % Junior Subordinated
Debentures of MCN.
USE OF PROCEEDS
All of the proceeds from the sale of the Preferred Securities will be
invested by MCN Financing in Junior Subordinated Debentures of MCN issued
pursuant to the Indenture described herein and ultimately will be used by MCN
for general corporate purposes, which may include capital expenditures,
investment in subsidiaries, working capital, repayment of debt and other
business opportunities.
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<PAGE> 43
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, Wilmington Trust Company, will act as
indenture trustee for the Preferred Securities under the Declaration for
purposes of compliance with the provisions of the Trust Indenture Act. The terms
of the Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the material terms and provisions of the Preferred Securities does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement is a part, the Trust
Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned, directly or
indirectly, by MCN. The Common Securities rank pari passu, and payments will be
made thereon on a pro rata basis, with the Preferred Securities, except that
upon the occurrence and during the continuance of a Declaration Event of
Default, the rights of the holders of the Common Securities to receive payment
of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. The Declaration does not permit the issuance by the Trust of any
securities other than the Trust Securities or the incurrence of any indebtedness
by the Trust. Pursuant to the Declaration, the Institutional Trustee will own
the Junior Subordinated Debentures purchased by the Trust for the benefit of the
holders of the Trust Securities. The payment of distributions out of money held
by the Trust, and payments upon redemption of the Preferred Securities or
liquidation of the Trust, are guaranteed by MCN to the extent described under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. The Guarantee will be held by Wilmington Trust Company, the
Guarantee Trustee, for the benefit of the holders of the Preferred Securities.
The Guarantee does not cover payment of distributions when the Trust does not
have sufficient available funds to pay such distributions. In such event, the
remedy of a holder of Preferred Securities is to vote to direct the
Institutional Trustee to enforce the Institutional Trustee's rights under the
Junior Subordinated Debentures. See "Description of the Preferred
Securities -- Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of % thereof compounded quarterly. The term
"distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1996, and will be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing
, 1996, when, as and if available for payment. Distributions
will be made by the Institutional Trustee, except as otherwise described below.
MCN has the right under the Indenture to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period from
time to time on the Junior Subordinated Debentures, which, if exercised, would
defer quarterly distributions on the Preferred Securities (though such
distributions would continue to accrue with interest since interest would
continue to accrue on the Junior Subordinated Debentures) during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Debentures is limited to a period not
exceeding 20 consecutive quarters or extend beyond the maturity date of the
Junior Subordinated Debenture. In the event that MCN exercises this right, then
(a) MCN shall not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to, any of its capital
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<PAGE> 44
stock (other than (i) purchases or acquisitions of shares of MCN Common Stock in
connection with the satisfaction by MCN of its obligations under any employee
benefit plans or the satisfaction by MCN of its obligations pursuant to any
contract or security requiring MCN to purchase shares of MCN Common Stock, (ii)
as a result of a reclassification of MCN capital stock or the exchange or
conversion of one class or series of MCN's capital stock for another class or
series of MCN capital stock or (iii) the purchase of fractional interests in
shares of MCN's capital stock pursuant to the conversion or exchange provisions
of such MCN capital stock or the security being converted or exchanged) or make
any guarantee payments with respect to the foregoing), (b) MCN shall not make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities (including guarantees) issued by MCN that rank
pari passu with or junior to such Junior Subordinated Debentures and (c) MCN
shall not make any guarantee payments with respect to the foregoing (other than
pursuant to the Preferred Securities Guarantee). Prior to the termination of any
such Extension Period, MCN may further extend the interest payment period;
provided, that such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarters or extend
beyond the maturity date of the Junior Subordinated Debenture. Upon the
termination of any Extension Period and the payment of all amounts then due, MCN
may select a new Extension Period, subject to the above requirements. See
"Description of the Junior Subordinated Debentures -- Interest" and "-- Option
to Extend Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to holders of record of
the Preferred Securities as they appear on the books and records of the Trust on
the record date next following the termination of such deferral period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from MCN on the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures." The payment of
distributions out of moneys held by the Trust is guaranteed by MCN to the extent
set forth under "Description of the Preferred Securities Guarantees" in the
accompanying Prospectus.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day prior to the relevant payment dates. Such
distributions will be paid through the Institutional Trustee who will hold
amounts received in respect of the Junior Subordinated Debentures in the
Property Account for the benefit of the holders of the Trust Securities. Subject
to any applicable laws and regulations and the provisions of the Declaration,
each such payment will be made as described under "Book-Entry Only
Issuance -- The Depository Trust Company" below. In the event that the Preferred
Securities do not continue to remain in book-entry only form, the Regular
Trustee shall have the right to select relevant record dates, which shall be
more than one Business Day but less than 60 Business Days prior to the relevant
payment dates. In the event that any date on which distributions are to be made
on the Preferred Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such record date.
A "Business Day" shall mean any day other than Saturday, Sunday or any other day
on which banking institutions in New York City (in the State of New York) are
permitted or required by any applicable law to close.
MANDATORY REDEMPTION
The Junior Subordinated Debentures will mature on , 2016 and
may be redeemed, in whole or in part, at any time on or after ,
2001, or at any time in certain circumstances upon the occurrence of a Tax Event
(as defined herein). Upon the repayment of the Junior Subordinated Debentures,
whether at maturity or upon redemption, the proceeds from such repayment or
payment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Junior Subordinated Debentures so repaid or redeemed at the Redemption Price;
provided, that
S-13
<PAGE> 45
holders of Trust Securities shall be given not less than 30 nor more than 60
days notice of such redemption, except in the case of payments upon maturity.
See "Description of the Junior Subordinated Debentures -- Optional Redemption."
In the event that fewer than all of the outstanding Preferred Securities are to
be redeemed, the Preferred Securities will be redeemed pro rata as described
under "Book-Entry Only Issuance -- the Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after such date), there is more than an
insubstantial risk that (i) the Trust would be subject to United States federal
income tax with respect to income accrued or received on the Junior Subordinated
Debentures, (ii) interest payable to the Trust on the Junior Subordinated
Debentures would not be deductible by MCN for United States federal income tax
purposes or (iii) the Trust would be subject to more than a de minimis amount of
other taxes, duties or other governmental charges, which change or amendment
becomes effective on or after the date of this Prospectus Supplement.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
1940 Act (as defined herein) to the effect that, as a result of the occurrence
of a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act"), which Change in 1940 Act Law becomes
effective on or after the date of this Prospectus.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Trust
shall, except in the limited circumstances described below, be dissolved with
the result that the Junior Subordinated Debentures with an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Trust Securities, would be
distributed to the holders of the Trust Securities in liquidation of such
holders' interests in the Trust on a pro rata basis within 90 days following the
occurrence, of such Special Event; provided, however, that in the case of the
occurrence of a Tax Event, that such dissolution and distribution shall be
conditioned on (i) the Regular Trustees' receipt of an opinion of nationally
recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published revenue rulings of
the Internal Revenue Service, to the effect that the holders of the Trust
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of such dissolution and distribution of Junior
Subordinated Debentures and (ii) MCN being unable to avoid such Tax Event within
such 90 day period by taking some ministerial action or pursuing some other
reasonable measure that will have no adverse effect on the Trust, MCN or the
holders of the Trust Securities. Furthermore, if after receipt of a Dissolution
Tax Opinion by the Regular Trustee (i) MCN has received an opinion (a
"Redemption Tax Opinion") of nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that MCN would be precluded from deducting the interest on
the Junior Subordinated Debentures for United States federal income tax
purposes, even after the Junior Subordinated Debentures were distributed to the
holders of Trust Securities in liquidation of such holders' interests in the
Trust as described above, or (ii) the Regular Trustees shall have been informed
by such tax counsel that it cannot deliver a No Recognition Opinion to the
Trust, MCN shall have the right, upon not less than 30 nor more than 60 days
notice, to redeem the Junior Subordinated Debentures, in whole or in part, for
cash within 90 days following the occurrence of such Tax Event, and, following
such redemption, Trust
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Securities with an aggregate liquidation amount equal to the aggregate principal
amount of the Junior Subordinated Debentures so redeemed shall be redeemed by
the Trust at the Redemption Price on a pro rata basis; provided, however, that
if at the time there is available to MCN or the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some ministerial
action, such as filing a form or making an election or pursuing some other
similar reasonable measure that has no adverse effect on the Trust, MCN or the
holders of the Trust Securities, MCN or the Trust will pursue such measure in
lieu of redemption.
If the Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, MCN will use its best efforts to cause the Junior
Subordinated Debentures to be listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debentures upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding, (ii) the Depositary or its nominee, as the record holder of
the Preferred Securities, will receive a registered global certificate or
certificates representing the Junior Subordinated Debentures to be delivered
upon such distribution, and (iii) any certificates representing Preferred
Securities not held by the Depositary or its nominee will be deemed to represent
Junior Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on such Preferred Securities until such certificates are
presented to MCN or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that an investor may receive if a
dissolution and liquidation of the Trust were to occur, may trade at a discount
to the price that the investor paid to purchase the Preferred Securities offered
hereby.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that MCN has paid to the Property
Trustee a sufficient amount of cash in connection with the related redemption or
maturity of the Junior Subordinated Debentures, the Trust will irrevocably
deposit with the Depositary funds sufficient to pay the applicable Redemption
Price and will give the Depositary irrevocable instructions and authority to pay
the Redemption Price to the holders of the Preferred Securities. See "Book-Entry
Only Issuance -- The Depository Trust Company." If notice of redemption shall
have been given and funds deposited as required, then, immediately prior to the
close of business on the date of such deposit, distributions will cease to
accrue and all rights of holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price but without interest on such
Redemption Price. In the event that any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day
(without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid either by the Trust, or by MCN pursuant to the Guarantee,
distributions on such Preferred Securities will continue to accrue at the then
applicable rate from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
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In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed pro rata as
described below under "Book-Entry Only Issuance -- The Depository Trust
Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), MCN or its subsidiaries may at any time,
and from time to time, purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Preferred Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment (the "Liquidation Distribution"), unless, in connection with such
Liquidation, Junior Subordinated Debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Preferred Securities have been
distributed on a pro rata basis to the holders of the Preferred Securities in
exchange for such Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
dissolution pro rata with the holders of the Preferred Securities, except that
if a Declaration Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the Common Securities with regard to
such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on
, 2021, the expiration of the term of the Trust, (ii) upon the
bankruptcy of MCN (iii) upon the filing of a certificate of dissolution or its
equivalent with respect to MCN or the holder of the Common Securities, the
filing of a certificate of cancellation with respect to the Trust, or the
revocation of the charter of the holder of the Common Securities or MCN and the
expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) upon the distribution of Junior Subordinated Debentures upon the
occurrence of a Special Event, (v) upon the entry of a decree of a judicial
dissolution of the holder of the Common Securities, MCN or the Trust, or (vi)
upon the redemption of all the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture. If the Property Trustee fails to enforce its rights under the Junior
Subordinated Debentures, any holder of Preferred Securities may institute a
legal proceeding against MCN to enforce the Property Trustee's rights under the
Junior Subordinated Debentures. Notwithstanding the foregoing, if a Declaration
Event of Default has occurred and is continuing and such event is attributable
to the failure of MCN to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, the redemption date), then a holder of Preferred
Securities may institute a Direct Action proceeding for enforcement of payment
to such holder directly of the principal of or interest on the Junior
Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the
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Preferred Securities of such holder on or after the respective due date
specified in the Junior Subordinated Debentures. In connection with such Direct
Action, MCN will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by MCN to
such holder of Preferred Securities in such Direct Action. The holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debentures.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. MCN and the Trust are
each required to file annually with the Institutional Trustee an officer's
certificate as to its compliance with all conditions and covenants under the
Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act and the Trust Indenture Act
and under "Description of the Preferred Securities Guarantees -- Modification of
the Preferred Securities Guarantees; Assignment" in the accompanying Prospectus,
and as otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debentures, to (i) exercise the
remedies available under the Indenture with respect to the Junior Subordinated
Debentures, (ii) waive any past Indenture Event of Default that is waivable
under Section 513 of the Indenture (as defined herein), or (iii) exercise any
right to rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable; provided, however, that, where
a consent or action under the Indenture would require the consent or act of
holders of more than a majority in principal amount of the Junior Subordinated
Debentures (a "Super-Majority") affected thereby, only the holders of at least
such Super-Majority in aggregate liquidation amount of the Preferred Securities
may direct the Institutional Trustee to give such consent or take such action.
If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debentures or the Declaration, a record holder of Preferred
Securities may, after such holder's written request to the Institutional Trustee
to enforce such rights, institute a legal proceeding directly against MCN to
enforce the Institutional Trustee's rights under the Junior Subordinated
Debentures or the Declaration without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. The
Institutional Trustee shall notify all holders of the Preferred Securities of
any notice of default received from the Debt Trustee with respect to the Junior
Subordinated Debentures. Such notice shall state that such Indenture Event of
Default also constitutes a Declaration Event of Default. Except with respect to
directing the time, method and place of conducting a proceeding for a remedy,
the Institutional Trustee shall not take any of the actions described in clauses
(i), (ii) or (iii) above unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not fail to be classified as a grantor trust for United States federal
income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Junior Subordinated
Debentures outstanding. The Institutional Trustee shall be under no obligation
to take any such action in accordance with the
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directions of the holders of the Trust Securities unless the Institutional
Trustee has obtained an opinion of tax counsel to the affect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Trust to redeem
and cancel Preferred Securities or distribute Junior Subordinated Debentures in
accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by MCN or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, MCN, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or
remove the MCN Trustees, who may be appointed, removed or replaced solely by MCN
as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee or the Delaware
Trustee), provided that, if any proposed amendment provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Trust Securities, whether by
way of amendment to the Declaration or otherwise or (ii) the dissolution,
winding-up or termination of the Trust other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected thereby;
provided, that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or the Common Securities,
then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of a majority in liquidation amount of such class of Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described
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below. The Trust may, with the consent of the Regular Trustees and without the
consent of the holders of the Trust Securities, consolidate, amalgamate, merge
with or into, or be replaced by a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (x) expressly assumes all
of the obligations of the Trust under the Trust Securities or (y) substitutes
for the Preferred Securities other securities having substantially the same
terms as the Trust Securities (the "Successor Securities"), so long as the
Successor Securities rank the same as the Trust Securities rank with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) MCN
expressly acknowledges a trustee of such successor entity possessing the same
powers and duties as the Institutional Trustee as the holder of the Junior
Subordinated Debentures, (iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with another
organization on which the Preferred Securities are then listed or quoted, (iv)
such merger, consolidation, amalgamation or replacement does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation or replacement, MCN has received an opinion of a
nationally recognized independent counsel to the Trust experienced in such
matters to the effect that, (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in the new entity), (B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (C)
following such merger, consolidation, amalgamation or replacement, the Trust (or
the successor entity) will continue to be classified as a grantor trust for
United States federal income tax purposes, and (viii) MCN guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee and the Common Securities Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
such consolidation, amalgamation, merger or replacement would cause the Trust or
the Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE-THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates,
representing the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock
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Exchange, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Preferred Securities, except in the event that
use of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Preferred Securities in accordance
with its procedures. Although voting with respect to the Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor Cede & Co.
will itself consent or vote with respect to Preferred Securities. Under its
usual procedures, DTC would mail an Omnibus Proxy to the Trust as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co. consenting
or voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy). MCN and the Trust believe that the arrangements among DTC,
Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights that
can be directly exercised by a holder of a beneficial interest in the Trust.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of DTC,
the Trust or MCN, subject to any statutory or regulatory requirements to the
contrary that may be in effect from time to time. Payment of distributions to
DTC is the responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
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DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with the consent of
MCN) may decide to discontinue use of the system of book-entry transfers through
DTC (or any successor depositary) with respect to the Preferred Securities. In
that event, certificates for the Preferred Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that MCN and MCN Financing believe to be
reliable, but neither MCN nor MCN Financing takes responsibility for the
accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any defaults that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The holders of Preferred Securities will not be required to
offer such indemnity in the event such holders, by exercising their voting
rights, direct the Institutional Trustee to take any action it is empowered to
take under the Declaration following a Declaration Event of Default. The
Institutional Trustee also serves as trustee under the Guarantee.
PAYING AGENT
In addition, in the event that the Preferred Securities do not remain in
book-entry only form, the following provisions would apply:
The Institutional Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers of
Preferred Securities will be effected without charge by or on behalf of the
Trust, but upon payment (with the giving of such indemnity as the Trust or MCN
may require) in respect of any tax or other government charges that may be
imposed in relation to it. The Trust will not be required to register or cause
to be registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
United States federal income tax purposes. MCN is authorized and directed to
conduct its affairs so that the Junior Subordinated Debentures will be treated
as indebtedness of MCN for United States federal income tax purposes. In this
connection, MCN and the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Trust or the
certificate of incorporation of MCN, that each of MCN and the Regular Trustees
determine in their discretion to be necessary or desirable to achieve such end,
as long as such action does not adversely affect the interests of the holders of
the Preferred Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE GUARANTEE
Pursuant to the Guarantee, MCN will irrevocably and unconditionally agree,
to the extent set forth therein, to pay in full, to the holders of the Preferred
Securities issued by the Trust, the Guarantee Payments (as defined in the
accompanying Prospectus)(except to the extent paid by the Trust), as and when
due, regardless of any defense, right of set-off or counterclaim which the Trust
may have or assert. The Company's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Company to the
holders of Preferred Securities or by causing the Trust to pay such amounts to
such holders. The Guarantee will be qualified as an indenture under the Trust
Indenture Act. Wilmington Trust Company will act as indenture trustee under the
Guarantee. The terms of the Guarantee will be those set forth in such Guarantee
and those made part of such Guarantee by the Trust Indenture Act. The Guarantee
will be held by the Guarantee Trustee for the benefit of the holders of the
Preferred Securities. A summary description of the Guarantee appears in the
accompanying Prospectus under the caption "Description of the Preferred
Securities Guarantees."
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Junior Subordinated
Debentures set forth in the accompanying Prospectus under the caption
"Particular Terms of the Subordinated Debt Securities." The following
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the description in the accompanying Prospectus
and the Subordinated Debt Securities Indenture, dated as of September 1, 1994
(the "Base Indenture") between MCN and NBD Bank, as Trustee (the "Debt
Trustee"), as supplemented by a First Supplemental Indenture, dated as of
, 1996 (the Base Indenture, as so supplemented, is hereinafter
referred to as the "Indenture"), the form of which is incorporated by reference
as an Exhibit to the Registration Statement of which this Prospectus Supplement
and the accompanying Prospectus form a part. Certain capitalized terms used
herein are defined in the Indenture.
Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Junior Subordinated Debentures may
be distributed to the holders of the Trust Securities in liquidation of the
Trust. See "Description of the Preferred Securities -- Special Event Redemption
or Distribution."
If the Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, MCN will use its best efforts to have the Junior
Subordinated Debentures listed on the New York Stock Exchange or on such other
national securities exchange or similar organization on which the Preferred
Securities are then listed or quoted.
GENERAL
The Junior Subordinated Debentures will be issued as unsecured debt under
the Indenture. The Junior Subordinated Debentures will be limited in aggregate
principal amount to approximately $ , such amount being the sum of the
aggregate stated liquidation of the Preferred Securities and the capital
contributed by MCN in exchange for the Common Securities (the "MCN Payment").
The Junior Subordinated Debentures are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and Additional
Interest (as defined herein), if any, on , 2016.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, such Junior
Subordinated Debentures will initially be issued as a Global Security (as
defined herein). As described herein, under certain limited circumstances,
Junior Subordinated Debentures may be issued in certificated form in exchange
for a Global Security. See "--Book-Entry and Settlement" below. In the event
that Junior Subordinated Debentures are issued in certificated form, such
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Junior Subordinated Debentures will be in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Junior Subordinated Debentures issued as a Global Security
will be made to DTC, a successor depositary or, in the event that no depositary
is used, to a Paying Agent for the Junior Subordinated Debentures. In the event
Junior Subordinated Debentures are issued in certificated form, principal and
interest will be payable, the transfer of the Junior Subordinated Debentures
will be registrable and Junior Subordinated Debentures will be exchangeable for
Junior Subordinated Debentures of other denominations of a like aggregate
principal amount at the corporate trust office of the Institutional Trustee in
Wilmington, Delaware; provided, that at the option of MCN payment of interest
may be made by check mailed to the address of the holder entitled thereto or by
wire transfer to an account appropriately designated by the holder entitled
thereto. Notwithstanding the foregoing, so long as the holder of any Junior
Subordinated Debentures is the Property Trustee, the payment of principal and
interest on the Junior Subordinated Debentures held by the Property Trustee will
be made at such place and to such account as may be designated by the Property
Trustee.
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction involving MCN.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all Senior Indebtedness of MCN
and pari passu with MCN trade creditors. No payment of principal (including
redemption and sinking fund payments), premium, if any, or interest on the
Junior Subordinated Debentures may be made (i) if any Senior Indebtedness of MCN
is not paid when due, (ii) any applicable grace period with respect to such
default has ended and such default has not been cured or waived or ceased to
exist, or (iii) if the maturity of any Senior Indebtedness of MCN has been
accelerated because of a default. Upon any distribution of assets of MCN to
creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all principal, premium, if any, and interest due or to become
due on all Senior Indebtedness of MCN must be paid in full before the holders of
Junior Subordinated Debentures are entitled to receive or retain any payment.
Upon satisfaction of all claims of all Senior Indebtedness then outstanding, the
rights of the holders of the Junior Subordinated Debentures will be subrogated
to the rights of the holders of Indebtedness of MCN to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Junior Subordinated Debentures are paid in full.
The term "Senior Indebtedness" means the principal of and premium, if any,
and interest on the following, whether outstanding on the date of execution of
the Subordinated Debt Securities Indenture or thereafter incurred or created:
(i) indebtedness of MCN for money borrowed by MCN (including purchase money
obligations with an original maturity in excess of one year) or evidenced by
debentures (other than the Subordinated Debt Securities), notes, bankers'
acceptances or other corporate debt securities or similar instruments issued by
MCN; (ii) obligations with respect to letters of credit; (iii) indebtedness of
MCN constituting a guarantee of indebtedness of others of the type referred to
in the preceding clauses (i) and (ii); or (iv) renewals, extensions or
refundings of any of the indebtedness referred to in the preceding clauses (i),
(ii) and (iii) unless, in the case of any particular indebtedness, renewal,
extension or refunding, under the express provisions of the instrument creating
or evidencing the same, or pursuant to which the same is outstanding, such
indebtedness or such renewal extension or refunding thereof is not superior in
right of payment to the Subordinated Debt Securities. In November 1994, MCN
issued $101 million of Series A Subordinated Debentures to MCN Michigan Limited
Partnership, a financing entity which issued cumulative preferred securities
that rank pari passu with the Preferred Securities.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by MCN. As of December 31, 1995, Senior Indebtedness of MCN
aggregated approximately $1,463 million.
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OPTIONAL REDEMPTION
MCN shall have the right to redeem the Junior Subordinated Debentures, in
whole or in part, from time to time, on or after 2001, or at any
time in certain circumstances upon the occurrence of a Special Event as
described under "Description of the Preferred Securities -- Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days notice,
at a redemption price equal to 100% of the principal amount to be redeemed plus
any accrued and unpaid interest, including Additional Interest, if any, to the
redemption date. If a partial redemption of the Preferred Securities resulting
from a partial redemption of the Junior Subordinated Debentures would result in
the delisting of the Preferred Securities,by such exchange on which the
Preferred Securities are then listed, MCN may only redeem the Junior
Subordinated Debentures in whole.
INTEREST
Each Junior Subordinated Debenture shall bear interest at the rate of
% per annum from the original date of issuance, payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year (each an
"Interest Payment Date"), commencing , 1996, to the person in whose
name such Junior Subordinated Debenture is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Junior Subordinated Debentures shall not
continue to remain in book-entry only form, MCN shall have the right to select
record dates, which shall be more than one Business Day prior to the Interest
Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed,
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
MCN shall have the right at any time, and from time to time, during the
term of the Junior Subordinated Debentures to defer payments of interest by
extending the interest payment period for a period not exceeding 20 consecutive
quarters, at the end of which Extension Period, MCN shall pay all interest then
accrued and unpaid (including any Additional Interest, as herein defined)
together with interest thereon compounded quarterly at the rate specified for
the Junior Subordinated Debentures to the extent permitted by applicable law
("Compound Interest"); provided, that during any such Extension Period, (a) MCN
shall not declare or pay dividends on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to any of
its capital stock (other than (i) purchases or acquisitions of shares of MCN
Common Stock in connection with the satisfaction by MCN of its obligations under
any employee benefit plans or the satisfaction by MCN of its obligations
pursuant to any contract or security requiring MCN to purchase shares of MCN
Common Stock, (ii) as a result of a reclassification of MCN capital stock or the
exchange or conversion of one class or series of MCN's capital stock for another
class or series of MCN capital stock or (iii) the purchase of fractional
interests in shares of MCN's capital stock pursuant to the conversion or
exchange provisions of such MCN capital stock or the security being converted or
exchanged) or make any guarantee payments with respect to the foregoing), (b)
MCN shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) issued by
MCN that rank pari passu with or junior to the Junior Subordinated Debentures
and (c) MCN shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Preferred Securities Guarantee). Prior to the
termination of any such Extension Period, MCN may further defer payments of
interest by extending the interest payment period; provided, however, that, such
Extension Period, including all such previous and further extensions, may not
exceed 20 consecutive quarters or beyond the maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the
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payment of all amounts then due, MCN may commence a new Extension Period,
subject to the terms set forth in this section. No interest during an Extension
Period, except at the end thereof, shall be due and payable. MCN has no present
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Junior Subordinated Debentures. If the
Institutional Trustee shall be the sole holder of the Junior Subordinated
Debentures, MCN shall give the Regular Trustees and the Institutional Trustee
notice of its selection of such Extension Period one Business Day prior to the
earlier of (i) the date distributions on the Preferred Securities are payable or
(ii) the date the Regular Trustees are required to give notice to the New York
Stock Exchange (or other applicable self-regulatory organization) or to holders
of the Preferred Securities of the record date or the date such distribution is
payable. The Regular Trustees shall give notice of MCN's selection of such
Extension Period to the holders of the Preferred Securities. If the
Institutional Trustee shall not be the sole holder of the Junior Subordinated
Debentures, MCN shall give the holders of the Junior Subordinated Debentures
notice of its selection of such Extension Period ten Business Days prior to the
earlier of (i) the Interest Payment Date or (ii) the date upon which MCN is
required to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Junior Subordinated
Debentures of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, MCN will pay as additional interest ("Additional Interest") such
additional amounts as shall be required so that the net amounts received and
retained by the Trust after paying any such taxes, duties, assessments or other
governmental charges will be not less than the amounts the Trust would have
received had no such taxes, duties, assessments or other governmental charges
been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debentures, will
have the right to declare the principal of and the interest on the Junior
Subordinated Debentures (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debentures. See "Particular Terms of the
Subordinated Debt Securities -- Events of Default and Notice Thereof" in the
accompanying Prospectus for a description of the Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders of
Preferred Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debentures. See "Description of the Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of MCN to pay interest
or principal on the Junior Subordinated Debentures on the date such interest or
principal is otherwise payable, MCN acknowledges that then a holder of Preferred
Securities may institute a Direct Action for payment on or after the respective
due date specified in the Junior Subordinated Debentures. Notwithstanding any
payments made to such holder of Preferred Securities by MCN in connection with a
Direct Action, MCN shall remain obligated to pay the principal of or interest on
the Junior Subordinated Debt Securities held by MCN Financing or the Property
Trustee of MCN Financing, and MCN shall be subrogated to the rights of the
holder of such Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by the Company to such holder in
any Direct Action. The holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust as
a result of the occurrence of a Special Event, the Junior Subordinated
Debentures will be issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the Depositary or its nominee.
Except under the limited circumstances described below, Junior Subordinated
Debentures represented by the Global Security will not be exchangeable for, and
will not otherwise be issuable as, Junior Subordinated Debentures in definitive
form.
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The Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depositary for the Junior Subordinated Debentures. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." As of the date of this Prospectus Supplement, the
description therein of DTC's book-entry system and DTC's practices as they
relate to purchases, transfers, notices and payments with respect to the
Preferred Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by MCN. MCN may appoint a
successor to DTC or any successor depositary in the event DTC or such successor
depositary is unable or unwilling to continue as a depository for the Global
Securities.
None of MCN, the Trust, the Institutional Trustee, any paying agent and any
other agent of MCN or the Debt Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a Global Security for such Junior Subordinated
Debentures or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the depositary notifies MCN that it is unwilling or unable to continue as
a depositary for such Global Security and no successor depositary shall have
been appointed, (ii) the depositary, at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the depositary is required to be
so registered to act as such depositary and no successor depositary shall have
been appointed, (iii) MCN, in its sole discretion, determines that such Global
Security shall be so exchangeable or (iv) there shall have occurred an Event of
Default with respect to such Junior Subordinated Debentures. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be exchangeable
for Junior Subordinated Debentures registered in such names as the Depositary
shall direct. It is expected that such instructions will be based upon
directions received by the Depositary from its Participants with respect to
ownership of beneficial interests in such Global Security.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
MCN will pay all fees and expenses related to (i) the offering of the Trust
Securities and the Junior Subordinated Debentures, (ii) the organization,
maintenance and dissolution of the Trust, (iii) the retention of the MCN
Trustees and (iv) the enforcement by the Institutional Trustee of the rights of
the holders of the Preferred Securities. The payment of such fees and expenses
will be fully and unconditionally guaranteed by MCN.
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EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, and to invest the proceeds from such issuance and sale in the Junior
Subordinated Debentures.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) MCN
shall pay all, and the Trust shall not be obligated to pay, directly or
indirectly, all costs, expenses, debt, and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration further provides
that the MCN Trustees shall not take or cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes of
the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by MCN as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If MCN does not make interest payments on the Junior Subordinated
Debentures purchased by the Trust, it is expected that the Trust will not have
sufficient funds to pay distributions on the Preferred Securities. The Guarantee
does not apply to any payment of distributions unless and until the Trust has
sufficient funds for the payment of such distributions. The Guarantee covers the
payment of distributions and other payments on the Preferred Securities only if
and to the extent that MCN has made a payment of interest or principal on the
Junior Subordinated Debentures held by the Trust as its sole asset.
If MCN fails to make interest or other payments on the Junior Subordinated
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Book --
Entry Only Issuance -- The Depository Trust Company" and "-- Voting Rights," may
direct the Institutional Trustee to enforce its rights under the Junior
Subordinated Debentures. If the Institutional Trustee fails to enforce its
rights under the Junior Subordinated Debentures, a holder of Preferred
Securities may institute a legal proceeding against MCN to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures without
first instituting any legal proceeding against the Institutional Trustee or any
other person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of MCN to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption on the redemption date), then a holder of Preferred
Securities may institute a Direct Action for payment on or after the respective
due date specified in the Junior Subordinated Debentures. In connection with
such Direct Action, MCN will be subrogated to the rights of such holder of
Preferred Securities under the Declaration to the extent of any payment made by
MCN to such holder of Preferred Securities in such Direct Action. MCN, under the
Guarantee, acknowledges that the Guarantee Trustee shall enforce the Guarantee
on behalf of the holders of the Preferred Securities. If MCN fails to make
payments under the Guarantee, the Guarantee provides a mechanism whereby the
holders of the Preferred Securities may direct the Guarantee Trustee to enforce
its rights thereunder. Any holder of Preferred Securities may institute a legal
proceeding directly against MCN to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee, or any other person or entity.
MCN and the Trust believe that the Guarantee, when taken together with
MCN's obligations under the Junior Subordinated Debentures and the Indenture and
its obligations under the Declaration, including its obligations to pay costs,
expenses, debts and liabilities of the Trust (other than with respect to the
Trust Securities), provide a full and unconditional guarantee of amounts on the
Preferred Securities. See "Description of the Preferred Securities
Guarantees -- General" in the accompanying Prospectus.
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UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets by holders who purchase the Preferred
Securities upon original issuance ("Initial Holders"). It does not deal with
special classes of holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, or persons that will hold the
Preferred Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to persons that have a functional currency other than the
U.S. Dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Preferred Securities. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures,
Skadden, Arps, Slate, Meagher & Flom, special tax counsel to MCN and the Trust,
will render its opinion generally to the effect that, although not entirely free
from doubt, under then current law and assuming full compliance with the terms
of the Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Junior Subordinated Debentures held
by the Trust will be classified for United States federal income tax purposes as
indebtedness of MCN.
CLASSIFICATION OF MCN FINANCING
In connection with the issuance of the Preferred Securities, Skadden, Arps,
Slate, Meagher & Flom, special tax counsel to MCN and the Trust, will render its
opinion generally to the effect that, under then current law and assuming full
compliance with the terms of the Declaration and the Indenture (and certain
other documents), and based on certain facts and assumptions contained in such
opinion, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a corporation.
Accordingly, for United States federal income tax purposes, each holder of
Preferred Securities generally will be considered the owner of an undivided
interest in the Junior Subordinated Debentures, and each holder will be required
to include in its gross income any OID accrued with respect to its allocable
share of those Junior Subordinated Debentures.
ORIGINAL ISSUE DISCOUNT
Because MCN has the option, under the terms of the Junior Subordinated
Debentures, to defer payments of interest by extending interest payment periods
for up to 20 quarters, all of the stated interest payments on the Junior
Subordinated Debentures will be treated as "original issue discount." Holders of
debt instruments issued with OID must include that discount in income on an
economic accrual basis before the receipt of cash attributable to the interest,
regardless of their method of tax accounting. Generally, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures will
be accounted for as OID, and actual distributions of stated interest will not be
separately reported as taxable income. The amount of OID that accrues in any
month will approximately equal the amount of the interest that accrues on the
Junior Subordinated Debentures in that month at the stated interest rate. In the
event that the interest payment period is extended, holders will continue to
accrue OID approximately equal to the amount of the interest payment due at the
end of the extended interest payment period on an economic accrual basis over
the length of the extended interest period.
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Because income on the Preferred Securities will constitute OID, corporate
holders of Preferred Securities will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Preferred
Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Preferred Securities other than Initial Holders may be
considered to have acquired their undivided interests in the Junior Subordinated
Debentures with market discount or acquisition premium as such phrases are
defined for United States federal income tax purposes. Such holders are advised
to consult their tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the Preferred Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF MCN
FINANCING
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution," Junior
Subordinated Debentures may be distributed to holders in exchange for the
Preferred Securities and in liquidation of the Trust. Under current law, such a
distribution, for United States federal income tax purposes, would be treated as
a non-taxable event to each holder, and each holder would receive an aggregate
tax basis in the Junior Subordinated Debentures equal to such holder's aggregate
tax basis in its Preferred Securities. A holder's holding period in the Junior
Subordinated Debentures so received in liquidation of the Trust would include
the period during which the Preferred Securities were held by such holder. If,
however, the related Special Event is a Tax Event which results in the Trust
being treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to holders of the Preferred Securities.
Under certain circumstances described herein (see "Description of the
Preferred Securities -- Special Event Redemption or Distribution"), the Junior
Subordinated Debentures may be redeemed for cash and the proceeds of such
redemption distributed to holders in redemption of their Preferred Securities.
Under current law, such a redemption would, for United States federal income tax
purposes, constitute a taxable disposition of the redeemed Preferred Securities,
and a holder could recognize gain or loss as if it sold such redeemed Preferred
Securities for cash. See "-- Sales of Preferred Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Preferred Securities and
the amount realized on the sale of such Preferred Securities. A holder's
adjusted tax basis in the Preferred Securities generally will be its initial
purchase price increased by OID previously includible in such holder's gross
income to the date of disposition and decreased by payments received on the
Preferred Securities. Such gain or loss generally will be a capital gain or loss
and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who disposes of his Preferred
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Junior Subordinated
Debentures through the date of disposition in income as ordinary income, and to
add such amount to his adjusted tax basis in his pro rata share of the
underlying Junior Subordinated Debentures deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest) a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a non-resident fiduciary of a foreign estate or trust.
S-29
<PAGE> 61
Under present United States federal income tax law: (i) payments by the
Trust or any of its paying agents to any holder of a Preferred Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the
Preferred Security does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of MCN entitled to vote, (b)
the beneficial owner of the Preferred Security is not a controlled foreign
corporation that is related to MCN through stock ownership, and (c) either (A)
the beneficial owner of the Preferred Security certifies to the Trust or its
agent, under penalties of perjury, that it is not a United States holder and
provides its name and address or (B) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and holds the
Preferred Security in such capacity, that certifies to the Trust or its agent,
under penalties of perjury, that such statement has been received from the
beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof; and
(ii) a United States Alien Holder of a Preferred Security will not be subject to
United States federal withholding tax on any gain realized upon the sale or
other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Preferred
Securities will be reported to holders on Forms 1099, which forms should be
mailed to holders of Preferred Securities by January 31 following each calendar
year.
The Trust will be obligated to report annually to Cede & Co., as holder of
record of the Preferred Securities, the OID related to the Junior Subordinated
Debentures that accrued during the year. the Trust currently intends to report
such information on Form 1099 prior to January 31 following each calendar year
even though the Trust is not legally required to report to record holders until
April 15 following each calendar year. The Underwriters (as defined herein) have
indicated to the Trust that, to the extent that they hold Preferred Securities
as nominees for beneficial holders, they currently expect to report to such
beneficial holders on Forms 1099 by January 31 following each calendar year.
Under current law, holders of Preferred Securities who hold as nominees for
beneficial holders will not have any obligation to report information regarding
the beneficial holders to the Trust. The Trust, moreover, will not have any
obligation to report to beneficial holders who are not also record holders.
Thus, beneficial holders of Preferred Securities who hold their respective
Preferred Securities through the Underwriters will receive Forms 1099 reflecting
the income on their respective Preferred Securities from such nominee holders
rather than the Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income tax, provided the
required information is provided to the Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
S-30
<PAGE> 62
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and
are acting as representatives (the "Representatives"), has
severally agreed to purchase the number of Preferred Securities set forth
opposite its name below. In the Underwriting Agreement, the several Underwriters
have agreed, subject to the terms and conditions set forth therein, to purchase
all the Preferred Securities offered hereby if any of the Preferred Securities
are purchased. In the event of default by an Underwriter, the Underwriting
Agreement provides that, in certain circumstances, the purchase commitments of
the nondefaulting Underwriters may be increased or the Underwriting Agreement
may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................
---
Total.........................................................
===
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus Supplement, and in part to certain securities dealers at
such price less a concession of $ per Preferred Security, provided that
such concession for sales of or more Preferred Securities to any single
purchaser will be $ per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $ per
Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures of MCN,
the Underwriting Agreement provides that MCN will agree to pay as compensation
("Underwriters' Compensation") to the Underwriters for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (next day) funds of $ per Preferred Security (or
$ in the aggregate) for the accounts of the several Underwriters,
provided that such compensation for sales of or more Preferred
Securities to any single purchaser will be $ per Preferred Security.
Therefore, to the extent of such sales, the actual amount of Underwriters'
Compensation will be less than the aggregate amount specified in the preceding
sentence.
During a period of 30 days from the date of the Prospectus Supplement,
neither the Trust nor MCN will, without the prior written consent of the
Representatives, directly or indirectly, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any Preferred Securities, any security
convertible into or exchangeable into or exercisable for Preferred Securities or
the Junior Subordinated Debentures or any debt securities substantially similar
to the Junior Subordinated Debentures or any equity securities substantially
similar to the Preferred Securities (except for the Junior Subordinated
Debentures and the Preferred Securities offered hereby).
S-31
<PAGE> 63
Application will be made to list the Preferred Securities on the NYSE under
the symbol " ". Trading of the Preferred Securities on the New York Stock
Exchange is expected to commence within a 30 day period after the initial
delivery of the Preferred Securities. The Representatives have advised the Trust
that they intend to make a market in the Preferred Securities prior to the
commencement of trading on the New York Stock Exchange. The Representatives will
have no obligation to make a market in the Preferred Securities, however, and
may cease market making activities, if commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
MCN and the Trust have agreed to indemnify the Underwriters against, or
contribute to payments that the Underwriters may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act of 1933,
as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, MCN and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
The validity of the Indenture, the Guarantee and the Junior Subordinated
Debentures and certain matters relating thereto will be passed upon on behalf of
MCN by Daniel L. Schiffer, Senior Vice President, General Counsel and Secretary
of MCN. Certain matters of Delaware law relating to the validity of the
Preferred Securities and certain United States federal income taxation matters
will be passed upon for MCN Financing by Skadden, Arps, Slate, Meagher & Flom,
special counsel to the Company. Certain legal matters will be passed upon for
the Underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., New York, New York.
Mr. Schiffer is a full-time employee and officer of MCN and owns 24,491 shares
of MCN as of February 26, 1996. Skadden, Arps, Slate, Meagher & Flom has also
represented certain of the Underwriters in various legal matters from time to
time. LeBoeuf, Lamb, Greene & MacRae, L.L.P. from time to time renders legal
services to the Company.
S-32
<PAGE> 64
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY MCN CORPORATION, MCN FINANCING I OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF MCN CORPORATION OR MCN FINANCING I SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Selected Historical Financial
Information.............................. S-3
MCN Corporation............................ S-4
MCN Financing I............................ S-5
Risk Factors............................... S-6
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.... S-10
Capitalization............................. S-11
Accounting Treatment....................... S-11
Use of Proceeds............................ S-11
Description of the Preferred Securities.... S-12
Description of the Guarantee............... S-22
Description of the Junior Subordinated
Debentures............................... S-22
Effect of Obligations Under the Junior
Subordinated Debentures and the
Guarantee................................ S-27
United States Federal Income Taxation...... S-28
Underwriting............................... S-31
Legal Matters.............................. S-32
PROSPECTUS
Available Information...................... 2
Incorporation of Certain Documents by
Reference................................ 3
MCN Corporation............................ 4
The MCN Trusts............................. 4
Use of Proceeds............................ 5
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends................ 5
Description of MCN Debt Securities......... 6
Particular Terms of the Senior Debt
Securities............................... 9
Particular Terms of the Subordinated Debt
Securities............................... 12
Description of MCN Capital Stock........... 17
Description of the MCN Trust Preferred
Securities............................... 19
Description of the Preferred Securities
Guarantees............................... 20
Description of Stock Purchase Contracts and
Stock Purchase Units..................... 22
Plan of Distribution....................... 23
Validity of Securities..................... 24
Experts.................................... 24
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
PREFERRED SECURITIES
MCN FINANCING I
% TRUST ORIGINATED
PREFERRED SECURITIES(SM)
("TOPRS(SM)")
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
MCN CORPORATION
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 65
SUBJECT TO COMPLETION, DATED MARCH 7, 1996
PROSPECTUS
$400,000,000
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
COMMON STOCK
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
-------------------------
MCN FINANCING I
MCN FINANCING II
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
MCN CORPORATION
-------------------------
MCN Corporation, a Michigan Corporation, ("MCN or the "Company") may
offer, from time to time, (i) unsecured senior debt securities (the "Senior Debt
Securities") consisting of debentures, notes or other unsecured evidences of
indebtedness, (ii) unsecured subordinated debt securities (the "Subordinated
Debt Securities") consisting of debentures, notes and other unsecured evidence
of indebtedness (item (i) or (ii) above being referred to herein as the "Debt
Securities"), (iii) Common Stock, $.01 par value ("MCN Common Stock"), (iv)
Stock Purchase Contracts ("Stock Purchase Contracts") to purchase Common Stock
or (v) Stock Purchase Units ("Stock Purchase Units"), each representing
ownership of a Stock Purchase Contract and Debt Securities or debt obligations
of third parties, including U.S. Treasury Securities, securing the holder's
obligation to purchase the Common Stock under the Stock Purchase Contract, in
each case in one or more series and in amounts, at prices and on terms to be
determined at or prior to the time of sale.
MCN Financing I and MCN Financing II (each, an "MCN Trust"), statutory
business trusts formed under the laws of the State of Delaware, may offer, from
time to time, preferred securities, representing undivided beneficial interests
in the assets of the respective MCN Trust ("Preferred Securities"). The payment
of periodic cash distributions ("distributions") with respect to Preferred
Securities of each of the MCN Trusts out of moneys held by each of the MCN
Trusts, and payment on liquidation, redemption or otherwise with respect to such
Preferred Securities, will be guaranteed by MCN to the extent described herein
(each a "Guarantee"). See "Description of the Preferred Securities Guarantees"
below. MCN's obligations under the Preferred Securities Guarantees are
subordinate and junior in right of payment to all other liabilities of MCN and
rank pari passu with the most senior preferred stock, if any, issued from time
to time by MCN. Subordinated Debt Securities may be issued and sold from time to
time in one or more series to an MCN Trust, or a trustee of such MCN Trust, in
connection with the investment of the proceeds from the offering of Preferred
Securities and Common Securities (as defined herein) of such MCN Trust. The
Subordinated Debt Securities purchased by an MCN Trust may be subsequently
distributed pro rata to holders of Preferred Securities and Common Securities in
connection with the dissolution of such MCN Trust upon the occurrence of certain
events as may be described in an accompanying Prospectus Supplement.
Specific terms of the particular Subordinated Debt Securities, the Preferred
Securities and the related Preferred Securities Guarantees, together with the
Stock Purchase Contracts, the Stock Purchase Units, the MCN Common Stock and the
Senior Debt Securities, in respect of which this Prospectus is being delivered
(the "Offered Securities") will be set forth in an accompanying Prospectus
Supplement or Supplements, together with the terms of the offering of the
Offered Securities, the initial price thereof and the net proceeds from the sale
thereof. The Prospectus Supplement will set forth with regard to the particular
Offered Securities, without limitation, the following: (i) in the case of Debt
Securities, the designation, aggregate principal amount, denomination, maturity,
any exchange, conversion, redemption or sinking fund provisions, interest rate
(which may be fixed or variable), the time and method of calculating interest
payments, the right of the Company, if any, to defer payment or interest on the
Subordinated Debt Securities and the maximum length of such deferral period,
public offering price, ranking as senior or subordinated debt, any listing on a
securities exchange and other specific terms of the offering, (ii) in the case
of MCN Common Stock, the designation, number of shares, public offering price
and other specific terms of the offering, (iii) in the case of Preferred
Securities, the designation, number of securities, liquidation preference per
security, initial public offering price, any listing on a securities exchange,
dividend rate (or method of calculation thereof), dates on which dividends shall
be payable and dates from which dividends shall accrue, any voting rights, any
redemption, exchange or sinking fund provisions, any other rights, preferences,
privileges, limitations or restrictions relating to the Preferred Securities of
a specific series and the terms upon which the proceeds of the sale of the
Preferred Securities will be used to purchase a specific series of Subordinated
Debt Securities of MCN, (iv) in the case of Stock Purchase Contracts, the
designation and number of shares of Common Stock issuable thereunder, the
purchase price of Common Stock, the date or dates on which the Common Stock is
required to be purchased by the holders of the Stock Purchase Contracts, any
periodic payments required to be made by the Company to the holders of the Stock
Purchase Contract or visa versa, and the terms of the offering and sale thereof,
and (v) in the case of Stock Purchase Units, the specific terms of the Stock
Purchase Contracts and any Debt Securities or debt obligations of third parties
securing the holder's obligation to purchase the Common Stock under the Stock
Purchase Contracts, and the terms of the offering and sale thereof. The Offered
Securities may be offered in amounts, at prices and on terms to be determined at
the time of the offering, provided, however, that the aggregate offering price
to the public of the Offered Securities will be limited to $400,000,000.
The Company's Common Stock is traded on the New York Stock Exchange ("NYSE")
under the symbol MCN. See "Description of MCN Capital Stock -- Price Range of
MCN Common Stock and Common Stock Dividends".
MCN and/or each of the MCN Trusts may sell the Offered Securities directly,
through agents designated from time to time or through underwriters or dealers.
See "Plan of Distribution." If any agents of MCN and/or any MCN Trust or any
underwriters or dealers are involved in the sale of the Offered Securities, the
names of such agents, underwriters or dealers and any applicable commissions and
discounts will be set forth in the related Prospectus Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE> 66
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY
REFERENCE HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN OR
THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MCN OR THE MCN
TRUSTS OR BY ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS AND ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
AVAILABLE INFORMATION
MCN is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "1934 Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy statements and other information
concerning MCN can be inspected and copied at the SEC's Public Reference Room,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as the
following Regional Offices of the SEC: 7 World Trade Center, Suite 1300, New
York, New York 10048; and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549, at prescribed rates. Such reports,
proxy statements and other information may also be inspected at the offices of
the NYSE, on which MCN Common Stock is traded, at 20 Broad Street, New York, New
York 10005.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by MCN Corporation and the MCN Trusts with the SEC under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
Offered Securities. This Prospectus does not contain all of the information set
forth in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to MCN, the MCN Trusts, and the Offered Securities. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the SEC or
incorporated by reference herein are not necessarily complete, and in each
instance reference is made to the copy of such document so filed for a more
complete description of the matter involved. Each such statement is qualified in
its entirety by such reference.
No separate financial statements of any of the MCN Trusts have been
included herein. MCN does not consider that such financial statements would be
material to holders of the Preferred Securities because (i) all of the voting
securities of each of the MCN Trusts will be owned, directly or indirectly, by
MCN, a reporting company under the Exchange Act, (ii) each of the MCN Trusts has
no independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in the assets of such MCN Trust and
investing the proceeds thereof in Subordinated Debt Securities issued by MCN,
and (iii) MCN's obligations described herein and in any accompanying prospectus
supplement under the Declarations of each Trust, the Guarantee issued with
respect to Preferred Securities issued by that Trust, the Subordinated Debt
Securities purchased by that Trust and the related Indenture, taken together,
constitute a full and unconditional guarantee of payments due on the Trust
Securities. See "Particular Terms of the Subordinated Debt Securities" and
"Description of the Preferred Securities Guarantees."
The MCN Trusts are not currently subject to the information reporting
requirements of the 1934 Act. The MCN Trusts will become subject to such
requirements upon the effectiveness of the Registration Statement, although they
intend to seek and expect to receive exemptions therefrom.
2
<PAGE> 67
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by MCN (File No. 1-10070) with the SEC
pursuant to the 1934 Act are incorporated by reference herein and made a part
hereof:
1. Annual Report on Form 10-K for the year ended December 31, 1995.
2. The description of MCN's Common Stock as contained in its Form 8-B dated
September 29, 1988.
3. The description of MCN's Preferred Share Purchase Rights contained in
its Form 8-A dated December 28, 1989.
4. MCN's Current Reports on Form 8-K dated January 10, 1996 and dated
February 6, 1996.
All documents filed by MCN pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the 1934 Act subsequent to the date hereof and prior to the termination of
the offering of the Offered Securities pursuant hereto shall be deemed to be
incorporated by reference in this Prospectus or in any Prospectus Supplement and
to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference in this Prospectus or in any Prospectus Supplement
shall be deemed to be modified or superseded for purposes of this Prospectus or
any Prospectus Supplement to the extent that a statement contained in this
Prospectus or in any Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus or in any Prospectus Supplement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus or any
Prospectus Supplement.
MCN undertakes to provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of any such
person, a copy of any or all of the foregoing documents incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to: Investor Relations, MCN Corporation, 500 Griswold Street,
Detroit, Michigan 48226; telephone 1-800-548-4655.
3
<PAGE> 68
MCN CORPORATION
MCN is a diversified natural gas holding company. Its principal operating
subsidiaries are Michigan Consolidated Gas Company ("MichCon"), a natural gas
distribution and intrastate transmission company; and MCN Investment Corporation
("MCN Investment"), a holding company with subsidiaries involved in exploration
and production, gas gathering and processing, gas storage, gas marketing and
cogeneration and computer operations services. MCN, a Michigan corporation
organized in 1988, is exempt from most provisions of the Public Utility Holding
Company Act of 1935.
MCN's major business segments are Gas Distribution and, within the
Diversified Energy group, Gas Services and Computer Operations Services.
GAS DISTRIBUTION operates the largest natural gas distribution and
intrastate transmission system in Michigan and one of the largest in the United
States. This segment includes the following companies:
MichCon -- A Michigan corporation organized in 1898 that, with its
predecessors has been in business for nearly 150 years. MichCon is a public
utility, engaged in the distribution and transmission of natural gas in the
State of Michigan serving over 1.2 million residential, commercial and
industrial customers.
Citizens Gas Fuel Company -- A Michigan corporation organized in 1951
that, with its predecessors, has been in business for more than 135 years.
Citizens is a gas utility that conducts all of its business in the State of
Michigan serving 13,000 residential, commercial and industrial customers.
GAS SERVICES is an integrated energy group with investments in: Exploration
and Production, Gas Gathering and Processing, Gas Storage and Gas Marketing and
Cogeneration.
COMPUTER OPERATIONS SERVICES is a leading provider of computer outsourcing
services in the United States. The Genix Group provides computer operations
management, data processing and related services to approximately 100 corporate
clients.
The mailing address of MCN's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226 and its telephone number is (313) 256-5500.
THE MCN TRUSTS
Each of MCN I and MCN II is a statutory business trust formed under
Delaware law pursuant to (i) a separate declaration of trust (each a
"Declaration") executed by the Company, as sponsor for such trust (the
"Sponsor") and the MCN Trustees (as defined herein) for such trust and (ii) the
filing of a certificate of trust with the Delaware Secretary of State on March
6, 1996. Each MCN Trust exists for the exclusive purposes of (i) issuing the
Preferred Securities and common securities representing undivided beneficial
interests in the assets of such Trust (the "Common Securities" and, together
with the Preferred Securities, the "Trust Securities"), (ii) investing the gross
proceeds of the Trust Securities in the Subordinated Debt Securities and (iii)
engaging in only those other activities necessary or incidental thereto. All of
the Common Securities will be directly or indirectly owned by the Company. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities except that upon an event of default under
the Declaration, the rights of the holders of the Common Securities to payment
in respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. The Company will, directly or indirectly, acquire Common Securities
in an aggregate liquidation amount equal to 3% of the total capital of each MCN
Trust. Each MCN Trust has a term of approximately 25 years, but may earlier
terminate as provided in the Declaration. Each MCN Trust's business and affairs
will be conducted by the trustees (the "MCN Trustees") appointed by the Company,
as the direct or indirect holder of all the Common Securities. The holder of the
Common Securities will be entitled to appoint, remove or replace any of, or
increase or reduce the number of, the MCN Trustees of an MCN Trust. The duties
and obligations of the MCN Trustees shall be governed by the Declaration of such
MCN Trust. A majority of the MCN Trustees (the "Regular Trustees") of each MCN
Trust will be persons who are employees or officers of or affiliated with the
Company. In certain limited circumstances set forth in a
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Prospectus Supplement, the holders of a majority of the Preferred Securities
will be entitled to appoint one additional Regular Trustee, who need not be an
employee or officer of or otherwise affiliated with the Company. One MCN Trustee
of each MCN Trust will be a financial institution which will be unaffiliated
with the Company and which shall act as property trustee and as indenture
trustee for purposes of the Trust Indenture Act of 1939 (the "Trust Indenture
Act"), pursuant to the terms set forth in a Prospectus Supplement (the "Property
Trustee" or the "Institutional Trustee"). In addition, unless the Property
Trustee maintains a principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law, one MCN Trustee of each MCN
Trust will have its principal place of business or reside in the State of
Delaware (the "Delaware Trustee"). The Company will pay all fees and expenses
related to the MCN Trusts and the offering of Trust Securities, the payment of
which will be guaranteed by the Company. The office of the Delaware Trustee for
each MCN Trust in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890. The
principal place of business of each MCN Trust shall be c/o MCN Corporation, 500
Griswold Street, Detroit, Michigan 48226; telephone 1-313-256-5500.
USE OF PROCEEDS
Each MCN Trust will use the proceeds received from the sale of its
Preferred Securities to purchase Subordinated Debt Securities from MCN. Unless
otherwise indicated in a Prospectus Supplement with respect to the proceeds from
the sale of the particular Offered Securities to which such Prospectus
Supplement relates, MCN intends to add the net proceeds from the sale of Offered
Securities to its general funds, to be used for general corporate purposes,
which may include capital expenditures, investment in subsidiaries, working
capital, repayment of debt and other business opportunities.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to fixed charges and preferred stock dividends for the
periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)(2)................. 2.51 2.64 3.04 2.74 2.08
</TABLE>
- -------------------------
(1) MCN has authority to issue up to 25,000,000 shares of preferred stock, no
par value, however, there are currently no shares outstanding and MCN
currently does not have a preferred stock dividend obligation. Therefore,
the Ratio of Earnings to Fixed Charges and Preferred Stock Dividends is
equal to the Ratio of Earnings to Fixed Charges and is not disclosed
separately.
(2) The Ratio of Earnings to Fixed Charges is based on earnings from operations.
"Earnings" consist of the pre-tax income of majority-owned and 50%-owned
companies adjusted to include any income actually received from less than
50% owned companies, plus fixed charges, less interest capitalized during
the period for nonutility companies and less the preferred stock dividend
requirements of MichCon included in fixed charges but not deducted in the
determination of pre-tax income. "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) in the case of MCN, the preferred securities dividend requirements of
subsidiaries (MichCon and MCN Michigan Limited Partnership), increased to
reflect the pre-tax earnings requirement for MichCon.
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DESCRIPTION OF MCN DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series
and will constitute either Senior Debt Securities or Subordinated Debt
Securities. Senior Debt Securities will be issued under an Indenture (the
"Senior Debt Securities Indenture"), between the Company and NBD Bank Michigan
("NBD"), as trustee (the "Senior Debt Securities Trustee"). NBD is a
wholly-owned subsidiary of First Chicago NBD Corporation. The Subordinated Debt
Securities will be issued under an Indenture (the "Subordinated Debt Securities
Indenture") between the Company and NBD as trustee (the "Subordinated Debt
Securities Trustee").
The Senior Debt Securities Indenture and the Subordinated Debt Securities
Indenture are referred to herein individually as an "Indenture" and,
collectively, as the "Indentures," and the Senior Debt Securities Trustee and
the Subordinated Debt Securities Trustee are referred to herein as the
"Trustee."
The following summaries of certain provisions of the Debt Securities and
the Indentures do not purport to be complete and are subject to, and are
qualified in their entirety by express reference to, all the provisions of the
Indentures, including the definitions therein of certain terms. Certain
capitalized terms herein are defined in the Indentures.
GENERAL
The Debt Securities will be unsecured obligations of the Company.
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provide that Debt Securities may
be issued thereunder, from time to time, in one or more series.
Reference is made to the Prospectus Supplement relating to the Debt
Securities being offered (the "Offered Debt Securities") for, among other
things, the following terms thereof: (1) the title of the Offered Debt
Securities; (2) any limit on the aggregate principal amount of the Offered Debt
Securities; (3) the date or dates on which the Offered Debt Securities will
mature; (4) the rate or rates (which may be fixed or variable) per annum at
which the Offered Debt Securities will bear interest or the method by which such
rate or rates shall be determined and the date from which such interest will
accrue or the method by which such date or dates shall be determined; (5) the
dates on which such interest will be payable and the Regular Record Dates for
such Interest Payment Dates; (6) the dates, if any, on which, and the price or
prices at which, the Offered Debt Securities may, pursuant to any mandatory or
optional sinking fund provisions, be redeemed by the Company and other detailed
terms and provisions of such sinking funds; (7) the date, if any, after which,
and the price or prices at which, the Offered Debt Securities may, pursuant to
any optional redemption provisions, be redeemed at the option of the Company or
of the Holder thereof and other detailed terms and provisions of such optional
redemption; (8) the right of the Company, if any, to defer payment of interest
on the Subordinated Debt Securities and the maximum length of any such deferral
period; and (9) any other terms of the Offered Debt Securities (which terms
shall not be inconsistent with the appropriate Indenture). For a description of
the terms of the Offered Debt Securities, reference must be made to both the
Prospectus Supplement relating thereto and to the description of Debt Securities
set forth herein.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of, and any premium or interest on, the Offered Debt Securities
will be payable, and the Offered Debt Securities will be exchangeable and
transfers thereof will be registrable, at the Place of Payment, provided that,
at the option of the Company, payment of interest may be made by check mailed to
the address of the person entitled thereto as it appears in the Security
Register.
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Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued in United States dollars in fully
registered form, without coupons, in denominations of $1,000 or any integral
multiple thereof. No service charge will be made for any transfer or exchange of
the Offered Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
For purposes of the descriptions of both the Senior Debt Securities and the
Subordinated Debt Securities, certain defined terms have the following meanings:
"Indebtedness" of any Person means, without duplication, (i) the principal
of and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capitalized Lease Obligations of such Person; (iii) all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following payment
on the letter of credit); (v) all obligations of the type referred to in clauses
(i) through (iv) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable as
obligor, guarantor or otherwise; and (vi) all obligations of the type referred
to in clauses (i) through (v) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured.
"Significant Subsidiary" means a Subsidiary or Subsidiaries of the Company
possessing assets (including the assets of its own Subsidiaries but without
regard to the Company or any other Subsidiary) having a book value, in the
aggregate, equal to not less than 10% of the book value of the aggregate assets
of the Company and its Subsidiaries calculated on a consolidated basis.
"Capitalized Lease Obligations" means an obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with such
principles.
The Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
principal amount. Special federal income tax, accounting and other
considerations applicable to any such Original Issue Discount Securities will be
described in any Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof as a result of the occurrence of an Event
of Default and the continuation thereof.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities (as such term is defined below) that will
be deposited with, or on behalf of, a Depositary ("Depositary") or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denomination
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or Global
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in registered form, a Global Security may not be registered for
transfer or exchange except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any nominee to a successor Depositary or a nominee of such successor Depositary
and except in the circumstances described in the
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<PAGE> 72
applicable Prospectus Supplement. The term "Global Security", when used with
respect to any series of Debt Securities, means a Debt Security that is executed
by the Company and authenticated and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, which shall be registered in the
name of the Depositary or its nominee and which shall represent, and shall be
denominated in an amount equal to the aggregate principal amount of, all of the
Outstanding Debt Securities of such series or any portion thereof, in either
case having the same terms, including, without limitation, the same original
issue date, date or dates on which principal is due, and interest rate or method
of determining interest.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or, if such Debt Securities are
offered and sold directly by the Company, by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants or
Persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interests in such Global Security by Persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
The foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Securities
represented by such Global Security for all purposes under the Indenture. Unless
otherwise specified in the applicable Prospectus Supplement, owners of
beneficial interests in such Global Security will not be entitled to have Debt
Securities of the series represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of Debt
Securities of such series in certificated form and will not be considered the
Holders thereof for any purposes under the Indenture. Accordingly, each Person
owning a beneficial interest in such Global Security must rely on the procedures
of the Depositary and, if such Person is not a participant, on the procedures of
the participant through which such Person owns its interest, to exercise any
rights of a Holder under the Indenture. The Company understands that under
existing industry practices, if the Company requests any action of Holders or an
owner of a beneficial interest in such Global Security desires to give any
notice or take any action a Holder is entitled to give or take under the
Indenture, the Depositary would authorize the participants to give such notice
or take such action, and participants would authorize beneficial owners owning
through such participants to give such notice or take such action or would
otherwise act upon the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
THE TRUSTEE
NBD is the Trustee under the Senior Debt Securities Indenture and the
Subordinated Debt Securities Indenture. NBD has extended lines of credit to
various subsidiaries of MCN. MCN and various of its subsidiaries maintain bank
accounts and have other customary banking relationships with NBD in the
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ordinary course of business. In addition, various MCN subsidiaries borrow money
from NBD. Mr. Thomas H. Jeffs II, President and Chief Operating Officer of NBD,
serves as a Director of MCN. Mr. Alfred R. Glancy III, Chairman, President and
Chief Executive Officer of MCN, serves as a Director of NBD.
PARTICULAR TERMS OF THE SENIOR DEBT SECURITIES
The following description of the Senior Debt Securities sets forth certain
general terms and provisions of the Senior Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Senior Debt
Securities offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may apply to the Senior Debt Securities so offered will
be described in the Prospectus Supplement relating to such Senior Debt
Securities.
RESTRICTIONS
The Senior Debt Securities Indenture provides that the Company shall not
consolidate with, merge with or into any other corporation (whether or not the
Company shall be the surviving corporation), or sell, assign, transfer or lease
all or substantially all of its properties and assets as an entirety or
substantially as an entirety to any Person or group of affiliated Persons, in
one transaction or a series of related transactions, unless: (1) either the
Company shall be the continuing Person or the Person (if other than the Company)
formed by such consolidation or with which or into which the Company is merged
or the Person (or group of affiliated Persons) to which all or substantially all
the properties and assets of the Company are sold, assigned, transferred or
leased is a corporation (or constitute corporations) organized under the laws of
the United States or any State thereof or the District of Columbia and expressly
assumes, by an indenture supplemental to the Senior Debt Securities Indenture,
all the obligations of the Company under the Senior Debt Securities and the
Senior Debt Securities Indenture, executed and delivered to the Trustee in form
satisfactory to the Trustee; (2) immediately before and after giving effect to
such transaction or series of transactions, no Event of Default, and no Default,
with respect to the Senior Debt Securities shall have occurred and be
continuing; and (3) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indentures comply with the Senior Debt
Securities Indenture.
The Senior Debt Securities Indenture also provides that the Company will
not, nor will it permit any Significant Subsidiary to, create, incur, or suffer
to exist any Lien in, of or on the property of the Company or any of its
Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges
or levies on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith and
by appropriate proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on its
books; (ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books; (iii) Liens arising
out of pledges or deposits under worker's compensation laws, unemployment
insurance, old age pensions, or other social security or retirement benefits, or
similar legislation; (iv) utility easements, building restrictions and such
other encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Company or its Subsidiaries; (v) Liens on the
capital stock, partnership interest, or other evidence of ownership of any
Subsidiary or such Subsidiary's assets that secure project financing for such
Subsidiary; (vi) Liens arising in connection with first mortgage bonds issued by
any Significant Subsidiary pursuant to any first mortgage indenture in effect as
of the date of the Senior Debt Securities Indenture, as such indenture may be
supplemented from time to time; (vii) purchase money liens upon or in property
now owned or hereafter acquired in the ordinary course of business (consistent
with the Company's business practices) to secure (A) the purchase price of such
property or (B) Indebtedness incurred solely for the purpose of financing the
acquisition, construction, or improvement of any such property to be subject to
such liens, or Liens existing on any such property at the time of acquisition,
or extensions, renewals, or replacements of any of the foregoing for the same or
a lesser
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amount; provided that no such lien shall extend to or cover any property other
than the property being acquired, constructed, or improved and replacements,
modifications, and proceeds of such property, and no such extension, renewal, or
replacement shall extend to or cover any property not theretofore subject to the
Lien being extended, renewed, or replaced; (viii) Liens existing on the date
Senior Debt Securities are first issued; and (ix) Liens for no more than 90 days
arising from a transaction involving accounts receivable of the Company
(including the sale of such accounts receivable), where such accounts receivable
arose in the ordinary course of the Company's business.
The Senior Debt Securities Indenture provides that the Company will not,
nor will it permit any Subsidiary to, enter into any arrangement with any lender
or investor (other than the Company or a Subsidiary), or to which such lender or
investor (other than the Company or a Subsidiary) is a party, providing for the
leasing by the Company or such Subsidiary for a period, including renewals, in
excess of three years of any real property located within the United States
which has been owned by the Company or such Subsidiary for more than six months
and which has been or is to be sold or transferred by the Company or such
Subsidiary to such lender or investor or to any person to whom funds have been
or are to be advanced by such lender or investor on the security of such real
property unless either (a) the Company or such Subsidiary could create
Indebtedness secured by a lien consistent with the restrictions set forth in the
foregoing paragraph on the real property to be leased in an amount equal to the
Value of such transaction without equally and ratably securing the Senior Debt
Securities or (b) the Company, within six months after the sale or transfer
shall have been made, applies an amount equal to the greater of (i) the net
proceeds of the sale of the real property leased pursuant to such arrangement or
(ii) the fair market value of the real property so leased to the retirement of
Senior Debt Securities and other obligations of the Company ranking on a parity
with the Senior Debt Securities.
RANKING OF SENIOR DEBT SECURITIES
The Senior Debt Securities will rank pari passu in right of payment with
all other unsecured indebtedness of the Company, except that the Senior Debt
Securities will be senior in right of payment to any subordinated indebtedness
which, by its terms, is subordinate to the Senior Debt Securities.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Senior Debt Securities
Indenture with respect to Senior Debt Securities of any series: (1) failure to
pay interest on any Senior Debt Security of that series when due, continued for
30 days; (2) failure to pay the principal of (or premium, if any, on) any Senior
Debt Security of that series when due and payable at Maturity, upon redemption
or otherwise; (3) failure to observe or perform any other covenant, warranty or
agreement contained in the Senior Debt Securities of that series or in the
Senior Debt Securities Indenture (other than a covenant, agreement or warranty
included in the Senior Debt Securities Indenture solely for the benefit of
Senior Debt Securities other than that series), continued for a period of 60
days after notice has been given to the Company by the Trustee or Holders of at
least 25% in aggregate principal amount of the Outstanding Senior Debt
Securities of that series; (4) failure to pay at final maturity, or acceleration
of, Indebtedness of the Company having an aggregate principal amount of more
than 1% of the Company's consolidated total assets (determined as of its most
recent fiscal year-end), unless cured within 10 days after notice has been given
to the Company by the Trustee or Holders of at least 10% in aggregate principal
amount of the Outstanding Senior Debt Securities of that series; (5) certain
events of bankruptcy, insolvency or reorganization relating to the Company; and
(6) any other Event of Default with respect to Senior Debt Securities of that
series specified in the Prospectus Supplement relating thereto or Supplemental
Indenture under which such series of Senior Debt Securities is issued.
The Senior Debt Securities Indenture provides that the Trustee shall,
within 30 days after the occurrence of any Default or Event of Default with
respect to Senior Debt Securities of any series, give the Holders of Senior Debt
Securities of that series notice of all uncured Defaults or Events of Default
known to it (the term "Default" includes any event which after notice or passage
of time or both would be an Event of Default); provided, however, that, except
in the case of an Event of Default or a Default in payment on any Senior Debt
Securities of any series, the Trustee shall be protected in withholding such
notice if and so long as the board of
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<PAGE> 75
directors, the executive committee or directors or responsible officers of the
Trustee in good faith determine that the withholding of such notice is in the
interest of the Holders of Senior Debt Securities of that series.
If an Event of Default with respect to Senior Debt Securities of any series
(other than due to events of bankruptcy, insolvency or reorganization) occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Outstanding Senior Debt Securities of that series, by
notice in writing to the Company (and to the Trustee if given by the Holders of
at least 25% in aggregate principal amount of the Senior Debt Securities of that
series), may declare the unpaid principal of and accrued interest to the date of
acceleration on all the Outstanding Senior Debt Securities of that series to be
due and payable immediately and, upon any such declaration, the Senior Debt
Securities of that series shall become immediately due and payable.
If an Event of Default occurs due to bankruptcy, insolvency or
reorganization, all unpaid principal of and accrued interest on the Outstanding
Senior Debt Securities of any series will become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder of
any Senior Debt Security of that series.
Any such declaration with respect to Senior Debt Securities of any series
may be annulled and past Events of Default and Defaults (except, unless
theretofore cured, an Event of Default or a Default in payment of principal of
or interest on the Senior Debt Securities of that series) may be waived by the
Holders of a majority of the principal amount of the Outstanding Senior Debt
Securities, upon the conditions provided in the Senior Debt Securities
Indenture.
The Senior Debt Securities Indenture provides that the Company shall
periodically file statements with the Trustee regarding compliance by the
Company with certain of the respective covenants thereof and shall specify any
Event of Default or Defaults with respect to Senior Debt Securities of any
series, in performing such covenants, of which the signers may have knowledge.
MODIFICATION OF SENIOR DEBT SECURITIES INDENTURE; WAIVER
The Senior Debt Securities Indenture may be modified by the Company and the
Trustee without the consent of any Holders with respect to certain matters,
including (i) to cure any ambiguity, defect or inconsistency or to correct or
supplement any provision which may be inconsistent with any other provision of
the Senior Debt Securities Indenture and (ii) to make any change that does not
materially adversely affect the interests of any Holder of Senior Debt
Securities of any series. In addition, under the Senior Debt Securities
Indenture, certain rights and obligations of the Company and the rights of
Holders of the Senior Debt Securities may be modified by the Company and the
Trustee with the written consent of the Holders of at least a majority in
aggregate principal amount of the Outstanding Senior Debt Securities of each
series affected thereby; but no extension of the maturity of any Senior Debt
Securities of any series, reduction in the interest rate or extension of the
time for payment of interest, change in the optional redemption or repurchase
provisions in a manner adverse to any Holder of Senior Debt Securities of any
series, other modification in the terms of payment of the principal of, or
interest on, any Senior Debt Securities of any series, or reduction of the
percentage required for modification, will be effective against any Holder of
any Outstanding Senior Debt Security of any series affected thereby without the
Holder's consent. The Senior Debt Securities Indenture does not limit the
aggregate amount of Senior Debt Securities of the Company which may be issued
thereunder.
The Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities of any series may on behalf of the Holders of all Senior
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain restrictive covenants of the Senior Debt
Securities Indenture. The Holders of not less than a majority in aggregate
principal amount of the Outstanding Senior Debt Securities of any series may on
behalf of the Holders of all Senior Debt Securities of that series waive any
past Event of Default or Default under the Senior Debt Securities Indenture with
respect to that series, except an Event of Default or a Default in the payment
of the principal of, or premium, if any, or any interest on any Senior Debt
Security of that series or in respect of a provision which under the Senior Debt
Securities
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Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding Senior Debt Security of that series affected.
DEFEASANCE
The Company may terminate its substantive obligations in respect of Senior
Debt Securities of any series (except for its obligations to pay the principal
of (and premium, if any, on) and the interest on the Senior Debt Securities of
that series) by (i) depositing with the Trustee, under the terms of an
irrevocable trust agreement, money or U.S. Government Obligations sufficient to
pay all remaining indebtedness on the Senior Debt Securities of that series,
(ii) delivering to the Trustee either an Opinion of Counsel or a ruling directed
to the Trustee from the Internal Revenue Service to the effect that the Holders
of the Senior Debt Securities of that series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and termination
of obligations, and (iii) complying with certain other requirements set forth in
the Senior Debt Securities Indenture.
PARTICULAR TERMS OF THE SUBORDINATED DEBT SECURITIES
The following description of the Subordinated Debt Securities sets forth
the general terms and provisions of the Subordinated Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Subordinated
Debt Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply will be described in the Prospectus
Supplement relating to such Subordinated Debt Securities.
For purposes of the description of the Subordinated Debt Securities,
certain defined terms have the following meanings:
"Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of
the Subordinated Debt Securities Indenture or thereafter incurred or
created: (i) indebtedness of the Company for money borrowed by the Company
(including purchase money obligations with an original maturity in excess
of one year) or evidenced by debentures (other than the Subordinated Debt
Securities), notes, bankers' acceptances or other corporate debt securities
or similar instruments issued by the Company; (ii) obligations with respect
to letters of credit; (iii) indebtedness of the Company constituting a
guarantee of indebtedness of others of the type referred to in the
preceding clauses (i) and (ii); or (iv) renewals, extensions or refundings
of any of the indebtedness referred to in the preceding clauses (i), (ii)
and (iii) unless, in the case of any particular indebtedness, renewal,
extension or refunding, under the express provisions of the instrument
creating or evidencing the same, or pursuant to which the same is
outstanding, such indebtedness or such renewal, extension or refunding
thereof is not superior in right of payment to the Subordinated Debt
Securities.
"Project Finance Indebtedness" means Indebtedness of a Subsidiary
(other than a Utility and other than the Company) secured by a Lien on any
property, acquired, constructed or improved by such Subsidiary after the
date of execution of the Subordinated Debt Securities Indenture which Lien
is created or assumed contemporaneously with, or within 120 days after,
such acquisition or completion of such construction or improvement, or
within six months thereafter pursuant to a firm commitment for financing
arranged with a lender or investor within such 120-day period, to secure or
provide for the payment of all or any part of the purchase price of such
property or the cost of such construction or improvement or on any property
existing at the time of acquisition thereof; provided that such a Lien
shall not apply to any property theretofore owned by any such Subsidiary
other than, in the case of any such construction or improvement, any
theretofore unimproved real property on which the property so constructed
or the improvement is located; and provided further that such Indebtedness,
by its terms, shall limit the recourse of any holder of such Indebtedness
(or trustee on such holder's behalf) in the event of any default in such
Indebtedness to the assets subject to such Liens and the capital stock of
the Subsidiary issuing such Indebtedness. Notwithstanding the foregoing,
Project Finance Indebtedness shall include all Indebtedness that would
constitute Project Finance Indebtedness but for the fact that such
Indebtedness was issued prior to the execution of the Subordinated Debt
Securities Indenture and taking
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<PAGE> 77
into account the fact that the property subject to the Lien may have been
acquired prior to the execution of the Subordinated Debt Securities
Indenture.
RESTRICTIONS
The Subordinated Debt Securities Indenture provides that the Company shall
not consolidate with, merge with or into any other corporation (whether or not
the Company shall be the surviving corporation), or sell, assign, transfer or
lease all or substantially all of its properties and assets as an entirety or
substantially as an entirety to any Person or group of affiliated Persons, in
one transaction or a series of related transactions, unless: (1) either the
Company shall be the continuing Person or the Person (if other than the Company)
formed by such consolidation or with which or into which the Company is merged
or the Person (or group of affiliated Persons) to which all or substantially all
the properties and assets of the Company are sold, assigned, transferred or
leased is a corporation (or constitute corporations) organized under the laws of
the United States or any State thereof or the District of Columbia and expressly
assumes, by indentures supplemental to the Subordinated Debt Securities
Indenture executed and delivered to the Trustee in form satisfactory to the
Trustee, all the obligations of the Company under the Subordinated Debt
Securities and the Subordinated Debt Securities Indenture; (2) immediately
before and after giving effect to such transaction or series of related
transactions or series of transactions, no Event of Default, and no Default,
with respect to the Subordinated Debt Securities shall have occurred and be
continuing; and (3) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or sale, assignment, transfer or lease and such supplemental indentures
comply with the Subordinated Debt Securities Indenture.
The Subordinated Debt Securities Indenture also provides that the Company
will not, nor will it permit any Significant Subsidiary to, create, incur, or
suffer to exist any Lien in, of or on the property of the Company or any of its
Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges
or levies on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith and
by appropriate proceedings and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on its
books; (ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar Liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books; (iii) Liens arising
out of pledges or deposits under worker's compensation laws, unemployment
insurance, old age pensions, or other social security or retirement benefits, or
similar legislation; (iv) utility easements, building restrictions and such
other encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Company or its Subsidiaries; (v) Liens on the
capital stock, partnership interest, or other evidence of ownership of any
Subsidiary or such Subsidiary's assets that secure project financing for such
Subsidiary; (vi) Liens arising in connection with first mortgage bonds issued by
any Significant Subsidiary pursuant to any first mortgage indenture in effect as
of the date of the Subordinated Debt Securities Indenture, as such indenture may
be supplemented from time to time; (vii) purchase money liens upon or in
property now owned or hereafter acquired in the ordinary course of business
(consistent with the Company's business practices) to secure (A) the purchase
price of such property or (B) Indebtedness incurred solely for the purpose of
financing the acquisition, construction, or improvement of any such property to
be subject to such liens, or Liens existing on any such property at the time of
acquisition, or extensions, renewals, or replacements of any of the foregoing
for the same or a lesser amount; provided that no such lien shall extend to or
cover any property other than the property being acquired, constructed, or
improved and replacements, modifications, and proceeds of such property, and no
such extension, renewal, or replacement shall extend to or cover any property
not theretofore subject to the Lien being extended, renewed, or replaced; (viii)
Liens existing on the date Subordinated Debt Securities are first issued; and
(ix) Liens for no more than 90 days arising from a transaction involving
accounts receivable of the Company (including the sale of such accounts
receivable), where such accounts receivable arose in the ordinary course of the
Company's business.
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The Subordinated Debt Securities Indenture provides that the Company will
not, nor will it permit any Subsidiary to, enter into any arrangement with any
lender or investor (other than the Company or a Subsidiary), or to which such
lender or investor (other than the Company or a Subsidiary) is a party,
providing for the leasing by the Company or such Subsidiary for a period,
including renewals, in excess of three years of any real property located within
the United States which has been owned by the Company or such Subsidiary for
more than six months and which has been or is to be sold or transferred by the
Company or such Subsidiary to such lender or investor or to any person to whom
funds have been or are to be advanced by such lender or investor on the security
of such real property unless either (a) the Company or such Subsidiary could
create Indebtedness secured by a lien consistent with the restrictions set forth
in the foregoing paragraph on the real property to be leased in an amount equal
to the Value of such transaction without equally and ratably securing the
Subordinated Debt Securities or (b) the Company, within six months after the
sale or transfer shall have been made, applies an amount equal to the greater of
(i) the net proceeds
of the sale of the real property leased pursuant to such arrangement or (ii) the
fair market value of the real property so leased to the retirement of
Subordinated Debt Securities and other obligations of the Company ranking senior
to or on a parity with the Subordinated Debt Securities.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Subordinated Debt Securities
Indenture with respect to the Subordinated Debt Securities of any series: (1)
failure to pay interest on any Subordinated Debt Securities of that series when
due, continued for 30 days; however, if the Company is permitted by the terms of
the Subordinated Debt Securities of the applicable series to defer the payment
in question, the date on which such payment is due and payable shall be the date
on which the Company is required to make payment following such deferral, if
such deferral has been elected pursuant to the terms of the Subordinated Debt
Securities; (2) failure to pay the principal of (or premium, if any, on) any
Subordinated Debt Securities of that series when due and payable at Maturity,
upon redemption or otherwise; however, if the Company is permitted by the terms
of the Subordinated Debt Securities, of the applicable series to defer the
payment in question, the date on which such payment is due and payable shall be
the date on which the Company is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the
Subordinated Debt Securities; (3) failure to observe or perform any other
covenant, warranty or agreement contained in the Subordinated Debt Securities of
that series or in the Subordinated Debt Securities Indenture (other than a
covenant, agreement or warranty included in the Subordinated Debt Securities
Indenture solely for the benefit of Subordinated Debt Securities of a series
other than that series), continued for a period of 60 days after notice has been
given to the Company by the applicable Trustee or Holders of at least 25% in
aggregate principal amount of the Outstanding Subordinated Debt Securities of
that series; (4) failure to pay at final maturity, or acceleration of,
Indebtedness of the Company, (but excluding Project Finance Indebtedness and
certain other gas and oil reserve-based financing with limited recourse to MCN
as described below), having an aggregate principal amount of more than 1% of the
Company's consolidated total assets (determined as of its most recent fiscal
year-end), unless cured within 10 days after notice has been given to the
Company by the Trustee or Holders of at least 10% in aggregate principal amount
of the Outstanding Subordinated Debt Securities of that series; (5) certain
events of bankruptcy, insolvency or reorganization relating to the Company; and
(6) any other Event of Default with respect to Subordinated Debt Securities of
that series specified in the Prospectus Supplement relating thereto; as noted in
(4) above, it will not be an Event of Default under the Subordinated Debt
Securities Indenture if a default occurs in certain gas and oil reserve-based
financing of Supply Development Group, Inc. ( a Subsidiary of the Company) or
its Subsidiaries if the obligations of MCN and its Subsidiaries with respect to
such Indebtedness (other than Supply Development Group, Inc. and its
Subsidiaries) are limited to (i) payments with respect to Section 29 tax
credits, (ii) payments with respect to certain material contracts of the
borrower (generally limited to gas and oil supply contracts and gas and oil
hedging contracts) and (iii) certain environmental obligations of the borrowers.
As of December 31, 1995, $100,000,000 of such gas and oil reserve-based
Indebtedness was outstanding. From time to time, MCN or its Subsidiaries may
establish additional similar reserve-based credit facilities with respect to
which a default would not result in an Event of Default under the Subordinated
Debt Securities Indenture.
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<PAGE> 79
The Subordinated Debt Securities Indenture provides that the Trustee shall,
within 30 days after the occurrence of any Default or Event of Default with
respect Subordinated Debt Securities of any series, give the Holders of
Subordinated Debt Securities of that series notice of all uncured Defaults or
Events of Default known to it (the term "Default" includes any event which after
notice or passage of time or both would be an Event of Default); provided,
however, that, except in the case of an Event of Default or a Default in payment
on any Subordinated Debt Securities of any series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or directors or responsible officers of the Trustee in
good faith determine that the withholding of such notice is in the interest of
the Holders of Subordinated Debt Securities of that series.
If an Event of Default with respect to Subordinated Debt Securities of any
series (other than due to events of bankruptcy, insolvency or reorganization)
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Subordinated Debt Securities of
that series, by notice in writing to the Company (and to the Trustee if given by
the Holders of at least 25% in aggregate principal amount of the Subordinated
Debt Securities of that series), may declare the unpaid principal of and accrued
interest to the date of acceleration on all the Outstanding Subordinated Debt
Securities of that series to be due and payable immediately and, upon any such
declaration, the Subordinated Debt Securities of that series shall become
immediately due and payable.
If an Event of Default occurs due to bankruptcy, insolvency or
reorganization, all unpaid principal of and accrued interest on the Outstanding
Subordinated Debt Securities of any series will become immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of any Subordinated Debt Security of that series.
Any such declaration with respect to Subordinated Debt Securities of any
series may be annulled and past Events of Default and Defaults (except, unless
theretofore cured, an Event of Default or a Default in payment of principal of
or interest on the Subordinated Debt Securities of that series) may be waived by
the Holders of a majority of the principal amount of the Outstanding
Subordinated Debt Securities of that series, upon the conditions provided in the
Subordinated Debt Securities Indenture.
The Subordinated Debt Securities Indenture provides that the Company shall
periodically file statements with the Trustees regarding compliance by the
Company with certain of the respective covenants thereof and shall specify any
Event of Default or Defaults with respect to Subordinated Debt Securities of any
series, in performing such covenants, of which the signers may have knowledge.
MODIFICATION OF SUBORDINATED DEBT SECURITIES INDENTURE; WAIVER
The Subordinated Debt Securities Indenture may be modified by the Company
and the Trustee without the consent of any Holders with respect to certain
matters, including (i) to cure any ambiguity, defect or inconsistency or to
correct or supplement any provision which may be inconsistent with any other
provision of the Subordinated Debt Securities Indenture and (ii) to make any
change that does not materially adversely affect the interests of any Holder of
Subordinated Debt Securities of any series. In addition, under the Subordinated
Debt Securities Indenture, certain rights and obligations of the Company and the
rights of Holders of the Subordinated Debt Securities may be modified by the
Company and the Trustee with the written consent of the Holders of at least a
majority in aggregate principal amount of the Outstanding Subordinated Debt
Securities of each series affected thereby; but no extension of the maturity of
any Subordinated Debt Securities of any series, reduction in the interest rate
or extension of the time for payment of interest, change in the optional
redemption or repurchase provisions in a manner adverse to any Holder of
Subordinated Debt Securities of any series, other modification in the terms of
payment of the principal of, or interest on, any Subordinated Debt Securities of
any series, or reduction of the percentage required for modification, will be
effective against any Holder of any Outstanding Subordinated Debt Security of
any series affected thereby without the Holder's consent. The Subordinated Debt
Securities Indenture does not limit the aggregate amount of Subordinated Debt
Securities of the Company which may be issued thereunder.
The Holders of a majority in aggregate principal amount of the Outstanding
Subordinated Debt Securities of any series may on behalf of the Holders of all
Subordinated Debt Securities of that series waive,
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<PAGE> 80
insofar as that series is concerned, compliance by the Company with certain
restrictive covenants of the Subordinated Debt Securities Indenture. The Holders
of not less than a majority in aggregate principal amount of the Outstanding
Subordinated Debt Securities of any series may on behalf of the Holders of all
Subordinated Debt Securities of that series waive any past Event of Default or
Default under the Subordinated Debt Securities Indenture with respect to that
series, except an Event of Default or a Default in the payment of the principal
of, or premium, if any, or any interest on any Subordinated Debt Security of
that series or in respect of a provision which under the Subordinated Debt
Securities Indenture cannot be modified or amended without the consent of the
Holder of each Outstanding Subordinated Debt Security of that series affected.
DEFEASANCE
The Company may terminate its substantive obligations in respect of
Subordinated Debt Securities of any series (except for its obligations to pay
the principal of (and premium, if any, on) and the interest on the Subordinated
Debt Securities of that series) by (i) depositing with the Trustee, under the
terms of an irrevocable trust agreement, money or U.S. Government Obligations
sufficient to pay all remaining indebtedness on the Subordinated Debt Securities
of that series, (ii) delivering to the Trustee either an Opinion of Counsel or a
ruling directed to the Trustee from the Internal Revenue Service to the effect
that the Holders of the Subordinated Debt Securities of that series will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and termination of obligations, and (iii) complying with certain
other requirements set forth in the Subordinated Debt Securities Indenture.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company and pari passu
with MCN trade creditors. No payment on account of principal of, premium, if
any, or interest on the Subordinated Debt Securities and no acquisition of, or
payment on account of any sinking fund for, the Subordinated Debt Securities may
be made unless full payment of amounts then due for principal, premium, if any,
and interest then due on all Senior Indebtedness by reason of the maturity
thereof (by lapse of time, acceleration or otherwise) has been made or duly
provided for in cash or in a manner satisfactory to the Holders of such Senior
Indebtedness. In addition, the Subordinated Debt Securities Indenture provides
that if a default has occurred giving the holders of such Senior Indebtedness
the right to accelerate the maturity thereof, or an event has occurred which,
with the giving of notice, or lapse of time, or both, would constitute such an
event of default, then unless and until such event shall have been cured or
waived or shall have ceased to exist, no payment on account of principal,
premium, if any, or interest on the Subordinated Debt Securities and no
acquisition of, or payment on account of a sinking fund for, the Subordinated
Debt Securities may be made. The Company shall give prompt written notice to the
Trustee of any default under any Senior Indebtedness or under any agreement
pursuant to which Senior Indebtedness may have been issued. The Subordinated
Debt Securities Indenture provisions described in this paragraph, however, do
not prevent the Company from making a sinking fund payment with Subordinated
Debt Securities acquired prior to the maturity of Senior Indebtedness or, in the
case of default, prior to such default and notice thereof. Upon any distribution
of its assets in connection with any dissolution, liquidation or reorganization
of the Company, all Senior Indebtedness must be paid in full before the Holders
of the Subordinated Debt Securities are entitled to any payments whatsoever. As
a result of these subordinated provisions, in the event of the Company's
insolvency, holders of the Subordinated Debt Securities may recover ratably less
than senior creditors of the Company.
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DESCRIPTION OF MCN CAPITAL STOCK
The following is a brief description of certain provisions relating to MCN
capital stock:
MCN has authority to issue up to 125,000,000 shares of capital stock, which
are divided into two classes as follows: 25,000,000 shares of MCN Preferred
Stock, no par value ("MCN Preferred Stock") and 100,000,000 shares of MCN Common
Stock, par value $.01 per share. On February 26, 1996, there were no shares of
MCN Preferred Stock outstanding and 66,776,428 shares of MCN Common Stock
outstanding.
MCN COMMON STOCK
Voting Rights: The holders of MCN Common Stock are entitled to one vote for
each share on all matters voted upon by MCN's shareholders and, subject to any
voting rights of outstanding MCN Preferred Stock, the holders of such shares
possess all voting power.
Any action required or permitted to be taken by any shareholder of MCN must
be effected at a duly called annual or special meeting of such shareholders and
may not be effected by any consent in writing by such shareholders. Except as
otherwise permitted by law, special shareholder meetings of MCN may be called
only pursuant to a resolution approved by the Board.
The holders of MCN Common Stock have noncumulative voting rights, which
means that the holders of more than 50% of the shares of MCN Common Stock voting
for the election of directors can elect 100% of the directors standing for
election at any meeting if they choose to do so and, in such event, the holders
of the remaining shares voting for the election of directors would not be able
to elect any person or persons to the Board at that meeting.
Dividend Rights: The holders of MCN Common Stock are entitled to such
dividends as may be declared from time to time by the Board from funds legally
available therefor subject to: (1) preferential dividend rights, if any, of any
series of MCN Preferred Stock then outstanding; and (2) applicable requirements,
if any, with respect to the setting aside of sums for purchase, retirement or
sinking funds for MCN Preferred Stock.
Liquidation Rights: In the event of liquidation, the holders of MCN Common
Stock will be entitled to receive pro rata any assets distributable to
shareholders in respect of shares held by them, subject to the rights of any
holders of MCN Preferred Stock.
No Preemptive Rights: No holder of MCN Common Stock has any right to
subscribe to any additional securities which may be issued by MCN.
Redemption and Conversion Provisions: MCN Common Stock does not have any
redemption provisions or conversion rights.
Preferred Share Purchase Rights: MCN Common Stock currently trades with
Preferred Share Purchase Rights. The Rights, which cannot be traded separately
from MCN Common Stock, are intended to protect shareholders in the event of an
unsolicited attempt to acquire MCN and become exercisable upon the occurrence of
certain triggering events. Triggering events include acquisition by a person or
group of beneficial ownership of 20% or more of MCN's Common Stock. The Rights
could also have the effect of delaying, deferring or preventing a takeover or
change in control of MCN that has not been approved by the Board of Directors.
Transfer Agent: The transfer agent and registrar for MCN Common Stock is
First Chicago Trust Company of New York, 525 Washington Boulevard, Jersey City,
New Jersey 07310.
PRICE RANGE OF MCN COMMON STOCK AND COMMON STOCK DIVIDENDS
MCN Common Stock began trading on the NYSE on January 4, 1989, following
the effective date of the restructuring of MichCon and subsequent formation of
MCN as its holding company. The high and low sales
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<PAGE> 82
prices of the Common Stock of MCN, as reported on the NYSE Composite Tape, and
the dividends declared on the Common Stock, have been as follows:
<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH* LOW* PAID PER SHARE*
----- ---- ---------------
<S> <C> <C> <C>
1994
First Quarter................................................ $20 $16 7/8 $ .2150
Second Quarter............................................... 20 1/8 17 5/8 .2150
Third Quarter................................................ 20 1/4 17 1/4 .2150
Fourth Quarter............................................... 19 1/16 17 1/8 .2225
1995
First Quarter................................................ 18 5/8 16 3/8 .2225
Second Quarter............................................... 19 7/8 18 .2225
Third Quarter................................................ 20 17 7/8 .2225
Fourth Quarter............................................... 23 1/2 19 3/8 .2325
1996
First Quarter (through March 1, 1996)........................ 25 1/2 21 5/8 .2325
</TABLE>
- -------------------------
* Adjusted for a 2:1 stock split in November 1994.
The closing price of MCN Common Stock on March 1, 1996 was $24.50 per
share. The book value of the Company's Common Stock on December 31, 1995 was
$10.02 per share.
The timing and amount of future cash dividends will depend on the financial
condition of MCN, the income from its subsidiaries, internal cash requirements
and other factors deemed relevant by MCN's Board of Directors.
MCN sponsors a dividend reinvestment and stock purchase plan under which
holders of record of MCN Common Stock may purchase a limited amount of MCN
Common Stock without paying brokerage fees and other expenses. Under this plan,
the MCN Common Stock may be purchased in the open market at prevailing prices or
purchased from MCN at the average of the high and low sales prices on the NYSE
for the trading day immediately preceding the purchase.
MCN PREFERRED STOCK
The Board of Directors of MCN is authorized, without further action by the
shareholders of MCN, to issue up to 25,000,000 shares of MCN Preferred Stock,
without par value, in one or more series, from time to time, with such voting
powers, full or limited, or without voting powers, and with such designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as may be provided in a
resolution or resolutions adopted by the Board of Directors. The authority of
the Board of Directors includes, but is not limited to, the determination or
fixing of the following with respect to shares of such class or any series
thereof: (i) the number of shares and designation; (ii) the dividend rate and
whether the dividends are to be cumulative; (iii) whether shares are to be
redeemable and, if so, the terms and provisions applying; (iv) whether the
shares are subject to a purchase, retirement or sinking fund and, if so, the
terms and provisions applying; (v) whether shares shall be convertible and, if
so, the terms and provisions applying; (vi) what voting rights are to apply, if
any, not to exceed one vote per share; (vii) the rights to which the holders of
shares are entitled upon voluntary or involuntary liquidation or dissolution;
and (viii) what restrictions are to apply, if any, on the issue or reissue of
any additional MCN Preferred Stock. If MCN Preferred Stock of a class were to be
issued, it would be preferred to the MCN Common Stock with respect to dividends
and other matters and might have the effect of making more difficult any change
in control of MCN.
Management cannot currently foresee whether or when MCN might issue any
shares of MCN Preferred Stock.
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<PAGE> 83
OTHER PROVISIONS
The Articles of Incorporation of MCN provide for a classified Board of
Directors; the removal of directors by a two-thirds vote of shareholders (but
only for cause) or by vote of two-thirds of the other directors (with or without
cause); procedures for nomination by shareholders of candidates for election as
a director; director consideration of other constituencies when evaluating a
business combination; the prohibition of shareholder action by written consent;
supermajority (two-thirds) shareholder vote to amend or repeal the foregoing
provisions; and limitations on the personal liability of directors. These
provisions are generally intended to enhance the likelihood of continuity and
stability in the composition of the Board of Directors and ensure the careful
consideration of proposed business combinations and any appropriate alternatives
for MCN's stockholders. Such provisions may have the effect of making more
difficult or discouraging a proxy contest, or delaying, deferring or preventing
a future takeover or change in control of MCN.
DESCRIPTION OF THE MCN TRUST PREFERRED SECURITIES
Each MCN Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each MCN Trust authorizes the Regular Trustees of such MCN
Trust to issue on behalf of such MCN Trust one series of Preferred Securities.
The Declaration will be qualified as an indenture under the Trust Indenture Act.
The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration or made part of the Declaration by the Trust Indenture Act, and
which will mirror the terms of the Subordinated Debt Securities held by the MCN
Trust and as described in the Prospectus Supplement related thereto. Reference
is made to the Prospectus Supplement relating to the Preferred Securities of the
Company for specific terms, including (i) the distinctive designation of such
Preferred Securities; (ii) the number of Preferred Securities issued by such MCN
Trust; (iii) the annual distribution rate (or method of determining such rate)
for Preferred Securities issued by such MCN Trust and the date or dates upon
which such distributions shall be payable; provided, however, that distributions
on such Preferred Securities shall be payable on a quarterly basis to holders of
such Preferred Securities as of a record date in each quarter during which such
Preferred Securities are outstanding; (iv) whether distributions on Preferred
Securities issued by such MCN Trust shall be cumulative, and, in the case of
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities issued by such MCN Trust shall be cumulative; (v) the
amount or amounts which shall be paid out of the assets of such MCN Trust to the
holders of Preferred Securities of such MCN Trust upon voluntary or involuntary
dissolution, winding-up or termination of such MCN Trust; (vi) the obligation,
if any, of such MCN Trust to purchase or redeem Preferred Securities issued by
such MCN Trust and the price or prices at which, the period or periods within
which, and the terms and conditions upon which, Preferred Securities issued by
such MCN Trust shall be purchased or redeemed, in whole or in part, pursuant to
such obligation; (vii) the voting rights, if any, of Preferred Securities issued
by such MCN Trust in addition to those required by law, including the number of
votes per Preferred Security and any requirement for the approval by the holders
of Preferred Securities, or of Preferred Securities issued by one or more MCN
Trusts, or of both, as a condition to specified action or amendments to the
Declaration of such MCN Trust; (viii) the terms and conditions, if any, upon
which the Subordinated Debt Securities may be distributed to holders of
Preferred Securities; (ix) if applicable, any securities exchange upon which the
Preferred Securities shall be listed; and (x) any other relevant rights,
preferences, privileges, limitations or restrictions of Preferred Securities
issued by such MCN Trust not inconsistent with the Declaration of such MCN Trust
or with applicable law. All Preferred Securities offered hereby will be
guaranteed by the Company to the extent set forth below under "Description of
the Preferred Securities Guarantees." Any United States federal income tax
considerations applicable to any offering of Preferred Securities will be
described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each MCN Trust
will issue one series of Common Securities. The Declaration of each MCN Trust
authorizes the Regular Trustees of such trust to issue on behalf of such MCN
Trust one series of Common Securities having such terms including distributions,
redemption, voting, liquidation rights or such restrictions as shall be set
forth therein. The terms
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<PAGE> 84
of the Common Securities issued by an MCN Trust will be substantially identical
to the terms of the Preferred Securities issued by such trust and the Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Preferred Securities except that, upon an event of default under the
Declaration, the rights of the holders of the Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and otherwise
will be subordinated to the rights of the holders of the Preferred Securities.
Except in certain limited circumstances, the Common Securities will also carry
the right to vote to appoint, remove or replace any of the MCN Trustees of an
MCN Trust. All of the Common Securities of each MCN Trust will be directly or
indirectly owned by the Company.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by MCN for the
benefit of the holders from time to time of Preferred Securities. Each Preferred
Securities Guarantee will be qualified as an indenture under the Trust Indenture
Act. Wilmington Trust Company will act as indenture trustee under each Preferred
Securities Guarantee (the "Preferred Guarantee Trustee"). The terms of each
Preferred Securities Guarantee will be those set forth in such Preferred
Securities Guarantee and those made part of such Preferred Securities Guarantee
by the Trust Indenture Act. The following summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the form of Preferred Securities Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, and the Trust Indenture Act. Each Preferred Securities
Guarantee will be held by the Preferred Guarantee Trustee for the benefit of the
holders of the Preferred Securities of the applicable MCN Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities issued by an MCN Trust, the
Guarantee Payments (as defined herein)(except to the extent paid by such MCN
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such MCN Trust may have or assert. The following payments or
distributions with respect to Preferred Securities issued by an MCN Trust to the
extent not paid by such MCN Trust (the "Guarantee Payments"), will be subject to
the Preferred Securities Guarantee thereon (without duplication): (i) any
accrued and unpaid distributions which are required to be paid on such Preferred
Securities, to the extent such MCN Trust shall have funds available therefor;
(ii) the redemption price (the "Redemption Price") and all accrued and unpaid
distributions to the date of redemption to the extent such MCN Trust has funds
available therefor with respect to any Preferred Securities called for
redemption by such MCN Trust and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such MCN Trust (other than in
connection with the distribution of Subordinated Debt Securities to the holders
of Preferred Securities or the redemption of all of the Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment, to the
extent such MCN Trust has funds available therefor and (b) the amount of assets
of such MCN Trust remaining available for distribution to holders of such
Preferred Securities in liquidation of such MCN Trust. The Company's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of Preferred Securities or by causing the
applicable MCN Trust to pay such amounts to such holders.
Each Preferred Securities Guarantee will be a guarantee with respect to the
Preferred Securities issued by the applicable MCN Trust, but will not apply to
any payment of distributions except to the extent such MCN Trust shall have
funds available therefor. If the Company does not make interest payments on the
Subordinated Debt Securities purchased by an MCN Trust, such MCN Trust will not
pay distributions on the Preferred Securities issued by such MCN Trust and will
not have funds available therefor. See "Description of the MCN Debt Securities
- -- Particular Terms of the Subordinated Debt Securities." The Preferred
Securities Guarantee, when taken together with MCN's obligations under the
Subordinated Debt Securities, the Subordinated Debt Securities Indenture, and
the Declaration will provide a full and unconditional guarantee on a
subordinated basis by the Company of payments due on the Preferred Securities.
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<PAGE> 85
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the MCN Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Preferred Securities Guarantee, except that upon an event of default under the
Subordinated Debt Securities Indenture, holders of Preferred Securities shall
have priority over holders of Common Securities with respect to distributions
and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In each Preferred Securities Guarantee, the Company will covenant that, so
long as any Preferred Securities issued by the applicable MCN Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Preferred Securities Guarantee or the Declaration of
such MCN Trust, then (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of MCN Common Stock in connection with the
satisfaction by MCN of its obligations under any employee benefit plans or the
satisfaction by MCN of its obligations pursuant to any contract or security
requiring MCN to purchase shares of MCN Common Stock, (ii) as a result of a
reclassification of MCN capital stock or the exchange or conversion of one class
or series of MCN's capital stock for another class or series of MCN capital
stock or, (iii) the purchase of fractional interests in shares of MCN's capital
stock pursuant to the conversion or exchange provisions of such MCN capital
stock or the security being converted or exchanged), (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company which rank pari passu with or junior to such Subordinated Debt
Securities and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to a Preferred Securities
Guarantee).
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities issued by the applicable MCN Trust. The manner
of obtaining any such approval of holders of such Preferred Securities will be
as set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the Preferred Securities of the
applicable MCN Trust then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable MCN Trust (a) upon full payment of the
Redemption Price of all Preferred Securities of such MCN Trust, (b) upon
distribution of the Subordinated Debt Securities held by such MCN Trust to the
holders of the Preferred Securities of such MCN Trust or (c) upon full payment
of the amounts payable in accordance with the Declaration of such MCN Trust upon
liquidation of such MCN Trust. Each Preferred Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of Preferred Securities issued by the applicable MCN Trust must restore
payment of any sums paid under such Preferred Securities or such Preferred
Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
to which such Preferred Securities Guarantee relates have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Preferred Guarantee Trustee in respect of the Preferred Securities
Guarantee
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<PAGE> 86
or to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities Guarantee. If the Preferred
Guarantee Trustee fails to enforce such Preferred Securities Guarantee, any
holder of Preferred Securities to which such Preferred Securities Guarantee
relates may institute a legal proceeding directly against the Company to enforce
such holder's rights under such Preferred Securities Guarantee, without first
instituting a legal proceeding against the relevant MCN Trust, the Preferred
Guarantee Trustee or any other person or entity. The Company waives any right or
remedy to require that any action be brought first against such MCN Trust or any
other person or entity before proceeding directly against the Company.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Preferred Securities Guarantees will constitute unsecured obligations
of the Company and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Company, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company and with
any guarantee now or hereafter entered into by MCN in respect of any preferred
or preference stock of any affiliate of the Company; and (iii) senior to the
Company's common stock. The terms of the Preferred Securities provide that each
holder of Preferred Securities issued by the applicable MCN Trust by acceptance
thereof agrees to the subordination provisions and other terms of the Preferred
Securities Guarantee relating thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby; but the foregoing shall not relieve the Preferred Guarantee Trustee,
upon the occurrence of an event of default under such Preferred Securities
Guarantee, from exercising the rights and powers vested in it by such Preferred
Securities Guarantee.
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
MCN may issue Stock Purchase Contracts, including contracts obligating
holders to purchase from the Company, and the Company to sell to the holders, a
specified number of shares of Common Stock at a future date or dates. The price
per share of Common Stock may be fixed at the time the Stock Purchase Contracts
are issued or may be determined by reference to a specific formula set forth in
the Stock Purchase Contracts. The Stock Purchase Contracts may be issued
separately or as a part of units ("Stock Purchase Units") consisting of a Stock
Purchase Contract and Debt Securities or debt obligations of third parties,
including U.S. Treasury securities, securing the holders' obligations to
purchase the Common Stock under the Purchase Contracts. The Stock Purchase
Contracts may require MCN to make periodic payments to the holders of the Stock
Purchase Units or visa versa, and such payments may be unsecured or prefunded on
some basis. The Stock Purchase Contracts may require holders to secure their
obligations thereunder in a specified manner.
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<PAGE> 87
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will not purport to be complete and will be qualified in its entirety
by reference to the Stock Purchase Contracts, and, if applicable, collateral
arrangements and depositary arrangements, relating to such Stock Purchase
Contracts or Stock Purchase Units.
PLAN OF DISTRIBUTION
MCN and/or any MCN Trust may sell the Offered Securities (i) to or through
underwriters or dealers; (ii) directly to purchasers; or (iii) through agents.
The Prospectus Supplement with respect to the Offered Securities will set forth
the terms of the offering of the Offered Securities, including the name or names
of any underwriters, dealers or agents; the purchase price of the Offered
Securities and the proceeds to MCN and/or an MCN Trust from such sale; any
underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation; any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
and any securities exchange on which such Offered Securities may be listed. Any
initial public offering price, discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
If dealers are utilized in the sale of Offered Securities, MCN and/or the
applicable MCN Trust will sell such Offered Securities to the dealers as
principals. The dealers may then resell such Offered Securities to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
The Offered Securities may be sold directly by MCN and/or an MCN Trust or
through agents designated by MCN and/or such MCN Trust from time to time. Any
agent involved in the offer or sale of the Offered Securities in respect to
which this Prospectus is delivered will be named, and any commissions payable by
MCN and/or the applicable MCN Trust to such agent will be set forth, in the
Prospectus Supplement relating thereto. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
The Offered Securities may be sold directly by MCN and/or an MCN Trust to
institutional investors or others, who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, MCN and/or the applicable MCN
Trust will authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase Offered Securities from MCN and/or
such MCN Trust at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject only
to those conditions set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Agents, dealers and underwriters may be entitled under agreements with MCN
and/or an MCN Trust to indemnification by MCN and/or the applicable MCN Trust
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which such agents, dealers or
23
<PAGE> 88
underwriters may be required to make in respect thereof. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for MCN and/or an MCN Trust in the ordinary course of business.
Each series of Offered Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Offered
Securities are sold for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice.The Offered Securities
may or may not be listed on a national securities exchange. No assurance can be
given that there will be a market for the Offered Securities.
VALIDITY OF SECURITIES
The validity of the Offered Securities of MCN will be passed upon for MCN
by Daniel L. Schiffer, Esq., Senior Vice President, General Counsel and
Secretary of MCN Corporation, and for the underwriters by LeBoeuf, Lamb, Greene
and MacRae, L.L.P. a partnership including professional corporations, New York,
New York. Mr. Schiffer is a full-time employee and officer of MCN and owns
24,491 shares of MCN Common Stock as of February 26, 1996. Certain matters of
Delaware law relating to the validity of the Preferred Securities will be passed
upon on behalf of the MCN Trusts by Skadden, Arps, Slate, Meagher & Flom,
special Delaware counsel to the MCN Trusts. Certain United States federal income
taxation matters will be passed upon for MCN and the MCN Trusts by Skadden,
Arps, Slate, Meagher & Flom, special tax counsel to MCN and the MCN Trusts.
Skadden, Arps, Slate, Meagher & Flom has represented certain of the Underwriters
in various legal matters from time to time. LeBoeuf, Lamb, Greene & MacRae,
L.L.P. from time to time renders legal services to the Company.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 have been audited by
DELOITTE & TOUCHE LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
MCN's Annual Report on Form 10-K for the year ended December 31, 1995,
includes various oil and gas reserve information summarized from reports
prepared by the independent petroleum consultants Ryder Scott Company; Miller
and Lents, Ltd.; Lee Keeling & Associates, Inc. and S.A. Holditch & Associates,
Inc. This reserve information and related schedules have been incorporated
herein by reference in reliance upon such reports given upon the authority of
said firms as experts in oil and gas reserve estimation.
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<PAGE> 89
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
SEC Registration Fee............................................... $104,408
NYSE Listing Fee................................................... *
Printing and Engraving............................................. *
Rating Agency Fee.................................................. *
Accounting Fees.................................................... *
Legal Fees......................................................... *
Blue Sky Fees...................................................... *
Transfer Agent's Fees.............................................. *
Trustee's Fees..................................................... *
Miscellaneous...................................................... *
--------
Total.............................................................. $ *
========
</TABLE>
- -------------------------
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") contain detailed provisions concerning the indemnification of directors
and officers against judgments, penalties, fines and amounts paid in settlement
of litigation.
Article VI, Section 6.1 of the By-Laws of MCN provides that MCN shall
indemnify its officers, directors, employees, agents and other persons to the
fullest extent of the MBCA.
Article NINTH of MCN's Articles of Incorporation provides that a director
of MCN shall not be personally liable to MCN or its shareholders for monetary
damages for breach of fiduciary duty as a director, except for liability for (i)
any breach of the director's duty of loyalty to MCN or its shareholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) a violation of Section 551(1) of the MBCA, or
(iv) any transaction from which the director derived an improper personal
benefit. If the MBCA is amended after the date of MCN's Articles of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of MCN shall
be eliminated or limited to the fullest extent permitted by the MBCA, as so
amended.
MCN has entered into indemnification contracts with each officer and
director of MCN, and certain officers of its subsidiaries, that contain
provisions essentially similar to the provisions of the MBCA and MCN's Articles
of Incorporation referred to above. In addition, MCN maintains directors' and
officers' liability insurance which covers certain liabilities arising from the
performance of their responsibilities as directors and officers.
The Declaration of each MCN Trust provides that no Institutional Trustee or
any of its Affiliates, Delaware Trustee or any of its Affiliates, or officer,
director, shareholder, member, partner, employee, representative or agent of the
Institutional Trustee or the Delaware Trustee (each a "Fiduciary Indemnified
Person"), and no Regular Trustee, Affiliate of any Regular Trustee, Affiliate of
any Regular Trustee, or any officer, director, shareholder, member, partner,
employee, representative or agent of any Regular Trustee, or any employee or
agent of the MCN Trust or its Affiliates (each a "Company Indemnified Person")
shall be liable, responsible or accountable in damages or otherwise to such
Trust or any officer, director, shareholder, partner, member, representative,
employee or agent of the MCN Trust or its Affiliates for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Fiduciary Indemnified Person or
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Company Indemnified Person in good faith on behalf of such MCN Trust and in a
manner such Fiduciary Indemnified Person or Company Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Fiduciary Indemnified Person or Company Indemnified Person by such Declaration
or by law, except that a Fiduciary Indemnified Person or Company Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Fiduciary Indemnified Person's or Company Indemnified Person's gross
negligence (or, in the case of a Fiduciary Indemnified Person, negligence) or
willful misconduct with respect to such acts or omissions.
The Declaration of each MCN Trust also provides that to the full extent
permitted by law, MCN shall indemnify any Company Indemnified Person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil criminal, administrative or
investigative (other than an action by or in the right of the Trust), by reason
of the fact that he is a was a Company Indemnified Person, against expenses
(including attorneys' fees), judgments, fines and any amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The Declaration of each MCN Trust also provides that to
the full extent permitted by law, the Company shall indemnify any Company
Indemnified person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor by reason of the fact that he is or was
a Company Indemnified Person against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matters to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonable entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper. The Declaration of each MCN Trust further
provides that expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in the immediately
preceding two sentences shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by MCN as
authorized in the Declaration. The directors and officers of MCN and the Regular
Trustees are covered by insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, which might be incurred by them in such capacities and against which they
cannot be indemnified by MCN or the MCN Trusts.
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<PAGE> 91
ITEM 16. EXHIBITS.
Exhibits identified in parentheses below are on file with the SEC and are
incorporated by reference to such previous filings.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------------------------------------
<C> <S>
1-1 Form of Underwriting Agreement with respect to the MCN Senior Debt Securities (to be
filed under subsequent Form 8-K).
1-2 Form of Underwriting Agreement with respect to the MCN Subordinated Debt Securities
(to be filed under subsequent Form 8-K).
1-3 Form of Underwriting Agreement with respect to MCN Common Stock (to be filed under
subsequent Form 8-K).
1-4 Form of Underwriting Agreement with respect to the MCN PRIDES (to be filed under
subsequent Form 8-K).
1-5 Form of Underwriting Agreement for Offering of Preferred Securities (to be filed
under subsequent Form 8-K).
4-1 Articles of Incorporation of MCN Corporation (Exhibit 3-1 to MCN's March 31, 1994
Form 10-Q).
4-2 By-Laws of MCN Corporation, as amended (Exhibit 3-2 to MCN's March 31, 1993 Form
10-Q).
4-3 Description of MCN's Preferred Share Purchase Rights (Form 8-A dated December 28,
1989).
4-4 Senior Debt Securities Indenture between MCN Corp. and NBD Bank, N.A., as Trustee.
(Exhibit 4-4 to MCN's September 29, 1994 Form S-3 Registration Statement).
4-5 Subordinated Debt Securities Indenture between MCN Corp. and NBD Bank, N.A., as
Trustee. (Exhibit 4-5 to MCN's September 29, 1994 Form S-3 Registration Statement).
4-6 Form of Preferred Security (included in Exhibits 4-15 and 4-16).
4-7 Form of Junior Subordinated Debenture (included in Exhibit 4-17).**
4-8 Form of Guarantee Agreement with respect to Preferred Securities.*
4-9 Form of Purchase Contract Agreement, between MCN Corporation and The First National
Bank of Chicago, as Purchase Contract Agent (including as Exhibit A the form of the
Security Certificate).**
4-10 Form of Pledge Agreement, among MCN Corporation, Chemical Bank, as Collateral Agent
and The First National Bank of Chicago, as Purchase Contract Agent.**
4-11 Certificate of Trust of MCN Financing I.*
4-12 Certificate of Trust of MCN Financing II.*
4-13 Declaration of Trust of MCN Financing I.*
4-14 Declaration of Trust of MCN Financing II.*
4-15 Form of Amended and Restated Declaration of Trust of MCN Financing I.*
4-16 Form of Amended and Restated Declaration of Trust of MCN Financing II.*
4-17 Form of Supplemental Indenture to Indenture to be used in connection with the
issuance of Junior Subordinated Debentures.**
5-1 Opinion of Skadden, Arps, Slate, Meagher & Flom regarding the validity of certain of
the Offered Securities.*
5-2 Opinion of Daniel L. Schiffer, Senior Vice President, General Counsel and Secretary
for MCN Corporation regarding the validity of certain of the Offered Securities.*
8-1 Tax Opinion of Skadden, Arps, Slate, Meagher & Flom.*
12-1 Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed
Charges and Preferred Stock Dividends. (Exhibit 12.1 to MCN's December 31, 1995,
Form 10-K).
23-1 Independent Auditors' Consent -- Deloitte & Touche LLP.*
23-2 Consent of S.A. Holditch & Associates, Inc.*
23-3 Consent of Lee Keeling & Associates, Inc.*
23-4 Consent of Ryder Scott Company.*
23-5 Consent of Miller and Lents, Ltd.*
23-6 Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibits 5-1 and 8-1).*
</TABLE>
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<PAGE> 92
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ------------------------------------------------------------------------------------
<C> <S>
23-7 Consent of Daniel L. Schiffer, Senior Vice President, General Counsel and Secretary
for MCN Corporation (included in Exhibit 5-2).*
24-1 Powers of Attorney for MCN Corporation.*
24-2 Board Resolution authorizing issuance of the Offered Securities.*
25-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, NBD
Bank, N.A., as Trustee under the Senior Debt Indenture.*
25-2 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of NBD
Bank, N.A., as Trustee under the Subordinated Debt Securities Indenture.*
25-3 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Wilmington Trust Company as Trustee of the Preferred Securities Guarantee of MCN for
the benefit of the holders of the Preferred Securities of MCN Financing I.**
25-4 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Wilmington Trust Company as Trustee of the Preferred Securities Guarantee of MCN for
the benefit of the holders of Preferred Securities of MCN Financing II.**
25-5 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Wilmington Trust Company as Trustee under the Amended and Restated Declaration of
Trust of MCN Financing I.**
25-6 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Wilmington Trust Company as Trustee under the Amended and Restated Declaration of
Trust of MCN Financing II.**
</TABLE>
- -------------------------
* Indicates document filed herewith.
** To be filed by amendment.
References are to MCN (File No. 1-10070) for documents incorporated by
reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by MCN pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15
II-4
<PAGE> 93
above, or otherwise, the Registrants have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrants will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 94
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, MCN Financing I
and MCN Financing II certify that they have reasonable grounds to believe that
they meet all of the requirements for filing on Form S-3 and that they have duly
caused this Registration Statement or amendment thereto to be signed on their
behalf by the undersigned, thereunto duly authorized, in the City of Detroit and
State of Michigan on March 6, 1996.
MCN FINANCING I
By /s/ DANIEL L. SCHIFFER
--------------------------------------
Daniel L. Schiffer, Trustee
By /s/ SEBASTIAN COPPOLA
--------------------------------------
Sebastian Coppola, Trustee
MCN FINANCING II
By /s/ DANIEL L. SCHIFFER
--------------------------------------
Daniel L. Schiffer, Trustee
By /s/ SEBASTIAN COPPOLA
--------------------------------------
Sebastian Coppola, Trustee
II-6
<PAGE> 95
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
Certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Detroit, State of Michigan, on March 6, 1996.
MCN CORPORATION
(Registrant)
By: /s/ PATRICK ZURLINDEN
--------------------------------------
PATRICK ZURLINDEN
Vice President, Controller and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities with MCN Corporation and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ----------------------------- ------------------
<C> <S> <C>
* Chairman, President, Chief March 6, 1996
- ------------------------------------- Executive Officer and
Alfred R. Glancy III Director
* Vice Chairman, Chief March 6, 1996
- ------------------------------------- Financial Officer and
William K. McCrackin Director
/s/ PATRICK ZURLINDEN Vice President, Controller March 6, 1996
- ------------------------------------- and Chief Accounting Officer
Patrick Zurlinden
* Director March 6, 1996
- -------------------------------------
Stephen E. Ewing
* Director March 6, 1996
- -------------------------------------
Roger Fridholm
* Director March 6, 1996
- -------------------------------------
Frank M. Hennessey
* Director March 6, 1996
- -------------------------------------
Thomas H. Jeffs II
* Director March 6, 1996
- -------------------------------------
Arthur L. Johnson
* Director March 6, 1996
- -------------------------------------
Dale A. Johnson
* Director March 6, 1996
- -------------------------------------
Helen O. Petrauskas
* Director March 6, 1996
- -------------------------------------
Howard F. Sims
*By:
/s/ PATRICK ZURLINDEN
- -------------------------------------
Patrick Zurlinden
Attorney-in-fact
</TABLE>
II-7
<PAGE> 96
INDEX TO EXHIBITS
Exhibits identified in parentheses below are on file with the SEC and are
incorporated by reference to such previous filings.
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGES
- ------- ------------------------------------------------------------------------- ------------
<S> <C>
1-1 Form of Underwriting Agreement with respect to the MCN Senior Debt
Securities (to be filed under subsequent Form 8-K).
1-2 Form of Underwriting Agreement with respect to the MCN Subordinated Debt
Securities (to be filed under subsequent Form 8-K).
1-3 Form of Underwriting Agreement with respect to MCN Common Stock (to be
filed under subsequent Form 8-K).
1-4 Form of Underwriting Agreement with respect to the MCN PRIDES (to be
filed under subsequent Form 8-K).
1-5 Form of Underwriting Agreement for Offering of Preferred Securities (to
be filed under subsequent Form 8-K).
4-1 Articles of Incorporation of MCN Corporation (Exhibit 3-1 to MCN's March
31, 1994 Form 10-Q).
4-2 By-Laws of MCN Corporation, as amended (Exhibit 3-2 to MCN's March 31,
1993 Form 10-Q).
4-3 Description of MCN's Preferred Share Purchase Rights (Form 8-A dated
December 28, 1989).
4-4 Senior Debt Securities Indenture between MCN Corp. and NBD Bank, N.A., as
Trustee. (Exhibit 4-4 to MCN's September 29, 1994 Form S-3 Registration
Statement).
4-5 Subordinated Debt Securities Indenture between MCN Corp. and NBD Bank,
N.A., as Trustee. (Exhibit 4-5 to MCN's September 29, 1994 Form S-3
Registration Statement).
4-6 Form of Preferred Security (included in Exhibits 4-15 and 4-16).
4-7 Form of Junior Subordinated Debenture (included in Exhibit 4-17).**
4-8 Form of Guarantee Agreement with respect to Preferred Securities.*
4-9 Form of Purchase Contract Agreement, between MCN Corporation and The
First National Bank of Chicago, as Purchase Contract Agent (including as
Exhibit A the form of the Security Certificate).**
4-10 Form of Pledge Agreement, among MCN Corporation, Chemical Bank, as
Collateral Agent and The First National Bank of Chicago, as Purchase
Contract Agent.**
4-11 Certificate of Trust of MCN Financing I.*
4-12 Certificate of Trust of MCN Financing II.*
4-13 Declaration of Trust of MCN Financing I.*
4-14 Declaration of Trust of MCN Financing II.*
4-15 Form of Amended and Restated Declaration of Trust of MCN Financing I.*
4-16 Form of Amended and Restated Declaration of Trust of MCN Financing II.*
4-17 Form of Supplemental Indenture to Indenture to be used in connection with
the issuance of Junior Subordinated Debentures.**
5-1 Opinion of Skadden, Arps, Slate, Meagher & Flom regarding the validity of
certain of the Offered Securities.*
5-2 Opinion of Daniel L. Schiffer, Senior Vice President, General Counsel and
Secretary for MCN Corporation regarding the validity of certain of the
Offered Securities.*
8-1 Tax Opinion of Skadden, Arps, Slate, Meagher & Flom.*
12-1 Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Fixed Charges and Preferred Stock Dividends. (Exhibit 12.1 to MCN's
December 31, 1995, Form 10-K)
</TABLE>
<PAGE> 97
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGES
- ------- ------------------------------------------------------------------------- ------------
<C> <S> <C>
23-1 Independent Auditors' Consent -- Deloitte & Touche LLP.*
23-2 Consent of S.A. Holditch & Associates, Inc.*
23-3 Consent of Lee Keeling & Associates, Inc.*
23-4 Consent of Ryder Scott Company.*
23-5 Consent of Miller and Lents, Ltd.*
23-6 Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibits 5-1
and 8-1).*
23-7 Consent of Daniel L. Schiffer, Senior Vice President, General Counsel and
Secretary for MCN Corporation (included in Exhibit 5-2).*
24-1 Powers of Attorney for MCN Corporation.*
24-2 Board Resolution authorizing issuance of the Offered Securities.*
25-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, NBD Bank, N.A., as Trustee under the Senior Debt Indenture.*
25-2 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of NBD Bank, N.A., as Trustee under the Subordinated Debt
Securities Indenture.*
25-3 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Wilmington Trust Company as Trustee of the Preferred
Securities Guarantee of MCN for the benefit of the holders of the
Preferred Securities of MCN Financing I.**
25-4 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Wilmington Trust Company as Trustee of the Preferred
Securities Guarantee of MCN for the benefit of the holders of Preferred
Securities of MCN Financing II.**
25-5 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Wilmington Trust Company as Trustee under the Amended and
Restated Declaration of Trust of MCN Financing I.**
25-6 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Wilmington Trust Company as Trustee under the Amended and
Restated Declaration of Trust of MCN Financing II.**
</TABLE>
- -------------------------
* Indicates document filed herewith.
** To be filed by amendment.
References are to MCN (File No. 1-10070) for documents incorporated by
reference.
<PAGE> 1
EXHIBIT 4-8
====================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
MCN Financing
Dated as of , 1996
====================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
<S> <C> <C>
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.3 Reports by the Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . 8
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees . . . . . . . . . . 13
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.4 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.6 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.7 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
<S> <C> <C>
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of , 1996, is executed and delivered by MCN
Corporation, a Michigan corporation (the "Guarantor"), and
, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Preferred Securities (as
defined herein) of MCN Financing, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of ________, 1996, among the trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof ________________ preferred securities,
having an aggregate liquidation amount of $ ____________________ (plus up to an
additional ________________ preferred securities, having an aggregate
liquidation amount of $ ____________ , to cover over-allotments), designated
the _____% Trust Originated Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to pay
to the Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
<PAGE> 5
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(c) all references to "the Preferred Securities
Guarantee" or "this Preferred Securities Guarantee"
are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Preferred Securities Guarantee, unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Preferred Securities
Guarantee, unless otherwise defined in this Preferred
Securities Guarantee or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Business Day" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by
any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
2
<PAGE> 6
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located
at Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
"Debentures" means the series of junior subordinated debt
securities of the Guarantor designated the ___% Junior Subordinated Debentures
due _______ held by the Institutional Trustee (as defined in the Declaration)
of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
(in either case, the "Liquidation Distribution"). If an event of default under
the Indenture has occurred and is continuing, the rights of holders of the
Common Securities to receive payments under the Common Securities Guarantee
Agreement are subordinated to the rights of Holders of Preferred Securities to
receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
3
<PAGE> 7
"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of September 1, 1994,
among the Guarantor (the "Debenture Issuer") and NBD Bank, N.A. as trustee, and
any indenture supplemental thereto pursuant to which certain subordinated debt
securities of the Debenture Issuer are to be issued to the Institutional
Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
4
<PAGE> 8
"Preferred Guarantee Trustee" means ,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee
may reasonably require, of the names and addresses of the Holders of the
Preferred Securities ("List of Holders") as of such date, (i) within 1
Business Day after January 1 and June 30 of each year, and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Preferred Guarantee Trustee provided, that the
5
<PAGE> 9
Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
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SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, the Preferred Guarantee Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Preferred Guarantee
Trustee shall have received written notice, or of which a Responsible Officer
of the Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by
the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee has occurred and
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<PAGE> 11
is continuing, the Preferred Guarantee Trustee shall enforce this Preferred
Securities Guarantee for the benefit of the Holders of the Preferred
Securities.
(c) The Preferred Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Preferred Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee
shall be construed to relieve the Preferred Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the requirements
of this Preferred Securities Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to determine
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<PAGE> 12
whether or not they conform to the requirements of this
Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less than
a Majority in liquidation amount of the Preferred Securities relating
to the time, method and place of conducting any proceeding for any
remedy available to the Preferred Guarantee Trustee, or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under
this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
a Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established
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<PAGE> 13
before taking, suffering or omitting any action hereunder, the
Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel, and the written advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court
of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
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<PAGE> 14
(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the
authority of the Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(b) No provision of this Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power
or authority available to the Preferred Guarantee Trustee shall be construed to
be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness. The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Preferred Securities Guarantee.
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ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed
in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
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(c) The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of resignation,
the resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant
to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee
all amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any
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right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Preferred Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of
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a guarantor, it being the intent of this Section 5.3 that the obligations of
the Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce
this Preferred Securities Guarantee, any Holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Preferred Securities Guarantee, without first instituting a
legal proceeding against the Issuer, the Preferred Guarantee Trustee or any
other Person. Notwithstanding the foregoing, if the Guarantor has failed to
make a Guarantee Payment, a holder of Preferred Securities may directly
institute a proceeding against the Guarantor for enforcement of the Preferred
Security Guarantee for such payment.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
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SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if
there shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) the
Guarantor shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees)
issued by the Guarantor which rank pari passu with or junior to the Debentures
or (c) the Guarantor shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Preferred Securities Guarantee
Agreement); provided, however, the Guarantor may declare and pay a stock
dividend where the dividend stock is the same stock as that on which the
dividend is being paid.
SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor except those
liabilities of the Guarantor made pari passu or subordinate by their terms,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Guarantor and with any guarantee now or hereafter
entered into by the Guarantor in respect of any preferred or preference stock
of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common
stock.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing,
this Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
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SECTION 8.2 Indemnification
(a) To the fullest extent permitted by applicable law,
the Guarantor shall indemnify and hold harmless each Indemnified Person from
and against any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person
in good faith in accordance with this Guarantee Agreement and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Guarantee Agreement, except that
no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
reasonable expenses (including legal fees) incurred by an Indem- nified person
in defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
(c) The obligation to indemnify as set forth in this
Section 8.2 shall survive the termination of the Preferred Securities
Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the
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<PAGE> 22
Declaration with respect to meetings of Holders of the Securities apply to the
giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders of
the Preferred Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):
MCN Corporation
500 Griswold Street
Detroit, MI 48226
Attention: Sebastian Coppola
(c) If given to any Holder of Preferred Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit
of the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
MCN CORPORATION, as Guarantor
By:
______________________________
Name:
Title:
Wilmington Trust Company, as Preferred
Guarantee Trustee
By:
______________________________
Name:
Title:
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<PAGE> 1
EXHIBIT 4-11
CERTIFICATE OF TRUST
The undersigned, the trustees of MCN Financing I desiring to form a business
trust pursuant to Delaware Business Trust Act, 12 Del. C. Section 3810,
hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust") is MCN
Financing I.
2. The name and business address of the trustee of the Trust which has its
principal place of business in the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
3. This Certificate of Trust shall be effective as of the date of filing.
Dated: March 6, 1996
/s/ Daniel L. Schiffer
---------------------------------
Daniel L. Schiffer, as Trustee
/s/ Sebastian Coppola
---------------------------------
Sebastian Coppola, as Trustee
Wilmington Trust Company, as Trustee
By: /s/ Norma Closs
------------------------------
Name: Norma Closs
Title: Vice-President
<PAGE> 1
EXHIBIT 4-12
CERTIFICATE OF TRUST
The undersigned, the trustees of MCN Financing II desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 Del. C. Section
3810, hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust") is MCN
Financing II.
2. The name and business address of the trustee of the Trust which has its
principal place of business in the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
3. This Certificate of Trust shall be effective as of the date of filing.
Dated: March 6, 1996
/s/ Daniel L. Schiffer
----------------------------------
Daniel L. Schiffer, as Trustee
/s/ Sebastian Coppola
----------------------------------
Sebastian Coppola, as Trustee
,
Wilmington Trust Company, as Trustee
By: /s/ Norma Closs
------------------------------
Name: Norma Closs
Title: Vice President
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EXHIBIT 4-13
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DECLARATION OF TRUST
MCN FINANCING I
Dated as of March 6, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Purpose . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Authority . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Title to Property of the Trust . . . . . . . . . . 4
SECTION 2.6 Powers of the Trustees . . . . . . . . . . . . . . 4
SECTION 2.7 Filing of Certificate of Trust . . . . . . . . . . 6
SECTION 2.8 Duration of Trust. . . . . . . . . . . . . . . . . 6
SECTION 2.9 Responsibilities of the Sponsor . . . . . . . . . . 6
SECTION 2.10 Declaration Binding on Securities Holders . . . . . 7
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3 Delaware Trustee . . . . . . . . . . . . . . . . . 8
SECTION 3.4 Institutional Trustee . . . . . . . . . . . . . . . 8
SECTION 3.5 Not Responsible for Recitals or Sufficiency of
Declaration . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Fiduciary Duty . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Indemnification . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Outside Businesses . . . . . . . . . . . . . . . . 13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Termination of Trust . . . . . . . . . . . . . . . 14
SECTION 5.3 Governing Law . . . . . . . . . . . . . . . . . . . 15
SECTION 5.4 Headings . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Successors and Assigns . . . . . . . . . . . . . . 15
SECTION 5.6 Partial Enforceability . . . . . . . . . . . . . . 15
SECTION 5.7 Counterparts . . . . . . . . . . . . . . . . . . . 15
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DECLARATION OF TRUST
OF
MCN FINANCING I
March 6, 1996
DECLARATION OF TRUST ("Declaration") dated and effective as of
March 6, 1996 by the undersigned Trustees (together with all other persons
from time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), MCN Corporation, a Michigan
corporation, as trust sponsor (the "Sponsor"), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Delaware Business Trust Act for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as hereinafter defined);
and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration of Trust as modified, supplemented or
amended from time to time;
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(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified; and
(e) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means MCN Corporation in its capacity as
the issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means NBD Bank, N.A., as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of September 1, 1994,
among MCN Corporation and NBD Bank, N.A., as trustee and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing an
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means MCN Corporation in its capacity as sponsor of
the Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "MCN Financing
I." The Trust's activities may be conducted under the name of the Trust or any
other name deemed advisable by the Regular Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o MCN
Coprporation, 500 Griswold Street, Detroit, Michigan 48226. At any time, the
Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Regular Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Regular Trustees as set forth in this
Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustees.
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The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided,
however , that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common Securities,
and, provided further, that there shall be no interests in the Trust
other than the Securities and the issuance of the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register all or part of
the Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Preferred Securities
for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock Exchange or any other
national stock exchange or the Nasdaq Stock Market's National
Market for listing upon notice of issuance of any Preferred
Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor relating to the registration
of the Preferred Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into an underwriting
agreement and pricing agreement providing for the sale of the
Preferred Securities;
(c) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and provide for reasonable
compensation for such services;
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(d) to incur expenses which are necessary or incidental
to carry out any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in
the form attached hereto as Exhibit A with the Secretary of State of the State
of Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for twenty-five (25) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be
executed and filed by the Trust, as the Sponsor deems necessary or
advisable in order to comply with the applicable laws of any such
States;
(c) to prepare for filing by the Trust an application to
the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Preferred Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the class of Preferred Securities under Section 12(b)
of the Exchange Act, including any amendments thereto; and
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(e) to negotiate the terms of an underwriting agreement
and pricing agreement providing for the sale of the Preferred
Securities.
Section 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security
or any interest therein in accordance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided further that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); provided further that there shall be at
least one trustee who is an employee or officer of, or is affiliated with the
Sponsor (a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be:
Daniel L. Schiffer
Sebastian Coppola
(a) Except as expressly set forth in this Declaration, any
power of the Regular Trustees may be exercised by, or with the consent of, any
one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees,
and except as otherwise required by the Business Trust Act, any Regular Trustee
is authorized to execute on behalf of the Trust any documents which the Regular
Trustees have the power and authority to cause the Trust to execute pursuant to
Section 2.6 provided, that, the registration statement referred to in Section
2.6(b)(i), including any amendments thereto, shall be signed by a majority of
the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural
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person over the age of 21 his or her power for the purposes of signing any
documents which the Regular Trustees have power and authority to cause the
Trust to execute pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Business Trust Act. Notwithstanding anything herein to
the contrary, the Delaware Trustee shall not be liable for the acts or
omissions to act of the Trust, of the Sponsor or of the Regular Trustees except
such acts as the Delaware Trustee is expressly obligated or authorized to
undertake under this Declaration or the Business Trust Act and except for the
gross negligence or willful misconduct of the Delaware Trustee.
SECTION 3.4 Institutional Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Institutional Trustee")
meeting the requirements of an eligible trustee of the Trust Indenture Act of
1939, as amended, by the execution of an amendment to this Declaration executed
by the Regular Trustees, the Sponsor, the Institutional Trustee and the
Delaware Trustee.
Section 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration.
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ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions; and
(b) an Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which distributions to holders of Securities might properly be
paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity, are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between Covered Persons; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
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provides terms that are, fair and reasonable to the Trust or
any holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another
express standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer shall indemnify,
to the full extent permitted by law, any Company Indemnified Person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or
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its equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circum- stances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 4.3(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by
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independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 4.3(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 4.3(a).
Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made
(i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 4.3(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.
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(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others,
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similar or dissimilar to the business of the Trust, and the Trust and the
Holders of Securities shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor or the Delaware Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor and the Delaware Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person and the Delaware Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for or may act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by
all of the Regular Trustees and the Sponsor; provided, however, if the
amendment effects the rights, powers, duties, obligations or immunities of the
Delaware Trustee, the amendment shall also be approved by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force
or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or
the revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with
the consent of all of the Regular Trustees and the Sponsor; and
(b) as soon as is practicable after the occurrence of an
event referred to in Section 5.2(a), the Trustees shall file a
14
<PAGE> 17
certificate of cancellation with the Secretary of State of the State of
Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
15
<PAGE> 18
IN WITNESS WHEREOF, the undersigned has caused this
Declaration of Trust of MCN Financing I to be executed as of the day and year
first above written.
/s/ Daniel L. Schiffer
------------------------------------
Name: Daniel L. Schiffer
Title: Regular Trustee
/s/ Sebastian Coppola
------------------------------------
Name: Sebastian Coppola
Title: Regular Trustee
Wilmington Trust Company,
as Delaware Trustee
By: /s/ Norma Closs
--------------------------------
Name: Norma Closs
Title: Vice President
MCN CORPORATION, as Sponsor
By: /s/ Sebastian Coppola
--------------------------------
Name: Sebastian Coppola
Title: Vice President and
Treasurer
<PAGE> 19
EXHIBIT A
CERTIFICATE OF TRUST
The undersigned, the trustees of MCN Financing I, desiring to
form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
(a) The name of the business trust being formed hereby
(the "Trust") is "MCN Financing I."
(b) The name and business address of the trustee of the
Trust which has its principal place of business in
the State of Delaware is as follows:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(c) This Certificate of Trust shall be effective as of
the date of filing.
Dated: March 6, 1996
------------------------------------
Daniel L. Schiffer, as Trustee
------------------------------------
Sebastian Coppola, as Trustee
Wilmington Trust Company, as Trustee
By:
---------------------------------
Name: Norma Closs
Title: Vice President
17
<PAGE> 1
EXHIBIT 4-14
================================
DECLARATION OF TRUST
MCN FINANCING II
Dated as of March 6, 1996
================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4 Authority . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Title to Property of the Trust . . . . . . . . . . . 4
SECTION 2.6 Powers of the Trustees . . . . . . . . . . . . . . . 4
SECTION 2.7 Filing of Certificate of Trust . . . . . . . . . . . 6
SECTION 2.8 Duration of Trust. . . . . . . . . . . . . . . . . . 6
SECTION 2.9 Responsibilities of the Sponsor . . . . . . . . . . . 6
SECTION 2.10 Declaration Binding on Securities Holders . . . . . . 7
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.3 Delaware Trustee . . . . . . . . . . . . . . . . . . 8
SECTION 3.4 Institutional Trustee . . . . . . . . . . . . . . . . 8
SECTION 3.5 Not Responsible for Recitals or Sufficiency
of Declaration. . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Fiduciary Duty . . . . . . . . . . . . . . . . . . . 9
SECTION 4.3 Indemnification . . . . . . . . . . . . . . . . . . . 10
SECTION 4.4 Outside Businesses . . . . . . . . . . . . . . . . . 13
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2 Termination of Trust . . . . . . . . . . . . . . . . 14
SECTION 5.3 Governing Law . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.4 Headings . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.5 Successors and Assigns . . . . . . . . . . . . . . . 15
SECTION 5.6 Partial Enforceability . . . . . . . . . . . . . . . 15
SECTION 5.7 Counterparts . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
i
<PAGE> 3
DECLARATION OF TRUST
OF
MCN FINANCING II
March 6, 1996
DECLARATION OF TRUST ("Declaration") dated and effective as of
March 6, 1996 by the undersigned Trustees (together with all other persons
from time to time duly appointed and serving as trustees in accordance with the
provisions of this Declaration, the "Trustees"), MCN Corporation, a Michigan
corporation, as trust sponsor (the "Sponsor"), and by the holders, from time to
time, of undivided beneficial interests in the Trust to be issued pursuant to
this Declaration;
WHEREAS, the Trustees and the Sponsor desire to establish a
trust (the "Trust") pursuant to the Delaware Business Trust Act for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer (as hereinafter defined);
and
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration of Trust as modified, supplemented or
amended from time to time;
<PAGE> 4
(d) all references in this Declaration to Articles and Sections
are to Articles and Sections of this Declaration unless
otherwise specified; and
(e) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" means a security representing a common
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any employee or agent of the Trust or its Affiliates.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates and (b) any holder of Securities.
"Debenture Issuer" means MCN Corporation in its capacity as
the issuer of the Debentures under the Indenture.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer and acquired by the Trust.
"Debenture Trustee" means NBD Bank, N.A., as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Delaware Trustee" has the meaning set forth in Section 3.1.
2
<PAGE> 5
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 4.3(b).
"Holder" means the person in whose name a certificate
representing a Security is registered.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the indenture dated as of September 1, 1994,
among MCN Corporation and NBD Bank, N.A., as trustee and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Security" means a security representing an
undivided beneficial interest in the assets of the Trust with such terms as may
be set out in any amendment to this Declaration.
"Regular Trustee" has the meaning set forth in Section 3.1.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Sponsor" means MCN Corporation in its capacity as sponsor of
the Trust.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
3
<PAGE> 6
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.
The Trust created by this Declaration is named "MCN Financing
II." The Trust's activities may be conducted under the name of the Trust or
any other name deemed advisable by the Regular Trustees.
SECTION 2.2 Office.
The address of the principal office of the Trust is c/o MCN
Coprporation, 500 Griswold Street, Detroit, Michigan 48226. At any time, the
Regular Trustees may designate another principal office.
SECTION 2.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
SECTION 2.4 Authority.
Subject to the limitations provided in this Declaration, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust. In
dealing with the Regular Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Regular Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Regular Trustees as set forth in this
Declaration.
SECTION 2.5 Title to Property of the Trust.
Legal title to all assets of the Trust shall be vested in the
Trust.
SECTION 2.6 Powers of the Trustees.
4
<PAGE> 7
The Regular Trustees shall have the exclusive power and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided,
however , that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common Securities,
and, provided further, that there shall be no interests in the Trust
other than the Securities and the issuance of the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission a
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register all or part of
the Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Preferred Securities
for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock Exchange or any other
national stock exchange or the Nasdaq Stock Market's National
Market for listing upon notice of issuance of any Preferred
Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor relating to the registration
of the Preferred Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into an underwriting
agreement and pricing agreement providing for the sale of the
Preferred Securities;
(c) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and provide for reasonable
compensation for such services;
5
<PAGE> 8
(d) to incur expenses which are necessary or incidental
to carry out any of the purposes of this Declaration; and
(e) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in
all matters necessary or incidental to the foregoing.
SECTION 2.7 Filing of Certificate of Trust.
On or after the date of execution of this Declaration, the
Trustees shall cause the filing of the Certificate of Trust for the Trust in
the form attached hereto as Exhibit A with the Secretary of State of the State
of Delaware.
SECTION 2.8 Duration of Trust.
The Trust, absent termination pursuant to the provisions of
Section 5.2, shall have existence for twenty-five (25) years from the date
hereof.
SECTION 2.9 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
(b) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must
take, and prepare for execution and filing any documents to be
executed and filed by the Trust, as the Sponsor deems necessary or
advisable in order to comply with the applicable laws of any such
States;
(c) to prepare for filing by the Trust an application to
the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Preferred Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the class of Preferred Securities under Section 12(b)
of the Exchange Act, including any amendments thereto; and
6
<PAGE> 9
(e) to negotiate the terms of an underwriting agreement
and pricing agreement providing for the sale of the Preferred
Securities.
Section 2.10 Declaration Binding on Securities Holders.
Every Person by virtue of having become a Holder of a Security
or any interest therein in accordance with the terms of this Declaration, shall
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration.
ARTICLE III
TRUSTEES
SECTION 3.1 Trustees.
The number of Trustees initially shall be three (3), and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor. The Sponsor is
entitled to appoint or remove without cause any Trustee at any time; provided,
however, that the number of Trustees shall in no event be less than two (2);
provided further that one Trustee, in the case of a natural person, shall be a
person who is a resident of the State of Delaware or that, if not a natural
person, is an entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); provided further that there shall be at
least one trustee who is an employee or officer of, or is affiliated with the
Sponsor (a "Regular Trustee").
SECTION 3.2 Regular Trustees.
The initial Regular Trustees shall be:
Daniel L. Schiffer
Sebastian Coppola
(a) Except as expressly set forth in this Declaration,
any power of the Regular Trustees may be exercised by, or with the consent of,
any one such Regular Trustee.
(b) Unless otherwise determined by the Regular
Trustees, and except as otherwise required by the Business Trust Act, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 2.6 provided, that, the registration statement
referred to in Section 2.6(b)(i), including any amendments thereto, shall be
signed by a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural
7
<PAGE> 10
person over the age of 21 his or her power for the purposes of signing any
documents which the Regular Trustees have power and authority to cause the
Trust to execute pursuant to Section 2.6.
SECTION 3.3 Delaware Trustee.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Notwithstanding any other provision of this Declaration, the
Delaware Trustee shall not be entitled to exercise any of the powers, nor shall
the Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees described in this Declaration. The Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Business Trust Act. Notwithstanding anything herein to
the contrary, the Delaware Trustee shall not be liable for the acts or
omissions to act of the Trust of the Sponsor or of the Regular Trustees
except such acts as the Delaware Trustee is expressly obligated or authorized
to undertake under this Declaration or the Business Trust Act and except for
the gross negligence or willful misconduct of the Delaware Trustee.
SECTION 3.4 Institutional Trustee.
Prior to the issuance of the Preferred Securities and Common
Securities, the Sponsor shall appoint a trustee (the "Institutional Trustee")
meeting the requirements of an eligible trustee of the Trust Indenture Act of
1939, as amended, by the execution of an amendment to this Declaration executed
by the Regular Trustees, the Sponsor, the Institutional Trustee and the
Delaware Trustee.
Section 3.5 Not Responsible for Recitals or Sufficiency of Declaration.
The recitals contained in this Declaration shall be taken as
the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration.
8
<PAGE> 11
ARTICLE IV
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 4.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions; and
(b) an Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which distributions to holders of Securities might properly be
paid.
SECTION 4.2 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity, are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;
(b) unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between Covered Persons; or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
9
<PAGE> 12
provides terms that are, fair and reasonable to the Trust or
any holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise; and
(c) whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another
express standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 4.3 Indemnification.
(a) (i) The Debenture Issuer shall indemnify,
to the full extent permitted by law, any Company Indemnified Person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests
of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or
10
<PAGE> 13
its equivalent, shall not, of itself, create a presumption that the
Company Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification
shall be made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery
of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circum- stances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 4.3(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 4.3(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by
11
<PAGE> 14
independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 4.3(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 4.3(a).
Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made
(i) by the Regular Trustees by a majority vote of a quorum of
disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 4.3(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 4.3(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 4.3(a) is in effect. Any repeal or modification of this
Section 4.3(a) shall not affect any rights or obligations then
existing.
12
<PAGE> 15
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 4.3(a).
(viii) For purposes of this Section 4.3(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 4.3(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 4.3(a) shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i) the Delaware
Trustee, (ii) any Affiliate of the Delaware Trustee, and (iii) any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Delaware Trustee (each of the Persons in
(i) through (iii) being referred to as a "Fiduciary Indemnified Person") for,
and to hold each Fiduciary Indemnified Person harmless against, any loss,
liability or expense incurred without gross negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 4.3(b) shall survive the termination of
this Declaration.
SECTION 4.4 Outside Businesses.
Any Covered Person, the Sponsor and the Delaware Trustee may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others,
13
<PAGE> 16
similar or dissimilar to the business of the Trust, and the Trust and the
Holders of Securities shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor or the Delaware Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor and the Delaware Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person and the Delaware Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for or may act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE V
AMENDMENTS, TERMINATION, MISCELLANEOUS
SECTION 5.1 Amendments.
At any time before the issue of any Securities, this
Declaration may be amended by, and only by, a written instrument executed by
all of the Regular Trustees and the Sponsor; provided, however, if the
amendment effects the rights, powers, duties, obligations or immunities of the
Delaware Trustee, the amendment shall also be approved by the Delaware Trustee.
SECTION 5.2 Termination of Trust.
(a) The Trust shall terminate and be of no further force
or effect:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or
the revocation of the Sponsor's charter or of the Trust's
certificate of trust;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor, or the Trust; and
(iv) before the issue of any Securities, with
the consent of all of the Regular Trustees and the Sponsor; and
(b) as soon as is practicable after the occurrence of an
event referred to in Section 5.2(a), the Trustees shall file a
14
<PAGE> 17
certificate of cancellation with the Secretary of State of the State of
Delaware.
SECTION 5.3 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 5.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 5.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 5.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 5.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
15
<PAGE> 18
IN WITNESS WHEREOF, the undersigned has caused this
Declaration of Trust of MCN Financing II to be executed as of the day and year
first above written.
/s/ Daniel L. Schiffer
-----------------------------------
Name: Daniel L. Schiffer
Title: Regular Trustee
/s/ Sebastian Coppola
-----------------------------------
Name: Sebastian Coppola
Title: Regular Trustee
Wilmington Trust Company, as Delaware Trustee
By: /s/ Norma Closs
-----------------------------------
Name: Norma Closs
Title: Vice President
MCN CORPORATION, as Sponsor
By: /s/ Sebastian Coppola
-----------------------------------
Name: Sebastian Coppola
Title: Vice President and
Treasurer
<PAGE> 19
EXHIBIT A
CERTIFICATE OF TRUST
The undersigned, the trustees of MCN Financing II, desiring to
form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
(a) The name of the business trust being formed hereby
(the "Trust") is "MCN Financing II."
(b) The name and business address of the trustee of the
Trust which has its principal place of business in
the State of Delaware is as follows:
Wilmington Trust Company
[Adddress]
(c) This Certificate of Trust shall be effective as of
the date of filing.
Dated: March 6, 1996
------------------------------------
Daniel L. Schiffer, as Trustee
------------------------------------
Sebastian Coppola, as Trustee
Wilmington Trust Company, as Trustee
By:
---------------------------------
Name: Norma Closs
Title: Vice President
17
<PAGE> 1
EXHIBIT 4-15
====================================
AMENDED AND RESTATED DECLARATION
OF TRUST
MCN FINANCING I
Dated as of , 1996
====================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.3 Reports by the Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4 Periodic Reports to Institutional Trustee . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . 9
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . . . . . . . . . . . . . . . 16
SECTION 3.8 Powers and Duties of the Institutional Trustee . . . . . . . . . . . . . . . . . . 17
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee . . . . . . . . . 19
SECTION 3.10 Certain Rights of Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . 24
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
TRUSTEES
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 5.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.3 Institutional Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware Trustee Generally . . . . . 29
SECTION 5.5 Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.6 Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . 30
SECTION 5.7 Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.8 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.9 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.10 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.11 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . 33
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.2 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.7 Definitive Preferred Security Certificates . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . 39
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent . . . . . . . . . . . . 49
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee . . . . . . . . . . . . . . . . . 51
SECTION 13.2 Representations and Warranties of Delaware Trustee . . . . . . . . . . . . . . . . . . . 52
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . A2-1
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
- ---------------
</TABLE>
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
iv
<PAGE> 6
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MCN FINANCING I
____________, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of , 1996, by the Trustees (as defined herein),
the Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the assets of the Trust to be issued
pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established MCN
Financing I (the "Trust"), a trust under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of , 1996 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on February , 1996, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE> 7
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
2
<PAGE> 8
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the "Closing Time" and each "Date of
Delivery" under the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to
be dated as of ___________, 1996 of the Sponsor in respect of the Common
Securities.
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent
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of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of
Securities.
"Debenture Issuer" means MCN Corporation, a Michigan
corporation in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means NBD Bank, N.A., as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Institutional
Trustee, a specimen certificate for such series of Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.4.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one
or more Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
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"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of September 1, 1994,
among the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in
Section 3.8(c).
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex
I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Preferred
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all outstanding Securities
of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
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(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 7.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement
to be dated as of ______, 1996, of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A- 1.
"Pricing Agreement" means the pricing agreement between the
Trust, the Debenture Issuer, and the underwriters designated by the Regular
Trustees with respect to the offer and sale of the Preferred Securities.
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"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Regular Trustee" has the meaning set forth in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means MCN Corporation, a Michigan corporation, or
any successor entity in a merger, consolidation or amalgamation, in its
capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of 10% or more of the aggregate liquidation
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<PAGE> 13
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all outstanding Securities
of the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Underwriting Agreement" means the Underwriting Agreement for
the offering and sale of Preferred Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of
the Trust Indenture Act that are required to be part of this Declaration and
shall, to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Section
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
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SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide the Institutional Trustee (i) within 14 days
after each record date for payment of Distributions, a list, in such form as
the Institutional Trustee may reasonably require, of the names and addresses of
the Holders of the Securities ("List of Holders") as of such record date,
provided that neither the Sponsor nor the Regular Trustees, on behalf of the
Trust, shall be obligated to provide such List of Holders at any time the List
of Holders does not differ from the most recent List of Holders given to the
Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Institutional Trustee. The Institutional
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity) provided that the
Institutional Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its
obligations under Section Section 311(a), 311(b) and 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after May 1 of each year, the Institutional
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such evidence of compliance
with any conditions precedent, if any,
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provided for in this Declaration that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the underlying
Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Preferred Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
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(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall also
not be waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated,
and until such Events of Default have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Institutional Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Section Section 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Section Section 316(a)(1)(A)
and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such waiver,
any such default shall cease to exist and any Event of Default with respect to
the Common Securities arising therefrom shall be deemed to have been cured for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture
by the Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default with
respect to the Preferred Securities under this Declaration. Any waiver of an
Event of Default under the Indenture by the Institutional Trustee at the
direction of the Holders of the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of the
corresponding Event of Default under this Declaration with respect to the
Common Securities for all purposes of this Declaration without further act,
vote or consent of the Holders of the Common Securities. The foregoing
provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of
the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture
Act is hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act.
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SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Securities, notices of all defaults with
respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving
of such notice (the term "defaults" for the purposes of this Section 2.7(a)
being hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided that, except for a default in
the payment of principal of (or premium, if any) or interest on any of the
Debentures or in the payment of any sinking fund installment established for
the Debentures, the Institutional Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Institutional
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Institutional Trustee shall not be deemed to
have knowledge of any default except:
(i) a default under Sections 501 and 503 of the
Indenture; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible Officer
of the Institutional Trustee charged with the administration of the
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "MCN Financing I," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o MCN
Corporation, 500 Griswold Street, Detroit, Michigan 48226. On ten Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
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SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
The Trust will be classified as a grantor trust for United
States federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Preferred Securities and the Common
Securities will be the owners of the Trust for United States federal income tax
purposes, and such owners will include directly in their gross income the
income, gain, deduction or loss of the Trust as if the Trust did not exist. By
the acceptance of this Trust, neither the Trustees, the Sponsor nor the owners
of the Preferred Securities or Common Securities will take any position for
United States federal income tax purposes which is contrary to the
classification of the Trust as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Institutional Trustee, the Regular Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Institutional Trustee Account or as otherwise provided in
this Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided,
however, that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common Securities,
and, provided further, that there shall be no interests in the Trust
other than the Securities, and the issuance of Securities shall be
limited to a
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simultaneous issuance of both Preferred Securities and Common Securities on
each Closing Date;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto, pertaining to the Preferred
Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register all or part of
the Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Preferred Securities
for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock Exchange, Inc. or any
other national stock exchange or the Nasdaq Stock Market's
National Market for listing upon notice of issuance of any
Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the registration
of the Preferred Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into the Underwriting
Agreement and Pricing Agreement providing for the sale of the
Preferred Securities;
(c) to acquire the Debentures with the proceeds of the
sale of the Preferred Securities and the Common Securities; provided,
however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional
Trustee for the benefit of the Holders of the Preferred Securities and
the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee
prompt written notice of the occurrence of a Special Event; provided
that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any
Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes
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of Section 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices to
the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may
be required of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to
bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable compensation
for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by Section
314(a)(4) of the Trust Indenture Act to the Institutional Trustee,
which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary, appropriate,
convenient or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's
valid existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of each
other jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Preferred Securities or to
enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trust-
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ees determine in their discretion to be necessary or desirable in
carrying out the activities of the Trust as set out in this Section
3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor trust;
and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated as indebtedness of
the Debenture Issuer for United States federal income tax
purposes,
provided that such action does not adversely affect the interests of
Holders;
(p) to take all action necessary to cause all
applicable tax returns and tax information reports that are required
to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform
all duties and powers, and do all things for and on behalf of the
Trust in all matters necessary or incidental to the foregoing;
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust
set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Institutional Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including
the Institutional Trustee) shall not, engage in any activity other than as
required or authorized by this Declaration. In
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particular, the Trust shall not and the Trustees (including the Institutional
Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust other
than the Securities; or
(vii) other than as provided in this Declaration or Annex
I, (A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is waivable under the Indenture, (C) exercise any right
to rescind or annul any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an insubstantial risk
that for United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by
and held of record in the name of the Institutional Trustee in trust for the
benefit of the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 5.6. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.
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(b) The Institutional Trustee shall not transfer its
right, title and interest in the Debentures to the Regular Trustees or to the
Delaware Trustee (if the Institutional Trustee does not also act as Delaware
Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Institutional Trustee Account") in the
name of and under the exclusive control of the Institutional Trustee
on behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the
Institutional Trustee, deposit such funds into the Institutional
Trustee Account and make payments to the Holders of the Preferred
Securities and Holders of the Common Securities from the Institutional
Trustee Account in accordance with Section 6.1. Funds in the
Institutional Trustee Account shall be held uninvested until disbursed
in accordance with this Declaration. The Institutional Trustee
Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness is at
least equal to the rating assigned to the Preferred Securities by a
"nationally recognized statistical rating organization", as that term
is defined for purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain special events (as may be
defined in the terms of the Securities) arising from a change in law
or a change in legal interpretation or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions
and perform such duties as may be specifically required of the Institutional
Trustee pursuant to the terms of the Securities.
(e) The Institutional Trustee shall take any Legal
Action which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act.
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(f) The Institutional Trustee shall not resign as a
Trustee unless either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been
appointed and has accepted that appointment in accordance with Section
5.6.
(g) The Institutional Trustee shall have the legal
power to exercise all of the rights, powers and privileges of a holder of
Debentures under the Indenture and, if an Event of Default actually known to a
Responsible Officer of the Institutional Trustee occurs and is continuing, the
Institutional Trustee shall, for the benefit of Holders of the Securities,
enforce its rights as holder of the Debentures subject to the rights of the
Holders pursuant to the terms of such Securities.
(h) Subject to this Section 3.8, the Institutional
Trustee shall have none of the duties, liabilities, powers or the authority of
the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth
in this Section 3.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Institutional Trustee
shall not take any action that is inconsistent with the purposes and functions
of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee.
(a) The Institutional Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed
to relieve the Institutional Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
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(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the
Institutional Trustee shall be determined solely by the
express provisions of this Declaration and the Institutional
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall be
read into this Declaration against the Institutional Trustee;
and
(B) in the absence of bad faith on the part of
the Institutional Trustee, the Institutional Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional
Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Institu-
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tional Trustee against such risk or liability is not reasonably
assured to it;
(v) the Institutional Trustee's sole duty with respect
to the custody, safe keeping and physical preservation of the
Debentures and the Institutional Trustee Account shall be to deal with
such property in a similar manner as the Institutional Trustee deals
with similar property for its own account, subject to the protections
and limitations on liability afforded to the Institutional Trustee
under this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for
any interest on any money received by it except as it may otherwise
agree with the Sponsor. Money held by the Institutional Trustee need
not be segregated from other funds held by it except in relation to
the Institutional Trustee Account maintained by the Institutional
Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible
for monitoring the compliance by the Regular Trustees or the Sponsor
with their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officers' Certificate;
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(iii) whenever in the administration of this Declaration,
the Institutional Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see
to any recording, filing or registration of any instrument (including
any financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel
or other experts and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Institutional
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Institutional Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any Holder, unless
such Holder shall have provided to the Institutional Trustee security
and indemnity, reasonably satisfactory to the Institutional Trustee,
against the costs, expenses (including attorneys' fees and expenses
and the expenses of the Institutional Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as
may be requested by the Institutional Trustee provided, that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve the
Institutional Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Institutional Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Institutional Trustee, in its
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discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or attorneys
and the Institutional Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or
its agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Institutional Trustee or its
agents alone shall be sufficient and effective to perform any such
action and no third party shall be required to inquire as to the
authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration
the Institutional Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Institutional Trustee (i) may request
instructions from the Holders of the Securities which instructions may
only be given by the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on
or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Institutional Trustee to perform any act
or acts or exercise any right, power, duty or obligation conferred or imposed
on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts, or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Institutional Trustee shall be construed to be a duty.
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SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Institutional Trustee described
in this Declaration. Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, a majority of or, if
there are only two, any Regular Trustee or, if there is only one, such Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for twenty-five (25) years from the
Closing Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge
with or into, or be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to any corporation or other body,
except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular
Trustees or, if there are more than two, a majority of the Regular Trustees and
without the consent of the Holders of the Securities, the Delaware Trustee or
the Institutional Trustee,
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consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same powers and
duties as the Institutional Trustee as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with
an other organization on which the Preferred Securities are then
listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect to any
dilution of such Holders' interests in the Preferred Securities as a
result of such merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation
or replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, pref-
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erences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect
(other than with respect to any dilution of the Holders'
interest in the new entity); and
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall
not, except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
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(b) to determine the States in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than
actions which must be taken by the Trust, and advise the Trust of
actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of
any such States;
(c) to prepare for filing by the Trust an application
to the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Preferred Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b) of the
Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Underwriting
Agreement and Pricing Agreement providing for the sale of the
Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be three (3), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; provided,
however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the "Delaware
Trustee"); (2) there shall be at least one Trustee who is an employee
or officer of, or is affiliated with the Sponsor (a "Regular
Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture
under the Trust Indenture Act, and such Trustee may also
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serve as Delaware Trustee if it meets the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law, provided that, if the
Institutional Trustee has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable
law, then the Institutional Trustee shall also be the Delaware Trustee
Section 3.11 shall have no application.
(c) The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall
act as Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 5.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Institutional Trustee shall
cease to be eligible to so act under Section 5.3(a), the Institutional
Trustee shall immediately resign in the manner and with the effect set forth in
Section 5.6(c).
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(c) If the Institutional Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Institutional Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in Section 310(b) of the
Trust Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed
to be specifically described in this Declaration for purposes of clause (i) of
the first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
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SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Regular Trustees.
The initial Regular Trustees shall be:
Daniel L. Schiffer
c/o MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
Sebastian Coppola
c/o MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
(a) Except as expressly set forth in this Declaration
and except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(b) Unless otherwise determined by the Regular
Trustees, and except as otherwise required by the Business Trust Act or
applicable law, any Regular Trustee is authorized to execute on behalf of the
Trust any documents which the Regular Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that, the
registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of
the Holders of a Majority in liquidation amount of the Common
Securities voting as a class at a meeting of the Holders of the Common
Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall
not be removed in accordance with Section 5.6(a) until a Successor
Institutional Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with this Section 5.6(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office
until his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the
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Sponsor and the Trust, which resignation shall take effect upon such delivery
or upon such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Institutional Trustee and delivered
to the Trust, the Sponsor and the resigning Institutional
Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use
their best efforts to promptly appoint a Successor Delaware Trustee or
Successor Institutional Trustee as the case may be if the Institutional Trustee
or the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Institutional Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Institutional
Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall
be liable for the acts or omissions to act of any Successor Institutional
Trustee or successor Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a
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vacancy shall occur. A resolution certifying the existence of such vacancy by
the Regular Trustees or, if there are more than two, a majority of the Regular
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section
5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of
the Regular Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Regular Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.
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SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Institutional Trustee or the Delaware Trustee, as
the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Debentures held by the Institutional Trustee (the amount of any such
payment being a "Payment Amount"), the Institutional Trustee shall and is
directed, to the extent funds are available
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for that purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall, on behalf of the Trust,
issue one class of preferred securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Preferred Securities") and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities.") The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the
Trust by a Regular Trustee. Such signature shall be the manual signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the Regular Trustees of the
Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage.
(c) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
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(e) Every Person, by virtue of having become a Holder
or a Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 7.2 Paying Agent.
In the event that the Preferred Securities are not in
book-entry only form, the Trust shall maintain in the borough of Manhattan,
City of New York, State of New York, an office or agency where the Preferred
Securities may be presented for payment ("Payment Agent"), and any such Paying
Agent shall comply with Section 317(b) of the Trust Indenture Act. The Trust
may appoint the Paying Agent and may appoint one or more additional paying
agents in such other locations as it shall determine. The term "Paying Agent"
includes any additional paying agent. The Trust may change any Paying Agent
without prior notice to any Holder. The Trust shall notify the Institutional
Trustee of the name and address of any Agent not a party to this Declaration.
If the Trust fails to appoint or maintain another entity as Paying Agent, the
Institutional Trustee shall act as such. The Trust or any of its Affiliates
may act as Paying Agent. The Trust shall initially act as Paying Agent for the
Preferred Securities and the Common Securities.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common
Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Holder of the Common Securities or
the Sponsor; the filing of a certificate of cancellation with respect
to the Trust or the revocation of the Holder of the Common Securities
or the Sponsor's charter and the expiration of 90 days after the date
of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution
of the Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities;
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(v) upon the occurrence and continuation of a Special
Event pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Securities and all of the Debentures
endorsed thereon shall have been distributed to the Holders of
Securities in exchange for all of the Securities; or
(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a) and upon completion of the winding-up of
the Trust and its termination, the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities
shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any
Related Party may only transfer Common Securities to the Sponsor or a Related
Party of the Sponsor; provided that, any such transfer is subject to the
condition precedent that the transferor obtain the written opinion of
nationally recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
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The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust shall
have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance, will
be issued in the form of one or more, fully registered, global Preferred
Security Certificates (each a "Global Certificate"), to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificate(s) shall initially be registered on the books and records of the
Trust in the name of Cede & Co., the nominee of DTC, and no Preferred Security
Beneficial Owner will receive a definitive Preferred Security Certificate
representing such Preferred Security Beneficial Owner's interests in such
Global Certificate(s), except as provided in Section 9.7. Unless and until
definitive, fully registered Preferred Security Certificates (the "Definitive
Preferred Security Certificates") have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7:
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(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Certificate(s)
and receiving approvals, votes or consents hereunder) as the Holder of
the Preferred Securities and the sole holder of the Global
Certificate(s) and shall have no obligation to the Preferred Security
Beneficial Owners;
(c) to the extent that the provisions of this Section
9.4 conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial
Owners shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, unless and until
Definitive Preferred Security Certificates shall have been issued to the
Preferred Security Beneficial Owners pursuant to Section 9.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Preferred Security Holders to the Clearing Agency, and shall have
no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its
services as securities depositary with respect to the Preferred
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Securities and a successor Clearing Agency is not appointed within 90
days after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with
the Sponsor to terminate the book entry system through the Clearing
Agency with respect to the Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect
to such Preferred Securities; and
(d) upon surrender of the Global Certificate(s) by the
Clearing Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in
relying on, said instructions of the Clearing Agency. The Definitive
Preferred Security Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which Preferred
Securities may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to
the Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees
such security or indemnity as may be required by them to keep each of
them harmless.
then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on
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behalf of the Trust shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like denomination. In connection with the issuance of any new Certificate
under this Section 9.8, the Regular Trustees may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration,
the Debentures, the Securities Guarantees and the terms of the Securities, the
Sponsor shall not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust;
and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable
for all of the debts and obligations of the Trust (other than with respect to
the Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Preferred Securities shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this
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Declaration or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than the duties imposed on the Institutional Trustee
under the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not
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constitute a breach of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Person at law or in
equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person
is permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the Company Indemnified
Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified
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Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall
be made in respect of any claim, issue or matter as to which such
Company Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including dismissal of
an action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii)
of this Section 10.4(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by
the Debenture Issuer in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this
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Section 10.4(a). Notwithstanding the foregoing, no advance shall be
made by the Debenture Issuer if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a
quorum of disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent
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entity, or is or was serving at the request of such constituent entity
as a director, trustee, officer, employee or agent of another entity,
shall stand in the same position under the provisions of this Section
10.4(a) with respect to the resulting or surviving entity as he would
have with respect to such constituent entity if its separate existence
had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Institutional Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Institutional Trustee and the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees, representatives,
custodians, nominees or agents of the Institutional Trustee and the Delaware
Trustee (each of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any loss, liability or expense incurred without gross
negligence (or, in the case of the Institutional Trustee, pursuant to Section
3.9, negligence) or bad faith on its part, arising out of or in connection with
the acceptance or administration or the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
obligation to indemnify as set forth in this Section 10.4(b) shall survive the
satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated
to present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Institutional Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
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particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly
prepared and delivered to each of the Holders of Securities, any annual United
States federal income tax information statement, required by the Code,
containing such information with regard to the Securities held by each Holder
as is required by the Code and the Treasury Regulations. Notwithstanding any
right under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such
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other form required by United States federal income tax law, and any other
annual income tax returns required to be filed by the Regular Trustees on
behalf of the Trust with any state or local taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Institutional Trustee shall be
made directly to the Institutional Trustee Account and no other funds of the
Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Institutional Trustee shall designate the
signatories for the Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any claimed over withholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or
by any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
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(i) the Regular Trustees (or, if there are more than
two Regular Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Institutional Trustee, the Institutional Trustee shall have first
received:
(A) an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel
to the Sponsor or the Trust) that such amendment is permitted
by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(iii) to the extent the result of such amendment would be
to:
(A) cause the trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Institutional Trustee in contravention of the
Trust Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
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(c) at such time after the Trust has issued any
Securities that remain outstanding, any amendment that would adversely affect
the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the
terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common Securities
and;
(f) the rights of the holders of the Common Securities
under Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration
may be amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations
of the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory authority
which amendment does not have a material adverse effect on the right,
preferences or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of
the Amended Declaration to such extent as may be necessary, provided
such modification, elimination or addition would not adversely affect the
rights, privileges or preference of any Holder of the Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Regular Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration,
the terms of the Securities or the rules of any stock exchange on which the
Pre-
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ferred Securities are listed or admitted for trading. The Regular Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the Regular Trustees one or more
calls in a writing stating that the signing Holders of Securities wish to call
a meeting and indicating the general or specific purpose for which the meeting
is to be called. Any Holders of Securities calling a meeting shall specify in
writing the Security Certificates held by the Holders of Securities exercising
the right to call a meeting and only those Securities specified shall be
counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the
terms of the Securities, the following provisions shall apply to meetings of
Holders of Securities:
(i) notice of any such meeting shall be given to all
the Holders of Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
exchange on which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by the
Holders of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize
or take such action at a meeting at which all Holders of Securities
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person
to act for it by proxy on all matters in which a Holder of Securities
is entitled to participate, including waiving notice of any meeting,
or voting or participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Holder of Securities executing it. Except as
otherwise provided herein, all matters relating to the giving,
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voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall
be conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Preferred Securities are then
listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Institutional Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Institutional
Trustee's acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is [national banking
association] with trust powers, duly organized, validly existing and
in good standing under the laws of the United States, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the
Institutional Trustee of the Declaration has been duly authorized by
all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the
Institutional Trustee, and it constitutes a legal, valid and binding
obligation of the
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Institutional Trustee, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of the
Declaration by the Institutional Trustee does not conflict with or
constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
(e) the Institutional Trustee, pursuant to this
Declaration, shall hold legal title and a valid ownership interest in
the Debentures.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform
its obligations under the Certificate of Trust and the Declaration.
The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity
or at law);
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(c) No consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders of the
Securities):
MCN Financing I
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may
give notice of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(c) if given to the Institutional Trustee, at its
Corporate Trust Office to the attention of Corporate Trust
Administration (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities):
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice to the
Trust):
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MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the applica-
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tion of such provision to persons or circumstances other than those to which it
is held invalid, shall not be affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
________________________________________
Daniel L. Schiffer, as Regular
Trustee
________________________________________
Sebastian Coppola, as Regular
Trustee
Wilmington Trust Company,
as Delaware Trustee
By:
_____________________________________
Name: Norma Closs
Title: Vice President
Wilmington Trust Company,
as Institutional Trustee
By: ____________________________________
Name:
Title:
MCN Corporation, as Sponsor
By: ____________________________________
Name: Sebastian Coppola
Title: Vice President and Treasurer
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ANNEX I
TERMS OF
___% TRUST ORIGINATED PREFERRED SECURITIES
___% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of _______, 1996 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. ____________________ Preferred
Securities of the Trust with an aggregate liquidation amount with respect to
the assets of the Trust of __________ dollars ($_____________) and a
liquidation amount with respect to the assets of the Trust of $25 per preferred
security, are hereby designated for the purposes of identification only as
"_____% Trust Originated Preferred SecuritiesSM ('TOPrS'SM)" (the "Preferred
Securities"). The Preferred Security Certificates evidencing the Preferred
Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Preferred Securities are listed.
(b) Common Securities. ______________ Common Securities
of the Trust with an aggregate liquidation amount with respect to the assets of
the Trust of ___________________ dollars ($______________) and a liquidation
amount with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as "______% Trust
Originated Common Securities" (the "Common Securities"). The Common Security
Certificates evidencing the Common Securities shall be substantially in the
form of Exhibit A-2 to the Declaration, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or
practice.
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2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of ______% (the "Coupon Rate") of the stated liquidation
amount of $25 per Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative,
will accrue from ________, 1996, and will be payable quarterly in arrears, on
March 31, June 30, September 30, and December 31 of each year, commencing on
__________, 1996, except as otherwise described below. The Debenture Issuer
has the right under the Indenture to defer payments of interest by extending
the interest payment period from time to time on the Debentures for a period
not exceeding 20 consecutive quarters (each an "Extension Period"), during
which Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall last beyond the date of maturity of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the
Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. While the Preferred
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Securities remain in book-entry only form, the relevant record dates shall be
one Business Day prior to the relevant payment dates which payment dates
correspond to the interest payment dates on the Debentures. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment in respect of the Preferred Securities will be made as described
under the heading "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company" in the Prospectus Supplement
dated______, 1996, to the Prospectus dated ______, 1996 (together, the
"Prospectus"), of the Trust included in the Registration Statement on Form S-3
of the Sponsor, the Trust and certain other business trusts. The relevant
record dates for the Common Securities shall be the same record date as for the
Preferred Securities. If the Preferred Securities shall not continue to remain
in book-entry only form, the relevant record dates for the Preferred
Securities, shall conform to the rules of any securities exchange on which the
securities are listed and, if none, shall be selected by the Regular Trustees,
which dates shall be at least one Business Day but less than 60 Business Days
before the relevant payment dates, which payment dates correspond to the
interest payment dates on the Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name such
Securities are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination, as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of liabilities of creditors an
amount equal to the aggregate of the stated liquidation amount of
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$25 per Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination, Debentures in an
aggregate principal amount equal to the aggregate stated liquidation amount of
such Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in
part, whether at maturity or upon redemption (either at the option of the
Debenture Issuer or pursuant to a Special Event as described below), the
proceeds from such repayment or payment shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at a redemption price
of $25 per Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash (the "Redemption
Price"). Holders will be given not less than 30 nor more than 60 days notice
of such redemption.
(b) If fewer than all the outstanding Securities are to
be so redeemed, the Common Securities and the Preferred Securities will be
redeemed Pro Rata and the Preferred Securities to be redeemed will be as
described in Section 4(f)(ii) below.
(c) If a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") shall occur and be continuing the
Regular Trustees shall, except in certain limited circumstances in relation to
a Tax Event described in this Section 4(c), dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Institutional Trustee,
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued
and unpaid interest equal to accrued and unpaid Distributions on, and having
the same record date for payment as the Securities, to be distributed to the
Holders of the Securities in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90 Day Period"); provided, however, that, as a condition of
such dissolution and distribution, the Regular Trustees shall have received an
opinion of
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a nationally recognized independent tax counsel experienced in such matters (a
"No Recognition Opinion"), which opinion may rely on published revenue rulings
of the Internal Revenue Service, to the effect that the Holders of the
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of the dissolution of the Trust and the distribution
of Debentures, and provided, further, that, if at the time there is available
to the Trust the opportunity to eliminate, within the 90 Day Period, the
Special Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure that has
no adverse effect on the Trust, the Debenture Issuer, the Sponsor or the
Holders of the Securities ("Ministerial Action"), the Trust will pursue such
Ministerial Action in lieu of dissolution.
If (i) in the event of a Tax Event, after receipt of a Tax
Event Opinion (as defined hereinafter) by the Regular Trustees, the Debenture
Issuer has received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that the
Debenture Issuer would be precluded from deducting the interest on the
Debentures for United States federal income tax purposes even if the Debentures
were distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), or (ii) in the event
of any Special Event, after receipt of a Tax Event Opinion or Investment
Company Event Opinion (as defined hereinafter), as the case may be, the Regular
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, the Debenture Issuer shall have the
right at any time, upon not less than 30 nor more than 60 days notice, to
redeem the Debentures in whole or in part for cash within 90 days following the
occurrence of such Special Event, and, following such redemption, Securities
with an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so redeemed shall be redeemed by the Trust at the Redemption
Price on a Pro Rata basis; provided, however, that, if at the time there is
available to the Trust the opportunity to eliminate, within such 90 day period,
the Special Event by taking some Ministerial Action, the Trust or the Debenture
Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Tax Event Opinion") to the effect that on or
after the date of the Prospectus Supplement, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority therefor or therein, or (b) any amendment to, or change in, an
interpretation or application of any
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such laws or regulations by any legislative body, court, governmental agency or
regulatory authority, which amendment or change is enacted, promulgated, issued
or announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the date of the Prospectus
Supplement, there is more than an insubstantial risk that (i) the Trust is or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to interest accrued or received on the Debentures, (ii)
the Trust is, or will be within 90 days of the date thereof, subject to more
than a de minimis amount of taxes, duties or other governmental charges, or
(iii) interest payable by the Debenture Issuer to the Trust on the Debentures
is not, or within 90 days of the date thereof will not be, deductible, in whole
or in part, by the Debenture Issuer for United States federal income tax
purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act (an "Investment
Company Event Opinion") that, as a result of the occurrence of a change in law
or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is a more than an insubstantial
risk that the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after the date of the Prospectus
Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depository") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Debentures to be
delivered upon such distribution and any certificates representing Securities,
except for certificates representing Preferred Securities held by the
Depository or its nominee (or any successor Clearing Agency or its nominee),
will be deemed to represent beneficial interests in the Debentures having an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the Coupon Rate of, and accrued and unpaid
interest equal to accrued and unpaid Distributions on such Securities until
such certificates are presented to the Debenture Issuer or its agent for
transfer or reissue.
(d) The Trust may not redeem fewer than all the
outstanding Securities unless all accrued and unpaid Distributions
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have been paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Debentures are distributed to holders of the
Securities, pursuant to the terms of the Indenture, the Debenture Issuer will
use its best efforts to have the Debentures listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities were listed
immediately prior to the distribution of the Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail
to each Holder of Securities to be redeemed or exchanged not fewer
than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Debentures. For purposes of the
calculation of the date of redemption or exchange and the dates on
which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in
the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities registered in the
name of and held of record by the Depository or its nominee (or any
successor Clearing Agency or its nominee) or any nominee, the
distribution of the proceeds of such redemption will be made to each
Clearing Agency Participant (or Person on whose behalf such nominee
holds such securities) in accordance with the procedures applied by
such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice, which notice may only be issued if
the Debentures are redeemed as set out in this Section 4 (which notice
will be irrevocable), then (A) while the Preferred Securities are in
book-entry only form, with respect to the Preferred Securities, by
12:00 noon, New York City time, on the redemption date, provided
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<PAGE> 69
that the Debenture Issuer has paid the Institutional Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Institutional Trustee will deposit
irrevocably with the Depository or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the applicable
Redemption Price with respect to the Preferred Securities and will
give the Depository irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities, and (B)
with respect to Preferred Securities issued in definitive form and
Common Securities, provided that the Debenture Issuer has paid the
Institutional Trustee a sufficient amount of cash in connection with
the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been
given and funds deposited as required, if applicable, then immediately
prior to the close of business on the date of such deposit, or on the
redemption date, as applicable, distributions will cease to accrue on
the Securities so called for redemption and all rights of Holders of
such Securities so called for redemption will cease, except the right
of the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Regular
Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such
date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not
paid either by the Institutional Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions
on such Securities will continue to accrue from the original
redemption date to the actual date of payment, in which case the
actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in respect of the
Preferred Securities, the Depository or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been
issued or, if Definitive
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<PAGE> 70
Preferred Security Certificates have been issued, to the Holder
thereof, and (B) in respect of the Common Securities to the Holder
thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws), provided the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any of
its subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class may direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with
respect to the Debentures, (ii) waive any past default and its consequences
that is waivable under Section ___ of the Indenture, or (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable, provided, however, that, where a consent
under the Indenture would require the consent or act of the Holders of greater
than a majority of the Holders in principal amount of Debentures affected
thereby (a "Super Majority"), the Institutional Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Preferred Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. The Institutional Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities. Other than with respect to directing the time, method and place of
conducting any remedy available to the Institutional Trustee or the Debenture
Trustee as set forth above, the Institutional Trustee shall not take any action
in accordance with the directions of the Holders of the Preferred Securities
under this paragraph unless the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust on
account of such action. If the Institutional Trustee fails to enforce its
rights under the Declaration, any
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<PAGE> 71
Holder of Preferred Securities may institute a legal proceeding directly
against any person to enforce the Institutional Trustee's rights under the
Declaration without first instituting a legal proceeding against the
Institutional Trustee or any other Person. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a holder
of Preferred Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Debentures. Except as provided in the preceding sentence, the Holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
Any approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of
any meeting at which Holders of Preferred Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
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<PAGE> 72
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Preferred Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under Section ____ of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable, provided that,
where a consent or action under the Indenture would require the consent or act
of the Holders of greater than a majority in principal amount of Debentures
affected thereby (a "Super Majority"), the Institutional Trustee may only give
such consent or take such action at the written direction of the Holders of at
least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Pursuant to this Section 6(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a vote
of the Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting any remedy available to the
Institutional Trustee or the Debenture Trustee as set forth above, the
Institutional Trustee shall not take any action in accordance with the
directions of the Holders of the Common Securities under this paragraph unless
the Institutional Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights under the Declaration, any
Holder of Common Securities may institute a legal proceeding directly against
any Person to enforce the Institutional Trustee's rights under the Declaration,
without first instituting a legal proceeding against the Institutional Trustee
or any other Person.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written con-
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<PAGE> 73
sent. The Regular Trustees will cause a notice of any meeting at which Holders
of Common Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to each Holder
of record of Common Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee
as the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination on the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders of
the Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the holders of greater than a majority in
aggregate principal amount of the Debentures (a "Super Majori-
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<PAGE> 74
ty"), the Institutional Trustee may only give such consent at the direction of
the Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding; provided, further, that the Institutional
Trustee shall not take any action in accordance with the directions of the
Holders of the Securities under this Section 7(b) unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default under the Declaration has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to each Holder of
the Preferred Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange,
Inc.
11. Acceptance of Securities Guarantee and Indenture.
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<PAGE> 75
Each Holder of Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights
to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.
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<PAGE> 76
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. [ ]
Certificate Evidencing Preferred Securities
of
MCN FINANCING I
____% Trust Originated Preferred Securities(SM) ("TOPrS"(SM))
(liquidation amount $25 per Preferred Security)
MCN FINANCING I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of preferred securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the
A1-1
<PAGE> 77
_____% Trust Originated Preferred Securities(SM) (liquidation amount $25 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of _______, 1996, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Preferred Securities Guarantee to
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of ____________, 199__.
MCN FINANCING I
By:________________________________
Name:
Title: Regular Trustee
A1-2
<PAGE> 78
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be
fixed at a rate per annum of ______% (the "Coupon Rate") of the stated
liquidation amount of $__ per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears for more than one quarter will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on ______ __, 1996, to
[Holders of record fifteen (15) days prior to such payment dates, which payment
dates shall correspond to the interest payment dates on the Debentures.] The
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") and, as a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
A1-3
<PAGE> 79
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert assignee's social security or tax identification number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_____________________________________________________________________________
_____________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-4
<PAGE> 80
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
MCN FINANCING I
______% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
MCN FINANCING I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
_________________ (the "Holder") is the registered owner of common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the ______% Trust Originated Common Securities (liquidation
amount $25 per Common Security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of _______, 1996, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder
is entitled to the benefits of the Common Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-1
<PAGE> 81
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of ____________, 199__.
MCN FINANCING I
By:________________________________
Name:
Title: Regular Trustee
A2-2
<PAGE> 82
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a
rate per annum of ______% (the "Coupon Rate") of the stated liquidation amount
of $__ per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing on _______ __, 1996, to Holders of
record fifteen (15) days prior to such payment dates, which payment dates shall
correspond to the interest payment dates on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence of such deferral, Distributions will also be deferred.
Despite such deferral, quarterly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarters.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-3
<PAGE> 83
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
_________________________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-4
<PAGE> 84
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 85
EXHIBIT C
UNDERWRITING AGREEMENT
B-1
<PAGE> 1
EXHIBIT 4-16
====================================
AMENDED AND RESTATED DECLARATION
OF TRUST
MCN FINANCING II
Dated as of , 1996
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TABLE OF CONTENTS
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ARTICLE I
INTERPRETATION AND DEFINITIONS
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SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.3 Reports by the Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.4 Periodic Reports to Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.6 Powers and Duties of the Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.8 Powers and Duties of the Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee . . . . . . . . . . . . . . . . 19
SECTION 3.10 Certain Rights of Institutional Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
TRUSTEES
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SECTION 5.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.3 Institutional Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware Trustee Generally . . . . . . . . . . . . 29
SECTION 5.5 Regular Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.6 Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.7 Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.8 Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.9 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.10 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.11 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . 33
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.2 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.7 Definitive Preferred Security Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent . . . . . . . . . . . . . . . . 49
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee . . . . . . . . . . . . . . . . . . . . . 51
SECTION 13.2 Representations and Warranties of Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 14.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.3 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.6 Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 14.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2-1
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
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CROSS-REFERENCE TABLE*
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Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
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310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(a)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annex I
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6(e)
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* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MCN FINANCING II
____________, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of , 1996, by the Trustees (as defined herein),
the Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the assets of the Trust to be issued
pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established MCN
Financing II (the "Trust"), a trust under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of , 1996 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on February , 1996, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and
Annexes and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
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"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the "Closing Time" and each "Date of
Delivery" under the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to
be dated as of ___________, 1996 of the Sponsor in respect of the Common
Securities.
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent
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of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of
Securities.
"Debenture Issuer" means MCN Corporation, a Michigan
corporation in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means NBD Bank, N.A., as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Institutional
Trustee, a specimen certificate for such series of Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.4.
"Direction" by a Person means a written direction signed:
(a) if the Person is a natural person, by that Person; or
(b) in any other case, in the name of such Person by one
or more Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
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"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of September 1, 1994,
among the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set
forth in Section 3.8(c).
"Investment Company" means an investment company as defined
in the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex
I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Preferred
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all outstanding Securities
of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
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(a) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 7.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement
to be dated as of ______, 1996, of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A- 1.
"Pricing Agreement" means the pricing agreement between the
Trust, the Debenture Issuer, and the underwriters designated by the Regular
Trustees with respect to the offer and sale of the Preferred Securities.
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"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Regular Trustee" has the meaning set forth in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means MCN Corporation, a Michigan corporation, or
any successor entity in a merger, consolidation or amalgamation, in its
capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of 10% or more of the aggregate liquidation
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amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all outstanding Securities
of the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Underwriting Agreement" means the Underwriting Agreement for
the offering and sale of Preferred Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of
the Trust Indenture Act that are required to be part of this Declaration and
shall, to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Section
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
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SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide the Institutional Trustee (i) within 14 days
after each record date for payment of Distributions, a list, in such form as
the Institutional Trustee may reasonably require, of the names and addresses of
the Holders of the Securities ("List of Holders") as of such record date,
provided that neither the Sponsor nor the Regular Trustees, on behalf of the
Trust, shall be obligated to provide such List of Holders at any time the List
of Holders does not differ from the most recent List of Holders given to the
Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Institutional Trustee. The Institutional
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity) provided that the
Institutional Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its
obligations under Section Section 311(a), 311(b) and 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after May 1 of each year, the Institutional
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Institutional Trustee such evidence of compliance
with any conditions precedent, if any,
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provided for in this Declaration that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the underlying
Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the
Preferred Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
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(i) is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall also
not be waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated,
and until such Events of Default have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Institutional Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Section Section 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Section Section 316(a)(1)(A)
and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such waiver,
any such default shall cease to exist and any Event of Default with respect to
the Common Securities arising therefrom shall be deemed to have been cured for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture
by the Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default with
respect to the Preferred Securities under this Declaration. Any waiver of an
Event of Default under the Indenture by the Institutional Trustee at the
direction of the Holders of the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of the
corresponding Event of Default under this Declaration with respect to the
Common Securities for all purposes of this Declaration without further act,
vote or consent of the Holders of the Common Securities. The foregoing
provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of
the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture
Act is hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act.
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SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Securities, notices of all defaults with
respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving
of such notice (the term "defaults" for the purposes of this Section 2.7(a)
being hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided that, except for a default in
the payment of principal of (or premium, if any) or interest on any of the
Debentures or in the payment of any sinking fund installment established for
the Debentures, the Institutional Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Institutional
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Institutional Trustee shall not be deemed to
have knowledge of any default except:
(i) a default under Sections 501 and 503 of the
Indenture; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible Officer
of the Institutional Trustee charged with the administration of the
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "MCN Financing II," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o MCN
Corporation, 500 Griswold Street, Detroit, Michigan 48226. On ten Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
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SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal
income tax purposes as a grantor trust.
The Trust will be classified as a grantor trust for United
States federal income tax purposes under Subpart E of Subchapter J of the Code,
pursuant to which the owners of the Preferred Securities and the Common
Securities will be the owners of the Trust for United States federal income tax
purposes, and such owners will include directly in their gross income the
income, gain, deduction or loss of the Trust as if the Trust did not exist. By
the acceptance of this Trust, neither the Trustees, the Sponsor nor the owners
of the Preferred Securities or Common Securities will take any position for
United States federal income tax purposes which is contrary to the
classification of the Trust as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to
the specific duties of the Institutional Trustee, the Regular Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Institutional Trustee Account or as otherwise provided in
this Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided,
however , that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common Securities,
and, provided further, that there shall be no interests in the Trust
other than the Securities, and the issuance of Securities shall be
limited to a
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simultaneous issuance of both Preferred Securities and Common
Securities on each Closing Date;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the
registration statement on Form S-3 prepared by the Sponsor,
including any amendments thereto, pertaining to the Preferred
Securities;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor to
be necessary in order to qualify or register all or part of
the Preferred Securities in any State in which the Sponsor has
determined to qualify or register such Preferred Securities
for sale;
(iii) execute and file an application, prepared
by the Sponsor, to the New York Stock Exchange, Inc. or any
other national stock exchange or the Nasdaq Stock Market's
National Market for listing upon notice of issuance of any
Preferred Securities;
(iv) execute and file with the Commission a
registration statement on Form 8-A, including any amendments
thereto, prepared by the Sponsor, relating to the registration
of the Preferred Securities under Section 12(b) of the
Exchange Act; and
(v) execute and enter into the Underwriting
Agreement and Pricing Agreement providing for the sale of the
Preferred Securities;
(c) to acquire the Debentures with the proceeds of the
sale of the Preferred Securities and the Common Securities; provided,
however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional
Trustee for the benefit of the Holders of the Preferred Securities and
the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee
prompt written notice of the occurrence of a Special Event; provided
that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any
Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes
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of Section 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices to
the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may
be required of the Regular Trustees pursuant to the terms of the
Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to
bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable compensation
for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by Section
314(a)(4) of the Trust Indenture Act to the Institutional Trustee,
which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary, appropriate,
convenient or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's
valid existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of each
other jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Preferred Securities or to
enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trustees
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determine in their discretion to be necessary or desirable in carrying out
the activities of the Trust as set out in this Section 3.6, including, but not
limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor trust;
and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated as indebtedness of
the Debenture Issuer for United States federal income tax
purposes,
provided that such action does not adversely affect the interests of
Holders;
(p) to take all action necessary to cause all
applicable tax returns and tax information reports that are required
to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform
all duties and powers, and do all things for and on behalf of the
Trust in all matters necessary or incidental to the foregoing;
The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust
set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Institutional Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including
the Institutional Trustee) shall not, engage in any activity other than as
required or authorized by this Declaration. In
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particular, the Trust shall not and the Trustees (including the Institutional
Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust other
than the Securities; or
(vii) other than as provided in this Declaration or Annex
I, (A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is waivable under the Indenture, (C) exercise any right
to rescind or annul any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an insubstantial risk
that for United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by
and held of record in the name of the Institutional Trustee in trust for the
benefit of the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 5.6. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.
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(b) The Institutional Trustee shall not transfer its
right, title and interest in the Debentures to the Regular Trustees or to the
Delaware Trustee (if the Institutional Trustee does not also act as Delaware
Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Institutional Trustee Account") in the
name of and under the exclusive control of the Institutional Trustee
on behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the
Institutional Trustee, deposit such funds into the Institutional
Trustee Account and make payments to the Holders of the Preferred
Securities and Holders of the Common Securities from the Institutional
Trustee Account in accordance with Section 6.1. Funds in the
Institutional Trustee Account shall be held uninvested until disbursed
in accordance with this Declaration. The Institutional Trustee
Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness is at
least equal to the rating assigned to the Preferred Securities by a
"nationally recognized statistical rating organization", as that term
is defined for purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain special events (as may be
defined in the terms of the Securities) arising from a change in law
or a change in legal interpretation or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions
and perform such duties as may be specifically required of the Institutional
Trustee pursuant to the terms of the Securities.
(e) The Institutional Trustee shall take any Legal
Action which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act.
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(f) The Institutional Trustee shall not resign as a
Trustee unless either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been
appointed and has accepted that appointment in accordance with Section
5.6.
(g) The Institutional Trustee shall have the legal
power to exercise all of the rights, powers and privileges of a holder of
Debentures under the Indenture and, if an Event of Default actually known to a
Responsible Officer of the Institutional Trustee occurs and is continuing, the
Institutional Trustee shall, for the benefit of Holders of the Securities,
enforce its rights as holder of the Debentures subject to the rights of the
Holders pursuant to the terms of such Securities.
(h) Subject to this Section 3.8, the Institutional
Trustee shall have none of the duties, liabilities, powers or the authority of
the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth
in this Section 3.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Institutional Trustee
shall not take any action that is inconsistent with the purposes and functions
of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee.
(a) The Institutional Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed
to relieve the Institutional Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
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(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the
Institutional Trustee shall be determined solely by the
express provisions of this Declaration and the Institutional
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall be
read into this Declaration against the Institutional Trustee;
and
(B) in the absence of bad faith on the part of
the Institutional Trustee, the Institutional Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional
Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Institutional
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Trustee against such risk or liability is not reasonably assured to
it;
(v) the Institutional Trustee's sole duty with respect
to the custody, safe keeping and physical preservation of the
Debentures and the Institutional Trustee Account shall be to deal with
such property in a similar manner as the Institutional Trustee deals
with similar property for its own account, subject to the protections
and limitations on liability afforded to the Institutional Trustee
under this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for
any interest on any money received by it except as it may otherwise
agree with the Sponsor. Money held by the Institutional Trustee need
not be segregated from other funds held by it except in relation to
the Institutional Trustee Account maintained by the Institutional
Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officers' Certificate;
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(iii) whenever in the administration of this Declaration,
the Institutional Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see
to any recording, filing or registration of any instrument (including
any financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel
or other experts and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Institutional
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Institutional Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Declaration at the request or direction of any Holder, unless
such Holder shall have provided to the Institutional Trustee security
and indemnity, reasonably satisfactory to the Institutional Trustee,
against the costs, expenses (including attorneys' fees and expenses
and the expenses of the Institutional Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as
may be requested by the Institutional Trustee provided, that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve the
Institutional Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Institutional Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Institutional Trustee, in its
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discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or
by or through agents, custodians, nominees or attorneys and the
Institutional Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due
care by it hereunder;
(ix) any action taken by the Institutional Trustee or
its agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Institutional Trustee or its
agents alone shall be sufficient and effective to perform any such
action and no third party shall be required to inquire as to the
authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration
the Institutional Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Institutional Trustee (i) may request
instructions from the Holders of the Securities which instructions may
only be given by the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on
or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Institutional Trustee to perform any act
or acts or exercise any right, power, duty or obligation conferred or imposed
on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts, or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Institutional Trustee shall be construed to be a duty.
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SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Institutional Trustee described
in this Declaration. Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, a majority of or, if
there are only two, any Regular Trustee or, if there is only one, such Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Regular Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for twenty-five (25) years from the
Closing Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge
with or into, or be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to any corporation or other body,
except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular
Trustees or, if there are more than two, a majority of the Regular Trustees and
without the consent of the Holders of the Securities, the Delaware Trustee or
the Institutional Trustee,
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consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same powers and
duties as the Institutional Trustee as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with
an other organization on which the Preferred Securities are then
listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any Successor
Securities) in any material respect (other than with respect to any
dilution of such Holders' interests in the Preferred Securities as a
result of such merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation
or replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, pref-
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erences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect
(other than with respect to any dilution of the Holders'
interest in the new entity); and
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall
not, except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to the
Preferred Securities, including any amendments thereto;
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(b) to determine the States in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than
actions which must be taken by the Trust, and advise the Trust of
actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of
any such States;
(c) to prepare for filing by the Trust an application
to the New York Stock Exchange or any other national stock exchange or
the Nasdaq National Market for listing upon notice of issuance of any
Preferred Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the Preferred Securities under Section 12(b) of the
Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Underwriting
Agreement and Pricing Agreement providing for the sale of the
Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be three (3), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a
majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; provided,
however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a
natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the "Delaware
Trustee"); (2) there shall be at least one Trustee who is an employee
or officer of, or is affiliated with the Sponsor (a "Regular
Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture
under the Trust Indenture Act, and such Trustee may also
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serve as Delaware Trustee if it meets the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law,
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable
law, then the Institutional Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
(c) The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Stree
Wilmington, Delaware 19890
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall
act as Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 5.3(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Institutional Trustee shall
cease to be eligible to so act under Section 5.3(a), the Institutional
Trustee shall immediately resign in the manner and with the effect set forth in
Section 5.6(c).
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(c) If the Institutional Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Institutional Trustee and the Holder of the Common
Securities (as if it were the obligor referred to in Section 310(b) of the
Trust Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed
to be specifically described in this Declaration for purposes of clause (i) of
the first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
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SECTION 5.4 Certain Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Regular Trustees.
The initial Regular Trustees shall be:
Daniel L. Schiffer
c/o MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
Sebastian Coppola
c/o MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
(a) Except as expressly set forth in this Declaration
and except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(b) Unless otherwise determined by the Regular
Trustees, and except as otherwise required by the Business Trust Act or
applicable law, any Regular Trustee is authorized to execute on behalf of the
Trust any documents which the Regular Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that, the
registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of
the Holders of a Majority in liquidation amount of the Common
Securities voting as a class at a meeting of the Holders of the Common
Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall
not be removed in accordance with Section 5.6(a) until a Successor
Institutional Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with this Section 5.6(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office
until his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the
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Sponsor and the Trust, which resignation shall take effect upon such delivery
or upon such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Institutional Trustee and delivered
to the Trust, the Sponsor and the resigning Institutional
Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use
their best efforts to promptly appoint a Successor Delaware Trustee or
Successor Institutional Trustee as the case may be if the Institutional Trustee
or the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Institutional Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Institutional
Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall
be liable for the acts or omissions to act of any Successor Institutional
Trustee or successor Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a
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vacancy shall occur. A resolution certifying the existence of such vacancy by
the Regular Trustees or, if there are more than two, a majority of the Regular
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section
5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of
the Regular Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of a Regular Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the Regular
Trustees. In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.
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SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the
Delaware Trustee, as the case may be, may be merged or converted or
with which either may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Institutional Trustee or the Delaware Trustee, as the case may
be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Debentures held by the Institutional Trustee (the amount of any such
payment being a "Payment Amount"), the Institutional Trustee shall and is
directed, to the extent funds are available
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for that purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall, on behalf of the Trust,
issue one class of preferred securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Preferred Securities") and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities.") The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the
Trust by a Regular Trustee. Such signature shall be the manual signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the Regular Trustees of the
Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage.
(c) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
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(e) Every Person, by virtue of having become a Holder
or a Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 7.2 Paying Agent.
In the event that the Preferred Securities are not in
book-entry only form, the Trust shall maintain in the borough of Manhattan,
City of New York, State of New York, an office or agency where the Preferred
Securities may be presented for payment ("Payment Agent"), and any such Paying
Agent shall comply with Section 317(b) of the Trust Indenture Act. The Trust
may appoint the Paying Agent and may appoint one or more additional paying
agents in such other locations as it shall determine. The term "Paying Agent"
includes any additional paying agent. The Trust may change any Paying Agent
without prior notice to any Holder. The Trust shall notify the Institutional
Trustee of the name and address of any Agent not a party to this Declaration.
If the Trust fails to appoint or maintain another entity as Paying Agent, the
Institutional Trustee shall act as such. The Trust or any of its Affiliates
may act as Paying Agent. The Trust shall initially act as Paying Agent for the
Preferred Securities and the Common Securities.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common
Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or
its equivalent with respect to the Holder of the Common Securities or
the Sponsor; the filing of a certificate of cancellation with respect
to the Trust or the revocation of the Holder of the Common Securities
or the Sponsor's charter and the expiration of 90 days after the date
of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution
of the Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities;
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(v) upon the occurrence and continuation of a Special
Event pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Securities and all of the Debentures
endorsed thereon shall have been distributed to the Holders of
Securities in exchange for all of the Securities; or
(vi) before the issuance of any Securities, with the
consent of all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a) and upon completion of the winding-up of
the Trust and its termination, the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities
shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any
Related Party may only transfer Common Securities to the Sponsor or a Related
Party of the Sponsor; provided that, any such transfer is subject to the
condition precedent that the transferor obtain the written opinion of
nationally recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
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The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust shall
have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance, will
be issued in the form of one or more, fully registered, global Preferred
Security Certificates (each a "Global Certificate"), to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificate(s) shall initially be registered on the books and records of the
Trust in the name of Cede & Co., the nominee of DTC, and no Preferred Security
Beneficial Owner will receive a definitive Preferred Security Certificate
representing such Preferred Security Beneficial Owner's interests in such
Global Certificate(s), except as provided in Section 9.7. Unless and until
definitive, fully registered Preferred Security Certificates (the "Definitive
Preferred Security Certificates") have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7:
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(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Declaration
(including the payment of Distributions on the Global Certificate(s)
and receiving approvals, votes or consents hereunder) as the Holder of
the Preferred Securities and the sole holder of the Global
Certificate(s) and shall have no obligation to the Preferred Security
Beneficial Owners;
(c) to the extent that the provisions of this Section
9.4 conflict with any other provisions of this Declaration, the
provisions of this Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial
Owners shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants. DTC will make book entry transfers among the Clearing
Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, unless and until
Definitive Preferred Security Certificates shall have been issued to the
Preferred Security Beneficial Owners pursuant to Section 9.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Preferred Security Holders to the Clearing Agency, and shall have
no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred Securities.
SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its
services as securities depositary with respect to the Preferred
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Securities and a successor Clearing Agency is not appointed within 90
days after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with
the Sponsor to terminate the book entry system through the Clearing
Agency with respect to the Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect
to such Preferred Securities; and
(d) upon surrender of the Global Certificate(s) by the
Clearing Agency, accompanied by registration instructions, the Regular
Trustees shall cause Definitive Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the
Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in
relying on, said instructions of the Clearing Agency. The Definitive
Preferred Security Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which Preferred
Securities may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to
the Regular Trustees, or if the Regular Trustees shall receive
evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees
such security or indemnity as may be required by them to keep each of
them harmless.
then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on
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behalf of the Trust shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like denomination. In connection with the issuance of any new Certificate
under this Section 9.8, the Regular Trustees may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration,
the Debentures, the Securities Guarantees and the terms of the Securities, the
Sponsor shall not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust;
and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable
for all of the debts and obligations of the Trust (other than with respect to
the Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Preferred Securities shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this
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Declaration or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified Person's
gross negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than the duties imposed on the Institutional Trustee
under the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not
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constitute a breach of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Person at law or in
equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person
is permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the Company Indemnified
Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure
a judgment in its favor by reason of the fact that he is or was a
Company Indemnified
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Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall
be made in respect of any claim, issue or matter as to which such
Company Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including dismissal of
an action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii)
of this Section 10.4(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person
is proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by
the Debenture Issuer in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such amount if it
shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this
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Section 10.4(a). Notwithstanding the foregoing, no advance shall be
made by the Debenture Issuer if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a
quorum of disinterested Regular Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Regular Trustees, counsel or the Common
Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or
Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred
Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights
to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent
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entity, or is or was serving at the request of such constituent entity
as a director, trustee, officer, employee or agent of another entity,
shall stand in the same position under the provisions of this Section
10.4(a) with respect to the resulting or surviving entity as he would
have with respect to such constituent entity if its separate existence
had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall,
unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a Company Indemnified Person and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the (i)
Institutional Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Institutional Trustee and the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees, representatives,
custodians, nominees or agents of the Institutional Trustee and the Delaware
Trustee (each of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any loss, liability or expense incurred without gross
negligence (or, in the case of the Institutional Trustee, pursuant to Section
3.9, neglience) or bad faith on its part, arising out of or in connection with
the acceptance or administration or the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
obligation to indemnify as set forth in this Section 10.4(b) shall survive the
satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated
to present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Institutional Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
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particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly
prepared and delivered to each of the Holders of Securities, any annual United
States federal income tax information statement, required by the Code,
containing such information with regard to the Securities held by each Holder
as is required by the Code and the Treasury Regulations. Notwithstanding any
right under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such
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other form required by United States federal income tax law, and any other
annual income tax returns required to be filed by the Regular Trustees on
behalf of the Trust with any state or local taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Institutional Trustee shall be
made directly to the Institutional Trustee Account and no other funds of the
Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Institutional Trustee shall designate the
signatories for the Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of any claimed over withholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or
by any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
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(i) the Regular Trustees (or, if there are more than
two Regular Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Institutional Trustee, the Institutional Trustee shall have first
received:
(A) an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel
to the Sponsor or the Trust) that such amendment is permitted
by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(iii) to the extent the result of such amendment would be
to:
(A) cause the trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Institutional Trustee in contravention of the
Trust Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
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(c) at such time after the Trust has issued any
Securities that remain outstanding, any amendment that would adversely affect
the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the
terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common Securities
and;
(f) the rights of the holders of the Common Securities
under Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration
may be amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations
of the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory authority
which amendment does not have a material adverse effect on the right,
preferences or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the
Amended Declaration to such extent as may be necessary, provided such
modification, elimination or addition would not adversely affect the
rights, privileges or preference of any Holder of the Securities.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities
may be called at any time by the Regular Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration,
the terms of the Securities or the rules of any stock exchange on which the
Pre-
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ferred Securities are listed or admitted for trading. The Regular Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the Regular Trustees one or more
calls in a writing stating that the signing Holders of Securities wish to call
a meeting and indicating the general or specific purpose for which the meeting
is to be called. Any Holders of Securities calling a meeting shall specify in
writing the Security Certificates held by the Holders of Securities exercising
the right to call a meeting and only those Securities specified shall be
counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the
terms of the Securities, the following provisions shall apply to meetings of
Holders of Securities:
(i) notice of any such meeting shall be given to all
the Holders of Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
exchange on which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting
of the Holders of Securities may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by the
Holders of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize
or take such action at a meeting at which all Holders of Securities
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person
to act for it by proxy on all matters in which a Holder of Securities
is entitled to participate, including waiving notice of any meeting,
or voting or participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Holder of Securities executing it. Except as
otherwise provided herein, all matters relating to the giving,
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voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall
be conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration,
the terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Preferred Securities are then
listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee
represents and warrants to the Trust and to the Sponsor at the date of this
Declaration, and each Successor Institutional Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Institutional
Trustee's acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is [national banking
association] with trust powers, duly organized, validly existing and
in good standing under the laws of the United States, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the
Institutional Trustee of the Declaration has been duly authorized by
all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the
Institutional Trustee, and it constitutes a legal, valid and binding
obligation of the
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Institutional Trustee, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of
the court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of the
Declaration by the Institutional Trustee does not conflict with or
constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
(e) the Institutional Trustee, pursuant to this
Declaration, shall hold legal title and a valid ownership interest in
the Debentures.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform
its obligations under the Certificate of Trust and the Declaration.
The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity
or at law);
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(c) No consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority
is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders of the
Securities):
MCN Financing II
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may
give notice of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(c) if given to the Institutional Trustee, at its
Corporate Trust Office to the attention of Corporate Trust
Administration (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities):
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other
address as the Holder of the Common Securities may give notice to the
Trust):
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MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 14.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application
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of such provision to persons or circumstances other than those to which it
is held invalid, shall not be affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
-------------------------------
Daniel L. Schiffer, as Regular
Trustee
-------------------------------
Sebastian Coppola, as Regular
Trustee
Wilmington Trust Company,
as Delaware Trustee
By:
----------------------------
Name: Norma Closs
Title: Vice President
Wilmington Trust Company,
as Institutional Trustee
By:
----------------------------
Name:
Title:
MCN Corporation, as Sponsor
By:
----------------------------
Name: Sebastian Coppola
Title: Vice President
and Treasurer
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ANNEX I
TERMS OF
___% TRUST ORIGINATED PREFERRED SECURITIES
___% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of _______, 1996 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. ____________________ Preferred
Securities of the Trust with an aggregate liquidation amount with respect to
the assets of the Trust of __________ dollars ($_____________) and a
liquidation amount with respect to the assets of the Trust of $25 per preferred
security, are hereby designated for the purposes of identification only as
"_____% Trust Originated Preferred SecuritiesSM ('TOPrS'SM)" (the "Preferred
Securities"). The Preferred Security Certificates evidencing the Preferred
Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Preferred Securities are listed.
(b) Common Securities. ______________ Common Securities
of the Trust with an aggregate liquidation amount with respect to the assets of
the Trust of ___________________ dollars ($______________) and a liquidation
amount with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as "______% Trust
Originated Common Securities" (the "Common Securities"). The Common Security
Certificates evidencing the Common Securities shall be substantially in the
form of Exhibit A-2 to the Declaration, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or
practice.
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2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of ______% (the "Coupon Rate") of the stated liquidation
amount of $25 per Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative,
will accrue from ________, 1996, and will be payable quarterly in arrears, on
March 31, June 30, September 30, and December 31 of each year, commencing on
__________, 1996, except as otherwise described below. The Debenture Issuer
has the right under the Indenture to defer payments of interest by extending
the interest payment period from time to time on the Debentures for a period
not exceeding 20 consecutive quarters (each an "Extension Period"), during
which Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall last beyond the date of maturity of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the
Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. While the Preferred
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Securities remain in book-entry only form, the relevant record dates shall be
one Business Day prior to the relevant payment dates which payment dates
correspond to the interest payment dates on the Debentures. Subject to any
applicable laws and regulations and the provisions of the Declaration, each
such payment in respect of the Preferred Securities will be made as described
under the heading "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company" in the Prospectus Supplement
dated______, 1996, to the Prospectus dated ______, 1996 (together, the
"Prospectus"), of the Trust included in the Registration Statement on Form S-3
of the Sponsor, the Trust and certain other business trusts. The relevant
record dates for the Common Securities shall be the same record date as for the
Preferred Securities. If the Preferred Securities shall not continue to remain
in book-entry only form, the relevant record dates for the Preferred
Securities, shall conform to the rules of any securities exchange on which the
securities are listed and, if none, shall be selected by the Regular Trustees,
which dates shall be at least one Business Day but less than 60 Business Days
before the relevant payment dates, which payment dates correspond to the
interest payment dates on the Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name such
Securities are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination, as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of liabilities of creditors an
amount equal to the aggregate of the stated liquidation amount of
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$25 per Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination, Debentures in an
aggregate principal amount equal to the aggregate stated liquidation amount of
such Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in
part, whether at maturity or upon redemption (either at the option of the
Debenture Issuer or pursuant to a Special Event as described below), the
proceeds from such repayment or payment shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at a redemption price
of $25 per Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash (the "Redemption
Price"). Holders will be given not less than 30 nor more than 60 days notice
of such redemption.
(b) If fewer than all the outstanding Securities are to
be so redeemed, the Common Securities and the Preferred Securities will be
redeemed Pro Rata and the Preferred Securities to be redeemed will be as
described in Section 4(f)(ii) below.
(c) If a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") shall occur and be continuing the
Regular Trustees shall, except in certain limited circumstances in relation to
a Tax Event described in this Section 4(c), dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Institutional Trustee,
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued
and unpaid interest equal to accrued and unpaid Distributions on, and having
the same record date for payment as the Securities, to be distributed to the
Holders of the Securities in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90 Day Period"); provided, however, that, as a condition of
such dissolution and distribution, the Regular Trustees shall have received an
opinion of
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a nationally recognized independent tax counsel experienced in such matters (a
"No Recognition Opinion"), which opinion may rely on published revenue rulings
of the Internal Revenue Service, to the effect that the Holders of the
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of the dissolution of the Trust and the distribution
of Debentures, and provided, further, that, if at the time there is available
to the Trust the opportunity to eliminate, within the 90 Day Period, the
Special Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure that has
no adverse effect on the Trust, the Debenture Issuer, the Sponsor or the
Holders of the Securities ("Ministerial Action"), the Trust will pursue such
Ministerial Action in lieu of dissolution.
If (i) in the event of a Tax Event, after receipt of a Tax
Event Opinion (as defined hereinafter) by the Regular Trustees, the Debenture
Issuer has received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that the
Debenture Issuer would be precluded from deducting the interest on the
Debentures for United States federal income tax purposes even if the Debentures
were distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), or (ii) in the event
of any Special Event, after receipt of a Tax Event Opinion or Investment
Company Event Opinion (as defined hereinafter), as the case may be, the Regular
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, the Debenture Issuer shall have the
right at any time, upon not less than 30 nor more than 60 days notice, to
redeem the Debentures in whole or in part for cash within 90 days following the
occurrence of such Special Event, and, following such redemption, Securities
with an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so redeemed shall be redeemed by the Trust at the Redemption
Price on a Pro Rata basis; provided, however, that, if at the time there is
available to the Trust the opportunity to eliminate, within such 90 day period,
the Special Event by taking some Ministerial Action, the Trust or the Debenture
Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Tax Event Opinion") to the effect that on or
after the date of the Prospectus Supplement, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority therefor or therein, or (b) any amendment to, or change in, an
interpretation or application of any
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such laws or regulations by any legislative body, court, governmental agency or
regulatory authority, which amendment or change is enacted, promulgated, issued
or announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the date of the Prospectus
Supplement, there is more than an insubstantial risk that (i) the Trust is or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to interest accrued or received on the Debentures, (ii)
the Trust is, or will be within 90 days of the date thereof, subject to more
than a de minimis amount of taxes, duties or other governmental charges, or
(iii) interest payable by the Debenture Issuer to the Trust on the Debentures
is not, or within 90 days of the date thereof will not be, deductible, in whole
or in part, by the Debenture Issuer for United States federal income tax
purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act (an "Investment
Company Event Opinion") that, as a result of the occurrence of a change in law
or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is a more than an insubstantial
risk that the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after the date of the Prospectus
Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depository") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Debentures to be
delivered upon such distribution and any certificates representing Securities,
except for certificates representing Preferred Securities held by the
Depository or its nominee (or any successor Clearing Agency or its nominee),
will be deemed to represent beneficial interests in the Debentures having an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the Coupon Rate of, and accrued and unpaid
interest equal to accrued and unpaid Distributions on such Securities until
such certificates are presented to the Debenture Issuer or its agent for
transfer or reissue.
(d) The Trust may not redeem fewer than all the
outstanding Securities unless all accrued and unpaid Distributions
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have been paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Debentures are distributed to holders of the
Securities, pursuant to the terms of the Indenture, the Debenture Issuer will
use its best efforts to have the Debentures listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities were listed
immediately prior to the distribution of the Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail
to each Holder of Securities to be redeemed or exchanged not fewer
than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Debentures. For purposes of the
calculation of the date of redemption or exchange and the dates on
which notices are given pursuant to this Section 4(f)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in
the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities registered in the
name of and held of record by the Depository or its nominee (or any
successor Clearing Agency or its nominee) or any nominee, the
distribution of the proceeds of such redemption will be made to each
Clearing Agency Participant (or Person on whose behalf such nominee
holds such securities) in accordance with the procedures applied by
such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice, which notice may only be issued if
the Debentures are redeemed as set out in this Section 4 (which notice
will be irrevocable), then (A) while the Preferred Securities are in
book-entry only form, with respect to the Preferred Securities, by
12:00 noon, New York City time, on the redemption date, provided
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that the Debenture Issuer has paid the Institutional Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Institutional Trustee will deposit
irrevocably with the Depository or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the applicable
Redemption Price with respect to the Preferred Securities and will
give the Depository irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities, and (B)
with respect to Preferred Securities issued in definitive form and
Common Securities, provided that the Debenture Issuer has paid the
Institutional Trustee a sufficient amount of cash in connection with
the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been
given and funds deposited as required, if applicable, then immediately
prior to the close of business on the date of such deposit, or on the
redemption date, as applicable, distributions will cease to accrue on
the Securities so called for redemption and all rights of Holders of
such Securities so called for redemption will cease, except the right
of the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Regular
Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such
date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not
paid either by the Institutional Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions
on such Securities will continue to accrue from the original
redemption date to the actual date of payment, in which case the
actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in respect of the
Preferred Securities, the Depository or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been
issued or, if Definitive
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Preferred Security Certificates have been issued, to the Holder
thereof, and (B) in respect of the Common Securities to the Holder
thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws), provided the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any of
its subsidiaries may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class may direct the time, method, and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or exercising any trust or power conferred on the Debenture Trustee with
respect to the Debentures, (ii) waive any past default and its consequences
that is waivable under Section ___ of the Indenture, or (iii) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable, provided, however, that, where a consent
under the Indenture would require the consent or act of the Holders of greater
than a majority of the Holders in principal amount of Debentures affected
thereby (a "Super Majority"), the Institutional Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Preferred Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. The Institutional Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities. Other than with respect to directing the time, method and place of
conducting any remedy available to the Institutional Trustee or the Debenture
Trustee as set forth above, the Institutional Trustee shall not take any action
in accordance with the directions of the Holders of the Preferred Securities
under this paragraph unless the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust on
account of such action. If the Institutional Trustee fails to enforce its
rights under the Declaration, any
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Holder of Preferred Securities may institute a legal proceeding directly
against any person to enforce the Institutional Trustee's rights under the
Declaration without first instituting a legal proceeding against the
Institutional Trustee or any other Person. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a holder
of Preferred Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Debentures. Except as provided in the preceding sentence, the Holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
Any approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Regular Trustees will cause a notice of
any meeting at which Holders of Preferred Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
66
<PAGE> 72
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Preferred Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under Section ____ of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable, provided that,
where a consent or action under the Indenture would require the consent or act
of the Holders of greater than a majority in principal amount of Debentures
affected thereby (a "Super Majority"), the Institutional Trustee may only give
such consent or take such action at the written direction of the Holders of at
least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Pursuant to this Section 6(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a vote
of the Holders of the Preferred Securities. Other than with respect to
directing the time, method and place of conducting any remedy available to the
Institutional Trustee or the Debenture Trustee as set forth above, the
Institutional Trustee shall not take any action in accordance with the
directions of the Holders of the Common Securities under this paragraph unless
the Institutional Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights under the Declaration, any
Holder of Common Securities may institute a legal proceeding directly against
any Person to enforce the Institutional Trustee's rights under the Declaration,
without first instituting a legal proceeding against the Institutional Trustee
or any other Person.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written con-
67
<PAGE> 73
sent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee
as the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination on the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders of
the Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the holders of greater than a majority in
aggregate principal amount of the Debentures (a "Super Majori-
68
<PAGE> 74
ty"), the Institutional Trustee may only give such consent at the direction of
the Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding; provided, further, that the Institutional
Trustee shall not take any action in accordance with the directions of the
Holders of the Securities under this Section 7(b) unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default under the Declaration has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to each Holder of
the Preferred Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange,
Inc.
11. Acceptance of Securities Guarantee and Indenture.
69
<PAGE> 75
Each Holder of Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights
to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.
70
<PAGE> 76
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. [ ]
Certificate Evidencing Preferred Securities
of
MCN FINANCING II
____% Trust Originated Preferred Securities(SM) ("TOPrS"(SM))
(liquidation amount $25 per Preferred Security)
MCN FINANCING II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of preferred securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the
A1-1
<PAGE> 77
_____% Trust Originated Preferred Securities(SM) (liquidation amount $25 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of _______, 1996, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Preferred Securities Guarantee to
the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of ____________, 199__.
MCN FINANCING II
By:
--------------------------------
Name:
Title: Regular Trustee
A1-2
<PAGE> 78
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be
fixed at a rate per annum of ______% (the "Coupon Rate") of the stated
liquidation amount of $__ per Preferred Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears for more than one quarter will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 90-day quarter.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on ______ __, 1996, to
[Holders of record fifteen (15) days prior to such payment dates, which payment
dates shall correspond to the interest payment dates on the Debentures.] The
Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period") and, as a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided
in the Declaration.
A1-3
<PAGE> 79
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer
- ---------------------------------------------------------------
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date:
--------------------------
Signature:
---------------------
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-4
<PAGE> 80
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
MCN FINANCING II
______% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
MCN FINANCING II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
_________________ (the "Holder") is the registered owner of common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the ______% Trust Originated Common Securities (liquidation
amount $25 per Common Security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of _______, 1996, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder
is entitled to the benefits of the Common Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Common Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-1
<PAGE> 81
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of ____________, 199__.
MCN FINANCING II
By:
--------------------------------
Name:
Title: Regular Trustee
A2-2
<PAGE> 82
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a
rate per annum of ______% (the "Coupon Rate") of the stated liquidation amount
of $__ per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarter will bear interest thereon compounded quarterly at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears, on March 31, June 30, September 30
and December 31 of each year, commencing on _______ __, 1996, to Holders of
record fifteen (15) days prior to such payment dates, which payment dates shall
correspond to the interest payment dates on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period") and,
as a consequence of such deferral, Distributions will also be deferred.
Despite such deferral, quarterly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further extend such
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed 20 consecutive quarters.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-3
<PAGE> 83
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
-------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Common Security
- --------------------------------
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date:
------------------------
Signature:
-------------------
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-4
<PAGE> 84
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 85
EXHIBIT C
UNDERWRITING AGREEMENT
B-1
<PAGE> 1
EXHIBIT 5-1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM APPEARS HERE]
March 6, 1996
MCN Corporation
MCN Financing I
MCN Financing II
c/o MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
Re: MCN Corporation;
MCN Financing I;
MCN Financing II;
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to (1) MCN Corporation (the "Company"), a
corporation organized under the laws of the State of Michigan and (2) MCN
Financing I and MCN Financing II (each an "MCN Trust" and, together, the "MCN
Trusts"), statutory business trusts formed under the laws of the State of
Delaware, in connection with the preparation of a Registration Statement on
Form S-3, which is being filed by the Company and the MCN Trusts with the
Securities and Exchange Commission (the "Commission") on the date hereof under
the Securities Act of 1933, as amended (the "Act") (such Registration Statement
being hereinafter referred to as the "Registration Statement") relating to the
registration under the Act of the preferred securities (the "Preferred
Securities") of each of the MCN Trusts and certain other securities.
The Preferred Securities of each MCN Trust are to be issued pursuant to the
Amended and Restated Declaration of Trust of such MCN Trust (each a "Declara-
tion" and, collectively, the "Declarations"), each such Declaration being among
the Company, as sponsor, Wilmington Trust Company, as the institutional
trustee and as Delaware trustee (the "Institutional Trustee") and
Daniel L. Schiffer and Sebastian Coppola, as regular trustees (together, the
"Regular Trustees"). Capitalized terms used but not oth-
<PAGE> 2
MCN Corporation
March 6, 1996
Page 2
erwise defined herein have the meanings ascribed to them in the Registration
Statement.
This opinion is being delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the certificate
of trust of each of the MCN Trusts (the "Certificates of Trust") filed
with the Secretary of State of the State of Delaware on March 6, 1996; (ii)
the form of the Declaration of each of the MCN Trusts (including the
designation of the terms of the Preferred Securities annexed thereto); and
(iii) the form of the Preferred Securities of each of the MCN Trusts. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the MCN Trusts, we have assumed that
such parties had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that the Declaration
of each MCN Trust, and the Preferred Securities of each MCN Trust, when
executed, will be in substantially the form reviewed by us. As to any facts
material to the opinions expressed herein which were not independently
established or verified, we have relied upon oral or written statements and
representations of officers, trustees and other representatives of the Company,
the MCN Trusts and others.
<PAGE> 3
MCN Corporation
March 6, 1996
Page 3
Members of our firm are admitted to the bar in the State of Delaware, and we
express no opinion as to the laws of any other jurisdiction.
Based on and subject to the foregoing and to the other qualifications and
limitations set forth herein, we are of the opinion that the Preferred
Securities of each MCN Trust, when the Declaration of such MCN Trust is duly
executed and delivered and the terms of the Preferred Securities are
established in accordance with the terms of the Declaration of such MCN Trust,
will be duly authorized for issuance and, when issued and executed in
accordance with the Declaration of such MCN Trust and delivered and paid for as
set forth in the form of prospectus supplement for the Preferred Securities
included in the Registration Statement, will be validly issued, fully paid and
nonassessable, representing undivided beneficial interests in the assets of
such MCN Trust. We bring to your attention, however, that the Preferred
Securities holders may be obligated, pursuant to the Declaration of such MCN
Trust, to (i) provide indemnity and/or security in connection with and pay
taxes or governmental charges arising from transfers of Preferred Securities
and (ii) provide security and indemnity in connection with the requests of or
directions to the Institutional Trustee of such MCN Trust to exercise its
rights and powers under the Declaration of such MCN Trust.
We hereby consent to the filing of this opinion with the Commission as an
exhibit of Exhibit 5-1 to the Registration Statement. We also consent to the
use of our name under the heading "Validity of Securities" in the base
prospectus and "Legal Matters" in the prospectus supplements for the Preferred
Securities and for the Preferred Redeemable Dividend Equity Securities to be
issued by the Company included in the Registration Statement. In giving this
consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission promulgated thereunder. This opinion is
expressed as of the date hereof unless otherwise expressly stated and we
disclaim any undertaking to advise you of any subsequent changes of the facts
stated or assumed herein or any subsequent changes in applicable law.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM
<PAGE> 1
EXHIBIT 5-2
March 6, 1996
MCN Corporation
500 Griswold Street
Detroit, MI 48226
Ladies And Gentleman:
I am acting as counsel for MCN Corporation ("MCN"), a Michigan corporation
and MCN Financing I and MCN Financing II, each a Delaware business trust
(collectively, the "MCN Trusts"), in connection with its filing with the
Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-3 (the "Registration Statement") with respect to the
Company's (i) unsecured senior debt securities (the "Senior Debt Securities"),
(ii) unsecured subordinated debt securities (the "Subordinated Debt
Securities") (item (i) or (ii) above being referred to herein as the "Debt
Securities"), (iii) shares of common stock, $.01 par value per share, including
the preferred stock purchase rights associated therewith (collectively, "Common
Stock"), (iv) stock purchase contracts to purchase Common Stock ("Stock
Purchase Contracts"), and (v) stock purchase units, each representing ownership
of a Stock Purchase Contract and Debt Securities or debt obligations of third
parties, including U.S. Treasury Securities, securing the holder's obligation
to purchase the Common Stock under the Stock Purchase Contract ("Stock Purchase
Units"). The Registration Statement also relates to the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of preferred
securities of the MCN Trusts (the "Preferred Securities") and guarantees of the
Preferred Securities by MCN (the "Preferred Securities Guarantees" and,
together with the Debt Securities, the Common Stock, the Stock Purchase
Contracts, the Stock Purchase Units and the Preferred Securities, the "Offered
Securities"). The Offered Securities will be issued from time to time pursuant
to the provisions of Rule 415 under the Securities Act. Capitalized terms used
but not defined herein are used as defined in the Registration Statement.
In preparation for rendering my opinion hereafter expressed, I have
examined the originals or copies certified to my satisfaction of corporate
records and other documents and certificates as I have deemed necessary.
Based on the above, I am of the opinion that:
1. MCN is a corporation duly organized and validly existing pursuant to
the laws of the State of Michigan;
2. The Debt Securities, the Common Stock, the Stock Purchase Contracts
and the Stock Purchase Units, which are covered by the Registration
Statement, when sold will be legally issued by MCN, duly authorized, fully
paid and non-assessable and, in the case of the Debt Securities, will
constitute valid and binding obligations
<PAGE> 2
of MCN, enforceable against MCN in accordance with their terms, except as
such enforcement is subject to any applicable bankruptcy, insolvency,
reorganization or other law relating to or affecting creditors' rights
generally and general principles of equity; and
3. Upon issuance, the Preferred Securities Guarantees will constitute
the legal, valid and binding obligation of MCN, enforceable against MCN in
accordance with their terms, except as such enforcement is subject to any
applicable bankruptcy, insolvency, reorganization or other law relating
to or affecting creditors' right generally and general principles of
equity.
I hereby consent to the use of this opinion as Exhibit 5-2 to the
Registration Statement and to the use of my name under the caption "Validity of
Securities" in the Prospectus and "Legal Matters" in the Prospectus Supplements
included therein. This consent may be incorporated by reference into any
registration statement of MCN relating to the Offered Securities included in
this Registration Statement on Form S-3 filed after the date hereof pursuant to
Rule 462(b) of the Securities Act.
Very truly yours,
/s/ Daniel L. Schiffer
-----------------------------
Daniel L. Schiffer
Senior Vice President,
General Counsel and Secretary,
MCN Corporation
<PAGE> 1
EXHIBIT 8-1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM APPEARS HERE]
March 6, 1996
MCN Corporation
MCN Financing I
MCN Financing II
c/o MCN Corporation
500 Griswold Street
Detroit, Michigan 48226
Re: MCN Corporation;
MCN Financing I;
MCN Financing II;
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special United States tax counsel to (1) MCN Corporation
(the "Company"), a corporation organized under the laws of the State of
Michigan, and (2) MCN Financing I and MCN Financing II (each an "MCN Trust"
and, together, the "MCN Trusts,"), statutory business trusts formed under the
laws of the State of Delaware, in connection with the preparation of a
Registration Statement on Form S-3, which was filed by the Company and the MCN
Trusts with the Securities and Exchange Commission (the "Commission") on the
date hereof under the Securities Act of 1933, as amended (the "Act") (such
Registration Statement being hereinafter referred to as the "Registration
Statement") relating to the registration under the Act of the Preferred
Redeemable Increased Dividend Equity Securities (the "PRIDES") of the Company,
the preferred securities (the "Preferred Securities") of each of the MCN
Trusts, and certain other securities.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, such documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinion set forth herein.
Based upon the foregoing, we are of the opinion that the descriptions set
forth under the captions "Certain Federal Income Tax Consequences" and "United
States Federal Income Taxation" in the prospectus supplements for the offerings
of the PRIDES and the Preferred Securities, respectively, included as part of
the Registration Statement, correctly describe the material aspects of the
United States federal income tax treatment, as of the date hereof, of an
investment in the PRIDES and the Preferred Securities.
<PAGE> 2
MCN Corporation
March 6, 1996
Page 2
We hereby consent to the filing of this opinion with the Commission as part of
Exhibit 8-1 to the Registration Statement. We also consent to the use of our
name under the headings "Validity of Securities" in the base prospectus and
"Legal Matters" in the prospectus supplements for the PRIDES and the Preferred
Securities included within the Registration Statement. In giving this consent,
we do not thereby admit that we are within the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Commission promulgated thereunder. This opinion is expressed as of the
date hereof unless otherwise expressly stated and we disclaim any undertaking
to advise you of any subsequent changes of the facts stated or assumed herein
or any subsequent changes in applicable law.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
<PAGE> 1
EXHIBIT 23.1
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our reports dated February 8, 1996, appearing in and incorporated
by reference in the Annual Report on Form 10-K of MCN Corporation for the
year ended December 31, 1995 and to the reference to us under the heading
"Experts" in the Prospectus, which is a part of this Registration Statement.
/s/ Deloitte & Touche LLP
Detroit, Michigan
March 5, 1996
<PAGE> 1
EXHIBIT 23-2
[SAH LETTERHEAD]
March 1, 1996
MCN Corporation
500 Griswold
Detroit, Michigan 48226
Re: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of S. A. Holditch & Associates, Inc., consents to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated
December 28, 1995, appearing in the Annual Report on Form 10-K of MCN
Corporation for the year ended December 31, 1995, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration statement
of MCN Corporation relating to the securities included in this Registration
Statement on Form S-3 filed after the date hereof pursuant to Rule 462(b)
under the Securities Act of 1933, as amended.
Very truly yours,
W. DENTON COPELAND
W. Denton Copeland, P.E.
WDC/dg
<PAGE> 1
EXHIBIT 23-3
[LEE KEELING AND ASSOCIATES, INC. LETTERHEAD]
March 1, 1996
MCN Corporation
500 Griswold
Detroit, Michigan 48226
Re: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Lee Keeling and Associates, Inc., Petroleum Consultants, consents
to the incorporation by reference in this Registration Statement on Form S-3
of our report dated January 16, 1996, appearing in the Annual Report on
Form 10-K of MCN Corporation for the year ended December 31, 1995, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
This consent may be incorporated by reference into any registration statement
of MCN Corporation relating to the securities included in this Registration
Statement on Form S-3 filed after the date hereof pursuant to Rule 462(b)
under the Securities Act of 1933, as amended.
Very truly yours,
LEE KEELING AND ASSOCIATES, INC.
LEE KEELING AND ASSOCIATES, INC.
PETROLEUM CONSULTANTS
<PAGE> 1
EXHIBIT 23-4
[RYDER SCOTT COMPANY PETROLEUM ENGINEERS LETTERHEAD]
March 1, 1996
MCN Corporation
500 Griswold
Detroit, MI 48226
Re: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Ryder Scott Company Petroleum Engineers consents to the
incorporation by reference in this Registration Statement on Form S-3 of our
report dated February 16, 1996, appearing in the Annual Report on Form 10-K of
MCN Corporation for the year ended December 31, 1995, and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Corporation relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
Very truly yours,
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
<PAGE> 1
EXHIBIT 23-5
[MILLER AND LENTS, LTD. LETTERHEAD]
February 27, 1996
MCN Corporation
500 Griswold
Detroit, MI 48226
Re: MCN Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Miller and Lents, Ltd. consents to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated
January 12, 1996, appearing in the Annual Report on Form 10-K of MCN
Corporation for the year ended December 31, 1995, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Corporation relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
Miller and Lents, Ltd. has no interest in MCN Corporation or in any
affiliated companies or subsidiaries and is not to receive such interest as
payment for such reports and has no director, officer, or employee otherwise
connected with MCN Corporation. We are not employed by MCN Corporation on a
contingent basis.
Yours very truly,
MILLER AND LENTS, LTD.
By P.G. Von Tungeln
-------------------------------
P.G. Von Tungeln
President
PGVT/mk
<PAGE> 1
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Alfred R. Glancy III
--------------------
Alfred R. Glancy III
<PAGE> 2
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
William K. McCrackin
--------------------
William K. McCrackin
<PAGE> 3
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Stephen E. Ewing
----------------
Stephen E. Ewing
<PAGE> 4
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Roger Fridholm
--------------
Roger Fridholm
<PAGE> 5
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Frank M. Hennessey
------------------
Frank M. Hennessey
<PAGE> 6
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Thomas H. Jeffs II
------------------
Thomas H. Jeffs II
<PAGE> 7
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Arthur L. Johnson
-----------------
Arthur L. Johnson
<PAGE> 8
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Dale A. Johnson
---------------
Dale A. Johnson
<PAGE> 9
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Helen O. Petrauskas
-------------------
Helen O. Petrauskas
<PAGE> 10
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Daniel L. Schiffer and Patrick Zurlinden, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Howard F. Sims
--------------
Howard F. Sims
<PAGE> 11
EXHIBIT 24-1
POWER OF ATTORNEY
Know All Men By These Presents:
That the undersigned director or officer of MCN Corporation, a corporation
formed under the laws of the State of Michigan, does constitute and appoint
Alfred R. Glancy III and Daniel L. Schiffer, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including
any post-effective amendments and any subsequent Registration Statement filed
by MCN Corporation pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act"), or other filings in connection therewith, under the
1933 Act, as amended, with respect to the issuance of up to $302,781,250
maximum aggregate offering price of securities of MCN Corporation, including
MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units,
MCN Common Stock or the securities of any special purpose financing entity;
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and ratifying and confirming all
that such attorneys and agents, or either of them, may do or cause to be done
by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 22nd day
of February, 1996.
Patrick Zurlinden
-----------------
Patrick Zurlinden
<PAGE> 1
EXHIBIT 24-2
MCN CORPORATION
SECRETARY'S CERTIFICATE
The undersigned, Senior Vice President, General Counsel and Secretary
of MCN Corporation, a Michigan corporation, hereby certifies that the following
is a true and correct copy of a resolution duly adopted at a Regular Meeting of
the Board of Directors of MCN Corporation on February 22, 1996, and such
resolution has not been modified, amended or rescinded and remains in full
force and effect on the date hereof.
RESOLVED, it is in the best interest of the
Corporation to issue, from time to time, debentures, notes
and/or other debt obligations (the "Debt Securities"), Common
Stock and/or Preferred Securities (the "Stock"), guarantees,
Forward Purchase Contracts, Stock Purchase Units or such other
forms of investment contracts as may be deemed necessary or
desirable by the Authorized Officers (as defined below) (the
"Other Securities"; collectively the Debt Securities, the
Stock and the Other Securities are hereinafter referred to as
the "Securities"). The Securities may be denominated or
payable in or issued for an equivalent amount of foreign
currencies or foreign currency units, may be convertible into
or obligate the Corporation or any Subsidiary Entity (as
defined below) to issue or deliver securities of the
Corporation or any other entity or may be issued at original
issue discount, the aggregate amount of Securities hereby
authorized being that amount as may result in the initial
offering prices to the public for all Securities aggregating
up to $302,781,250 (determined in the case of foreign
currencies or foreign currency units based upon the equivalent
in U.S. Dollars, or in the case of other Securities or
property, based on the fair market value thereof, determined
by the Authorized Officers in good faith and consistent with
any applicable rules and regulations of the Securities and
Exchange Commission (the "SEC")), such amount, when combined
with the remaining authorizations previously approved by this
Board and carried over, totals $400 million;
FURTHER RESOLVED, that the Corporation is
authorized to form such business trusts, partnerships or other
subsidiary entities (collectively, the "Subsidiary Entities"),
as may be necessary or desirable to effectuate the issuance of
the Securities and to cause any such Subsidiary Entity to
issue Securities, trust certificates or partnership interests.
The Chairman of the Board, Vice-Chairman, or any
Vice-President (each an "Authorized Officer") are hereby
authorized, by and in the name of the Corporation, to execute
and deliver such agreements, declarations, certificates and
other documents as may be necessary or desirable in connection
with the formation of a Subsidiary Entity or the creation,
issuance, sale or delivery of Securities, trust certificates
or partnership interests by such Subsidiary Entity.
FURTHER RESOLVED, that the Corporation is
authorized, subject to the limitations set forth below, to
create, issue and sell the Securities on such terms and
conditions as shall be determined by the pricing committee of
directors and officers of the Corporation (the "Pricing
Committee") appointed by the Board of Directors' resolutions.
FURTHER RESOLVED, that any one Authorized
Officer be, and each of them hereby is, authorized, and
empowered to execute and deliver on behalf of the Corporation
an indenture or indentures, including one or more supplements
to any Indenture, in the form approved or authorized by the
Pricing Committee under the
<PAGE> 2
corporate seal to be thereto affixed and attested by the
Secretary, with the Trustee or Trustees appointed, such
indenture or indentures, or supplement or supplements, to be
in such form and content and bear such date as may be approved
by the Authorized Officer executing the same, such approval to
be conclusively evidenced by the execution of said indenture
or indentures, or supplement or supplements.
FURTHER RESOLVED, that subject to the
authority of the Pricing Committee to determine any discount
received by, or commission paid to, any underwriters or
agents, any one Authorized Officer is hereby authorized and
empowered to execute from time to time, on behalf of the
Corporation, a purchase agreement or agreements, an
underwriting agreement or agreements or any other type of
agreement between the Corporation and the underwriter or
representatives of the underwriters (or any agents) or any
other purchaser appointed and named in such underwriting
agreement or agreements or (other type of agreement) providing
for the sale by the Corporation and the purchase of Securities
by said underwriters, agents or other purchasers.
FURTHER RESOLVED, that any one Authorized
Officer be, and each of them hereby is, authorized, in the
name and on behalf of the Corporation, to execute and deliver
such other agreements, documents, certificates, and
instruments as may be required by any Fiduciary in connection
with an indenture, purchase contract agreement, pledge
agreement, trust agreement, partnership agreement or other
similar certificate, declaration or other document as may be
necessary or appropriate in connection with the issuance and
sale of the Securities.
FURTHER RESOLVED, that any one Authorized
Officer be, and each of them is hereby authorized and
empowered to appoint a Property Trustee, Purchase Contract
Agent, Collateral Agent and any other agent or trustee
necessary or appropriate in connection with the issuance or
sale of the Securities.
FURTHER RESOLVED, that any one Authorized
Officer be, and each of them hereby is, authorized and
empowered to execute the Securities in temporary and
definitive form, under his manual or facsimile signature and
under the facsimile seal of the Corporation, attested by the
manual or facsimile signature of the Secretary.
FURTHER RESOLVED, that any one Authorized
Officer be, and each of them hereby is, authorized, in the
name and on behalf of the Corporation and any Subsidiary
Entity, to prepare, execute and file, or cause to be prepared
and filed, with the SEC one or more Registration Statements
with respect to the Securities under the Securities Act of
1933, as amended, together with all documents required as
exhibits to said Registration Statement or Statements, or any
amendments or supplements thereto, and all certificates,
letters, instruments, applications and other documents which
may be required to be filed with the SEC with respect to the
<PAGE> 3
registration and offering of Securities, and to take any and
all actions that any such Authorized Officer shall deem
necessary or advisable.
FURTHER RESOLVED, that it is desirable and in
the best interest of the Corporation that the Securities be
qualified or registered for sale in various states; that any
one Authorized Officer is hereby authorized to perform on
behalf of the Corporation and any Subsidiary Entity any and
all such acts as they may deem necessary or advisable in order
to comply with the applicable laws of any states, and in
connection therewith to execute and file all requisite papers
and documents.
FURTHER RESOLVED, that any one Authorized
Officer be, and each of them hereby is, authorized, in the
name and on behalf of the Corporation and any Subsidiary
Entity, to make application to such securities exchange as the
officer acting shall deem necessary or appropriate for the
listing thereon of any issues of Securities by the Corporation
or any Subsidiary Entity.
FURTHER RESOLVED, that any one Authorized
Officer be, and each of them hereby is, authorized, and
directed to do and perform, or cause to be done and performed,
all such acts, deeds and things and to make, execute and
deliver, or cause to be made, executed and delivered, all such
agreements, undertakings, documents, instruments or
certificates in the name and on behalf of the Corporation or
otherwise as each such officer may deem necessary or
appropriate to effectuate or carry out fully the purpose and
intent of the foregoing resolutions, including the performance
of the obligations of the Corporation under Purchase
Agreements, Underwriting Agreements or Sales Agreements,
Indentures, Purchase Contract Agreements, Pledge Agreements,
Trust Agreements, Partnership Agreements or other similar
agreements, certificates or declarations, the Securities, any
Registration Statement or any other agreements related to the
Securities.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of March, 1996.
/s/ DANIEL L. SCHIFFER
-------------------------------
Daniel L. Schiffer, Senior Vice
President, General Counsel and
Secretary
<PAGE> 1
EXHIBIT 25-1
================================================================================
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A CORPORATION DESIGNATED
TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
____________________________
NBD BANK
(Exact name of Trustee as specified in its charter)
<TABLE>
<S> <C> <C>
611 Woodward Avenue
Detroit, Michigan 48226 38-0864715
(Address of principal executive offices) (Zip Code) (I.R.S. Employer Identification No.)
</TABLE>
NBD BANK
611 WOODWARD AVENUE
DETROIT, MICHIGAN 48226
CORPORATE TRUST DEPARTMENT
ATTN: JOSEPH L. WEIDENBACH (313) 225-2211
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
MCN CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Michigan 38-2820658
(State or jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
500 Griswold Street
Detroit, Michigan 48226
(Address of principal executive offices) (Zip Code)
SENIOR DEBT
(Title of the indenture securities)
<PAGE> 2
1. GENERAL INFORMATION
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
State of Michigan Department of Commerce Financial Institutions
Bureau, Lansing, Michigan
Federal Reserve Bank of Chicago, Chicago, Illinois
Federal Deposit Insurance Corporation, Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR.
The obligor is not an affiliate of the Trustee.
3. VOTING SECURITIES OF THE TRUSTEE.
The following information is furnished as to each class of voting
securities of the Trustee:
<TABLE>
<CAPTION>
AS OF FEBRUARY 28, 1996
_______________________________________________________________________
COLUMN A COLUMN B
_______________________________________________________________________
TITLE OF CLASS AMOUNT OUTSTANDING
_______________________________________________________________________
<S> <C>
Common Stock, par value $12.50 per share 8,948,648 shares
</TABLE>
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
NBD Bank is Trustee under an Indenture, dated September 1, 1994, with
MCN Corporation ("MCN"), securing an issue of $101,100,000 9-3/8%
Series A Subordinated Deferrable Interest Debt Securities due November
30, 2024. The Trustee is not aware of any default under this
Indenture.
NBD Bank is Trustee under an Indenture, dated September 1, 1995, with
MCN Investment Corporation ("MCN Investment"), a wholly owned
subsidiary of MCN Corporation ("MCN"), securing an issue of Medium-Term
Notes due February 1, 1999, February 1, 2001 and February 1, 2003,
respectively. The Trustee is not aware of any default under this
Indenture.
NBD Bank is Trustee under an Indenture, dated September 1,1995, with
MCN Investment, authorizing the issuance of up to $500,000,000 of
Medium-Term Notes Due Nine Months or More from Date of Issue. The
Trustee is not aware of any default under this Indenture.
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR
OR UNDERWRITERS.
Neither the Trustee nor any of the directors nor executive officers of
the Trustee is a director, officer, partner, employee, appointee or
representative of the underwriter for the obligor.
Alfred R. Glancy III, Chairman, President and CEO of MCN, is a member
of the Board of Directors of NBD Bank.
Thomas H. Jeffs II, President of NBD Bank, is a member of the Board of
Directors of MCN.
<PAGE> 3
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
Voting securities of the Trustee owned by the obligor and its
directors, partners and executive officers, taken as a group, do not
exceed one percent of the outstanding voting securities of the Trustee.
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Voting securities of the Trustee owned by any underwriter and its
directors, partners and executive officers, taken as a group, do
not exceed one percent of the outstanding voting securities of the
Trustee.
8. SECURITIES OF OBLIGOR OWNED OR HELD BY THE TRUSTEE.
The amount of securities of the obligor which the Trustee owns
beneficially or holds as collateral security for obligations in default
does not exceed one percent of the outstanding securities of the
obligor.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
The Trustee does not own beneficially or hold as collateral security
for obligations in default any securities of an underwriter for the
obligor.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
The Trustee does not own beneficially or hold as collateral security
for obligations in default voting securities of a person who, to
the knowledge of the Trustee (1) owns 10% or more of the voting
securities of the obligor, or (2) is an affiliate, other than a
subsidiary, of the obligor.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PER CENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
The Trustee does not own beneficially or hold as collateral security
for obligations in default any securities of a person who, to the
knowledge of the Trustee, owns 50 percent or more of the voting
securities of the obligor.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE AS OF FEBRUARY 27, 1996.
<TABLE>
_______________________________________________________________________
COLUMN A COLUMN B COLUMN C
_______________________________________________________________________
NATURE OF INDEBTEDNESS AMOUNT OUTSTANDING DATE DUE
_______________________________________________________________________
<S> <C> <C>
$30 million participation $0 July 30, 1998
in a $300 million
revolving credit facility
$3 million standby letter $489,421.22 July 30, 1998
of credit
</TABLE>
13. DEFAULTS BY THE OBLIGOR.
Not applicable.
<PAGE> 4
14. AFFILIATIONS WITH THE UNDERWRITERS.
No underwriter is an affiliate of the Trustee.
15. FOREIGN TRUSTEE.
Not applicable.
16. LIST OF EXHIBITS.
(1) Articles of Association of the Trustee. Attached hereto as
Exhibit A.
(2) Certificate of Authority of the Trustee to commence business.
See Exhibit A.
(3) Authorization of the Trustee to exercise corporate trust
powers. Attached hereto as Exhibit B.
(4) By-Laws of the Trustee. Attached hereto as Exhibit C.
(5) Not Applicable.
(6) Consent by the Trustee required by Section 321 (b) of the
Trust Indenture Act of 1939.
Incorporated by reference to Exhibit (6) filed with Amendment
No. 1 to Form T-1 Statement, Registration No. 22-4501.
(7) Report of condition of Trustee. Attached hereto as Exhibit D.
(8) Not applicable.
(9) Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the Trustee, NBD Bank, a Michigan banking corporation, has duly caused this
statement of eligibility and qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Detroit, State of
Michigan on the 29th day of February 1996.
NBD BANK
(Trustee)
By: ___________________________
Joseph L. Weidenbach
Trust Officer
<PAGE> 5
[NBD LOGO]
ARTICLES OF
INCORPORATION
AND
BYLAWS
<PAGE> 6
NBD BANK
DETROIT, MICHIGAN
Charter No. 970
ARTICLES OF INCORPORATION
EFFECTIVE JANUARY 1, 1995
FIRST.
The name of this Bank shall be NBD Bank.
SECOND.
The place where the principal office of this Bank is located is in the City of
Detroit, Wayne County, State of Michigan.
The Board of Directors shall have the power to change the location of the main
office anywhere within the City of Detroit without the approval of the
shareholders and shall have the power to establish or change the location of
any branch or branches of this Bank to any other location without the approval
of the shareholders.
THIRD.
The purpose of this Bank is to carry on the business of banking pursuant to the
Michigan Banking Code of 1969, as amended.
FOURTH.
The authorized amount of the capital stock of this Bank shall be 10,000,000
shares of common stock of the par value of $12.50 each. The authorized amount
of the capital stock of this Bank may be increased or decreased from time to
time in accordance with provisions of the laws of the State of Michigan.
FIFTH.
The period for which this Bank is organized is perpetual.
SIXTH.
A Director of the Bank shall not be personally liable to the Bank or its
shareholders for monetary damages for a breach of fiduciary duty as a Director,
except for liability: (a) for any breach of the Director's duty of loyalty to
the Bank or its shareholders; (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (c)
resulting from a violation of Section 43 of the Michigan Banking Code, as
amended; (d) for any transaction from which the Director derived an improper
personal benefit; or (e) for any act or omission occurring prior to the date
upon which this Article is duly adopted and filed as required by law. If,
following approval of this Article by the shareholders, the Michigan Banking
Code is amended to authorize corporate action further eliminating or limiting
the personal liability of
<PAGE> 7
Directors, then the liability of a Director of the Bank shall be eliminated or
limited to the fullest extent permitted by the Michigan Banking Code, as
amended. Any repeal, modification or adoption of any provisions in these
Articles of Incorporation inconsistent with this Article shall not adversely
affect any right or protection of a Director of the Bank existing at the time
of such repeal, modification or adoption.
SEVENTH.
These Articles of Incorporation may be changed or amended at any time by a vote
of the shareholders owning a majority of the stock of this Bank in any manner
not inconsistent with the provisions of law.
<PAGE> 8
STATE OF MICHIGAN
DEPARTMENT OF COMMERCE
FINANCIAL INSTITUTIONS BUREAU
[STATE EMBLEM]
OFFICE OF THE COMMISSIONER
I, Patrick M. McQueen, Commissioner, do hereby certify, that
NBD BANK
in the City of Detroit, County of Wayne, State of Michigan, a financial
institution existing and operating under the provisions of the banking code of
1969, having satisfactorily complied with all statutory requirements obtaining
in such matter, is hereby authorized to exercise FULL TRUST POWERS as provided
in sections 181 through 186 of the banking code of 1969, effective 11:59 p.m.
on December 31, 1994.
[STATE SEAL] SIGNED AND SEALED this 21st day of
DECEMBER 1994, at Lansing, Michigan.
/s/ Patrick M. McQueen
----------------------------
Patrick M. McQueen
Commissioner
<PAGE> 9
NBD BANK
DETROIT, MICHIGAN
________________________________
BYLAWS
EFFECTIVE JANUARY 1, 1995
________________________________
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. Annual Meetings. The regular Annual Meeting of the stockholders of
this Bank for the election of directors and for the transaction of any other
business as may properly come before the meeting shall be held on the third
Monday in May of each year or at such other date as from time to time may be
designated by the Board of Directors. If the election of directors shall not
be held on the day designated for an annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a
meeting of the stockholders as soon thereafter as convenient. Nominations for
election to the Board of Directors may be made by the Board of Directors or by
any stockholders entitled to vote for the election of directors.
Section 2. Special Meetings. Except as otherwise specifically provided by
statute, special meetings of the stockholders may be called for any purpose at
any time by the Board of Directors or by the holders of at least ten per cent
(10%) of the then outstanding shares of stock. Section 3. Place of Meetings.
Annual meetings or special meetings of the stockholders shall be held at the
main office of the Bank or at such other place within or without the State of
Michigan as is established by the Board of Directors.
Section 4. Proxies. All proxies secured for any annual or special meeting of
stockholders shall be dated and filed by the Secretary with the records of the
meeting.
Section 5. Notice of Meetings. Written notice stating the place, day and hour
of the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten days, before
the date of the meeting either personally or by mail, by or at the direction of
the President, or the Secretary, or the officer or persons calling the meeting
to each stockholder of record entitled to vote at such meeting. If mailed,
such notices shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
records of the Bank with postage thereon prepaid. Such notice may be waived in
writing.
Section 6. Fixing the Record Date. For the purpose of determining
stockholders entitled to
<PAGE> 10
notice of or to vote at any meeting of stockholders, annual or special, or
entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the Board of
Directors shall fix in advance a record date and hour for any such
determination of stockholders, such date in any case to be not more than fifty
(50) days and, in case of a meeting of stockholders, not less than ten (10)
days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. When a determination of
stockholders entitled to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
Section 7. Stockholders' Action Without A Meeting. Unless otherwise
restricted in the Articles of Incorporation or these Bylaws, any action which
may be taken at the annual or any special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by all stockholders
entitled to vote with respect to the subject matter thereof.
ARTICLE II
DIRECTORS
Section 1. Size and Vacancies. The Board of Directors shall consist of such
number of persons, not less than five nor more than twenty-five, as from time
to time shall be determined by a majority of the votes to which all
stockholders are at the time entitled or by resolution adopted by the
affirmative vote of a majority of the Board of Directors. Any vacancies in the
Board of Directors may be filled by action of a majority of the remaining
Directors between meetings of stockholders. Subject to the limitation as to
the number of Directors, the stockholders may elect not to exceed two less than
the full Board, and the unfilled directorships shall be considered as vacancies
and may be filled thereafter by the Board of Directors.
Section 2. Powers. The Board of Directors, a majority of whom shall be a
quorum to transact business, shall have power to manage and administer the
business and affairs of the Bank and to prescribe Bylaws for the regulation of
the business of the Bank and the conduct of its affairs not inconsistent with
law, the Articles of Incorporation and these Bylaws. Except as expressly
limited by law, all corporate powers of the Bank shall be vested in and may be
exercised by the Board of Directors.
Section 3. Officers and Employees. The Board of Directors shall have power to
elect or appoint such officers and employees as may be required to transact the
business of the Bank, to define their duties, to require bonds from them and to
fix the penalty thereof, and to continue them in office or dismiss them.
Section 4. Meetings. The regular meetings of the Board of Directors shall be
held on such date and at such time each month, within or without the State of
Michigan as shall from time to time be determined by the Board of Directors by
resolution, except that in the month in which the regular annual meeting of the
stockholders is held, the regular meeting of the Board of Directors shall be
held following and on the same day as the regular meeting of the stockholders.
When any regular meeting of the Board of Directors falls upon a holiday, the
meeting shall be held on
<PAGE> 11
such other day as the Board of Directors may previously designate. Special
meetings of the Board of Directors may be called at any time by the Secretary
or by any officer of higher rank than Vice President, or any three Directors.
Notice of each special meeting shall be given personally or by duly mailing,
telephoning, or telegraphing the same, at least twenty-four hours before the
meeting. Any or all Directors may waive notice of any meeting either before or
after the meeting.
Section 5. Participation In Meetings By Telephone. Unless otherwise
restricted by the Articles of Incorporation or these Bylaws, members of the
Board of Directors or any committee designated by the Board may participate in
a meeting of the Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Section 6. Directors' Action Without A Meeting. Unless otherwise restricted
by the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent thereto
is signed by all members of the Board or of such committee as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
or committee.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. There shall be a committee composed of not
less than four (4) members to be known as the Executive Committee which shall
consist of all the officer-directors of the Bank and two (2) other directors
appointed as shall be provided by the Board of Directors. Provision shall be
made by the Board of Directors for the appointment of alternates to act for
members in the event of their absence or disability.
1.1 Presiding Officer. The Chairman of the Board shall act as presiding
officer at any meeting of the Executive Committee. In the event of the absence
or disability of the Chairman of the Board, the President shall act as
presiding officer. In the event of the absence or disability of the Chairman
of the Board and President, another officer-director, if present, shall act as
presiding officer. If no officer-director member is present, an Executive Vice
President of the Bank may serve as the presiding officer or the other members
present at the meeting shall elect one of their members as presiding officer.
1.2 Quorum. Any two (2) persons, each of whom is a member or alternate
member of the Executive Committee, of whom not less than one (1) shall be
non-officer directors, shall constitute a quorum for the transaction of
business at any meeting of the Executive Committee.
1.3 Duties. The Executive Committee shall function from day to day or
such other short intervals as shall be found requisite and expedient in the
carrying on of the business and affairs of the Bank, and between meetings of
the Board of Directors, said Committee, within the scope of the jurisdiction
and functions assigned by the Board of Directors to such Committee, shall
<PAGE> 12
have and may exercise, so far as may be permitted by law, all power and
authority of the Board of Directors (including the right to authorize the seal
of the Bank to be affixed to all instruments on which the same may be required
or appropriate) and shall have power, but not by way of limitation of its
general powers, to discount and purchase bills, notes, and other evidences of
debt, and to buy and sell bills of exchange. A record of the meetings of the
Committee shall be kept, which shall be accessible to inspection by the
Directors at all times, and the Committee shall, at each regular meeting of the
Board of Directors and at such other times as the Board of Directors may
request, submit in writing a full report of its actions. The Board of
Directors shall approve or disapprove the report of the Executive Committee,
such action to be recorded in the minutes of the meeting; provided, however,
that no rights of third parties shall be affected by any action of the Board of
Directors, if such rights have attached by virtue of action of the Executive
Committee within the scope of the jurisdiction and functions assigned by the
Board of Directors to said Committee.
Section 2. Audit Committee. There shall be appointed annually by the Board of
Directors an Audit Committee composed of not less than three (3) Directors none
of whom shall be officers of the Bank.
2.1 Duties. The Audit Committee shall:
(i) Cause to be made by the Auditing Department of the Bank a
suitable examination of the financial records and operations of the Bank
through a program of continuous internal audits. The Committee may employ
independent certified public accounting firms of recognized standing to make
such additional examinations and audits as it may deem advisable. The
examinations caused to be made by the Committee shall meet any examination
requirements prescribed from time to time by the Michigan Financial
Institutions Bureau or other regulatory authorities having jurisdiction and may
be made in conjunction with examinations of the Michigan Financial Institutions
Bureau.
(ii) Report to the Board of Directors at least once in each
calendar year the results of the examinations made and such conclusions and
recommendations as the Committee deems appropriate.
Section 3. Other Committees. The Board of Directors may create and appoint
such other committees as it may, at any time or from time to time, find
necessary or desirable to facilitate and expedite the management and
administration of the affairs of the Bank. The Board of Directors shall have
power to specify the number of members of any such other committee, to
designate the powers and duties of any such other committee, and to provide for
the tenure in office of its members, its method of organization, and its
procedure for the transaction of business.
ARTICLE IV
OFFICERS
<PAGE> 13
Section 1. Appointment and Titles. The officers of this Bank shall include a
Chairman of the Board and a President and may include one or more Vice Chairman
of the Board, each of whom shall be a member of the Board of Directors, and
shall further include one or more Vice Presidents, a Secretary, one or more
Assistant Secretaries, and such other officers as may be from time to time
required for the prompt and orderly transaction of its business, to be elected
by the Board of Directors. The same person may hold any two or more offices,
and in any such case, these Bylaws shall be construed and understood
accordingly; provided that the same person may not hold the offices of Chairman
of the Board and Secretary or President and Secretary. The duties and
authorities of the officers of the Bank, other than those mentioned in these
Bylaws, shall be those usually pertaining to their respective offices, or as
may be designated by the Chairman of the Board, subject to the supervision and
direction of the Board of Directors.
Section 2. Term of Office of Officer-Directors. The Chairman of the Board,
the President and any Vice Chairman of the Board shall hold office for the
current year for which the Board of Directors of which they shall be members
was elected, unless they shall resign, become disqualified, or be removed; and
any vacancy occurring in any of such offices may be filled by the remaining
members of the Board of Directors.
Section 3. Chairman of the Board and President. The Chairman of the Board
shall be the chief executive officer of the Bank, shall preside at meetings of
stockholders and directors, shall have general supervision and direction of the
business of the Bank, and perform such other duties as may be designated by the
Board of Directors. The President shall perform such duties as may be
designated by the Board of Directors and, in the event of the absence or
disability of the Chairman of the Board, shall have his powers and duties. The
Vice Chairman of the Board shall perform such duties as may be designated by
the Board of Directors.
Section 4. Officers. All other officers shall be elected to hold their
respective offices at the pleasure of the Board of Directors of the Bank, and
shall have such duties, other than those mentioned herein, as shall be
prescribed by the Board of Directors.
Section 5. Secretary. The Secretary or Assistant Secretary or other officers
designated by the Board of Directors shall be responsible for stock books and
records, and other valuables of the Bank, and shall keep accurate minutes of
all meetings. The Secretary shall attend to the giving of all notices required
by these Bylaws to be given. He shall be custodian of the corporate seal,
records, documents and papers of the Bank. He shall provide for the keeping of
proper records of all transactions of the Bank. The Secretary, or Assistant
Secretary in his absence, shall have the power to sign indemnity agreements and
appoint agents by executing powers of attorney or such other similar documents
deemed necessary in the ordinary course of transacting the Bank's business. He
shall serve as Cashier, and he or his Deputy Cashiers shall have and may
exercise any and all other powers and duties pertaining by law, regulation or
practice, to the office of the Cashier, or imposed by these Bylaws. He shall
also perform such other duties as may be assigned to him, from time to time, by
the Board of Directors.
Section 6. Officers, Employees and Agents. All other officers, employees and
agents of this Bank shall be responsible for all such sums of money and
property of every kind as may be entrusted to their care or placed in their
hands by the Board of Directors, or otherwise come into
<PAGE> 14
their hands as officers, employees or agents; and shall qualify under the
bankers blanket bond covering the bank officers and employees, approved as to
type and amount from year to year by the Board of Directors, conditioned for
the honest and faithful discharge of their duties as such officers, employees
or agents, and that they will faithfully and honestly apply and account for all
sums of money and other property of this Bank that may come into their hands as
such officers, employees or agents and pay over and deliver the same to the
order of the Board of Directors, or to any other person or persons authorized
by the Board of Directors to receive the same.
ARTICLE V
SEAL
The Board may adopt a seal of the Bank in any form including a raised
impression or a stamp bearing the name of the Bank and the city and state of
its principal place of business. The Secretary shall be the official custodian
of the seal and shall be responsible for the safekeeping and proper use
thereof. The seal shall not be used or affixed to any paper or document
whatsoever except by the Secretary or any Assistant Secretary, or such other
officers or employees of the Bank as may be authorized by the Secretary or any
Assistant Secretary to affix the seal.
ARTICLE VI
EXECUTION OF INSTRUMENTS
Section 1. Conveyance of Real Estate. All transfers and conveyances of real
estate shall be made by the Bank, under seal, and shall be signed by the
President or any Vice President or any other officer, employee or agent of the
Bank as may be designated by the Secretary, and shall be attested by the
Secretary or any Assistant Secretary, or such other officer or employee of this
Bank as may be authorized by the Secretary to affix the seal.
Section 2. Contracts. All contracts, checks, drafts, etc., shall be signed by
the Secretary, or any officer of the rank of Vice President or higher rank, or
any other officer or employee designated by the Secretary.
Section 3. Absence of Resolution. No resolution of the Board of Directors
shall be necessary in order to authorize the execution, acknowledgement or
verification of any document by any officer who is authorized under these
Bylaws to do so, and he or she shall have full authority to act as if he or she
were duly authorized by resolution of the Board of Directors in each particular
case.
<PAGE> 15
ARTICLE VII
BANKING HOURS
The Bank shall be open for business upon such hours of each day of the
year as the Chief Executive Officer or his delegate shall from time to time
direct and the Chief Executive Officer or his delegate may, in his discretion,
prescribe different banking hours for different classes of business and
different banking hours for one or more branch offices, than prescribed for the
principal banking office.
ARTICLE VIII
MINUTE BOOK
The organization papers of this Bank, the returns of the judges of the
elections, the proceedings of all regular and special meetings of the Board of
Directors and of the stockholders, the Bylaws and any amendments thereto, and
reports of the committees of the Board of Directors shall be recorded in the
minute book and the minutes of each meeting shall be signed by the person
presiding at such meeting and attested by the Secretary.
ARTICLE IX
TRANSFERS OF STOCK
Section 1. Transfers. The stock of this Bank shall be assignable and
transferable only on the books of this Bank, subject to the restrictions and
provisions of the law; and a transfer book shall be provided in which all
assignments and transfers of stock shall be made.
Section 2. Record Date. The stock transfer books of the Bank shall not be
closed for the determination of stockholders entitled to dividends, but any
dividend can be made payable to stockholders of record on the date such
dividend is declared, or any subsequent date. The Bank shall be fully
protected in giving notices of meetings, paying dividends and doing such other
things as require a knowledge of the names of the stockholders of the Bank, in
relying upon the names of the stockholders as they appear upon the stock books
of the Bank.
Section 3. Form and Issuance. Certificates of stock, bearing the manual or
facsimile signature of the Chairman of the Board, President or any Vice
President, and the Secretary, or the manual or facsimile signature of any two
of such other employees of the Bank as may be designated for such purpose from
time to time by resolution of the Board of Directors, and bearing the impressed
or facsimile seal of the Bank, may be issued to stockholders. The death,
resignation, discharge or incapacity of any person whose manual or facsimile
signature appears on any certificate, shall not affect the validity of such
certificate of stock, whether such certificate has theretofore or is thereafter
issued. All certificates of stock shall state upon the face thereof that the
stock is transferable only upon the books of the Bank; and when stock is
transferred, the certificates therefore shall be returned to the Bank,
canceled, preserved and new certificates issued.
<PAGE> 16
ARTICLE X
PROXIES AND CONSENTS
Proxies to vote and written consent with respect to shares of stock of
other corporations owned by or standing in the name of the Bank may be executed
and delivered from time to time on behalf of the Bank by two officers, one of
whom shall be the Chairman, President, Executive Vice President, Senior Vice
President or a Vice President and the other of whom shall be the Secretary or
an Assistant Secretary of the Bank; or by any other person or persons duly
authorized by the Board of Directors.
ARTICLE XI
TRUST DIVISION
Section 1. Exercise of Fiduciary Powers. All fiduciary powers of the Bank
shall be exercised through the Trust Division under the supervision of the
Trust Committee, subject to the Michigan Banking Code and subject to such
regulations as the Michigan Financial Institutions Bureau shall from time to
time establish. All books and records relating to fiduciary activities shall
be kept separate and distinct from the other books and records of the Bank.
Section 2. Officer in Charge. The Trust Division shall be placed under the
management and immediate supervision of an officer in charge appointed by the
Board of Directors. The duties of such officer shall be to cause the policies
and instructions of the Board of Directors, the chief executive officer and the
Trust Committee, with respect to the fiduciary accounts entrusted to the Bank,
to be carried out, and to supervise the due performance of such accounts in
accordance with law and their terms.
Section 3. Other Officers. Any other officer specifically appointed for the
performance of fiduciary activities shall exercise such powers and perform such
duties as are prescribed by these Bylaws, or as may be assigned to them by the
Board of Directors, the chief executive officer or the officer in charge of
fiduciary activities.
Section 4. Signature and Authentication of Instruments. All instruments in
which the Bank is named as Trustee or in any other fiduciary capacity and all
authentications or certificates by the Bank as Trustee under any mortgage, deed
of trust or other instrument securing bonds, debentures, notes or other
obligations of any individual, association or corporation, and all certificates
as Registrar or Transfer Agent and all certificates of deposit for stocks and
bonds, interim certificates, trust certificates and any other certificates,
document or instrument requiring execution may be signed or countersigned in
behalf of the Bank by any Trust Officer or officer of equal or higher rank
specifically elected or appointed for the performance of fiduciary duties or
the Secretary or any officer of the rank of Vice President or higher rank or by
any other person appointed for that purpose by the Board of Directors.
<PAGE> 17
Section 5. Custody of Investments. The investments of each fiduciary account
shall be kept separate from the assets of the Bank, and shall be placed in the
joint custody or control of not less than two of the officers or employees of
the Bank designated for that purpose by the Board of Directors. All such
officers and employees shall be adequately bonded. The investments of each
such fiduciary account shall be either: kept separate from those of all other
accounts, except as provided under the regulations of the Michigan Financial
Institutions Bureau for collective investment, or adequately identified as the
property of the relevant account.
Section 6. Trust Committee. There shall be a Trust Committee which shall be
composed of not less than five (5) members of the Board of Directors, at least
three (3) of whom shall be non-officer directors, and may include one or more
officers of the Bank who are not directors, appointed by the Board of Directors
to serve during its pleasure. The Trust Committee shall have general
supervision of and shall determine the policies relating to the administration
of fiduciary relationships. It shall have general supervision of the Trust
Division, the other committees to which the exercise of fiduciary powers of the
Bank are assigned, and the investment of funds and disposition of investments
held by the Bank in a fiduciary capacity. It shall have such other powers and
duties relating to the administration of fiduciary accounts entrusted to the
Bank as may be conferred upon it from time to time by the Board of Directors.
The Trust Committee shall meet at least once a month and shall keep minutes of
its meetings showing the disposition of all matters considered and passed upon,
and shall make monthly reports to the Board of Directors. Any three (3)
persons, each of whom is a member of the Trust Committee, of whom not less than
two (2) shall be nonofficer directors, shall constitute a quorum for the
transaction of business at any meeting of the Trust Committee.
ARTICLE XII
QUORUM
Except as otherwise provided by statute or in the Articles of Incorporation
or these Bylaws, a majority of all the stockholders or Directors, as the case
may be, shall be required to constitute a quorum to do business. Should there
be no quorum at any regular or special meeting of stockholders or Directors,
the stockholders or Directors present may adjourn from day to day until a
quorum is in attendance.
ARTICLE XIII
INDEMNIFICATION AND INSURANCE
The Bank shall indemnify and reimburse any director, officer, employee, or
agent to the fullest extent permitted by the laws of the State of Michigan, as
amended from time to time.
<PAGE> 18
ARTICLE XIV
AMENDMENTS TO BYLAWS
These Bylaws may be repealed, altered, or amended, in whole or in part, by
the vote of a majority of the Directors, at any regular or special meeting of
the Board of Directors.
CERTIFICATION
I, _________________________________, ________________________________ of NBD
Bank of Detroit, Michigan, certify that the foregoing is a true and exact copy
of the Articles of Incorporation and Bylaws of NBD Bank effective January 1,
1995.
IN WITNESS WHEREOF, I have executed this certification and caused the corporate
seal of the Bank to be affixed on _______________________, 19___ .
_____________________
<PAGE> 19
Charter No. 13671 Comptroller of the Currency District
REPORT OF CONDITION CONSOLIDATING
DOMESTIC AND FOREIGN SUBSIDIARIES OF THE
NBD BANK
|in the State of Michigan, at the close of business on December 31,
1995 published in response to call made by Comptroller of the
Currency, under title 12, United States Code, Section 161.
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C>
Cash and balances due from depository institutions
Noninterest-bearing balances and currency
and coin............................................................. 1,551,031
Interest-bearing balances............................................ 628,810
Securities:
Held-to-maturity securities.......................................... 0
Available-for-sale securities........................................ 5,018,302
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds sold............................................... 595,150
Securities purchased under agreements to resell.................. 146,401
Loans and lease financing receivables:
Loans and leases, net of unearned income............................. 20,460,785
LESS: Allowance for loan and lease losses............................ 267,382
Loans and leases, net of unearned income and
allowance............................................................ 20,193,403
Assets held in trading accounts.......................................... 154,747
Premises and fixed assets (including
capitalized leases).................................................. 348,959
Other real estate owned.................................................. 16,176
Investments in unconsolidated subsidiaries and
associated companies................................................. -
Customers' liability to this bank on acceptances
outstanding.......................................................... 164,133
Intangible assets........................................................ 38,024
Other assets............................................................. 606,503
-------------
Total assets............................................................. 29,461,639
=============
LIABILITIES
Deposits:
In domestic offices.................................................. 16,450,184
Noninterest-bearing.............................................. 4,799,681
Interest-bearing................................................. 11,650,503
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................................... 2,910,868
Noninterest-bearing.............................................. 67,313
Interest-bearing................................................. 2,843,555
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.......................................... 1,958,326
</TABLE>
<PAGE> 20
<TABLE>
<S> <C>
Securities sold under agreements to repurchase................... 243,869
Demand notes issued to the U.S. Treasury................................. 162,376
Trading liabilities...................................................... 75,745
Other borrowed money:
With original maturity of one year or less....................... 2,377,209
With original maturity of more than one year..................... 1,564,618
Mortgage indebtedness and obligations
under capitalized leases............................................. 14,262
Bank's liability on acceptances executed and
outstanding.......................................................... 164,133
Notes and debentures subordinated to
deposits............................................................. 700,000
Other liabilities........................................................ 566,318
-------------
Total liabilities........................................................ 27,187,908
-------------
EQUITY CAPITAL
Common stock............................................................. 111,858
Surplus.................................................................. 631,981
Undivided profits and capital reserves................................... 1,448,664
Net unrealized holding gains (losses) on available-for-sale securities... 72,912
Cumulative foreign currency translation
adjustments.......................................................... 8,316
-------------
Total equity capital..................................................... 2,273,731
-------------
Total liabilities and equity capital..................................... 29,461,639
=============
</TABLE>
I, Jason N. Hansen, Vice President of the above-named bank do
hereby declare that this Report of Condition is true and correct to
the best of my knowledge and belief.
JASON N. HANSEN
January 25, 1996
We, the undersigned directors, attest to the correctness of this
statement of resources and liabilities. We declare that it has been
examined by us, and to the best of our knowledge and belief has been
prepared in conformance with the instructions and is true and correct.
THOMAS H. JEFFS II
JOHN E. LOBBIA
ALFRED R. GLANCY III
Directors
<PAGE> 1
EXHIBIT 25-2
================================================================================
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A CORPORATION DESIGNATED
TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___
____________________________
NBD BANK
(Exact name of Trustee as specified in its charter)
<TABLE>
<S> <C> <C>
611 Woodward Avenue
Detroit, Michigan 48226 38-0864715
(Address of principal executive offices) (Zip Code) (I.R.S. Employer Identification No.)
</TABLE>
NBD BANK
611 WOODWARD AVENUE
DETROIT, MICHIGAN 48226
CORPORATE TRUST DEPARTMENT
ATTN: JOSEPH L. WEIDENBACH (313) 225-2211
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
MCN CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Michigan 38-2820658
(State or jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
500 Griswold Street
Detroit, Michigan 48226
(Address of principal executive offices) (Zip Code)
JUNIOR SUBORDINATED DEBENTURES
(Title of the indenture securities)
<PAGE> 2
1. GENERAL INFORMATION
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
State of Michigan Department of Commerce Financial Institutions
Bureau, Lansing, Michigan
Federal Reserve Bank of Chicago, Chicago, Illinois
Federal Deposit Insurance Corporation, Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR.
The obligor is not an affiliate of the Trustee.
3. VOTING SECURITIES OF THE TRUSTEE.
The following information is furnished as to each class of voting
securities of the Trustee:
<TABLE>
<CAPTION>
AS OF FEBRUARY 28, 1996
_______________________________________________________________________
COLUMN A COLUMN B
_______________________________________________________________________
TITLE OF CLASS AMOUNT OUTSTANDING
_______________________________________________________________________
<S> <C>
Common Stock, par value $12.50 per share 8,948,648 shares
</TABLE>
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
NBD Bank is Trustee under an Indenture, dated September 1, 1994, with
MCN Corporation ("MCN"), securing an issue of $101,100,000 9-3/8%
Series A Subordinated Deferrable Interest Debt Securities due November
30, 2024. The Trustee is not aware of any default under this
Indenture.
NBD Bank is Trustee under an Indenture, dated September 1, 1995, with
MCN Investment Corporation ("MCN Investment"), a wholly owned
subsidiary of MCN Corporation ("MCN"), securing an issue of Medium-Term
Notes due February 1, 1999, February 1, 2001 and February 1, 2003,
respectively. The Trustee is not aware of any default under this
Indenture.
NBD Bank is Trustee under an Indenture, dated September 1, 1995, with
MCN Investment, authorizing the issuance of up to $500,000,000 of
Medium-Term Notes Due Nine Months or More from Date of Issue. The
Trustee is not aware of any default under this Indenture.
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR
OR UNDERWRITERS.
Neither the Trustee nor any of the directors nor executive officers of
the Trustee is a director, officer, partner, employee, appointee or
representative of the underwriter for the obligor.
Alfred R. Glancy III, Chairman, President and CEO of MCN, is a member
of the Board of Directors of NBD Bank.
Thomas H. Jeffs II, President of NBD Bank, is a member of the Board of
Directors of MCN.
<PAGE> 3
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
Voting securities of the Trustee owned by the obligor and its
directors, partners and executive officers, taken as a group, do not
exceed one percent of the outstanding voting securities of the Trustee.
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Voting securities of the Trustee owned by any underwriter and its
directors, partners and executive officers, taken as a group, do
not exceed one percent of the outstanding voting securities of the
Trustee.
8. SECURITIES OF OBLIGOR OWNED OR HELD BY THE TRUSTEE.
The amount of securities of the obligor which the Trustee owns
beneficially or holds as collateral security for obligations in default
does not exceed one percent of the outstanding securities of the
obligor.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
The Trustee does not own beneficially or hold as collateral security
for obligations in default any securities of an underwriter for the
obligor.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
The Trustee does not own beneficially or hold as collateral security
for obligations in default voting securities of a person who, to
the knowledge of the Trustee (1) owns 10% or more of the voting
securities of the obligor, or (2) is an affiliate, other than a
subsidiary, of the obligor.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PER CENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
The Trustee does not own beneficially or hold as collateral security
for obligations in default any securities of a person who, to the
knowledge of the Trustee, owns 50 percent or more of the voting
securities of the obligor.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE AS OF FEBRUARY 27, 1996.
<TABLE>
_______________________________________________________________________
COLUMN A COLUMN B COLUMN C
_______________________________________________________________________
NATURE OF INDEBTEDNESS AMOUNT OUTSTANDING DATE DUE
_______________________________________________________________________
<S> <C> <C>
$30 million participation $0 July 30, 1998
in a $300 million
revolving credit facility
$3 million standby letter $489,421.22 July 30, 1998
of credit
</TABLE>
13. DEFAULTS BY THE OBLIGOR.
Not applicable.
<PAGE> 4
14. AFFILIATIONS WITH THE UNDERWRITERS.
No underwriter is an affiliate of the Trustee.
15. FOREIGN TRUSTEE.
Not applicable.
16. LIST OF EXHIBITS.
(1) Articles of Association of the Trustee. Attached hereto as
Exhibit A.
(2) Certificate of Authority of the Trustee to commence business.
See Exhibit A.
(3) Authorization of the Trustee to exercise corporate trust
powers. Attached hereto as Exhibit B.
(4) By-Laws of the Trustee. Attached hereto as Exhibit C.
(5) Not Applicable.
(6) Consent by the Trustee required by Section 321 (b) of the
Trust Indenture Act of 1939.
Incorporated by reference to Exhibit (6) filed with Amendment
No. 1 to Form T-1 Statement, Registration No. 22-4501.
(7) Report of condition of Trustee. Attached hereto as Exhibit D.
(8) Not applicable.
(9) Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the Trustee, NBD Bank, a Michigan banking corporation, has duly caused this
statement of eligibility and qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Detroit, State of
Michigan on the 29th day of February 1996.
NBD BANK
(Trustee)
By: ___________________________
Joseph L. Weidenbach
Trust Officer
<PAGE> 5
[NBD LOGO]
ARTICLES OF
INCORPORATION
AND
BYLAWS
<PAGE> 6
NBD BANK
DETROIT, MICHIGAN
Charter No. 970
ARTICLES OF INCORPORATION
EFFECTIVE JANUARY 1, 1995
FIRST.
The name of this Bank shall be NBD Bank.
SECOND.
The place where the principal office of this Bank is located is in the City of
Detroit, Wayne County, State of Michigan.
The Board of Directors shall have the power to change the location of the main
office anywhere within the City of Detroit without the approval of the
shareholders and shall have the power to establish or change the location of
any branch or branches of this Bank to any other location without the approval
of the shareholders.
THIRD.
The purpose of this Bank is to carry on the business of banking pursuant to the
Michigan Banking Code of 1969, as amended.
FOURTH.
The authorized amount of the capital stock of this Bank shall be 10,000,000
shares of common stock of the par value of $12.50 each. The authorized amount
of the capital stock of this Bank may be increased or decreased from time to
time in accordance with provisions of the laws of the State of Michigan.
FIFTH.
The period for which this Bank is organized is perpetual.
SIXTH.
A Director of the Bank shall not be personally liable to the Bank or its
shareholders for monetary damages for a breach of fiduciary duty as a Director,
except for liability: (a) for any breach of the Director's duty of loyalty to
the Bank or its shareholders; (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (c)
resulting from a violation of Section 43 of the Michigan Banking Code, as
amended; (d) for any transaction from which the Director derived an improper
personal benefit; or (e) for any act or omission occurring prior to the date
upon which this Article is duly adopted and filed as required by law. If,
following approval of this Article by the shareholders, the Michigan Banking
Code is amended to authorize corporate action further eliminating or limiting
the personal liability of
<PAGE> 7
Directors, then the liability of a Director of the Bank shall be eliminated or
limited to the fullest extent permitted by the Michigan Banking Code, as
amended. Any repeal, modification or adoption of any provisions in these
Articles of Incorporation inconsistent with this Article shall not adversely
affect any right or protection of a Director of the Bank existing at the time
of such repeal, modification or adoption.
SEVENTH.
These Articles of Incorporation may be changed or amended at any time by a vote
of the shareholders owning a majority of the stock of this Bank in any manner
not inconsistent with the provisions of law.
<PAGE> 8
STATE OF MICHIGAN
DEPARTMENT OF COMMERCE
FINANCIAL INSTITUTIONS BUREAU
[STATE EMBLEM]
OFFICE OF THE COMMISSIONER
I, Patrick M. McQueen, Commissioner, do hereby certify, that
NBD BANK
in the City of Detroit, County of Wayne, State of Michigan, a financial
institution existing and operating under the provisions of the banking code of
1969, having satisfactorily complied with all statutory requirements obtaining
in such matter, is hereby authorized to exercise FULL TRUST POWERS as provided
in sections 181 through 186 of the banking code of 1969, effective 11:59 p.m.
on December 31, 1994.
[STATE SEAL] SIGNED AND SEALED this 21st day of
DECEMBER 1994, at Lansing, Michigan.
/s/ Patrick M. McQueen
----------------------------
Patrick M. McQueen
Commissioner
<PAGE> 9
NBD BANK
DETROIT, MICHIGAN
________________________________
BYLAWS
EFFECTIVE JANUARY 1, 1995
________________________________
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. Annual Meetings. The regular Annual Meeting of the stockholders of
this Bank for the election of directors and for the transaction of any other
business as may properly come before the meeting shall be held on the third
Monday in May of each year or at such other date as from time to time may be
designated by the Board of Directors. If the election of directors shall not
be held on the day designated for an annual meeting, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a
meeting of the stockholders as soon thereafter as convenient. Nominations for
election to the Board of Directors may be made by the Board of Directors or by
any stockholders entitled to vote for the election of directors.
Section 2. Special Meetings. Except as otherwise specifically provided by
statute, special meetings of the stockholders may be called for any purpose at
any time by the Board of Directors or by the holders of at least ten per cent
(10%) of the then outstanding shares of stock. Section 3. Place of Meetings.
Annual meetings or special meetings of the stockholders shall be held at the
main office of the Bank or at such other place within or without the State of
Michigan as is established by the Board of Directors.
Section 4. Proxies. All proxies secured for any annual or special meeting of
stockholders shall be dated and filed by the Secretary with the records of the
meeting.
Section 5. Notice of Meetings. Written notice stating the place, day and hour
of the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than ten days, before
the date of the meeting either personally or by mail, by or at the direction of
the President, or the Secretary, or the officer or persons calling the meeting
to each stockholder of record entitled to vote at such meeting. If mailed,
such notices shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
records of the Bank with postage thereon prepaid. Such notice may be waived in
writing.
Section 6. Fixing the Record Date. For the purpose of determining
stockholders entitled to
<PAGE> 10
notice of or to vote at any meeting of stockholders, annual or special, or
entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the Board of
Directors shall fix in advance a record date and hour for any such
determination of stockholders, such date in any case to be not more than fifty
(50) days and, in case of a meeting of stockholders, not less than ten (10)
days prior to the date on which the particular action, requiring such
determination of stockholders, is to be taken. When a determination of
stockholders entitled to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
Section 7. Stockholders' Action Without A Meeting. Unless otherwise
restricted in the Articles of Incorporation or these Bylaws, any action which
may be taken at the annual or any special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by all stockholders
entitled to vote with respect to the subject matter thereof.
ARTICLE II
DIRECTORS
Section 1. Size and Vacancies. The Board of Directors shall consist of such
number of persons, not less than five nor more than twenty-five, as from time
to time shall be determined by a majority of the votes to which all
stockholders are at the time entitled or by resolution adopted by the
affirmative vote of a majority of the Board of Directors. Any vacancies in the
Board of Directors may be filled by action of a majority of the remaining
Directors between meetings of stockholders. Subject to the limitation as to
the number of Directors, the stockholders may elect not to exceed two less than
the full Board, and the unfilled directorships shall be considered as vacancies
and may be filled thereafter by the Board of Directors.
Section 2. Powers. The Board of Directors, a majority of whom shall be a
quorum to transact business, shall have power to manage and administer the
business and affairs of the Bank and to prescribe Bylaws for the regulation of
the business of the Bank and the conduct of its affairs not inconsistent with
law, the Articles of Incorporation and these Bylaws. Except as expressly
limited by law, all corporate powers of the Bank shall be vested in and may be
exercised by the Board of Directors.
Section 3. Officers and Employees. The Board of Directors shall have power to
elect or appoint such officers and employees as may be required to transact the
business of the Bank, to define their duties, to require bonds from them and to
fix the penalty thereof, and to continue them in office or dismiss them.
Section 4. Meetings. The regular meetings of the Board of Directors shall be
held on such date and at such time each month, within or without the State of
Michigan as shall from time to time be determined by the Board of Directors by
resolution, except that in the month in which the regular annual meeting of the
stockholders is held, the regular meeting of the Board of Directors shall be
held following and on the same day as the regular meeting of the stockholders.
When any regular meeting of the Board of Directors falls upon a holiday, the
meeting shall be held on
<PAGE> 11
such other day as the Board of Directors may previously designate. Special
meetings of the Board of Directors may be called at any time by the Secretary
or by any officer of higher rank than Vice President, or any three Directors.
Notice of each special meeting shall be given personally or by duly mailing,
telephoning, or telegraphing the same, at least twenty-four hours before the
meeting. Any or all Directors may waive notice of any meeting either before or
after the meeting.
Section 5. Participation In Meetings By Telephone. Unless otherwise
restricted by the Articles of Incorporation or these Bylaws, members of the
Board of Directors or any committee designated by the Board may participate in
a meeting of the Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Section 6. Directors' Action Without A Meeting. Unless otherwise restricted
by the Articles of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent thereto
is signed by all members of the Board or of such committee as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
or committee.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. There shall be a committee composed of not
less than four (4) members to be known as the Executive Committee which shall
consist of all the officer-directors of the Bank and two (2) other directors
appointed as shall be provided by the Board of Directors. Provision shall be
made by the Board of Directors for the appointment of alternates to act for
members in the event of their absence or disability.
1.1 Presiding Officer. The Chairman of the Board shall act as presiding
officer at any meeting of the Executive Committee. In the event of the absence
or disability of the Chairman of the Board, the President shall act as
presiding officer. In the event of the absence or disability of the Chairman
of the Board and President, another officer-director, if present, shall act as
presiding officer. If no officer-director member is present, an Executive Vice
President of the Bank may serve as the presiding officer or the other members
present at the meeting shall elect one of their members as presiding officer.
1.2 Quorum. Any two (2) persons, each of whom is a member or alternate
member of the Executive Committee, of whom not less than one (1) shall be
non-officer directors, shall constitute a quorum for the transaction of
business at any meeting of the Executive Committee.
1.3 Duties. The Executive Committee shall function from day to day or
such other short intervals as shall be found requisite and expedient in the
carrying on of the business and affairs of the Bank, and between meetings of
the Board of Directors, said Committee, within the scope of the jurisdiction
and functions assigned by the Board of Directors to such Committee, shall
<PAGE> 12
have and may exercise, so far as may be permitted by law, all power and
authority of the Board of Directors (including the right to authorize the seal
of the Bank to be affixed to all instruments on which the same may be required
or appropriate) and shall have power, but not by way of limitation of its
general powers, to discount and purchase bills, notes, and other evidences of
debt, and to buy and sell bills of exchange. A record of the meetings of the
Committee shall be kept, which shall be accessible to inspection by the
Directors at all times, and the Committee shall, at each regular meeting of the
Board of Directors and at such other times as the Board of Directors may
request, submit in writing a full report of its actions. The Board of
Directors shall approve or disapprove the report of the Executive Committee,
such action to be recorded in the minutes of the meeting; provided, however,
that no rights of third parties shall be affected by any action of the Board of
Directors, if such rights have attached by virtue of action of the Executive
Committee within the scope of the jurisdiction and functions assigned by the
Board of Directors to said Committee.
Section 2. Audit Committee. There shall be appointed annually by the Board of
Directors an Audit Committee composed of not less than three (3) Directors none
of whom shall be officers of the Bank.
2.1 Duties. The Audit Committee shall:
(i) Cause to be made by the Auditing Department of the Bank a
suitable examination of the financial records and operations of the Bank
through a program of continuous internal audits. The Committee may employ
independent certified public accounting firms of recognized standing to make
such additional examinations and audits as it may deem advisable. The
examinations caused to be made by the Committee shall meet any examination
requirements prescribed from time to time by the Michigan Financial
Institutions Bureau or other regulatory authorities having jurisdiction and may
be made in conjunction with examinations of the Michigan Financial Institutions
Bureau.
(ii) Report to the Board of Directors at least once in each
calendar year the results of the examinations made and such conclusions and
recommendations as the Committee deems appropriate.
Section 3. Other Committees. The Board of Directors may create and appoint
such other committees as it may, at any time or from time to time, find
necessary or desirable to facilitate and expedite the management and
administration of the affairs of the Bank. The Board of Directors shall have
power to specify the number of members of any such other committee, to
designate the powers and duties of any such other committee, and to provide for
the tenure in office of its members, its method of organization, and its
procedure for the transaction of business.
ARTICLE IV
OFFICERS
<PAGE> 13
Section 1. Appointment and Titles. The officers of this Bank shall include a
Chairman of the Board and a President and may include one or more Vice Chairman
of the Board, each of whom shall be a member of the Board of Directors, and
shall further include one or more Vice Presidents, a Secretary, one or more
Assistant Secretaries, and such other officers as may be from time to time
required for the prompt and orderly transaction of its business, to be elected
by the Board of Directors. The same person may hold any two or more offices,
and in any such case, these Bylaws shall be construed and understood
accordingly; provided that the same person may not hold the offices of Chairman
of the Board and Secretary or President and Secretary. The duties and
authorities of the officers of the Bank, other than those mentioned in these
Bylaws, shall be those usually pertaining to their respective offices, or as
may be designated by the Chairman of the Board, subject to the supervision and
direction of the Board of Directors.
Section 2. Term of Office of Officer-Directors. The Chairman of the Board,
the President and any Vice Chairman of the Board shall hold office for the
current year for which the Board of Directors of which they shall be members
was elected, unless they shall resign, become disqualified, or be removed; and
any vacancy occurring in any of such offices may be filled by the remaining
members of the Board of Directors.
Section 3. Chairman of the Board and President. The Chairman of the Board
shall be the chief executive officer of the Bank, shall preside at meetings of
stockholders and directors, shall have general supervision and direction of the
business of the Bank, and perform such other duties as may be designated by the
Board of Directors. The President shall perform such duties as may be
designated by the Board of Directors and, in the event of the absence or
disability of the Chairman of the Board, shall have his powers and duties. The
Vice Chairman of the Board shall perform such duties as may be designated by
the Board of Directors.
Section 4. Officers. All other officers shall be elected to hold their
respective offices at the pleasure of the Board of Directors of the Bank, and
shall have such duties, other than those mentioned herein, as shall be
prescribed by the Board of Directors.
Section 5. Secretary. The Secretary or Assistant Secretary or other officers
designated by the Board of Directors shall be responsible for stock books and
records, and other valuables of the Bank, and shall keep accurate minutes of
all meetings. The Secretary shall attend to the giving of all notices required
by these Bylaws to be given. He shall be custodian of the corporate seal,
records, documents and papers of the Bank. He shall provide for the keeping of
proper records of all transactions of the Bank. The Secretary, or Assistant
Secretary in his absence, shall have the power to sign indemnity agreements and
appoint agents by executing powers of attorney or such other similar documents
deemed necessary in the ordinary course of transacting the Bank's business. He
shall serve as Cashier, and he or his Deputy Cashiers shall have and may
exercise any and all other powers and duties pertaining by law, regulation or
practice, to the office of the Cashier, or imposed by these Bylaws. He shall
also perform such other duties as may be assigned to him, from time to time, by
the Board of Directors.
Section 6. Officers, Employees and Agents. All other officers, employees and
agents of this Bank shall be responsible for all such sums of money and
property of every kind as may be entrusted to their care or placed in their
hands by the Board of Directors, or otherwise come into
<PAGE> 14
their hands as officers, employees or agents; and shall qualify under the
bankers blanket bond covering the bank officers and employees, approved as to
type and amount from year to year by the Board of Directors, conditioned for
the honest and faithful discharge of their duties as such officers, employees
or agents, and that they will faithfully and honestly apply and account for all
sums of money and other property of this Bank that may come into their hands as
such officers, employees or agents and pay over and deliver the same to the
order of the Board of Directors, or to any other person or persons authorized
by the Board of Directors to receive the same.
ARTICLE V
SEAL
The Board may adopt a seal of the Bank in any form including a raised
impression or a stamp bearing the name of the Bank and the city and state of
its principal place of business. The Secretary shall be the official custodian
of the seal and shall be responsible for the safekeeping and proper use
thereof. The seal shall not be used or affixed to any paper or document
whatsoever except by the Secretary or any Assistant Secretary, or such other
officers or employees of the Bank as may be authorized by the Secretary or any
Assistant Secretary to affix the seal.
ARTICLE VI
EXECUTION OF INSTRUMENTS
Section 1. Conveyance of Real Estate. All transfers and conveyances of real
estate shall be made by the Bank, under seal, and shall be signed by the
President or any Vice President or any other officer, employee or agent of the
Bank as may be designated by the Secretary, and shall be attested by the
Secretary or any Assistant Secretary, or such other officer or employee of this
Bank as may be authorized by the Secretary to affix the seal.
Section 2. Contracts. All contracts, checks, drafts, etc., shall be signed by
the Secretary, or any officer of the rank of Vice President or higher rank, or
any other officer or employee designated by the Secretary.
Section 3. Absence of Resolution. No resolution of the Board of Directors
shall be necessary in order to authorize the execution, acknowledgement or
verification of any document by any officer who is authorized under these
Bylaws to do so, and he or she shall have full authority to act as if he or she
were duly authorized by resolution of the Board of Directors in each particular
case.
<PAGE> 15
ARTICLE VII
BANKING HOURS
The Bank shall be open for business upon such hours of each day of the
year as the Chief Executive Officer or his delegate shall from time to time
direct and the Chief Executive Officer or his delegate may, in his discretion,
prescribe different banking hours for different classes of business and
different banking hours for one or more branch offices, than prescribed for the
principal banking office.
ARTICLE VIII
MINUTE BOOK
The organization papers of this Bank, the returns of the judges of the
elections, the proceedings of all regular and special meetings of the Board of
Directors and of the stockholders, the Bylaws and any amendments thereto, and
reports of the committees of the Board of Directors shall be recorded in the
minute book and the minutes of each meeting shall be signed by the person
presiding at such meeting and attested by the Secretary.
ARTICLE IX
TRANSFERS OF STOCK
Section 1. Transfers. The stock of this Bank shall be assignable and
transferable only on the books of this Bank, subject to the restrictions and
provisions of the law; and a transfer book shall be provided in which all
assignments and transfers of stock shall be made.
Section 2. Record Date. The stock transfer books of the Bank shall not be
closed for the determination of stockholders entitled to dividends, but any
dividend can be made payable to stockholders of record on the date such
dividend is declared, or any subsequent date. The Bank shall be fully
protected in giving notices of meetings, paying dividends and doing such other
things as require a knowledge of the names of the stockholders of the Bank, in
relying upon the names of the stockholders as they appear upon the stock books
of the Bank.
Section 3. Form and Issuance. Certificates of stock, bearing the manual or
facsimile signature of the Chairman of the Board, President or any Vice
President, and the Secretary, or the manual or facsimile signature of any two
of such other employees of the Bank as may be designated for such purpose from
time to time by resolution of the Board of Directors, and bearing the impressed
or facsimile seal of the Bank, may be issued to stockholders. The death,
resignation, discharge or incapacity of any person whose manual or facsimile
signature appears on any certificate, shall not affect the validity of such
certificate of stock, whether such certificate has theretofore or is thereafter
issued. All certificates of stock shall state upon the face thereof that the
stock is transferable only upon the books of the Bank; and when stock is
transferred, the certificates therefore shall be returned to the Bank,
canceled, preserved and new certificates issued.
<PAGE> 16
ARTICLE X
PROXIES AND CONSENTS
Proxies to vote and written consent with respect to shares of stock of
other corporations owned by or standing in the name of the Bank may be executed
and delivered from time to time on behalf of the Bank by two officers, one of
whom shall be the Chairman, President, Executive Vice President, Senior Vice
President or a Vice President and the other of whom shall be the Secretary or
an Assistant Secretary of the Bank; or by any other person or persons duly
authorized by the Board of Directors.
ARTICLE XI
TRUST DIVISION
Section 1. Exercise of Fiduciary Powers. All fiduciary powers of the Bank
shall be exercised through the Trust Division under the supervision of the
Trust Committee, subject to the Michigan Banking Code and subject to such
regulations as the Michigan Financial Institutions Bureau shall from time to
time establish. All books and records relating to fiduciary activities shall
be kept separate and distinct from the other books and records of the Bank.
Section 2. Officer in Charge. The Trust Division shall be placed under the
management and immediate supervision of an officer in charge appointed by the
Board of Directors. The duties of such officer shall be to cause the policies
and instructions of the Board of Directors, the chief executive officer and the
Trust Committee, with respect to the fiduciary accounts entrusted to the Bank,
to be carried out, and to supervise the due performance of such accounts in
accordance with law and their terms.
Section 3. Other Officers. Any other officer specifically appointed for the
performance of fiduciary activities shall exercise such powers and perform such
duties as are prescribed by these Bylaws, or as may be assigned to them by the
Board of Directors, the chief executive officer or the officer in charge of
fiduciary activities.
Section 4. Signature and Authentication of Instruments. All instruments in
which the Bank is named as Trustee or in any other fiduciary capacity and all
authentications or certificates by the Bank as Trustee under any mortgage, deed
of trust or other instrument securing bonds, debentures, notes or other
obligations of any individual, association or corporation, and all certificates
as Registrar or Transfer Agent and all certificates of deposit for stocks and
bonds, interim certificates, trust certificates and any other certificates,
document or instrument requiring execution may be signed or countersigned in
behalf of the Bank by any Trust Officer or officer of equal or higher rank
specifically elected or appointed for the performance of fiduciary duties or
the Secretary or any officer of the rank of Vice President or higher rank or by
any other person appointed for that purpose by the Board of Directors.
<PAGE> 17
Section 5. Custody of Investments. The investments of each fiduciary account
shall be kept separate from the assets of the Bank, and shall be placed in the
joint custody or control of not less than two of the officers or employees of
the Bank designated for that purpose by the Board of Directors. All such
officers and employees shall be adequately bonded. The investments of each
such fiduciary account shall be either: kept separate from those of all other
accounts, except as provided under the regulations of the Michigan Financial
Institutions Bureau for collective investment, or adequately identified as the
property of the relevant account.
Section 6. Trust Committee. There shall be a Trust Committee which shall be
composed of not less than five (5) members of the Board of Directors, at least
three (3) of whom shall be non-officer directors, and may include one or more
officers of the Bank who are not directors, appointed by the Board of Directors
to serve during its pleasure. The Trust Committee shall have general
supervision of and shall determine the policies relating to the administration
of fiduciary relationships. It shall have general supervision of the Trust
Division, the other committees to which the exercise of fiduciary powers of the
Bank are assigned, and the investment of funds and disposition of investments
held by the Bank in a fiduciary capacity. It shall have such other powers and
duties relating to the administration of fiduciary accounts entrusted to the
Bank as may be conferred upon it from time to time by the Board of Directors.
The Trust Committee shall meet at least once a month and shall keep minutes of
its meetings showing the disposition of all matters considered and passed upon,
and shall make monthly reports to the Board of Directors. Any three (3)
persons, each of whom is a member of the Trust Committee, of whom not less than
two (2) shall be nonofficer directors, shall constitute a quorum for the
transaction of business at any meeting of the Trust Committee.
ARTICLE XII
QUORUM
Except as otherwise provided by statute or in the Articles of Incorporation
or these Bylaws, a majority of all the stockholders or Directors, as the case
may be, shall be required to constitute a quorum to do business. Should there
be no quorum at any regular or special meeting of stockholders or Directors,
the stockholders or Directors present may adjourn from day to day until a
quorum is in attendance.
ARTICLE XIII
INDEMNIFICATION AND INSURANCE
The Bank shall indemnify and reimburse any director, officer, employee, or
agent to the fullest extent permitted by the laws of the State of Michigan, as
amended from time to time.
<PAGE> 18
ARTICLE XIV
AMENDMENTS TO BYLAWS
These Bylaws may be repealed, altered, or amended, in whole or in part, by
the vote of a majority of the Directors, at any regular or special meeting of
the Board of Directors.
CERTIFICATION
I, _________________________________, ________________________________ of NBD
Bank of Detroit, Michigan, certify that the foregoing is a true and exact copy
of the Articles of Incorporation and Bylaws of NBD Bank effective January 1,
1995.
IN WITNESS WHEREOF, I have executed this certification and caused the corporate
seal of the Bank to be affixed on _______________________, 19___ .
_____________________
<PAGE> 19
Charter No. 13671 Comptroller of the Currency District
REPORT OF CONDITION CONSOLIDATING
DOMESTIC AND FOREIGN SUBSIDIARIES OF THE
NBD BANK
|in the State of Michigan, at the close of business on December 31,
1995 published in response to call made by Comptroller of the
Currency, under title 12, United States Code, Section 161.
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C>
Cash and balances due from depository institutions
Noninterest-bearing balances and currency
and coin............................................................. 1,551,031
Interest-bearing balances............................................ 628,810
Securities:
Held-to-maturity securities.......................................... 0
Available-for-sale securities........................................ 5,018,302
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds sold............................................... 595,150
Securities purchased under agreements to resell.................. 146,401
Loans and lease financing receivables:
Loans and leases, net of unearned income............................. 20,460,785
LESS: Allowance for loan and lease losses............................ 267,382
Loans and leases, net of unearned income and
allowance............................................................ 20,193,403
Assets held in trading accounts.......................................... 154,747
Premises and fixed assets (including
capitalized leases).................................................. 348,959
Other real estate owned.................................................. 16,176
Investments in unconsolidated subsidiaries and
associated companies................................................. -
Customers' liability to this bank on acceptances
outstanding.......................................................... 164,133
Intangible assets........................................................ 38,024
Other assets............................................................. 606,503
-------------
Total assets............................................................. 29,461,639
=============
LIABILITIES
Deposits:
In domestic offices.................................................. 16,450,184
Noninterest-bearing.............................................. 4,799,681
Interest-bearing................................................. 11,650,503
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................................... 2,910,868
Noninterest-bearing.............................................. 67,313
Interest-bearing................................................. 2,843,555
Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased.......................................... 1,958,326
</TABLE>
<PAGE> 20
<TABLE>
<S> <C>
Securities sold under agreements to repurchase................... 243,869
Demand notes issued to the U.S. Treasury................................. 162,376
Trading liabilities...................................................... 75,745
Other borrowed money:
With original maturity of one year or less....................... 2,377,209
With original maturity of more than one year..................... 1,564,618
Mortgage indebtedness and obligations
under capitalized leases............................................. 14,262
Bank's liability on acceptances executed and
outstanding.......................................................... 164,133
Notes and debentures subordinated to
deposits............................................................. 700,000
Other liabilities........................................................ 566,318
-------------
Total liabilities........................................................ 27,187,908
-------------
EQUITY CAPITAL
Common stock............................................................. 111,858
Surplus.................................................................. 631,981
Undivided profits and capital reserves................................... 1,448,664
Net unrealized holding gains (losses) on available-for-sale securities... 72,912
Cumulative foreign currency translation
adjustments.......................................................... 8,316
-------------
Total equity capital..................................................... 2,273,731
-------------
Total liabilities and equity capital..................................... 29,461,639
=============
</TABLE>
I, Jason N. Hansen, Vice President of the above-named bank do
hereby declare that this Report of Condition is true and correct to
the best of my knowledge and belief.
JASON N. HANSEN
January 25, 1996
We, the undersigned directors, attest to the correctness of this
statement of resources and liabilities. We declare that it has been
examined by us, and to the best of our knowledge and belief has been
prepared in conformance with the instructions and is true and correct.
THOMAS H. JEFFS II
JOHN E. LOBBIA
ALFRED R. GLANCY III
Directors
